Q1 2019 Results - Earnings Call
Apr 25, 2019, 10:01 pm
#1
Original Poster
Join Date: Apr 2017
Programs: AS 100k, DL PM, New Sagaya
Posts: 1,291
Q1 2019 Results - Earnings Call
My selected highlights from the call, link to full transcript at the end.
Overview:
Tilden: We also discussed our intent to achieve those margins by improving performance in the controllable parts of our operations. Viewed through that lens, the first quarter results were solid. On the revenue side, our initiatives began to deliver on schedule and in some cases, ahead of schedule. And on the cost side, we outperformed our guidance by delivering better productivity than we planned despite completing fewer ASMs than planned. So in factors we control that drive long-term value, we're headed in the right direction. That said, the underlying improvements we're making to the business were masked somewhat by two unusual factors: first, a series of winter storms in February that significantly disrupted our operations; and second, a substantial drop in close-in fares in our California and New York-based transcon markets, which extended through most of the quarter.
2019 Strategy:
Minicucci: I would like to comment briefly on our longer-term growth potential. We always said the merger with Virgin America was about growth. And we still stay that today, however, given our slower growth this year, some investors have asked whether our thinking on this has changed. A short answer to that is no. We still see lots of opportunity for profitable growth, especially in California, leveraging the valuable airport assets we acquired with the merger. We're taking a pause this year to let our recent network investments mature and increase returns. But beyond this year, we will leverage our competitive advantages especially, our low costs, our award-winning service, and our generous loyalty program to continue delivering profitable growth in the years ahead as we've done historically. We're just getting started on what we can and will deliver for our guests, our employees and our owners, and we are confident that our trajectory is heading upward.
Route Softness:
Harrison: In addition, California transcon markets, specifically San Francisco and Los Angeles to the New York Metro and Boston airports, were one of two operating regions to experience negative RASM in Q1. These markets representing 14% of our network saw significant weakness in close-in pricing from January through mid-March.
Since tickets purchased close to departure date generally sell for above-average prices, this close-in weakness had a material, 110 basis impact on Q1 and explains most of the variance to our original guidance. These prices were isolated, however, and do not affect the way we think about our revenue trajectory for the rest of the year. Close-in fares rebounded significantly in mid-March and have continued to firm since, consistent with their typical seasonal pattern.
We are cautiously optimistic on California transcon pricing as we head into the spring and summer. Hawaii was the only other region to experience revenue softness in the first quarter. This was reflected in our original guidance due to lower pricing that has been in market since September of last year. Importantly, though still negative, pricing in Hawaii has remained quite stable of late and in some cases has improved.
VX Legacy Routes vs AS Legacy Routes
Analyst Kevin Crissey Q&A: Just one quick one. We've heard argues that your good results from a network and revenue perspective have been traditionally your legacy Alaska markets, and your weakest results have been your traditional legacy Virgin routes. Can you talk to that? And maybe put another way, what areas of Virgin network and assets are doing well?
Andrew Harrison: Kevin, it's Andrew. We - I recall and maybe I've made, I made in earlier quarters, some very high-level comment around that Pac Northwest versus California. We don't share that level of detail, but what I would, going forward that was just initial half of the acquisition. What I will share with you is that what we have squarely in focus with all the initiatives we are doing with the cross fleeting, with the Saver Fares, with the loyalty growth, the productivity, cost reductions is continuing to improve the results of the California marketplace, which is as you know, a very highly competitive marketplace. And we have seen good solid trajectory there. We have a lot of work to do, no question, but our results continue to improve and that's exactly what we're looking to do.
