Serious Discussion About The New Plan

[BoeingBoy]

mweiss,

I'm coming to this thread late - been on a 4-day trip - but here's my thoughts...

As funguy2 said, the plan sounds like it could work. Rolling hubs, more point-2-point, rational fares, etc all sound like the things that need to be implemented and should have been done long before now. The problem I see is in the details.

Rolling hubs - from the public statement that 75% of the flights will be non-connecting, it sounds like merely spreading out arrivals & departures with no thought to trying to maintain connections. Sounds like using a current industry buzzword with no real idea of what it really means (or simply the lack of any idea of how to accomplish it).

Increased a/c utilization - much needed, but need the rolling hubs to accomplish it with the current fleet. I'm also hearing that the timeline is 4 years to go from just over 10 hours per day to just short of 12 hours - much too long a time. WN is over 12 hours now, I believe, and I've read that over 50% of their passengers make connections.

Too many RJ's - the plan is entirely about mainline and trying to reach 6 cent CASM (plus fuel), which is doubtful in itself. But unlike WN, AirTran (never can remember their designator), or even B6 (the Emb-190 is a modern-day 737-200 at 100+ seats, not a RJ, and will have mainline economics), we are not a mainline only airline. The seat mile costs of the all the RJ's (including the Emb-170) will assure that our system costs are well above any of the LCC's. As you probably know, the BTS released the 1Q04 financial data for the network, bigger LCC, and regional airlines, and our domestic system CASM went up to 16.04 cents while we no longer hold the title to highest yield (excluding express-type operators). That is the RJ effect.

In short (???), the "if" in "if we get a competitive cost structure we can expand mainline", etc is a very big "if" indeed. To stand a chance of getting a competitive cost structure we MUST expand mainline (growth will by itself lower unit costs), but financing all these RJ's is using up all the financing we can get.

Jim

 

[mweiss]

Back to the topic...

Someone who wants to talk about the topic! Thanks, funguy!

I feel that this plan should have been implemented in BK or earlier.

So do I, but here we are. The question to answer now is whether or not they are the right moves to make now, even if they should have been implemented several years ago.

There is no fleet simplification, no Express carrier simplification part of this plan, that I know of.

True. Of course, none of us knew what was in the plan anyway until it was put in a press release. So, for all we know, the simplification may be in the unspoken plan. I, for one, sure hope so. How's about taking all Express service inhouse and putting MAA on the job?

 

[mweiss]

I'm coming to this thread late - been on a 4-day trip

Glad to have you back. I missed your voice of reason.

from the public statement that 75% of the flights will be non-connecting

Not especially smart, is it? Of course, if the goal is to push connecting pax through CLT in order to reduce the overload at PHL, it might not be as dumb as it looks at first blush. Depends on whether or not there's enough O&D at PHL to obviate the need for connecting pax.

I'm also hearing that the timeline is 4 years to go from just over 10 hours per day to just short of 12 hours

As if the airline has four years to wait to get there... that's gotta be one of the lamest goals ever set.

As you probably know, the BTS released the 1Q04 financial data for the network, bigger LCC, and regional airlines, and our domestic system CASM went up to 16.04 cents while we no longer hold the title to highest yield (excluding express-type operators).

I didn't know. I've been spending a lot of time crunching my old data! But that 16c CASM is horrid! What on earth brought it up so much? Was this really based only on operating costs? And what happened to yield? Who's ahead now and by how much?

To stand a chance of getting a competitive cost structure we MUST expand mainline (growth will by itself lower unit costs)

Why "must?" I mean, sure, as a rule it's better to grow than to lay off. Is the demand there, though, at the prices US has to charge?

 

[funguy2]

RowUnderDCA:

I believe this is Seigel's plan, because I do not see how Lakefield could have put together a plan so quickly. However, you are probably correct in that this is not the same plan put together during BK. This is obviously a response to LUV, where the BK plan did not include the PHL assult. Maybe this is Seigel's second post-BK plan, the first never seeing the light of day due to LUV.

Boeing Boy:

You bring up a good point. We hear all this mumbo-jumbo about 6cent mainline CASM, moving Airbus jets to fly more point-to-point service from BOS/LGA/DCA... But we do not hear about where the RJs/turboprops from DCA/LGA are being redeployed to (since there is only a limited number of slots) or a general plan for the RJ's/MAA/MDA.

