Sorry for the tease in today’s earlier post, but these became public at different times, so I decided to go with a rare double post. Today, American and JetBlue are creating a strategic partnership in the same vein as the American/Alaska deal. Some have suggested American was irrelevant in New York and would have to pull back, but creativity has bred another option while also boosting Boston. This should instantly make American more relevant where it needs the help most.
This particular partnership just covers Boston and New York (JFK/LaGuardia/Newark) and nothing else. That means these two will continue to bash heads in Philly and South Florida, and JetBlue will continue to do… whatever it is doing in LA. I had long thought there was an opportunity to carve up JetBlue with the north going to American and the south to United in order to make them both more competitive in those regions. But why split the airline up if American can just partner with the part that it needs?
Assuming that the economics create enough incentive for each airline to take the other’s connecting flows in large numbers — and this is really the key to the whole thing — this will be a boon for both carriers. I’m assured that this is structured similarly to the Alaska deal which was meant to accomplish just that, but of course, we haven’t seen that in practice yet.
American’s strategy in New York since the merger has effectively been a) serve the big business markets and b) bring people from smaller cities where American has strength to New York. It was missing out on opportunities to actually serve most New Yorkers, and it was ok with that because it had to be. It was never going to get enough slots to be competitive, so why give a half-hearted effort and make the airline underperform even more in the region? That would only end up losing more money.
Now with JetBlue, American can gain a big benefit without having to spend a dime. JetBlue has huge relevance to New Yorkers, but it’s weaker outside the eastern seaboard… and it has no long-haul. This will eventually result in a codeshare and frequent flier partnership, so that means loyalists to either program will now be able to get most of their needs filled by sticking with their preferred airline and its partner. This creates a real — though obviously not perfect — third competitor to Delta and United in New York.
What’s really interesting here is that the airlines can now work together to serve their strongholds by moving slots around if they see fit. I spoke with both Chief Revenue Officer Vasu Raja at American and SVP Airline Planning Scott Laurence from JetBlue and they talked about this in real terms.
For example, with the added relevance to people in New York, Vasu says American will pull its 50-seaters from New York and be able to offer everything on airplanes with two classes onboard. Meanwhile, JetBlue could grow beyond its tiny presence at LaGuardia by utilizing gates and slots that American might not need.
At JFK, American is going to rely on JetBlue to really bulk up the feed for international. To accomplish this, it could swap a morning slot for an evening slot with JetBlue since they each have better uses at those times.
American is expecting the benefit to be enough that it will bring back Rio service this next winter, add Athens service for next summer, and start Tel Aviv year-round. Yes, it will be a pain to connect between Terminals 5 and 8, but as Scott noted, JetBlue feeds all kinds of airlines at JFK at different terminals successfully today. They may look at ways to improve the connection experience, but it will work either way.
I brought up the issue that American and JetBlue have more overlap than American and Alaska, so how would that work? I asked, for example, about LA to JFK. Vasu says they can focus the A321T as a true corporate shuttle while JetBlue can help serve all those coach travelers that American has turned away due to lack of capacity. Even in competitive markets, they think there’s opportunity.
Vasu was feeling characteristically bullish by saying that this will be comparable to Philly as a Transatlantic gateway. That would be… something. But New York isn’t the only winner here. Don’t forget about Boston.
Vasu tells me that American’s largest AAdvantage base outside of its hubs is in Boston. Now those travelers will have a whole lot more options for earning miles when they fly JetBlue. At the same time, JetBlue’s customers will have access to American’s flights, including London. This is much less interesting to JetBlue since it will likely be flying its own metal to London soon enough, but it still gives JetBlue a global partner to help counter Delta’s growing presence.
This along with the Alaska deal gives American significant presence along the coasts where the airline is weakest. Even better for American, it doesn’t have to pour a bunch of money in to get the benefit. Delta knows the pain that can come with equity deals — its second quarter results included over $2 billion in writedowns for LATAM, Aeromexico, and Virgin Atlantic investments. If this does work as planned, then it’s a big win for JetBlue and American. If not, well, nothing is lost.
55 comments on “American Becomes Instantly Relevant in New York With JetBlue Strategic Partnership”
I just finished reading your first post when this one appeared.
It obviously had been rumored but let’s not forget that AA and B6 have cooperated before and terminated it.
Let’s also not try to deny that both got to the point of feeling enough pain that they decided to work together again, just as was the case with Alaska.
