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sdexplorer00
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 3:33 pm

“ American appears to be the most vulnerable of the major airlines. It was the most heavily leveraged of the legacy carriers going into the crisis; it had amassed $34 billion of gross debt, $46 billion of annual revenue and $6 billion of earnings before interest, taxes, depreciation, amortization, and rent/restructuring cost, or Ebitdar, a measure of operating cash flow for airlines.”

https://www.barrons.com/articles/chipot ... 1587465001
 
JAMBOJET
Posts: 293
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 3:43 pm

sdexplorer00 wrote:
“ American appears to be the most vulnerable of the major airlines. It was the most heavily leveraged of the legacy carriers going into the crisis; it had amassed $34 billion of gross debt, $46 billion of annual revenue and $6 billion of earnings before interest, taxes, depreciation, amortization, and rent/restructuring cost, or Ebitdar, a measure of operating cash flow for airlines.”

https://www.barrons.com/articles/chipot ... 1587465001


Pretty amazing that even with all that very widespread information and opinion on AA's very high debt load out there in the market, American's enterprise value is still higher than Delta's EV. Delta's EV has been higher than American's for a LONG time.

If the point MIflyer12 is trying to make was accurate, you'd see AA's market cap at close to zero. Instead, AA's current market cap is the only thing giving it a nearly ~$5B higher EV than Delta. It's not as though the market is unaware of AAL's debt load as it prices out EV via market cap and currently values American higher than Delta.

Obviously that could change as most anything can in this environment.
 
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calpsafltskeds
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 4:31 pm

cporcelli78 wrote:
I am going to wager that AA & AS merge after this Wuhan virus meltdown is over. Industry will consolidate further. I could also see an F9/NK merger as well.

Assuming they all survive, yes, if allowed, I see the potential of DL/HA, AA/AS, UA/B6, F9/NK/G4 (All Airbus), and WN probably absorbing SunCountry's 737s, maybe w/o even a merger - definitely downplaying MSP.

Once one of these mergers happens, expect more to fall in line soon after with AA/AS expected first, then a battle for B6 between UA and DL, last guy gets HA. If DL poaches AS first, then expect B6 to UA and AA would get HA by default. HA has only 62 units, B6 has 269 and AS has 334. Of course, all fleets will be diminished due to Covid-19 affect, fleet retirements and unions integration with scope clauses, etc.

If AA/AS merger, expect:
- DL to exit SEA, AA would serve major Asian cities from SEA, but probably not minor cities served by SFO. I wonder if AA would eventually downplay the West Coast market as US and AA did after picking up PS & OC. This could leave the PNW as potential WN growth territory.
- Hawaii would be battle between UA and DL, with DL gaining dominance with inter island and international destinations.
- UA would gain SE hubs at MCO & FLL - I'm sure these would shake out a bit with LLCs maybe controlling one hub and UA the other. JFK vs. EWR could be an issue with duplication the government would address with pullbacks at JFK. This would probably end up with WN or LLCs gaining JFK slots, and the big 3 would each have big operations at 2 NYC airports AA LGA domestic/JFK hub, DL LGA domestic/JFK hub, UA JFK domestic/EWR hub. SJU - who knows if UA would retain, pull back and if AA returns.

LLCs, if they can manage public vs. private ownership issues could merge these all Airbus fleets and provide better service levels than currently provided and cut into WN and major's point to point dominance. Could they have a massive hub in FL and pick somewhere mid-continent for another?

WN would continue to grow at hubs and in point to point with or w/o SunCountry, who could join with the other LLCs or go out of business if demand is so low WN doesn't need their aircraft.
 
MrPeanut
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 5:58 pm

calpsafltskeds wrote:
cporcelli78 wrote:
I am going to wager that AA & AS merge after this Wuhan virus meltdown is over. Industry will consolidate further. I could also see an F9/NK merger as well.

Assuming they all survive, yes, if allowed, I see the potential of DL/HA, AA/AS, UA/B6, F9/NK/G4 (All Airbus), and WN probably absorbing SunCountry's 737s, maybe w/o even a merger - definitely downplaying MSP.

Once one of these mergers happens, expect more to fall in line soon after with AA/AS expected first, then a battle for B6 between UA and DL, last guy gets HA. If DL poaches AS first, then expect B6 to UA and AA would get HA by default. HA has only 62 units, B6 has 269 and AS has 334. Of course, all fleets will be diminished due to Covid-19 affect, fleet retirements and unions integration with scope clauses, etc.

If AA/AS merger, expect:
- DL to exit SEA, AA would serve major Asian cities from SEA, but probably not minor cities served by SFO. I wonder if AA would eventually downplay the West Coast market as US and AA did after picking up PS & OC. This could leave the PNW as potential WN growth territory.
- Hawaii would be battle between UA and DL, with DL gaining dominance with inter island and international destinations.
- UA would gain SE hubs at MCO & FLL - I'm sure these would shake out a bit with LLCs maybe controlling one hub and UA the other. JFK vs. EWR could be an issue with duplication the government would address with pullbacks at JFK. This would probably end up with WN or LLCs gaining JFK slots, and the big 3 would each have big operations at 2 NYC airports AA LGA domestic/JFK hub, DL LGA domestic/JFK hub, UA JFK domestic/EWR hub. SJU - who knows if UA would retain, pull back and if AA returns.

LLCs, if they can manage public vs. private ownership issues could merge these all Airbus fleets and provide better service levels than currently provided and cut into WN and major's point to point dominance. Could they have a massive hub in FL and pick somewhere mid-continent for another?

WN would continue to grow at hubs and in point to point with or w/o SunCountry, who could join with the other LLCs or go out of business if demand is so low WN doesn't need their aircraft.


Why would anyone need to merge? The demand won’t be there to necessitate a merger and the integration hassles would more than outweigh the benefit post COVID-19. You won’t see mergers, but rather liquidations.

The question is which ones will the government continue to support. The level of demand is so weak that it makes no sense to continue to support all of them.
 
flyinghippo
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 6:06 pm

From my armchair CEO point of view, if ALL the current airlines survive COVID-19 as a smaller version of the former self, consolidation will occur in 2021/2022.

Here is one scenario I think might happen:
AS is the biggest target for DL since AS/DL merger will bring the most synergy, and fit into DL's strategy for SEA. They'd have to fight AA for it but as others have mentioned already, DL might be in a better position from a financial perspective to pull this off.
WN might target B6 and become an LLC behemoth with true coverage from coast to coast. F9/NK/G4 will fold if they don't merge or find a bigger suitor to marry.
If AA loses out on AS, they will either compete for B6 with WN, or go after HA for their pacific routes.
UA might actually be okay by itself - They can't really go after B6 since it means giving up either EWR or JFK gates if those two combine and making the synergy much less valuable, and HA, AS does not add much in terms of market share.

In any case, I think the key player here is AS and where they decide to go
 
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OA412
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 7:31 pm

JAMBOJET wrote:
sdexplorer00 wrote:
“ American appears to be the most vulnerable of the major airlines. It was the most heavily leveraged of the legacy carriers going into the crisis; it had amassed $34 billion of gross debt, $46 billion of annual revenue and $6 billion of earnings before interest, taxes, depreciation, amortization, and rent/restructuring cost, or Ebitdar, a measure of operating cash flow for airlines.”

https://www.barrons.com/articles/chipot ... 1587465001


Pretty amazing that even with all that very widespread information and opinion on AA's very high debt load out there in the market, American's enterprise value is still higher than Delta's EV. Delta's EV has been higher than American's for a LONG time.

If the point MIflyer12 is trying to make was accurate, you'd see AA's market cap at close to zero. Instead, AA's current market cap is the only thing giving it a nearly ~$5B higher EV than Delta. It's not as though the market is unaware of AAL's debt load as it prices out EV via market cap and currently values American higher than Delta.

Obviously that could change as most anything can in this environment.

