Psa To Be Sold?

[skyguy25]

Please tell me why you feel that of the WO, PSA is the one that is going to be sold? They are the ONLY profitable division of Airways- doesn't make sense to get rid of the only thing that is working around here. PSA will become the only Express division owned by USAirways. No Alle-pied or Mid Atlantic. One of the worst things that Airways did was remove PSA's presence in the West. What a loss. Any chance to regain that with PSA? Anyone who was anyone flew PSA Airlines, and STILL talk about how they miss it. Let's smile again.

 

[Cloud Watcher]

US Airways needs the cash for short term survival. Mesa will be only too happy to buy up your RJ's.

Don't be affraid, I'm sure you will look good with a blue Mesa ID.

 

[Furloughedagain]

Regardless of whether or not the subsidiary PSA is profitable or not (arthur anderson accounting notwithstanding...) is irrelevent. The FLYING that is done by PSA airlines would be profitable for group regardless of who actually operates the aircraft.

I'm basing this opinion on the fee-for-departure business model.

Basically a fee-for-departure is nothing more than a wet-lease. US Airways wet-leases a Canadair Regional Jet. For their fee they receive 50 empty seats, a crew, an aircraft, fuel, insurance etc.

What US Airways chooses to do with those 50 seats is entirely up to them.

They could sell 50 seats, or 1 seat. The fee they pay that carrier is the same.

Example: (numbers VERY simple for the sake of discussion)

So lets just say (for the sake of argument) that the fee-for-departure on a given flight-segment is $1000.00

US Airways goes out and sells 50 seats for $500 yielding $25,000 for that flight segment of which, $1000.00 goes to Chautauqua or whomever.

Total profit to US Airways = $24,000

Example #2 - Wholly Owned:

Now lets say US Airways has a subsidiary such as PSA operate the same flight.

They go out and sell 50 seats for $500 per seat yielding $25,000 for US Airways.

Now, from that $25,000 US Airways has to subtract the costs of running an airline.

• General Offices, Headquarters, Hangars, Facilities
• Employee Costs: Flight crews, dispatchers, schedulers, mechanics
• Aircraft Leasing and Maintenance Costs Plus Depreciation
• Ground Servicing and Ground Service Equipment
• Insurance
• Other Misc. Expenses

Lets say that the total expenses for this particular flight segment equal $1050.

Total profit to US Airways: $23950.00

You see, regardless of whether or not the product is owned by US Airways it may be MORE EXPENSIVE ( and therefore the company makes LESS PROFIT) by having it flown by a subsidiary.

This phenominon is not exclusive to the regionals either -- as you can see by the use of codeshares and larger and larger "regional jets" the mainline product has been outsourced to the lowest bidder as well. It is a business arrangement that, unfortunately, is in the best interest of the company.

Lets do a list of Pros and Cons for Contracting:

US Airways - Pros:
- Regional Jet Flying at a Fixed Cost
- An Express product that the customer perceives to be seamless
- No need to dump resources into a capital intensive operation
- Contract carriers can be bid against one another

US Airways - Cons:
- Less control over the product, customer service, employee uniforms etc.
- Funding growth (potentially) for competitors who also codeshare with vendor.

Codeshare Partner - Pros:
- Fixed Costs allow for very simply cost/profit analysis and make it easier to secure financing for more growth.
- Multiple codeshare partners reduce jeopardy associated with partnering with one major carrier.

The Big Question: What is Cheaper?

The big question facing not only US Airways but almost every carrier that chooses between wholly-owned regionals and codeshare partners is, simply:

What costs less? The FEE, or the cost of running an airline?

Since the marketing department is going to sell those 50 seats regardless it just comes down to who is cheaper.

In the past the codeshare product may have been inferior to the wholly-owned product. Today, that could not be further from the truth. Super-Regionals such as Mesa, Chautauqua, ACA, and Skywest are providing high quality service to their major airline customers that are nearly TRANSPARENT when compared to wholly-owned regionals.

Which means to the beancounters upstairs -- its all about who can do it cheaper.

My opinion? PSA will be sold to Mesa Air Lines and the US Airways customers won't notice the difference.

 

[BoeingBoy]

Not to be overly picky, but this from Mesa's annual report...

----------------------
The contracts also include reimbursement of certain costs incurred by Mesa in performing flight services. These costs, known as "pass-through costs," may include aircraft ownership cost, passenger and hull insurance, aircraft property taxes as well as, fuel, landing fees and catering. The contracts also include a profit component that may be determined based on a percentage of profits on the Mesa flown flights, a profit margin on certain reimbursable costs as well as a profit margin based on certain operational benchmarks.
-----------------------

Not quite the same as a wet lease where the fee includes all the costs.

Having said that, I agree that the company seeks the cheapest way to provide the express seats. Just hope they look at the TOTAL cost of affiliate flying vs W/O, not just the fee.

Jim

 

[DorkDriver]

US Airways needs the cash for short term survival. Mesa will be only too happy to buy up your RJ's.

Don't be affraid, I'm sure you will look good with a blue Mesa ID.

