AA CEO says no new hubs, fleet growth, point to point flying

mikejepp · Thu Mar 15, 2018 12:58 pm

American's CEO said there is a list of 7 things that the airline is not planning on doing, no matter if times are good or bad.

Included are:

1. Expanding service to markets that don’t touch a hub.
2. New hubs.
3. Large aircraft order, not primarily for replacement.

https://www.forbes.com/sites/tedreed/2018/03/14/when-might-it-be-time-to-sell-american-airlines-shares-here-are-seven-potential-indicators/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix&yptr=yahoo#6189c3ea5100

UpNAWAy · Thu Mar 15, 2018 1:52 pm

No surprises there.

MIflyer12 · Thu Mar 15, 2018 2:02 pm

It's still disappointing to see that the CEO will go on record stating that AA doesn't want to compete out of new hubs, nor on new point-to-point flying. Somebody at the DOJ doing airline merger reviews ought to tuck away this Forbes article.

UpNAWAy · Thu Mar 15, 2018 2:05 pm

What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

9w748capt · Thu Mar 15, 2018 2:05 pm

He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

WorldFlier · Thu Mar 15, 2018 2:10 pm

UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

So is Cleveland a Focus City for United?

If not, does that mean only DL does Focus Cities?

jbs2886 · Thu Mar 15, 2018 2:10 pm

UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.

UpNAWAy · Thu Mar 15, 2018 2:17 pm

Flawed? Show me the value of adding a few one off point to points are trying to open yet another HUB?
How would any of that be wiser than just growing your existing hubs? My argument is rock solid!

cactus73 · Thu Mar 15, 2018 2:20 pm

jbs2886 wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running ourt of new places to fly via their hubs..

Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.

Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.

Midwestindy · Thu Mar 15, 2018 2:28 pm

WorldFlier wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

So is Cleveland a Focus City for United?

If not, does that mean only DL does Focus Cities?

It has some p2p flights, but CLE is not officially a focus city, I think UA has below 50 flights per day there as well.... https://www.united.com/web/en-US/conten ... fault.aspx

AA does more p2p than UA does, and DL, AS, F9, NK, and WN have "focus cities"

A PNW hub for AA would have too much overlap with PHX and LAX, wouldn't add much value to their network, and DL and AS would fight it tooth and nail

tphuang · Thu Mar 15, 2018 2:38 pm

AA doesn't really need new hubs. It has great hubs. The only place it would need a new hub is in pnw or Rocky mountain region. Also, it doesn't have as much money as Delta to be starting new focus cities or hubs.

Delta is really in a pretty unique position. It has 3 of the most profitable hubs in the country along with good reputation and good operation. That it can attempt to go in and build new hubs and focus cities. AA spends it's resources to fortify it's existing hubs, especially lax which is quagmire for everyone.

Given where AA hubs are, I think that's a pretty good strategy. Maybe someday it will attempt to build a pnw or Rocky mountain hub. Who knows.

william · Thu Mar 15, 2018 2:59 pm

MIflyer12 wrote:
It's still disappointing to see that the CEO will go on record stating that AA doesn't want to compete out of new hubs, nor on new point-to-point flying. Somebody at the DOJ doing airline merger reviews ought to tuck away this Forbes article.

Its capacity discipline. The same religion AA's Crandall was preaching in the 80s. The religion the airlines could have practiced when there was 6 majors.

slcdeltarumd11 · Thu Mar 15, 2018 3:05 pm

I don't see any legacy adding hubs. Focus cities at most, and rub things thru existing proven hubs.

iyerhari · Thu Mar 15, 2018 3:31 pm

Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

SESGDL · Thu Mar 15, 2018 3:36 pm

iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

PHL is very much a fortress hub for AA as well. So it's not just CLT that they dominate without any type of formidable competition.

Jeremy

ual747den · Thu Mar 15, 2018 3:37 pm

9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

His entire job is to make the shareholders rich. This is a company and returning a profit to the owners is what it is all about.

UpNAWAy · Thu Mar 15, 2018 3:38 pm

A lot of it is just basic math a P2P serves one market a P2Hub serves hundreds a P2hub to Hub2P across the country serves thousands.

scbriml · Thu Mar 15, 2018 3:46 pm

9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

As long as he's delivering on the first part, he's doing a good job. AA is run for its shareholders, not its customers.

iyerhari · Thu Mar 15, 2018 3:47 pm

SESGDL wrote:
iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

PHL is very much a fortress hub for AA as well. So it's not just CLT that they dominant without any type of formidable competition.

