Exit Financing & The Future

[mweiss]

I just poked around the web a bit. At MLW, the 170 requires 4,177 feet for landing. 17/35 is 5,460 feet, and 8/26 is an even 5,000 feet. Interestingly, even the 145 only requires 4,593 feet for landing.

The issue is takeoff, not landing. The 170 needs only 5,217 feet for takeoff at MGTW. The 145 requires 7,448 feet.

The CRJ700 has similar airfield performance numbers to the 170, though the 700ER requires just slightly too much for takeoff at MGTW from 17/35.

So, the 170 and 700 (but not 700ER at MGTW) can use 17/35 for both takeoff and landing. All RJs can use any runway at PHL for landing.

 

[Rico]

First of all, you should NEVER build the airline around terminal constraints. Congestion constraints, maybe. But to say that Terminal F could not be reconfigured to handle bigger jets is foolish. I'll ask a question here... Does Wal-Mart downsize their store because the building is not big enough, or do they build a bigger building

You know, you seem to be issing the point, that is what can we do now, not later on, to maximize our current assets and market position in our most important markets...

Could the F gaes be modified to handle larger aircraft...? Sure. That would mean fewer gates, and a substantial investment into the facility to do so. .But what advantage does that offer US Airways at this time...? It is the PHL airport itself that cannot handle additional mainline flights, not just the terminal gates.

Swapping out smaller RJ's and turboprops for the E-170 lowers costs and increases revenue for the PHL operation, while not creating any additional traffic congestion (which substantially increases costs + decreases productivity)

Those displaced RJ and turboprop assets can then be used to provide better (or additional) feed into places like CLT instead.

It also allows us to make best use of current facilities in place, and take advantage of the commuter runways that SWA and AirTran have a more difficult time using.

Like I said before, the E-170s are not replacing the returned mainline jets, it is the better utilization of the remaining narrowbodies that is making up for that loss. Our costs are lowered by both utuilizing E-170's and CRJ-700s in place of other express aircraft, and the increased productivity of the 737 and Airbus fleet.

 

[mweiss]

Swapping out smaller RJ's and turboprops for the E-170 lowers costs and increases revenue for the PHL operation...

[post="242884"][/post]​

Careful there...your point is accurate, but you're mixing apples and oranges in that statement.

It lowers unit costs and increases gross revenue. So, what we really have to be looking at is the two following statements:

• It lowers unit costs and lowers unit revenue.
• It raises gross costs and raises gross revenue.

Both of these statements are true; the relevant question is whether unit costs drop faster than unit revenue. The corollary, of course, is the question of whether gross costs rise more slowly than gross revenue.

In the microcosms of PHL, LGA, and DCA, the answers to those relevant questions may well prove to be "yes." Assuming that they are, what about the rest of the network? Where are the smaller RJs going? Shouldn't we still be looking to have more mainline outside of those three cities?

 

[Rico]

In the microcosms of PHL, LGA, and DCA, the answers to those relevant questions may well prove to be "yes." Assuming that they are, what about the rest of the network? Where are the smaller RJs going? Shouldn't we still be looking to have more mainline outside of those three cities?

Microcosms...?

PHL, LGA, and DCA are three of the most important markets we have. They also are the markets in which we have the most urgent need to make adjustments to right now.

Additional mainline aircraft cannot make those adjustments..., period.

You seem to be missing the key point, we cannot add more mainline into PHl and DCA easily, or at all. So the next best thing to a B737 or Airbus in terms of costs, quaility, and capability is simply the E-170.

The E-170 will either replace a RJ that has higher CASM, or replace a short haul turboprop route with a long stage length route. The other option is for a E-170 to replace a mainline aircraft on a frequency, allowing that mainline "slot" to be used elsewhere (for max effect).

Why is that so hard for people to understand...?


Where are the displaced RJ's and Turboprops going...? Well, we are supposed to be a hybrid airline, meaning we still plan to operate a traditional hub/spoke system out of CLT (to compete with ATL). So the best use of said aircraft is to provide additional feed into CLT, so those mainline and express aircraft that have to sit around waiting for connecting traffic, get as much connecting traffic as possible.

IMO there exists plenty of room in our system to upgrade the express fleet, getting rid of the 19 seaters, and upgrading the other 30 seaters to either a 50 seat Turboprop or RJ.

 

[mweiss]

Microcosms...?

Yes, microcosms. "Little worlds." Until they are the only three cities served by US, they are not US's entire world. Ergo, microcosms.

You seem to be missing the key point, we cannot add more mainline into PHl and DCA easily, or at all.

Am I? Perhaps you need to reread my responses.

The E-170 will either replace a RJ that has higher CASM, or replace a short haul turboprop route with a long stage length route. The other option is for a E-170 to replace a mainline aircraft on a frequency, allowing that mainline "slot" to be used elsewhere (for max effect).

Nobody is arguing that both of those are bad ideas. What we're arguing is that, if you look at US's system overall, and the current publicly known information about the fleet, the company's behavior doesn't match your suggestion.

IMO there exists plenty of room in our system to upgrade the express fleet, getting rid of the 19 seaters, and upgrading the other 30 seaters to either a 50 seat Turboprop or RJ.

[post="242900"][/post]​

Of course there is. So why is it that the fleet changes are to reduce the number of mainline aircraft instead of reducing the number of 19-seaters?