The real loser is AA which will be downsizing in order to cut money-losing routes while B6 wins big time if AA starts leasing slots and gates at LGA – based on the information you provided.
Given AA just sent WARN letters to 25k workers and is asking for more federal aid, it is obvious that AA is not in a position to lose money and has to cut its money-losing operations.
Let’s not forget that this still involves just a simple codeshare not unlike what B6 has had with foreign carriers that see less reason to cooperate w/ B6 given its relationship with AA and thus oneworld.
Ah I hadn’t seen this news. 2500 pilots just got a furlough notice that Vasu Raja said LESS THAN A MONTH AGO that they wouldn’t get.
COVID is a huge reprieve for B6 and AA.
DL was getting ready to steamroll B6 in BOS (and AA was going to lose a lot of money on its last-gasp BOS expansion), but pulled way back due to COVID.
AA was going to have to fight off DL-LATAM in MIA, first real competitor since Eastern, DL and UA left decades ago.
Likewise UA’s expansion in ORD at AA’s expense is on hold as Scott Kirby gets really, really conservative all the sudden.
And at a higher level, DL’s paxex investments that contrasted so starkly with AA’s paxex tragedy (O-A-SIS) get slowed down and get less attention as survival becomes the only concern.
Good times!
Lol, DL was getting ready to steamroll B6 in BOS. The kind of imagination that goes on here is quite amazing. DL had 21 gates and B6 had 30.
With this, DL experiment in BOS is finished. AA will be back as the legacy of choice at BOS. I don’t see why any AA ff at BOS will have reason to jump to DL now. DL ff at BOS now have a great reason to jump to AA.
Big winner here is obviously B6. They get more slots at LGA and JFK. They solve their IRROP problems they had at BOS/JFK. AA allows them to stay and expand in T5 of LAX. And they get feed from AA. JetBlue is getting everything they wanted here.
AA is a smaller winner I guess. But like in AS deal, the smaller carrier wins big time by getting AA’s domestic network.
“I don’t see why any AA ff at BOS will have reason to jump to DL now.”
You don’t fly AA much, do you? :)
they can fly B6 to the same places now. The main advantage DL was building at BOS over AA is its network relevance. It no longer has that advantage.
FC – Regarding LAX, American doesn’t control T5. It only has a few gates there with the rest being common use. As far as I know, American had nothing to do with that transaction, nor did it even know JetBlue was planning on doing that. This agreement doesn’t include LAX, and American is far better sticking with Alaska than JetBlue since JetBlue adds very limited value there. I wouldn’t expect feed from American to fill JetBlue’s flights in LA. The only thing American will do is help fill flights from LA to New York and Boston, but it’s not clear that JetBlue needs help on those routes… maybe Newark.
The B6/AA agreement is only in BOS and NYC, and it has nothing to do with LAX.
Cranky,
What is that photo in the middle of the post? Also if B6 & AS are partners with AA on their respective coasts, would it make sense for B6 & AS to also partner with one another as well?
I’m sorry, Sean, but do you go to a museum, look at a Van Gogh and ask people around you what it is? Brett’s work is considered to be at the same level of Van Gogh, Rembrandt and Picasso. Heck, even Banksy is afraid for Brett’s fierce competition.
So: don’t ask. Just focus on how it makes you feel: that’s what it’s all about.
This comment is outstanding.
Yep, I agree!
Voltron was an animated show from the early 80s. For us GenXers who were under the age of 10 at the time, watching it on Saturday mornings along with all the other amazing cartoons (GI Joe, etc.) was essentially the highlight of our weekends.
Brett’s Godzilla art work should be hung in the Louvre!
I thought it was MegaTron at first…
Oh, I’m sorry. Didn’t realize my visual impairment was so off putting to you. Never realized I had that kind of effect on people here.
SEAN – In the long run there could be opportunity for JetBlue and Alaska, but I don’t think there’s anything in the very near term.
As for the art, yep… Voltron.
Thanks Cranky, Not easy being nearsighted.
I think FC has a point as far as letting B6 & AS feed AA on the coasts.
All these things are related. Ever since the news of B6’s reprotection agreement with AA/AS first came out, it was quite clear something is at work here. AA suddenly released a bunch of JFK slots. B6 suddenly found slots to add flights to LGA. B6 deciding to attack UA at EWR. AA allowing B6 to stick around and grow at T-5 in LAX.
