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AA Q1 2019 Results

Posted: Fri Apr 26, 2019 1:24 pm
by Ishrion
http://news.aa.com/news/news-details/20 ... fault.aspx
http://s21.q4cdn.com/616071541/files/do ... -Recap.pdf

Reported a first-quarter 2019 pre-tax profit of $245 million, or $314 million excluding net special items1, and a first-quarter net profit of $185 million, or $237 million excluding net special items1
First-quarter earnings were $0.41 per diluted share, or $0.52 per diluted share excluding net special items1
Reported record first-quarter revenue of $10.6 billion. Also reported record first-quarter total revenue per available seat mile (TRASM) — the 10th consecutive quarter of TRASM growth
Returned $646 million to shareholders in the form of dividends and share repurchases in the first quarter

“We presently estimate the grounding of the 737 MAX will impact our 2019 pre-tax earnings by approximately $350 million. With the recent run-up in oil prices, fuel expenses for the year are also expected to be approximately $650 million higher than we forecast just three months ago.”

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 1:27 pm
by cledaybuck
That's underwhelming.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 1:32 pm
by N757ST
I’ve said it before, but the 28 billion in debt (including operating lease liabilities) is staggering compared to the rest of the industry.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 1:42 pm
by tphuang
So their guidance is 1 to 3% TRASM increase even after they proactively cut all the under performing JFK stuff due to 737MAX grounding? That's really weak

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:06 pm
by MIflyer12
So, DL, UA, AA, WN, AS, B6, NK and Allegiant have now reported. (if I've had an eyesight/transposition problem please correct me.) Sources 1Q2019 company earnings releases.

Ranked by Net Income, $ millions:

Delta 730
Southwest 387
United 292
American 185
Allegiant 57
Spirit 56
JetBlue 42
Alaska 4

Ranked by operating margin % (operating income/operating revenues):

Allegiant 20.2%
Spirit 10.3%
Southwest 9.8%
Delta 8.5%
United 5.2%
JetBlue 3.1%
American 2.3%
Alaska 1.3%

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:14 pm
by x1234
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:19 pm
by BA744PHX
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...

Lack of unions... for now.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:24 pm
by jasoncrh
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.

BA744PHX wrote:
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...

Lack of unions... for now.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:38 pm
by tphuang
MIflyer12 wrote:
So, DL, UA, AA, WN, AS, B6, NK and Allegiant have now reported. (if I've had an eyesight/transposition problem please correct me.) Sources 1Q2019 company earnings releases.

Ranked by Net Income, $ millions:

Delta 730
Southwest 387
United 292
American 185
Allegiant 57
Spirit 56
JetBlue 42
Alaska 4

Ranked by operating margin % (operating income/operating revenues):

Allegiant 20.2%
Spirit 10.3%
Southwest 9.8%
Delta 8.5%
United 5.2%
JetBlue 3.1%
American 2.3%
Alaska 1.3%

B6's operating margin is 4.1% (would be higher if excluding special items).

x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...


You do see that DL is middle of the pack in that margins list right? WN consistently has higher margin than DL, yet people still only ask what is so special about DL. Given that they dominate ATL/MSP/DTW, with only AA at CLT having similar dominance, isn't it pretty obvious why they do better than other legacies?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:39 pm
by flyboy80
How would a lack of unions have anything to do with Delta's success? Did it help Delta in the 1990s, didn't other airlines that were heavily unionized win coveted J.D. Power awards and out perform DL at various points in history, despite being unionized? And from a cost perspective, perhaps Delta's numbers would be changed somewhat if they were unionized- workers would probably be paid higher, have more benefits, and better working rules and conditions that would ultimately cost Delta more. It sounds like the pilots are gearing to take a big increase paid for by Delta's success. Will Delta placate the other workgroups (non union) by handing them uninspiring raises and hiring more non-benefitted workers?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 2:40 pm
by Miamiairport
Southwest I believe has about half of AA's revenues but its net income was about double. And WN is unionized with some of the highest paid employees in the airline industry. Add to that no premium cabins and no checked bag fees. Me thinks Parker and company are too occupied with ripping out AVOD and shoving in seats, although to be fair both UA and DL have also "denisified" Y.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:11 pm
by dmorbust
jasoncrh wrote:
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.