And UAs EV is apparently even lower than both AA and DL. So what? None of them are going under even if all three end up back in Ch. 11.
Hughes Airwest - Top Banana In The West
 
JAMBOJET
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 7:46 pm

OA412 wrote:
JAMBOJET wrote:
sdexplorer00 wrote:
“ American appears to be the most vulnerable of the major airlines. It was the most heavily leveraged of the legacy carriers going into the crisis; it had amassed $34 billion of gross debt, $46 billion of annual revenue and $6 billion of earnings before interest, taxes, depreciation, amortization, and rent/restructuring cost, or Ebitdar, a measure of operating cash flow for airlines.”

https://www.barrons.com/articles/chipot ... 1587465001


Pretty amazing that even with all that very widespread information and opinion on AA's very high debt load out there in the market, American's enterprise value is still higher than Delta's EV. Delta's EV has been higher than American's for a LONG time.

If the point MIflyer12 is trying to make was accurate, you'd see AA's market cap at close to zero. Instead, AA's current market cap is the only thing giving it a nearly ~$5B higher EV than Delta. It's not as though the market is unaware of AAL's debt load as it prices out EV via market cap and currently values American higher than Delta.

Obviously that could change as most anything can in this environment.

And UAs EV is apparently even lower than both AA and DL. So what? None of them are going under even if all three end up back in Ch. 11.


I agree. The potential for Chapter 11 seems relatively high for AA, the potential for Chapter 7 seems extremely low. And the first airline to go through Chptr 11 after all this will likely end up with a strategic advantage, as much as it hurts equity holders.
My initial comment on EV was responding to a poster that tried to infer current market cap had a relationship to future strategy execution for AA. Current market cap means nothing without EV as a reference point. It's simply different capital structures. And neither current EV or Market cap means much about the ability to execute on strategies a year or two from now. Who knows what the world will look like.
 
FSDan
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 8:25 pm

jetawayusa wrote:
would it be feasible for AA to go all in (internationally) @SEA and attack Delta?


No. AA's got much bigger fish to fry right now than trying to establish a new international gateway against a competitor. They have so far announced more fleet retirements than either DL or UA, so I expect expansion won't be in the cards so much as trying to re-establish the most profitable parts of what they previously had.

jetawayusa wrote:
now that Delta is no longer a wannabe bully in the PNW market...does AS really need to be in OW?


Unless I missed something, DL hasn't made any indication that they plan on pulling the plug on their SEA operation. Even the close in cuts for April/May seem to indicate that SEA is ahead of BOS and the CVG/RDU focus cities in order of importance for DL.
This is my signature until I think of a better one.
 
Western727
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 8:38 pm

FSDan wrote:
jetawayusa wrote:
would it be feasible for AA to go all in (internationally) @SEA and attack Delta?


No. AA's got much bigger fish to fry right now than trying to establish a new international gateway against a competitor. They have so far announced more fleet retirements than either DL or UA, so I expect expansion won't be in the cards so much as trying to re-establish the most profitable parts of what they previously had.

jetawayusa wrote:
now that Delta is no longer a wannabe bully in the PNW market...does AS really need to be in OW?


Unless I missed something, DL hasn't made any indication that they plan on pulling the plug on their SEA operation. Even the close in cuts for April/May seem to indicate that SEA is ahead of BOS and the CVG/RDU focus cities in order of importance for DL.


The (totally biased, to the point of irrationality) Seattle native in me hopes that DL pulls the plug on their SEA operation. SEA simply doesn't have the space to house two hubs. While it'll take years for the industry to recover, anyway, I do miss flying to/from SEA in the pre-DL hub days when it wasn't as crowded...and we all know that if AS and DL's hubs both survive (whether with consolidation or not), SEA will again burst at the seams in a few/several years.
Jack @ AUS
 
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gunsontheroof
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 9:23 pm

Western727 wrote:
FSDan wrote:
jetawayusa wrote:
would it be feasible for AA to go all in (internationally) @SEA and attack Delta?


No. AA's got much bigger fish to fry right now than trying to establish a new international gateway against a competitor. They have so far announced more fleet retirements than either DL or UA, so I expect expansion won't be in the cards so much as trying to re-establish the most profitable parts of what they previously had.

jetawayusa wrote:
now that Delta is no longer a wannabe bully in the PNW market...does AS really need to be in OW?


Unless I missed something, DL hasn't made any indication that they plan on pulling the plug on their SEA operation. Even the close in cuts for April/May seem to indicate that SEA is ahead of BOS and the CVG/RDU focus cities in order of importance for DL.


The (totally biased, to the point of irrationality) Seattle native in me hopes that DL pulls the plug on their SEA operation. SEA simply doesn't have the space to house two hubs. While it'll take years for the industry to recover, anyway, I do miss flying to/from SEA in the pre-DL hub days when it wasn't as crowded...and we all know that if AS and DL's hubs both survive (whether with consolidation or not), SEA will again burst at the seams in a few/several years.


PR announced that they'd be starting MNL-SEA next month, but I haven't heard any news about where that's at now. Almost certainly delayed if not outright cancelled, but no updates to be found from what I can tell.
Picked a hell of a week to quit sniffing glue.
 
JAMBOJET
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 9:55 pm

FSDan wrote:
jetawayusa wrote:
would it be feasible for AA to go all in (internationally) @SEA and attack Delta?


No. AA's got much bigger fish to fry right now than trying to establish a new international gateway against a competitor. They have so far announced more fleet retirements than either DL or UA, so I expect expansion won't be in the cards so much as trying to re-establish the most profitable parts of what they previously had.

What bigger fish does AA have to fry?

Delta's "fish":
1. New international strategy as equity investments are either diluted or companies go away -- From Oceania to Asia where KE is weakened and keeping up routes like HND-MSP/PDX/SEA doesn't look too profitable with zero feed in Tokyo.
2. Bos vs B6 with a recovery weighted toward domestic travel -- benefiting B6
3. Focus Cities?
4. Miami hublet to help LA?
5. NYC vs UA and B6 -- Lower ability to flow traffic at JFK vs UA in EWR given dual-hub strategy and fighting B6 domestic and close international travel where B6 will have an advantage in cost.
6. Significant 2nd place LAX position to AA/AS with a weakened KE and likely non-existent VA and potentially losing LHR access if VS goes away. Will Delta prioritize the JFK-LHR frequency above LAX?
7. SEA in significant second place to AS in what will likely be a domestic recovery -- AS gets access to OW flights to HKG, TYO, and LHR and joins a powerful alliance in SEA.
8. What to do about their limited Heathrow slots given the potential of VS going away -- those slots are already being used as collateral by VS. Delta won't get any via their equity.
9. Pilot contract that mandates a certain international percentage of flying by DL... something UA and AA don't have.

AA's fish
1. I guess, debt? Obviously more than Delta but DL will have lots of new debt coming out of all this too
2... ? It's not like AA is opening new hubs?
3. BOS-LHR can go away easily and replaced by BA. So can SEA-LHR or just about anything AA flies from RDU-LHR to JFK-LHR.
4. AA never really did focus cities. They just had added a few new cities out of AUS, BOS, and RDU. But... Those cities already had access to many of Delta's "focus city" routes anyway like ORD, MIA, DCA, (except AUS obviously), etc. No real need to keep those new routes if Delta has given up on focus cities anyway.
5. AA's position in any of their other hubs isn't anything new.
6. In Miami, Delta and LATAM won't be in any position to fight off the dominant hub carrier anytime soon. If anything, LATAM is going to be struggling massively once Delta goes back on their Miami hublet

So this bigger "fish to fry" by AA... Given their plan in SEA was two flights only anyway with free feed from AS, how is that bigger than the enormous amount of battles Delta currently has to wage?
 
tphuang
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 10:14 pm

DL by their action seems intent on keeping SEA around. Frankly, if they significantly downsize BOS/RDU/CVG, they can keep SEA around in a slightly reduced capacity. At this point, DL management seems invested enough in SEA to continue the fight. We will see, the longer this downturn goes for, the more they will be willing to leave SEA. DL's JV strategies are blowing up royally, but it still has massive advantage over UA/AA in that its core hubs are more profitable and more dominated. So in a theoretical world, it might be able to sustain all three of NYC/LAX/SEA even in a weaker market. Hard to say. Depends on the demand.

