Thank our grandkids. They're the ones paying for it.

This is exactly how I saw it.

I was happily sitting at Frontier but wanting to see how the ULCC model survived a downturn. Covid was obviously way worse than I ever expected but Frontier and Spirit seem to have survived better than the big boys.

I'm obviously staying at Frontier now!

Everyone should know at this point that they wont be paying for it.

There is definitely room for Spirit to grow their market share. However, I do think their growth can only go so far. Don’t take this next comment personally as it has zero to do with the pilots: A lot of people out there hate spirit and will pay more to not fly on them. Just saying. But I agree they will make ground on those customers who chose the basic economy on legacies and those trying to save a buck.

It’s not just about growing new routes or destinations, but adding frequency to current ones. We use to have many routes that we serve 1 flight a day. If that flight cancels, it’s a nightmare when it comes to rebooking those affected passengers.

I don’t completely disagree. The same can be said for Frontier. However, there was a time in the not too distant past that a lot of people preferred a “traditional” airline over SWA. What was the saying? “Every time a Southwest jet takes off there’s an empty trailer park somewhere”?

The biggest gripe I get from people when they find out that I fly for Frontier (and the same holds for Spirit complaints) is lack of flight frequency and the “nickel and dime” pricing. The first will likely be solved in time as both airlines grow. Neither will ever have legacy level six flight per day between city pairs, but even twice a day to popular locations could ease some passenger apprehension. The latter is a complaint that I’ve been hearing less and less. I do believe people are starting to understand that it’s a “pay for what you use” model, not a “milk the passenger” model. Why be forced to pay for an appetizer if you don’t want, or plan to eat, the appetizer when you go to a restaurant? Many people will eventually realize that bags don’t ever fly for free, just as they began to understand that “More direct flights than any other airline” does not mean “More nonstop flights...”.

And in truth, the Big Three have done a pretty good job of locking up gate space at their hubs with legions of RJs, but the decreased flying (and especially decreased international and business flying) caused by the pandemic has been an opportunity for the ULCCs to get a foot (or two) into airports that were long closed to them due to gate restraints. That will permit more frequent ULCC flights.

I get that, but as others pointed out, SWA had the
same issues. Luckily for Spirit, 2/3 of the legacy carriers usually sit DFL in performance and overall ratings. So any apprehension some people might have about the product can be solved based on the more expensive Legacy alternative who will get you there with less reliable and in the same uncomfortable seat, just for more money.

That’s a very good point and a metric I didn’t consider.

Right.

Frontier already serves over 100 destinations. We don't need any new cities, we need frequency

https://simpleflying.com/us-airline-recovery-winners/?fbclid=IwAR0tpNfD8p1M0IixIVVn9xp-t5C2F9kD3yorTcGyR40GqWg3DOpJ23bcwxs

I don’t know how anyone looks at that data and puts Allegiant and Frontier in the headline but cuts Spirit out.

wha wha

Frontier, Allegiant and Spirit lead the airline recovery push. There ya go...

Looks like AA and JB too

https://uploads.tapatalk-cdn.com/202...02f61c01a4.jpg

Important to note that is just capacity being offered.

Right. Doesn’t fit with your narrative.

Pretty simple, who needed the bail out the most? Opinions are one things, numbers are another!

Personally I am glad thing are on the upswing now for everyone.

So the numbers are: no outstanding loans and everyone took the free grants.

What I am trying to say, who needed it the most? Certainly not the ULCCs

this hasn’t played out yet. Everybody incurred debt - some more than others - and most saw share dilution. Most companies are unlikely to generate a cash flow in the next few years that will permit them to pay off tranches of bonds as they mature meaning they will need to refinance that debt in a few years (or less). Bonds on used aircraft may not (or may) be renewable at the same coupon that they were originally given when those aircraft were new. And a little whiff of inflation - not impossible when $3 Trillion in infrastructure improvements are being debated - could dramatically increase debt service requirements for those with bad credit ratings (which is almost all airlines currently). There is still considerable uncertainty.

My narrative?

3 bailouts later and I no longer think liquidation is on the table. The next couple years are going to be pretty interesting though that’s for sure.

As for the current situation I think it’s as simple as all the airlines rushing to grab market share while the federal government is picking up a big chunk of the tab. And the pressure on AA is only going to increase. Like I said, interesting couple of years ahead.

Another question for the financially savvy. I understand that two of the biggest costs for airlines are fuel and labor. How's AA compare to the rest of the industry on labor costs?

The main problem isn’t labor rates per se. It’s one of an awful lot of people being at the top of those scales, and the WB aircraft (and their pilots) not being able to be optimally employed until international and business flying rebounds. that and the debt service. $35 billion is a lot of debt to service - especially now when everyone is losing money.

This is why startups seem to be able to get goping and occasionally thrive despite numerous structural barriers to entry. A new pilot group works for a lot less, and that won't change until they get a union, operate for a couple decades, and do a couple contract cycles.

Yeah even Spirit, which has been around a couple decades, doesn’t have very many truly senior guys. Prior to COVID they had guys making CA at about 3 years. When you are growing 15% per year half your people are an FO with 4 years - or less. AA is going to be retiring about 7% of their pilots a year pretty soon - while Spirit will be retiring 1-2% of theirs. They simply don’t HAVE that many senior people. When your Median CA is in their seventh or eighth year and your Median FO is in their 3rd year you have a helluva advantage over a longer established major where the median CA is making top scale and their Median FO is over 12 years - even if the hourly rates per year longevity were the same - which they aren’t.

I think that's the rub. As a guidance counselor told me more than a few years ago you can expect your pay to be related directly to your ability to make your company money. Obviously there are exceptions but I've felt that was good advice all these years later. I'm sure we would all like to make 500K a year but most aren't in a position to do so and if the company's bottom line can't support it eventually it will go out of business. Guess we'll see.

I wonder what the monthly payment on 35 Billion dollars of debt is?

Depends on your bond rating usually although the payout is generally twice a year rather than monthly. Or at least what your bond rating was when you took out the loan.

https://www.forbes.com/sites/michael...h=2d49b006cffa


https://www.bloomberg.com/news/artic...-strong-demand


But the big risk is that all the money the fed has been pumping into the economy will raise interest rates and when the bonds mature they will need to be refinanced at a far higher rate if the company can’t generate the free cash flow to pay the bonds off outright.