Previously, the mission for MAA/MDA was to right size the PIT hub, and the RJ mission was point-to-point service. Now, PIT will no longer be a hub, so what becomes of MDA/MAA? And if the point-to-point operations are now mainline, where do all the RJ's go?

mweiss:

Rolling Hubs work well in fairly large markets. PHL (stimulated with lower fares) should fit the bill. I agree there is probably some "buzzword" abuse going on here... Execs writing a check that now the scheduling guys have to figure out how to cash. However, the concept should work at PHL.

General comment:

The company (and USA320Pilot) has said much about America West contracts and before that Southwest contracts. My impression is that these carriers do it with less money AND less people... Thus furloughs and work-rule changes are a must... More info on these items are essential for the plan to work. I guess as an outsiders, I will have to rely on what I read in here, as this is not the kind of information generally made public.

 

[BoeingBoy]

mweiss & funguy,

Now that I've spent 2 hours catching up on old posts, I've seen your replys....

On the connecting, I agree that moving some connecting opportunities to CLT from PHL seems to make sense (anything to make PHL flow better). But going from nearly 100% connecting to only 25% connecting sounds like more than that. My guess (only that) is that much of the domestic mainline connection will be long-haul or international plus high density markets. I certainly hope that they don't plan on eliminating many of the connecting opportunities from medium/small markets to popular destinations. Presume also that express will provide a lot of shorter-haul connecting feed into the hubs instead of mainline, but then there's the problem of the higher unit cost of that feed - tends to offset the lowering of mainline unit cost.

The data's up on the BTS site but NWA took top honors in yield for the 1st quarter (15.47 cents vs our 15.43 cents.

Maybe "must" expand mainline is a little too strong, but I don't think by very much. In theory, we could become a mostly point to point and shed employees to fit the model, but there are expenses we couldn't shed. With the limit on expansion imposed by the fleet size and possible a/c utilization, there is a natural limit on the reduction in CASM due to the change in business model. The converse, expanding mainline by adding airplanes and increasing daily utilization provides a bigger "bang for the buck"

In another thread, someone asked why the LCC's were making money and the network carriers aren't. Look at Airtran, Southwest, and JetBlue - our main LCC competition. No express operation. Is the answer that simple - of course not, but if you want low unit costs you can't be flying around lots of airplanes with unit costs of 15 cents and up.

Jim

 

[mweiss]

Hmmm...looking at the BTS report, I notice that US still has the highest RASM. And, of course, the highest CASM.

But what's interesting is to compare US's Q4 2003 CASM with Q1 2004 CASM. It's up less than 0.15 cents, which is a smaller increase than anyone else except CO (which had about the same amount of increase). That, at least, looks good...

...until you see how RASM is falling. Nobody's RASM fell as far as US. NW's actually increased by an entire cent, which is truly an impressive performance, reflected in their yield. Only Air Wisconsin did a better job in that metric.

OK, so a couple of questions immediately come to mind:

1. What kept US's CASM overall in check?
2. Why did RASM fall so far so fast? Were the Go Fares already in place in Q1? Or was something else going on?

 

[PITbull]

Mweiss,

Lakefield sent out a newsletter to all employees in May citing that of ALL the legacy carriers and including some LCCs, that U had the highest CASMs at 10.2 cents exluding fuel. Only DL was second following UAL and than NW, AA and CO being last of the legacies.

I guess it could be worse, however, excluding United (who did better than us in their CASMs and are still in BK), with U BK filing, sheding much cost in Bk along with two major concessions from labor along with ATSB approval and Alliances....

I just have to shake my head in dismay.

 

[USA320Pilot]

PITBUll:

PITBUll said: "And don't sit and stretch the facts. ALPA IS SCHEDULED TO LOSE JOBS AS WELL! And you (USA320Pilot) do know how many.....cause I know how many!"

USA320Pilot comments: Today at the ALPA MEC Meeting the Negotiating Committee passed out a Term Sheet that addresses the new business plan and ALPA's potential participation.

The Term Sheet said, "Work rule changes specified in this Transformation Agreement shall be implemented in conjunction with attrition and growth in block hours and shall not cause any pilots to be furloughed or displaced to a lower-paying position or to an SJ. The total number of mainline pilots on the property shall be specified including 'the last pilot standing'."

ALPA has the ability to obtain its cost targets without additional furloughs and I suspect that will occur. Moreover, the language above is similar to the no furlough clause due to productivity improvements contained in the Supplemental Restructuring Agreement.

