mci----stl

mech1

Newbie
Jan 6, 2003
3
0
Here is an idea say AA closes MCI and STL down and laysoff all TWA LLC employees and AA still does not reduce there debt than who do we blame? It seems that all we here is that the company needs to cut labor costs. TWA tried that and look where that got them. TWA blamed the persuian gulf war and also higher gas prices and look where that got them. Why do we not here SWA complaining about high fuel prices and the possible war with Iraq? Don''t they pay the same for fuel? I would like to think they will turn around for the best but don''t see that happening.
 

AAquila

Senior
Sep 22, 2002
357
0
AA is still studying STL and MCI, they want to know how and why they're posting such great ( on time ) numbers. Would the fact that they're 90% TWA have anything to do with it?
 

Wild Onion

Advanced
Aug 21, 2002
120
0
[blockquote]
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On 1/22/2003 12:32:45 PM AAquila wrote:

AA is still studying STL and MCI, they want to know how and why they're posting such great ( on time ) numbers. Would the fact that they're 90% TWA have anything to do with it?
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[/blockquote]

Actually, they're 100% AA.
 

FrugalFlyer

Senior
Aug 20, 2002
254
0
[blockquote]
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On 1/22/2003 12:32:45 PM AAquila wrote:

AA is still studying STL and MCI, they want to know how and why they're posting such great ( on time ) numbers. Would the fact that they're 90% TWA have anything to do with it?
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[/blockquote]

On time performance is great, but: how much $$$ is STL making (or losing)?
 

AC AA LA FA

Veteran
Aug 21, 2002
630
22
mars
www.usaviation.com
Just wondering..How imporntant is it for a hub to make money? Isnt a more or less a geographic point used to connect pax thru to other citys..North-south..east-west/intl..where ever..I never understood how the profitability of a hub is determined...anyone care to enlighten?
 

Connected1

Senior
Aug 20, 2002
332
0
[blockquote]
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On 1/23/2003 8:13:42 AM TWAFA007 wrote:

Carty has said that the STL Hub is AMRs' most profitable hub.
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That's not true now, nor has it ever been. I don't care to enter the debate as to whether TWA or STL is "good" or "bad". I'm just trying to keep our facts straight.
 

Connected1

Senior
Aug 20, 2002
332
0
[blockquote]
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On 1/23/2003 1:33:46 AM AC AA LA FA wrote:

I never understood how the profitability of a hub is determined...anyone care to enlighten?
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Glad you asked! Finally, some real airline business talk...

You are right that the profitability of a hub is kind of a nebulous concept. For simplicity's sake, however, think of it as the sum of the profitability of each of its routes. Route profitability is measured in two ways:

1. By taking into account only the revenue and costs that are incurred on the route itself.

2. By taking (1) and adding to it the incremental revenue or costs driven by the passengers that the route fed to other upline/downline routes.

Pax/Cargo revenue is pretty easy to assign to the route level because you have PNRs that contain a price and an itinerary. Cost allocation is more of an art because you have a multitude of expenses that are not incurred on a flight-by-flight basis like aircraft depreciation/leases, aircraft maintenance, terminal rent, airport employees, etc. Fortunately, though, there are certain costs that can be nailed down to the flight level like fuel, landing fees, and certain types of pilot-f/a pay. Of course, there is even more art involved in (2) above, because you have to decide which costs are incremental to upline/downline routes and which are not.

Now, back to your question. To calculate hub profitability, you add the profitability of all of the hub's routes using methodology (1) above. You cannot add the routes together using methodology (2) because you may be double-counting numbers.

For example, assume that the STL hub only has two routes - DSM-STL and JFK-STL. Using methodology (1), you would add only the revenue and costs assigned to each route together to come up with your hub total. Under methodology (2), you would add revenue and costs from each route, plus the incremental portion of revenue and costs driven by DSM-STL pax on the JFK-STL route and vice versa. Therefore, the incremental revenue and costs would be double-counted when you added the routes together.