Jeremy

Well the definition of a fortress hub is not just the market dominance within that hub which is also correct in a way but it also means there are no other major hubs located within a close distance. I know of many people including business travelers who check EWR and sometimes JFK/LGA if the price is conducive vs. PHL. So, in that sense, PHL does have competition from EWR, JFK and LGA to quote the prime hubs. CLT, ATL, MSP, SLC do not have any major hubs to geographical proximity. I should say even BOS is in a similar position.

MO11 · Thu Mar 15, 2018 3:53 pm

ual747den wrote:
9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

His entire job is to make the shareholders rich. This is a company and returning a profit to the owners is what it is all about.

Exactly....welcome to the 21st century.

MIflyer12 · Thu Mar 15, 2018 3:54 pm

cactus73 wrote:
. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.

You might want to check your math on seats and RPMs by hub. MSP and DTW are quite 'like' AA at ORD, MIA and PHL.

Here's a quick flight/seats reference I found: viewtopic.php?t=575077

keesje · Thu Mar 15, 2018 3:56 pm

4. Aircraft order done in exchange for financing.

“These things all did happen in the past,” Parker said. “They aren’t going to happen again.

When did that happen?

DeltaRules · Thu Mar 15, 2018 4:34 pm

I always assumed if BA started service to CMH it would be done via codeshare on an AA 757 to LHR. Does AA consider LHR a hub or is that theory now out the window?

PlanesNTrains · Thu Mar 15, 2018 5:05 pm

DeltaRules wrote:
I always assumed if BA started service to CMH it would be done via codeshare on an AA 757 to LHR. Does AA consider LHR a hub or is that theory now out the window?

I would imagine it’s considered a hub for the purposes of this conversation. Not sure if they actually refer to LHR as a hub, though.

Dominion301 · Thu Mar 15, 2018 5:46 pm

iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

A city with at least 8-10 non-hub flights a day is a true indication of a focus city. For example, if you count LHR and LGA as AA hubs, RDU only has PIT as a non-hub route.

In fact, other than BOS, do AA really have any focus cities anymore now that DL has taken away the title of RDU being a focus city?

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.

RobertPhoenix · Thu Mar 15, 2018 5:51 pm

keesje wrote:
4. Aircraft order done in exchange for financing.

“These things all did happen in the past,” Parker said. “They aren’t going to happen again.

When did that happen?

It happened with America West or US Airways when they got help from Airbus.

But I think I can guarantee that if any airline runs out of money, and they can get financing by ordering planes, they will do it.

Same goes with the idea of "we are not going to lose money again" Admirable sentiments, but divorced from probability and reality.

iyerhari · Thu Mar 15, 2018 5:53 pm

Dominion301 wrote:
iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

A city with at least 8-10 non-hub flights a day is a true indication of a focus city. For example, if you count LHR and LGA as AA hubs, RDU only has PIT as a non-hub route.

In fact, other than BOS, do AA really have any focus cities anymore now that DL has taken away the title of RDU being a focus city?

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.

BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!

jfklganyc · Thu Mar 15, 2018 6:08 pm

I believe that was the 350/US bankruptcy funding from airbus

9w748capt · Thu Mar 15, 2018 6:11 pm

iyerhari wrote:
Dominion301 wrote:
iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.

A city with at least 8-10 non-hub flights a day is a true indication of a focus city. For example, if you count LHR and LGA as AA hubs, RDU only has PIT as a non-hub route.

In fact, other than BOS, do AA really have any focus cities anymore now that DL has taken away the title of RDU being a focus city?

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.

BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!

Incredible how unsuccessful AA has been in CDG. Crazy that not even ORD-CDG is year-round on AA anymore. Compare that to UA's Europe network.

ATLFlyer323 · Thu Mar 15, 2018 6:18 pm

tphuang wrote:
AA doesn't really need new hubs. It has great hubs. The only place it would need a new hub is in pnw or Rocky mountain region. Also, it doesn't have as much money as Delta to be starting new focus cities or hubs.

Delta is really in a pretty unique position. It has 3 of the most profitable hubs in the country along with good reputation and good operation. That it can attempt to go in and build new hubs and focus cities. AA spends it's resources to fortify it's existing hubs, especially lax which is quagmire for everyone.

