Frontier Takes a Stab a November, Delta Swings at the Competition, and United Whacks International

Sep 14, 2020

More Reading on This Topic: Frontier, Schedule Changes

Happy Monday, everyone. It was a quiet week in Airlineland as most residents stayed behind the scenes working on future plans, but that didn’t stop the Animal from putting out a first stab at November plans.

Meanwhile, the Eagle made a couple minor but possibly telling changes in the mountains, the Widget made more friends in Africa, and the Globe gave China, Oceania, and even some South American flying a haircut through the winter.

Oh, and did I mention Ms Blue? Well, that saucy little minx made a big splash by announcing a slew of new service last week, but that is worthy of its own post. I’ll cover that tomorrow. For today, however… Like sands through the hourglass, so are the skeds of air lines.

American Grows Aspen… But Not Everywhere

It was a quiet week for American, but that doesn’t mean there was nothing to report. The airline tactically bumped up some flying in a handful of markets ranging from Florida (Dallas/Fort Worth to Sarasota, for example) to the less likely — American will go from 1 daily to 2 in DFW to Yuma this winter. But Aspen saw the most action of all.

The ski destination gains additional frequencies from Chicago/O’Hare, DFW, and Phoenix. But wait, it’s not all good news. American’s already limited schedule from Los Angeles during the holidays is cut even more. That means there’s now one less flight operating December 17 through January 6. This is all minor, but does it reflect LA’s diminishing importance in the network? It feels a little like the “death by a thousand cuts” strategy while Phoenix continues to bulk up.

Delta Grows Africa, Swings at Other Airlines

It was only last Wednesday that United announced it would begin flying from Newark to Johannesburg and from Washington/Dulles to Accra and Lagos. Could Delta have already responded or was this just a happy coincidence? Delta loaded moves in all of these markets over the weekend.

Atlanta – Johannesburg goes from 5x weekly to 1x daily starting in March 27 (the beginning of the IATA summer season)
Atlanta – Lagos goes from 4x weekly to daily after the holiday season (when it’s already loaded as daily)
New York/JFK – Accra goes from 5x weekly to 1x daily starting October 1
New York/JFK – Lagos restart moves up from March 29 to December 11 and will operate 4x weekly instead of 3x weekly

It seems difficult for Delta to have put together a response to United that quickly, and if that’s the case, then this growth just reflects what United was thinking. Africa may be a bright spot.

Meanwhile, unhappy with JetBlue no doubt, Delta added the only intra-West market it doesn’t fly that JetBlue announced it would fly from Los Angeles — LAX to Reno — to the schedule twice a day starting December 19. It also begins flying from JFK to San Salvador that day which seems like a market that’s had a lot of action from more than one airline.

There are a handful of Salt Lake routes — Eugene, Medford, and Tulsa — that bump up by one daily frequency this fall and winter. Medford also gets an extra frequency to Seattle.

Lastly, there’s poor Providence. I’m not sure why, but Delta took an axe to the city. Detroit drops from roughly 3 a day down to 2 while Atlanta goes from 3 to 1. Those are the only routes Delta flies from the city.

Frontier Takes a Look at November

Now that September is here, October is pretty much locked in. That means it’s time to start taking a harder look at November. Frontier has done just that.

2020 Frontier % of Flights versus 2019 via Cirium

Frontier didn’t schedule the same sort of backsliding this summer that other airlines did, but it had been pretty stagnant for some time. In October, it ticked up to above 60 percent, and now in November, the first shot is at a high 77 percent.

Is this wishful thinking? Possibly. After all, Frontier tweaks schedules a lot up until the last minute. (Case in point, it cut September a half point last weekend, and it’s already been September for more than a week.) But for now, it appears to be feeling a bit more bullish that things will ramp up.

United Hacks China, Oceania, and South American Flying

United spent last week talking about all the new international flying it would do, but that isn’t ready to be filed yet. No, instead, this week was filled with a lot of international cuts focused on China, Oceania, and South America for this winter.

