Exit Financing & The Future

[diogenes]

R.U.D.,

I certainly subscribe to the theory that U will not make operational changes until labor costs reach their target, and I believe that target has not yet been met.

So far, I have learned to expect the worst with management/labor relations at U, and my expectations have been met.

 

[BoeingBoy]

Do you happen to have at your fingertips some recent US Airways CASM numbers?

In particular, I'd like to know what the CASM is, excluding fuel and labor.

[post="241968"][/post]​

Michael,

Using the same methods as I used to calculate system CASM/total RASM and non-labor costs for November, I come up with 6.0 cents (5.95850775) ex fuel/labor.

Obviously, that is only ex U labor as contractor labor is still there, as is affiliate carrier labor.

Also this assumes that fuel expense shown in the Nov numbers is only U Group (mainline, W/O'ed, MDA) fuel and that affiliate fuel paid by U is included in "capacity purchases". If this assumption is correct (???), fuel expense to produce the assumed seat miles is greater, meaning that CASM ex fuel/labor is lower, but since there's no breakdown of "capacity purchases" that's as far as I can go.

For what it's worth, I'd assume that the Dec numbers will be filed with the court in the next few days.

Jim

 

[TheLarkAscending]

Do you write things like this with a straight face?

[post="241706"][/post]​

Perhaps spirits inspire the fractured syntax: invisible, imaginary, refined or distilled? :wacko:

 

[mweiss]

Regardless of which of the two supplied methods (sfb's or BB's) are used, it appears that there's plenty more that needs to be done in order to really effectively compete.

An interesting question to ponder:
If US employees were to remain extraordinarily low-paid, but be treated with respect, would morale be high?

Not that I expect we'll ever get to find out the answer to that one.

 

[Phoenix]

Wrong?

Lets see, how many times did you spout the UCT/ICT with United?

WRONG IT NEVER HAPPENED.

...

[post="241691"][/post]​

Someone famous said "Fake it till ya make it." It has also been said, "If you haven't made it yet, then you are still fakin it."

Regards,

Phoenix

 

[BoeingBoy]

If US employees were to remain extraordinarily low-paid, but be treated with respect, would morale be high?

[post="242031"][/post]​

Michael,

Here's my opinion and with $5 you can buy a Starbucks beverage....

It boils down to human nature - we miss what is no longer there more than we would miss it if it never had been there.

For me personally (since in the larger sense the pay, etc, is pretty much unimportant to me at this point) there's a bigger issue - it didn't have to be this way. If coming out of BK1 an effort had been made to just fly most of the airplanes 1 extra leg per day (from 8:15 to 9:30 per day flight time on the 737 fleet, a little more on the little Buses) we would have at least broken even in the first 9 months of 04 and probably have made a net profit. What kind of accomplishment would that have been in these times in this industry?

Jim

 

[funguy2]

RowUnderDCA Said:
Well, I guess that's my point. All you 'fact folks' are kind of stretching your real position: "We don't believe that U management will actually DO the things they say they'll do or actually DO the things that are implied by what they say they will do" into these stats and facts and circumstances. It seems to me your making a leap without including the main ingrediant: "WE DONT BELIEVE THEYLL DO (or can do) IT."

funguy2 Replies:
Its not that I don't believe or don't beleive what US Airways management says. My point is that thus far, their actions, public announcements, etc, do not match the proclaimed "We will have LCC costs." Now there's a few things that could be going on... Maybe not everything is publicly announced... Or maybe management is over-stating their goal (common tactic in negotiations)... Or maybe management is trying to look good for potential exit financiers and drum up interest. I can't say, as I don't know. But what I do know, is that the public information does not support that LCC-type costs can be acheived.

rico Said:
Many fail to see the changes in the Northeastern markets, that favor high density point to point flying from larger markets, rather than having our larger aircraft sit around waiting for connections from Altoona, Hagerstown, or Elmira. Costs can be driven down substantially by concentrating upon those markets that can fill planes throughout the day... Making better use of the assets and people we have is what will drive costs down the fastest. And changing our route structure is the best way.

funguy2 Replies:
You are right. I fail to see this "theory" in action. What has been announced thus far involves a redeployment of PIT assets to FLL. While, I'll admit, I don't look extremely closely at scheduling details, there have been no public announcements about increased aircraft utilization or new service on the basis of being more efficient (i.e. we added BUF-MDW service because our BUF-PHL service combined with a rolled PHL hub created an opportunity since we are no longer adhering to a strict bank structure, or whatever)

So you are right. I fail to see it. I have always maintained that the principle has merit, and that US Airways should persue it. What I fail to see is implementation. Which is similar to my response to RowUnderDCA. If I am wrong, that would be great, as it means that US Airways has a fighting chance. So prove me wrong. Where has US Airways added flying or aircraft utilization out of being more efficient? Remember, the PHL hub is rolled is just a few weeks, so any new service for the next serveral months would certainly be loaded into reservations systems by now.