Buy them with what, stock options? Mesa can barely finance 24 RJs, and did you notice that what few jets they can finance lately are NOT for USAirways. If you allow the financing that U Group has secured for these 60 jets to go to MESA, Group risks the potential of letting MESA use these aircraft for their other feeds. CHQ has a few airplanes that they use on both the Delta, American, and USAirways side. Yeah, you can sign contracts saying "you will only fly these airplanes for us", but everyone accociated with USAirways knows what a contract means around here. Becareful what you predict, it might come true. I think it would be more wise for Dr. Bronner to allow PSA to be sold to something like "RSA Holdings, Inc." or something other than MESA. Why put all your feed into one basket, especially one like Mesa? One day Mesa could say, "We don't want to feed USAirways anymore, we can make more money feeding America West with those jets". If that happens, J4J at MESA is all history and so is USAirways.

 

[N628AU]

You are wrong. Mesa is close to finalizing financing for all their planned deliveries this year and into 2005. They have never missed a delivery due to financing problems. The only reason they have been getting any used equipment is that they can get their hands on them rather quickly.

Where are you getting your information from anyway?

 

[d328pilot]

Mesa is dropping 700+ million to get new 70 and 90 seat rjs. There is absoutely no way that they can finance a purchase of PSA or the additional rj deliveries. They just dont have that much money.

The names i recall seeing in the news articles that had bid on assets are AA, DL, FL, and B6.

 

[ACrazy8]

Funny how everyone who is associated with the 328 says, "no way MESA will buy PSA" and everyone else is saying, "more than likely MESA will buy PSA." Just an observation........

 

[flyin2low]

One of the worst things that Airways did was remove PSA's presence in the West. What a loss. Any chance to regain that with PSA? Anyone who was anyone flew PSA Airlines, and STILL talk about how they miss it. Let's smile again.

You, Jetstream International, are not PSA. Your company merely took the name in 1995. How dare you try to falsely assume the look or resurrect the business model of a once great airline. If you wish to try something original on your own, I have no problem with that. :down:

 

[d328pilot]

make no mistake about it...no one here wants to be bought by mesa. but mesa cannot just create cash to buy us. where are they going to get the money from? Why were they not listed among the ones bidding on assets?

If memory serves, your airline is the one that made us take the name PSA. I dont think it was our choice. Had we known how we would be treated, maybe red headed stepchild international would have been more in line.

 

[batman]

"""You, Jetstream International, are not PSA. Your company merely took the name in 1995. How dare you try to falsely assume the look or resurrect the business model of a once great airline. If you wish to try something original on your own, I have no problem with that. """

That is very true. Piedmont used to be Henson and PSA started as Jetstream Intl (started flying with those jetstream 31s). Neither has any conection to its current name.

 

[Cloud Watcher]

The PSA folks are in denial. If Group wants to sell off PSA your'e toast. Don't fool yourself! PSA is a flee on a dog's rump for Mesa. Park the 328's then start to worry about the future. They are dressing up the WO's for sale. Just because PSA is flying RJ's does no put you above anything.

The longterm prospects for US Airways are grim at best. I believe that Bonner will get his investment back no matter what. If it means selling off assets so be it. With all of the Mainline employees that have been hosed, they will not blink to get rid of PSA if it means survival of the airline. Even if it is just for 6 months!

 

[d328pilot]

from the mesa website:
As of December 31, 2003, the Company's cash and marketable securities were approximately $159.8 million, including restricted cash of $9.3 million.

just because mainline is flying an airbus or boeing doesnt mean you are above anything either. I doubt the "employees" will have the choice of which assets are sold.

time will tell

 

[Furloughedagain]

Well THAT much is true.

Mainline is currently less about 130 airplanes (as compared to 2000) including:

All of the DC9s, MD80s, F100s (which for all intents and purposes was an 85 seat "RJ"), and 737-200s along with all of the associated staff -- 12,000+ employees.

I don't feel that the remaining mainline employees feel any sense of entitlement based on aircraft type. I think they know very well how it feels to be downsized and outsourced into oblivion.

And for the record, prior to Jetstream Intl., PSA was known as VeeNeal.

I miss those J31s... (sigh) Good times...

 

[Light Years]

skyguy-

You are talking about two different PSAs. The original PSA, Pacific Southwest Airlines, has been fully merged into "mainline" US Airways. All thats left is the empoyees as not a single PSA route is still flown by US, and with the retirement of the MD80, I dont think any aircraft are left either- just some terrific people from a really terrific airline of the past.

Jetstream International was a wholly owned airline of Piedmont Airlines, operating as Piedmont Commuter when USAir bought Piedmont. In 1995, USAir decided to change the names of its three wholly owned regionals to reflect the three major airlines that had made up USAir. This kept the historical names in the family, and more importantly, stops anyone else from using them. Jetstream was given PSA, or rather PSA Airlines (theres nothing Pacific or Southwest about Ohio).

At one point Jetstream did temporarily do some West Coast Express service, to replace States West. For a year they served several CA cities from the LAX hub with J31s. This was eventually taken over by Trans States Airlines, which did it until it was scrapped altogether in 2000.