U.S. air deal seems unlikely

[N288AA]

With APA an USAPA being invited to the merger talks I would say there are merger bells about to ring.

 

[signals]

Don't bet the farm just yet.

 

[jimntx]

I understand Love will be limited, that's exactly the reason for acquiring the 738. When you are limited on the amount of flights you can offer you have to fly a bigger airplane. I firmly believe Love will see alot of WN's 738.

Once the Wright Amendment expires (2014?), Love is limited only by the fact that there are only two runways, and the FAA being anal retentive as they are still insist that only one airplane at a time can be either taking off or landing on a single runway.

 

[IORFA]

Oh, and that little gate maximum. But why forget all the facts?

 

[jimntx]

Well, there is a little fact that either the City of Dallas or Southwest is planning a new terminal--but it will be in addition to, not instead of, the current terminal. But, why forget all the facts yourself?

Besides, Southwest has always made better and more efficient use of gates than AA. Another little fact to put in your pipe and smoke.

 

[FWAAA]

Well, there is a little fact that either the City of Dallas or Southwest is planning a new terminal--but it will be in addition to, not instead of, the current terminal. But, why forget all the facts yourself?

Nope. The terminal construction will result in a total of just 20 gates at DAL compared to 32 total gates before the controversial compromise:

http://www.bizjournals.com/dallas/stories/2006/08/28/daily18.html?page=all

Besides, Southwest has always made better and more efficient use of gates than AA.

That much is true. WN often schedules 8-10 flights a day per gate, far more than the capability of most legacy airlines.

 

[IORFA]

FWAAA, How many gates is WN getting? 16? Thanks Jim, once again, you expand your rant. I never said anything about WN gate usage. There is no disputing that they have always used their gates to a higher capacity than most/if not all of the rest of the industry. By the way where is your proof of this super secret new terminal that no one knows of? Cynical? Moi?

 

[FWAAA]

Yep, the agreement gives WN preferential use on 16 gates; AA and Express Jet each have preferential use on two (for a total of 20).

Currently, WN flies 125 daily departures from 15 gates to 16 cities, including Albuquerque, Amarillo, Austin, Birmingham, El Paso, Harlingen/South Padre Island, Houston (Hobby), Kansas City, Little Rock, Lubbock, Midland/Odessa, New Orleans, Oklahoma City, San Antonio, St. Louis and Tulsa.

I realize that WN will be able to fly DAL to plenty of AA's high revenue DFW destinations, including SAN, SNA, LAX, SFO and SEA as well as LGA, BOS and MIA, plus MDW but I don't see where WN will get enough space at DAL to do all that. I don't see WN giving up all the short-haul flights on which it gets fairly high fares but perhaps I'm wrong.

Now that AA has lowered its costs in Ch 11, it is no longer a very high cost airline, and should be able to compete against WN, which is no longer the very low cost airline it was a decade ago.

Here's the agreement between AA, WN, XJT, Dallas and Fort Worth to restrict DAL to 20 gates: http://www.lovefieldmodernizationprogram.com/docs/FINAL_EXECUTED-ContractToResolveTheWrightAmendmentIssues.pdf

 

[IORFA]

I agree with you, they can't drop all the Texas flights and hope to fill the new flights. I don't see a big shift either way. They will have space problems and the need to fly most of their current schedule of cities at a decent level. Thanks for helping stop false statements on here. Facts are hard to find at times!

 

[WorldTraveler]

DAL will become a longhaul business market airport for WN and they will dramatcally reduce their short haul skid. They already control that market which means they can cut it way down to maximize use of gates. NE biz mats, MDW, Florida, Calif could all be done five times per day w 738s focused just on the local mkt and longhaul conx.
WN can push far more revenue thru DAL than they r doing now and still meet the gate limits...and dramatically grow its share of local Dallas revenue.

 

[jimntx]

Here's the agreement between AA, WN, XJT, Dallas and Fort Worth to restrict DAL to 20 gates: http://www.lovefield...dmentIssues.pdf

Dated 2006. Now, how many times has the Wright Amendment been amended in its lifetime? I'm sure that the above agreement is written in stone and will never, ever be changed. We all know that these sorts of agreements are never changed.

 

[swamt]

Maybe the strategy is to emerge from BK as a stand alone plan, with employee cost shafted so bad that investors will give AA the money needed to "buyout" US and JetBlue both and just as AirCal, RenoAir, and TWA were treated so too will the next victims.