BoeingBoy Said:
For me personally (since in the larger sense the pay, etc, is pretty much unimportant to me at this point) there's a bigger issue - it didn't have to be this way. If coming out of BK1 an effort had been made to just fly most of the airplanes 1 extra leg per day (from 8:15 to 9:30 per day flight time on the 737 fleet, a little more on the little Buses) we would have at least broken even in the first 9 months of 04 and probably have made a net profit. What kind of accomplishment would that have been in these times in this industry?

funguy2 Replies:
Exactly. This has been my point for a long time. What a missed opportunity BK #1 really was.

 

[Rico]

IMO the previous managment was taken off guard by the ability of the other legacies to match our cuts obtained from BK1.

They were able to get labor concessions in response, but I do not think that is is quite as easy this time.m Also not as easy, is the other legacies ability to balance their need to draw down capacity, while maintaining market share/fleet utilization.

US Airways on the other hand has shed off much of what it did not need and lowered our costs, so we are in a position to fully mazimize our fleet, gates, and people. we can seek out profitable growth rather than downsize further.

Rational growth will lower our costs as well. Looking to fly longer stage lengths, usually point to point, from high density markets we can once again better utilize our fleet and people rather than relying upon the 40min "hops" so common in our route structure today.

There is room for improvement, lots of it. In our situation that is a good thing, as wel can make those changes and move forward, while others wil have to make do with what they have, or draw back to what they can keep.

I have seen changes funguy, I am moving my base to DCA, along with most of MDA, as we make a dramatic change to the route structure there. Now, besides going all jet, we will have narrowbody quality aircraft on most flights out of there (with few exceptions). This way we mazximize the small revenue preimum of flying directly into DC, and take advantage of one of the best pont to point O+D markets around. Our competition has nothing to counter with at this time due to slot or fleet limitations.

That is just the start IMO funguy, but it IS a good one.

 

[sfb]

You know, the idea that the company could obtain another 1 Billion in concessions on a third time seemd impossible a year ago too.

But they did it.

Well, it certainly was impossible outside of a second bankruptcy reorganization. The basic problem with the first one was that the company's strategy was exactly the same as before they filed -- just smaller, with more RJ's, with less debt, and lower labor costs. I think folks will remain skeptical until there's a more substantive strategy than more Caribbean flying and offering GoFares when forced to do so by the competition.

IMO there exists as much a chance now for them to retool our organization and route structure to maximize our advantages. Getting out of the "Worst East-West Hub in the Northeast", and instead turning PIT into a good point to point market is a great start (that many on here are way too biased to accept).

You know, making PIT into a point-to-point focus city probably would be a good idea -- except the company has done anything but that. PIT is still scheduled like a banked hub, and the company maintains a great deal of service into markets which are quite weak on a point-to-point basis. PIT-ERI, for example, operates 4 times daily. PIT-BUF also has four daily flights each way in spite of the O&D market being barely enough to fill a single 19-seater each way. PIT-ROC has four daily frequencies for 11 passengers each way, per day. There are 4 daily PIT-DAY flights for 8 passengers each way per day and 4 daily PIT-AVP flights for 7 passengers each way, per day. And yet they don't fly PIT-IAH or PIT-MSP or PIT-MKE or PIT-JAX or PIT-MCI or PIT-MEM (all top 40 markets from PIT).

Again, I am not attacking the idea of a focus city and point-to-point flying from PIT; I am pointing out that PIT is not, in reality, operated that way. It is, at present, merely a smaller version of the old hub with fewer flights. While this may change in the future, the "focus" at PIT still appears to be connecting traffic. And it appears that mainline flying from PIT drops by another 10% (to 62 daily flights) in February.

Many fail to see the changes in the Northeastern markets, that favor high density point to point flying from larger markets, rather than having our larger aircraft sit around waiting for connections from Altoona, Hagerstown, or Elmira. Costs can be driven down substantially by concentrating upon those markets that can fill planes throughout the day... Making better use of the assets and people we have is what will drive costs down the fastest. And changing our route structure is the best way.