AA has realized that it doesn’t have the money to compete at LAX and NYC. So it’s partnering up with AS on west coast and B6 on East coast. The smaller carriers are benefiting big time. In short to medium term, this will undoubtedly help AA in Northeast and with big corporate accounts in rest of the country.
Long term, AA is accelerating JetBlue’s move to become a legacy lite that will be very competitive in the corporate space. Unlike AS, JetBlue actually will be flying TATL. In about 5 years, why would someone in NYC/BOS continue as AA ff when JetBlue can get them everywhere they need to go?
If AA can significantly shed costs and blame Covid (i.e. machinists, etc.), I wouldn’t be surprised if in 5 to 8 years we see a reverse merger with B6 buying AA, similar to AW/US. B6 is definitely coming out as the winner on this one.
How far do you think the A321XLR can go? B6 may be able to fly a lower-altitude bumpy flight to Gatwick in 2-3 years, but they aren’t taking their corporate customers anywhere else (maybe DUB & CDG?) and you have to wonder if they’ll actually go through with JFK-LON now that their customers have access to the largest JFK-LHR shuttle already.
They got 26 A321LR/XLR, so that gives them about 26 R/T assuming that they can schedule it efficiently enough to allow for spares at JFK/BOS. Probably not all of them with be used from JFK/BOS TATL. Even if they get 20 R/T, that should be enough to cover LON/DUB/PARIS/AMS and a few other places out of JFK & BOS.
Would be interesting to see their strategy now. JFK is wide open and they have the slots needed to compete against DL/UA in NYC market now. So, do they continue making BOS their TATL hub or do they focus on JFK? Things might be shifting to latter.
How far can the XLR go? Far.
While the marketing claims never match reality, when the XLR was announced I looked at the claimed range and it was just enough to get you SAN-LON. So most anything interesting in Europe ought to feasible for B6 from JFK and BOS.
And don’t forget that WOW managed to get a standard A321neo from KEF to LAX nonstop once. https://twitter.com/flightradar24/status/956120700233936896?s=21
Note to Jon Snow: In rereading the Vasu Raja interview, he didn’t say American wasn’t going to furlough anyone. He said the airline was committed to avoiding them. That’s a big difference. No management I know of wants to furlough people, but companies have to do what they have to do.
I have to give all the airlines credit for avoiding the urge to simply economize for the sake of economizing. They’re focused on strategic investments and other initiatives that will make them better in the long run. To me, that’s smart. It’s certainly easier for Delta and Southwest to do this than United and American, but all of these companies seem to be committed to using this situation to improve themselves.
There have been businesses that have starved themselves to death by underinvesting. A number of railroads did that, notably the Rock Island and Milwaukee Road. They were so focused on hoarding cash that they didn’t adequately invest in their infrastructure. Neither of those companies exists today.
History can be a good teacher if one takes the right lessons from it. The tough part is that no one knows what the right lessons are in the middle of a crisis.
FC,
Notable also is that AAL keeps its own debt while B6 and AS get to grow their revenues. AA’s debt as a percent of revenue was sky high; it will only grow as AA shrinks.
AA’s strategy of partnering with smaller carriers simply solidifies that there will be no loss of competition if AAL fails in bankruptcy and that the government does not need to intervene in re-allocating valuable aviation assets such as NYC slots or approving mergers.
AA is “willing” its most valuable assets to AS and B6, making it less painful to the world as AA continues to shrink.
And anyone that thinks that B6 is giving up on its transatlantic strategy needs to realize that customers and airlines themselves still view single airline and even joint ventures as much more valuable than the simple codeshare arrangements that AA can do with AS and B6. AA is just helping B6 get a headstart on its own transatlantic plans – and it won’t take 5 years.
And we haven’t heard anything about B6 pulling back their PHL to Florida expansion – further solidifying the overlap of B6 on AA’s network.
Totally agreed on this one with you. JetBlue get a huge gain here.
Rarely, do we see a larger company help a smaller one grow to this degree. And now AA is doing that for 2 airlines.
I am surprised that UA didn’t intervene though. I saw things were going in this direction 3 months ago. UA could’ve been the one partnership with JetBlue. And then, they wouldn’t be facing a buildup in EWR. Now, JetBlue will not only have its own gates + the unclaimed gates at new terminal 1 but also be able to use AA’s gates there?
In the end of they day, AA was the most desperate. They gave JetBlue a deal beyond their own imagination.