I don't think your too far off on your scenerio. I also posted before it will probably be a 3 party deal once finalized and done with. We all know AA wants to be the puchaser at any cost possible so Horton could keep the reins. However, I don't think shareholders, creditors, as well as the employees will allow Horton to run the "new" AA.

 

[FWAAA]

Dated 2006. Now, how many times has the Wright Amendment been amended in its lifetime? I'm sure that the above agreement is written in stone and will never, ever be changed. We all know that these sorts of agreements are never changed.

Yes, it's an agreement from June, 2006, and AFAIK, it hasn't been changed yet. It's possible that it might be changed, but it's not like I sprung some brand new news on you - you've had six and a half years to learn about the compromise.

I disagreed with it when it happened - I would have preferred to see the Wright Amendment eliminated and the DAL terminals expanded to allow all the flights the DAL market could support, but I can also see the points of the cities of Dallas and Fort Worth and AA, all of whom want to see the huge investment at DFW be fully used.

As much as everyone (including AA management in filings with the BK court) drones on and on about how WN at DAL will be the death of AA starting in 2014, I look at HOU (Hobby) as instructive. CO (now UA) has built a gigantic hub at IAH despite WN flying 143 daily departures from HOU to anyplace it wants - there's no Wright Amendment limits at HOU. If CO can thrive at IAH despite WN at HOU, then I think that AA will survive at DFW despite some new WN flights to key AA markets. Yes, it will further harm AA's revenue at DFW, but WN probably won't steal away corporate contracts from AA as effectively as DL and UA have. Companies that fly their employees all over the world will look to UA, DL and AA. Business people not tied to corporate contracts and vacationers will fly whomever is cheapest.

Additionally, WN at MDW (WN's largest station by far) hasn't killed the dual hubs of UA and AA a few miles NW at ORD. Granted, the CHI metro area is more than 50% larger than the metroplex or Houston.

And as I pointed out above, WN ain't always the cheapest like it was in the old days. Its pilots and FAs are now the most expensive in the world thanks to AA's bankruptcy. They may still be the most efficient, but thanks to AA's Ch 11, its pilots and FAs no longer have quite the same cushy work rules as they used to, which should help AA compete on costs.

 

[swamt]

well, not quite ANY market.... domestic only and realistically it'll have to be in the lower 48... and there are limitations on what WN can push thru DAL but few people are willing to admit ther drain that DAL could have on AA's domestic revenues at DFW.

DAL is a far closer airport and the airport location of DAL is totally different from any other secondary to primary airport in cities that have two airports in the US. HOU and MDW are on opposite sides of downtown from IAH and ORD, for example.

And even at DFW, other carriers not allied w/ AA continue to grow their presence.

2014 is also when many of the countries in Latin America that do not currently have Open Skies have committed to have them w/ the US... and that includes providing additional US carrier access between MIA and Latin America. AA has done as well as it has in Latin America because other US carriers cannot add capacity into many of the key airports in Latin America, esp. from MIA.

AA will face a much tougher competitive environment within less than 2 years.....

WT, You are correct. After W/A is gone SWA will be able to fly to any domestic location they wish. Some near international markets as well. But here's a hint; The brand new terminals and airport remodle at Love Field is building an internation wing with customs area, I wonder why that is? SWA wouldn't be wasting their money would they? I don't think so. Again you are correct. But it won't be long until the W/A law will get changed once again. SWA was victorious in their repeal of the W/A with the loan restriction of no international flights out of LF. This will change a few years down the road when SWA will victoriously again show the public and the gov how SWA will bring the "southwest affect" to the international market as they did domestically. You guys watch, you heard it here first, SWA will go international out of LF sometime in the future, I just don't know when, hell, SWA doesn't even know when right now.

 

[swamt]

Nope. The terminal construction will result in a total of just 20 gates at DAL compared to 32 total gates before the controversial compromise:

http://www.bizjourna...8.html?page=all



That much is true. WN often schedules 8-10 flights a day per gate, far more than the capability of most legacy airlines.

I mis-spoke when answering WT above. The restrictions of international flts out of LF was not the only restriction. SWA was also limited to the number of gates to be operated. Yes this is at 20. However, this new construction is being done with future growth plans in the future. SWA flights will more than double within 2 years time at LF once the full blown flt sched is achieved (could be longer than 2 years the way SWA likes to grow slowly). I see more gates, more flts, near international flts as well as international flts out of LF eventually.