Originally Posted by
VacancyBid
https://
www.sec.gov/Archives/edgar/data/1498710/000095010324016405/ex9905_037.jpg
This is the key slide. It shows the pivot from $50-$150 fares to $200-$400 fares.
If you do a little math, they are looking to dump $1 billion in revenue from their current customer base and pick up $1.5 billion from the new upmarket crowd.
Put another way, they're basically looking to totally abandon their current customers and swap for a totally new group of consumers.
They are basing getting profitable by raising market share in the $200 class from 15% to 20%, sloping to the $600 class from 1.5% to 15%. Maybe getting another 5% @ $200 is achievable, but getting 10 times as many people @ $600 and over 15% of everyone in between without a new pitch & more BFSs, new gate people, food in the airplanes, better reservations options (person you can talk to) is not going to happen. I heard UAL didn't want NK planes because it would take too long and expensive to reconfigure them.
Napkin math: for the first 6 months of the year, NK lost $350M, flying 12M people at $108/person. Breaking even would have required another $30/person. Focussing on getting an extra $50 has a better chance than focussing on an extra $500...