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[BLOCKQUOTE][BR]----------------[BR]On 10/2/2002 9:24:19 AM ITRADE wrote:
[P]56%....That's a horrible load factor.[/P]
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[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]
[P]Marky[/P][/BLOCKQUOTE]
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