Letters To The Editor

[BoeingBoy]

Letters to the Editor - CLT Observer - April 22, 2004
(Names omited)

Observer forum: Letters to editor

CEOs come and go (but never produce)

In response to "CEO of struggling US Airways resigns" (April 20):As a furloughed US Airways aircraft mechanic with over 13 years seniority, I have now seen four chief executives come and go. None, including David Siegel, has done anything innovative to help assure the profitable survival of the company.

Board chairman David Bronner's comment that Siegel "has done an admirable job" is ludicrous.

What all the former CEOs have done is fatten their own wallets, then walk away with a pat on the back from the board.

After years of mismanagement, US Airways may now be beyond the help of anyone. Shame.

Gxxx Hxxxxxx


Indian Trail

Riches given CEOs costly to US Airways

I about dropped my coffee cup this morning as I saw the severance packages and pension payments given the airline's former CEOs. And they've had the gall to ask hard-working employees to take a wage cut? Don't they have trouble sleeping?

It's not because of low-fare carriers coming in that US Airways has problems.

Jx Axx Nxxxxxx

 

[a320schoolbusdriver]

Board chairman David Bronner's comment that Siegel "has done an admirable job" is ludicrous

When I read that I assumed it was all part of his departure plan.
Tell the world what a great job he did!
Look after our ivey league boys

 

[700UW]

US Airways in peril

New leader might help, but old problems won't go away


The resignation of US Airways CEO David Siegel cleared the way for new leadership, but it didn't solve the airline's problems. Foremost among them is the bottom line. While cost-cutting is needed, that alone won't lift the company out of the red. Revenues will have to rise -- no easy accomplishment in an industry hobbled by the aftermath of 9-11, a sputtering national economy and increased competition from low-cost airlines.

The first two problems -- 9-11 and the economy -- may be improving, but the threat from low-fare competitors is likely to get tougher.

In March, Mr. Siegel issued a dire warning after Southwest Airlines decided to compete for business at US Airways' Philadelphia hub. Southwest picked Philadelphia "for one reason," he said. "They're coming to kill us." US Airways had gone head-to-head with Southwest on the West Coast and at Baltimore-Washington International Airport. Southwest had prevailed both times.

Analysts at Goldman Sachs took a less alarmist view of Philadelphia. They noted other low-fare carriers already serve the routes Southwest will fly, so the impact is likely to be greater on low-cost rivals than on US Airways.

Whatever the case, the rise of budget airlines is transforming the industry. According to US Airways, the low-fare carriers' share of the market rose from 5 percent in the late 1980s to 20 percent today and is expected to reach 40 percent by 2006. US Airways is especially vulnerable because most of that growth has come on shorter routes of about 500 miles, primarily in the Northeast. That's where US Airways is the biggest carrier, and most of its flights travel about 500 miles.

US Airways is the industry's least-efficient carrier, with the highest cost per mile. To cut fares without cutting costs would lead to greater losses. To succeed, a new business plan must produce competitive prices. The question is whether that will be accomplished by the new leadership team or by new owners who buy the airline.

It's easy to understand the anger of US Airways employees, including the 5,700-plus at the Charlotte hub. They took big cuts in pay and pensions, but management still called for more. Yet the hemorrhaging of money must stop. US Airways Chairman David Bronner's Alabama pension fund put money into the airline as an investment, not a public service. In the end, concerns about tradition, promises and expectations won't matter. The airline's future is a matter of dollars and cents.

 

[mweiss]

US Airways is the industry's least-efficient carrier, with the highest cost per mile. To cut fares without cutting costs would lead to greater losses.

I was just thinking about this. US currently has the highest RASM in the industry. The airlines with rational fares have lower RASM. Does this mean that US adopting rational fares would reduce US's RASM? Any thoughts?

If so, then growing the company to cover the additional demand generated by the new fare structure might just become a case of losing money on each passenger, but making it up in volume.

 

[RowUnderDCA]

I was just thinking about this. US currently has the highest RASM in the industry. The airlines with rational fares have lower RASM. Does this mean that US adopting rational fares would reduce US's RASM? Any thoughts?

If so, then growing the company to cover the additional demand generated by the new fare structure might just become a case of losing money on each passenger, but making it up in volume.

This is what Ive been assuming all along, cuz I never really believed that Seigel was lying. At least the short-term revenue drop was expected to be a possibly insurmountable problem without additional cost cuts. It IS amazing that Seigel was SO bad at communicating this to his employees, but that's what I heard.

 

[BoeingBoy]

mweiss,

"Does this mean that US adopting rational fares would reduce US's RASM?"

Of course, nobody really knows till it's tried, but you've got to look at the difference between "rational fares" and "RASM". The first is the price of an individual ticket, and really the upper end of the ticket price range at that. The second is total revenue driven (assuming constant total ASM's).

So the question comes down to this: will we sell more of the rationalized upper end tickets and will that be enough to offset the loss realized by lowering the price of the few non-rationalized upper end tickets we sell now.

On a side note, to me doing something about F/C fares is a no brainer - we actually sell very few now so almost any increase in sales would be a plus. And that almost requires doing something about coach fares - can't have full fare F/C costing less than full fare coach.

Jim

 

[BoeingBoy]

mweiss,

Sort of a ps to the above...

I suspect our high RASM is largely due to our high percentage of short flights where traditional pricing results in the fare per mile being magnitudes higher than long haul.

Jim

 

[usfliboi]

NOTE! The letter to the editor was written by a furloughed USAIRWAYS MECH> I have the name if interested otherwise look it up he signed his name. Just trying to put things in perspective here.

 

[mweiss]

Jim,

You're probably right about the RASM/stage length relationship, though in truth neither of us know because we don't know the actual fare mix sold. Which is also why we don't know if rational fares would increase RASM or not.

I still think that NW's ConnectFirst approach makes a tremendous amount of sense. Charge for FC, but put it in a coach-class fare. Why? Because businesses generally have a policy of not paying for FC, but they'll pay for coach, even if it's Y. You can still have an F on the menu, at, say 30% more than Y, but it'd be there more for show and to extract the extra money from those who insist on buying a ticket that says F on it.

The value of this strategy, however, is probably diminishing now because of changes in corporate travel policy, primarily brought about by the usury fares being charged by the legacies in 1998 and 1999.

 

[insp89]

NOTE! The letter to the editor was written by a furloughed USAIRWAYS MECH> I have the name if interested otherwise look it up he signed his name. Just trying to put things in perspective here.

Put "what" in perspective ? The article itself states that the author is a furloughed Usairways mech. :blink:

 

[E-TRONS]

In response to BOEINGBOY's first post:

Corporate america along with all their robber-barrons SUCK :angry:

Where else can you find a larger group of immoral thieves than in the stuffed shirt white collared world :down: :down:

Absolutely deplorable conduct.........even convicted criminals have a code of honor :huh:

They all will be held accountable in the FINAL END