Today's Alpa Meeting With Lakefield

[Rico]

Boeing,

You have been one of the few that have had something of substance to add to the debate. I have appreciated the additonal news links and other pertinant info you have suppplied.

I do not mean to speak for you, yet it seems that reading through your response, and memory serves for your past postings, you are not against most of what is suggested in the Transformation Plan. Rather you (like all of us) would prefer to see concrete evidence of management's proposed changes actaually happening, see the transformation occur, and see the company becoming what they have proposed (or start the process) before you toss in your support let alone care to entertain further concessions.

If that is inncorrect, I apologize for my assumption. If it is what you think, then I agree with you.

But I have been trying to keep a "Glass half full" attitude regarding if real change is occuring. I think US has no choice but to go trough these changes they have announced. I happen to think that this sounds more like a real plan rather than the smoke and mirrors of the past. And I think that they have started the process in motion as much as possible without new labor agreements in hand. For example. announcing the PIT drawdown is unwelcome news to many, but in contex such a thing is the first step in moving those aircraft onto point to point routes..

Because I feel much still depends upon getting new agreements in place if only to secure further financing, period. Without financing, growth is a pipe dream. Without profitable growth, there is ittle hope for us to remain alive, let alone competitive.

 

[X-U]

A quick way to lower CASM would be to go to all-coach configuration on all but Trans-Atlantic flights. JBLUs 320s hold 162 versus 142 for US, almost 15% more.
While there are lots of FFs who want the fat seats, the market, as evidenced by WN and JBLU is showing that demand is not sufficient to recoup the costs. As all of the free-market proponents like to point out, market forces will force supply to match demand. The demand for First Class, at the cost that is required to produce it, is not sufficient, but the demand for coach seats is, as evidenced by the high low factors.

 

[cavalier]

Rico,

Ok, I'll take a stab at this....

"Maintain or increase current wage levels"
While I'd be the first to say a raise would be nice, it's not likely to happen and certainly not expected. However, for us pilots the wages are not much above the current "yardstick", and if you throw WN into the equation they're pretty competitive.

"Maintain or decrease current productivity levels"
I don't want to be less productive, but I don't want to be blamed for being unproductive when the source of the problem is the business model, not me. Productivity has two components - one of which is output or ASM's in our case. If I went to WN, AWA, or JB and took my contract with me I would instantly be more productive. Why? Because the business model is much more efficient.

"Keep PIT as a full sized Hub"
I personally don't have the data to know whether PIT should be retained as a hub or not. However, since we're basically concentrated in the Northeast with only "spokes" outside this region, I do wonder what the effect will be of having CLT as our only connecting hub as envisioned in the Transformation Plan. Will our passengers from New England going to/from the upper midwest still choose us if they have to connect thru CLT instead of PIT or PHL, or will they go to CAL thru EWR/CLE, NWA thru DTW, or even UAL or AMR thru ORD?

"Do not buy any regional jets whatsoever"
Never said that and never will. There is a place for "RJ's", whether the BAC-111 or F-28 in their day or the CRJ-700 or Emb-170 today. The key is to use them properly, not just get lots because you can pay the employees that work them less. Even with the lower labor costs, they are still more expensive per ASM than larger planes.

"Pull financing out of the clear blue and grow mainline, esp widebodies"
As pointed out in a post above, growing mainline doesn't necessarily mean adding airplanes. We can produce more ASM's by flying the planes we have more per day and flying them further per flight, and isn't increasing the number of ASM's produced effectively growth? As far as financing new mainline aircraft, that was (to me) one of Siegel's blunders - tying up all the financing that he could beg, borrow, or steal on up to 400 RJ's while parking mainline aircraft at the same time. Some of that financing could have been used to keep some of those parked aircraft flying or to get more mainline aircraft.