Does that help?
 

TWAFA007

Advanced
Sep 2, 2002
133
0
[blockquote]
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On 1/22/2003 6:08:21 PM FrugalFlyer wrote:

[blockquote]
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On 1/22/2003 12:32:45 PM AAquila wrote:

AA is still studying STL and MCI, they want to know how and why they're posting such great ( on time ) numbers. Would the fact that they're 90% TWA have anything to do with it?
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[/blockquote]

On time performance is great, but: how much $$$ is STL making (or losing)?
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[/blockquote]
Aloha FrugalFlyer,

Carty has said that the STL Hub is AMRs' most profitable hub. The purchase of TWA gave AA a cushion during the downturn. Over 10,000 jobs have been lost on the TWA side of the "fence,". If not for TWA, AA would have taken the hit.

ALOHA, 007
 

TWAFA007

Advanced
Sep 2, 2002
133
0
[blockquote]
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On 1/23/2003 8:47:10 AM Connected1 wrote:

[blockquote]
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On 1/23/2003 8:13:42 AM TWAFA007 wrote:

Carty has said that the STL Hub is AMRs' most profitable hub.
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[/blockquote]
That's not true now, nor has it ever been. I don't care to enter the debate as to whether TWA or STL is "good" or "bad". I'm just trying to keep our facts straight.
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Aloha Connected1,

Are you saying that Carty lied?

ALOHA, 007
 

mturpiz

Member
Aug 22, 2002
57
0
www.usaviation.com
On Carty saying STL is AMR's most profitable hub:

(1) Please post a link to the source or at least a direct quote and the source. That way we can all evaluate exactly what was said and draw conclusions.

(2) As for STL being the "most profitable", well, since TWA was mostly about STL and TWA lost money very consistantly for quite a few years, if indeed STL is the "most profitable" then AA must have done quite a turnaround.

(3) Calling anything as big as a hub "profitable" in this envirnoment is almost silly. With the massive losses that AMR and other airlines are posting, I suspect few if any traditional hubs, when viewed as a whole, are stand-alone profitable at this time.
 

Connected1

Senior
Aug 20, 2002
332
0
[blockquote]
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On 1/23/2003 8:55:36 AM TWAFA007 wrote:

Are you saying that Carty lied?
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He never said it. Here's the link:
 

Cart Pusher

Advanced
Aug 20, 2002
146
0
[blockquote]
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On 1/23/2003 9:23:38 AM mturpiz wrote:

(2) As for STL being the "most profitable", well, since TWA was mostly about STL and TWA lost money very consistantly for quite a few years, if indeed STL is the "most profitable" then AA must have done quite a turnaround.

[/blockquote]


TWA would have been profitable during it's last years had it not been for the KARABU agreement. They couldn't shake that KARABU agreement and could not make money because of it. TWA was running a lean, profitable airline if not for the agreement with Carl Icahn.
 

Connected1

Senior
Aug 20, 2002
332
0
[blockquote]
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On 1/23/2003 10:35:33 AM Cart Pusher wrote:

TWA would have been profitable during it's last years had it not been for the KARABU agreement.
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Right, to a large degree. And the thought at the time was that we could essentially buy TWA, revoke Karabu, and be golden. Little did we know, yield would entirely vanish by the end of the year anyway.
 

FrugalFlyer

Senior
Aug 20, 2002
254
0
[blockquote]
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On 1/23/2003 1:33:46 AM AC AA LA FA wrote:

Just wondering..How imporntant is it for a hub to make money? Isnt a more or less a geographic point used to connect pax thru to other citys..North-south..east-west/intl..where ever..I never understood how the profitability of a hub is determined...anyone care to enlighten?
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[/blockquote]

Well, I'm no rocket scientist, but if I'm running a hub-spoke airline system I'd rather have a profitable hub than a well geographically positioned one. I mean what's the point of operating a hub in the center of the universe if you can't make any money (profit)?