BA744PHX wrote:
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...

Lack of unions... for now.


You forgot SLC. I posted about this before, but Delta has quite smartly built up complete dominance (70% or greater market share) in its 4 largest hubs which also happen to have no alternative airport options: ATL, MSP, DTW, & SLC. No other airline can match that, and as a result DL returns higher profits than the other airlines and can still fund expansions in places like SEA & BOS.

AA has CLT, but their other three largest hubs all have alternative airport competition (DFW has DAL to temper pricing, MIA has FLL, and ORD has MDW). For UA, its four largest hubs are ORD (but MDW, and also no majority share even at ORD), IAH (but HOU), EWR (but LGA, JFK), and DEN which doesn't have an alternative airport but UA doesn't dominate DEN market share with even a majority share (WN competition).

That's why DL makes more $!

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:17 pm
by MIflyer12
dmorbust wrote:
jasoncrh wrote:
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.

BA744PHX wrote:
Lack of unions... for now.


You forgot SLC. I posted about this before, but Delta has quite smartly built up complete dominance (70% or greater market share) in its 4 largest hubs which also happen to have no alternative airport options: ATL, MSP, DTW, & SLC.


You guys just don't get it (although this is off-topic in a AA earnings thread). ATL is majority-connecting traffic. Not only is DL competing with WN at ATL, it's competing with every other carrier for one-stop traffic. DTW and MSP are closer to 50/50 O&D and connecting. SLC is too small in a ~6,000 flight a day operation even to matter. Lack of competition isn't the answer. Lack of unions isn't the answer - unless you want to argue that non-union labor is more productive per wage/benefit $. You don't want to argue that, do you?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:22 pm
by flight152
dmorbust wrote:
jasoncrh wrote:
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.

BA744PHX wrote:
Lack of unions... for now.


You forgot SLC. I posted about this before, but Delta has quite smartly built up complete dominance (70% or greater market share) in its 4 largest hubs which also happen to have no alternative airport options: ATL, MSP, DTW, & SLC. No other airline can match that, and as a result DL returns higher profits than the other airlines and can still fund expansions in places like SEA & BOS.

AA has CLT, but their other three largest hubs all have alternative airport competition (DFW has DAL to temper pricing, MIA has FLL, and ORD has MDW). For UA, its four largest hubs are ORD (but MDW, and also no majority share even at ORD), IAH (but HOU), EWR (but LGA, JFK), and DEN which doesn't have an alternative airport but UA doesn't dominate DEN market share with even a majority share (WN competition).

That's why DL makes more $!

United does have majority market share with 45% of traffic year to date 2019.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:26 pm
by jasoncrh
No, we get it. even though DL has a lot of flow traffic at those hubs, the local fares are VERY high. And the flow traffic at those hubs, especially Atlanta, tends to be high fare too. Go look up Huntsville to Raleigh/ Durham. Memphis to Charleston. Thigns like that. Those are HIGH fare markets, and Delta owns them. And they dominate the local traffic. Yes, southwest has a lot of flights at ATL, but it's WAY fewer than when Air Tran was there. Delta stil dominates the local traffic, and the local traffic pays high fares.

MIflyer12 wrote:
dmorbust wrote:
jasoncrh wrote:
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.



You forgot SLC. I posted about this before, but Delta has quite smartly built up complete dominance (70% or greater market share) in its 4 largest hubs which also happen to have no alternative airport options: ATL, MSP, DTW, & SLC.


