AA seeks new service to Brazil

[WorldTraveler]

WT, you'll need to find someone else to hate on. I don't waste my time secretly voting down your posts. It's more rewarding to simply call you out in public.

The JV may be an issue for the time being, but the alliance benefits will still be a positive, even moreso than what Skyteam provides, since DL now offers partial credit with its alliance partners (good luck keeping track who gives full, half, or quarter miles for elite status...).

The economy is indeed a problem, but I suspect these routes will be launched just in time for World Cup. I'm sure you're more than aware that it's being held in Brasil. Isn't Curitaba one of the host cities?

The options on EK and other carriers in the Gulf are about 1000 miles longer flying, and offset by lower fares I'm sure, but don't overlook how much the issues of language and culture come into play.

I don’t hate anyone… esp. not on this forum.

I have repeatedly said that I intend to participate in this forum based on open discussion. While you and your double personality Veritas have whipped up populist support in your attempt to belittle me by using the post voting system, including on topics such as the GAO’s concerns over the AA/US merger, you continue to fail to accurately be able to discuss the issues at hand regarding the business of aviation which specific to this topic include:

AA and JL do not and cannot have a JV on their services between Brazil and Japan – therefore arguing that this new route will make a difference because of the JV is inaccurate.

Your statement that JJ will be able to provide more feed than what Gol can provide DL is equally inaccurate. Gol does not offer any nonstop int’l flights to the US and they are also larger than TAM. TAM is in fact an AA competitor to the US and they have to divide the capacity they provide into AA’s gateways including GRU between JJ and AA’s own int’l flights. That doesn’t mean that AA and JJ both won’t be fine but it is completely inaccurate to say that DL doesn’t have as much domestic feed from Gol as JJ will provide AA. All the alliance benefits (again which aren’t even approved or operating) don’t matter if the seats aren’t there.

Even IORFA gets that AA’s chances of making LAX-GRU work are slim given that the market has not been successful by other carriers who have offered far less service. Yet, AA, which has more 777s than it knows what to do with, has decided that throwing another 777 on a 12+ hour flight will make everything work right alongside LAX-PVG (to accompany the rest of AA’s underperformance to Asia) and DFW-ICN (right alongside KE who increased its own service to ensure AA can’t get a foothold in the market).
It is nothing short of a bold-faced lie to argue that you haven’t voted done my posts by the thousands and then cried “look at his reputation.” You have repeatedly been unable to accept the fact that other people really do understand the business of aviation, and in many cases it means that your vaunted view of AA doesn’t hold water.

Many major special events such as the World Cup and Olympics actually DEPRESS normal demand and revenues rather than increasing it. Hotel prices soar, occupancy rates frequently are less than what they would have been otherwise, and regular business travel stops. Virgin Atlantic just noted that they lost money because of that dynamic in London. The same thing will happen in Brazil.

Brazil is one of the most culturally accepting countries in the world and there are large middle East populations in Brazil. There is no aversion to Brazilians to use Middle East carriers… which is probably why they continue to grow in Brazil. And it doesn’t change that the US gov’ts withdrawal from the transit without visa program hurts flow traffic thru the US, precisely why JL cancelled its long-running NRT-JFK-GRU flight.

And it doesn’t change that the World Cup will involve a little over a month of travel and then the realities of the market will be right back to where they would have been…
IORFA is right…. LAX-GRU will be another money-losing flight which Doug Parker will have to figure out how to get out of… maybe one of those shiny new 787s will cut the fuel price of operating the flight even if it adds a couple hundred million in additional debt – but no one is watching those debt levels except for Wall Street who will put pressure on the new AA to generate profits – even while AA’s debt levels will continue to soar as they take delivery of all hundreds of new aircraft. And Wall Street gets yet another chance to weigh in on AA’s financials in about a month since the current quarter is a little over a week away from ending.

The invitation and challenge to you and the other people who have voted down my posts and/or voted yours up in support of you (and I know exactly who they are) is to participate in the debate based on the superiority of the points they present. You, and many of the them, have consistently been shown to be lacking in their ability to engage in that manner but you are unique in your ability to call someone else out about the use of the post voting system while manipulating it yourself. The truth, Veritas, really does always come out.