Bradley Tilden: Kevin, it's Brad. I might add on that to that a little bit. In my time here, I've seen lots of different reasons for this company be - reasons that were challenge for sometimes for a period of years. When I first joined Seattle to the Bay Area - Pacific Northwest to the Bay Area was a challenged area. It's a highly contributing area today. When we first went into transcon's sort of a similar experience and it's really, really valuable part of our franchise today. Southern Cal to Mexico, if you go back a few years was not - was underperforming for some period of time. And so some of these California transcon markets aren't doing what we believe they should do. But it doesn't shake our belief in our need to be there and it doesn't shake our belief in our competitive advantage. So we're going - I don't know that we'll add a ton of capacity in these markets, but we're going to stay there. And we are going to fight it out, and we believe our company has real competitive advantage that will be rewarded over time.
On Saver Fares:
Minicucci: Sixth, we launched our new Saver Fare product in January. This was the most significant change we've made to our product and pricing lineup in years. And as we adapt to it operationally and respond to questions from some of our guests, the incremental revenue it has generated has thus far exceeded our expectations.
Harrison: Saver Fare, the largest component of these, exceeded our expectations as more guests chose to buy out of the product than we planned. As Saver and other initiatives reached their run rates in Q2, we expect this tailwind to grow.
Tilden in Q&A: Matt, let me start. When - like we said, the Saver rollout exceeded our expectations. It's been a really good rollout. And as you rollout new big changes like this, of course, we did have some issues operationally with managing what we call oversold list, but we're working through those right now with our frontline folks. And having that rolled out, we handled some customer questions on how this thing works. So there were a bit of issues we had to work our way through. But I would say those things are working well, and we're making our way through that.
In terms of total dollars, I think, we feel totally comfortable about - we said $100 million. And when we look at - we look at it overall with all our revenue initiatives, we feel pretty good about that. And we've only launched it for four months. We'll give you more of a sense as we get more traction over the next few months on how it's going, but we're optimistic that we improve on that.
Analyst Daniel Mckenzie Q&A: Shane, I guess this question would be for you. From what I can tell the Saver Fare appears to be more mechanical and less dynamic today. First, am I correct in that characterization? And then is there potential to be more dynamic here and how do we think about what that could mean for revenue as we look forward here?
Shane Tackett: Yes, Daniel, you are right. I think we've gone out initially with a pretty sort of flat approach. We've really done it essentially based on how far people are traveling, and I think that's really what the industry has gone out with and more or less has stuck with. I think there is - we're starting to ask the same question you just asked me. Is there a way to get a little smarter at the flight level to move the buy up around. Our goal with this would be loss of buy up at pretty low price. We would love to sort of maximize the economics by getting a lot of people into the main cabin fare that's the better product. And so we want to make that buy up attractive to folks over time. So we are very motivated to figure out how to get more dynamic, as you say, with this but it's probably a couple of quarters away. We really do need a little history before we start changing that goal a lot.
On FA's:
Minicucci: Third, our flight attendants began flying together as fully-integrated teams on January 31; fourth, last week, we completed our Flight Path program, a series of face-to-face workshops with our people to reinforce our culture and bring us together as one team. Over 20,000 employees attended these sessions with leadership over the past 6 months, and they've helped us move forward as one team toward our strategic and financial goals
On Mileage Plan:
Harrison: Our loyalty member base and credit cardholders also continue to grow, especially in California. Total Mileage Plan revenues grew 7.3% or 3x faster than our overall revenues.
In Q&A: I would - we'll still hit, without getting into details, double-digit growth in both Mileage Plan and the credit card in the first quarter. And in fact, California growth was double the systemwide growth rate. So I would say that we're still seeing very good momentum even in the base that we're growing off increases.
Harrison in Q&A: Jamie, we see the usual periodic bonus offers that are just sort of glittery deals to bring people in. But what we believe the fundamentals are that over the long term, loyalty programs only work if you actually reward people for their loyalty and have [indiscernible] and deeply embedded built - generous mechanisms to keep people's loyalty. And so what we see right now is that our loyalty program and the growth that we've been able to achieve, we feel like what we offer to guests is being well received. And as I shared earlier, our California growth on both card and Mileage Plan is double the rate, albeit on a smaller base and our systemwide growth, which is double digits. So it's always moving around. But as we continue to roll out new products, people get to know us more. Our awareness gets higher. We feel really good about what we have to offer to folks who want to join our club.
