We hear from said cheerleader that the one flight a day DL has to Russia is impacting cargo revenue - how much is DL losing on currency losses in Russia? Remember we bash AA including today on currency issues all the time - what are the other impacts Russia is having on DL?
Russia
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WorldTraveler
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The economic sanctions against Russia because of their involvement in Ukraine on top of the fall in oil prices has impacted Russia greatly and is not a secret for this board.
DL is the only US airline that serves Russia and acquired rights to do so from Pan Am in 1991. For brief periods AA and UA both attempted to serve Moscow without success. DL added a 2nd flight (from ATL in addition to the JFK route) but JFK-SVO remains the only US carrier route to Russia by the big 3.
DL has mentioned the weakness of the Russian economy and its effects on DL's route which for this winter is offering 45% fewer seats than a year ago.
DL is the only US airline that serves Russia and acquired rights to do so from Pan Am in 1991. For brief periods AA and UA both attempted to serve Moscow without success. DL added a 2nd flight (from ATL in addition to the JFK route) but JFK-SVO remains the only US carrier route to Russia by the big 3.
DL has mentioned the weakness of the Russian economy and its effects on DL's route which for this winter is offering 45% fewer seats than a year ago.
WorldTraveler
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you can harp on it if you want.
DL has reduced capacity almost in half on a route that they flew only once per day. DL found other places to replace that capacity.
It is a real market issue. Notice that I acknowledge it exists and that DL has dealt with it.
It would be nice if other people could be honest about the real market issues that other airlines face.... but perhaps the reason is because they don't know the information and know even less about what is being done to handle the situation.
DL has reduced capacity almost in half on a route that they flew only once per day. DL found other places to replace that capacity.
It is a real market issue. Notice that I acknowledge it exists and that DL has dealt with it.
It would be nice if other people could be honest about the real market issues that other airlines face.... but perhaps the reason is because they don't know the information and know even less about what is being done to handle the situation.
WorldTraveler
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actually, I have NOT seen a whole lot of people who have admitted there is a currency issue in Latin America that will dramatically impact AA in its largest global region. Perhaps you can show me the posts.
But yeah, we can park that topic along with the fuel hedges as long as both go out at the same time - and until there is any information showing the impact... which might now be 3 weeks until earnings releases.
I'll throw in Asia/Pacific performance if you make sure that it goes out the window for all carriers (ps. Tokyo is part of Asia and remember we have the HND slot issue on the table)
but we can table it all as long as you make sure it all gets tabled - or none of it does.
you in or out?
But yeah, we can park that topic along with the fuel hedges as long as both go out at the same time - and until there is any information showing the impact... which might now be 3 weeks until earnings releases.
I'll throw in Asia/Pacific performance if you make sure that it goes out the window for all carriers (ps. Tokyo is part of Asia and remember we have the HND slot issue on the table)
but we can table it all as long as you make sure it all gets tabled - or none of it does.
you in or out?
WorldTraveler
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yes, it is true that Asia/Pacific is not your issue but there are a number of people who are hellbent in trying to argue that DL is dying in Tokyo. and they'd love to make you believe that DL is losing money.
Japan is a shrinking market but DL is maintaining its share and is making money.
specific to your question about Russia, the majority of DL's traffic between Russia and the US is Russia originating which probably means it is Ruble denominated. However, DL has long carried a lot of immigrant traffic which is largely paid for from the west but is one way out of Russia.
Thus, it is possible that DL is suffering currency losses but whether DL's decision to reduced capacity is due to reduced demand at any price or because the traffic is heavily Ruble denominated, DL is reducing capacity.
and that is precisely the type of strategy that an airline has to make when currencies swing wildly and there are no hedges in place.
The reason why DL did reduce as much Tokyo capacity initially is because DL had hedges that were covering several hundred million dollars per year in hedge losses.
DL does not have currency hedges against the Ruble or has not disclosed them just like AA does not have hedges against currencies in Argentina, Brazil, or Venezuela.
When there are no currency hedges in place, the full impact of the currency changes goes directly to the revenue bottom line, just as it does with fuel on the cost side.
DL and UA have far less of their revenue at risk due to currency fluctuations but they have hedge losses which are losing money right now while AA has more revenue at risk due to currency swings but little fuel exposure right now - although DL did have gains from fuel in the past and when fuel starts going up carriers that hedge - which will include DL - will benefit from those hedges wihle AA will eat the full cost of the increases.
Japan is a shrinking market but DL is maintaining its share and is making money.
specific to your question about Russia, the majority of DL's traffic between Russia and the US is Russia originating which probably means it is Ruble denominated. However, DL has long carried a lot of immigrant traffic which is largely paid for from the west but is one way out of Russia.
Thus, it is possible that DL is suffering currency losses but whether DL's decision to reduced capacity is due to reduced demand at any price or because the traffic is heavily Ruble denominated, DL is reducing capacity.
and that is precisely the type of strategy that an airline has to make when currencies swing wildly and there are no hedges in place.
The reason why DL did reduce as much Tokyo capacity initially is because DL had hedges that were covering several hundred million dollars per year in hedge losses.
DL does not have currency hedges against the Ruble or has not disclosed them just like AA does not have hedges against currencies in Argentina, Brazil, or Venezuela.
When there are no currency hedges in place, the full impact of the currency changes goes directly to the revenue bottom line, just as it does with fuel on the cost side.
DL and UA have far less of their revenue at risk due to currency fluctuations but they have hedge losses which are losing money right now while AA has more revenue at risk due to currency swings but little fuel exposure right now - although DL did have gains from fuel in the past and when fuel starts going up carriers that hedge - which will include DL - will benefit from those hedges wihle AA will eat the full cost of the increases.
