Originally Posted by
acl65pilot
They are not the darlings they once were. It is a fine line. With any company many of your costs are fixed, and it makes sense to spread them out over more products. When you reduce capacity, you have fewer products in which to spread these fixed costs out over. In our case that raises CASM. Yes, RASM can increase to a point. It is a fine line, at some point your RASM jump does not cover the CASM jump, hence the phrase, "You cannot shrink to profitability."
SWA has been able to constantly spread their higher costs over more seats, and that is why that up to a few years ago, they were able to look really good on paper. They still are very well run, but absent taking over the international market, they are capped out with regard to their old model. IMO, they realize this, and that is why they bought ATN.
Sure, I see that and you see that and our management understands that: but is there too much pressure from the analysts for capacity control? I see the pressure to reduce debt, and that is very good - it helps lower our costs.
I guess I see the discussion with the analysts a bit of theater, where we say we're going reduce capacity, and we can point to some reduction, but we don't really. It is in the company's best interest is to upgauge rather than lower capacity, from what I can see. A 757 is a better plane to compete with a 320/737 from a Low Cost Carrier, rather than using a MD88. Lower seat miles, etc. Bigger airplanes does make the pilot force happier, as long as we're not parking smaller planes. (I know that doesn't make sense, but we should use those MD88s on markets that were previously RJs or DC9, etc)