Lie Flats/AS F vs J:
Q&A from Hunter Keay: Okay. Chris and Brad, and then couple of years ago you guys resisted the urge of lie-flats because a couple - one of the reasons at least was because you thought you might make yours - your airline more prone to a downturn, which I felt was actually really insightful. But look, you've said before you try to attract new customers and the marketplace has changed. Not only Pacific Northwest, but now you're in these markets in San Francisco and Los Angeles. You've got the credit card, and your competitors are having some success with these lie-flat seats. So how are you thinking about that now? Are you fighting the urge to do it? Or is it something you guys have just decided we'll never going to do this and that's just who we are.
Shane Tackett: Hunter, it's Shane. I think I answered this question before. Our thinking haven't changed. And in fact, if you look at some of the pricing softness in the markets that you're talking about, a lot of that is actually on the premium side of the cabin. And so I'm not sure that the economics would be any different. In fact, they would probably be more challenging at this point.
I think the question about do we have a good enough first-class product, which is again a very small percentage of the overall market that demands that. Is it good enough to compete with lie flat, I think it's a good question, and it's one we're sort of humble about and we're just - we're going to take a little more time to understand if we need to go a different route. We don't really have the aircraft to do lie-flat today. We've got some of the A321s. That's the aircraft you would want to do it on. So we said before, if we needed to go there we could. But right now, our sort of view is more loyalty and upgrade into our premium cabins, and less sort of all-out looking to yield in the premium cabins and that still works for us. Throughout the system, we think it will. If that changes, we'll be able to go lie-flat if we have to.
Analyst Brandon Oglenski Q&A: Okay, I appreciate that. And then I wanted to follow up on the question about business-class versus your domestic First Class. Have you guys put the 900 on the transcon routes yet? And are you getting the relative revenue production out of the aircraft that you thought you would? I guess, more from like a square foot perspective?
Andrew Harrison: Sure. We actually just - it was only really mid-March that we fully transferred all of JFK and New York to Los Angeles and San Francisco on to the ER and the 321, so - as we get into these demand periods. So we will get a lot more visibility to how they perform over the next few months. So that's just really started as we speak.
https://seekingalpha.com/article/425...pt?part=single
Overview:
Tilden: We also discussed our intent to achieve those margins by improving performance in the controllable parts of our operations. Viewed through that lens, the first quarter results were solid. On the revenue side, our initiatives began to deliver on schedule and in some cases, ahead of schedule. And on the cost side, we outperformed our guidance by delivering better productivity than we planned despite completing fewer ASMs than planned. So in factors we control that drive long-term value, we're headed in the right direction. That said, the underlying improvements we're making to the business were masked somewhat by two unusual factors: first, a series of winter storms in February that significantly disrupted our operations; and second, a substantial drop in close-in fares in our California and New York-based transcon markets, which extended through most of the quarter.
2019 Strategy:
Minicucci: I would like to comment briefly on our longer-term growth potential. We always said the merger with Virgin America was about growth. And we still stay that today, however, given our slower growth this year, some investors have asked whether our thinking on this has changed. A short answer to that is no. We still see lots of opportunity for profitable growth, especially in California, leveraging the valuable airport assets we acquired with the merger. We're taking a pause this year to let our recent network investments mature and increase returns. But beyond this year, we will leverage our competitive advantages especially, our low costs, our award-winning service, and our generous loyalty program to continue delivering profitable growth in the years ahead as we've done historically. We're just getting started on what we can and will deliver for our guests, our employees and our owners, and we are confident that our trajectory is heading upward.
Route Softness:
Harrison: In addition, California transcon markets, specifically San Francisco and Los Angeles to the New York Metro and Boston airports, were one of two operating regions to experience negative RASM in Q1. These markets representing 14% of our network saw significant weakness in close-in pricing from January through mid-March.
