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JammyBritton27 wrote:https://alphastreet.com/bite/d0aaa20
ALK posted a 4% YoY profit growth and a 35% revenue growth for Q3 2017, as it continues the integrating with West Coast carrier Virgin America.
jordanh wrote:JammyBritton27 wrote:https://alphastreet.com/bite/d0aaa20
ALK posted a 4% YoY profit growth and a 35% revenue growth for Q3 2017, as it continues the integrating with West Coast carrier Virgin America.
Wasn't that revenue "growth" just the results of AS and VX being combined - with the additional revenue being what came over from VX?
Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
jordanh wrote:JammyBritton27 wrote:https://alphastreet.com/bite/d0aaa20
ALK posted a 4% YoY profit growth and a 35% revenue growth for Q3 2017, as it continues the integrating with West Coast carrier Virgin America.
Wasn't that revenue "growth" just the results of AS and VX being combined - with the additional revenue being what came over from VX?
Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
jordanh wrote:JammyBritton27 wrote:https://alphastreet.com/bite/d0aaa20
ALK posted a 4% YoY profit growth and a 35% revenue growth for Q3 2017, as it continues the integrating with West Coast carrier Virgin America.
Wasn't that revenue "growth" just the results of AS and VX being combined - with the additional revenue being what came over from VX?
Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
F9Animal wrote:Awesome!!! Alaska is just chugging right along. Any talk about aircraft and the Airbus at all?
tphuang wrote:Probably going to end up with the best margin since other major airlines all had a lot more exposure to hurricane season. That's one benfit to operating in the west coast.
jbs2886 wrote:jordanh wrote:JammyBritton27 wrote:https://alphastreet.com/bite/d0aaa20
ALK posted a 4% YoY profit growth and a 35% revenue growth for Q3 2017, as it continues the integrating with West Coast carrier Virgin America.
Wasn't that revenue "growth" just the results of AS and VX being combined - with the additional revenue being what came over from VX?
Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
Its stock is down 10% on those results. Revenue and earnings both missed estimates. Cost increases were far above estimates, as well. Load factor down. I suspect we will see a brake put on expansion.
tphuang wrote:They are really great at cost control. The casm was flat despite higher fuel cost vs last year q3.
WkndWanderer wrote:jbs2886 wrote:jordanh wrote:Wasn't that revenue "growth" just the results of AS and VX being combined - with the additional revenue being what came over from VX?
Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
Its stock is down 10% on those results. Revenue and earnings both missed estimates. Cost increases were far above estimates, as well. Load factor down. I suspect we will see a brake put on expansion.
Load factor was flat at a solid 85% year over year even with 7% capacity growth over AS+VX's combined 2016 capacity and 20 new routes started in Q3 alone. I don't think we're going to see brakes that aren't related to resource constraints anytime soon.
EA CO AS wrote:Congrats to my co-workers on a nice quarter!
Alias1024 wrote:tphuang wrote:They are really great at cost control. The casm was flat despite higher fuel cost vs last year q3.
It will be interesting to see if they can keep those costs under control going forward. The arbitrator's decision on a joint pilot contract should be out in the next week or two, and that's likely to include large pay increases. Right now Alaska pilots are running 18-25% behind Southwest on hourly rates, and the Virgin America group is more like 40%. The comparisons aren't any better with DL, AA, and UA so it seems likely that a large increase in pilot costs is in the near future. If they don't get a large pay raise, I'd expect to see an exodus from the bottom of the seniority list as DL, UA, WN, and AA poach their pilots, raising training costs at Alaska. If they get a big pay raise, you can expect that other employee groups will take note and push for similar gains.
It's difficult to see how AS doesn't have to fight quickly rising labor costs in the near future.
usxguy wrote:Investors and media are not calling Alaska anything positive right now. Its not dooms day, but its also not a "light chop". Its a lot worse at Horizon than people are leading on to believe, and I *am* an Alaska cheerleader. I've been avoiding QX flights at all costs, and others have as well. And before the A.net koolaid drinkers call me out, just look at some of the frequent flyer message boards and social media. Delta is seeing some fairly interesting increases out of Seattle, yet they've cut back flying... I wonder why. Hopefully things "fix" themselves at AAG and it can go back to being a great airline.