AA is going to downsize both NYC/LAX. There is no way around that. It will be very short on cash coming out of this and need to pay interest on a much larger debt position. Which means, it has greater need to cut anything that was not profitable before virus hit. MIA is likely to be weak for a few years. PHL is likely to be weak for a few years given the reduced demand in TATL market. ORD will be weak for a few years. So they need to spend more of their resources fortifying their most profitable hubs of DFW/CLT/DCA.
 
FSDan
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 10:38 pm

JAMBOJET wrote:
FSDan wrote:
jetawayusa wrote:
would it be feasible for AA to go all in (internationally) @SEA and attack Delta?


No. AA's got much bigger fish to fry right now than trying to establish a new international gateway against a competitor. They have so far announced more fleet retirements than either DL or UA, so I expect expansion won't be in the cards so much as trying to re-establish the most profitable parts of what they previously had.

What bigger fish does AA have to fry?

So this bigger "fish to fry" by AA... Given their plan in SEA was two flights only anyway with free feed from AS, how is that bigger than the enormous amount of battles Delta currently has to wage?


If you go back and read my post again, you should see that I was responding to a question about whether AA will "go all in" internationally at SEA. If you think that's a higher priority for AA than rebuilding their international network from LAX, ORD, PHL, JFK, etc. that has been slashed, I guess we'll have to agree to disagree. Otherwise, yes, I maintain that AA has bigger fish to fry than expanding internationally from SEA.

And not everything on this site has to be AA vs DL or UA vs DL. I was commenting on the relative importance of SEA international flying to AA within its own network.
This is my signature until I think of a better one.
 
jetawayusa
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 10:52 pm

""I agree. The potential for Chapter 11 seems relatively high for AA, the potential for Chapter 7 seems extremely low. And the first airline to go through Chptr 11 after all this will likely end up with a strategic advantage, as much as it hurts equity holders.
My initial comment on EV was responding to a poster that tried to infer current market cap had a relationship to future strategy execution for AA. Current market cap means nothing without EV as a reference point. It's simply different capital structures. And neither current EV or Market cap means much about the ability to execute on strategies a year or two from now. Who knows what the world will look like.[/quote]""


How many times can a US corporation file for Bankruptcy protection? (Chapter 11) and can someone smaller like AS or B6 acquire AA or DL? and keep their names (Like HP-US-AA).... I would like to see AS take over DL or AA...possibility?
 
JAMBOJET
Posts: 293
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Tue Apr 21, 2020 11:27 pm

FSDan wrote:

If you go back and read my post again, you should see that I was responding to a question about whether AA will "go all in" internationally at SEA. If you think that's a higher priority for AA than rebuilding their international network from LAX, ORD, PHL, JFK, etc. that has been slashed


Every carrier is going to need to rebuild their current international hubs, Delta included. That’s not a “fish to fry” as you put it.

We’re both talking about unique “other than get back to normal” initiatives. Delta has a lot more to worry about to even get back to whatever their new normal is vs fighting off AS with double Delta’s market share in Seattle in a weak international environment.
But if Delta really plans on defending an uncompetitive Seattle position against Alaska with weak/non-existent profits for a year+, they’ll need more than a bailout to do it.

AA adding two international flights with free feed from AS seems a LOT easier and more likely than Delta sustaining a battle against a carrier ~twice its size in Seattle and with lower operating costs.
 
FSDan
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 12:53 am

JAMBOJET wrote:
FSDan wrote:
If you go back and read my post again, you should see that I was responding to a question about whether AA will "go all in" internationally at SEA. If you think that's a higher priority for AA than rebuilding their international network from LAX, ORD, PHL, JFK, etc. that has been slashed


Every carrier is going to need to rebuild their current international hubs, Delta included. That’s not a “fish to fry” as you put it.

We’re both talking about unique “other than get back to normal” initiatives.


No, I'm talking about "get back to normal" initiatives, and have been the whole time. Try to forget about DL for just a second since they're not an integral part of the point I'm trying to make... Now, the question I'm responding to is whether AA will mount an international expansion from SEA. Consider that they've just retired all their 752s, 763s, and 333s, and won't be receiving enough new 788s to make up for that capacity for a few years (and A321XLRs and 789s aren't starting to arrive until 2023). The practical implication of that is that even if demand miraculously came back up to 100% of 2019 levels by Summer 2021, AA wouldn't be able to offer all the long haul service it had planned for this summer. Spooling up a new international gateway in SEA would further pull limited resources away from proven routes. When I say AA has bigger fish to fry, I'm saying that SEA is likely the last international gateway AA cares about right now, and BLR is probably near the bottom of international destinations they're raring to get back to. Let alone any additional "all in" SEA international gateway expansion proposed by the poster I was responding to...

JAMBOJET wrote:
AA adding two international flights with free feed from AS seems a LOT easier and more likely than Delta sustaining a battle against a carrier ~twice its size in Seattle and with lower operating costs.


On the other hand, maintaining a multi-destination TPAC hub in SEA is probably a lot more strategically important to DL (especially if they start to feel they're over-reliant on the JV with KE) than serving one ULH destination in India is to AA (BLR, for which SEA was selected as a gateway largely due to range limitations).
This is my signature until I think of a better one.
 
winginit
Posts: 2879
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 1:45 am

tphuang wrote:
DL by their action seems intent on keeping SEA around. Frankly, if they significantly downsize BOS/RDU/CVG, they can keep SEA around in a slightly reduced capacity. At this point, DL management seems invested enough in SEA to continue the fight. We will see, the longer this downturn goes for, the more they will be willing to leave SEA. DL's JV strategies are blowing up royally, but it still has massive advantage over UA/AA in that its core hubs are more profitable and more dominated. So in a theoretical world, it might be able to sustain all three of NYC/LAX/SEA even in a weaker market. Hard to say. Depends on the demand.


I think that's spot on, and another factor is the significant capital spending that DL has already put towards SEA - money that can't in any way be retracted. Same goes for LAX.
 
JAMBOJET
Posts: 293
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 2:08 am

FSDan wrote:
JAMBOJET wrote:
FSDan wrote:
If you go back and read my post again, you should see that I was responding to a question about whether AA will "go all in" internationally at SEA. If you think that's a higher priority for AA than rebuilding their international network from LAX, ORD, PHL, JFK, etc. that has been slashed


Every carrier is going to need to rebuild their current international hubs, Delta included. That’s not a “fish to fry” as you put it.

We’re both talking about unique “other than get back to normal” initiatives.


No, I'm talking about "get back to normal" initiatives, and have been the whole time. Try to forget about DL for just a second since they're not an integral part of the point I'm trying to make... Now, the question I'm responding to is whether AA will mount an international expansion from SEA. Consider that they've just retired all their 752s, 763s, and 333s, and won't be receiving enough new 788s to make up for that capacity for a few years (and A321XLRs and 789s aren't starting to arrive until 2023). The practical implication of that is that even if demand miraculously came back up to 100% of 2019 levels by Summer 2021, AA wouldn't be able to offer all the long haul service it had planned for this summer. Spooling up a new international gateway in SEA would further pull limited resources away from proven routes. When I say AA has bigger fish to fry, I'm saying that SEA is likely the last international gateway AA cares about right now, and BLR is probably near the bottom of international destinations they're raring to get back to. Let alone any additional "all in" SEA international gateway expansion proposed by the poster I was responding to...

JAMBOJET wrote:
AA adding two international flights with free feed from AS seems a LOT easier and more likely than Delta sustaining a battle against a carrier ~twice its size in Seattle and with lower operating costs.