Hi Brett,
OK, so leaving out the part about American announcing possibility/probability of layoffs/furloughs up to 25k come October 1st after CARES Act expires yesterday, any word from AA’s union leaders – especially its pilots?
Also, as most flyers know, both Alaska Air and JetBlue have reputations for better overall service on the ground and inflight, with JetBlue offering at least 2” more (as in 32” being its minimum aboard its Airbus A321s, reconfigured A320s and Embraer 195s) in its “Core” (aka Main Cabin) rows, not to mention 34” in the remaining A320s yet to be densified; plus 35” pitch in Even More Space extra legroom rows (and much more, like 37”, in A320s that haven’t be degraded and destroyed yet).
Then there’s JetBlue’s iconic FREE LiveTV seatback IFE aboard ALL of its aircraft, including the Embraer’s and future Airbus A220s, and its FREE “Fly-Fi” inflight wi-fi?
And what about AA’s “Who cares if you get Covid19 because you’re so close to the person seated next to you aboard AA’s fully booked aircraft (where Senators are exempt from policies requiring wearing face masks even as a pandemic is spiraling out of control in the state they represent) featuring those hated and loathed teeny, tiny, 17” wide seats, you’re literally rubbing shoulders, elbows, even possibly hips and legs for 1-16 hours on 1 of AA’s atrociously densified, not to mention, hideously uncomfortable, RJ’s, Boeing 737s, or most horrible of all, AA’s densified 10-abreast 777s and 9-abreast 787s”?
Does JetBlue have a “plan” for that seeing as its long positioned itself as offering “the most legroom in coach” – not to mention its 18” wide seats on the A320s and 321s, even more than 18” width on the Embraer’s, and however wider than 18” the soon to arrive A220s will be?
How exactly does that mesh well wit’s AA’s notoriously horrible 30” pitch rows and skimpy 17” seat widths on most of its aircraft?
Oh, and speaking of 737s – what about pax who book JetBlue coded-flights in the belief they need not worry about flying a 737 MAX after it (finally) returns to scheduled service only to discover their flight is not just “operated by” American, but worse, is a 737 MAX (which, like it or not, a great many people are going to insist on seeing a year or more if problem free operations before being willing to fly); what’s JetBlue’s plan/policies for that going to be?
Finally, is AA going to IMPROVE its overall quality to more closely align with JetBlue and Alaska Air’s?
Or are JetBlue and Alaska going to destroy their brands by racing to the bottom where American has settled in recent years?
Just wondering how the yawning chasm between American’s awfulness and the better reputations that both Alaska and JetBlue are known for is going to be reconciled as the differences are pretty significant, where even in an industry where the overall quality for all of the remaining airlines is nothing to “write home about”, American’s reputation has been consistently among the worst for quite some time?
Now, getting back to American’s unions – THAT’s going to be some party, right?!?!
Is there any “Cranky” branded popcorn available in advance to have on hand when it’s time to sit back and watch the all of the violent twists and turns when the soon to premiere next chapter of “Hunger Games: Airline Edition” gets underway in all its glory in real time?!?! ?
Howard – No doubt there’s a lot in here that hasn’t even been broached yet. The product differences are all minor in my mind. JetBlue already interlines and codeshares with dozens of international carriers that have completely different onboard experiences. That’s the nature of partnerships, and so far no airline has decided that consistency in a partnership makes any difference.
I did ask about onboard product and both Vasu and Scott said they’re open to those ideas for the future if it makes sense, but I wouldn’t expect much.
The reality is that today you have people in New York who can choose United or Delta for their global needs or they can cobble things together with JetBlue or American and others. If people like those airlines, then they will now have more reason to work with them. It provides a third option that can get people where they need to go. All the other stuff to me is minor. If they aren’t happy, then they can just switch elsewhere and then maybe the airlines will have to make changes.
CF
Very interesting deal for AA and B6, but curiously no mention of EWR.
With B6’s recent announcement that they are starting MINT service from EWR to the West Coast, it make one wonder if this included in their deal, it may make UA a bigger participant in the dynamics of how things play out.
Does it include B6’s EWR MINT flights?
Right from JetBlue’s own released
http://otp.investis.com/clients/us/jetblue_airways/usn/usnews-story.aspx?cid=981&newsid=69683
JetBlue will grow in greater New York City, adding flights at LaGuardia (LGA) and Newark (EWR), while also increasing its presence at JFK for seamless connections to American’s expanded international network. JetBlue plans to enhance service to strategic markets on the East Coast, West Coast, and in the Southeast, building on JetBlue’s recently announced service between EWR and nine markets, including Mint® service to Los Angeles (LAX) and San Francisco (SFO).
