I think it's obvious that spirit is in a great place to get aggressive with the contraction of the legacies. Rona situation changes month over month, and then travel demand swings with it, directly into LCCs.

It's just going to come down to how many chips they are willing to push into the pot.

Furloughing is buying gold bars, not furloughing is buying Bitcoin. Both likely to pay off, but one safer than the other.

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I don't understand why everyone continues to comment on the "tone" of the MEC communications as furlough imminent. They've had the same tone the entire time.

Don't get me wrong, I'm preparing myself for the worst, not trying to spread false hope, but it's not over until it's over.

 

I’d agree. I see NK and F9 being in a better position to grab market share than even WN (what with the MAX issues) and it looks like WN intends to put their chips in the pot. Of course they do have more chips...

 

[QUOTE
it’s very possible that management will decide - like the WN management apparently has - that this is an opportunity to seize market share from the Big Three while they are handicapped by the loss of their own international flying. If that were the case they well might just not furlough or downgrade at all and keep their cheapest labor on board, flying aircraft at less than break-even fares to gain markets and gates, then gradually ease up prices to where they are again generating profits as the recovery happens.

It all depends upon how they see the recovery playing out. Clearly, between the additional Fed loans available to them and the recent sale of stock, they have the liquidity to put the chips on the table if they want to place that sort of a bet.[/QUOTE]

I keep hearing this on the line and in the forums. I don't think the big 3 are going to give up domestic market share without a fight. International is obviously their bread and butter, but with that market recessed and probably not coming back for quite sometime, whose to say they won't evaluate their market position and concentrate assets and resources toward the preservation of these markets. Yes, the big 3 are going to contract, but so could we. Also, what are the terms of these loans? Is there anything that would prevent us from entering into someone else's market? Yes we are smaller and nimble, and maybe we are able to add some additional routes, but I don't think this will be a huge windfall as some are thinking. SWA, JB, Frontier, and Allegiant will be competing for these routes as well.

 

This is what the company wants, to be aggressive and go after gates and routes that are left behind. They have mention this many times at the town hall. They can’t do that and keep our current routes, when they have hundreds of pilots on furlough. I keep hearing “it’s cheap to furlough” but how long will it take to bring those pilots back and get them current again. We have captains doing OE now who were awarded A captain spot 3-4 months ago. Of all the LCC / ULCC we are the only ones discussing furlough from what I can see.

 

They undoubtedly will TRY to do that, if for no other reason than it may be a couple of years before international and business travel comes back. But structurally they are at a disadvantage.

With as many as nine (9) different fleet types, and with the majority of their international flying being done by their most senior people, they have a real problem. All their furloughs are going to come from their Junior (and mostly domestic) flyers Who are flying their most junior aircraft. But before those people go someone else will have to be trained to replace them because those senior to them likely don’t have the same type ratings. Think about it - how many FOs with the seniority to avoid a furlough are going to have an A220 type? So you pay the junior people you are about to furlough to do the flying while you are paying the senior guy to learn the type. So OK, the FO you are going to downgrade to the A220 was flying the 737. You are going to have to downgrade somebody else - maybe flying the 757 - into his slot. Another type rating. The guy replacing him is An FO flying the A330. Another type rating. The guy replacing him is an FO flying the 777 or 787 whose last type rating before that was in the 727. And you go through the same thing with displaced captains. They’ll displace to the extent they can where it is monetarily or geographically best for them among the options available to them. If it happens to be most cost effective for management, that’s fine, but it’s unlikely to happen. You get a hellacious domino effect of expensive training events while you largely wind up with your most expensive equipment - equipment poorly suited for strictly domestic flying - sitting for lack of passengers and the cheapest part of your labor force furloughed, while simultaneously pi$$ing everybody off from the churn.

The /LCC ULCC starts with a less expensive labor force, can continue to utilize all their equipment, and other than the training cost of downgrading a Captain for every two or three FOs they furlough, really don’t incur a great deal of expense.

That doesn’t mean that the Big Three can’t or won’t compete, but it does mean that they are at an enormous CASM disadvantage when they do while simultaneously paying to park a whole lot of equipment poorly suited for domestic flying.

Worst case EVERYBODY loses money in a giant game of chicken, waiting for the other guy to raise seat prices first. Somebody - or even several somebodies - might go bankrupt before a winner emerges.

But it’s like the old Kipling story goes in Arithmetic on the Frontier:

 

I completely agree that the legacies are at a structural disadvantage, and they are going to take some serious knocks and losses along the way. But a wounded animal can still be a very dangerous one as well. They have all said they are going to emerge much smaller airlines. They are offering generous early out's for many near retirement, long term VIL's, shedding outdated fleets, and I wouldn't be surprised if one or two legacy carriers go to a two type fleet. One for domestic and one for international. I can also envision even more reliance on their code share and regional feed to maintain presence in markets that will no longer justify narrow body domestic service in order to keep the brand visible and keep competition at bay. Lastly, I can see the strategic use of bankruptcy to preserve the airline by renegotiated contracts, and protection from creditors. The last one is what I fear most when trying to compete.

I definitely think the LCC''s will have many opportunities to expand, but I think this will only happen if there are passengers to fly. If we continue to see the virus infections climb, and major destinations go back into lock down, or the dreaded 2nd wave emerging. Then only the strong are going to survive, and our industry will continue to contract, or never return to 2019 passenger levels. I just don't think market expansion will be that easily achieved by the LLC's.

 

you sent your call to action on The use of strategic bankruptcy to shed CBAs right?

 

Of course I think Spirit would like to get more gate space and capitalize on other airlines pulling back, but they fact is that won't happen right now because we are still losing money. It would be a bad financial decision to spend money chasing that when we (spirit) aren't even breaking even. Now if/when flying starts to pick up that would be a possibility, but right now I just don't see it.

 

Yeah, I’m not sure Spirit has the cash to gamble. At this point they’re still in survival mode.

 

On the town halls whenever someone brings up a scenario of us growing or gaining market share or taking advantage of the situation or anything of that nature, leadership guys sort of giggle like, “Oh, you pilots are so naive and cute” and reiterate that we are in survival mode and will be lucky to stop the hemorrhaging.