On the other hand, maintaining a multi-destination TPAC hub in SEA is probably a lot more strategically important to DL (especially if they start to feel they're over-reliant on the JV with KE) than serving one ULH destination in India is to AA (BLR, for which SEA was selected as a gateway largely due to range limitations).


I think you’re overblowing the fleet availability. You’re talking about 27 total planes between The A333 and 767 and they were going to be gone soon anyway (21, I think per Lucky and others?). AA hasn’t deferred any scheduled 787 deliveries in 2020 or 2021 that I’ve seen. Have they? A 789 doesn’t have to be delivered in 2021 for a 788 delivery in 2021 to allow a 789 to fly out of Seattle.
AA is talking about BLR in late 21 now. They have plenty of planes. It’s not like the 757 was going to be doing anything out of Seattle and the world is awash with cheap planes if they need more narrow bodies or wide bodies quickly.

https://onemileatatime.com/american-air ... -737-a330/
the old A333 retirement seems to have been 2021: https://thepointsguy.com/news/american- ... uary-2019/

Whether delta NEEDS sea is a different topic, but it won’t change that delta won’t be making much money and trying to fight a carrier twice your size in SEA with lower costs during a domestic recovery doesn’t sound like a money-making opportunity especially when competing Internationally against a company, AA, that only has to fly two routes to help AS be competitive internationally while BA, JL and CX fly the rest. AA must be licking their chops at the opportunity to build an international hub in SEA without any domestic feed or real hard cost and AS as well if it means kicking Delta out. In case you've forgotten, AA is literally doing what Delta desperately wanted to do with AS all along: Fly internationally and have AS do the domestic feed at a lower cost.

Is Delta really going to prioritize a Heathrow slot for Seattle if Virgin goes down? Over jfk, atl, and even Boston?

And, to be frank, I’m pretty sure Alaska’s strategic goals/objectives in their hometown will always be stronger than Delta’s strategic desire for a TPAC hub at an airport where they’ve shown they’re a consistent second place for years. AS now has a carrier/alliance willing to help them fix the one problem they have in Seattle, international flights and AS is willing to provide them cheap feed for those flights.
 
Detroit313
Posts: 544
Joined: Thu Dec 14, 2017 2:56 pm

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 2:43 am

AA and Alaska will have a healthy lead at No1 as the market leaders of Los Angeles.

AA is already at No1 even without the expanded Alaska alliance and Alaska joining One World.
 
onwFan
Posts: 438
Joined: Wed Feb 03, 2016 4:02 am

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 4:03 pm

flyinghippo wrote:
From my armchair CEO point of view, if ALL the current airlines survive COVID-19 as a smaller version of the former self, consolidation will occur in 2021/2022.

Here is one scenario I think might happen:
AS is the biggest target for DL since AS/DL merger will bring the most synergy, and fit into DL's strategy for SEA. They'd have to fight AA for it but as others have mentioned already, DL might be in a better position from a financial perspective to pull this off.
WN might target B6 and become an LLC behemoth with true coverage from coast to coast. F9/NK/G4 will fold if they don't merge or find a bigger suitor to marry.
If AA loses out on AS, they will either compete for B6 with WN, or go after HA for their pacific routes.
UA might actually be okay by itself - They can't really go after B6 since it means giving up either EWR or JFK gates if those two combine and making the synergy much less valuable, and HA, AS does not add much in terms of market share.

In any case, I think the key player here is AS and where they decide to go

I wouldn’t be surprised if this crisis serves as the impetus for another round of mergers. But I will certainly be surprised if regulators allow DL to swallow up AS or B6 given the complete overlap at SEA, JFK and BOS. There are plenty of other combinations which would make more sense without distorting competition.
 
tphuang
Posts: 5211
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 4:14 pm

a lot of this is predicated on airlines being able to run profit by next summer, which is not a guarantee at this point.

A v shape recovery seems unlikely at this point, What it the recovery looks like a half circle. Let's say we get to next summer and demand is only 2/3 of what it was in summer of 2019. Airlines are operating 75% of 2019 schedule, which means if LF was 87% in summer of 2019, then LF will be 77% and fare levels are less than they were in 2019. Let's say fare levels are 10 to 20% lower by July 2021 vs July 2019. Airlines that were generating 15% margin, would be around -10% to flat margin . Then what will the world look like.

DL would probably be close to chapter 11 if it hasn't hit that point yet. It will probably be 1/3 smaller both mainline and regional. And it will likely to operate more smaller jet like 717 or A220 vs 757/A321. TPAC demand will still be really low. TATL demand will be slower coming back also. So, DL would be essentially relying on small mainlines for its SEA operation. A220 while wonderful is not unlimited. DL has to make a decision on whether A220 goes to mostly SEA or split between SEA/LAX or split between SEA/LAX/NYC.

AA would probably have already filed chapter 11 in Q1 and getting close to chapter 7. It's going to go through some serious structuring which may reduce its labor cost in the long run. But in short term, it's money losing assets like LGA/JFK slots are not getting kept around. It's LAX operation will be significantly reduce. MIA will be reduced. PHL will be reduced due to TATL weakness. Will AA even be operating 100 flights a day at LAX or 150 flights a day at LGA/JFK when it's desperately avoiding chapter 11?

AS would probably be worried chapter 11 also although I think they won't end up in the courts. It will most likely be getting rid of A320s and returning to single mainline fleet. SFO/LAX A320 bases will be significantly reduced. All the marbles back in PNW and AK.

I don't think it's a given AS + AA will necessarily be larger than DL at LAX next summer. I think DL has some serious decision to make right now. Does it continue to throw money in SEA or does it go all in at LAX and NYC? A220 can't be everywhere. Neither can their resources. And that's assuming DL continues to be a in a better cash position than AA/UA due to its larger unencumbered assets and lower debt prior to this started.
 
strfyr51
Posts: 4985
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Re: AS to join oneworld

Wed Apr 22, 2020 4:39 pm

whywhytee wrote:
I don’t know why but I always thought they’d join SkyTeam

Well? You can thank Delta for that! Delta was the one who tried to Muscle in on AK and treat them "Shabbily" or they might have invited them to join and worked with them. Now? They might well have to give up their OWN hub at SEA. I know they thought they could force AS out to PDX. But maybe? They can move to PDX themselves since they "Screwed the Pooch" so thoroughly at SEA...
 
hiflyeras
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 4:42 pm

DL might consider concentrating on LAX...their competitors AA and UA are weakened and retrenching. Iit might be time to strike and have a true 'owner' of LAX. AS will fight to the death in SEA...will UA and AA in LAX? The only big money DL is really out in SEA is the cost of construction of their beautiful lounges. I can't think of much else they've had to pay for that wouldn't be normal needs such as gate signage, ticket counter refresh/expansion and office space. Port of Seattle is paying for the new FIS through future fees paid by the airlines. It's POS that is the loser if DL shrinks in SEA.
 
FSDan
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 5:16 pm

JAMBOJET wrote:
FSDan wrote:
the question I'm responding to is whether AA will mount an international expansion from SEA. Consider that they've just retired all their 752s, 763s, and 333s, and won't be receiving enough new 788s to make up for that capacity for a few years (and A321XLRs and 789s aren't starting to arrive until 2023). The practical implication of that is that even if demand miraculously came back up to 100% of 2019 levels by Summer 2021, AA wouldn't be able to offer all the long haul service it had planned for this summer. Spooling up a new international gateway in SEA would further pull limited resources away from proven routes. When I say AA has bigger fish to fry, I'm saying that SEA is likely the last international gateway AA cares about right now, and BLR is probably near the bottom of international destinations they're raring to get back to. Let alone any additional "all in" SEA international gateway expansion proposed by the poster I was responding to...