Since tickets purchased close to departure date generally sell for above-average prices, this close-in weakness had a material, 110 basis impact on Q1 and explains most of the variance to our original guidance. These prices were isolated, however, and do not affect the way we think about our revenue trajectory for the rest of the year. Close-in fares rebounded significantly in mid-March and have continued to firm since, consistent with their typical seasonal pattern.
We are cautiously optimistic on California transcon pricing as we head into the spring and summer. Hawaii was the only other region to experience revenue softness in the first quarter. This was reflected in our original guidance due to lower pricing that has been in market since September of last year. Importantly, though still negative, pricing in Hawaii has remained quite stable of late and in some cases has improved.
VX Legacy Routes vs AS Legacy Routes
Analyst Kevin Crissey Q&A: Just one quick one. We've heard argues that your good results from a network and revenue perspective have been traditionally your legacy Alaska markets, and your weakest results have been your traditional legacy Virgin routes. Can you talk to that? And maybe put another way, what areas of Virgin network and assets are doing well?
Andrew Harrison: Kevin, it's Andrew. We - I recall and maybe I've made, I made in earlier quarters, some very high-level comment around that Pac Northwest versus California. We don't share that level of detail, but what I would, going forward that was just initial half of the acquisition. What I will share with you is that what we have squarely in focus with all the initiatives we are doing with the cross fleeting, with the Saver Fares, with the loyalty growth, the productivity, cost reductions is continuing to improve the results of the California marketplace, which is as you know, a very highly competitive marketplace. And we have seen good solid trajectory there. We have a lot of work to do, no question, but our results continue to improve and that's exactly what we're looking to do.
Bradley Tilden: Kevin, it's Brad. I might add on that to that a little bit. In my time here, I've seen lots of different reasons for this company be - reasons that were challenge for sometimes for a period of years. When I first joined Seattle to the Bay Area - Pacific Northwest to the Bay Area was a challenged area. It's a highly contributing area today. When we first went into transcon's sort of a similar experience and it's really, really valuable part of our franchise today. Southern Cal to Mexico, if you go back a few years was not - was underperforming for some period of time. And so some of these California transcon markets aren't doing what we believe they should do. But it doesn't shake our belief in our need to be there and it doesn't shake our belief in our competitive advantage. So we're going - I don't know that we'll add a ton of capacity in these markets, but we're going to stay there. And we are going to fight it out, and we believe our company has real competitive advantage that will be rewarded over time.
On Saver Fares:
Minicucci: Sixth, we launched our new Saver Fare product in January. This was the most significant change we've made to our product and pricing lineup in years. And as we adapt to it operationally and respond to questions from some of our guests, the incremental revenue it has generated has thus far exceeded our expectations.
Harrison: Saver Fare, the largest component of these, exceeded our expectations as more guests chose to buy out of the product than we planned. As Saver and other initiatives reached their run rates in Q2, we expect this tailwind to grow.
Tilden in Q&A: Matt, let me start. When - like we said, the Saver rollout exceeded our expectations. It's been a really good rollout. And as you rollout new big changes like this, of course, we did have some issues operationally with managing what we call oversold list, but we're working through those right now with our frontline folks. And having that rolled out, we handled some customer questions on how this thing works. So there were a bit of issues we had to work our way through. But I would say those things are working well, and we're making our way through that.
In terms of total dollars, I think, we feel totally comfortable about - we said $100 million. And when we look at - we look at it overall with all our revenue initiatives, we feel pretty good about that. And we've only launched it for four months. We'll give you more of a sense as we get more traction over the next few months on how it's going, but we're optimistic that we improve on that.
Analyst Daniel Mckenzie Q&A: Shane, I guess this question would be for you. From what I can tell the Saver Fare appears to be more mechanical and less dynamic today. First, am I correct in that characterization? And then is there potential to be more dynamic here and how do we think about what that could mean for revenue as we look forward here?