Given where AA hubs are, I think that's a pretty good strategy. Maybe someday it will attempt to build a pnw or Rocky mountain hub. Who knows.

Just curious, what would those hubs be? ATL, DTW, MSP? I'm just trying to think of markets where they face minimal competition...

-ATLFlyer323

Alexdk · Thu Mar 15, 2018 6:20 pm

WorldFlier wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

So is Cleveland a Focus City for United?

If not, does that mean only DL does Focus Cities?

If regional is included:

AA destinations (0.5 for seasonal)
1. BOS 16
2. RDU 11.5
3. PIT 11.5
4. BNA 10.5

UA:
1. CLE 14.5
2. HNL 14

Aren’t these focus cities?

RainerBoeing777 · Thu Mar 15, 2018 6:44 pm

Alexdk wrote:
WorldFlier wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..

So is Cleveland a Focus City for United?

If not, does that mean only DL does Focus Cities?

If regional is included:

AA destinations (0.5 for seasonal)
1. BOS 16
2. RDU 11.5
3. PIT 11.5
4. BNA 10.5

UA:
1. CLE 14.5
2. HNL 14

Aren’t these focus cities?

HNL for decades was city of focus of UA, many of its transpacificas routes towards scale in HNL until the arrival of the first Boeing 747-400 where they began to fly nonstop to Asia and Australia from SFO and LAX

UA still has routes to Japan, Guam and Micronesia from HNL, if it can be considered a focus city for UA

airbazar · Thu Mar 15, 2018 7:02 pm

iyerhari wrote:
Dominion301 wrote:

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);

BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!

Well they have to cut something if they are going to fit their entire operation under 1 roof at terminal B so my guess is that all of the above should be gone within a year or so.

FSDan · Thu Mar 15, 2018 7:17 pm

Dominion301 wrote:
Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.

BOS-CDG is gone.

AA still flies FLL-PAP 2x daily, which is technically not hub to hub (although FLL is within their South Florida hub market).

There's RDU-LHR, although LHR is arguably a hub in that case.

The Saturday only sun routes I can think of are MCI-CUN, BNA-CUN, RDU-CUN, PIT-CUN, BOS-PLS (winter only), BOS-MBJ (winter only), BOS-PUJ (winter only), and BOS-CUN.

American 767 · Thu Mar 15, 2018 7:28 pm

9w748capt wrote:
Incredible how unsuccessful AA has been in CDG. Crazy that not even ORD-CDG is year-round on AA anymore..

And they are now down to only one daily CDG-JFK flight, AA45/44.
AA121/120 is gone, it was still there last summer.

This doesn't surprise me at all. Air France flies CDG-JFK four times daily, and one of the flights is an A380. CDG is a Sky Team major hub and American is looking at downsizing JFK, they'd rather concentrate on expanding their PHL hub.

77H · Thu Mar 15, 2018 7:29 pm

cactus73 wrote:
jbs2886 wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running ourt of new places to fly via their hubs..

Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.

Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H

jbs2886 · Thu Mar 15, 2018 7:55 pm

77H wrote:
cactus73 wrote:
jbs2886 wrote:

Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.

Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H

Again, I agree DL has a different hub system that allows them to make focus cities work. But, AA could operate focus cities, and in fact, kind of does. BOS being the primary example. Maybe there are fewer opportunities for AA, but to say unequivocally focus cities would never work for AA is flawed.

Dominion301 · Thu Mar 15, 2018 8:10 pm

jbs2886 wrote:
77H wrote:
cactus73 wrote:

Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H

Again, I agree DL has a different hub system that allows them to make focus cities work. But, AA could operate focus cities, and in fact, kind of does. BOS being the primary example. Maybe there are fewer opportunities for AA, but to say unequivocally focus cities would never work for AA is flawed.

AUS used to be an AA focus city, but it certainly isn't any longer. As for BOS and not having room in Terminal B, keep in mind most of those non-hub routes are operated only 1x and don't take up a lot of space.

tphuang · Thu Mar 15, 2018 8:20 pm

I think in aa case, they can certainly make focus cities at Boston and rdu work, but that’s not something they are interested at right now. I just hope they don’t cut further at jfk.

Buffalomatt1027 · Thu Mar 15, 2018 8:23 pm

mikejepp wrote:
American's CEO said there is a list of 7 things that the airline is not planning on doing, no matter if times are good or bad.