Yeh those Brazilians are lining up already to purchase AA tickets.
http://www.youtube.com/watch?v=m_AXVPK8rxc&feature=youtube_gdata_player

Not only are Brazilians fed up with the amount of money the Brazilian gov’t is spending to prepare for the World Cup, including trying to fix its infrastructure, but also that basic services are either of low quality – such as public health care - or are too expensive and continuing to increase in price – such as public transport.

Cities including CURITIBA are facing the same economic challenges; AA will indeed serve most of the cities that will host the World Cup in Brazil and the economic challenges facing each are just as real.
Brazil’s economy is growing at a slower rate than even the US right now, inflation is at the upper end of what economists inside and outside of Brazil consider acceptable for the level of growth in the economy, the Brazilian population growth rate is lower than the US’, and Brazil’s emerging middle class has high expectations of upward mobility and strong social services from the gov’t as promised by former President Lula. Now, Brazil’s gov’t faces stagflation (one of the hardest challenges for central banks to “treat&rdquo as well as the challenge of managing public expectations that are significantly different from what they can deliver. Further, Brazil has decided they have to let the currency markets move where they will in contrast to what the Brazilian Central Bank has done previously which is now causing huge movements in the US-Brazil exchange rate…. Exactly the recipe for cutting demand for air travel.

AA has tied a great deal of its future to Brazil, a country which faces enormous economic and political challenges right at the time when AA needs the one region of the world which AA dominates to deliver as it heads into a costly and complicated merger…. Yes, bring on the popcorn.

BTW, IORFA, you might be surprised to learn that DL’s ATL-GRU flight ranks above other US carrier US-Brazil flights including slightly ahead of CO/UA’s IAH-GIG flight in terms of combined passenger/cargo revenue they carry per flight… and both of those are operated on much lower cost 767s. There are indeed markets that can support additional Brazil service and ATL-GRU is the best candidate.

 

[737823]

BTW, IORFA, you might be surprised to learn that DL’s ATL-GRU flight ranks above other US carrier US-Brazil flights including slightly ahead of CO/UA’s IAH-GIG flight in terms of combined passenger/cargo revenue they carry per flight… and both of those are operated on much lower cost 767s. There are indeed markets that can support additional Brazil service and ATL-GRU is the best candidate.

WT, with all due respect what does this thread have to do with DL? I value your contributions and participation in this forum but seriously there is a time and place to discuss DL, this is the AA forum and a thread about AA flights to Brazil. Where are you getting this information on cargo and passenger revenue per departure? Is it publicly available? If so, please provide a link to the source.

Josh

 

[eolesen]

WT, it's just not worth the effort responding to all your bloviating.

If you really think Veritas and I are the same person (enough people around here already know our private identities), take it up with the forum owner.

 

[FWAAA]

AA and JL do not and cannot have a JV on their services between Brazil and Japan – therefore arguing that this new route will make a difference because of the JV is inaccurate.

Not exactly. Sure, AA and JAL don't have an immunized joint venture between USA and Brazil, but they do have a joint venture across the Pacific, and that's where AA needs the most help. AA already prints money between the USA and Brazil.

Los Angeles is a popular destination for both Japanese and Brazilians, and connecting the two might help. The great circle route between NRT and GRU runs on top of JFK, making it the optimal connection point, but LAX adds only about 120 miles, so it's not an inefficient routing. Besides, that frees up seats on the JFK-TYO flights for more valuable O&D traffic. LAX-GRU will need connecting traffic to succeeed, and thus, attracting some NRT-GRU passengers would be a good fit. Unless/until JAL returns its own metal to Brazil, JAL/AA customers will either fly AA metal or defect to DL/Sky or UA/Star.

That said, I've consistently predicted that AA would not get this award (looks like I was wrong) and I've predicted that if AA won the award, the route would not be successful long-term.

FWIW, you repeatedly stated, somewhat authoritatively, that AA would not be awarded its LAX-GRU request. Looks like we were both wrong.

Brazil is one of the most culturally accepting countries in the world and there are large middle East populations in Brazil. There is no aversion to Brazilians to use Middle East carriers… which is probably why they continue to grow in Brazil. And it doesn’t change that the US gov’ts withdrawal from the transit without visa program hurts flow traffic thru the US, precisely why JL cancelled its long-running NRT-JFK-GRU flight.