Shane Tackett: Yes, Daniel, you are right. I think we've gone out initially with a pretty sort of flat approach. We've really done it essentially based on how far people are traveling, and I think that's really what the industry has gone out with and more or less has stuck with. I think there is - we're starting to ask the same question you just asked me. Is there a way to get a little smarter at the flight level to move the buy up around. Our goal with this would be loss of buy up at pretty low price. We would love to sort of maximize the economics by getting a lot of people into the main cabin fare that's the better product. And so we want to make that buy up attractive to folks over time. So we are very motivated to figure out how to get more dynamic, as you say, with this but it's probably a couple of quarters away. We really do need a little history before we start changing that goal a lot.
On FA's:
Minicucci: Third, our flight attendants began flying together as fully-integrated teams on January 31; fourth, last week, we completed our Flight Path program, a series of face-to-face workshops with our people to reinforce our culture and bring us together as one team. Over 20,000 employees attended these sessions with leadership over the past 6 months, and they've helped us move forward as one team toward our strategic and financial goals
On Mileage Plan:
Harrison: Our loyalty member base and credit cardholders also continue to grow, especially in California. Total Mileage Plan revenues grew 7.3% or 3x faster than our overall revenues.
In Q&A: I would - we'll still hit, without getting into details, double-digit growth in both Mileage Plan and the credit card in the first quarter. And in fact, California growth was double the systemwide growth rate. So I would say that we're still seeing very good momentum even in the base that we're growing off increases.
Harrison in Q&A: Jamie, we see the usual periodic bonus offers that are just sort of glittery deals to bring people in. But what we believe the fundamentals are that over the long term, loyalty programs only work if you actually reward people for their loyalty and have [indiscernible] and deeply embedded built - generous mechanisms to keep people's loyalty. And so what we see right now is that our loyalty program and the growth that we've been able to achieve, we feel like what we offer to guests is being well received. And as I shared earlier, our California growth on both card and Mileage Plan is double the rate, albeit on a smaller base and our systemwide growth, which is double digits. So it's always moving around. But as we continue to roll out new products, people get to know us more. Our awareness gets higher. We feel really good about what we have to offer to folks who want to join our club.
Lie Flats/AS F vs J:
Q&A from Hunter Keay: Okay. Chris and Brad, and then couple of years ago you guys resisted the urge of lie-flats because a couple - one of the reasons at least was because you thought you might make yours - your airline more prone to a downturn, which I felt was actually really insightful. But look, you've said before you try to attract new customers and the marketplace has changed. Not only Pacific Northwest, but now you're in these markets in San Francisco and Los Angeles. You've got the credit card, and your competitors are having some success with these lie-flat seats. So how are you thinking about that now? Are you fighting the urge to do it? Or is it something you guys have just decided we'll never going to do this and that's just who we are.
Shane Tackett: Hunter, it's Shane. I think I answered this question before. Our thinking haven't changed. And in fact, if you look at some of the pricing softness in the markets that you're talking about, a lot of that is actually on the premium side of the cabin. And so I'm not sure that the economics would be any different. In fact, they would probably be more challenging at this point.
I think the question about do we have a good enough first-class product, which is again a very small percentage of the overall market that demands that. Is it good enough to compete with lie flat, I think it's a good question, and it's one we're sort of humble about and we're just - we're going to take a little more time to understand if we need to go a different route. We don't really have the aircraft to do lie-flat today. We've got some of the A321s. That's the aircraft you would want to do it on. So we said before, if we needed to go there we could. But right now, our sort of view is more loyalty and upgrade into our premium cabins, and less sort of all-out looking to yield in the premium cabins and that still works for us. Throughout the system, we think it will. If that changes, we'll be able to go lie-flat if we have to.
Analyst Brandon Oglenski Q&A: Okay, I appreciate that. And then I wanted to follow up on the question about business-class versus your domestic First Class. Have you guys put the 900 on the transcon routes yet? And are you getting the relative revenue production out of the aircraft that you thought you would? I guess, more from like a square foot perspective?