Included are:

1. Expanding service to markets that don’t touch a hub.
2. New hubs.
3. Large aircraft order, not primarily for replacement.

https://www.forbes.com/sites/tedreed/2018/03/14/when-might-it-be-time-to-sell-american-airlines-shares-here-are-seven-potential-indicators/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix&yptr=yahoo#6189c3ea5100

If this is true .... Buffalo / BNIA should get a couple new routes from AA. Currently they only fly to Philly and Charlotte. Dallas seems like a good fit!

afcjets · Thu Mar 15, 2018 8:28 pm

cactus73 wrote:
jbs2886 wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running ourt of new places to fly via their hubs..

Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.

Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs.

I am not saying AA should do the same either, but based on this logic DL has more room to expand at their secondary hubs than AA.

william wrote:
MIflyer12 wrote:
It's still disappointing to see that the CEO will go on record stating that AA doesn't want to compete out of new hubs, nor on new point-to-point flying. Somebody at the DOJ doing airline merger reviews ought to tuck away this Forbes article.

Its capacity discipline. The same religion AA's Crandall was preaching in the 80s. The religion the airlines could have practiced when there was 6 majors.

AA surpassed UA in the 80s as the world's largest airline under Crandall and that is also when he added hubs in BNA, RDU, SJU, and SJC, none of which exist today. Crandall may have preached that, but he certainly didn't practice it.

MIflyer12 · Thu Mar 15, 2018 8:37 pm

77H wrote:

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H

That is gibberish. AA's hubs are in the in the biggest metro markets, so they have the most competition -- so they should just stay in those markets instead of trying to develop focus cities or new hubs (as DL has done with SEA and LAX)?

As for size of markets, you really should look at rankings of domestic O&D traffic by airport, and recognize where DL has hubs, and where AA operates. MSP is bigger than PHL. SLC (SLC!) is bigger than CLT. ATL is almost the size of ORD, but Delta at ATL is vastly bigger than AA at ORD.

Click on Domestic O&D Ranking at lower right https://orlandoairports.net/about-us/#t ... statistics

lowfareair · Thu Mar 15, 2018 8:43 pm

American 767 wrote:
9w748capt wrote:
Incredible how unsuccessful AA has been in CDG. Crazy that not even ORD-CDG is year-round on AA anymore..

And they are now down to only one daily CDG-JFK flight, AA45/44.
AA121/120 is gone, it was still there last summer.

This doesn't surprise me at all. Air France flies CDG-JFK four times daily, and one of the flights is an A380. CDG is a Sky Team major hub and American is looking at downsizing JFK, they'd rather concentrate on expanding their PHL hub.

Don't forget the DL flights as part of that joint venture, making it 6 daily flights on SkyTeam, AA simply can't compete even with 2. The leisure side is screwed as well with Primera, XL, and Norwegian offering fares of $400-$600 r/t during peak season. Premium leisure has La Compagnie with fares often under $1500 r/t. La Compagnie may not have the best business class, but I would struggle to justify paying twice as much to fly an AA 763 if I was traveling on my own dime.

9w748capt · Thu Mar 15, 2018 8:57 pm

lowfareair wrote:
American 767 wrote:
9w748capt wrote:
Incredible how unsuccessful AA has been in CDG. Crazy that not even ORD-CDG is year-round on AA anymore..

And they are now down to only one daily CDG-JFK flight, AA45/44.
AA121/120 is gone, it was still there last summer.

This doesn't surprise me at all. Air France flies CDG-JFK four times daily, and one of the flights is an A380. CDG is a Sky Team major hub and American is looking at downsizing JFK, they'd rather concentrate on expanding their PHL hub.

Don't forget the DL flights as part of that joint venture, making it 6 daily flights on SkyTeam, AA simply can't compete even with 2. The leisure side is screwed as well with Primera, XL, and Norwegian offering fares of $400-$600 r/t during peak season. Premium leisure has La Compagnie with fares often under $1500 r/t. La Compagnie may not have the best business class, but I would struggle to justify paying twice as much to fly an AA 763 if I was traveling on my own dime.

Great point. Living in the middle of the country, I totally forget about all those other options on the coasts such as XL, Norwegian, etc.

jumbojet · Thu Mar 15, 2018 9:26 pm

AA is 24 billion dollars in debt (and growing). They couldn't even afford a pack of bubbalicious bubble gum if they wanted, let alone try to build a new hub, focus city or buy a new plane.