Chicago/O’Hare – Bejing restart delayed until March 26
Chicago/O’Hare – Sao Paulo restart delayed until March 27
Houston/Intercontinental – Sydney restart delayed until March 26
Los Angeles – Melbourne restart delayed until March 26
Los Angeles – Sydney cut from daily to 3x weekly until March 26
Newark – Hong Kong restart delayed until March 26
Newark – Lima restart delayed until March 28
San Francisco – Auckland restart delayed until March 27
San Francisco – Hong Kong cut from 2x daily to 1x daily until March 27
San Francisco – Melbourne restart delayed until March 27
San Francisco – Shanghai/Pudong cut from 2x daily to 1x daily until March 26
Washington/Dulles – Beijing restart delayed until March 27
Washington/Dulles – Sao Paulo restart delayed until March 27

That is quite the lengthy haircut, but in Australia, it better matches what Qantas is expecting to see happen. And in China, well, that’s a whole different ball of wax anyway with all the political and security issues plaguing the market.

And that’s all for this week’s episode. Stay tuned tomorrow for a look at JetBlue’s moves, and then, come back next week to see what transpires in the next thrilling episode of Skeds of air Lines.

Brett

18 responses to “Frontier Takes a Stab a November, Delta Swings at the Competition, and United Whacks International”

Kevin

Sep 14, 2020 at 6:12 am

RE: DL at PVD

MHT isn’t showing bookable in Oct./Nov, either. My guess is they want to focus on funneling as much traffic to BOS as they can.

That said, ORH-DTW is running 1x daily, soooo….

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1. southbay flier
  
  Sep 14, 2020 at 7:27 am
  
  Somehow Manchester and Providence were considered to be same metro area as Boston, but not Worcester. I think Delta tried to drop ORH-DTW and was rebuffed by the Feds. That route will go next month when the money from the Feds ends.
  
  Reply
  1. Kevin
    
    Sep 14, 2020 at 9:08 am
    
    You’re correct; DL did try and drop it. As for what happens after 10/1? Who knows, but I wouldn’t bet on ORH staying…
    
    Reply
Jason

Sep 14, 2020 at 6:15 am

I think you mean “ski” not “sky” market when referring to Aspen.
Also, the correct name of the city in El Salvador is San Salvador, not Salvador. As I was reading the post, I thought you were referring to Salvador, the city in Brazil, not the city in El Salvador. Then I realized that Delta hasnt flown there and eventually realized that you must mean San Salvador… but maybe I’m mistaken?
Otherwise, thanks for the summary and I look forward to it every week.

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Jon Snow

Sep 14, 2020 at 7:23 am

Did the Nigeria point of sale cash repatriation problem that UA partially blamed for killing IAH-LOS get sorted out? DL’s still going strong, so either they’re living on US POS or Nigeria’s not refusing to repatriate cash.

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MissTheMasters

Sep 14, 2020 at 8:57 am

And now, while still burning $27 million a day, Delta has put its crown jewel, the SkyMiles Program, in play. Evidently, it can get a better deal on that than it can by taking the Loans portion of the Cares Act.

If Delta had directed its free cash flow toward buying down its debt and focusing on building an investment grade credit rating, instead of pumping its share price with billions and billions in stock buy-backs, it would not be in this position today.

Yes, Southwest did it too. But Southwest NEVER jeopardized its credit rating. Southwest never compromised its ability to continue as a going concern. It never laid bare its financial underbelly, unlike the Big 3.

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1. Kevin
  
  Sep 14, 2020 at 9:10 am
  
  DL had been doing the exact things you’ve mentioned- paying down debt, funding pensions, reinvesting in the company, etc. Not to mention returning some earnings to employees via Profit Sharing.
  
  Reply
2. Tim Dunn
  
  Sep 14, 2020 at 10:11 am
  
  Delta has the second best credit rating in the industry after Southwest.
  Delta had the lowest amount of debt coming into covid and already has the lowest daily cash burn per day on an apples to apples basis.
  Delta employees enjoyed the highest profit sharing in the industry for years – far more than UAL and larger than LUV’s on an absolute basis.
  
