AA updates investors, defers aircraft, raises CASM guidance

[WorldTraveler]

IN an investor update this morning, AA Group estimates a 16-18% pre-tax, before specials margin for the 2nd quarter. AA says system capacity for 2015 will grow about 1% over 2014.

AA also is delaying delivery of 5 787 aircraft by one to two years and 35 A320neo family aircraft from 2017 and 2018 for several years.

AA's adjustment in capacity growth has led to an adjustment in mainline CASM to a 3-8% increase in ex-fuel CASM in the 2nd half of the year.
http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-sec

 

[lpbrian]

These A/C delivery deferrals are old news.

 

[700UW]

How many threads do we need on the same topic?

 

[WorldTraveler]

the financial elements of the investor update are new including the 6-8% reduction in RASM for the quarter IIRC and the increase in CASM esp. later in the year as capacity is reduced.

FWAAA's other thread nailed it.

 

[lpbrian]

OK, so what. This probably applies to all airlines. What matters most are new aircraft and jobs. All airlines defer and modify orders. AA's new A/C orders were placed before the merger occurred. The merger puts a different paint job on things. No news here.

 

[WorldTraveler]

yes, the principle does apply to all airlines. Growing airlines create jobs and are also able to keep costs down. And mergers also require rationalizing the network and removing duplicate capacity. every airline that has merged has gone thru the same process and AA will too... they just have only gone thru part of the process.

and the bigger piece of this for AA is that Parker paid alot of money to gain labor peace in order to get the merger done, something UA did not do. WN did the same thing but has watched its costs go up considerably. DL got alot of revenue growth thru its NYC expansion. WN managed to get a nice revenue boost while growing because of DAL, LGA, and DCA growth and because of new int'l routes. AA hs to find the same higher RASM growth while going thru the same process.

and so far neither AA or UA have shown that they can grow revenues as fast as what DL or WN did post merger.

AA's investor guidance indicates slower growth, increasing CASM, and slower RASM growth than the industry as it works thru the merger process.

 

[AANOTOK]

Wait for it...wait for it...there it is, the Delta better reference!
 

yes, the principle does apply to all airlines. Growing airlines create jobs and are also able to keep costs down. And mergers also require rationalizing the network and removing duplicate capacity. every airline that has merged has gone thru the same process and AA will too... they just have only gone thru part of the process.

and the bigger piece of this for AA is that Parker paid alot of money to gain labor peace in order to get the merger done, something UA did not do. WN did the same thing but has watched its costs go up considerably. DL got alot of revenue growth thru its NYC expansion. WN managed to get a nice revenue boost while growing because of DAL, LGA, and DCA growth and because of new int'l routes. AA hs to find the same higher RASM growth while going thru the same process.

and so far neither AA or UA have shown that they can grow revenues as fast as what DL or WN did post merger.

AA's investor guidance indicates slower growth, increasing CASM, and slower RASM growth than the industry as it works thru the merger process.

 

[WorldTraveler]

It actually includes each of the big 4. They are all there.

talking about metrics means nothing if there is no basis for comparison.

If the point is simply for everyone to feel good about themselves, then numbers aren't ever brought into the discussion.

Numbers are part of the discussion because business by nature requires talking about issues which might make some people feel uncomfortable.

AA is still in the merger process, will be for several years, and those airlines that have fully completed their mergers are working on other issues and accomplishing other things.

That is just a nature of the business and the timing of it.

The real challenge for AA will be in the 4th quarter of this year and beyond when AA will show how its finances will be affected by the res cutover and completion of the legal (non-labor) part of the merger process.

 

[jimntx]

BlahBlahBlah Delta UberAlles blahblahblah (insert fake statistic here) blahblahblah Call someone a moron because they don't understand your half sentences, neologisms, and made up "facts" blahblahblah Delta did it better blahblahblah Delta did it sooner blahblahblah lather, rinse, repeat etc etc etc ad infinitum

 

[FWAAA]

Wait for it...wait for it...there it is, the Delta better reference!

+ ∞
 

BlahBlahBlah Delta UberAlles blahblahblah (insert fake statistic here) blahblahblah Call someone a moron because they don't understand your half sentences, neologisms, and made up "facts" blahblahblah Delta did it better blahblahblah Delta did it sooner blahblahblah lather, rinse, repeat etc etc etc ad infinitum

+ ∞

 

[WorldTraveler]

outstanding post.

At the beginning of 2015, new AA (AA+US) had 983 mainline planes, and by the end of 2015, that count will be down to 941.

Meanwhile, DL and WN continue to grow at substantial rates. WN traffic and capacity is up about 8% year over year, while DL traffic and capacity is up about half that much so far in 2015.

At AA, 2015 capacity is expected to be about 1% higher than in 2014.

Low cost airlines generally grow, while high-cost airlines shrink. Except, of course, for HPdbaAA.

 

[silverbird007]

AAs fleet ( avg age, fuel efficiency, etc) is so far ahead of any other legacy, its not even worth wasting the time to argue! Except for DL, who may be secretly buying up AAs old MD 80s!

 

[WorldTraveler]

New aircraft cost money. The economics of new vs old are simply not as favorable with low fuel prices. It isn't possible to logically argue that low fuel prices make growth profitable but not recognize the impact on fleet replacement. And while AA has a more efficient mainline fleet, it is behind other competitors in regional carrier capacity

 

[robbedagain]

figures
 
no matter what  you just have to be smart arse about it all    first its mainline   now its bec of regional  what next   you truly are unbelievable

 

[WorldTraveler]

AA, DL, and UA all have mixed fleets - mainline and regional.

It is absolutely factual and balanced to note that AA has made progress on its mainline fleet but has not replaced its RJ fleet to the extent DL and UA have.

Given that the regional carrier fleet is heavily tied to connecting to the mainline fleet, any carrier that doesn't address both parts is not gaining the full advantage.

AA has indeed made alot of progress in updating its fleet and it has cost alot of money and they will reap benefits from it. But AA will spend more of its earnings on that at a lower return on investment because of lower fuel prices and AA will still have alot of older, less fuel-efficient regional aircraft than DL or UA.

that's not a swipe to anyone. That is an accurate assessment of where AA is.