Rosy outlook for AA

AANOTOK said:
WT, you may have never came right out and said AA will not succeed, but you have insinuated numerous times that the obstacles they must overcome could be daunting and possibly insurmountable. Also, what you have stated and continue to state is AA is so far behind the Great Delta, (who in your eyes can do no wrong) that the obstacles are no doubt INSURMOUNTABLE and AA will forever be playing catchup to the Almighty Delta!!
 
Again - read it for what it is.  All the endless diatribes about all of AA's insurmountable problems and challenges, and minimizing all of the strengths AA will soon be able to wield, and all the insinuations and implications that Delta has permanently locked up its leading position are basically just the stages of grief, only applied to Delta fanboys.  Once it became clear that the whole "world's largest airline" line was no longer going to be applicable, then it turned to how Delta's is the world's most profitable airline, best-run airline, etc.  And now, based on analyst estimates, perhaps - perhaps - that line, too, is approaching the end of its runway.
 
This is a common pattern and a well-worn path, no different than Delta's attempt to steal JAL away from AA failed four years ago ...
 
First it was the self-congratulation about how Delta had scored a massive victory over AA:
"The writing has been on the wall for quite some time. The timing of how it will all play out remains to be seen but the outcome seems pretty certain."
 
Then shocked denial when it became obvious that Delta might not actually win out:
"If true, this decision once again confirms how poorly JAL has been run and that they are unable and unwilling to do what they have to do to turn their company around."
 
And finally then outright anger and resignation when reality sets in:
"DL ... will still operate more than enough flights to depress yields over the Pacific and in Japan as long as it takes to finish Japan Airlines off once and for all."
 
As I said, the fear and foreboding is becoming increasingly palpable.
 
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DL lost the world's largest airline title when UA/CO merged.  AA had nothing to do with it.
 
SInce you mention JAL, how has that JV worked out for you?  AA and JL offer far less service from NYC and ORD than they did before and AA continues to have average fares that are far below DL and UA to NRT.  JVs aren't supposed to do that.
 
AA tried to move its JFK-HND service to LAX and instead just gave up and dropped it, only to compete directly against UA from SFO.  It doesn't take a rocket scientist to figure out that JL is going to come up on the short end of the stick in a contest out of UA's hub where AA is virtually no help. 
 
DL's Pacific operations are profitable on a year round basis while AA subsidizes its presence in the region to the tune of $200M or more....
 
yep, AA got JL while DL makes money.
Not hard to figure out who won that contest.
 
thanks for asking. 
 
on the overall topic, when AA can demonstrate that the growth of new low fare capacity in DCA and N. Texas has no impact on AA, you can crow.  History is decidedly against there being no impact to AA.  Throw in the DL-VS JV and whatever happens in Latin America and the future is far from as certain as you want to make it out to be.
 
Sure, AA can overcome... but for you to dismiss the concerns I have raised when the JL deal alone proves I was right shows you don't understand or don't want to admit the real facts regarding the situation. 
 
WorldTraveler said:
DL lost the world's largest airline title when UA/CO merged.  AA had nothing to do with it.
 
SInce you mention JAL, how has that JV worked out for you?  AA and JL offer far less service from NYC and ORD than they did before and AA continues to have average fares that are far below DL and UA to NRT.  JVs aren't supposed to do that.
 
AA tried to move its JFK-HND service to LAX and instead just gave up and dropped it, only to compete directly against UA from SFO.  It doesn't take a rocket scientist to figure out that JL is going to come up on the short end of the stick in a contest out of UA's hub where AA is virtually no help. 
 
DL's Pacific operations are profitable on a year round basis while AA subsidizes its presence in the region to the tune of $200M or more....
 
yep, AA got JL while DL makes money.
Not hard to figure out who won that contest.
 
thanks for asking. 
 
on the overall topic, when AA can demonstrate that the growth of new low fare capacity in DCA and N. Texas has no impact on AA, you can crow.  History is decidedly against there being no impact to AA.  Throw in the DL-VS JV and whatever happens in Latin America and the future is far from as certain as you want to make it out to be.
 
Sure, AA can overcome... but for you to dismiss the concerns I have raised when the JL deal alone proves I was right shows you don't understand or don't want to admit the real facts regarding the situation. 
Gee, WT...maybe AA should just go out of business and let DL take over the airline industry. Oh, I forgot Delta is already the only airline that matters....
 Just like throughout out the history of civilization where mighty empires have risen and fallen,  so shall ye mighty Delta fall from its perch high atop the industry. 
 
BTW,, where is the DL lawsuit against the DOJ regarding the LGA and DCA slots?
 
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nowhere have I ever said what you have just inferred.... nowhere.
 
I criticized legacy AA mgmt for making poor decisions, AMR"s creditors dumped nearly all of them, US mgmt has been installed, and I am confident that AA is on a strong forward course.
 
It doesn't change that the timing of AA's BK has left it vulnerable to alot of known competitive challenges including the end of Wright (revision) which was known 8 years ago, Open Skies in Latin America.... the asset divestiture came with the merger as has the DL-VS JV.
 