  Delta has told the Dept. of Treasury that it will not take CARES Act loans. in contrast, American cannot get private sector financing while United’s CEO argues for more government money while adding service to other legacy carrier international markets and standing by while low cost carriers invade United’s primary hubs.
  
  I’m not sure what your post has to do with the schedule announcements but Delta is the largest airline in the world in terms of capacity and has more transpacific capacity than United in October. United’s outlook for Tokyo is diminished with its decision to close its Narita flight attendant base.
  
  It was a given not too far into covid that there would be a rearranging of the airline industry and that is now taking place.
  
  Reply
  1. Tim Dunn
    
    Sep 14, 2020 at 10:12 am
    
    and LUV’s credit rating has fallen, just like every other airline’s.
    
    Reply
    1. MissTheMasters
      
      Sep 14, 2020 at 11:14 am
      
      LUV has fallen one rating level. Delta has fallen two levels. LUV is solidly in the investment grade category. Delta is solidly in the junk category. LUV has been removed from the “Credit Watch” category by Market Watch, meaning its current Investment Grade rating is considered stable. Delta remains in free-fall, as evidenced by the revelation of the SkyMiles mortgage.
      
      You, like so many others, continue to see Delta’s peers as American and United. You seem to think that because Delta’s route structure and complex fleet mirrors AA and UA, that they Delta’s competition. Well, as you like to remind AA and UA, this is a BUSINESS. Delta had a wonderful post-merger opportunity to clean up its balance sheet and build a BUSINESS to last. It could have used those stock buy-back billions to build a mansion. Instead, it built a house of cards.
      
      You like to write that LUV never does well in legacy hubs (except for DEN). Tell us when Delta has EVER invaded a Southwest hub. Look at the map: every time Southwest buys another carrier, it HAS to have a hub in a Delta fortress hub. Meanwhile, Southwest bides its time in Delta’s fortress hubs, while opening up more cities to skim traffic off the Delta hub, while effectively trapping Delta in the hub. Sooner or later, Southwest will put ATL and SLC in a deeply discounted pricing structure. What then? Be glad Kelleher isn’t still around. He would have done so already……just because he could. He loved to compete because he knew it was better for the Consumer and that it made Southwest a stronger BUSINESS. Gary Kelly, on the other hand, is a tactician. He prefers the “Death by a Thousand Cuts” strategy. And Delta is bleeding.
      
      So keep comparing Delta to United and American. Keep boasting that Moe was the boss of Larry and Curley. I’ve got some news for you: they were all Stooges. Unless and until Delta realizes it’s true competition is Southwest – and organizes its BUSINESS to compete with Southwest – it will not find a commanding position in the marketplace.
      
      Reply
      1. Tim Dunn
        
        Sep 14, 2020 at 11:56 am
        
        First,
        again, I am not sure other what you are contributing to the schedule discussion but, I’ll bite.
        
        There are a number of cities where Southwest was larger than Delta but isn’t any more – RDU and SEA for starters.
        
        And based on October schedules, Delta’s relative position in its most recently announced group of focus cities – AUS, SJC and BNA is the same or better than it was before covid, with the exception of BNA where Delta is the 2nd largest airline, surpassing AA.
        
        DL has clearly grown in a number of Southwest markets including a number of cities in the Midwest.
        
        WN is a smaller airline in Atlanta as well as DTW, MSP and SLC than it has been in the past; there are simply no facts to support your notion that WN will trash the pricing structure. If they didn’t do it before, they won’t now as much as you want to hope otherwise.
        
        And anyone recognizes that AA DL and UA are each other’s most direct competitors precisely because no other US carriers have the global networks.
        
