Originally Posted by
Varsity
To be honest, AA doesn't need the military pilots or the outside hires to stay in business. It does need to keep the eagle carriers staffed and solvent to stay in business. They have grown to be a massive component of the operation, doing more departures a day than mainline.
AA wouldn't survive paying mainline rates to fly these routes and it wouldn't survive only flying trunk routes between major cities. It has already proven that it can't compete with the ultra low cost carriers head on.
A key part of the hub and spoke model in recent years has been the cheap regional feed, both to feed the hubs AND to saturate gates with small aircraft to fulfill the requirements of the ‘use it or lose it’ terms for keeping dedicated gates.
The hub and spoke model was already in trouble with aircraft like the A220, Embraer E195s, and A319NEOs bringing point to point service to secondary hubs. Why travel in a CRJ a couple hundred miles off a straight line course to go to a hub to sit for two hours, even if you have a fancy lounge to sit in, when you can simply go direct?
But by COVID driving down the passenger load (and business and international flights for years to come), even defending many of the ‘fortress’ hubs from the likes of Frontier, Allegiant, Spirit, even Breeze, to say nothing of Southwest, has become far more difficult. And while shrinking their fleet size and number of aircraft types will save the legacies money in the long run, in the short run it simply drives up costs - especially training costs - while reducing the need for pilots. And since ultimately the number of pilots needed is controlled by the gainfully employed aircraft, their pilot demand will remain low until they get more aircraft in the air. Until international is back most WB aircraft are going to remain parked and until business flying is back, even the remaining legacy narrow body with interiors designed to appeal to those missing business class passengers will be at an economic disadvantage to the L/ULCCs competing for the vacationers on CASA alone.
But to EVER get their pilot numbers up to where they once were the legacies are going to need to get their aircraft numbers up to where they once before the aircraft fleet retirements which is going to require they get more financing (ie., bond debt) and all of the Big Three currently have more debt than they’ve ever had and very low bond ratings, forcing the coupon in their bonds - that is, the debt service they will owe annually for the loan if the money - up into the 10-11% range.
So right now the post COVID reality favors SWA and the ULCCs and that is going to be affecting hiring for years. That’s why F9 and NK have already resumed hiring and none of the legacies have.
Flows have always been a device to fill the ranks of the regionals - not the major. But for the next several years flows will be even less valuable as the Big Three adjusts to the downsizing moves they have already made.