JAL may have been unhappy with the immigration policies of the USA, but JAL did not cancel its JFK-GRU flight for this reason; JFK-GRU was axed at the end of September, 2010, during (and due to) JAL's bankruptcy:

http://www.bbc.co.uk/news/10089208

http://www.flightglobal.com/news/articles/jal-to-drop-45-routes-in-drastic-cuts-to-network-341194/

http://www.flightglobal.com/blogs/asian-skies/2010/10/jal-vows-to-return-to-sao-paul.html

BTW, IORFA, you might be surprised to learn that DL’s ATL-GRU flight ranks above other US carrier US-Brazil flights including slightly ahead of CO/UA’s IAH-GIG flight in terms of combined passenger/cargo revenue they carry per flight… and both of those are operated on much lower cost 767s. There are indeed markets that can support additional Brazil service and ATL-GRU is the best candidate.

If true, that's an impressive accomplishment, especially given that ATL enjoys only 10% of the O&D to/from Brazil as MIA and only 15% of the O&D of NYC. In fact, ATL has just half as much Brazil O&D as LAX. Still, I have to agree with the others: So what? This discussion is about AA, not DL's overwhelming dominance everywhere it flies.

 

[WorldTraveler]

Well, Josh, since you missed the flow of the conversation, let me help you out.

The TOPIC IS about AA’s efforts to add capacity to Brazil, even if it involved a then-different route case.

The most recent route case has been decided and my first post here was an objective, unbiased recounting of the results with ABSOLUTELY no preference for one carrier or the other.

looks like the DOT is awarding AA its requested LAX-GRU route while DL gets ATL-GRU #2 this year while US gets assurance that CLT-GRU will continue after the lease ends with UA and DL is assured that DTW-GRU will continue with an award in 2014.
Meanwhile, the Brazil Real is at its weakest point vs. the US Dollar in more than 3 years which weakens demand for travel to the US from a country where shopping excursions are a major driver of tourism.
http://finance.yahoo.com/q/bc?s=USDBRL=X&t=5y&l=on&z=m&q=l&c=

That was followed by an assessment by LAX-GRU who also looked back to history to prove the market isn’t as strong as some here have contended. He/she concluded by noting that in his opinion none of the four new flights has enough demand to be viable…. (more on that later).

I still contend that LAX-GRU won't last more than a year. KE doesn't do good on it at 2x a week, and DL failed at it as well just around 2 years ago. I hope to be wrong, just personally can't see it working. I see it being moved to ORD later or hoarding it In MIA and switching it with a dual GRU-GIG slot. I don't think there is enough demand for any of these 4 new flights.

E answered with the following which started w/ a factual statement and then he added on several factually based statements which in fact are not just opinion and can be measured.

I've said it before... GRU is home to one of the largest Japanese populations outside of Japan. Throw in the JV with JAL, and TAM's inclusion in oneworld, and, well, you've got a lot of feed that KE and DL couldn't generate if they wanted to.

It was E who decided to expand the conversation beyond an objective discussion of the new Brazil awards and turn it into an us vs. them discussion.

I’ve noted at least three other times in recent weeks and I will note once again that it was others who decided to take the topic away from AA and yet are the very ones who end up crying when the “facts” they present are handed back to them, but with corrections, and a bit of my own commentary.
AA does not have access to anywhere near the amount of domestic feed at GRU as DL does… his statement is categorically false.

AA does not and will not have a joint venture agreement that will allow JL to share revenue or participate in a Japan-Brazil itinerary connecting thru the US; the only basis by which AA and JL can cooperate in a Japan-Brazil itinerary via the US is via simple codesharing or if a passenger chooses a point to point fare via the US. The AA/JL joint venture is not legally a transpacific joint venture; it is a joint venture allowing cooperation between the US and Japan and does not automatically include every destination that could flow over each other’s networks. As a further example, US carriers cannot participate in a joint venture involving China, even including connections over NRT or other Asian hubs, because the US and China do not have Open Skies.

IORFA accurately noted that the supply of seats between the US and Brazil is reaching a saturation point and demand to fill new flights is questionable. I don’t doubt that, and reinforced the statement esp. in light of recent currency changes. However, the statement is inaccurate insomuch as there are very different levels of performance between various US carrier routes.