From the Seattle Times Article:
Alaska Air Group management acknowledged Wednesday that the ongoing challenges of integrating its big Virgin America acquisition have caused “a lot of anxiety around here… a lot of tough conversations,” and have distracted executives from other issues.
In an early morning internal message from Tilden to all Alaska Air employees, he cautioned that the competitive challenges “are going to get more intense in the months ahead.”
Chief executive Brad Tilden also said ongoing problems with cancelled flights at Alaska’s regional carrier Horizon Air have prompted him to move its flight operations center from Portland to Seattle.
https://www.seattletimes.com/business/b ... rizon-air/
dmorbust wrote:I think something an analyst alluded to, but AS management refuses to acknowledge, is that a lot of Virgin's cool factor allure is gone with the branding changeover to Alaska; an SFO or LAX millenial might have paid a bit of a premium to book Virgin, but not Alaska. The fact that PRASM on VX markets dropped 7% this quarter isn't exactly a good sign.
B752OS wrote:What are their best performing routes? Best performing transcons?
IPFreely wrote:dmorbust wrote:I think something an analyst alluded to, but AS management refuses to acknowledge, is that a lot of Virgin's cool factor allure is gone with the branding changeover to Alaska; an SFO or LAX millenial might have paid a bit of a premium to book Virgin, but not Alaska. The fact that PRASM on VX markets dropped 7% this quarter isn't exactly a good sign.
Virgin America lost $523,000,000 in their first 10 years of operation which is why their directors put them up for sale. Whatever "cool factor" Virgin had needs to go -- it failed long before any acquisition.
dmorbust wrote:I completely agree with you that Virgin America's financial history was beyond weak, but then why did Alaska management pay $4 billion for it, decide to remove Virgin branding, and expect to keep and grow that customer base? VX PRASM down 7% this quarter is really bad.
With the added capacity, Alaska Air is flying new routes mostly in California, while at the same time it also faces intense fare competition from larger airlines.
As a result, revenue per available seat per mile flown — a closely watched measure of an airline’s efficiency — dropped to 13.12 cents from 13.97 cents a year ago, down 6.1 percent. This metric was actually flat on the legacy Alaska routes, but down on the legacy Virgin routes.
Tilden said his team is studying the inherited Virgin routes closely and may reduce frequencies on some and make other changes.
“We are getting our arms around the Virgin network; we’re starting to think about it,” Tilden said. “You’ll see some adjustments to the part of the schedule that we inherited from Virgin America.”
What are their best performing routes? Best performing transcons?
DiamondFlyer wrote:usxguy wrote:Investors and media are not calling Alaska anything positive right now. Its not dooms day, but its also not a "light chop". Its a lot worse at Horizon than people are leading on to believe, and I *am* an Alaska cheerleader. I've been avoiding QX flights at all costs, and others have as well. And before the A.net koolaid drinkers call me out, just look at some of the frequent flyer message boards and social media. Delta is seeing some fairly interesting increases out of Seattle, yet they've cut back flying... I wonder why. Hopefully things "fix" themselves at AAG and it can go back to being a great airline.
From the Seattle Times Article:
Alaska Air Group management acknowledged Wednesday that the ongoing challenges of integrating its big Virgin America acquisition have caused “a lot of anxiety around here… a lot of tough conversations,” and have distracted executives from other issues.
In an early morning internal message from Tilden to all Alaska Air employees, he cautioned that the competitive challenges “are going to get more intense in the months ahead.”
