Is The End Near?

[BoeingBoy]

Interesting reading from Unisys Transportation Management Consultants

Adobe PDF format - Adobe Acrobat required

http://www.unisys.com/eprise/main/admin/mi...3_Scorecard.pdf


Read it and weep,

Jim

 

[Pacemaker]

Interesting report. For those who don't want to wait for the download and wade through the whole thing, here's the bottom line: Without directly saying so, the authors clearly believe US Airways will not survive the incursion in PHL by SW. The authors point out that the last, best chance for US Airways to change its' fortunes was during CH. 11, but management did not cut non-labor costs agressively enough and more importantly did nothing to change the business model. So the authors say.

 

[deltawatch]

Will the last one out - turn off the lights :unsure:

 

[BoeingBoy]

For those that are interested, here is the link to all of Unisys' "Scorecards". As above, they are in Adobe PDF format and require Adobe Acrobat to view.

http://www.unisys.com/transportation/solut.../scorecards.htm

Scorecard 1 discusses the business model of the legacy carriers

Scorecard 7 discusses U's emergence from bankruptcy and the value (or lack thereof) of RJ's

Jim

 

[BoeingBoy]

In the latest "Scorecard" I found this quote from a U filing to the SEC interesting, as did the authors:

"USAir, whose operating costs are among the highest in the domestic airline industry,
believes that it must reduce those costs significantly if it is to survive in this low fare competitive environment."

Nothing unusual about this statement - it is exactly what Siegel has been saying to the employees. For those that haven't followed this airline for very long, this quote is taken directly from U's 10-K filing to the SEC in (drum roll please) 1993.

I believe that Seth Schofield was CEO at that time. He asked for employee concessions and got them. Wolfe and Gangwal have come and gone. They also asked for employee concessions and got them. Now Siegel is here. He has asked for employee concessions and got them.

In the last decade, what changes have been made to the business model? The mergers of USAir, Piedmont, and PSA resulted in 9 aircraft types. By 1993 this was reduced to 8 (I think the BAC-111 was gone but the BAE-146 was still here). That has been reduced to 4 types now. Fleet simplification was desperately needed then and has been largely accomplished, though I'd mention that we cancelled Boeing orders at a cost measured in $10's of millions and got the Buses. We would have 2 fleet types if NG737's and 767-300's had been acquired instead of the Buses.

Some would say that adding RJ's has been a change to the business model. In '93 we operated F28's - a RJ by today's definition.

Jim

 

[passed_over]

When is US going to come to the realization that the RJ is not the answer to there east coast problems. How much more efficient the Dash 8 400 would be. Its a better ride, more efficient, and almost as fast. Of course what is 10 minutes in the big picture.

Happy Holidays to all

 

[ITRADE]

I agree that the 400Q is a good craft for short-haul markets. The problem is a passenger perception in that passengers don't like airplanes with propellors.

 

[ual777fan]

Perception or not, if the 400Q would dramitically lower costs, adopt it. USAir is fighting Southwest. They need to look everywhere in an effort to cut costs esp. in operations. This would be the time to adopt a new fare structure and streamline operations as a pre-emptive strike against LUV.

 

[USFlyer]

I'm very curious to see what the new plan is that we keep hearing will be announced in January. I tend to agree that U rushed thru its Chapter 11 proceedings, but, on the otherhand, the story I'm getting is that some creditors were about to pull the plug. I don't think management had much choice in the matter. If there is another trip thru Chapter 11, I see US being bought and/or fragmented. Or, I see US keeping MDA/MAA and PSA and becoming a RJ feeder for UAL (flying UAL colors).

 

[TBONEJ4J]

Horizon is taking market share from LUV using the Q400.

When passengers think prop they think B1900. It is up to the Marketing department to make them think Q400 and a whole new world of low cost operation will open up. Funny how the same management mindset that says customers only care about low fares is too blind to see the opportunity that the Q400 would provide to undercut even LUV.

Star Alliance partner Lufthansa had the good sense to convert CRJ700 orders to Q400 orders. Why? You cannot lead by following! Comair started the RJ thing years ago. It's yesterdays innovation. RJs are not the answer to US Airways' problems. They are however the gateway to Mesa becoming a much larger airline than U ever was.

Where's the Vision??????

 

[oldiebutgoody]

I have to agree with USFlyer. I wish Dave all the best. I hope his new plan has vision and is workable. I believe that many of the poor sentiments which are being voiced will change if folks sense that UAIR is making headway in it's restructuring. I believe that any workable plan will value the experienced workforce that UAIR possesses, and stop what appears to be "heaping blame" upon them for the woes of this company. I sense that this attitude MAY be changing, we can only hope. I, for one, would love to have a company here that we could be proud of, and a president and CEO that we could admire. Maybe after we see the new plan we can feel this way (one can only hope!). Happy Holidays everyone!

 

[Pacemaker]

In the last decade, what changes have been made to the business model?

IMO most of our problems arise from your unanswered question.

Since the PSA & Piedmont acquisition USAir has been on an unsucessful 15-year quest to define itself. Regional east coast carrier or major? There are two workable models in the industry - worldwide legacy carrier and low-cost carrier. US Airways has been neither; there is no place for inbetweens.

 

[wrenchbender]

There are discrepancies in the data posted by Unisys.
Note the cost per ASM for USAirways (page 9 &10) cost is .13 cents per ASM.
Did they do all their analysis using old data?

Check this chart, page two, USAirways cost per ASM is .11 cents post bankruptcy.

http://thehub.usairways.com/news/update/pd...f/Oct312003.PDF

What will happen to USAirways CASM when MidAtlantic is launched?
It should average cost lower yet.
Rolling hubs and other cost improvements should bring USAirways cost to
"Somewhere south of 9 cents per ASM." This according to Seigel’s message to employees about the need to cut 200 to 300 million per year in cost.

All the while Southwests cost are rising quickly, 23% in the last six years.
Wages are considerably higher at Southwest and climbing while USAirways are stable or declining.

The big question is can USAirways hold on long enough until balance is achieved in their systems efficency and cost?
Will Southwest then scale back PHL or leave altogether when faced with loosing money to gain market share?

PHL could become another BWI but not without a long protracted battle.
It could mean that “LUVâ€￾, the darling of wallstreet post red ink for the first time in their history.

I don't believe it will be as Unisys predicts with their chart showing WN in five years.
(page 20)

Only time will tell.

 

[usfliboi]

ual .... Dave has made it clear we cannot and will not any time soon redo our farestructure simply because we would bleed massively . We have to change the way we do buisness first. Im sure we will adjust our fares in phl however no doubt we can and will compete

 

[Doc]

DID YOU ALL READ THE WHOLE REPORT?

OMG ....Although the picture painted was not great it also said a lot about LUV cost rising and hides its unit cost with growth and in my opinion they will start feeling the pressure of higher labor cost etc….
PHL is not that bleak we feed that station and they are not in Boston so just relax do your job but keep your options open remember your life should not be revolving around U right now....But we need to be consumer friendly no matter how you feel it will pay off in the end if there is one.

Sorry but you all need to read the whole thing. You’re so used to bad news you even go looking for it………