News and notes from around the interweb:
- US hotel occupancy back near its 2015 all-time high
- Alaska Airlines companion certificate from co-brand credit cards now works on Virgin America flights too.
- New 2.5% cash back card coming in April $0 fee the first year then $59, and actually gives 3% in year one.
- Status report on American’s international first class lounge at New York JFK. I love the lighting, I’ve heard it gets too busy and will only get busier once business class passengers get access. Flagship Dining expected to begin in May.
- Delivery of Iran Air’s third new Airbus plane was delayed, reportedly due to ‘banking restrictions’.
Iran Air A300, Copyright: rebius / 123RF Stock Photo - Doug Parker thinks American Airlines can beat Delta thanks to new aircraft which is sort of a strange claim considering the airline has viewed itself as saddled with orders placed by legacy American executives before the merger — and because Delta can less expensively capitalize on the used aircraft market and distressed sales by manufacturers. In other words, the claim is now that we’re stuck with all these expensive planes might as well claim it was what we wanted all along.
American Airlines Boeing 787-9
When did Parker say he was being “saddled” with planes? If he said it, he quickly changed his mind, because US Airways management made no effort to renegotiate those orders when it effectively bought AA out of bankruptcy.
Parker sometimes gets criticized for the extra debt being carried as a result of the new fleet, but most of the more successful Wall Street analysts say it’s a good financial move, because the debt is backed by valuable real assets and the interest rate on these loans is very low.
I’m not an accountant or an airplane lease expert, so I can’t offer a definitive opinion on this subject, but anyone who thinks Parker is some rube about these things is foolish. He has consistently used “finance tricks” to outmaneuver his competitors. Like Delta, United and Southwest all lost billions on fuel hedges, before deciding that Parker was right about them (basically, the brokerage houses almost always won on these bets regardless of which way fuel prices moved).
So if Parker says the new planes make good financial sense, I think it might be wise to believe him. Cynicism isn’t always a winning investment strategy. Relying on proven results usually is.