CO’s IAH-GIG was started relatively recently and has quickly become one of the highest revenue US-Brazil flights operated solely on a daily basis (ie no double daily frequencies). However, CO/UA’s IAH-GIG flight trails DL’s ATL-GRU flight in terms of total onboard revenue. It is probably precisely because of that fact that DL has tried repeatedly to obtain permission to use a 744 on the route (without success from the Brazilian aviation authority) and has added DTW-GRU which replicates many of the same traffic flows. It is factual to discuss the amount of revenue that an airline carries on a route and in this case it is very much accurate to note that DL’s ATL-GRU is one of the highest revenue US-Brazil flights, in direct response to the statement that IORFA made. It is also accurate to note that IAH-GIG and ATL-GRU are both operated with 767s and yet carry more revenue than many other flights that are operated by more expensive 777s.

No one doubts that MIA is the largest Latin America O&D in the US but less than 1/3 of AA's traffic on MIA-GRU is local traffic; more than 2/3 is connecting traffic and DOT data shows that DL competes very effectively for that traffic.
If 2/3 of MIA-GRU's traffic is connecting (over 500 passengers per day), then it doesn't take a rocket scientist to realize that DL's sole single daily ATL-GRU flight with 245 seats is capable of effectively competing in all of those O&Ds.

It also doesn't change that fares in MIA-GRU are at all-time low levels as capacity continues to be poured into the market, some of which includes Gol and Copa's relatively low quality connecting or one-stop flights... yet they are succeeding at pushing fares down.

I’m sorry but I am tired of the double standard that you and others seem to think that it is ok to tell me to shut up about DL but allow others to make statements that elicit a response, including making inaccurate statements about what AA can do, including with respect to DL or any other airline.

If you and others want to make inaccurate statements and not be challenged on them, then start a private forum. As long as you and others participate in an open forum, you can expect to be challenged when inaccurate statements are made.

And most importantly, when people like E, using one or more of his pseudonyms wants to continue to vote down my posts in which he doesn’t even participate because it contains less than glowing information regarding AA, then you can bet that there will be fireworks and a strong response.

If you want to not see discussions about DL in AA forums, then I suggest you, E, and the rest have a little pow-wow and decide that you are going to hold to the same standards that you expect of others – and you will also have the moral fortitude to stand up to comments you don’t like instead of lobbing hand grenades from the sideline expecting no one to notice or respond.

Not only do I notice, but I will treat you with the same respect that you demonstrate.

 

[robbedagain]

will aa use a 76 or a 777 on the ord to gru and gig runs? also i did not know til the other day that aa also flies to the disputed island recife i think its that one if soo what aircraft do they use and to where

 

[737823]

will aa use a 76 or a 777 on the ord to gru and gig runs? also i did not know til the other day that aa also flies to the disputed island recife i think its that one if soo what aircraft do they use and to where

Likely a 777 from ORD I would guess. MIA-REC is currently 5x weekly service on 75L.

Josh

 

[737823]

Well, Josh, since you missed the flow of the conversation, let me help you out.

The TOPIC IS about AA’s efforts to add capacity to Brazil, even if it involved a then-different route case.

The most recent route case has been decided and my first post here was an objective, unbiased recounting of the results with ABSOLUTELY no preference for one carrier or the other.

No WT, I have followed the discussion perfectly well. I still fail to see how DL is relevant to this discussion. It's no secret DL is very dear to you, but does it need to be brought up in every single topic? Once again, where are you getting the information on passenger and cargo revenue per departure? Do you have a link to publicly available data?

Josh

 

[FrugalFlyerv2.0]

will aa use a 76 or a 777 on the ord to gru and gig runs? also i did not know til the other day that aa also flies to the disputed island recife i think its that one if soo what aircraft do they use and to where

Recife (Brazil), is not an island.

 

[FrugalFlyerv2.0]

CO’s IAH-GIG was started relatively recently and has quickly become one of the highest revenue US-Brazil flights operated solely on a daily basis (ie no double daily frequencies). However, CO/UA’s IAH-GIG flight trails DL’s ATL-GRU flight in terms of total onboard revenue.