Andrew Harrison: Sure. We actually just - it was only really mid-March that we fully transferred all of JFK and New York to Los Angeles and San Francisco on to the ER and the 321, so - as we get into these demand periods. So we will get a lot more visibility to how they perform over the next few months. So that's just really started as we speak.
https://seekingalpha.com/article/425...pt?part=single
Last edited by williwaw; Apr 25, 2019 at 10:32 pm
Apr 25, 2019, 10:29 pm
#2
Join Date: Jan 2005
Location: Bend, OR
Programs: AS 100k, UA Platinum, Marriott Titanium, Hertz PC
Posts: 228
Interesting that they opened the door to lie-flats. Bring on the market dynamics that support this fleet upgrade!
Apr 25, 2019, 10:42 pm
#3
Join Date: Dec 2007
Location: USA
Programs: AS MVPG75k
Posts: 330
That really stuck out to me.
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
Apr 25, 2019, 10:53 pm
#4
Original Poster
Join Date: Apr 2017
Programs: AS 100k, DL PM, New Sagaya
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That really stuck out to me.
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
Apr 25, 2019, 10:54 pm
#5
Join Date: Oct 2005
Location: SEA
Programs: AS G100K, DL PM, IHG Gold, HHonors Diamond
Posts: 843
I wonder what WN's entering the CA-HI in March will have any material effects on AS' 2Q results, especially the AS HI market had already shown softness in revenue in 1Q. That was before WN went full force into that market.
Apr 25, 2019, 11:42 pm
#6
Join Date: Jan 2006
Location: CONUS
Posts: 947
They're getting their ... KICKED out of Virgin hubs. Keep it up Ben!
Apr 25, 2019, 11:43 pm
#7
Join Date: Dec 2018
Programs: Alaska MVP Gold 7K, MARRIOTT PLAT PREMIER WITH AMBASSADOR
Posts: 164
Thank in so much for posting really great stuff! I’m no expert and probably have the least industry knowledge of any of you that have posted but my gut read is there is trouble adapting the Virgin crowd in to the Alaskan couture fully.
i can speak to that because I was what they called a “founding member” with Virgin joined their loyalty program in 07 two months after their first flight and was obsessed with them. I always said it was unlike any other flying expieirnce and I remember all the great people I met in first class as a young entrepreneur it was always 100% agreement that Virgin was unlike any other carrier.
having said that though it was around a few years before the merger when my company started investing in Portland I began flying with Alaska and they immediately became my unquestioned second favorite airline and I always said they had the kindest best company culture and goes without saying best loyalty program.
to be blunt a lot of the Virgin crowd is a bit stuck up and I heard a lot of negative comments after the merger not only from travelers but flight attendants and pilots I know with Virgin. So I have been pretty concerned about the adaption to the Virgin crowd because all the initial feedback I got from my Virgin diehards were they weren’t buying it.
i love Alaska and while nothing to me will ever be what Virgin was Alaska is by far and away the best thing going right now for US travel so I’m really hoping I’m wrong and that Alaska is successful in all their ventures if a former virgin addict like me can become an Alaska junkie I’m sure others will as well if given the opportunity. Anyway thanks again for the info truly appreciate it!
i can speak to that because I was what they called a “founding member” with Virgin joined their loyalty program in 07 two months after their first flight and was obsessed with them. I always said it was unlike any other flying expieirnce and I remember all the great people I met in first class as a young entrepreneur it was always 100% agreement that Virgin was unlike any other carrier.
having said that though it was around a few years before the merger when my company started investing in Portland I began flying with Alaska and they immediately became my unquestioned second favorite airline and I always said they had the kindest best company culture and goes without saying best loyalty program.
to be blunt a lot of the Virgin crowd is a bit stuck up and I heard a lot of negative comments after the merger not only from travelers but flight attendants and pilots I know with Virgin. So I have been pretty concerned about the adaption to the Virgin crowd because all the initial feedback I got from my Virgin diehards were they weren’t buying it.
i love Alaska and while nothing to me will ever be what Virgin was Alaska is by far and away the best thing going right now for US travel so I’m really hoping I’m wrong and that Alaska is successful in all their ventures if a former virgin addict like me can become an Alaska junkie I’m sure others will as well if given the opportunity. Anyway thanks again for the info truly appreciate it!
