Pit Selected As Hub For New, Low-fare Airline

[ClueByFour]

Seriously folks, this does not look good for U in PIT. Yes, many things can happen. For once I do agree with Chip that the timing is suspect. IMHO, the timing is designed to take Siegel off the the fence and force him to make a decision.

Good luck to all at U.

Exactly.

For those in the back who cannot or will not hear this: Bronner held paper on various US assets. Bronner put in a few hundred million of DIP, thus assuring that if US did not come out of bankruptcy he would get his original (the paper) and secondary (the DIP) back. He has said (that I've seen) all of one time that he'd consider spending money on additional "stuff" for US. Siegel claimed he was labor friendly and Chiames said they'd never outsource the airbus checks, and I have a nice chunk of water spanning real estate that I'll sell to anyone who believes any of it.

And now, for a little story:

So now he's (Bronner) going to cough up at least that much to buy UA assets, and integrate them, which can be done for south of a billion, of course.

Duane Woerth will leave his job as ALPA president and a DL pilot (IIRC) to be executive VP of the new firm, because it's not as if his employer (DL) stands to gain if UA goes under, right? And here I thought his knowledge was limited to union politics and the operation of jet aircraft--who knew there was a finance geek waiting to get out?

US will bring glass back to F on it's transcons between hubs at and SFO and IAD and maybe DCA, since Dave the Almighty has all sorts of pull on the hill, and has threatened to leave DCA, saying "I'm seeing no love from the business community in Washington, so I'll move the hub out to Dulles if I don't get perimeter exemptions."

To top off the service in F, slices of the great pumpkin will be served to both Charlie Brown and any nonrevs or deadheads who promise to spread various forms of FUD to instigate the employees of the now former United Airlines.

Back on topic:

Now you know why Roddey has taken the stance he has. The man is a businessman, folks, and made a ton of money before getting into politics. Why do you think Dave blinked? Absent snowballs in Hades (UCT), US cannot operationally hub all the RJ traffic that the ATSB and Fitch approved business plan calls for thru the existing hubs, and will not dominate another O&D market of PIT's size absent of LCC competition.

Not to mention the small issue of hubs less than 300 miles apart, and getting run out of the market by LCCs, or outbid by more solvent airlines on ORD, SFO, or DEN assets.

Dave tried to stick it to PIT (county/state/etc) and apparently ran into a couple of politicos who are somewhat smarter than he is and a taxpayer base that is not under the threat of anything they can't deal with who are willing to just say no.

 

[flyin2low]

I can see it now.

Roam arrives, US Airways runs..........

 

[deelmakur]

When things go south between negotiating parties, everybody postures (read, lies). Believe nothing you hear from either the County or the company. Meantime, you can unload on Beauvais, who is certainly no Herb Kelleher, and his "virtual" airline, which probably goes nowhere, but PIT is one fine, uncrowded hub facility. Somebody is going to get a deal to come in there on a cut rate basis. It's interesting to note that among the lowfare guys who have gained traction, the real success stories have been JetBlue and AirTran. There is a direct relationship betwen those guys really grabbing share, and where it has come from (US in the Northeast and DL, which has had it's lunch eaten at the ATL hub). Then you look at ATA and Spirit, who have chosen to fight with carriers who have not abandoned share, and have remained aggressive on fares. They don't do so well. There's a reason AirTran is running O & D from PHL and now DCA into Florida. They are filling gaping holes left in the wake of service cutbacks (and notice, they have ordered or optioned 100 full size aircraft). These guys smell blood. While you're being dismissive of cutrate carriers coming into places like PIT, remember, they aren't all the same. If Beauvais can think about it, so can others.

 

[ITRADE]

I had to chuckle when I read the press release and announcement about ROAM.

Half of the gripes that are voiced about the western PA delegation is that the removal of a US hub from PIT will spell the end of commercial service at airports like Bradford, Franklyn, DuBoise, Altoona, etc.

Looking at the press release, its clear that the ROAM plan would not touch these airports with a 10 foot pole. Their sole desire is to serve big cities that have big populations that can provide enough passengers to fill a plane. So, Western PA has not found a knight in shining armor with this one.

In any event, my guess is that US had anticipated a contingency with a LCC coming to town. Certain there was the possibility that were US to quit PIT, somebody like ATA or Air Tran would have come in.