EWR is mentioned prominently there. UA is not going going to like this.
This caught my eye… JetBlue is not joining oneworld® or the AA/IAG Atlantic Joint Business Agreement and will continue with plans to independently launch and operate transatlantic flights to London in 2021. Meanwhile in the same press release AA is going to restart service to MAD & add TLV, a route that DL has been flying for quite some time. Oh, lets not forget that this is El Al’s bread & butter route.
Could we se B6 joining one world at some pointe? I think this press release just might open the door for that
tvmccabe – Yep, Newark is a part of this for sure.
Thanks, CF
American’s recent alliances speak volumes to their weaknesses and provides a glimpse into their future. AA shrinks LAX/JFK/BOS significantly partially offset by the Alaska and JetBlue alliances. Meanwhile, AA turns their primary focus to DFW and CLT with a dose of other hubs thrown into the mix.
JetBlue’s LAX move now makes more sense.
Yes it does. Amazing how in just a few days how JBLU’s move from LGB to LAX goes from being a headscratcher by some to being a stroke of brilliance. They see AA’s weakness as does everyone else & they struck a deal that ends up being anon-zero sum gain at first, but could prove to be a blockbuster should AA falter. Same for AS as well.
DesertGhost – I still am not convinced that JetBlue’s moves make sense in LA. This deal doesn’t include LA, and I think Alaska might find it problematic if that were to change. Meanwhile, Alaska is sitting on top of JetBlue on the Bozeman route. The competitive spirit is still alive.
American is far better off tying itself to Alaska in the west than it is with JetBlue. There is still no reason for JetBlue to be operating these flights.
That’s why I wrote “more” sense. But you may be right that it doesn’t make much, if any, sense.
I think it may appear that this move by B6 may make little sense at the present time , but perhaps they are playing the long game & are setting themselves up for that as is AS. B6 is getting ready to pounce on slots & gates being vacated by AA.
Lets not forget LAX is also preparing for the Olympics coming to the area in 2028 & that requires terminal reconstruction as well as other transportation projects across the metro area.
JetBlue’s move at LAX is very strategic. They will be very busy expanding NY/NJ the next couple of years, which will finally give them the network they need to compete for top dollars on the business market. By the time they finish these adds in 2 or 3 years, business demand will be back and they will be flying to Europe. It will probably take that long to also build Boston to 200.
LA Basin and South Florida will be the most important part of building their network outside of Northeast to grab more of the top corporate accounts. Think about how many of these big New York firms have offices in California and south Florida.. Without a decent network out there, hard for JetBlue to really compete for some of that business. So building up LA Basin and South Florida is very important in their network. And also in their drive to be more than a regional carrier.
So starting 2023, they will shift focus onto LA Basin and South Florida. And also finish building their presence in Boston. If they play this right, they could be the largest carrier in NY and Boston by 2025 and second largest in NJ. And they will compete for the top dollar clients in NY with the legacy carriers.
That seems to be very good reward for losing money on 20 to 25 flights on west coast. For the next 2 years, they probably will stick to around just 10 flights a day in west coast. That’s not a lot of flying.
And also considering how many flights they will have between NY area and LA Basin, is it really that much sacrifice to try to build customer base in LA Area to improve their performance on JFK/EWR-LAX?
In the short term, everyone is going to be loss-making and AA/AS/B6 just came up with a plan to lure customers. And this will pretty much make them the most significant players at all major US airports.
One thing is sure – DL got screwed up BIG TIME!
@KS,
AA has cobbled together a plan to leave its money-losing markets to multiple carriers with whom it can’t legally coordinate anything. It is simply walking away from money-losing markets and choosing the competitor that it thinks will provide a chance of leaving a few crumbs. AA’s relevance in the largest markets in the country have been under attack for years; ORD is now essentially just a domestic operation to UA’s benefit and now its LAX, LGA and JFK markets leave DL in an even stronger position in NYC.
AA can’t negotiate corporate agreements with AS or B6; those passengers will be shifting their business to DL and UA which still will operate integrated nationwide networks. And corporate travel will return far before AA can put it can convince customers to fly B6 and AS.