I think you’re overblowing the fleet availability. You’re talking about 27 total planes between The A333 and 767 and they were going to be gone soon anyway (21, I think per Lucky and others?). AA hasn’t deferred any scheduled 787 deliveries in 2020 or 2021 that I’ve seen. Have they? A 789 doesn’t have to be delivered in 2021 for a 788 delivery in 2021 to allow a 789 to fly out of Seattle.
AA is talking about BLR in late 21 now. They have plenty of planes. It’s not like the 757 was going to be doing anything out of Seattle and the world is awash with cheap planes if they need more narrow bodies or wide bodies quickly.


I think fleet availability is a real factor. AA had planned for the 763s to be retired by the end of the year, and the next round of 788 deliveries were supposed to cover for that lost capacity. I think you're right that AA hasn't deferred deliveries of the 788s, but I don't think it's out of the question either if AA's financial situation gets too tight. There was no replacement lined up for the 333 capacity as far as I'm aware until the next batch of 789s start arriving. Some of the 757 routes will be dropped outright, but others will be covered by 788s (see DFW-LIM, and I wouldn't be surprised if AA eventually decides they want some widebody cargo-hauling capacity on MIA-LIM as well). Of the 763 routes, some can be dropped outright (PHL-TXL and PHL-DBV seem likely), but others AA will probably want to backfill with 788s - I'm thinking the likes of MIA-MVD, PHL-MAN, and PHL-LIS that have a more established history of operation. The bottom line is that I think any incoming 788 deliveries over the next few years will be needed to take over or bring back previously established routes before AA considers using them to free up 789s for experimental ULH flying.

More importantly, I think you still haven't gone back and looked at the original post I was responding to that kicked off this whole conversation. The poster asked whether AA could "attack DL" at SEA by expanding internationally. I took that to mean AA launching SEA-PEK, SEA-PVG, etc., and not just the already-announced SEA-BLR and SEA-LHR. I do not think AA has the fleet resources to mount that sort of international expansion at SEA short of cutting their LAX TPAC operation or something similar.

For the record, I'd love to see AA launch SEA-BLR and succeed, and then even launch SEA-SIN after that. I don't hate AA or want to see them fail. I just think their priorities might have shifted for now.

JAMBOJET wrote:
AA must be licking their chops at the opportunity to build an international hub in SEA without any domestic feed or real hard cost and AS as well if it means kicking Delta out. In case you've forgotten, AA is literally doing what Delta desperately wanted to do with AS all along: Fly internationally and have AS do the domestic feed at a lower cost.


I don't think AA's licking their chops about anything at the moment - the first step is to survive until Summer 2021 at this point. Then, if things are trending up (and I sincerely hope they are), they can reevaluate expansion opportunities. And I'd correct your statement to "AA is literally doing what Delta did with AS, until it stopped working for them after a few years". If the DL-AS partnership had been the goldmine that some people think the AA-AS partnership is going to be, I don't see why DL would have pivoted to a strategy that's much more capital intensive for them.
This is my signature until I think of a better one.
 
tphuang
Posts: 5211
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 5:40 pm

The idea that AA is ready to build an international hub in SEA, especially to TPAC region, in the current international demand environment is quite far fetched. I mean how long is it going to take demand to come back in TPAC market? 3 years, 5 years, 7 years? And when it comes back, the Chinese carriers with their lower cost are going to trash the market before US3 builds back their presence. I really don't see TPAC as a great opportunity for AA in the forseeable future.
 
Lootess
Posts: 454
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 5:49 pm

tphuang wrote:
The idea that AA is ready to build an international hub in SEA, especially to TPAC region, in the current international demand environment is quite far fetched. I mean how long is it going to take demand to come back in TPAC market? 3 years, 5 years, 7 years? And when it comes back, the Chinese carriers with their lower cost are going to trash the market before US3 builds back their presence. I really don't see TPAC as a great opportunity for AA in the forseeable future.


When you are bleeding probably $75+ million a day, you aren't investing in a loss-leading India route anytime soon on a 787.
 
JAMBOJET
Posts: 293
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 6:58 pm

Lootess wrote:
tphuang wrote:
The idea that AA is ready to build an international hub in SEA, especially to TPAC region, in the current international demand environment is quite far fetched. I mean how long is it going to take demand to come back in TPAC market? 3 years, 5 years, 7 years? And when it comes back, the Chinese carriers with their lower cost are going to trash the market before US3 builds back their presence. I really don't see TPAC as a great opportunity for AA in the forseeable future.


When you are bleeding probably $75+ million a day, you aren't investing in a loss-leading India route anytime soon on a 787.


Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub in late 2021 with free domestic feed using a 787 to a place where no other American/Indian carrier serves with obvious tech demand while AS gets full access to LHR, HKG, and TYO via Oneworld partners?

B. Delta keeping several Asia routes long-term (with a much lower cost Chinese carrier on each China route that partners with AS on each route and JL with feed on each end of the TYO route) and building anything substantial in SEA internationally during a domestic recovery while maintaining the cost of a domestic hub that is half the size of their competitor's hub and at a higher cost? China isn't coming back any faster than BLR but BLR won't have any competition on the route, unlike Alaska's partner, Hainan, that flies PVG and PEK from SEA. Delta has no feed on the Tokyo end of their flight.

One sounds pretty cheap to do. The other sounds really expensive for a carrier losing $100M/day in late March, Delta. Neither carrier has a true TPAC hub. Both want one. But one has free domestic feed to build one and a partner in SEA that would love nothing more than to push Delta out. AA doesn't need to fly many of the obvious Asia routes out of SEA, their oneworld partners already do.

And AA flying SEA-LHR is a no-brainer. They'd have feed on the Heathrow and SEA end, if wanted. If they choose not to fly it, BA can easily increase capacity, if needed. If Delta loses VS, it's hard to imagine Seattle even keeping LHR access on Delta given Delta's other hub priorities with their limited Heathrow slots.

Whether AA starts PVG or PEK to FSDan's initial replies. I obviously have no idea and have never attempted to suggest more than stated plans. But this toe dip in SEA seems very likely and cheap for them to try vs the enormous cost Delta has keeping an inferior domestic hub to AS and competing with JL/NH and the Chinese Carriers on nearly every route. The last time it was just JL/NH and Delta on a route, Delta left. JFK-TYO, one of the biggest local markets for Delta and out of NYC. Delta couldn't even keep HKG out of SEA. Something Cathay doesn't seem to have any trouble doing despite everything happening in HKG.

Don't worry. I know your answer is B. ;) But it just strikes me as a bad guess given the long-term cost of each option for AA vs DL. Alaska's desire to keep its hometown of SEA is always going to be a larger strategic goal than Delta building a TPAC hub.
 
Detroit313
Posts: 544
Joined: Thu Dec 14, 2017 2:56 pm

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 7:41 pm

The delusion in here that American Airlines and Alaska together along with massively important for Los Angeles OneWorld members like Qantas, Cathay and Japan Airlines are in more danger in LA that Delta which is already at No2 in Los Angeles and has no partner in Japan, Hong Kong and Oceania makes me laugh.
 
DTWLAX
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 7:48 pm

JAMBOJET wrote:
Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub in late 2021 with free domestic feed using a 787 to a place where no other American/Indian carrier serves with obvious tech demand while AS gets full access to LHR, HKG, and TYO via Oneworld partners?


You are assuming that traffic will still exist in 2021.
If this pandemic has taught us anything, it is work can be done remotely without having to travel. Virtual meetings are the way to go and you will see the trend continuing into 2021.
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 7:57 pm

DTWLAX wrote:
JAMBOJET wrote:
Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub in late 2021 with free domestic feed using a 787 to a place where no other American/Indian carrier serves with obvious tech demand while AS gets full access to LHR, HKG, and TYO via Oneworld partners?


You are assuming that traffic will still exist in 2021.
If this pandemic has taught us anything, it is work can be done remotely without having to travel. Virtual meetings are the way to go and you will see the trend continuing into 2021.