        So, yes, Delta not only competes successfully against WN but also against its most direct global competitors.
        
        and WN’s credit rating has fallen; only by picking and choosing data points and getting basic facts wrong do you even succeed at discussing specific carrier financial metrics. ALL carriers have had their credit ratings dropped. DL still has access to the private financial markets and isn’t asking for more government money. They are paying about 2% more for money than WN but since AA can’t even get private loans any more and UA says it will need more government money, the notion that DL is at a disadvantage is simply not supported by facts.
        
        and in case you haven’t figured it out, DL and WN will both feast on AA and UA markets for years to come; they both will take enough from each other to build viable networks but they are both smart enough to realize where their greatest growth opportunities are – not in each other’s back yards.
        
        Reply
      2. DesertGhost
        
        Sep 14, 2020 at 12:35 pm
        
        In simple terms, stock is a form of financing. It differs from debt (EETCs, bonds, notes, etc.) because the proceeds from stock don’t have to be paid back. Stock is safer than debt for the company, but riskier for the investor. Just because the money raised from selling stock doesn’t have to be paid back doesn’t mean it can’t be. Buying back stock is really no different than paying back a loan from the company’s point of view. There’s nothing inherently evil or insidious about stock buybacks.
        
        Reply
  2. DesertGhost
    
    Sep 14, 2020 at 11:54 am
    
    Based on the recent Cowen call, your assertion that American can’t get private sector financing at all is inaccurate. It can, but the government’s terms of LIBOR + 350 basis points is a much better deal than it can get in the private marketplace given its debt load and its need to service that debt. Obviously, American and United’s options are more limited than airlines like Delta and Southwest that had better balance sheets and lower debt service payments going into the pandemic. Delta and Southwest apparently can do about as well or better than LIBOR + 350 in the marketplace and are taking advantage of that situation. Good for them. All the airlines will be in trouble at some point if demand doesn’t pick up. And when it comes down to it, bankruptcy can’t solve a lack of demand and revenue. American and United will simply have to file for Chapter 11 sooner than the others. And if it gets really bad, some people might get their wish to see American (and maybe United) liquidated. Alternatively, this mess might bring about international mergers. Or … heaven forbid … “AmAir” (Alitalia?) may be closer than we think. Yikes!
    
    Reply
    1. Tim Dunn
      
      Sep 14, 2020 at 12:06 pm
      
      If AA hasn’t gotten recent private sector lending, then it can’t regardless of what it says.
      
      And there are plenty of people that have no interest in lending to an airline at a lower interest rate than what the private sector will do; UA’s comments last week probably sunk any chance of further loans while DL’s move today cemented that the industry has more than adequate access to private markets.
      The industry needs to shrink to match demand; there is no justification for any airline not making the tough decisions to cut their size and costs. The American people do not need to provide any further support for airlines.
      And it is far from clear that the Treasury will provide any further loans to AA because others are not taking their share of the loans.
      
      There hasn’t been a single major crisis that hasn’t resulted in a chapter 11 filing at least for one or more US airlines and often led to liquidation.
      
      There is no reason to think that the government should continue to prop up airlines like AA that were not profitable on a large part of their international network; carriers like AS NK and B6 can all grow in AA domestic markets (along with DL and WN).
      
      DL and WN are very likely to provide more competition in Miami than AA has provided for 20 years.
      
      There is a point where it is time to admit that AA is not providing any compelling contribution to the US global air transportation system and their continued shrinkage in their top markets only makes it easier to let other carriers replace them.
      
      UA is going to keep swinging for now but its domestic system is increasingly being overtaken by low cost carriers, making it look more and more like Pan Am which couldn’t gain an advantage domestically and so kept flying international routes to try to have significance – but to no avail.
      
      Reply
      1. DesertGhost
        
        Sep 14, 2020 at 12:49 pm
        
        I’m almost certain (99.9%) that I saw where American got a loan recently from Goldman Sachs and also issued some stock. I believe the interest rate was close to the double-digit range, which is a lot worse than LIBOR+3.5% (about 5.5% to 5.75% overall). Derek Kerr’s remarks to Helane Becker indicated that they’re still looking at alternatives other than the government, including a stock offering. But they don’t want to do anything if they don’t have to. All of the airlines, even your beloved Delta, will be toast if this goes on much longer. When Garry Kelly starts talking like that (as I saw n Airliners.net), you know things are bad.
        
