American Airlines has cut its international schedule by 75% and its domestic schedule by 30%. Load factors are dropping. People aren't buying tickets. The one thing American Airlines has too much of is seating capacity. And the one thing American Airlines has too little of to make it through this crisis is money. That's why they're running to the government for assistance.
And yet they're continuing their 'Oasis retrofit' program where they replace the interiors of domestic aircraft, spending money to:
By Tuesday of last week United Airlines had already announced they were slashing capital spending by 50% for the rest of the year. They're essentially making no discretionary investments, and saying not to expect capital investment to come back for 2-4 years. And things have gotten worse since then. Remember, this was before the ban on travel from Europe to the U.S. for anyone that has been in the Schengen countries of Europe plus the U.K. and Ireland for the last 14 days.
Yet American Airlines keeps spending money on planes, and not to make them more appealing to attract customers either. As of this writing six planes are in the midst of retrofit across two locations.
Two of these Boeing 737s are returning to service right away. So let's assume there was no stopping the work at this point. Perhaps these two and two of the planes entering modification now are essentially 'overlapping'. That leaves four modification lines open and four planes they're currently investing capital spending in. At the J.P. Morgan conference last Tuesday American said they intended to continue retrofitting the 737 fleet this way even accounting for coronavirus.
Let's be 100% clear: American Airlines is spending money to make planes less comfortable for passengers. They don't even need the extra seats now. And they're asking the government for money, effectively asking taxpayers to pay for the airline's 'densification' program. How does the Board put up with this?
All Rights Reserved © 2024