For comparison purposes, DL is now under 8 billion in debt and decreasing.

jbs2886 · Thu Mar 15, 2018 9:35 pm

jumbojet wrote:
AA is 24 billion dollars in debt (and growing). They couldn't even afford a pack of bubbalicious bubble gum if they wanted, let alone try to build a new hub, focus city or buy a new plane.

For comparison purposes, DL is now under 8 billion in debt and decreasing.

This is incredibly misleading and exaggerated (can't afford bubbalicious bubble gum...come on). AA and DL are at very different places in their fleet replacement cycle, which has a demonstrable impact on debt. Moreover, your quote of DL's debt excludes substantial pension-related debt. Just because it is listed differently does not mean that it is not debt.

I am a big DL fan, but why do you come on an AA thread just to bash AA with these ridiculous comments while finding a way a compliment DL in the process? BOTH airlines are in fine financial shape. To add, if AA were in such dire circumstances, why is their debt rating fine? No, its not investment grade, but it is fine. https://www.moodys.com/credit-ratings/A ... ting-32600

jumbojet · Thu Mar 15, 2018 10:06 pm

jbs2886 wrote:
[ (can't afford bubbalicious bubble gum...come on). AA and DL are at very different places in their fleet replacement cycle, which has a demonstrable impact on debt. Moreover, your quote of DL's debt excludes substantial pension-related debt. Just because it is listed differently does not mean that it is not debt.

I am a big DL fan, but why do you come on an AA thread just to bash AA with these ridiculous comments while finding a way a compliment DL in the process? BOTH airlines are in fine financial shape. To add, if AA were in such dire circumstances, why is their debt rating fine? No, its not investment grade, but it is fine. https://www.moodys.com/credit-ratings/A ... ting-32600

No sense of humor jbs? Of course they can afford bubbilicous bubble gum. I'm not bashing AA just mentioning some facts from a recent article about AA's debt. I guess the minute someone speaks negatively about an airline its considered bashing? :roll:

This isn't capex discipline
American Airlines executives have frequently noted that capital spending will be significantly lower in 2018 and beyond, relative to the past few years. That said, American plans for capex to average more than $4 billion a year between 2018 and 2020. This is still quite a lot of money for a company that only generated $4.7 billion of cash from operations in 2017.
Most of this capex relates to the 56 Boeing 737 MAX 8s and 50 Airbus A321neos that American Airlines will receive between now and 2020. Given the massive backlogs for these models, it wouldn't be difficult for American to defer some of these deliveries if it wanted to keep operating its 737-800s.
Instead, American Airlines is poised to continue its free-spending ways. With annual capex of more than $4 billion and pension contributions increasing, the company will have little or no cash available for debt reduction between now and 2020. This situation will leave American Airlin

https://www.fool.com/investing/2018/03/ ... money.aspx

Oh, and by the way Delta has been making significant inroads to its pension debt. Even if you add Deltas debt to their pension obligations, its still way under AA's debt of 25.6 billion dollars and that doesnt factor in AA's own pension obligations (to which I cant find an answer to)

https://www.fool.com/investing/2018/03/ ... nsion.aspx

N505fx · Thu Mar 15, 2018 10:08 pm

9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

I don't agree with this - nearly 175K revenue miles on AA last year and a very consistent experience - their policies and service have not disappointed and sometimes have even wowed. The only hiccup in my Exec Plat time has been the catering issue at LAX, but for those flights, they recovered pretty well with the boarding gate carts and such.

IPFreely · Thu Mar 15, 2018 10:56 pm

9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.

His job is to make money for the company's owners. And despite your unsubstantiated claim, AA has a consistent and high quality product, both mainline and regional. If you want to see inconsistent and low quality, look no further than Endeavor. AA has also has no multi-day global shutdowns because their computers won't reboot properly.

448205 · Thu Mar 15, 2018 11:24 pm

keesje wrote:
4. Aircraft order done in exchange for financing.

“These things all did happen in the past,” Parker said. “They aren’t going to happen again.

When did that happen?

Pan Am A300
AA A300
USAir A32X order
America West A32X order

Pretty much an Airbus thing, though Boeing has worked with some of its big foreign players: EK, Ryanair, Fly Dubai and Lion.

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