SoCalGuy

Andy.....

Not to get into a pi$$ing contest of fact & figures on the "9's" burn per hr vs the cost of CAL leases ect....but I sure as heck hope your right on the $110 bbl cost....that's news/facts we can ALL use!!

contrail67

Agreed...Andy

ewrbasedpilot

I believe that statement is wrong. Fuel is being bought on a daily basis with the price skyrocketing every day. Many of the tickets passengers use were purchased at substantially reduced prices so a full airplane doesn't translate into profit at all. If fuel prices continue upward at the current rate, 100% loadfactors won't mean a hill of beans. The problem is that labor prices are fairly constant, as are leases, landing fees etc. So the major factor contributing to our financial losses are JET FUEL PRICES. You don't see them talking about load factors every day, do you? The problem I see now is that we're going to have to charge too much for an average person to fly, and the only people we'll see are those redeeming frequent flier points which generate NO revenue or business fliers whose companies get reduced rates if they fly in "bulk". In other words, the price of jet fuel may be the downfall of our industry, not loadfactors. It's already happening................

Andy

I made a short reply about CAL in response to JSled's CAL comment. I got drug into a lengthy CAL discussion; not a rathole that I wished to pursue.
Yes, CAL's doing fine at this snapshot in time. So are the rest of the airlines. So why are UAL and DAL parking aircraft? It isn't solely due to fuel costs; if that were the case, those costs would be passed on to the consumer.

Nice shot at my mil leave job. I deal with historic facts, capabilities, and to a very large part FORECASTS. Call it speculation or whatever you like. In my particular job, we use those forecasts to prepare the military and civil authorities (both domestic and allies) for possible future threats.
I return off of mil leave to United on 1 April.

I can tell by your comments that you're very young. You remind me of one my first trips as an FE at United; fall 2000. The FO was ~6 mos senior to me and was bragging about his brand new $300K+ house. Everything was blue skies and smooth ride ahead. I didn't interject, but walked away from that trip thinking what a knucklehead he was; so little understanding of the airline industry.
Your USAFA training has done you a disservice. That fine institution, of which I'm also a grad, did nothing to foster independent thinking. Everything was cookie cutter by the book. Your fighter background has merely reinforced that mindset.
Son, you ain't bulletproof and neither is your company. I did not make any of my comments about CAL as an attack on them; they are well positioned to survive a downturn. However, there is a huge line of TRW++ ahead and your company can either continue to fly straight toward the line or make course corrections to avoid it. I'm betting that they're smart enough to make the course corrections.

Andy

The commodity traders are deleveraging their positions due to higher margin requirements. A great deal of the latest runup in commodity prices (this is happening across all commodities, not just oil) was due to speculation.

As for the dollar, I don't know if this is bottom yet. It will definitely have bottomed after the fed cuts the Fed funds rate below 1% - likely to happen prior to summer. After that point, I'd expect the dollar to firm significantly as the rest of the world's central banks start cutting their rates.

Between decreased speculation, a stronger dollar, and decreased oil demand, the price of oil should continue to fall. This link has a few analytic errors, but you can clearly see oil demand destruction: http://www.bloomberg.com/apps/news?p...p.OaQ&refer=us

You're correct that I misstated using the term load factors - yields would have been more appropriate.
To date, the airlines have been able to hedge and pass some of those costs on to the consumer. Going forward, the consumer won't be able to afford to fly, in spite of falling oil prices.

jsled

Hey Andy,

Since when have the airlines passed costs on to the consumer? For a student of airline history and the cyclical nature of the business, such as you claim, this statement is almost comical. The airline's fuel cost's have soared by as much as 80% in the last year. I wish it was that easy to just raise ticket prices by the same percentage, but obviously that is not the case. Airlines raise fares and hope for others to match. If not, they rescind the fare increase for fear of losing market share. Right or wrong, that is the game. Heck, in the past, airlines have had the goal of increasing market share without regard to profit, which of course amplifies the boom and bust nature of the beast. As far as DAL parking jets, they will also take delivery of new jets which makes for a net gain. SWA is retiring jets, too. That does not mean they are shinking like UAL. And I don't agree with your "hiring cycle" logic on CAL. Although I do know what you mean by a hiring cycle. Could the fact that CAL has NO/NONE/NADA 70 seat RJ's, and UAL has basically UNLIMITED 70 seat RJ's have something to do with their increased hiring? I think it is definetly a factor. Word is that SA will take delivery of 10 more shiny E-170's while we park our guppies this year. It is outsourcing, plain and simple. Or maybe CAL's growth has more to do with the fact that Kellner makes Tilton look like Goodwin