You guys just don't get it (although this is off-topic in a AA earnings thread). ATL is majority-connecting traffic. Not only is DL competing with WN at ATL, it's competing with every other carrier for one-stop traffic. DTW and MSP are closer to 50/50 O&D and connecting. SLC is too small in a ~6,000 flight a day operation even to matter. Lack of competition isn't the answer. Lack of unions isn't the answer - unless you want to argue that non-union labor is more productive per wage/benefit $. You don't want to argue that, do you?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:27 pm
by jasoncrh
Thanks, yes - SLC too!

dmorbust wrote:
jasoncrh wrote:
Delta completely owns 3 cities (ATL, DTW, MSP) and faces minimal competition in all 3. These cities all generate a healthy amount of corporate travel, and Delta charges high prices and can get those fares. Furthermore, many markets in the southeast /midwest where Delta flies are completely devoid of competition from ULCC carriers - Delta and the other legacy carriers in those regions (AA in the southeast, UA in the midwest/ great plains) do not have to discount and keep fares high. AA and UA, as well as B6, WN, etc, are all WAY more exposed to LCC/ULCC competition. That's really all it is.

BA744PHX wrote:
Lack of unions... for now.


You forgot SLC. I posted about this before, but Delta has quite smartly built up complete dominance (70% or greater market share) in its 4 largest hubs which also happen to have no alternative airport options: ATL, MSP, DTW, & SLC. No other airline can match that, and as a result DL returns higher profits than the other airlines and can still fund expansions in places like SEA & BOS.

AA has CLT, but their other three largest hubs all have alternative airport competition (DFW has DAL to temper pricing, MIA has FLL, and ORD has MDW). For UA, its four largest hubs are ORD (but MDW, and also no majority share even at ORD), IAH (but HOU), EWR (but LGA, JFK), and DEN which doesn't have an alternative airport but UA doesn't dominate DEN market share with even a majority share (WN competition).

That's why DL makes more $!

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:41 pm
by Brickell305
Miamiairport wrote:
Southwest I believe has about half of AA's revenues but its net income was about double. And WN is unionized with some of the highest paid employees in the airline industry. Add to that no premium cabins and no checked bag fees. Me thinks Parker and company are too occupied with ripping out AVOD and shoving in seats, although to be fair both UA and DL have also "denisified" Y.


My take on AA is that it simply has no vision. Does it want to be a premium carrier, an LCC, a hybrid? Parker seems to think that pax don't care about service and he may be right but if so, why do they consistently lag their legacy peers on almost every front?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:58 pm
by chonetsao
Brickell305 wrote:
Miamiairport wrote:
Southwest I believe has about half of AA's revenues but its net income was about double. And WN is unionized with some of the highest paid employees in the airline industry. Add to that no premium cabins and no checked bag fees. Me thinks Parker and company are too occupied with ripping out AVOD and shoving in seats, although to be fair both UA and DL have also "denisified" Y.


My take on AA is that it simply has no vision. Does it want to be a premium carrier, an LCC, a hybrid? Parker seems to think that pax don't care about service and he may be right but if so, why do they consistently lag their legacy peers on almost every front?


Very good yet serious question. Doug needs to go. Someone who has a vision need to come in to lead AA better. Doug might have ideas, but he is not communicating with the market and employees. All he has done is to make AA a flying greyhound in domestic market while charging the premium prices.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 3:59 pm
by EBiafore99
Brickell305 wrote:
Miamiairport wrote:
Southwest I believe has about half of AA's revenues but its net income was about double. And WN is unionized with some of the highest paid employees in the airline industry. Add to that no premium cabins and no checked bag fees. Me thinks Parker and company are too occupied with ripping out AVOD and shoving in seats, although to be fair both UA and DL have also "denisified" Y.


My take on AA is that it simply has no vision. Does it want to be a premium carrier, an LCC, a hybrid? Parker seems to think that pax don't care about service and he may be right but if so, why do they consistently lag their legacy peers on almost every front?


Bingo

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 4:05 pm
by x1234
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ. Finally AA is making profits in the Pacific after their network restructuring! The Atlantic/Latin markets suffer from LCC growth.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 4:17 pm
by nikeherc
flight152 wrote:
[United does have majority market share with 45% of traffic year to date 2019.