Now, for the 20th time, just tell me where any other airline has faced anywhere near the same number or scale of major competitive events as AA will face over the next year or so.
 
The fact that NO ONE has come close to suggesting a similar situation tells me that I am indeed correct.   Blowing past any one of those as being a non-event while doing it to multiple events at the same time is quite simply negligent.
 
from the article:
 
Four specific headwinds  (similar to my list; he notes B6 in the transcon market but doesn't mention Latin America)
 
1. A real competitor in London
 
2. A new threat in the transcontinental market
 
3. New competition in Dallas
 
4. Low-cost carriers arrive in D.C
 
Foolish bottom line
I have great respect for American Airlines CEO Doug Parker and the rest of his leadership team. However, good management cannot change the fact that the airline business is ultra-competitive and has few barriers to entry.
Several artificial barriers to entry that have protected American Airlines are falling this year. Delta and Virgin Atlantic were given antitrust immunity to coordinate schedules, Southwest's base at Love Field in Dallas is opening to long-haul flights, and American was forced to divest slots at Reagan Airport to competitors.
Some of these three big changes -- as well as JetBlue's unrelated decision to introduce a premium cabin on transcontinental flights -- will start impacting American next quarter. However, the biggest impacts will come at the end of this year and through 2015. Investors should steer clear of American Airlines stock until the euphoria wears off and the market starts to rationally weigh the merger benefits against headwinds like these.
 
Delta, United

When Delta bought Northwest Airlines Corp. in 2008, the stock slumped on concern that a $1 billion savings-and-revenue goal was too little. Three months later, Delta doubled the total to $2 billion, only to see the financial crisis choke off travel and losses persist through 2010’s first quarter.

“It took Delta three years to get to $1 billion in revenue synergy and five years to get to the $2.5 billion I mark them at today,” said Fintzen, who is based in New York. “United, at the other extreme, is three-plus years now into its merger and still has a small revenue dis-synergy the way I calculate it.”

Most of American’s $1 billion goal for so-called merger synergies will be in revenue, about $900 million, according to the airline, whose changes include calibrating jet assignments to match demand so the planes on a given route are as full as possible. Separately, American envisions $400 million more in “annual earnings improvement” with moves such as raising the seat count on some models, President Scott Kirby has said.
 
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diamondcutter said:
Separately, American envisions $400 million more in “annual earnings improvement” with moves such as raising the seat count on some models, President Scott Kirby has said.
So in other words taking dumpy America West 319/320 aircraft may replace AA 738s, and those aircraft will have seats added. Wonderful, just wonderful.

Josh
 
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No they are gonna ban dumpy, lying and misinformation spreading alleged passengers and make money to eliminate those types of passengers.
 
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700UW said:
No they are gonna ban dumpy, lying and misinformation spreading alleged passengers and make money to eliminate those types of passengers.
Articulate what you mean, did BLUTO post this?

Josh
 
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Are you accusing me of being BLUTO?
 
Keep spreading garbage and see what sticks to change deflect.
 
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josh  the best thing you can ACTUALLY DO is to Stop Flying The New AA since your HATRED IS CLEAR   You have nothing good to say 
 
go earn some money to help JP pay back for their fraud    time to lock those clowns up
 
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b49186a4f338e3f804766f022d03e1d80c644cb85fafc6f85198894f29e9fbc9.jpg
 
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diamondcutter said:
Delta, United

When Delta bought Northwest Airlines Corp. in 2008, the stock slumped on concern that a $1 billion savings-and-revenue goal was too little. Three months later, Delta doubled the total to $2 billion, only to see the financial crisis choke off travel and losses persist through 2010’s first quarter.

“It took Delta three years to get to $1 billion in revenue synergy and five years to get to the $2.5 billion I mark them at today,” said Fintzen, who is based in New York. “United, at the other extreme, is three-plus years now into its merger and still has a small revenue dis-synergy the way I calculate it.”

Most of American’s $1 billion goal for so-called merger synergies will be in revenue, about $900 million, according to the airline, whose changes include calibrating jet assignments to match demand so the planes on a given route are as full as possible. Separately, American envisions $400 million more in “annual earnings improvement” with moves such as raising the seat count on some models, President Scott Kirby has said.
 
given that DL's was the first megamerger, it is a given that they wouldn't have received the benefits as fast as other carriers who came in at the end of the cycle after other carriers led by DL have reworked their network and managed capacity to maximize profitability. 
 
it is also worth noting that DL's merger took place in the midst of the 2008 economic meltdown while AA's has taken place in a period of fairly decent economic certainty right now.
 
AA might well exceed DL's take on merger benefits but it is also possible that DL's leadership in the market means that the benefit for the industry will be decreasing in future years, not increasing unless AA specifically starts cutting its own network, which will also help DL.
 
BTW, I am honored that 9 people so hate reading my post about AA's strategic weaknesses even though it was taken directly from a published article.
 
If the fact that published authors are tracking along with what I have said here for years is what gets people wound up, I am truly honored to have broken the ground on these issues months, if not years ago. 
 
the WHOLE TRUTH can be painful, can't it?