When discussing whether AA will run 1-2 international flights/day out of SEA in 2021 or Delta will run an entire unprofitable TPAC hub in 2021, I went ahead and set "some amount of traffic" as a constant when comparing the two variables. ;)

If there's zero/little traffic by late 2021, we'll be discussing which airline is in Chapter 7.
 
FSDan
Posts: 3321
Joined: Mon Jan 03, 2011 5:27 pm

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 9:48 pm

JAMBOJET wrote:
Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub...

B. Delta keeping several Asia routes long-term...


The two aren't mutually exclusive... A is largely experimental and is much easier to reverse in the short term if it doesn't pan out. B is much more strategically important and not easy to reverse.

JAMBOJET wrote:
Alaska's partner, Hainan, flies PVG and PEK from SEA.


HU's future seems far less certain than that of other carriers in this discussion.

JAMBOJET wrote:
Delta has no feed on the Tokyo end of their flight.


And? They're after O&D traffic here (where they're the longest-established player in the market), and can supplement that with connections from the likes of SMF, LAS, PHX, SLC, DEN, AUS, etc. as needed. AA has no feed on the CDG end of JFK-CDG, but has been able to stick it out against DL+AF anyway. There doesn't need to be feed on both ends of every long haul route for it to be successful.

JAMBOJET wrote:
Neither carrier has a true TPAC hub. Both want one.


I'd argue both have multiple legitimate TPAC hubs. DL at SEA, AA at LAX, AA at DFW, and DL at DTW have all routinely sustained service to 4-5 TPAC destinations at a time over the years. Other than UA at SFO, 4-5 departures to TPAC destinations is par for the course for US3 TPAC hubs.

JAMBOJET wrote:
AA doesn't need to fly many of the obvious Asia routes out of SEA, their oneworld partners already do.


OneWorld partners cover NRT and HKG from SEA, and I believe that's it. I wouldn't call that "many". And CX isn't a JV partner of AA, so CX serving SEA-HKG provides little material benefit to AA.

JAMBOJET wrote:
AA flying SEA-LHR is a no-brainer.


AA flying SEA-LHR is irrelevant IMO, given the metal-neutral JV with BA. BA's been flying this route multiple times daily in the summer for years, and AA replacing BA on a frequency makes little difference in the market beyond optics. It's a no-brainer if AA has lower costs than BA on the route.

JAMBOJET wrote:
The last time it was just JL/NH and Delta on a route, Delta left. JFK-TYO, one of the biggest local markets for Delta and out of NYC.


You're conveniently leaving out the part where JL and NH were gaining daytime access to JFK-HND while DL was stuck on JFK-NRT. In this case JL is the carrier flying to NRT while the other two fly to HND, putting them at a disadvantage for the more lucrative O&D traffic.

JAMBOJET wrote:
Delta couldn't even keep HKG out of SEA. Something Cathay doesn't seem to have any trouble doing despite everything happening in HKG.


The difference here being that SEA-HKG isn't that big of a local market, and CX can connect passengers on SEA-HKG-India and SEA-HKG-Southeast Asia itineraries. Also, I don't think DL's been losing too much sleep over the last year or two about pulling out of HKG for the time being...

JAMBOJET wrote:
Alaska's desire to keep its hometown of SEA is always going to be a larger strategic goal than Delta building a TPAC hub.


Here I agree you have a valid point. If AS were to lose SEA, they would have no hope for the future. DL's not in that position there. Nonetheless, walking away from their main TPAC hub serving the western half of the country isn't something DL is going to take lightly either.
This is my signature until I think of a better one.
 
FSDan
Posts: 3321
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 9:57 pm

Detroit313 wrote:
The delusion in here that American Airlines and Alaska together along with massively important for Los Angeles OneWorld members like Qantas, Cathay and Japan Airlines are in more danger in LA than Delta which is already at No 2 in Los Angeles and has no partner in Japan, Hong Kong and Oceania makes me laugh.


On the flip side, I think some people are forgetting that AA and AS are, and will remain, competitors in the LAX market on any routes they both serve. This isn't a merger, and they don't have ATI. They can't work together on which routes to keep or to drop, and they might raise eyebrows at the DOJ if any synergies that end up happening appear to be too coordinated.

Anyone claiming AA+OneWorld carriers won't be a force at LAX for a long time to come is arguably delusional, but at the same time anyone thinking AA+AS are going to be some sort of unified mega operation is also delusional given the current state of the relationship. DL is in the midst of massively investing in the LAX market, and IMO is also likely to be a force there for a long time to come. Given the fractured nature of the LAX pie, both of those things can happen at the same time.
This is my signature until I think of a better one.
 
User avatar
DBCoop3r
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 10:19 pm

DTWLAX wrote:
JAMBOJET wrote:
Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub in late 2021 with free domestic feed using a 787 to a place where no other American/Indian carrier serves with obvious tech demand while AS gets full access to LHR, HKG, and TYO via Oneworld partners?


You are assuming that traffic will still exist in 2021.
If this pandemic has taught us anything, it is work can be done remotely without having to travel. Virtual meetings are the way to go and you will see the trend continuing into 2021.


Someone has to go install the systems to do that.

Construction, installations, site surveying, sales, conferences, engineering consultation. There is still much to do in person, front office people are only the tip of the iceberg when it comes to business flying.
 
JAMBOJET
Posts: 293
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 10:53 pm

FSDan wrote:
JAMBOJET wrote:
Which is more likely?

A. AA starting one route/day to a tech hub from a tech hub...

B. Delta keeping several Asia routes long-term...


The two aren't mutually exclusive... A is largely experimental and is much easier to reverse in the short term if it doesn't pan out. B is much more strategically important and not easy to reverse.

JAMBOJET wrote:
Alaska's partner, Hainan, flies PVG and PEK from SEA.


HU's future seems far less certain than that of other carriers in this discussion.

JAMBOJET wrote:
Delta has no feed on the Tokyo end of their flight.


And? They're after O&D traffic here (where they're the longest-established player in the market), and can supplement that with connections from the likes of SMF, LAS, PHX, SLC, DEN, AUS, etc. as needed. AA has no feed on the CDG end of JFK-CDG, but has been able to stick it out against DL+AF anyway. There doesn't need to be feed on both ends of every long haul route for it to be successful.

JAMBOJET wrote:
Neither carrier has a true TPAC hub. Both want one.


I'd argue both have multiple legitimate TPAC hubs. DL at SEA, AA at LAX, AA at DFW, and DL at DTW have all routinely sustained service to 4-5 TPAC destinations at a time over the years. Other than UA at SFO, 4-5 departures to TPAC destinations is par for the course for US3 TPAC hubs.

JAMBOJET wrote:
AA doesn't need to fly many of the obvious Asia routes out of SEA, their oneworld partners already do.


OneWorld partners cover NRT and HKG from SEA, and I believe that's it. I wouldn't call that "many". And CX isn't a JV partner of AA, so CX serving SEA-HKG provides little material benefit to AA.

JAMBOJET wrote:
AA flying SEA-LHR is a no-brainer.


AA flying SEA-LHR is irrelevant IMO, given the metal-neutral JV with BA. BA's been flying this route multiple times daily in the summer for years, and AA replacing BA on a frequency makes little difference in the market beyond optics. It's a no-brainer if AA has lower costs than BA on the route.

JAMBOJET wrote:
The last time it was just JL/NH and Delta on a route, Delta left. JFK-TYO, one of the biggest local markets for Delta and out of NYC.


You're conveniently leaving out the part where JL and NH were gaining daytime access to JFK-HND while DL was stuck on JFK-NRT. In this case JL is the carrier flying to NRT while the other two fly to HND, putting them at a disadvantage for the more lucrative O&D traffic.

JAMBOJET wrote:
Delta couldn't even keep HKG out of SEA. Something Cathay doesn't seem to have any trouble doing despite everything happening in HKG.