"Management stop asking for any further concessions, no matter what"
I'll admit, it would be nice to see management do something with the concessions they've already been given before they ask for more. Until the business model is made more efficient, concessions are merely a delaying tactic. More concessions may slow the approach of the day or reckoning for this airline, but won't stop that approach. One quick example - our "Premier" hub in PHL. Among all the ways it is inefficient is the fact that it has the 5th highest average taxi time in the country behing ORD, EWR, LGA, and JFK (the afternoon international rush brings JFK's average slightly above PHL's). PHL's average taxi-out time is 10 minutes higher than CLT's (25.5 minutes vs 15.5 minutes). Remember that time spent in taxi costs money - crew pay, fuel burn - but has ZERO productivity since no ASM's are produced. Let's see - 10 minutes average per flight X number of flights per day X 356 days a year = big bucks in cost and lost productivity.

"Get rid of MidAtlantic, rid of "Mainline Express", rid of US Airways Express"
Just like the RJ's, the Express operation has a place. Unless, of course, you're talking about "getting rid" of it because we bring it all in-house. I've said before that I'd prefer all flying be done by one airline with one seniority list. There could be a differentiation made for Express flying in the contract - we did it for MetroJet. My second choice would be to have the W/O'ed carriers do all the express flying and eliminate the affiliates - why give them a profit (and watch them grow) to fly our passengers when we're losing money and contemplating more concessions?

Jim

[post="168076"][/post]​

After reading this it only further affirms my position that U doesn't deserve to live. Trying to change its entire concept every year throwing millions is like a dog chasing it's tail.

I especially agree here with Jim on the concessions only prolonging the inevitable future of U, which is NO FUTURE.

They had their time and wasted it and now the employees are absolutely against U’s management along with ton of once loyal customers.

Like that report says, U may end up being worth more dead than alive, and personally I feel we are already at that point and I am not banker or MW with a genius business mind, just a grease monkey combo other skill trades that help make rich men even richer.

Working at U as an executive coming up with a plan, good bad or indifferent makes you very wealthy and does nothing for U, THIS will be the real cause of their demise.


So like on another topic that no one answered, I'll ask it again: Please explain the virtues of U's further existence, please explain the pro's of U continual struggles and how that benefits anyone? All it's doing is making old employees even older with still no future, where is the sense, why are we here, someone please explain why U deserves to live longer off the backs of retirees, vendors, current employees, other companies, banks, on and on, why is it so damn important that U's life support not be terminated? Hell, they want to legalize euthanasia but at the same time keep a sorry company like U’s life sacred, where's the logic?

 

[Rico]

Please explain the virtues of U's further existence, please explain the pro's of U continual struggles and how that benefits anyone?

I will take a crack at answering this one...

1. Feed my baby girl
2. Feed my wife
3. Feed myself
4. Clothes on our backs
5. Roof over our heads

I could go on, but those are the five most important ones to me.

Like I said before, wishing that the job (I and tens of thousands rely upon to make make a living) to "shut down" is moronic. :angry:

It is easy to gripe, easy to whine, and real easy to knock everything without offering any plausible alternative.

 

[BoeingBoy]

Rico,

"you are not against most of what is suggested in the Transformation Plan. Rather you (like all of us) would prefer to see concrete evidence of management's proposed changes actaually happening, see the transformation occur, and see the company becoming what they have proposed (or start the process) before you toss in your support let alone care to entertain further concessions."

Well, not quite right. Going back at least to Wolf (all the eggs in the merger basket with no plan B), thru Gangwal (something of a caretaker period), and thru Siegel (exited BK and apparently thought the job was done), no one has bothered to create an efficient operation. To give Lakefield some due, he's come in when time is running out with too little cash and no available financing to do much of anything (Of course he sat on the board while Siegel twiddled his thumbs).

The "new & improved" transformation plan has some good ideas - increased utilization of the assets, more point to point flying, etc. The problem as I see it is that implementation has been put off so long that there is not sufficient time to implement them, especially at the pace I've been led to believe is managements timetable. So we're stuck at the intersection of too little, too late, and too slow.

The single biggest mistake that past management made (again, from my point of view) was shrink the airline too much. The single biggest mistake this management is making is not expanding the airline fast enough, because that is the single thing that will potentially have the largest impact on our unit costs.

I know that there are those who say that once the TP is in place, a whole wonderful world of financing will open up, allowing us to do exciting things. I only know that without the TP being in place we risk losing the RJ financing. With the TP in place, we'll probably keep the RJ financing, but be stretched to the limit because of it. Who in their right mind would loan us more in that scenerio?

