Moderators: richierich, ua900, PanAm_DC10, hOMSaR
airliner371 wrote:"The successful implementation of our new reservation system is a top priority for this quarter. The first release is currently scheduled for December, and final technology readiness is progressing as planned."
"We are excited about the fourth quarter 2016 scheduled launch of new service to Cuba from Florida, as well as Mexico service from Los Angeles International Airport. Also, we are on track for completion of a new five-gate international terminal in Ft. Lauderdale with new international routes planned for mid-2017."
"We also have exciting growth opportunities beyond those planned for next year. We will continue to manage our growth prudently in light of the revenue environment and increasing fuel prices. We plan to slow our 2017 available seat mile growth rate to less than 4.0 percent, year-over-year, with approximately 2.0 points of the increase relating to domestic growth."
piedmontf284000 wrote:They reported a 33.6 percent decline in quarterly profit. Not good. They are blaming part of it on a result of a technology outage in July. That really came back to haunt them.
MIflyer12 wrote:piedmontf284000 wrote:They reported a 33.6 percent decline in quarterly profit. Not good. They are blaming part of it on a result of a technology outage in July. That really came back to haunt them.
DL, AA, UA, and AS all reported declines in GAAP after-tax profit year over year. Not all suffered tech outages. It's possible the U.S. industry has peaked in this cycle.
LAXintl wrote:Pretty bad.
Stock taking a major tumble - down 11.7% as of 10:15 eastern.
DickAnderson666 wrote:Pretty bad RASM guidance for 4Q and then couple that with the labor TAs that, if voted in, will raise costs by over half a billion a year.
Hard to be optimistic about WN's future.
winginit wrote:
Surely those increased labor costs will bring them within the CASM range of the legacies if you don't consider them in line already. Per Oliver Wyman, back in Q2 2015 (most recent data I could quickly pull up) system CASM was:
United: 12.2
Delta: 11.9
American: 11.8
Southwest: 11.0
The question is, at what point can Southwest no longer honestly consider themselves low cost?
MIflyer12 wrote:DL, AA, UA, and AS all reported declines in GAAP after-tax profit year over year. Not all suffered tech outages. It's possible the U.S. industry has peaked in this cycle.
DickAnderson666 wrote:Yeah this is only the beginning. Pretty bad RASM guidance for 4Q and then couple that with the labor TAs that, if voted in, will raise costs by over half a billion a year
DickAnderson666 wrote:Hard to be optimistic about WN's future.
winginit wrote:The question is, at what point can Southwest no longer honestly consider themselves low cost?
commavia wrote:I think that train has long since left the station (or plane left the gate, as it were). Southwest hasn't been the lowest cost competitor in many if not most of its markets for years now, and its continual cost creep as it buys labor peace and makes critical, long overdue investments in infrastructure like IT are clearly taking a toll.
DickAnderson666 wrote:Look at the product you get on WN vs the other carriers. Much worse for now same cost. And any investment in the product just increases their costs more. Not a winning formula.
commavia wrote:Southwest hasn't been the lowest cost competitor in many if not most of its markets for years now, and its continual cost creep as it buys labor peace and makes critical, long overdue investments in infrastructure like IT are clearly taking a toll.
winginit wrote:Surely those increased labor costs will bring them within the CASM range of the legacies if you don't consider them in line already. Per Oliver Wyman, back in Q2 2015 (most recent data I could quickly pull up) system CASM was:
United: 12.2
Delta: 11.9
American: 11.8
Southwest: 11.0
winginit wrote:if you spend any amount of time in their HDQ or with their employees, not only will they proclaim that they're still a low cost carrier, but they'll say they're the low cost carrier; and a lot of their core marketing messages still focus on the cost savings to the customer. I generally don't mind flying Southwest on account of their friendly service, but I feel as though that's what they should be starting to focus on in their consumer messaging. The fracturing of the low cost facade is starting to be visible even to your run of the mill consumer.
commavia wrote:That Southwest faces major, structural, challenges that need to be addressed is not news. This has been quite clear to anyone paying attention for a decade. We'll see how it pans out - Southwest is a very well-run company with lots of really smart people.
commavia wrote:What I find more interesting is the contrast in tone between primarily the network carriers and, say, JetBlue and Southwest. Whereas all three of AA, Delta and United spoke about seeing improving trends and potentially "turning the corner" on RASM across most of their networks (with the notable and unanimous exception of Europe), JetBlue and Southwest seem to be taking a far more cautious, if not even negative, tone regarding Q4 and going forward.