The difference here being that SEA-HKG isn't that big of a local market, and CX can connect passengers on SEA-HKG-India and SEA-HKG-Southeast Asia itineraries. Also, I don't think DL's been losing too much sleep over the last year or two about pulling out of HKG for the time being...

JAMBOJET wrote:
Alaska's desire to keep its hometown of SEA is always going to be a larger strategic goal than Delta building a TPAC hub.


Here I agree you have a valid point. If AS were to lose SEA, they would have no hope for the future. DL's not in that position there. Nonetheless, walking away from their main TPAC hub serving the western half of the country isn't something DL is going to take lightly either.


Interesting points and why this industry is so fun to debate about.
 
klkla
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 11:07 pm

hiflyeras wrote:
Seattle will be more loyal to AS if it becomes a fight to the end. No doubt of that.


Seattle will be loyal to the airline that gets them to where they are going for the best price. They aren't going to fly an airline only because it is based in Seattle.

tphuang wrote:
The idea that AA is ready to build an international hub in SEA, especially to TPAC region, in the current international demand environment is quite far fetched. I mean how long is it going to take demand to come back in TPAC market? 3 years, 5 years, 7 years? And when it comes back, the Chinese carriers with their lower cost are going to trash the market before US3 builds back their presence. I really don't see TPAC as a great opportunity for AA in the forseeable future.


You are right. One flight to India does not make a hub. Seattle was the only place that route could work and Alaska was the only airline that could provide the feed except Delta, which would never be allowed. This was a marriage of convenience and not a huge strategic partnership that some people are making it out to be.
 
onwFan
Posts: 438
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 11:11 pm

FSDan wrote:
There doesn't need to be feed on both ends of every long haul route for it to be successful.

This was largely true two months ago. But going forward, especially on TPAC which has been by far the most difficult market for the US3; every bit of feed is going to matter. If AS indeed decides to get in bed with oneworld (which is their only way to defend SEA against DL), then DL is definitely going to face a much steeper uphill battle on TPAC from LAX/SEA. This may not have been a big threat when the AA/AS partnership was announced, but it very much is now because many TPAC routes need to slowly build traffic from scratch... The fact that DL has the highest number of non-hub routes isn't going to help and the much needed TYO/ICN balancing is finally going to happen at DL.
 
FSDan
Posts: 3321
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Wed Apr 22, 2020 11:49 pm

onwFan wrote:
FSDan wrote:
There doesn't need to be feed on both ends of every long haul route for it to be successful.

This was largely true two months ago. But going forward, especially on TPAC which has been by far the most difficult market for the US3; every bit of feed is going to matter. If AS indeed decides to get in bed with oneworld (which is their only way to defend SEA against DL), then DL is definitely going to face a much steeper uphill battle on TPAC from LAX/SEA.


Fair point about the drop in overall demand, although regarding AS+OneWorld I'd say any uphill battle for DL would be much more pronounced in SEA than LAX. The number of AS FFs in the LA area relative to the total market and relative to DL's FF base there is much less notable than the number of SEA area AS FFs relative to DL. Put another way, how many FFs are there in the LA area who have been flying AS for domestic needs and DL for international? I'd guess not many. Probably many more of those individuals in SEA that DL would need to fight for.

onwFan wrote:
the much needed TYO/ICN balancing is finally going to happen at DL.


Maybe slightly, but TYO is likely to remain the most important TPAC O&D market in the future as demand begins to recover. Similar to UA's position at LHR, DL is likely to keep an above-average presence at HND due to geography and market size. They also need to try to stay in balance with KE within the JV, and Japan is the market where it's most logical for DL to send more of their metal.
This is my signature until I think of a better one.
 
onwFan
Posts: 438
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 12:01 am

FSDan wrote:
onwFan wrote:
FSDan wrote:
There doesn't need to be feed on both ends of every long haul route for it to be successful.

This was largely true two months ago. But going forward, especially on TPAC which has been by far the most difficult market for the US3; every bit of feed is going to matter. If AS indeed decides to get in bed with oneworld (which is their only way to defend SEA against DL), then DL is definitely going to face a much steeper uphill battle on TPAC from LAX/SEA.


Fair point about the drop in overall demand, although regarding AS+OneWorld I'd say any uphill battle for DL would be much more pronounced in SEA than LAX. The number of AS FFs in the LA area relative to the total market and relative to DL's FF base there is much less notable than the number of SEA area AS FFs relative to DL. Put another way, how many FFs are there in the LA area who have been flying AS for domestic needs and DL for international? I'd guess not many. Probably many more of those individuals in SEA that DL would need to fight for.

onwFan wrote:
the much needed TYO/ICN balancing is finally going to happen at DL.


Maybe slightly, but TYO is likely to remain the most important TPAC O&D market in the future as demand begins to recover. Similar to UA's position at LHR, DL is likely to keep an above-average presence at HND due to geography and market size. They also need to try to stay in balance with KE within the JV, and Japan is the market where it's most logical for DL to send more of their metal.

Indeed, but the ability to maintain that position in HND has gotten diluted for DL with the recent developments. On the TYO/ICN route balancing part, I have a question: Are DL’s HND routes even part of the JV? If so, why did KE recently pull down all their planned codeshares between HND-US on DL metal?

https://www.routesonline.com/news/38/ai ... es-in-s20/
 
FSDan
Posts: 3321
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 12:11 am

onwFan wrote:
On the TYO/ICN route balancing part, I have a question: Are DL’s HND routes even part of the JV?


Yes, I believe Japan is included in the JV, along with South Korea, Hong Kong, and Southeast Asia. Mainland China is excluded due to no open skies agreement between the U.S. and China.
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onwFan
Posts: 438
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 12:15 am

FSDan wrote:
onwFan wrote:
On the TYO/ICN route balancing part, I have a question: Are DL’s HND routes even part of the JV?


Yes, I believe Japan is included in the JV, along with South Korea, Hong Kong, and Southeast Asia. Mainland China is excluded due to no open skies agreement between the U.S. and China.

If so, it is odd that they dropped codeshares on those routes...
 
jetawayusa
Posts: 19
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 3:35 am

klkla wrote:
hiflyeras wrote:
Seattle will be more loyal to AS if it becomes a fight to the end. No doubt of that.


Seattle will be loyal to the airline that gets them to where they are going for the best price. They aren't going to fly an airline only because it is based in Seattle.

tphuang wrote:
The idea that AA is ready to build an international hub in SEA, especially to TPAC region, in the current international demand environment is quite far fetched. I mean how long is it going to take demand to come back in TPAC market? 3 years, 5 years, 7 years? And when it comes back, the Chinese carriers with their lower cost are going to trash the market before US3 builds back their presence. I really don't see TPAC as a great opportunity for AA in the forseeable future.


You are right. One flight to India does not make a hub. Seattle was the only place that route could work and Alaska was the only airline that could provide the feed except Delta, which would never be allowed. This was a marriage of convenience and not a huge strategic partnership that some people are making it out to be.


Is it conceivable that AS could buy AA? or Delta?
 
F9Animal
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 6:19 am

Please delete
I Am A Different Animal!!
 
TYWoolman
Posts: 609
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 1:34 pm

Bottomline: If Delta pulls Seatte it pushes United ahead further in the Pacific when demand picks up. Can't see it happening. The AS/AA partnership only validates a Delta/Seattle presence, and does not adversely affect long-term strategy at all.
 
TYWoolman
Posts: 609
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 1:57 pm

onwFan wrote:
FSDan wrote:
onwFan wrote:
On the TYO/ICN route balancing part, I have a question: Are DL’s HND routes even part of the JV?


Yes, I believe Japan is included in the JV, along with South Korea, Hong Kong, and Southeast Asia. Mainland China is excluded due to no open skies agreement between the U.S. and China.

If so, it is odd that they dropped codeshares on those routes...