No, there is room aplenty to change the way we do things for the better, and now is the best time.

There's nothing wrong with this strategy, per se; it's just not happening so far. There have been a few new (Express/MDA) flights added from DCA, and flight times are being shifted at PHL, but aside from that I'm finding it difficult to discern any meaningful change in how the mainline is run.

Well, ask DAL, ask AMR, ask the rest of our competition. Would we be able to pull off FLL as easily if AMR was healthy and aggresive...? Would CLT, DCA, LGA, and BOS be as easy to retool if DAL was the 800lb Gorilla of the past rather, than the multi-billion dollar losing animal it is now...?

Well, right now it remains to be seen if US will "pull off FLL." I can book BOS-SAL-BOS Saturday-to-Saturday (peak days) at the end of February for a fare that works out to a yield of 6.4 cents/mile. My guess is that AA is taking a wait-and-see approach to what US is doing at FLL -- and will respond if it appears that US will make it out of bankruptcy and if the FLL operation is affecting MIA.

As for Delta, it appears to me that the SimpliFares initiative is the more aggressive stance; US Airways' GoFares have been almost exclusively implemented in response to LCC incursion at PHL (WN/FL) and WAS (DH). Delta's out-of-court restructuring seems to be as wide-reaching as US Airways' -- aside from dumping debt and leases. They've added point-to-point flying in Florida and to Florida from the Southeast, have deployed Song on point-to-point routes from BOS, NYC, and BDL to Florida and LAS, as well as some transcon flying from Florida, and are restructuring their network with the shutdown of DFW and rolling the ATL megahub. It appears to me that the expansion of flying at ATL and CVG are designed, in part, to put even more pressure on US.

Can the LCC's grow fast enough to counter our moves without endangering their own cost structures or established expansion plans...? Not really.

Southwest has 29 net aircraft coming this year while jetBlue and Airtran together also have a similar number of (or more) new aircraft coming. Southwest would LUV to expand more quickly at the "crown jewel" (PHL), but they don't have enough gates, so they'll settle for PIT in May. They were able to add 41 departures at PHL in six months, even while adding roughly 20 flights in other markets. JetBlue has its eyes set on Delta's old gates at BOS when they free up this spring, and they have 15-20 new aircraft (including EMB190's) coming this year. The LCC's will likely add capacity equal to 25-30% of US's domestic flying this year.

Some might look at this as a glass half empty situation, but IMO we have already turened the corner, and can now take advantage of things to turn it into a glass half full situation instead.

Well, I will agree that management has now gotten the cost cuts from labor which they claim to need. But given the company's track record, I believe it is prudent to remain skeptical (though open-minded) about the company's intent to implement the rest of the promised changes to the business. I suppose that makes me a "naysayer" and a purveyor of negative drivel (NOT DRIBBLE!!!!!), but I'm still waiting for the truly substantive changes to happen. I'm not holding my breath for "systemwide GoFares"

 

[BoeingBoy]

Many fail to see the changes in the Northeastern markets, that favor high density point to point flying from larger markets, rather than having our larger aircraft sit around waiting for connections from Altoona, Hagerstown, or Elmira.

[post="241996"][/post]​

Are you really saying that DCA, NYC, and BOS haven't been major O&D markets before? That only now does it make sense to have point to point service from these markets?

Well, ask DAL, ask AMR, ask the rest of our competition. Would we be able to pull off FLL as easily if AMR was healthy and aggresive...? Would CLT, DCA, LGA, and BOS be as easy to retool if DAL was the 800lb Gorilla of the past rather, than the multi-billion dollar losing animal it is now...?

[post="241996"][/post]​

To start with, we haven't "pulled off" anything in FLL yet - let's see how it goes once it starts before we start patting ourself on the back for being so successful.

Maybe you missed DAL's "Simplifares" announcement. They sure shook up the industry like an 800 lb gorilla. Or the 10,000 extra seats they'll be offering to JAX for the superbowl - doesn't sound like the move of a wimp (yet I notice we haven't announced anything yet).

Can the LCC's grow fast enough to counter our moves without endangering their own cost structures or established expansion plans...? Not really.

[post="241996"][/post]​

Haven't I read that WN is adding the same number of new planes in 2005 as in 2004, and that they're prepared to add more if market conditions warrent? Isn't JetBlue getting new planes, including the Emb-190? Isn't Airtran getting NG737's? Something tells me that the LCC's are planning on continuing their growth.