Not to quibble, but 45% is a plurality, not a majority.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 4:21 pm
by MSPNWA
I think they look a little bloated on the cost side. To me they should be a larger airline with that cost structure. Passenger revenue is fine. Other revenue could be higher though. DL wins in that area.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 4:53 pm
by ScottB
jasoncrh wrote:
No, we get it. even though DL has a lot of flow traffic at those hubs, the local fares are VERY high. And the flow traffic at those hubs, especially Atlanta, tends to be high fare too. Go look up Huntsville to Raleigh/ Durham. Memphis to Charleston. Thigns like that. Those are HIGH fare markets, and Delta owns them. And they dominate the local traffic. Yes, southwest has a lot of flights at ATL, but it's WAY fewer than when Air Tran was there. Delta stil dominates the local traffic, and the local traffic pays high fares.


But DL does have competition for the flow traffic at ATL from AA with its hub at CLT (and less so DFW). DL wins the competition for higher-fare traffic in flow markets because they're putting a much better product (from the standpoint of reliability and customer experience) on the table. AA puts a crap product out there and since they don't really compete on price unless forced to do so by LCCs/ULCCs, DL gets the high-value customers. Their focus on a "world-class customer experience" appears to be focused on matching Ryanair, Vueling, Lion Air, and Air Asia.

MIflyer12 wrote:
American 2.3%


Operating margins near the bottom of the industry this many years out from the merger are a symptom of the failings of management. The economy is firing on all cylinders; in a recessionary environment this airline would have posted a loss in the hundreds of millions of dollars for the quarter and that's troubling for a company sitting on as much debt as AAL.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 4:57 pm
by jagraham
N757ST wrote:
I’ve said it before, but the 28 billion in debt (including operating lease liabilities) is staggering compared to the rest of the industry.


As of today, American Airlines Group Inc's weighted average cost of capital is 6.84% https://www.gurufocus.com/term/wacc/AAL ... +Group+Inc

$28 billion is a lot. And if interest rates shot up and AAL didn't protect themselves it would be trouble for AAL.
But for now, that money is costing them just under $2 billion per year. And they have a new fleet. Eventually the fuel savings will pay for that borrowed money - if the economy keeps cooperating.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:00 pm
by sagechan
jagraham wrote:
N757ST wrote:
I’ve said it before, but the 28 billion in debt (including operating lease liabilities) is staggering compared to the rest of the industry.


As of today, American Airlines Group Inc's weighted average cost of capital is 6.84% https://www.gurufocus.com/term/wacc/AAL ... +Group+Inc

$28 billion is a lot. And if interest rates shot up and AAL didn't protect themselves it would be trouble for AAL.
But for now, that money is costing them just under $2 billion per year. And they have a new fleet. Eventually the fuel savings will pay for that borrowed money - if the economy keeps cooperating.


The other thing is the debt was largely the result of LAA management prior to merger, it's a cost that they just have to deal with even if they didn't cause it. They've definitely worked to spread out CapEx and other than the needed WB order for 767 replacements, this group has seemed to try to limit cap expenses.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:20 pm
by Austin787
Brickell305 wrote:
Miamiairport wrote:
Southwest I believe has about half of AA's revenues but its net income was about double. And WN is unionized with some of the highest paid employees in the airline industry. Add to that no premium cabins and no checked bag fees. Me thinks Parker and company are too occupied with ripping out AVOD and shoving in seats, although to be fair both UA and DL have also "denisified" Y.


My take on AA is that it simply has no vision. Does it want to be a premium carrier, an LCC, a hybrid? Parker seems to think that pax don't care about service and he may be right but if so, why do they consistently lag their legacy peers on almost every front?

I think they have a vision: to be the world's largest ULCC while charging premium prices. Doesn't seem to be working, based on AA's financial results.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:27 pm
by slcdeltarumd11
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? .


Delta connects people thru and operates lower cost fortress hubs ATL, MSP, SLC, DTW. Print Money

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:37 pm
by apodino
x1234 wrote:
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ. Finally AA is making profits in the Pacific after their network restructuring! The Atlantic/Latin markets suffer from LCC growth.