Chief executive Brad Tilden also said ongoing problems with cancelled flights at Alaska’s regional carrier Horizon Air have prompted him to move its flight operations center from Portland to Seattle.
https://www.seattletimes.com/business/b ... rizon-air/
From the outside looking in, as a person at another regional, it wouldn't surprise me at this point to never seen another 175 delivered to QX. Especially if AS has figured out they can get the same product from OO, for less money. The biggest obstacle there, is that OO is quickly forcing themselves into a coming staffing issue.
dashdrvr wrote:DiamondFlyer wrote:usxguy wrote:Investors and media are not calling Alaska anything positive right now. Its not dooms day, but its also not a "light chop". Its a lot worse at Horizon than people are leading on to believe, and I *am* an Alaska cheerleader. I've been avoiding QX flights at all costs, and others have as well. And before the A.net koolaid drinkers call me out, just look at some of the frequent flyer message boards and social media. Delta is seeing some fairly interesting increases out of Seattle, yet they've cut back flying... I wonder why. Hopefully things "fix" themselves at AAG and it can go back to being a great airline.
From the Seattle Times Article:
Alaska Air Group management acknowledged Wednesday that the ongoing challenges of integrating its big Virgin America acquisition have caused “a lot of anxiety around here… a lot of tough conversations,” and have distracted executives from other issues.
In an early morning internal message from Tilden to all Alaska Air employees, he cautioned that the competitive challenges “are going to get more intense in the months ahead.”
Chief executive Brad Tilden also said ongoing problems with cancelled flights at Alaska’s regional carrier Horizon Air have prompted him to move its flight operations center from Portland to Seattle.
https://www.seattletimes.com/business/b ... rizon-air/
From the outside looking in, as a person at another regional, it wouldn't surprise me at this point to never seen another 175 delivered to QX. Especially if AS has figured out they can get the same product from OO, for less money. The biggest obstacle there, is that OO is quickly forcing themselves into a coming staffing issue.
Could you point to some factual data that supports AAG can get the same product from OO for less money than QX. OO does not reveal its cost to AS and neither does QX.
EA CO AS wrote:o QX is staffed to operate a full schedule going forward and does not anticipate further staffing cancellations
ucdtim17 wrote:EA CO AS wrote:o QX is staffed to operate a full schedule going forward and does not anticipate further staffing cancellations
Well that’s not true. The schedule is significantly reduced from what it was. Maybe, hopefully, they’re finally adequately staffed to fly the schedule as it exists but it is not the “full” schedule QX would have anticipated a year ago.
EA CO AS wrote:ucdtim17 wrote:EA CO AS wrote:o QX is staffed to operate a full schedule going forward and does not anticipate further staffing cancellations
Well that’s not true. The schedule is significantly reduced from what it was. Maybe, hopefully, they’re finally adequately staffed to fly the schedule as it exists but it is not the “full” schedule QX would have anticipated a year ago.
It's absolutely true. QX did the right thing by right-sizing their schedule to not have additional weeks or months of pre-cancels that would negatively impact customers, and now that new schedule they anticipate operating fully, without any staff-related drawdowns or cancellations. In addition, they're doubling the size of the training department to keep up with the influx of new pilots and those transitioning from the Q400 to the E175. In the meantime, the schedule anticipated a year ago, which was aggressive, can return in time.
Now, perhaps my way of looking at it is glass half-full, but it's also entirely accurate.
DiamondFlyer wrote:dashdrvr wrote:DiamondFlyer wrote:
From the outside looking in, as a person at another regional, it wouldn't surprise me at this point to never seen another 175 delivered to QX. Especially if AS has figured out they can get the same product from OO, for less money. The biggest obstacle there, is that OO is quickly forcing themselves into a coming staffing issue.
Could you point to some factual data that supports AAG can get the same product from OO for less money than QX. OO does not reveal its cost to AS and neither does QX.
I said if. And AS knows what it costs to fly those 175s at QX, since they own QX. By virtue of contracting with OO, they know what OO is charging them to fly them (including the OO skim). As to which is cheaper, nobody knows. But in terms of economies of scale, OO is going to win, looking at their fleet as compared to the QX fleet. Add to that the fact that the labor force, in general, is much less senior at OO, also helps sway the costs to being lower at OO.
ucdtim17 wrote:EA CO AS wrote:ucdtim17 wrote:
Well that’s not true. The schedule is significantly reduced from what it was. Maybe, hopefully, they’re finally adequately staffed to fly the schedule as it exists but it is not the “full” schedule QX would have anticipated a year ago.
