Crisis? What Crisis?
The CEOs of American, Delta, United, and Alaska say they're not particularly worried about high fuel prices.
Dear readers,
I've returned from Tokyo, where friendly ANA executives sought to explain to me why removing seats (to add giant premium suites) and offering 34-inch pitch in economy class is good for business. Their rationale (which might be true) made my brain explode, as I thought about how Ben Smith might choke when he saw the airline’s new Boeing 787-9 LOPA.
That's a story for another time, because on Tuesday, JP Morgan held its annual airline conference in Washington, D.C. Insiders look forward to it because Jamie Baker doesn’t cozy up to CEOs with canned questions they have already answered 10 times. He can make executives look dumb or inept, but they must show up anyway, because he’s so influential.
Today, I will focus on how top executives from the four U.S. global network carriers handled Baker’s1 aggressive questioning. All are feeling a pinch from fuel prices, (United expects to pay about $400 million more in the first quarter than expected) though CEOs from what I’m now calling the Big Four — Alaska, United, Delta, and American — expressed optimism they’ll recover costs by raising fares.2
We won’t know if they can for several months. However, I think three of the four CEOs did a nice job of communicating why their airlines have enough strengths to attract motivated customers who will pay more.
The fourth airline might do OK too. But the CEO of that airline couldn’t tell Baker why his carrier had a moat that would protect it. It’s a potential problem as a carrier without a competitive advantage might struggle if demand wanes.
Which CEO struggled to define his moat? Read on to find out. And stay for nuggets from each of the four presentations.