This was the most interesting tidbit from the call for me too. AA is widely thought of as the weakest player in Asia, but this revelation, plus the fact that DL underperformed in Asia based on their call is curious. This tells me AA is having much more success with Alliance Partners in Asia than DL. AA has both Oneworld partners CX and JL in the region, plus China Southern's code share is helping them in China. DL has somewhat of a strained relationship with KE and doesn't seem to have as many opportunities as AA does in the partner department.

Some other tidbits from calls today.

1. The BA Joint Venture has really helped AA in JFK tenfold where LHR went from a huge loss leader into a very profitable route. It was hinted that Premium customers on OneWorld flights may actually be favoring the AA premium product over the BA premium product. Keep an eye on this. If AA can free up metal, you may see more AA metal on JFK-LHR and less BA metal.

2. AA does not believe the 321 NEO is a capable transatlantic plane at the moment, so don't look for it to do too much in the way of ETOPS other than Hawaii.

3. The Mechanics and the Rampers still do not have a joint contract, and I have it on good authority things got heated in a Q and A session today between employees and Doug Parker. Employee morale is very low right now.

4. AA is maintaining a cash balance of $7 Billion.

5. AA still believes its stock is undervalued and as long as this continues they will continue to buy back shares. If they don't believe this, they will increase dividends.

6. MD-80s will still be retired this year even with the MAX issues.

7. E satellite in DFW opens next month, and AA also gets 6 mainline gats in B at the same time.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:42 pm
by jagraham
One other thing to consider regarding AA - they just completed their labor group integrations. Pilots about a year ago, flight attendants late last year. Before that, they had to operate as two airlines under the same label. Now that they are integrated, we shall see if management can make AA live up to its potential.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:46 pm
by winginit
apodino wrote:
x1234 wrote:
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ. Finally AA is making profits in the Pacific after their network restructuring! The Atlantic/Latin markets suffer from LCC growth.

This was the most interesting tidbit from the call for me too. AA is widely thought of as the weakest player in Asia, but this revelation, plus the fact that DL underperformed in Asia based on their call is curious. This tells me AA is having much more success with Alliance Partners in Asia than DL. AA has both Oneworld partners CX and JL in the region, plus China Southern's code share is helping them in China. DL has somewhat of a strained relationship with KE and doesn't seem to have as many opportunities as AA does in the partner department.


I'm eagerly awaiting the transcript of the call. It's been implied by x1234 that they said outright that TPAC was profitable, and I'm finding that very hard to believe, although I wouldn't be surprised if they said that TPAC was showing the best YoY revenue climate as DL echo'd that as well on their call.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 5:52 pm
by apodino
jagraham wrote:
One other thing to consider regarding AA - they just completed their labor group integrations. Pilots about a year ago, flight attendants late last year. Before that, they had to operate as two airlines under the same label. Now that they are integrated, we shall see if management can make AA live up to its potential.

No they haven't completed them completely yet. As I mentioned the Rampers are not integrated, and neither are the Maintenance folks. This has been a very bitter contract negotiation that has the NMB involved, and has led to a lot of fingerpointing and bad will.

It should also be noted that the MX programs have not yet integrated either. All the Boeing planes (Save for the old HP 757s which are going away) and the sharkleted Airbus planes are on the LAA MX program, while all the other Airbus planes (Including the NEOs) and the E190s are on the LUS MX program. These systems still have to be integrated, and I believe the long range plan is for everything to migrate to the LUS system (Sceptre). But they still need a joint contract to do so. They are no where near that right now based on what I have seen.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 6:11 pm
by ericm2031
You also have a pretty public contract battle at Envoy happening. 3 years of trying to come up with a contract, just to have it overwhelmingly rejected.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 6:19 pm
by Varsity1
And the pilots at Envoy/Piedmont are pissed.

PSA is getting paid 25% more to do the exact same job. No word on pay improvements at Envoy or Piedmont.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 6:27 pm
by iyerhari
tphuang wrote:
You do see that DL is middle of the pack in that margins list right? WN consistently has higher margin than DL, yet people still only ask what is so special about DL. Given that they dominate ATL/MSP/DTW, with only AA at CLT having similar dominance, isn't it pretty obvious why they do better than other legacies?