MIflyer12 wrote:piedmontf284000 wrote:They reported a 33.6 percent decline in quarterly profit. Not good. They are blaming part of it on a result of a technology outage in July. That really came back to haunt them.
DL, AA, UA, and AS all reported declines in GAAP after-tax profit year over year. Not all suffered tech outages. It's possible the U.S. industry has peaked in this cycle.
DickAnderson666 wrote:
I completely agree with you, but I honestly don't think cost is the problem. Look at the product you get on WN vs the other carriers. Much worse for now same cost. And any investment in the product just increases their costs more. Not a winning formula.
airzona11 wrote:Seems inline with other carriers.
winginit wrote:airzona11 wrote:Seems inline with other carriers.
I'll argue that wall street strongly disagrees with you if you look at the stock performance over the time period within which the US3+WN announced earnings...
dc10lover wrote:MIflyer12 wrote:piedmontf284000 wrote:They reported a 33.6 percent decline in quarterly profit. Not good. They are blaming part of it on a result of a technology outage in July. That really came back to haunt them.
DL, AA, UA, and AS all reported declines in GAAP after-tax profit year over year. Not all suffered tech outages. It's possible the U.S. industry has peaked in this cycle.
I think a slowdown in growth is happening in the industry.
FlyPNS1 wrote:I don't think WN really faces any major structural challenges. About the only challenge is managing employee expectations on wages/benefits, but otherwise I don't see what major structural changes WN needs. However, this issue won't be unique to WN. Most of the legacy carriers will face a similar problem if not worse as legacy employees attempt to "claw back" bankruptcy loses.
FlyPNS1 wrote:I think the legacy three are generally far more optimistic in their calls as they are more focused on making Wall Street happy. The last few quarters we've repeatedly heard DL talk about turning the corner, only to later push that "turner corn" off another quarter. And of course UA was the master of promising a brighter future even when that enthusiasm was hard to justify.
DickAnderson666 wrote:Look at the product you get on WN vs the other carriers. Much worse for now same cost.
IPFreely wrote:DickAnderson666 wrote:Look at the product you get on WN vs the other carriers. Much worse for now same cost.
You haven't flown Southwest and the other majors domestically. If you had you would know how wrong this statement is. Mainline vs mainline Southwest is slightly worse, mainly because of the lack of assigned seats and cattle car style boarding. But unlike the other carriers, Southwest actually operates all its own flights. And for short and medium haul domestic flying, Southwest is far superior to Delta Connection or any of the other underperforming regional carriers.
flymco753 wrote:This gives me some hope that MCO-DTW will return full time and possibly seasonal additions from FLL/TPA/RSW-DTW should WN choose to add those. I wonder too if some stations like FNT, CAK, and DAY will close and operations be moved to DTW, CLE, and CVG.
airliner371 wrote:Sorry to disappoint but none of this info should give you hope for any of those specific routes.
IPFreely wrote:
You haven't flown Southwest and the other majors domestically. If you had you would know how wrong this statement is. Mainline vs mainline Southwest is slightly worse, mainly because of the lack of assigned seats and cattle car style boarding. But unlike the other carriers, Southwest actually operates all its own flights. And for short and medium haul domestic flying, Southwest is far superior to Delta Connection or any of the other underperforming regional carriers.
DickAnderson666 wrote:Hmm...I must've just dreamed the 170 segments I've flown on WN in the last 10 years. ....Here's just a few of the many things where WN is worse:
FriscoHeavy wrote:Everyone who thinks WN is in trouble and as "structural issues" needs to chill out. Quit preaching doom and gloom. Probably the same crowd that believes you can't get an 8%+ return on stock funds long-term because the future is going to supposedly be worse than the last 100 years. You have no idea what you're talking about.
FriscoHeavy wrote:Trust me, WN will be just fine so all you naysayers need to calm down and try to think realistically.
IPFreely wrote:
WN is so much worse in every area that after your first segment you only went back for 169 more? That makes as much sense as a waterproof towel.
IPFreely wrote:DickAnderson666 wrote:Look at the product you get on WN vs the other carriers. Much worse for now same cost.
You haven't flown Southwest and the other majors domestically. If you had you would know how wrong this statement is. Mainline vs mainline Southwest is slightly worse, mainly because of the lack of assigned seats and cattle car style boarding. But unlike the other carriers, Southwest actually operates all its own flights. And for short and medium haul domestic flying, Southwest is far superior to Delta Connection or any of the other underperforming regional carriers.
DickAnderson666 wrote:Here's just a few of the many things where WN is worse:
...
On time performance worse than OA mainline
...
DickAnderson666 wrote:Why do you think that WN tries to dominate the locations they serve? So that no one has a choice and has to pick them.