 

[bandit1]

I was just watching the today show and they had Richard Branson on ...the question was asked about him starting a low cost airline in the US and he was pretty candid and said within 6-8 months and that he was talking to a few airlines to buy rather than start from scratch... could this be related?

 

[Dilligas]

I was just watching the today show and they had Richard Branson on ... <snip>

Branson will also be on "Your World" with Neil Cavuto on Fox this afternoon, 4 PM Eastern, and it replays at various times thru the night.

Any other Cavuto fans here? Neil seems like a good guy to me.

 

[deelmakur]

Re:Branson, I'll repeat my earlier observation. The lowfare guys who are run by clever management (and target weak competition), do very nicely. Secondly, if you are looking for a modern hub, at a good deal, PIT jumps out. In much the same way DIA (Denver) reached out to Frontier, and gave them a sweetheart deal after CO dropped the hub, and refused to be part of the new airport financing (while UA sat there and watched), Allegheny County will cut somebody a break.
I'm guessing it won't get to that. With all the velocity out there, even this mangement may be starting to realize that when they leave, somebody comes in. You would have thought they teach that at Harvard.

 

[RowUnderDCA]

I highly doubt that Frontier is paying less in rent per gate than UAL. Airports do have flexibility in the rates and charges structure, but they are forbidden from treating carriers agreeing to like terms, differently. If Frontier bought CAL rights from CAL at a discount, that may be different.

Same deal with PIT. ACAA will be hard pressed to offer JetFud a better deal than they'd offer U. Interestingly, U is reported to agree to occupy gates at PIT on a non-signatory basis.

 

[CSSUP]

I have always wondered where the Mid-atlantic name came from. Maybe Richard Branson/Virgin Atlantic was involved from it's conception. Foreign ownership up to 49% is a recent development. Take ACA merge with MDA and let VS own 49%.

Just another conspiracy theory........

 

[PHX Flyer]

Foreign ownership of 49% is not new at all - it has been like this for as long as I can think back. What's more restricted is the ownership of voting stock - the limit here is (and will remain for the foreseeable future) 24.99%. As long as these conditions remain, I doubt that Branson will get involved in a US venture. He is waiting for the conclusion of the on-going EU/US open-skies negotiations, which - in an ideal case - would result in all ownership restrictions being dropped. Until this has actually happened, I would not count on him. Aside from that he has said repeatedly that he was not interested in acquiring an existing US airline. He wants to start one from scratch.

 

[W:EXCH:INVOL]

Any other Cavuto fans here? Neil seems like a good guy to me.

Nice ties.

 

[deelmakur]

One of the conditions in the construction of DIA was that the carriers in some way guarantee some of the debt issued. CO declined, and shut their hub, after first agreeing. At the time, it was contemplated that HP would replace the CO western routes in a codeshare, so CO bailed. Frontier has never had to make such a commitment, and my recollection is UA has complained from time to time. Selective enforcement of conditions is a way of life with local governments. You can bet your bippy the locals in PIT will do whatever they have to in order to pay for that place. Notwithstanding the public debt they have issued, there's also the contract with BAA to run the facility, and numerous retail leases entered into as part of the combination "shopping mall"/air terminal concept. If BAA (British Airports Authority) think they got screwed because of the failure of Allegheny County to hold the main user (with 80% of the traffic) they'll sue them faster than a bag disappearing in Philly. Just watch.

 

[delldude]

so tell me now,why is jim roddey smiling all of the sudden???

 

[AM49AAA]

With ALPA president Duane Woerth echoing my comments that United cannot get exit-financing Siegel has even more leverage of ACAA. In my opinion, Dave Siegel may want his cake and be able to eat it too. In my opinion, Siegel wants to make MDA and the mainline in PIT like Comair and Delta in Cincinnati, as well as take over assets in Los Angeles, San Francisco, Denver, and Chicago.

However, David Bronner is likely looking for a windfall and wants to buy low so he can eventually sell high, which could be an objection by United's unsecured creditor's committee, who likely is trying to get a better deal.

Chip,

Supposedly the VP of US Airways express was quoted by a pilot as saying the US Airways wasn't in a position to move on any of UAL's assetts unless they fell into our lap. That dosen't sound to positive on the long heralded, long awaited UCT.