AA making moves on its hubs/fleet

[Eric Diffoot]

American Boosts RJ Fleet, Key Hubs


Sep 17, 2009

Adrian Schofield [email protected]

American today announced a major shakeup to its mainline and Eagle network, and as part of that, is placing new orders for Bombardier CRJ-700s that will almost double the size of this fleet. The carrier is dramatically boosting flights out of Chicago, Miami and New York, while cutting service out of St. Louis and Raleigh/Durham. More Eagle flying will be shifted to Chicago. In new financing developments, American revealed deals for $2.9 billion in new liquidity and debt. American is exercising options for 22 additional CRJ-700s, adding to the 25 it currently has in the Eagle fleet. Delivery will begin in the middle of next year, and all will be fully financed. First class cabins will be added to the 25 existing -700s, which will be concentrated mainly in the Chicago market. Also on the fleet front, the airline announced it has selected GE engines for its planned 787 deliveries. Regarding its mainline network, American will next year add 57 new flights in Chicago, including 12 new domestic and three international destinations. There will be 23 flights added at Miami, and 19 at DFW - partly to replace RJ flying that is being shifted to Chicago. Seven flights will be added at New York Kennedy, with three new international and three domestic destinations, and two flights added at LaGuardia. Los Angeles will also see two more flights. American said these changes are for the summer 2010 schedule, compared to the existing winter schedule. To match the increases, St. Louis will be cut back by 46 daily flights, which will eliminate 20 destinations. This will leave St. Louis with 36 mainline and regional flights to nine cities. Raleigh/Durham will lose nine flights and three destinations. Airline executives indicated many jobs will shift from St. Louis and Raleigh to its hubs. American revised its 2010 capacity guidance upward slightly, and now forecasts 1% mainline and consolidated growth, with domestic essentially flat and international up 2.5%. The carrier said the slight increase is due to the resumption of flights to Mexico that were cut following the H1N1 flu scare, and its new Beijing flight which it earlier deferred but now plans to start next year. The carrier's new financing consists of $1.3 billion in new liquidity, including $1 billion in cash from the advance sale of frequent flyer miles to its credit card partner Citi, and $280 million under a loan from GE Captial Aviation Services secured by aircraft. The carrier also secured $1.6 billion in sale/leaseback financing from GECAS, using previously ordered Boeing 737s. The carrier now has financing in place for its 737 deliveries through 2011. Photo credit: AMR

http://www.aviationweek.com/aw/generic/story.jsp?id=news/SHAKE091709.xml&headline=American%20Boosts%20RJ%20Fleet,%20Key%20Hubs&channel=comm

I'm rather happy to hear news like this coming from AA, except for the shift of jobs out of STL and RAL part, in that that they're doing something productive for the future. All you hear mostly from the other airlines are that they're cutting back, delaying deliveries, finding finance, and etc. They're really stepping up in fixing things while bringing in the new and getting the old out.

[saupatel]

Any news on the future of the MD's. I thought those were fuel hogs and needed to be replaced with 737's.

[Eric Diffoot]

Well aparantly in the May 25, 2009 issue of Aviation Week & Space Technology they said that AA plans to put the 737s into domestic service at a rate of about 2-3 per month but as for the replacing the entire md-80 fleet, who knows. Their current 737 order, 76 firmed orders, only replaces a handfull of md-80s but that still leaves them with over 200 md-80s to go and as to if they will order more 737s or wait and see what Airbus and Boeing do in terms of their future narrowbodies is the mystery here.
Most of the new 737s coming in are replacing md-80 routes in and out of Chicago.


American Airlines unveils new 737-800 with expanded seating, overhead storage

http://www.usatoday.com/travel/flights/item.aspx?type=blog&ak=65416617.blog

[TeeVee]

much as i am loyal to AA, one of the reasons they are doing "ok" is a result of the concessions its employees made years ago, which have never been paid back. business smart, but ruthless

[EconomyClass]

Does it cost an airline more or less in fuel costs to run a hub-spoke system? I assume adopting the system was about increased market control. But nowadays with fuel on an upward trend, shouldn't they do some computer runs and choose the most efficient system of those available? I live in a hub, and I know our local airline has controlled the airport for decades. That eventually sent it into bankruptcy and merger. So it seems to me adjusting the business model should be considered an option.

[AA 1818]

Great news, and also, hopefully we will see some of that money invested in JAL (hopefully - but only if it is a smart business move for them...). Apart from that, yes there are only a few 737s on order (compared to the massive MD fleet), but apart from that, we are going to see some of the MDs head for retirement as we see downsizing of the fleet anyway. Apart from that, some of the RJs will also supplement the MD retirement a bit. Will the MDs likely be with the fleet in 5 years? Undoubtedly. As someone highighted, I think that we will see a many faceted solution in place to replace the MDs (read, many aircraft types) as well as better market analysis and better utilization of aircraft to meet demand.

[AA 1818]

much as i am loyal to AA, one of the reasons they are doing "ok" is a result of the concessions its employees made years ago, which have never been paid back. business smart, but ruthless

Sadly, as the days go by (and as more and more employees retire) the attiude at the airline is mostly along the lines of "Well, at least I have a job...". The other day I was flying from MIA to DFW and while speaking with an F/A (she had only been with the company for a few years) she explained that she came from a Reigonal Carrier and that she was much happier and more fortunate to work for AA now. A little while later I recognized a more senior flight attendent and we started chatting, as as we got one the same topic, she explained how horribly she had been paid (since taking cuts and the like) and how badly they have seen their benefits deteoriate. I think that the next-generation of employess (those that cannot remember the glory days) have been indoctrinated into a belief that 'this is as good as it gets' and so don't have much reason to complain. For those that remember the past, the current airline is a sick reminder...

[thxcollins]

Does it cost an airline more or less in fuel costs to run a hub-spoke system?

I would think less due to the fact that they can tanker fuel from their hub and save on outstation costs. Although, depending on where the hub is, the negotiated rate could be more than certain locations.