[BLOCKQUOTE][BR]----------------[BR]On 10/2/2002 9:24:19 AM ITRADE wrote:
[P]56%....That's a horrible load factor. Wonder how everybody else did.[/P]
[P]No doubt better. I wonder what Southwests numbers would be had they cut 20% of their schedules? AA looks like they are 64%. With a 20% capacity reduction, that translates to what? [/P]
[P]And what airline board is the only one that lacks worrisome posts about concessions and bankruptcy? Times are tough throughout the airline industry, but anyone who points to SWA's load factor and somehow interprets that as being worse than the others might tend to be a bit off base. [/P][/BLOCKQUOTE]
On 10/2/2002 9:52:42 AM wannabe CRJ driver wrote:
Does anyone remember what our break-even factor is......I thought is was in the 40-45% range....bit with all the changes and added expenses I don't know?
Last I heard (3-4 months ago) breakeven LF for WN was in the low 50s--seems I rememeber it being in the 52-54% range. Inasmuch as WN expects to report a very slim (for them) 3Q profit, it would seem that somewhere in the 52-54% range would indeed be their breakeven LF.
KC, I don't think you can really look at anyone's September's stats and make good comparisons, since you have the three-day shutdown, as well as airlines -and- airports having resumed operations at differing rates. You also have the issue of DCA remaining closed far longer than any other airport, which will not impact LUV, but does affect US, DL, UA, and AA (in about that order) to differing degrees of magnitude.
Still, it is a good question. Was it really a good idea to not reduce capacity in order to preserve employee relations, or should WN have taken some discretionary capacity out of the system?
[BLOCKQUOTE][BR]----------------[BR]On 10/2/2002 1:10:24 PM eolesen wrote:
[P]KC, I don't think you can really look at anyone's September's stats and make good comparisons, since you have the three-day shutdown, as well as airlines -and- airports having resumed operations at differing rates. You also have the issue of DCA remaining closed far longer than any other airport, which will not impact LUV, but does affect US, DL, UA, and AA (in about that order) to differing degrees of magnitude.[BR][BR]Still, it is a good question. Was it really a good idea to not reduce capacity in order to preserve employee relations, or should WN have taken some discretionary capacity out of the system?[/P]----------------[/BLOCKQUOTE]
[P]IMHO, for the long term, I think that SWA was exactly right to maintain capacity. What would have become of employee morale, which can translate into customer service, had anyone been part of the first ever furlough at Southwest? From what I have seen on various airline boards, employee relations are pretty important at any company. If they are able to show a profit this quarter and this year, however small, without the massive layoffs and cutbacks, then I believe that Southwest will be an even bigger gorilla than they already are. I believe part of the culture at Southwest was to live in the good times as if they were bad times. You see lots of posts about how underpaid Southwest employees are (a misconception, from what I have seen), but to ask the employees to live lean in the good times requires the company to demonstrate WHY they did that when the times turn bad. Job security is one of those intangibles. I believe that when things turn around, SWA employees, unlike recalled employees from other airlines, will not find themselves worrying about where they sit on the seniority list during the next cycle. [/P]
[BLOCKQUOTE][BR]----------------[BR]On 10/2/2002 2:26:29 PM DL Gold Medallion wrote:
[P]Just for information's sake a 64% load factor (someone's guess for AA) with a 20% overall schedule reduction equals a load factor on the old schedule of 51.2%.[/P]----------------[/BLOCKQUOTE]
[P]Sorry if I made 64% look like a guess. I got the info from this link [A href=http://biz.yahoo.com/prnews/021001/datu072_1.html]http://biz.yahoo.com/prnews/021001/datu072_1.html[/A][/P]
I think SWA made the right decision *for them* to keep capacity up. But I don't think it would have necessarily been the right decision for the traditional major carriers for several reasons:
(1) At many (not all) mainline carriers, a big portion of their system cuts came from pullback of overseas routes. Domestic capacity wasn't cut as dramatically. Were SWA to have intercontinental routes, it probably would have been good for them to trim them somewhat too (and as a result their total ASM cut would have been closer to that of the other majors.)
(2) Southwest's did cut back on a number of short-haul routes, but total ASM's were fairly stable in part because reduced short-haul flying was replaced by continued additions in longer-haul flying. Unlike most other majors, Southwest is uniquely blessed with good long-haul opportunities to grow into.
(3) Unlike some of the other majors, Southwest could *afford* to avoid big cuts. Perhaps (and I do mean *perhaps*) in the short run Southwest could be more profitable if they cut back some flying, laid off some employees, etc. But by not doing so there are greater long-term benefits. Benefits such as increased market share, enhanced employee loyalty & satisfaction, continued high utilization of equipment, etc., are intangible but significant plusses for the company.
In the opinion of many, the industry still has an overcapacity problem. Southwest is unique in their position among the majors to weather the storm without ripping apart any of their house to burn for heat. In not following the crowd with dramatic ASM cutbacks, Southwest made a very good decision.
While this thread is about SWA's load factor, an underlying sentiment regards cutting capacity and therefore, employees. Job security is the quid pro quo for lower wages... SWA can't afford to cut jobs unless it wishes to enter the death spiral of employee/management relations. If SWA starts cutting jobs, the security carrot disappears from the employees and they will probably react by demanding increases in more traditional forms of compensation (pay, benefits). As far as SWA's break even load factor, the flight release says that 3Q B/E LF is between 61 and 64%. It doesn't say if that includes cargo or not.
[BLOCKQUOTE][BR]----------------[BR]On 10/2/2002 9:24:19 AM ITRADE wrote:
[P]56%....That's a horrible load factor.[/P]
[P]Yes, 56% is not that impressive. But IIRC, WN has traditionally had load factors below most of its non-lowfare competitors. Much of this is probably a result of their frequency philosophy. They serve most markets with a lot of frequency which is a strategy of great convenience to the customers. They tend to saturate their markets in order to dominate them. This results in lower load factors due to excess capacity. But they are structured to operate profitably with lower load factors.[/P]
[P]After 9/11, it is correct that WN did not reduce capacity. But they did curtail planned increases and defer aircraft deliveries. It appears that the same downward pressure on fares which has plagued others has suppressed WN earnings, although they are still profitable where most others are leaking like a sieve. While the rest of the industry is suffering from overcapacity vis a vis prior to 9/11, WN is not. Like almost every other criteria used to measure industry performance, where WN is cited as an exception, that appears to be the case here as well, which is consistent and logical.[/P]
[P]My hunch is that if WN starts seeing the need to cut capacity, and I don't think they will, they would do it by expanding into markets without increasing capacity. Normally their entrance into new markets coincides with new aircraft deliveries. Instead, they could simply re-shuffle existing capacity to accommodate new markets rather than shrinking. Some of their targeting may take the form of feeding off the weakness of others, which they have usually tried to avoid in the past. There is plenty of room for WN to increase market share by gaining it from others. That is simply not the case for the big six.[/P]
[P]One other often overlooked success story is Alaska. They have been doing extremely well in this hostile environment, and they've been doing it in the unique situation of having to compete with both the high-cost, full service carriers and low fare WN. Quite a trick. We should take a closer look at what they're doing and what the results have been. Also, Alaska cut practically no capacity after 9/11 and I don't believe they laid off any employees, either. AND, they're making money![/P]