I have 2 issues with this DL glorification statement:
i) to make your statement more impactful (worship the widget) you've added a qualifying statement (ie no double daily frequencies), which takes the luster off. if DL's single daily flight is so profitable from ATL, how much more profitable are AA's multiple flights from better gateways? (Actually, I have no idea whether AAs flights to Brazil are profitable, but according to WT I'm sure if DL had the South American network that AA has,they would be ).
ii) what is your source of data to make that conclusions? is it publically available, or are you making an educated estimate based on some available data and then extrapolating to reach a conclusion? if so, what available data are you using to make that conclusion?

But getting back to AA service to Brazil: should the LAX flight suck, is AA allowed to transfer the frequencies to another city?

 

[robbedagain]

thanks i must of been thinking of the faulk land islands sorry about that given that aa is one world and soon to have us in that alliance and with the merger given that aa is going to start gru lax i would think may be just may be aa will find a way to make it work but if not by the time dp comes on stage he will probably figure it out and i would imagine that the 787 would be a better plane for it may be

 

[FWAAA]

thanks i must of been thinking of the faulk land islands sorry about that given that aa is one world and soon to have us in that alliance and with the merger given that aa is going to start gru lax i would think may be just may be aa will find a way to make it work but if not by the time dp comes on stage he will probably figure it out and i would imagine that the 787 would be a better plane for it may be

How on earth did AA ever survive without him? I mean, AA is only flying about 20 daily widebody flights to deep South America from NYC, MIA and DFW, and AA "figured it out" without Doug Parker. He's not the prodigal son, despite all the Tempe hero worship on display.

 

[WorldTraveler]

No WT, I have followed the discussion perfectly well. I still fail to see how DL is relevant to this discussion. It's no secret DL is very dear to you, but does it need to be brought up in every single topic? Once again, where are you getting the information on passenger and cargo revenue per departure? Do you have a link to publicly available data?
Josh

Then if you followed the discussion then you shouldn’t have a hard time grasping that my first post to this thread which had been dormant for a year involved posting the results of the route award and I noted AA’s award first followed by the other 3 awards, none of which were made w/ any kind of comment.

Would you have been happy to have me say that AA won the LAX-GRU award w/ no mention of any of the other three?

And it still doesn’t change that it was E who decided to turn the conversation into a “AA will kick DL’s butt” comment and did it using flawed information.

Once again, if you and everyone else want to have a peaceful board, then learn to abide by the same rules that you expect of others. For about the third time in as many weeks, it was someone else and not me who decided to take the conversation down using comparisons of superiority which aren’t based on fact.

I have no problem w/ anyone having pride in their movement or organization, but if you want to bring it up, be prepared to do so based on facts. And if someone else shows that your “facts” are flawed, then don’t expect to get a pass.

I have 2 issues with this DL glorification statement:
i) to make your statement more impactful (worship the widget) you've added a qualifying statement (ie no double daily frequencies), which takes the luster off. if DL's single daily flight is so profitable from ATL, how much more profitable are AA's multiple flights from better gateways? (Actually, I have no idea whether AAs flights to Brazil are profitable, but according to WT I'm sure if DL had the South American network that AA has,they would be ).
ii) what is your source of data to make that conclusions? is it publically available, or are you making an educated estimate based on some available data and then extrapolating to reach a conclusion? if so, what available data are you using to make that conclusion?

But getting back to AA service to Brazil: should the LAX flight suck, is AA allowed to transfer the frequencies to another city?

No, it doesn’t take the luster off. Brazil is a restricted access market for US carriers which means that DL has not had the frequencies to expand service that other carriers have had. CO was in the same position. AA and UA bought their way into the market and I slight them nothing for what they bought and, in AA’s case, has built over the past few years.

I am also not saying that AA’s Latin American network is not profitable. It has long been rumored and I have every reason to believe it based on available data that the Latin America system has bankrolled a large amount of AA’s overall operation and continues to do so.
My point is that there are two routes that are operated on a single daily basis – IAH-GIG and ATL-GRU both generate revenue per flight higher than what AA generates on its core routes, all of which have multiple frequencies. Despite what a lot of people here seem to think, it is very possible for carriers to make a lot of money and not serve MIA.