It's absolutely true. QX did the right thing by right-sizing their schedule to not have additional weeks or months of pre-cancels that would negatively impact customers, and now that new schedule they anticipate operating fully, without any staff-related drawdowns or cancellations. In addition, they're doubling the size of the training department to keep up with the influx of new pilots and those transitioning from the Q400 to the E175. In the meantime, the schedule anticipated a year ago, which was aggressive, can return in time.
Now, perhaps my way of looking at it is glass half-full, but it's also entirely accurate.
They “right-sized” the schedule, i.e. made it smaller, less than “full.”
PlanesNTrains wrote:ucdtim17 wrote:EA CO AS wrote:
It's absolutely true. QX did the right thing by right-sizing their schedule to not have additional weeks or months of pre-cancels that would negatively impact customers, and now that new schedule they anticipate operating fully, without any staff-related drawdowns or cancellations. In addition, they're doubling the size of the training department to keep up with the influx of new pilots and those transitioning from the Q400 to the E175. In the meantime, the schedule anticipated a year ago, which was aggressive, can return in time.
Now, perhaps my way of looking at it is glass half-full, but it's also entirely accurate.
They “right-sized” the schedule, i.e. made it smaller, less than “full.”
It's the new "full". Had they increased their schedule instead of decreasing it, would they have been flying a "more than full" schedule? No - it'd still be "the schedule". I think we get what he's saying. QX reduced their schedule and now is able to operate that reduced "full" schedule without staffing issues. No need to quibble.
EA CO AS wrote:A few pertinent points:
o Wall Street doesn't like to be surprised, hence the 13% drop today.
o Wall Street also likes buying opportunities, and that's what you should expect to see tomorrow.
o QX has taken a self-inflicted beating, but the plan to turn that operation around has already borne fruit
o QX is staffed to operate a full schedule going forward and does not anticipate further staffing cancellations
o The QX fleet plan calls for them to take delivery of 13 E175s in 2018
o The operational plan for QX also calls for improved opportunities for flow to AS to market AAG as a career destination for new pilots
o AS had already projected dramatically increased pilot CBA costs into their long term plans when weighing the VX acquisition costs/benefits
o Going to arbitration was part of an agreed-upon framework with ALPA to get a deal done more quickly than traditional, prolonged negotiations
o Transcon fares are depressed, but plans call for moving higher-capacity, lower CASM 737-900ERs to traditional VX transcon markets
o SOC still planned for January 2018
o Single PSS planned for Q2 2018
o First Airbus in AS livery will be in January 2018
So are there challenges ahead? Of course; but despite the headwinds, AS continues to have industry-leading pretax margins.
n7371f wrote:EA CO AS wrote:A few pertinent points:
o Wall Street doesn't like to be surprised, hence the 13% drop today.
o Wall Street also likes buying opportunities, and that's what you should expect to see tomorrow.
o QX has taken a self-inflicted beating, but the plan to turn that operation around has already borne fruit
o QX is staffed to operate a full schedule going forward and does not anticipate further staffing cancellations
o The QX fleet plan calls for them to take delivery of 13 E175s in 2018
o The operational plan for QX also calls for improved opportunities for flow to AS to market AAG as a career destination for new pilots
o AS had already projected dramatically increased pilot CBA costs into their long term plans when weighing the VX acquisition costs/benefits
o Going to arbitration was part of an agreed-upon framework with ALPA to get a deal done more quickly than traditional, prolonged negotiations
o Transcon fares are depressed, but plans call for moving higher-capacity, lower CASM 737-900ERs to traditional VX transcon markets
o SOC still planned for January 2018
o Single PSS planned for Q2 2018
o First Airbus in AS livery will be in January 2018
So are there challenges ahead? Of course; but despite the headwinds, AS continues to have industry-leading pretax margins.
Some of this is pure cheese whiz...
QX turnaround is bearing fruit? Laughable. Never mind AS Corporate abruptly moving QX SOC out of PDX to SEA because QX can't operate itself to established norms. And doing so on top of just-around-the-corner combination of Virgin and AS OCC...Everyone in our biz who I know well is in pure agreement that this move means QX is no better.
