tphuang wrote:Super80DFW wrote:tphuang wrote:
This seems like the difference between AA and UA. UA is making capacity decisions based on the forward bookings/demands they see. AA is making capacity decisions based on demand they hope to see. And in June, it worked out well for AA in that bookings came back faster in Texas/Florida. Now that every ULCC is adding back
capacity, that means a bigger portion of bookings will go to them. Unless demand really jumps, I don't see how this leap in capacity will work out again for AA.
You sure have some heavily negative options about AA without any idea of what AA's bookings actually look like. Over the last couple weeks, AA has been carrying 3 times the amount of passengers daily that UA is.
They have been burning cash at 50% faster than UA this quarter and 25 to 30% faster than DL. And they have the weakest cash position of any airline. And now, WN and ULCCs have all added back a lot of capacity for second half of June and July. That means those mostly leisure travelers are going to be very low yielding.
Just take a look at G4's investor update today to see how much cash a well run airline will still be burning when booking is 40% of normal levels. And AA definitely is not at 40% of its normal booking levels.
Keep in mind that while AA may have been carrying 2.5 to 3 times the amount of passengers UA is, it's certainly not getting that much total revenue. Stuff like cargo revenue and loyalty programs will be about the same between the two airlines and they are going to be a larger portion of total revenue than before. Also keep in mind that the extra customers AA are carrying are going to be a lot lower yielding than UA's passengers, since AA is essentially fighting LCCs/ULCCs for price sensitive customers.
You don't know any of that to be a fact, you're simply hoping it to be true. You don't know what percentage of AA's, or UA's business for that matter, comes from elite driven high dollar revenue.