I am glad that AA succeeds in Latin America but my longstanding point is that the amount of their int’l network that does not generate revenue comparable to other carriers is fearfully large. And it only takes looking at LHR to realize how profitable LHR was for AA but yet when other carriers were able to come into the market, they have succeeded quite well.

Let’s not forget that Latin America is largely not Open Skies which means that AA has an advantage due to its size and the inability of its competitors to expand into the market. It is also incredibly imperative to the future of the new AA that they be able to retain and expand their leadership in Latin America, yet history is replete with examples of where other carriers in other regions have lost share to new/expanded competitors when the opportunity arose. Those who think AA can rest on its laurels in Latin America would do well to consider that other carriers also recognize the strategic importance and necessity of serving one of the regions that has generated above average fares and has been growing faster than other regions.

The data comes from the US DOT. As I have noted, it is not accessible on a public website because it contains information that the US government deems is not available to foreign entities. There is consolidated data on US carrier performance by region that is publicly available.

As to the question of whether AA can transfer the rights, yes, they probably could but it would require a petition to the DOT etc. etc. IN reality, this is likely the last route case between the US and Brazil since US-Brazil will have Open Skies. Right now, Open Skies already practically exists except to/from São Paulo and Campinas which are considered to be the same city by the treaty.

It is also possible over time that AA could make LAX-GRU work using a smaller/more efficient aircraft but it can’t be lost that they are taking on Korean Air in two new markets – DFW-ICN and LAX-GRU and I don’t think anyone would call the largest Asian transpacific airline a pushover.

FWAAA,
while Parker would do well to realize that AA has built a pretty extensive and profitable network in Latin America which means that he should give ex-AA people the ability to demonstrate what the routes they bring to the table can do, let's also not forget that Parker has taken a network that was far less coherent than AA's and has managed to make it profitable and it involved chopping a lot of routes that they previously said were strategically important.
Further, as much as it frosts some of the AA mgmt. supporters, the new AA will be run largely by former US and former HP managers. For some people, it's a little hard to swallow the fact that HP managers will now be running an airline as large as the new AA, but that is the reality that is happening.

BTW, flight cancellations are occurring tonite between the US and Brazil because of the protests that are blocking access to some airports, including GRU.

 

[eolesen]

WT, I suspect you're the only one posting with pseudonyms here, or voting with them. I hardly check in here anymore, let alone needing to do so with multiple ID's.

Unlike you, sadly, I get enough satisfaction from my day job that i don't need to live vicariously thru a web forum.

But, as you've made the accusation repeatedly, it's well past the time to either put up or shut up on the issue. I happen to know Veritas casually, as we've exchanged emails for several years. Those who were frequent participants on the TW forums do as well. And my identity hasn't been a secret for over 10 years now.

So please, let's see your proof on this. I'm all ears.

I'm sure that the board admins would gladly start looking at IP addresses to support or debunk your theory. Or maybe you could submit a FOIA request from the NSA...

 

[WorldTraveler]

(Deleted by moderator),

The evidence about Veritas being one of your IDs on this forum was confirmed by you in another recent conversation we had about AA’s strategies. But even if Veritas and you aren’t the same person, Veritas shows very similar writing styles, very similar allegiances to AA, and a similar disdain for me. The only real difference is that Veritas is the insider who still has access to AA’s current information vs. you who left the company.

It also doesn’t change the fact that you have railed intensely about Spectator’s manipulation of the post voting system, a subject that is very much of an interest to Veritas who has voted down my posts by the hundreds, if not thousands. For someone who seems to have no stated interest in the post voting system, you have made mountains out of Spectator even while I have repeatedly said that Spectator exists to counter serial red button pushers like you via your Veritas username and others who have done the same thing; everyone else has gotten the message except for you and/or Veritas.

It also doesn’t change that Veritas doesn’t even participate in strategic discussions about AA yet gets livid every time I make even the slightest negative comment about AA and its management. I have ZERO TOLERANCE for the passive aggressive behavior of using the post voting system as a surrogate for actually participating in the discussion.

I don’t have terribly high standards for the people I converse with on this and other internet chat forums. The first is to be accurate and knowledgeable about what you post and the second is to be willing to admit when someone else demonstrates that their position is right and yours is not.

