Midatlantic's Future

[BoeingBoy]

spindoc,

"There has to be a meaningful change in the way the company operates in order to gain the confidence of the capital markets."

Believe it or not, something we agree on. 18 months after emerging from the last BK with nearly $2 Billion in cost cuts only to see CASM remain about the same, I think it should be obvious to most that more than labor concessions are needed to save this company. The only question is how long the creditors will give us to start making significant changes.

Jim

 

[BoeingBoy]

Oh, on the subject of MDA....

One of the furloughed pilots posted on the ALPA board this morning that he had been advised that his early October class date had been postponed with no firm date. That's all he said, so take it for what it's worth.

Jim

[post="181002"][/post]​

A correction:

It was the 9-20-04 pilot class that was postponed. No word yet on other classes (or F/A classes)

Sorry for the error.

Jim

 

[Rico]

Jim... You keep spreading the costs over the seats, but that is missing the point. IF every seat was filled in both jets, then the lower average seat cost would matter.

But the thing is, mainline only averages 75% load factor, so in reality, you are forced to spread your costs on the larger aircraft over a far smaller amount of seats (with butts in em).

That same load factor would fill the E-170, so to be fair, you need to compare average RASM, not CASM.

My point about IAH being a CAL stronghold is valid, you seemed to miss it. IAH is a hub for CAL, which means they have all the people connecting through IAH from all those places wanting to get to PHL to fill up multiple frequencies, right...?

CAL has a strong network of connections into IAH, the majority of which, US Airways does not serve, correct? On the other hand, while Airways has conections into PHL, CAL already has direct service into IAH from many of them.

So what that means, is that Airways has to "make do" with O+D traffic, while CAL can operate higher frequencies utilizing those connections through the day. Since Airways is already at a disadvantage going into IAH (as I explained), it is harder for Airways to fill up multiple Airbuses through the day. The only profitable way to fill the gap, match or exceed CAL's frequency is to utilize smaller equipment. Even just on O+D, itis easier to come up with 35+ pax on a flight than the 70+ needed to just "break even" on the larger aircraft.

If you look in the cabin and see 40 passengers on your flight, you know we just lost $$$, in the E-170, we just made a profit...

This will come into play even moreso, when we operate into other airlines' strongholds (from focus cities or other markets point to point), where we will not even have the connecting passengers that PHL or CLT has.

We are a North/South airline, to play with the East/West carriers when we fly East/West we will have to take a gun to the knife fight. The E-170 is just that.

 

[Dog Wonder]

The FA classes finishing soon are the last ones scheduled.

 

[diogenes]

So PitBull,

Are you going to try and pull down the operation PitBull?

What did you expect the company to do when the employee groups would not agree to cut costs?

[post="181109"][/post]​

Blaming PitBull for this is like blaming Jim Cantore for the weather.

They're both just reporting the facts.

 

[TheLarkAscending]

.....go and sit in a corner somewhere...someone will give you a lollypop.

No they won't -- we don't reward bad behavior!

 

[BoeingBoy]

Rico,

I guess we'll never quite agree. If I'm reading you right, the E-170 is better than sliced bread and if we had lots more of them and lots less of those bigger airplane with "empty seats" flying around we would be making tons of money and driving the LCC's into oblivion.

I just don't see it that way. But I at least accept the fact that the E-170 has a place.

In the PHL-IAH argument, you seem to be saying that CAL has all this feed because IAH is their "stronghold" but ignoring the feed that we should have in our PHL "stronghold". You can't have it both ways - either both airlines enjoy the benefit of feed in their respective hubs or neither does. On the other hand, if you're saying that CAL is a better run airline with better located hubs, you'll find no disagreement from me.

Lastly, average load are fine but don't tell the whole story. If particular times of day (or particular days) will only support an aircraft the size of the E-170, then use it. If they'll only support a CRJ-200, use it (even lower trip costs). But if a particular time of day or day of the week will support a larger plane and the E-170 is all that's available, the extra potential passengers are faced with a decision - go to our competition or take a later flight. If they go to the competition, will they come back next time even if there are seats available?

Jim

 

[atlantis]

The FA classes finishing soon are the last ones scheduled.

[post="181207"][/post]​

yeah that is true. the class that finishs tomorrow is it for now. they told them that they dont know when there will be more classes. or if there will be.
what does anyone think about this.
when will every body find out if they get things worked out between the embaerer company and us.
if they get thinks worked out will they start getting plaines again>?
what does anyone think about weather or not there will be more classes for midatlatnic.>? thanks

 

[mweiss]

...the key here, is that labor costs are way way lower with the Mid folks, and thats what the management seems to think is the only key to being a successful carrier.

[post="180785"][/post]​

And that, in a nutshell, is why US Airways must ultimately fail.

 

[mweiss]

In the PHL-IAH argument, you [Rico] seem to be saying that CAL has all this feed because IAH is their "stronghold" but ignoring the feed that we should have in our PHL "stronghold".

