Delta’s mismanagement help AA big?!?!
#11
This candid interview from www.planebusiness.com can be viewed in whole on the APC American Forum.
American Airlines' New Chief Revenue Officer Vasu Raja Dishes On Capacity, The Old AMR, And Why You Need To Zig When Others Zag
PBB: So why did you guys decide to zig, when everyone else decided to zag?
Vasu: Well, you know, we were looking at all of this like everybody else and Scott [Kirby] was talking about having to shrink and everybody was expecting us to take out a lot of capacity as well. At the time, early on, that thinking made sense.
But then, we start looking around and hey, credit to Zed [Brian Znotins, VP Network and Schedule Planning]. I mean, he came and said, look, "Our break-even load factor at $35 fuel is like 25%. But then when fuel went into the tank – that number dropped to 9%.
So then we began to look at what other people were doing with their schedules. So we looked at Delta and United – and both airlines completely ****-canned their hubs. They literally broke all of their connectivity.
And it was at this point that we were also just about to go cut a ton of capacity.
But instead, what we did was, we actually went in and completely rebuilt our hub structures.
Go pull up any set of O&D markets. Take a look.
And guess what happened. In May, load factors got bigger.
For June, we’re looking at a system load factor of 55%, but in our [core] domestic system, our load factor is runnning at 70%.
American Airlines' New Chief Revenue Officer Vasu Raja Dishes On Capacity, The Old AMR, And Why You Need To Zig When Others Zag
PBB: So why did you guys decide to zig, when everyone else decided to zag?
Vasu: Well, you know, we were looking at all of this like everybody else and Scott [Kirby] was talking about having to shrink and everybody was expecting us to take out a lot of capacity as well. At the time, early on, that thinking made sense.
But then, we start looking around and hey, credit to Zed [Brian Znotins, VP Network and Schedule Planning]. I mean, he came and said, look, "Our break-even load factor at $35 fuel is like 25%. But then when fuel went into the tank – that number dropped to 9%.
So then we began to look at what other people were doing with their schedules. So we looked at Delta and United – and both airlines completely ****-canned their hubs. They literally broke all of their connectivity.
And it was at this point that we were also just about to go cut a ton of capacity.
But instead, what we did was, we actually went in and completely rebuilt our hub structures.
Go pull up any set of O&D markets. Take a look.
And guess what happened. In May, load factors got bigger.
For June, we’re looking at a system load factor of 55%, but in our [core] domestic system, our load factor is runnning at 70%.
American Airlines has the highest required load factor for a break-even flight at 78.9%. While the maximum loss to operate one flight of 1,000 miles is $32,357, the maximum profit with 100% of all seats sold is only $11,038.
Mar 31, 2020
#12
A somewhat different thought......This is from Forbes.
American Airlines has the highest required load factor for a break-even flight at 78.9%. While the maximum loss to operate one flight of 1,000 miles is $32,357, the maximum profit with 100% of all seats sold is only $11,038.
Mar 31, 2020
American Airlines has the highest required load factor for a break-even flight at 78.9%. While the maximum loss to operate one flight of 1,000 miles is $32,357, the maximum profit with 100% of all seats sold is only $11,038.
Mar 31, 2020
#13
Gets Weekends Off
Joined APC: Jan 2010
Position: Representing the REAL Delta
Posts: 857
And the Delta egos were better then the rest keeps on beating!!!! Odd how in that AA thread I don’t see anyone bashing delta during these times. How are those green slips and profit sharing these days? The little bit that Delta had that was better aren’t around in a down turn either. Wish everyone the best but have to laugh at some of you all. Stereotypes alive and well. “How’s the ride.”
1) Restricted Jumpseat privileges, which took regionals leaving American pilots behind to break. It wasn’t out of the goodness of their hearts!
2) The TWA merger was fair and equatable ....righttttt
While Delta has more than its fair share of “winners”, American takes the cake, hands down.
Delta might be the runner up in this regard but on an entirely different planet
Last edited by cornbeef007; 06-29-2020 at 07:25 AM.
#14
It may also be helpful if people used more precise terms. "Load factor" based on a reduced schedule, with what percentage of available seat miles versus June 2019? Wouldn't PRASM adjusted for current routes and fleet size make a difference? Also, "break even" at 25%.. is that 25% for a given flight to break even? Or 25% across the system for the flight operations to break even? Or the entire airline?
#15
Banned
Joined APC: May 2017
Posts: 2,012
If, as in the current situation, labor and aircraft are basically a fixed cost, the marginal cost to add a flight is essentially just fuel.
so it’s true now that adding flights is easy. Doesn’t translate to normal accounting though
so it’s true now that adding flights is easy. Doesn’t translate to normal accounting though
#16
Again, I sincerely hope AAL does well, and hope we all make it through this unscathed. It’s just seems that with all of us in jeopardy, AAL’s neck is stuck out a bit farther than the rest of the pack.
#17
Agreed, it’s nothing personal. I really hope AAL doesn’t go through BK, I really hope we all bounce back quickly. It’s just hard to take the article at face value and applaud their management as geniuses while knowing they’re leveraged 8:1 ($40B in debt with a $5B market cap) and that the AAL payroll costs more than the company is worth.
Again, I sincerely hope AAL does well, and hope we all make it through this unscathed. It’s just seems that with all of us in jeopardy, AAL’s neck is stuck out a bit farther than the rest of the pack.
Again, I sincerely hope AAL does well, and hope we all make it through this unscathed. It’s just seems that with all of us in jeopardy, AAL’s neck is stuck out a bit farther than the rest of the pack.
If only we had invested all our money in other airlines and oil refineries, we’d be in much better shape.
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#19
I wonder if anyone knows no real debt is due at AA until 2023?
#20
AA getting to the top with a “25%” break even point is about as realistic as China having the lowest cases/deaths from Covid.
People are scared. Things are closing up again. Not the time to flood the market. It’s bold, unlike the coffee I was able to find in LGA.
People are scared. Things are closing up again. Not the time to flood the market. It’s bold, unlike the coffee I was able to find in LGA.
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