Solid DL business model.
1. They own the market in their fortress hubs - ATL, MSP, DTW, SLC.
2. They have the ability to stay competitive and give fight in ultra-competitive markets such as JFK, LGA
3. Chase new territory and be able to take on losses - BOS, SEA or find newer focus city where they think they have a chance - RDU, AUS etc. It is clear that AA or UA are not into the focus city model.

Even if the economy tanks, DL would have to rethink their strategy in select markets in Point 3. Which ones they decide to not stomach losses would be clearer at that time.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 6:33 pm
by jasoncrh
Yes, as I wrote, the competition is American for that flow traffic. Have you actually looked at the types of planes Delta uses in most of their markets to/ from Atlanta? Mostly 717s, MD88s, and regional jets such as the CRJ and the CR7/CR9. These airplanes are nearly identical internally to what AA offers in Charlotte. No IFE, some with wifi, etc. Delta an dAA both compete and both get the same high fare traffic on these intra-southeast itineraries that, while not glamorous, are VERY high fare. Neither has to lower their fares, so they both get high fares. It's very easy.

ScottB wrote:
jasoncrh wrote:
No, we get it. even though DL has a lot of flow traffic at those hubs, the local fares are VERY high. And the flow traffic at those hubs, especially Atlanta, tends to be high fare too. Go look up Huntsville to Raleigh/ Durham. Memphis to Charleston. Thigns like that. Those are HIGH fare markets, and Delta owns them. And they dominate the local traffic. Yes, southwest has a lot of flights at ATL, but it's WAY fewer than when Air Tran was there. Delta stil dominates the local traffic, and the local traffic pays high fares.


But DL does have competition for the flow traffic at ATL from AA with its hub at CLT (and less so DFW). DL wins the competition for higher-fare traffic in flow markets because they're putting a much better product (from the standpoint of reliability and customer experience) on the table. AA puts a crap product out there and since they don't really compete on price unless forced to do so by LCCs/ULCCs, DL gets the high-value customers. Their focus on a "world-class customer experience" appears to be focused on matching Ryanair, Vueling, Lion Air, and Air Asia.

MIflyer12 wrote:
American 2.3%


Operating margins near the bottom of the industry this many years out from the merger are a symptom of the failings of management. The economy is firing on all cylinders; in a recessionary environment this airline would have posted a loss in the hundreds of millions of dollars for the quarter and that's troubling for a company sitting on as much debt as AAL.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 6:34 pm
by jasoncrh
exactly, great summary


iyerhari wrote:
tphuang wrote:
You do see that DL is middle of the pack in that margins list right? WN consistently has higher margin than DL, yet people still only ask what is so special about DL. Given that they dominate ATL/MSP/DTW, with only AA at CLT having similar dominance, isn't it pretty obvious why they do better than other legacies?

Solid DL business model.
1. They own the market in their fortress hubs - ATL, MSP, DTW, SLC.
2. They have the ability to stay competitive and give fight in ultra-competitive markets such as JFK, LGA
3. Chase new territory and be able to take on losses - BOS, SEA or find newer focus city where they think they have a chance - RDU, AUS etc. It is clear that AA or UA are not into the focus city model.

Even if the economy tanks, DL would have to rethink their strategy in select markets in Point 3. Which ones they decide to not stomach losses would be clearer at that time.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 8:58 pm
by jetsetterusa
Does anyone have any idea when the HND slots will be announced?

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 10:09 pm
by winginit
jetsetterusa wrote:
Does anyone have any idea when the HND slots will be announced?


While I can't recall the source, I had heard 'end of Summer'. I'm guessing August.

Re: AA Q1 2019 Results

Posted: Fri Apr 26, 2019 11:45 pm
by winginit
apodino wrote:
x1234 wrote:
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ. Finally AA is making profits in the Pacific after their network restructuring! The Atlantic/Latin markets suffer from LCC growth.