I think this shows Korean has more leverage in this partnership. And that they rather protect the Seoul hub. Plus, Japan-Korean political relations may be ok, but from my experiences Japan and Korea personally don't care for each other much. Can't imagine Korean point of sale in Japan to drive demand on to Delta metal. IMO. Delta really drew a fine line when they went after JAL 10yrs ago, IMO the regional arch-rival to Korean. That's why Korean holds the leverage and Delta knows it.
 
onwFan
Posts: 438
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 2:17 pm

TYWoolman wrote:
Bottomline: If Delta pulls Seatte it pushes United ahead further in the Pacific when demand picks up. Can't see it happening. The AS/AA partnership only validates a Delta/Seattle presence, and does not adversely affect long-term strategy at all.

True. But the catch is that SEA is now basically HND + ICN with a challenging resumption of PKX and PVG. DL’s operations at HND and ICN (with KE) seem to dwarf their SEA ops for the near future. I have a feeling that we are going to see a LOT of network adjustments in the coming months; and as you say, could depend on what UA does as well at LAX/SFO. I don’t expect anything from AA other than delaying all their Asia route relaunches as much as possible, till they figure out what is the scene is at LAX and SEA.
 
TYWoolman
Posts: 609
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 3:53 pm

onwFan wrote:
TYWoolman wrote:
Bottomline: If Delta pulls Seatte it pushes United ahead further in the Pacific when demand picks up. Can't see it happening. The AS/AA partnership only validates a Delta/Seattle presence, and does not adversely affect long-term strategy at all.

True. But the catch is that SEA is now basically HND + ICN with a challenging resumption of PKX and PVG. DL’s operations at HND and ICN (with KE) seem to dwarf their SEA ops for the near future. I have a feeling that we are going to see a LOT of network adjustments in the coming months; and as you say, could depend on what UA does as well at LAX/SFO. I don’t expect anything from AA other than delaying all their Asia route relaunches as much as possible, till they figure out what is the scene is at LAX and SEA.


Unprecedented times; Especially when recovery is predicted to be 3 years out (according to Delta CEO). I find that the only predictions I personally can make are based on times that are now long gone. The real bottomline is: the effect on the airline industry is at its infancy. Who knows where this baby is going to crawl next!
 
onwFan
Posts: 438
Joined: Wed Feb 03, 2016 4:02 am

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 4:31 pm

TYWoolman wrote:
onwFan wrote:
FSDan wrote:

Yes, I believe Japan is included in the JV, along with South Korea, Hong Kong, and Southeast Asia. Mainland China is excluded due to no open skies agreement between the U.S. and China.

If so, it is odd that they dropped codeshares on those routes...


I think this shows Korean has more leverage in this partnership. And that they rather protect the Seoul hub. Plus, Japan-Korean political relations may be ok, but from my experiences Japan and Korea personally don't care for each other much. Can't imagine Korean point of sale in Japan to drive demand on to Delta metal. IMO. Delta really drew a fine line when they went after JAL 10yrs ago, IMO the regional arch-rival to Korean. That's why Korean holds the leverage and Delta knows it.

Makes sense. They definitely don’t want to end up being the next CZ, G3 or AR.
 
FSDan
Posts: 3321
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 5:34 pm

TYWoolman wrote:
onwFan wrote:
FSDan wrote:

Yes, I believe Japan is included in the JV, along with South Korea, Hong Kong, and Southeast Asia. Mainland China is excluded due to no open skies agreement between the U.S. and China.

If so, it is odd that they dropped codeshares on those routes...


Can't imagine Korean point of sale in Japan to drive demand on to Delta metal.


This would be my best guess as to why they dropped the codeshare. I assume they would still share in the costs and revenues of the U.S.-Japan flights as part of the JV, though.
This is my signature until I think of a better one.
 
winginit
Posts: 2879
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Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 5:49 pm

FSDan wrote:
TYWoolman wrote:
onwFan wrote:
If so, it is odd that they dropped codeshares on those routes...


Can't imagine Korean point of sale in Japan to drive demand on to Delta metal.


This would be my best guess as to why they dropped the codeshare. I assume they would still share in the costs and revenues of the U.S.-Japan flights as part of the JV, though.


A point worth raising that's applicable to all of DL's JVs and not just KE (and in fact, all JVs industry wide) is that contractually, all of these joint venture agreements (the underlying financial transactions that take place in the form of transfer payments) can be essentially dissolved if either party has a meaningful ownership change (to include a government stake above a certain percent). That's a very real possibility here with not only KE, but obviously VS, AM and even AFKL. In virtually all cases with anti-trust immunized joint ventures across the industry there's pretty large transfer payments (up to hundreds of millions of dollars per year) so it will be very interesting to see if a product of these restructurings is a dissolved joint venture or two. The fate of Virgin Australia would I think obviously put that on the chopping block first.

jetawayusa wrote:
Is it conceivable that AS could buy AA? or Delta?


No. The whole 'small carrier buys big carrier' that US/AA pulled off was really only possible because US came to the table with a massive bag of cash at the same time as AA was in bankruptcy. No airline is flush with cash today so it all comes down to unencumbered assets, a scene that is dominated by DL and WN. Just this morning you've seen DL raise an additional $3B just using primarily NYC and LHR slots.
 
tphuang
Posts: 5211
Joined: Tue Mar 14, 2017 2:04 pm

Re: AS to join OneWorld / AA to make SEA an Intl gateway

Thu Apr 23, 2020 6:26 pm

winginit wrote:
FSDan wrote:
TYWoolman wrote:

Can't imagine Korean point of sale in Japan to drive demand on to Delta metal.


This would be my best guess as to why they dropped the codeshare. I assume they would still share in the costs and revenues of the U.S.-Japan flights as part of the JV, though.


A point worth raising that's applicable to all of DL's JVs and not just KE (and in fact, all JVs industry wide) is that contractually, all of these joint venture agreements (the underlying financial transactions that take place in the form of transfer payments) can be essentially dissolved if either party has a meaningful ownership change (to include a government stake above a certain percent). That's a very real possibility here with not only KE, but obviously VS, AM and even AFKL. In virtually all cases with anti-trust immunized joint ventures across the industry there's pretty large transfer payments (up to hundreds of millions of dollars per year) so it will be very interesting to see if a product of these restructurings is a dissolved joint venture or two. The fate of Virgin Australia would I think obviously put that on the chopping block first.

I think the KE JV is very much in doubt here. There might be a wholesale change in KE operations after this is over. They've basically had to endure the downturn 2 months longer than Western airlines. I don't think much will change in AFKL JV. And that's obviously their most important JV.

Also, the fate of WS and that JV is in question at this point.
jetawayusa wrote:
Is it conceivable that AS could buy AA? or Delta?


No. The whole 'small carrier buys big carrier' that US/AA pulled off was really only possible because US came to the table with a massive bag of cash at the same time as AA was in bankruptcy. No airline is flush with cash today so it all comes down to unencumbered assets, a scene that is dominated by DL and WN. Just this morning you've seen DL raise an additional $3B just using primarily NYC and LHR slots.


That's the difference between AA and DL. DL with less debt and more unencumbered assets can still accumulate more debt in time of crisis. And if you look at the bond term of 7%, that's pretty high coupon payments for the duration of the bond
https://www.bloomberg.com/news/articles ... pId=google

If that's what DL is hoping to get (and we don't know exactly what yield they will end up getting), what can AA possibly get in this market with its debt load?

The fact that DL is looking to raise money with slots/routes vs aircraft would indicate how low the market currently values aircraft vs airlines' accounting department.

Also keep in mind that by doing all on its own financing, DL won't have to subject itself to possible restrictions on employment level past Sep 30th. I think there is very real possibility that whoever takes the additional loans from federal gov't will have to make some kind of commitment on employment level until end of the year. Again, nothing preventing DL from significantly furloughing on Oct 1st if it raises enough money to survive on its own.

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