Apr 25, 2019, 11:51 pm
#8
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Shane Tackett: Hunter, it's Shane. I think I answered this question before. Our thinking haven't changed. And in fact, if you look at some of the pricing softness in the markets that you're talking about, a lot of that is actually on the premium side of the cabin. And so I'm not sure that the economics would be any different. In fact, they would probably be more challenging at this point.
He answered his own question and was too dense to realize it.
Maybe someday they'll figure it out.
Apr 26, 2019, 4:02 am
#9
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Yeah, as a consumer, I don't see any softness in business class fares SFO-NYC. UA and DL have if anything gotten pricier, with very limited discount inventory available. Close in, those tix all cost over $2k RT, and typically more like $2.5k+. But AS can't compete for that business, because their hard product is simply not competitive.
Apr 26, 2019, 4:26 am
#10
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Yeah, as a consumer, I don't see any softness in business class fares SFO-NYC. UA and DL have if anything gotten pricier, with very limited discount inventory available. Close in, those tix all cost over $2k RT, and typically more like $2.5k+. But AS can't compete for that business, because their hard product is simply not competitive.
Hope and prayers seems to be the plan for California and every quarter they make up another excuse as to why they are not turning the ship around there.
Apr 26, 2019, 7:58 am
#11
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Even B6 is also getting $1300+ each way with full cabins close in. They have talked about weakness since the merger on premium routes yet the trajectory has been straight down. Some like BOS-LAX only have one AS flight a day some days of the week and is on life support for half of the year. Then they somehow think that simply flying larger aircraft with twice as many premium seats they are not selling will help the situation. HI also continues to be weak and with WN totally focused there for growth in 2019-2020 that extra capacity will bring down AS profitability there even more. Competitors continue to add capacity and/or upgrade their premium products while AS is fiddling around.
Hope and prayers seems to be the plan for California and every quarter they make up another excuse as to why they are not turning the ship around there.
Apr 26, 2019, 8:35 am
#12
Join Date: Aug 2018
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Not too savvy if they're willing to a pay a premium to sit in UAs 2-4-2 F 777s - what a joke. I'd take an AS 737 any day over that for a California - Hawaii flight.
Apr 26, 2019, 9:14 am
#13
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That really stuck out to me.
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
I've watched a debate in multiple threads rage on about whether or not Alaska is expanding or staying flat since the VX merger. This settles it, at least for 2019. I, personally, want to see Alaska grow and succeed. Seeing them admit they are taking a pause on growing markets in 2019 is disappointing, but I'm glad they are being honest with investors (and flyertalk).
Apr 26, 2019, 9:54 am
#14
FlyerTalk Evangelist
Join Date: Aug 2002
Location: Bay Area, CA
Programs: UA Plat 2MM; AS MVP Gold 75K
Posts: 35,067
This SEA think that AS is using towards the premium markets is very reminiscent of the CO think back in the day. CO put a ridiculously high weight and cost on managing a subfleet for premium markets, and was willing to leave money on the table to avoid dealing with that. AS will figure it out eventually.
Apr 26, 2019, 9:56 am
#15
FlyerTalk Evangelist
Join Date: Aug 2002
Location: Bay Area, CA
Programs: UA Plat 2MM; AS MVP Gold 75K
Posts: 35,067
The argument I have seen is whether or not they are shrinking. Flat isn’t shrinking. Their previous guidance for 2019 had been they are holding back on growth (which is what VX had to do to run a profit, they cut some of their order book back before the merger).
It's kind of like cost of living going up and you not getting a raise. You essentially got a pay cut if you don't get a cost of living adjustment from time to time.