This was the most interesting tidbit from the call for me too. AA is widely thought of as the weakest player in Asia, but this revelation, plus the fact that DL underperformed in Asia based on their call is curious. This tells me AA is having much more success with Alliance Partners in Asia than DL. AA has both Oneworld partners CX and JL in the region, plus China Southern's code share is helping them in China. DL has somewhat of a strained relationship with KE and doesn't seem to have as many opportunities as AA does in the partner department.


The transcript of the call is now available, and it's not quite in line with what is being implied:

x1234 wrote:
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ.


Here's the quote:

Pacific was our best performing entity for the quarter with unit revenue growth about 9%. Gains were really in both yield and load factor across the both economy and business gap. And so it is really broad strength in the Pacific.

I mean every entity in the Pacific I posit you know revenue growth led by Hong Kong, Japan. We benefited from our restructuring of our operations to China and our partnership with China Southern.

So we added five additional Kocher cities to Beijing, and now to Shanghai we now cover either through our own metal or through our coach. With China Southern 86% of demand. So we expect that Pacific looking forward to be solidly profitable in the second quarter - solidly positive in the second quarter as well.


So Pacific was the best performing entity measured by YoY revenue growth, which is very different from Pacific being the best performing entity from a profitability perspective.

x1234 wrote:
Finally AA is making profits in the Pacific after their network restructuring!


Per the above, that's not what was said. They did however say that they do expect the Pacific to be 'solidly profitable in the second quarter', so there's that.

apodino wrote:
This tells me AA is having much more success with Alliance Partners in Asia than DL.


How are you defining success? Just curious.

apodino wrote:
AA has both Oneworld partners CX and JL in the region, plus China Southern's code share is helping them in China. DL has somewhat of a strained relationship with KE and doesn't seem to have as many opportunities as AA does in the partner department.


DL and KE have a full-fledged profit sharing joint venture. That relationship hasn't been in any way strained for years.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 12:08 am
by Erebus
tphuang wrote:
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...


You do see that DL is middle of the pack in that margins list right? WN consistently has higher margin than DL, yet people still only ask what is so special about DL. Given that they dominate ATL/MSP/DTW, with only AA at CLT having similar dominance, isn't it pretty obvious why they do better than other legacies?


The 3 airlines that are above DL all happen to be LCCs. Not the same league.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:09 am
by tphuang
Erebus wrote:
tphuang wrote:
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...


You do see that DL is middle of the pack in that margins list right? WN consistently has higher margin than DL, yet people still only ask what is so special about DL. Given that they dominate ATL/MSP/DTW, with only AA at CLT having similar dominance, isn't it pretty obvious why they do better than other legacies?


The 3 airlines that are above DL all happen to be LCCs. Not the same league.


WN has a national network and has been around for a long time. I would say comparing them to DL is pretty fair.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:26 am
by N649DL
x1234 wrote:
What is Delta doing so differently versus the rest of the industry!? One thing I've noticed when shopping for flights is that Delta is ALWAYS PRICED HIGHER than the competition every time on international long-haul. Delta must be doing something right...


At this point, DL's reputation has been so polished for a while that it can price themselves above the competition. The chances of them dropping the ball (cancellations, baggage loss, major delays) are significantly less in my experience than flying the competition. And if they screw up, they'll give you a generous amount of compensation in either SkyMiles, gift cards, or e-certs.

UA now with Kirby is taking the USAirways approach of being rock bottom in pricing against the competition. AA always seems about the same as DL these days with pricing (or slightly less.)

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:34 am
by BroadwayLimited
tphuang wrote:
WN has a national network and has been around for a long time. I would say comparing them to DL is pretty fair.

100% agree.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:37 am
by BroadwayLimited
N649DL wrote:
At this point, DL's reputation has been so polished for a while that it can price themselves above the competition. The chances of them dropping the ball (cancellations, baggage loss, major delays) are significantly less in my experience than flying the competition. And if they screw up, they'll give you a generous amount of compensation in either SkyMiles, gift cards, or e-certs.