Regards,

USA320Pilot

 

[ua767fo]

The Term Sheet said, "Work rule changes specified in this Transformation Agreement shall be implemented in conjunction with attrition and growth in block hours and shall not cause any pilots to be furloughed or displaced to a lower-paying position or to an SJ. The total number of mainline pilots on the property shall be specified including 'the last pilot standing'."

ALPA has the ability to obtain its cost targets without additional furloughs and I suspect that will occur.

For better or worse, a new reality is upon this industry. To many are trying to hold on to old ways of doing business. Change has (and will never be ) easy. I think finally, ALPA is waking up to the new realities.

One of the functions of a union is to preserve jobs, so if this does just that, while allowing the company to morph into a successfull long standing entity, it is a win/win. Sadly there are many unemployed USAirways pilots, but the reality (even if I didnt like it when furloughed) is to protect the jobs and careers of the active members FIRST. Given a successfull business, recalls will then come in the future. Its not easy being on the outside looking in, but it is better so see the chance to return in the future, than to see the entire entity disappear. Leadership demands tough choices, let the AAA MEC act wisely.

DENVER, CO

 

[ClueByFour]

Translation:

The top 51% will gladly throw the bottom 49% under the bus to keep a mainline seat.

If U goes under, I'm going to make it a point to fly on B6 more often, in the hope I can find a 1985 U hire pulling gear for a 1991 U hire. And join Captain J4J laughing.

 

[PITbull]

PITBUll:

PITBUll said: "And don't sit and stretch the facts. ALPA IS SCHEDULED TO LOSE JOBS AS WELL! And you (USA320Pilot) do know how many.....cause I know how many!"

USA320Pilot comments: Today at the ALPA MEC Meeting the Negotiating Committee passed out a Term Sheet that addresses the new business plan and ALPA's potential participation.

The Term Sheet said, "Work rule changes specified in this Transformation Agreement shall be implemented in conjunction with attrition and growth in block hours and shall not cause any pilots to be furloughed or displaced to a lower-paying position or to an SJ. The total number of mainline pilots on the property shall be specified including 'the last pilot standing'."

ALPA has the ability to obtain its cost targets without additional furloughs and I suspect that will occur. Moreover, the language above is similar to the no furlough clause due to productivity improvements contained in the Supplemental Restructuring Agreement.

Regards,

USA320Pilot

USA320,


That's the alpa mec's plan. That's not managment's plan. i am in no position to devulge that infomation to you or anyone on this board. your mec is probably in 'confidentiality'.

But, i believe you need to corner your 'yahoo' Alpa committee and ask them just what is managment's intention on furloughs...cause you guys will be had. Rest assured, my friend.

There is not one group that will go uneffected by furloughs...i repeat...not one group.

 

[Rob]

Delta has today asked the DOT to renew their BOS-LGW route, which is currently dormant. In their application they admit that they want the route authority only in case they ever decide to resume flying it.

Given UAIR's fairly substantial position in BOS and existing Gatwick operation, it might make sense to go after this route with one provision: that the company is in a position to pioneer a low-cost, low fare operation. I don't think a me-too operation mimicking BOS's Heathrow flights would succeed.

Such a route would fit into the new plan's emphasis on transatlantic and p2p flying and could even operate with a PIT tag to try to hang onto what business remains in PIT.

 

[USA320Pilot]

ua767fo, I share your sentiment in your last post.

PITBUll, I disagree with your comment and I understand ALPA's and the company's position. Could there be furloughs? Absolutely. Will there be? I do not think so.

Respectfully,

USA320Pilot

 

[PITbull]

USA320,


i'll wager you a bet. pose this to your financial airline analyst. It maybe he won't b3e able to tell you this, so i suggest you ask your Alpa rep to be frank and honest.

You don't have to come on this board to say it...its for your group's Fyi.

There will be nothing your group can do to stop this....

 

[usairways_vote_NO]

ua767fo, I share your sentiment in your last post.

PITBUll, I disagree with your comment and I understand ALPA's and the company's position. Could there be furloughs? Absolutely. Will there be? I do not think so.

Respectfully,

USA320Pilot

Look at USA320Pilot post post above

In his mind there will not be any layoffs in pilot group. Yet he says and knows other groups will be voting to eliminate their jobs. But he say just quit don't vote no.

Wonder what motivates him to say that?
What motivates him to post his mantra?
Why does he lack credibility?