Actually, he's not. If you read closely, he pointed out that for IAH O&D traffic, CO already offers nonstop service from the non-hub cities with which US would (necessarily) compete using connecting service. CO does have an advantage there.

In essence, the problem US has in that particular market is an insufficient network.

As for the rest of your argument with Rico, both sides have a grain of truth.

In some instances, the decreased frequency that comes from using larger aircraft (assuming that one keeps ASMs constant in the market) can result in fewer seats filled. This is what led to the traditional legacy carrier model of setting frequency based on business travelers, and using leisure travelers to fill the rest of the plane.

On the other hand, increased frequency coming from smaller aircraft creates a lot of CASM pressure. More pilots, ground personnel, gates (in some markets), and a higher ASM operating cost raises CASM.

Therefore, in order to justify the high-frequency small-aircraft approach, the increase in RASM must be greater than the increase in CASM.

In some markets, the higher frequency might well work. The problem is that WN has proven that you really can eat your cake and have it too. The upshot is that it is impossible to win against them if you view the world as having only the two options listed above.

 

[BoeingBoy]

I'll pretty much settle for that with two exceptions.

From how many of the NE cities does CAL have non-stop service to IAH. For those that they don't (and I suspect there are pretty many) CAL would offer connecting service thru EWR/CLE vs our's thru PHL/CLT/PIT(less & less). I'll give you the point that many (all) of the cities in TX and the SW that CAL can feed thru IAH to PHL probably more than offsets that, though. (the limited network thing).

The "average LF" argument is not equivalent to that LF on every flight every day. One flight may have 20 pax while another time of day/day of week will have 120. By only offering 70-some on all flights, there are times you're driving potential customers to the competition. Whether the net is good or bad, I don't know (and doubt that anyone does in reasonably real time outside CCY).

Obviously, the ideal would be to have the fleet and flexibility to tailor the plane to the load on every flight every day, but no airline can do that. So you try to tailor the plane to the average load for each flight each day.

My fear is that the inability to add to the mainline fleet due to all the financing being tied up with RJ's is that bigger airplanes are replaced with smaller ones just to free up the larger ones for other things - p2p, caribbean, etc. Hopefully, this is done wisely, but with the management that got us to this point I'm not sure.

Jim

 

[mweiss]

From how many of the NE cities does CAL have non-stop service to IAH.

I'm feeling a bit lazy, so I'm going to do top of the head here. The itty-bitty-cities will have connections in EWR or CLE. That shouldn't be more than 25% of the total pax (and I suspect it's much less).

many (all) of the cities in TX and the SW that CAL can feed thru IAH to PHL probably more than offsets that, though. (the limited network thing).

Exactly. In the northeast, the two airlines are on roughly equal footing. In the southwest, there's no comparison.

The "average LF" argument is not equivalent to that LF on every flight every day. One flight may have 20 pax while another time of day/day of week will have 120. By only offering 70-some on all flights, there are times you're driving potential customers to the competition. Whether the net is good or bad, I don't know (and doubt that anyone does in reasonably real time outside CCY).

Generally, demand management is used in these situations, pushing passengers to other flights with yield management. It's not perfect, but it's pretty good.

My fear is that the inability to add to the mainline fleet due to all the financing being tied up

[post="181299"][/post]​

And a reasonable fear it is. US is in the position of having to come from behind with pretty much every possible disadvantage. This is why I don't think that the airline is viable. It's not like CO in 1994, which had an underutilized powerhouse in EWR and a pretty solid network.

 

[BoeingBoy]

Ok, we're just about at agreement.

Yield management, as you say, is pretty good at pushing people onto other flights instead of the competition (at least in general, who knows how good ours is). But that's mostly the price sensitive passenger. The businessman wanting the first flight to make a meeting (or the last flight to get home) is more time sensitive and less price sensitive (to a degree) and higher average fare. And that's the last type of passenger you want to push to your competition.

Jim

ps - frankly, this is all theoretical to me since I have no idea how many passengers fly between the two cities on any given day at any given time of day. For all I know, the E-170 may be too big.

 

[Air conditioned]

yeah that is true. the class that finishs tomorrow is it for now. they told them that they dont know when there will be more classes. or if there will be.
what does anyone think about this.
when will every body find out if they get things worked out between the embaerer company and us.
if they get thinks worked out will they start getting plaines again>?
what does anyone think about weather or not there will be more classes for midatlatnic.>? thanks

[post="181276"][/post]​

I think this is certainly the question of the hour. Hopefully soon deliveries will start again so that classes can resume. No one knows if it will happen, but all we can do is hope and pray for the best. I am not sure how long it takes to work things out between Embraer and U when they are in bankruptcy or when an announcement would be made. Maybe they will keep it secret for a while if things are smoothed out, who knows. Perhaps the less they tell the employees the more they can accomplish.

 

[mweiss]

Jim,

You're on the right track. Now the only remaining question is how often there are more business passengers than seats on the planes at those key times. I'd be astonished if there were flights that had nothing but full Y on them.