And, again, let’s keep in mind this all involves a small fraction of AA’s network; the largest remaining portion of AA’s network overlaps with DL which has been very successful in winning over corporate customers, even in markets like DFW.
And let’s not forget that AA employees are watching their network being given away to low cost competitors even as they receive notices that tens of thousands of AA jobs being eliminated.
AA’s system revenues are far closer to DL’s than anyone else – and much of the rest of its is in play, esp. as DL develops its joint venture with Latam.
The AA-US merger never delivered what was promised. Covid is simply forcing AA to admit that it can’t continue to push the narrative of being a global competitor to DL and UA.
Let’s check back in a couple years but, despite what Vasu thinks, history will show that AA has written its own obituary with its moves over the past month.
Tim – American can negotiate corporate deals that include Alaska and JetBlue flights.
Cranky
AA can never do anything right that would meet Tim’s approval.
Reading his comments One feels like it is best that AA shuts down so that darling Delta could have its way. It’s constant doom and gloom. Nothing but cold water. At least give them (AA)credit for the effort.
on a codeshare basis only. They can’t negotiate prices for B6 as the operating carrier.
Again, AA is simply cobbling together a network to get rid of the money-losing parts of its network.
No carrier has ever codeshared its way to dominance in markets that other carriers can serve on their own metal where they can control the whole revenue experience. If you believe otherwise, I would love to hear it.
DL and UA have the advantage of offering holistic, integrated networks while AA is trying to cobble together codeshares with competitors that will use AA for what AS and B6 will get where they can
And B6 will still grow in markets such as PHL where the cost to AA is far greater than the codeshare revenue AA might win in most NYC markets. And if B6 chooses not to start those markets after announcing them and today’s announcement, the DOJ will certainly want to chat.
@ryby
America is reaping the consequences of failing to run a more financially responsible airline for six years after the US merger, convinced that money was cheap and AA could afford to fly routes which I and others knew were money-losing. DL and UA aren’t chopping their network with new announcements every week, veiled under the guise of “we’re cooperating w/ airline X to extend our network.”
Whether you can admit it or not, DL spent the last 10 years strengthening its financial position relative to AA and UA – and DL will gain at AA and UA’s expense with AAL’s announcements today some of the best news DAL’s sales team could possibly receive.
Perhaps CF’s next interview can be a roundtable w/ AA employees and get their opinions on today’s announcements, even as they process their WARN notices
“DL which has been very successful in winning over corporate customers, even in markets like DFW”. And yet, DL chickened out of its plan to launch SEA-DFW, both markets where they were killing AA? This is one of the finest example of the extent of DL fanboys’ imagination of the imaginary DL magic kingdom. Next, they will be saying DL is giving AA a run for their money at CLT.
you do realize that the country is fighting a virus-induced 90% drop in revenue in the second quarter?
Don’t suppose you think that enormous list of CANCELLATIONS of AA routes has anything to do with any of this?
DL did make sure DFW-LGA and DFW-LAX were some of its earliest routes to return.
Along with DAL (Love Field) to Atlanta just so that Southwest and the City of Dallas knows that DL isn’t giving up on its commitment to pursue more access at Love Field.
Delta will never get more access at Love Field unless they can buy the two gates from AS. They had the chance to buy the two gates from United and passed. There lucky to even still be at Love field.
@Paul,
the fact that Delta didn’t buy any gates at Love Field and yet WN has failed to get Delta to leave proves that Delta’s strategy of requiring the City of Dallas to provide access to carriers such as Delta that did not have gate leases at the time United sold its two gates to Southwest has been successful.
I don’t think DL screwed up. I think what AA did was a solution to a problem AA had. AA is addressing these problems by shifting over unprofitable flying to partners. It address and exposes AA’s problems at the same time, and let’s not forget this is not a profit sharing venture. Therefore, partnerships like these have historically not worked out long term due to conflicts of interests.
Many here in recent months have opined that AA needed to shrink do to their poor financial health & the partnerships are a way to do that. Now that is only part of the issue as we all know the maxim “you cant shrink to profitability.” So therefore something else must be done such as restructuring the business or perhaps closing one of the hubs.
It’s too bad years ago American under Bob Crandall chose not to pursue People Express. If they had, AA would now dominate EWR and have Terminal C.
Lots of butt-hurt Deltoids on here. It’s almost Pavlovian how quickly the response from them comes. Cranky posts anything about AA, and within minutes comes the screeching about debt levels and routes being discontinued and all the tired old screeds that you find at the top of literally every AA post for the last three years.