        Reply
        
        Tim Dunn
        
        Sep 14, 2020 at 2:03 pm
        
        Yes, you are right. I was referencing new debt in the past month or so.
        It’s not about anyone’s beloved anything.
        It’s simply about financial strength.
        
        You and others don’t want to acknowledge that Delta spent 10 years cleaning up its balance sheet and was in a much better position than AA or UA before covid.
        DL’s financial metrics were much closer to WN than to AA and UA.
        
        The difference in financial strength will matter in the next few months as airlines jockey for market position.
        It was a given that WN was going to look for opportunities to grow using its financial strength.
        
        Most people haven’t done the schedules analysis to see that Delta is doing the same thing; its relative market strength is no different than it was in its top 20 markets with a few exceptions –
        1. DL has added back more capacity (slightly so) in BOS and JFK than B6 and that is significant since DL is operating a small part of its long-haul international network although more comes back in October.
        2. DL has become the largest carrier at LAX and appears set to remain that way
        3. DL has overtaken AA at BNA, a market where the two were neck in neck for months but is an example of the reality that AA’s stronger hubs are not enough to offset its weaker hubs so that AA’s domestic system advantage is eroded because it cannot and is not using all of its hubs to the same proportion as it did pre-covid. in contrast, ATL, DTW and MSP are all operating at about 60% capacity while SLC is one of the strongest US carrier hubs in terms of capacity that has been returned.
        
        Even though some would argue that DL (and WN) are capping load factors, that is an arbitrary and changeable factor and DL is revising its cap upward. The cap helps DL and WN to revenue manage to get higher fares in a low demand environment while using larger aircraft – DL has heavily restored its 737-900ERs and A321s, both of which are newer and more fuel-efficient.
        
        to your point about stock buybacks, you are absolutely correct. The difference is that buybacks should only be done when balance sheet strength is good enough. AA had negative stockholder equity even before covid while DL bought back the lowest percentage of its stock as a percentage of free cash flow than AA UA or WN. DL did invest in other carriers instead of buying back as much of its own stock – and some of those equity investments are at risk. But DL has gotten joint ventures as a result of those investments and not one of those JVs are not at risk of ending. Also, DL’s losses on equity investments in other carriers become tax assets while there is no financial benefit if your own stock falls below what you spent to buy it back.
        
        There is a shakeout coming in the airline industry and it will be seen first in market-specific airline strategies. While F9 and B6 are stabbing at anything they can to generate some revenue, AA and UA clearly realize that some of their most choice domestic markets are being targeted by other carriers but they have little ability to fight to get it back.
        
        The fact that DL’s capacity strategies – and likely share to follow – looks more like WN’s than AA or UA’s shows that DL is far better positioned to ride this out and grow in the process than AA or UA.
  3. henry LAX
    
    Sep 18, 2020 at 8:21 am
    
    @TD : “Delta has the second best credit rating in the industry”
    
    https://www.moodys.com/credit-ratings/Delta-Air-Lines-Inc-credit-rating-815082757
    
    “Delta Air Lines, Inc.: Update following affirmation of Baa3 senior unsecured debt ratings, SkyMiles debt issuance”
    ” Moody’s affirms Delta Air Lines’ Baa3 senior unsecured rating, assigns Baa1 senior
    secured rating to SkyMiles IP Ltd.; outlook negative”
    
    Talk about grading on a curve. The next notch below Baa3 is speculative/junk rating.
    
    Reply
David SF eastbay

Sep 14, 2020 at 10:12 am

For Los Angeles-Aspen, AA must know the rich and famous who travel to Aspen use private jets, and the peons to Aspen can just travel via PHX since most may just travel to nearby mountains or up to Tahoe to ski.

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