WorldTraveler
Corn Field
- Dec 5, 2003
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- #31
wondered how long it would take for sometime to pick this up.The discussion of Delta capacity expansion began with questions by JPMorgan analyst Jamie Baker. Delta has grown in Seattle, where it is building a trans-Pacific hub and where it reported 6% third-quarter growth in passenger revenue per available seat mile on a 25% capacity increase, and in Los Angeles, where it will begin Delta Connection service to Dallas and Austin next month and to San Antonio next spring.
"I am curious about how you model for new routes and whether that has evolved at all over time, and in particular whether you consider earnings multiple destruction," Baker said.
"When you add capacity, particularly into (other airline) hubs, it diminishes [background=transparent]shareholder[/size][/background]
confidence, it suggests a lack of discipline, and in my opinion, it jeopardizes the likelihood of earning a multiple closer to that of high-quality industrial transport," he said. "So I know it may be difficult to quantify, but do you ever stop before you announce a route and just ask, or maybe run it past others: What if this destroys tens of millions of dollars of shareholder value by robbing me of a better earnings multiple?"
Following the call, Wolfe Research Hunter Keay, who downgraded Delta to peer perform from outperform on Sept. 26, called Delta's 2% capacity guidance "unnerving," saying it implies 4% domestic growth since international growth is likely to be flat. He also called Baker's question "one of the most on-point questions we've heard (yet) it was dismissed by management as being inappropriate."
http://www.thestreet.com/story/12918525/2/delta-to-wall-street-dont-tell-us-how-to-run-our-airline.html
guess you decided you should start harping on DL's strategic moves since I am providing factual information regarding the labor issues which you cannot counter.
your ears should perk up and get the truth that DL's RASM INCREASED in SEA and LHR even after adding capacity.
given that DOT data will be available to validate whether DL is telling the truth or not, let's see what kind of excuse AA comes up with for restarting ATL-LGA and adding ATL-LAX where it is highly doubtful that their RASM will be better than elsewhere on their system.
BTW, they said they would ask the same question of other carriers on their earnings calls.
Since Parker cried about DL and VS adding capacity into LHR, it isn't hard to see the logic of why AA felt a need to go after DL's top markets - even if AA can't and won't show positive revenue results from their move while DL already is.