DickAnderson666 wrote:Look I'm not saying WN is a bad carrier, I'm just saying if I have a choice I'm picking a carrier who has the amenities I mentioned.
TUSDawg23 wrote:I've been a big fan of WN for many years and have done most of my flying on them since I was a kid. I love the friendly staff, the family culture, their fantastic domestic network, the simplification of Rapid Rewards, and the free checked bags. But I'm becoming more and more irritated with some of their quirks. The fact that it's some kind of competition to check in asap just in the hope of a halfway decent seat irritates me. I also don't like the lack of power ports. Nearly every major carrier has them now except for WN.
I can live with them not flying to Hawaii, but they need to step up their game especially with their onboard product if they really want to get a bigger chunk of business travelers.
alasizon wrote:The slowdown of growth is almost an entire slowdown of Mainline capacity growth. There is a lot of regional capacity that can be added by the US3 + AS that is still healthy growth. WN can't match a lot of that growth due to their operating structure and station requirements.
airliner371 wrote:People seem to be forgetting what SWA is.
airliner371 wrote:Perhaps it is because Southwest is one of the big 4 carriers now that people seem to expect Southwest to offer a legacy style but that's not who they are. Southwest exists today because they offer a product that differs from UA, AA and DL.
MIflyer12 wrote:Lack of regionals isn't WN's growth problem
BMWdrvr75 wrote:This is exactly what I am talking about. WN has evolved in many different ways on the Ground Operations side even the Flight Operations side. However, the inflight service side has not evolved since 1971. If they are trying to become the most flown airline it is time to win over new customers i.e business travelers who expect a little more. Example: Mr. Kelly called the new MAX galley "cutting edge," IMO it is far from cutting edge...WN inflight thinks because they can still use trays to serve drinks, tattered baskets to pass out peanuts, and no carts this makes it cutting edge. I do not think the money, time and effort the folks in Dallas spent on this "cutting edge" galley is going to win over new customers. Cutting edge might be to offer a few more perks ala JetBlue - Mint, Spirit - Big Seats, - Alaska - just a overall good product (which by the way is quietly expanding in California with many more destinations than Southwest) Minimal cutting edge would be power ports, technology for better passenger comfort in the new aircraft. It really is time for to start bringing in more customers, continue being profitable and competitive by taking a look at inflight offerings.
commavia wrote:Southwest may not be a "legacy" carrier, but it has, indeed, dramatically evolved its business model in the last 15-20 years, including adopting various elements of network carriers' business and operating models. Gone are 20-minute turns on largely short-stage-length, point-to-point routes between primarily uncongested airports. Today Southwest is every bit the network carrier, hub-and-spoke Goliath as AA, Delta and United.
Cubsrule wrote:What operations do AA or UA have that look like the WN operations at BNA or STL? WN has some mega-hubs but still has a lot of flying that does not touch those stations.
commavia wrote:Cubsrule wrote:What operations do AA or UA have that look like the WN operations at BNA or STL? WN has some mega-hubs but still has a lot of flying that does not touch those stations.
My statement was tied to the second sentence above, not the first. Southwest has more mid-size connecting stations than the network carriers, but it also has plenty of megahubs just like those network carriers.
Cubsrule wrote:Yes, but WN's network is still fundamentally different. Take a look at the number of turns of under an hour that WN schedules at its hubs versus any of the legacies . . .
commavia wrote:It may not be now, but I think it could be a problem in the future. Southwest's organic growth in the domestic U.S. market, above and beyond effectively the secular rate of economic growth, is done - just like the network airlines. The stimulative effect of the vaunted "Southwest effect" isn't what it once was, and Southwest has tapped just about every single major market in the country. In fact, the only way for Southwest to grow into pretty much the last remaining major U.S. market, ATL, was through inorganically acquiring a major competitor. As such, Southwest now faces the prospect of driving shareholder value either through lower costs or growth. Costs seem to be going up, not down, so that leaves growth. And Southwest is, clearly, trying to grow internationally with 737s from California, Texas, Florida, etc. to Latin America. But as said, that is fraught with competitive challenges, and as such it will take time and money to push its way into markets that are already very well-served by competitors who in some cases offer lower costs and/or a better product. So absent growing up into widebodies, that leaves growing down into something smaller than a 737 that can effectively feed volume into hubs like BWI, MDW, HOU, DEN, PHX, LAS, etc.
commavia wrote:And I do believe Southwest is every bit the hub and spoke Goliath that AA, Delta and United are - just in a slightly different way, as Southwest does, indeed, have more mid-size connecting hubs in addition to its megahubs.