SpinDoc said:
While it may be true that the company is overstating
the "ask" in the negotiations, maybe they are trying
to finally fix the cost problems that have been
evident with US for many years.
The thing is that while the company is going after labor like there's no tomorrow, they seem to have no interest in addressing all the other costs at US Airways, Inc., which are just out of control. Last quarter, the company's mainline ASM cost was 11.18 cents, including fuel. The labor component was 4.17 cents -- leaving 7.01 cents in non-labor costs. Or,
even if the employees worked for free, US Airways' costs would still be 1 cent per ASM higher than jetBlue's.
Let's say the company was truthfully only asking for $800 million in wage concessions (unlikely) per year. That works out to $200 million per quarter, and that would have put UAIR's mainline labor outlay at $364 million, or 2.69 cents/ASM. The company's ASM cost would
still be 9.70 cents -- higher than B6, FL, WN, TZ, F9, CO, and AA, while only marginally lower than DL and NW.
I don't see how it can be put more plainly: the company MUST reduce its non-labor costs, but management seems to have no interest whatsoever in doing so.
If they can get huge
givebacks from the unions now, maybe the company
will prosper and in 5 years, the total package will
be better than other legacy and low cost carriers.
No it won't, because the company's contract proposals all expire in over 7 years, in 2012. Even if the company prospers, there's no guarantee that labor will see a penny of it, though you can be certain that the bonus money will flow freely at CCY.
And if the company doesn't fix its non-labor cost structure, the LCC's will still be eating US Airways' lunch in five years. Remember, jetBlue's total costs are lower than US Airways' non-labor costs.
The company is not bluffing. CH11 is coming on
Sept. 12. Maybe it's time for everyone to recognize
what is truly needed to keep this company from
CH7.
In spite of all the lipservice, the progress toward fixing what ails the company since bankruptcy was filed over two years ago has been poor -- aside from extracting more and more concessions from labor. They had six months to come up with a response to WN's entry into PHL and fare-matching with "GoFares" was the best they could do? It's astonishing that the company's post-bankruptcy business plan was based on limited low-fare competition in its core markets when it should have been clear that WN, FL, and B6 would continue to expand in US's home region.