Management's Transformation Plan has actions designed to increase revenue and lower unit costs. 20 points of the new business plan are:
1. Increased aircraft utilization from an averge of 10.0 to 11.5 hours per day. This will improve productivity of employees, aircraft, and facilities, both in the air and the ground. This is the single largest cost reduction item and is only possible with new labor accords.
2. More point-to-point flying with the increased utuilzation and major point-to-point schedule changes to occur after the slow winter season, probably around President's Day holiday to take advantage of the busy travel season thereafter. New non-stop service to be flown to key business and leisure markets from key East Coast focus cities, which can support O&D traffic with higher yields and load factors.
The top ten U.S. domestic O&D markets in regard to revenue are New York, Washington, D.C., Chicago, Los Angeles, Dallas, Atlanta, San Francisco, Boston, Denver, and Houston. Interestingly, Philadelphia is number twelve, Charlotte is number fifteen, and Pittsburgh is number sixteen.
In addition, the company plans on operating flights from US Airways key Northeast cities to all key leisure markets with Low Cost Carrier (LCC) type aircraft turn times and utilization.
3. Increased Caribbean, European, and Latin American expansion. The plan envisions expanding European and Caribbean service, with potential new transatlantic routes from Philadelphia to Star Alliance hubs of Warsaw (LOT Polish Airlines), Vienna (Austrian Airlines), Oslo & Copenhagen (SAS Scandinavian Airlines), and Birmingham (BMI). Note - BMI’s main operational base is London’s Heathrow airport.
New Caribbean/Latin American destination, which could include service to Panama, Nicaragua, Honduras, Carracus, Bogota, and Liberia, Costa Rica.
New Charlotte-Barbados service. In addition, US Airways will increase nonstop Boston-Aruba service in November 2004, and add a second nonstop Saturday flight between Charlotte and St. Thomas in December 2004.
4. Increased code share opportunities. New code share service to the Czech Republic, Denmark, Finland, Iceland, Luxembourg, Malta, Norway, Poland, Romania, the Slovak Republic, and Sweden, and beyond.
5. Entered into a wide-ranging cargo agreement with Lufthansa in July 2004, through which Lufthansa will assume cargo capacity marketing and freight handling for US Airways' flights from Europe to the U.S. As part of the agreement, the carriers will combine operations at all European locations and in Charlotte, Philadelphia, and Pittsburgh, further enhancing the carriers’ synergies and cost efficiencies at those locations.
6. Hub re-focus and the transition of Pittsburgh to a focus city. Rolling the Philadelphia hub, adding two banks to the Charlotte hub, and reducing relatively high cost Pittsburgh hub operations and then re-positioning aircraft to other opportunities. This will lead to improved employee productivity and less misconnected passengers, lost bags, and flight delays.
7. Near completion on Philadelphia International Airport baggage handling improvement project, including redesign of the baggage system for terminals B & C and international baggage recheck. Completion of the full project is expected by the end of the summer.
8. Lower, simpler fares with GoFares program. With a less complex fare structure, Reservations talk time goes down and productivity increases. The Sales Department will have fewer complex contracts to manage, resulting in lower selling costs. Fewer customer complaints for Consumer Affairs to handle.
9. Consolidate the flight crew training centers from McCormack, Carnot, and the Pittsburgh simulator center to the Charlotte Flight Training Center effective November 1. This will create economies of scale, reduce lease expense, and increase productivity.
10. Sell excess facilites such as excess Pittsburgh flight training equipment, two simulators (B737 & A320), and Orlando Reservations facility.
11. Complete planning and then implement Star Alliance joint purchasing program to reduce acquisition costs.
12. Continue with Star Alliance partner facility and handling integration to reduce costs.
13. IT improvements. New web site to be introduced shortly, more Kiosks, boarding pass readers, and increased use of the internet to boost online sales from 10 to 20%. Scanners will be available at 18 airports in the U.S. US Airways anticipates adding more than 100 self-service kiosks by the end of the year for easier check-in. This will help reduce distribtion costs.
14. With advertising driving more consumers to usairways.com, the amount of fees the company pays to CRS systems will drop.
15. Installing an EMB-170 and CRJ-200/700 simulator in Charlotte to reduce contract training expense.
16. Online paperwork and automation through the hub to reduce unit costs.
17. Increased Embraer Division and other RJ growth to bring more feed and revenue to the company. Potential ALPA relief in managing the pilot staffing requirements for the EMB division over the next four months, since the Company plans to aggressively add new EMB-170 aircraft to the EMB division of US Airways.
18. Merging Piedmont and Allegheny to lower unit costs.
19. Bombardier and US Airways reached an agreement to extend the delivery schedule of its regional jets order by a year, which will lower near-term capital expenditures. In addition, the agreement permitted the company to upgrade an order for 23 50-seat CRJ200 jets into 70-seat and 90-seat (with ALPA scope relief) versions of the aircraft. The revised mix calls for the delivery of 37 CRJ200 and 48 CRJ700 or CRJ900 jets, Bombardier said. Deliveries are scheduled to be completed by March 2006, instead of April 2005.
20. High density B757 seat configuration reducing First Class from 24 to 8 seats ad re-focusing these aircraft to operate in high density, low yeild leisure markets. The new configuration will boost revenue.
Respectfully,
USA320Pilot
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