UA now with Kirby is taking the USAirways approach of being rock bottom in pricing against the competition. AA always seems about the same as DL these days with pricing (or slightly less.)

Also agree 100%.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:38 am
by BroadwayLimited
Duplicate

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:41 am
by Mboyle1988
Delta doesn't just have competition free hubs by accident. Atlanta has long had rival carriers attempting to build hubs there. Delta has fought them off. Southwest back 15-20 years ago was much bigger in SLC. Delta fought them off. Detroit had Spirit in their old business model. Northwest fought them off. I don't think it's fair to say that DL just happened onto competition free hubs. Let's compare to AA. DFW was a dominant hub without a relevant alternative carrier. To the extent that WN is a factor at DAL, that is because the market wasn't loyal to AA. To the extent that B6 has a following at FLL, that's because AA's product out of MIA was not competitive. MIA was the crown jewel of legacy AA. Now it loses money supposedly. If they want to complain about the competition at ORD, why didn't they keep STL, which had no competition and could have served a similar role in the network? They chose ORD because it was a bigger city with more premium demand. They made a strategic decision to stay in competitive markets and go after that traffic.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:43 am
by BroadwayLimited
Duplicate

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 2:53 am
by N649DL
Mboyle1988 wrote:
Delta doesn't just have competition free hubs by accident. Atlanta has long had rival carriers attempting to build hubs there. Delta has fought them off. Southwest back 15-20 years ago was much bigger in SLC. Delta fought them off. Detroit had Spirit in their old business model. Northwest fought them off. I don't think it's fair to say that DL just happened onto competition free hubs. Let's compare to AA. DFW was a dominant hub without a relevant alternative carrier. To the extent that WN is a factor at DAL, that is because the market wasn't loyal to AA. To the extent that B6 has a following at FLL, that's because AA's product out of MIA was not competitive. MIA was the crown jewel of legacy AA. Now it loses money supposedly. If they want to complain about the competition at ORD, why didn't they keep STL, which had no competition and could have served a similar role in the network? They chose ORD because it was a bigger city with more premium demand. They made a strategic decision to stay in competitive markets and go after that traffic.


I read a comment recently about AA losing money at MIA. Is this really true? I find it really hard to believe unless CLT is really a distraction with regard to stealing away connecting traffic.

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 3:00 am
by kondoo
x1234 wrote:
Just finished listening to the call. Interesting commentary that the Pacific was the best performing entity led by Hong Kong & Japan outperforming both Atlantic & Latin. China improved too with code-shares to interior China out of PEK/PVG on CZ. Finally AA is making profits in the Pacific after their network restructuring! The Atlantic/Latin markets suffer from LCC growth.


Only reason is the best performing because they canceled so much capacity YOY. IE ORD-China gone

Re: AA Q1 2019 Results

Posted: Sat Apr 27, 2019 3:07 am
by kondoo
Mboyle1988 wrote:
Delta doesn't just have competition free hubs by accident. Atlanta has long had rival carriers attempting to build hubs there. Delta has fought them off. Southwest back 15-20 years ago was much bigger in SLC. Delta fought them off. Detroit had Spirit in their old business model. Northwest fought them off. I don't think it's fair to say that DL just happened onto competition free hubs. Let's compare to AA. DFW was a dominant hub without a relevant alternative carrier. To the extent that WN is a factor at DAL, that is because the market wasn't loyal to AA. To the extent that B6 has a following at FLL, that's because AA's product out of MIA was not competitive. MIA was the crown jewel of legacy AA. Now it loses money supposedly. If they want to complain about the competition at ORD, why didn't they keep STL, which had no competition and could have served a similar role in the network? They chose ORD because it was a bigger city with more premium demand. They made a strategic decision to stay in competitive markets and go after that traffic.



"New" AA does not know how to do effective Revenue Management. Plain and simple. That's what's screwing up with AA's performance. Bad execution everywhere, bad strategy, can't do proper RM 101. Unless they change it from the top, AA will continue to underperform.