IMO the previous managment was taken off guard by the ability of the other legacies to match our cuts obtained from BK1.

[post="241996"][/post]​

By "other legacies" I presume you mean exactly 1 - AMR. Which other legacy outside BK had major cost cuts until recently. Or maybe our management is so slow that's it took them over 18 months to realize that they'd been caught off guard.

I am moving my base to DCA, along with most of MDA, as we make a dramatic change to the route structure there. Now, besides going all jet, we will have narrowbody quality aircraft on most flights out of there (with few exceptions). This way we mazximize the small revenue preimum of flying directly into DC, and take advantage of one of the best pont to point O+D markets around.

[post="241996"][/post]​

If PIT is such a...what did you call it, oh yea..."Worst East-West Hub in the Northeast", why was the MDA base ever there? Surely it would have been preferrable to put the flights into DCA instead? All those advantages you cite were were advantages then.
In fact, some are not available now - both DAL and UAL are adding Emb-170's to their express fleets so have the wherewithal to counter MDA if they choose when they didn't before.

In short, everything you've mentioned made as much sense coming out of BK1 as they do in BK2. More, in fact, because then we had the finances to accomplish so much while now we're counting pennies trying to survive for another day. Instead of acting, our management is still reacting.

But, hey, if the fantasy rocks your boat then have at it.....

Jim

 

[funguy2]

You know, making PIT into a point-to-point focus city probably would be a good idea -- except the company has done anything but that. PIT is still scheduled like a banked hub, and the company maintains a great deal of service into markets which are quite weak on a point-to-point basis. PIT-ERI, for example, operates 4 times daily. PIT-BUF also has four daily flights each way in spite of the O&D market being barely enough to fill a single 19-seater each way. PIT-ROC has four daily frequencies for 11 passengers each way, per day. There are 4 daily PIT-DAY flights for 8 passengers each way per day and 4 daily PIT-AVP flights for 7 passengers each way, per day. And yet they don't fly PIT-IAH or PIT-MSP or PIT-MKE or PIT-JAX or PIT-MCI or PIT-MEM (all top 40 markets from PIT).

sfb: I had noted the same observation in another thread a few weeks ago... I did not have the market size numbers (which are astnoshing, to say the least), but rather I noted the difference between the US Airways PIT "focus city" with other developed or developing focus cities... like NW @IND/MKE, AA@BNA/RDU, FL@PHL/BWI, etc. AA does not fly to CMH/DAY/BUF etc from RDU because there is not enough local traffic. Likewise US should not be flying PIT-CMH/DAY/BUF/et al for the same reason from a "focus city".

If you put our points together... What a powerful argument.

Then, you can further that to the difference between what US Airways management SAYS is happening and the ACTUAL IMPLEMENTATION of the plan. Maybe this is a temporary phenomenon as the company "transistions". For that, we will have to wait and see.

 

[sfb]

funguy2-

Actually, I'll disagree with you on one point. There's nothing wrong with flying PIT-DAY, PIT-BUF, or PIT-ROC (PIT-CMH is probably a bit too short) as long as the company prices rationally. You'd get a heck of a lot more people flying PIT-DAY (instead of driving) if the walkup fare were way less than $400 each way, and PIT-ALB would be much more popular if the average fare were less than $330 each way. If PIT is supposed to be focused on O&D traffic, price it so that people in Pittsburgh will fly!

 

[Rico]

Geeze,

I knew you guys would have to move onto something new after you were each proved wrong about concessions/strikes/collapse

I will add the transformation of our company to the list after it is accompished as well...

My point still stands, the Legacies are in no position to respond, the LCC's only have a finite amount of growth they can accomplish before the year's end, and right now we are in a good position to change things for the better.

Change takes time, and money. We have to be careful with each. But over the year I think (once again) you guys will be eating your words regarding U's chances.

Wait and see.

 

[funguy2]

sfb - point taken. I generally go with an "all else equal" philosophy...

rico - absolutely, we'll have to wait and see... US Airways' chances are improving, no doubt... But there is a difference between seeing the light at the end of the tunnel and reaching it. US Airways still has a monumental challenge ahead of it, and many, many opportunities to change have been wasted. I hope, for the sake of the employees, that US Airways survives... I always have. It may now seem more possible, but that does not make it more probable.

 

[USA320Pilot]

Rico:

Your comments are well thought out and accurate.

Regards,

USA320Pilot