Good Day and welcome back to the funship. What will you be flying?

scrapdog

Andy - again, in all fairness - you made a short reply on CAL based solely on your speculation that was completely factless. You stated that CAL's "at the end of their hiring cycle" (which is false). I felt compelled to then make a more lengthy statement about CAL that was full of facts - along with the data format and date at which those said facts were presented. I, just like you, don't want to get into a ****ing match. However, I do want information public to all folks that is based on sound knowledge and factual data - not conjecture and speculation.

Secondly - I don't appreciate your personal judgement of my character. Besides pointing out the fact I'm a USAFA grad (and yes that's a true statement), you know nothing else about me. I have my faults and I know I can be stubborn, but I also try to look at both sides of every story (again, I try my best...). I do think I can "think outside the box" (my primary IP in T38's was an outstanging mentor on that subject) - and that has nothing to do on where I went to school nor which aircraft I fly. Some of the most down to earth folks I've met - much more sound thinkers than myself - are both Academy grads AND fly fighters.

Lastly - I don't know if 30 (I turn 31 this month) is young, but I don't think age has anything to do with presenting factual data on a message board - which is what I solely meant to do in rebuttal to your speculation about CAL. The blues/powerpoint comment directed at you was strictly a joke between AF brethren that I thought you would get a chuckle at. I guess you didn't. However, I do know one thing the fighter community has taught me - and that is to have thick skin. How about you Andy (or sir, if that's what you'd prefer)?

Best of luck @ UAL next month. I'm currently on military leave myself.

Andy

You're correct; it's somewhat of a game of chicken. If any airline doesn't match, the increase gets rescinded. Post 911, it was Northwest that refused to match multiple times. They didn't match because several airlines that raised fares (especially United) were dumping tickets on priceline at the same time.
At this point in time, Southwest, due to their hedges, is in the driver's seat. Whenever they raise prices, it sticks. All of their increases over the last year have been matched. I don't know how much their fuel costs have increased over the last year, but I'd bet that due to hedges, it's been less than 80%.

The elasticity of demand for airline tickets also has to be taken into account when airlines adjust ticket prices. They're using profit maximization models (don't know if you've ever taken an econometrics class; it made my head hurt ) to figure out the tradeoffs. I think that the best way to measure the effectiveness is to look changes in RASM and CASM. United's done pretty good in the last year on that measure; In 2007, mainline PRASM increased .74 cents while mainline CASM (including fuel) increased .16 cents.

Market share's a really forked up part of the business. While watching Indy go tits up, I read an interesting article on what it takes to put an airline out of business. I've fried most of those brain cells since then, but the general jist was that if you could strip 5% of an airline's load factor, it'll eventually go tits up. Very similar to the actions that several airlines engaged in vs United post-911. It was understandable; when there's a wounded animal, you go after it. United's been guilty of the same tactics in the past.

I was unaware of additional E-170s being delivered. We share a good part of the blame for that, giving the company unlimited 70 seaters. Did we ever get that block hour minimum filled in; section 1-F-1 of C2003?

I'll be a bottom reserve puke on the 757/767. Let's see how long that lasts should they elect to not renew some 757 leases. I'd either be looking at a long time on fifi or a couple months' pay when shown the door, depending on how bad the economy gets. I've been catching up on section 7.

Andy

Scrapdog, no mas. Yes, 31's young.
We all know how a staff job's viewed. I put that description in there - somewhat accurate of what I've been doing the last 3 yrs - because someone else complained that they had no idea of what my job was (the previous post function makes it very easy to figure out one's history. Yes, the comments about my powerpoints and blues were taken in the wrong context; my bad.

Just to throw a bit more Continental facts into the mix, here's an article from this last week (wasn't going to bother using it, but you seem to insist that CAL's gameplan is not going to change): http://www.chron.com/disp/story.mpl/...s/5621590.html

Can we please lay any further CAL discussions to rest? I had no intention of engaging on that topic; this thread was about UAL hiring on hold.

scrapdog

Yes we can - and thanks for the article. Interesting speculatory read!

Again, best of luck @ UAL!