MSPNWA wrote:LAXintl wrote:Seems United management occupied with many townhalls. Here is one by the new COO
Here some pertinent commentary.
Q. Please explain why American and Southwest are flying heavier schedules than United. What do they know that we don't know?
A. All airlines see a very consistent set of data around demand, so our competitors are not seeing anything that we cannot. We may differ from them in how we view the recovery: we see it as a marathon, not a sprint. Our approach is to conserve cash now to make sure we're in a strong financial position when demand normalizes.
I don't expect the COO to admit anything different, but I have to push back against the statement about data. When competitors are operating schedules 2-3 times larger than you are, you're simply not getting the same amount of data as they are. They are getting a different set of data, and most importantly it's more robust and detailed than yours. I think the second part is accurate in that strategies are different, but at this point I'd say UA picked the wrong recovery strategy. Even in a marathon you need to run fast immediately when the gun sounds. You can't walk your way to victory.
Every carrier is desperate for cash. Implying that some carriers are and some aren't is quite the statement when they all are racking up debt to stay alive. Throw debt out the window. What matters right now is cash, and who can turn their operations cash-positive the fastest and strongest. And what's good for the goose is good for the gander. If AA's running a larger schedule for more cash, then that's the strategy that UA should be taking as well. But clearly there was a difference in opinion, and now UA and DL are in a tougher spot to grow operations to stem cash-loss.
In a few weeks time we will all see if UA's ultra conservative Q2 strategy paid off or if UA should have swung for the fences like AA. Personally I think UA made the right decision flying only 10% of the schedule in May and June. However I could be wrong and honestly my position has changed early on I wanted UA to be more aggressive it wasn't until a few weeks ago that I change my position and thought UA made the right decision. Kirby has admitted UA could have flown more of the schedule like AA has done but at what cost. An airline like UA is at disadvantage when airlines like NK and F9 are in the drivers seat in terms of pricing power. WN decided early on to match most F9 and NK's fares which WN can do because they have lower cost. WN has just started rising their fares heading into July as demand continues to grow. AA was not afraid to get on the fight for every leisure passengers and their passenger numbers prove it. AA in June carried 3 times more passengers than UA there is no arguing those facts. The questions many people are looking to have answered in a few weeks is this: 1) Did UA loose money by hold firm at 10% capacity for the month of June even though it was clear demand was rising? or question 2) Did AA loose money by chasing every leisure traveler at bottom of the barrel fares?
UA in June flew 10% of our schedule Kirby stated he expects Q2 revenue to be down somewhere around 92%. I could be wrong (and please correct me if I am) but I think in June AA flew around 30%-35% of their schedule. If there revenue remains down 90% or more in Q2 I wonder how many people would still believe AA made the right choice by going head to head with the NK, F9, and WN? The only way we all will know which airline made the right decision in Q2 is by patiently waiting for each airlines Q2 report.