I also expect that people will be honest enough to participate in the conversation and not hide behind others and other tools to get back at others. In the case of this forum, don’t use the post voting system as a tool to get back at me because of your inability to accurately discuss the issues. Continuous participation in the post voting system without written participation will be answered by a full-on written response and confrontation.

The topic here is AA and Brazil where I have never questioned AA’s dominance in the region or its inability to generate substantial revenues.

I have complained for years that AA has taken a franchise that served the world’s top markets and has been marginalized because it refused to deal with its cost problems in BK, allowing other competitors to gain key market share. Other carriers are finding ways to strategically and successfully increase their presence in key AA markets but the opposite is not true; AA continues to try to build its presence in markets where other carriers are much stronger yet with results that have been shown to be inferior.

My concerns particularly over the past few months have been that AA is throwing a bunch of capacity in BK into long-haul markets, most of which are already highly competitive and where it is highly questionable whether they could ever make a profit. Not even much stronger airlines have the nerve to start up new routes route alongside LH or KE on some of their key routes but AA has done that several times this year on top of adding routes in markets where AA has failed before.

I wrote here before AA ever entered BK even when they were proposing massive growth (20% at the time) that they would never be able to add that much international capacity because of competitive pressures and nearly every one of these markets that have been added has confirmed that. It was clear then that AA needed to add a bunch of capacity in order to get its CASM down and that is exactly what they have done, even though AA’s revenue growth has suffered while it has retained capacity in the face of capacity cuts and much larger revenue increases at other carriers. Further, AA’s need to be relevant in key global markets has collided with the reality that it has not found success in most of its service to continental Europe or Asia.
Despite the loyalty you and some others might have for AA mgmt, it is clear that the board of the new AA and the creditors both agree with my assessment that current AA mgmt has done a terrible job of managing what was once an incredibly great franchise and they will be replacing nearly all senior AA mgmt with US mgmt, many of which go all the way back to America West.

As much as it frosts you, Doug Parker and his team have managed to combine HP and US and turn it into a profitable company, even if they have had the advantage of well below average labor costs for several of their largest labor groups. US doesn’t fly “vanity” capacity, instead operating only to where it has a good chance of making money and not just where it thinks it needs to have a “strategic presence.”
It may also turn out to be true that none of the capacity in this latest route award is really needed based on the dramatic recent changes in exchange rates between the US and Brazil. Even before the latest increases in the dollar-real exchange rate, Brazilian tourist bookings to the US were down 8% according to a Brazilian travel agency association. It also doesn’t change that AA will continue to be the largest carrier between the US and Brazil, including from the west coast, and there really is no strategic benefit in operating a 12 hour flight when they can carry the traffic on shorter, existing flights that are and will be far more successful.

These market based, financial, strategic, and economic realities are things you cannot escape and which I will continue to discuss - AA employees and stakeholders deserve to know how the company is being run and what the future holds.

I can’t be happier that AA is setting the stage for a strong future and for an end to the pay cuts that employees have taken in order to subsidize AA’s need to have a presence in markets where it clearly cannot generate acceptable profits or returns on its investment.

IIRC, there was time when AA had a slogan “doing what we do best.” Do I remember correctly? That also meant that AA didn’t do then what it could not successfully do.

It will be really nice to see AA return to profitability by doing what it does as well as or better than its competitors and also realizing that it can’t be everything other carriers are, just as they realize that AA has an advantage in Latin America that they don’t try to replicate.

Interestingly, the same principle of knowing what you do well and doing that and not 12 other things is why some people succeed in the marketplace of ideas while others try to be relevant based on supposed “expertise” on dozens of topics.

The new AA will most certainly have a future in Asia and continental Europe even if might not be from LAX, ORD, or JFK but instead PHL and other gateways. I will strongly bet that it won’t take many moons before Parker and co. decide it isn’t worth using the company’s valuable resources to fight in markets where they have little chance of success or asking the employees to sacrifice in order to make those routes work.
And when you talk to Veritas you might let him know that as long as he refuses to come out of the shadows and talk about the issues which apparently get him so upset, I will address them and he will continue to be marginalized and lose the debate even without saying a word.

Worrying about the post voting system by inflating your own reputation while trashing others won't change the fact that the new AA will be run very differently than the one you knew and most of us see that as a very good thing.

Most sincerely yours,

WT