What did AA do to these people? Why does every post about American or United have to turn into an incessant, bleating reminder of how much better Delta is?
(OK, maybe just one butt-hurt Deltoid.)
I don’t know about you but I have been following the US airline industry for nearly 50 years. I happen to have annual reports to stockholders for both American and Delta for 1980. Back then, there were lots of pretty pictures and nice paper so it highlighted the best of each company. American was significantly larger than Delta and also had set on a path to be an immensely powerful airline.
Fast forward 20 years and after 9/11 and the wheels started falling off the airline industry. American delayed filing for bankruptcy and tried an out-of-court restructuring. They ultimately didn’t cut their costs and lost significant market share over the next decade to young B6 esp. in NYC, AA’s former home.
In the decade after the 2008/09 financial crisis, and as AA was in bankruptcy, Delta started gaining share at AA’s expense in NYC.
After AA’s bankruptcy and merger, AA had just 2 years that it posted industry average profits. And then the market share losses started growing – mostly to United in Chicago and Delta in NYC and Los Angeles.
AA spent the last 5 years telling stockholders that money was cheap so it was ok to run up debt to buy new airplanes and buy back more stock than any other US airline – and yet AAL stock fell more fell more than any other airline’s. American has been the least profitable airline for years on a margin basis and had the highest costs in the industry even before covid-19 despite being the most recent out of bankruptcy.
Covid struck the airline industry and AA is now forced to get serious about eliminating its money-losing routes and so a wholesale gutting of AA’s presence in the nation’s top markets is now underway.
Whether you want to accept it or not, AA has decided to give away its presence in NYC and LAX to codeshare partners, hoping it can hold onto something of a presence but unable to lose the money it has lost for nearly 20 years to maintain a strategic presence.
Vasu is simply trying to sell a roses in a box for what anyone can clearly see is a wholesale withdrawal from the nation’s key remaining markets even as Delta starts building a hub in Miami, meaning that Delta and United, but predominantly Delta will serve nearly all of American’s top markets – while hoping that codeshare partners, at best, can retain something of what American once did very well.
There was something special in the air at American at one time.
Anyone that doesn’t recognize the absolute strategic capitulation that has taken place over the past month simply does not want to see reality.
I don’t want to rain on what is clearly a very hard period for American employees but I can’t sit by and pretend that AA is “becoming instantly relevant” as it cuts scores of its own flights, lays off its own employees, but holds onto the debt that was certain to sink American even if it could have retained its presence in NYC, LAX and MIA.
No, it’s not butt hurt. It’s really abject pity in seeing what has become of American over the past 40 years. The decisions AA management is having to take now are the natural business consequences of failing to properly manage one crisis after another – and now having no choice but to sell out American’s future and forever close the proudest chapters of American’s history to survive a crisis that no one expected would take place – even though history shows that airlines have been hit by deep crises over and over again.
I’m sorry if I have to break the bad news that this really is not unlike what happened at Eastern and TWA and Pan Am. All died from a thousand cuts, all cloaked as the next big new thing. If you have watched airline history as I have, you’ve seen it play out. To pretend that AA is not going down the very same path is simple denial.
“Yes, it will be a pain to connect between Terminals 5 and 8, but as Scott noted, JetBlue feeds all kinds of airlines at JFK at different terminals successfully today”
let’s see….. HA TP CapeAir EI are already co-located at JFK T5. So it’s only a handful of inconvenient connections involving EK to Dubai, SA to JNB, and FI to KEF.
PANYNJ 2019 annual report shows JFK volume : B6 : 14,395,334, AA 6,351,874….. yea….. a handful of inconvenient connections involving JNB DXB KEF is sooooo comparable to padding 44.1% to B6’s pre-pandemic size at JFK.
First half of Cranky’s statement is true on its own, second half is also true on its own, but by lumping them into one single sentence, he attempts to have the reader (incorrectly) believe the second half has any relevance to the first half, and that the issue raised in the first half will become moot inside the reader’s minds. Must be marketing-n-public-relations-speak at its very finest.
Maybe cranky also forgot how long the sky corridor is connecting AirTrain T5 to the terminal itself ?
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As for most # of flights and most pax, maybe someone should count the insane level of duplicate and overlap of flights and volume on JFK/EWR/LGA – MIA/FLL/PBI.