It might also help that AAG actually have someone in a top-level position who has experience combining carriers. Every AAG person calling the shots comes from the inward thinking world of Alaska - and it's harming the carriers right now. AAG has always been a well-run airline - when focused on their own world. That world is gone now and, so far, the results aren't good.
jordanh wrote:Wall Street was predicting $2.32 per share earnings; it was actually only $2.14. Somebody will be disappointed...
dmorbust wrote:EA CO AS wrote:Congrats to my co-workers on a nice quarter!
I don't mean to be rude, but this wasn't a nice quarter by any financial measure. ALK stock went down today 13.21%...that is worse than United's earnings call fiasco 6 days ago!
JammyBritton27 wrote:dmorbust wrote:EA CO AS wrote:Congrats to my co-workers on a nice quarter!
I don't mean to be rude, but this wasn't a nice quarter by any financial measure. ALK stock went down today 13.21%...that is worse than United's earnings call fiasco 6 days ago!
It was a nice result, not in terms of the stock price though
N757ST wrote:I remember the days when if the airline posted a profit the stock would go through the roof. Now if you post a 17% margin versus last years 18% the investors want to burn the witch.
dmorbust wrote:I completely agree with you that Virgin America's financial history was beyond weak, but then why did Alaska management pay $4 billion for it, decide to remove Virgin branding, and expect to keep and grow that customer base?
DiamondFlyer wrote:AS knows what it costs to fly those 175s at QX, since they own QX. By virtue of contracting with OO, they know what OO is charging them to fly them (including the OO skim). As to which is cheaper, nobody knows. But in terms of economies of scale, OO is going to win, looking at their fleet as compared to the QX fleet.
EA CO AS wrote:o Wall Street doesn't like to be surprised, hence the 13% drop today.
o Wall Street also likes buying opportunities, and that's what you should expect to see tomorrow.
usxguy wrote:From the Seattle Times Article:
In an early morning internal message from Tilden to all Alaska Air employees, he cautioned that the competitive challenges “are going to get more intense in the months ahead.”
https://www.seattletimes.com/business/b ... rizon-air/
ScottB wrote:DiamondFlyer wrote:AS knows what it costs to fly those 175s at QX, since they own QX. By virtue of contracting with OO, they know what OO is charging them to fly them (including the OO skim). As to which is cheaper, nobody knows. But in terms of economies of scale, OO is going to win, looking at their fleet as compared to the QX fleet.
OO may well be able to operate more cheaply than QX, but then AS pays a guaranteed margin to OO which might make the all-in cost higher. There's also some value to having the captive subsidiary in that it gives AAG some flexibility in negotiations with the outsourced regional providers. If SkyWest/Republic/Trans States don't sharpen their pencils quite enough, AAG can take the business back. With the consolidation in the regionals over the past decade or so, those carriers have likely regained a bit of negotiating leverage.
DiamondFlyer wrote:The problem is, today's newhire regional pilot, is the most technologically connected group of pilots ever, and they do their research. QX is a burning dumpster fire right now, that offers nothing to potential new hires. They have no real unique bases, no pay that's outstanding, no sort of career progression to speak of. And obscenely long seat locks.
Money would eventually solve the problem, but AS doesn't seem to be interested in that solution.
vadodara wrote:VX had many issues; one thing they did not was choice real estate in key markets. That the markets are complementary for AS is a big plus.
Every airline, including Delta, have had their hiccups. AS is but they will get over it. Obviously, SFO/LAX are great but even better is access to East Coast. No one succeeds without getting out of their comfort zone. AS has, and eventually will get it right!
EA CO AS wrote:A few pertinent points:
o Wall Street doesn't like to be surprised, hence the 13% drop today.
o Wall Street also likes buying opportunities, and that's what you should expect to see tomorrow.
Jamake1 wrote:VX established a name for itself in its Premium cabin offerings and built a loyal following of high yield customers in the transcon market as a result. I just don't see how Alaska is going to be competitive in those markets with the well established MINT product of JetBlue and lie-flat beds offerings of the legacies. There are good premium cabin products in the market. What is going to be Alaska's competitive advantage for the high yield transcon customer demographic?