 

[Rico]

Look man, keep it simple, the E170s are profitable, useful, and available.

The returned mainline aircraft were leased at below market rates, and the lessor wanted them back, so they could lease them out for a higher profit margin elsewhere.

The addition of the E-170's is just for now, it does not mean that US Airways will never regain, nor add back to the mainline fleet with additional aircraft in the future. It just means that right now, they cannot.

But, they cn add E-170's, and they should. So they will.

Get it...?

 

[mweiss]

Look man, keep it simple

You bet I'll keep it simple.

the E170s are profitable, useful, and available.

Useful and available, absolutely. Profitable, maybe, depending on how, when, where, and why they are being used.

The returned mainline aircraft were leased at below market rates, and the lessor wanted them back, so they could lease them out for a higher profit margin elsewhere.

OK, let's assume that you're right about this; I don't know enough of the details to be able to agree or disagree. It doesn't change my conclusion.

The addition of the E-170's is just for now, it does not mean that US Airways will never regain, nor add back to the mainline fleet with additional aircraft in the future.

And nobody said that it did, barring, of course, the possibility that US files 7.

What it does mean, however, is that near-term systemwide CASM is not likely to fall, outside of the concessions. The removal of mainline aircraft (for whatever reason), coupled with the addition of the 170s (again for whatever reason), runs counter to their claims that US would have lower CASM than WN.

Get it...?

 

[700UW]

Actually the lessors did not want the several 737s that US sent back, they had to pay a penalty and they were leased to JAT in Yugoslavia.

 

[PITbull]

.
Gee, I am trying to think what is different about U between now and the last year...

Oh, yeah, 1 Billion/yr in cost savings...

Plus MDA, and PSA were built up (rather than sending that growth off proprty to Mesa/CHQ), PIT was downsized further, and DCA was upsized... All in the past year.

So yeah, there is a difference.

And yes I am sure that there HAS BEEN an exit financier, just waiting for the right time to present themselves. The ATSB and other creditors would not have allowed things to proceed this far unless that were the case.

[post="241930"][/post]​

Hey Sparky,

MAA is only getting 3 a/c in March, and 3 in July. Pretty slow growth to me....that's if we make it.

Keep in clear mind-view that oil prices need to stablilize below $50 in the mid 40s during the next 6 months, or there will be more than U liquidating.

 

[Rico]

What it does mean, however, is that near-term systemwide CASM is not likely to fall, outside of the concessions. The removal of mainline aircraft (for whatever reason), coupled with the addition of the 170s (again for whatever reason), runs counter to their claims that US would have lower CASM than WN.

Get it...?

Who said it would...?

Reread what they said, that after the plan is fully implemented, that the cost would be lower, not near-term.

Pay attention please.

IMO it would be at least a years time before substantial cost savings are worked past the many near term changes that have to be made.

After that, then I would assume that we are well on the way towards that goal.


Man, you people are so willing to be negative about anything to do with US Airways, that you create situations in your head. WN costs IN TIME, not next week

Duh <_<

 

[mweiss]

Reread what they said, that after the plan is fully implemented, that the cost would be lower, not near-term...

IMO it would be at least a years time...

OK, well...let's say that you're right, and we just have to give it time.

First of all, if you haven't noticed, US is burning furniture right now. That doesn't last very long.

Secondly, when a company is in dire financial straits, the smart thing is to reduce costs, not raise them. In other words, the 170s make sense as a second phase, but are rather cart-before-horse for a first phase.

OBTW, what would the next phase be in this plan?

Man, you people are so willing to be negative about anything to do with US Airways, that you create situations in your head.

[post="242981"][/post]​

I don't have a bias here. It just sounds like it because things have been bad for US for so long.

 

[funguy2]

Rico - its not mweiss or I who have said that US Airways needs LCC costs in order to attract exit financing from BK... And that implies that this needs to occur in short order, for all the stars to align by June 30th for the CEO's target BK exit date.

In other words, US Airways doesn't have "time" for this to occur. I have to agree with mweiss' statements on this topic.

 

[deltawatch]

In meeting between executives and station level management held this week …. When ask if there was anyone interested in providing the $250,000,000 investment for U to exit BK they confirmed with cost cuts now in place there was. In fact there has been a big spike in interest. Stated they are not allowed to reveal who they are at this time. Said USAir will be out of BK in June.

 

[jimntx]

Even SWA is not immune to the problems of the current market. They announced today that they are pulling out of Buch International in Houston citing mounting losses.

Everything is wacked right now and fuel is as much to blame as anything.

[post="243263"][/post]​

I wouldn't make much of the IAH pullout. We are talking about 6 flights a day with only one destination--DAL.

 

[ClueByFour]

Even SWA is not immune to the problems of the current market. They announced today that they are pulling out of Buch International in Houston citing mounting losses.

Everything is wacked right now and fuel is as much to blame as anything.

[post="243263"][/post]​

Two things should be pointed out:

LUV has never run more than about 10 flights/day out of IAH, all to DAL. It was an early turf war with CO.

With 130+ flights out of town (including 25+ to DAL) from HOU, it sure does not sound like a panic.

As for the fuel, it's amazing what a hedge will do. CCY is finally trying it again (after the proverbial cow defecated and left the barn--again).