"Just a couple more" E175's...period/for long haul? Or "just a couple more" until...year end 2018? year end 2019?
Makes a lot of sense that SkyWest wouldn't touch the short routes for financial reasons. What is AG's incentive to get QX E175's onto these short routes instead of Q400's, which seem like they'd be more efficient operationally on short routes? (Increased capacity to feed AS?)
Originally Posted by
fivebyfive
Unfortunately there is no transparency. However, it is easy to read between the lines once you understand AG mgmt behavior. We know that AG is expecting tuff times in the foreseeable future. Hence the AS hiring freeze and deferred aircraft orders. Deferring orders is important because it lowers capital commitment which directly helps profit margins. That is a big one for the shareholders. QX is going to take on just enough E175s to do the short Q400 routs. These short routs are bread and butter for AS profits. They are what fill the AS 737s. However, Sky West will not do these short routs because they are not profitable for them. Cost of seat mile is too high and maintenance costs soar. Hence the value of QX to AG. QX has no choice. They do what AG tells them to do. AG finds it more cost effective to farm out all of the longer routs to Sky West. And Sky West will gladly take all of them. And that’s where the remainder of QX E175 orders will be deferred. Farming to Sky West both decreases cost and keeps capital commitment down. A win/win for AG.
I think smart money says just a couple more E175s will come onto QX property.