I fully expect that ALPA will reach an agreement with the company on more concessions. That agreement may well pass membership ratification. But with 27 months till retirement, I fully expect the doors to close before I get a chance to retire.

Jim

 

[WorldTraveler]

As a US outsider but with some knowledge of the industry, I cannot believe that US transformation will be successful if it involves moving assets from PIT which is costly but has decent revenues to NE-Florida and other highly competitive leisure point to point markets. US is in absolutely no position to jump back into some of the most brutal and competitive markets in the world even with concessions from all of its unions. Point to point flights are great and I do agree with the logic but the markets US is picking are not the kind that will ensure US' success.

I am not an advocate of shutting the door to any business but the reality is that US has squandered too many opportunities and wasted too much time. Lakefield might be the smartest guy and have the best plan but US has alienated most of its workforce at exactly the time when that group is what will make or break the company's turnaround efforts. The margin of error in the airline industry is razor thin and I'm afraid that US and UA have exceeded that margin and will never be able to recover.

 

[USA320Pilot]

BoeingBoy:

BoeingBoy said: "I fully expect that ALPA will reach an agreement with the company on more concessions. That agreement may well pass membership ratification. But with 27 months till retirement, I fully expect the doors to close before I get a chance to retire."

USA320Pilot comments: Management has not yet fully articulated how they will come up with their $700 million in cuts, but yesterday Lakefield said they would be provided to the Negotiating Committee, and from the type of conversation I believe they will be provided before next week.

In addition, yesterday I saw the confidential financial information along with the MEC and I can tell you this, your comment above is inaccurate, if the TP is implemented in the third quarter.

Separately, I have been told what the projected TP increased utilization point-to-point implementation date (not yesterday) will be and it will be implemented like a light bulb being turned on. Although for some the increased flying will not come fast enough, I fully understand the strategic rational of what management is doing and agree with their plan.

Respectfully,

USA320Pilot

 

[BoeingBoy]

The $700 million is relatively easy to explain, just harder to implement. Increasing a/c utilization by 15% would get you to within spitting distance of the goal.

If they are going to increase utilization "like turning on a light bulb", I'd like to know two things. Why haven't they done it already (and none of that nonsense about "can't without contract changes" since we both know it's a case of won't not can't), and who's going to be riding all those new flights while we wait for schedules to be loaded into res systems, tickets to be sold, etc.

Jim

 

[mweiss]

Until the business model is made more efficient, concessions are merely a delaying tactic.

[post="168076"][/post]​

Absolutely. And that's the biggest tragedy of all. The concessions have been viewed as the goal, not the means to a goal.

I've said before that I'd prefer all flying be done by one airline with one seniority list. There could be a differentiation made for Express flying in the contract - we did it for MetroJet.

I agree that it'd be the right approach. It would vastly reduce the overhead that US currently has with all of the W/Os and affiliates.

 

[mweiss]

While there are lots of FFs who want the fat seats, the market, as evidenced by WN and JBLU is showing that demand is not sufficient to recoup the costs. As all of the free-market proponents like to point out, market forces will force supply to match demand. The demand for First Class, at the cost that is required to produce it, is not sufficient, but the demand for coach seats is, as evidenced by the high low factors.

[post="168086"][/post]​

Whoa there. I suspect you're seeing things that aren't there. Have you checked out the difference in yields between US and WN in competitive markets? Admittedly, I haven't (Jim, you have the data on market yields...could you run those numbers?), but I would bet that the yield differential more than makes up for the difference in costs attributable to decreased seats and increased costs (free booze, meals, etc.).

 

[EyeInTheSky]

Just read ALPA's financial review of the company. Guys, it's pretty bad. Liquidation is a real possibility. That being said, this whole thing could come down a whole lot sooner than anyone anticipated.

 

[BoeingBoy]

I haven't gotten into yields. With the rapidly changing environment (LCC growth, GoFares) the BTS data is a snapshot of what was, not what is. The only thing I've seen is way out of date - the Unisys report from last year. I think it was the one around when WN announced service from PHL.

They looked at competitive markets with connections on US thru PHL and WN thru BWI. IIRC, our yields were lower than WN's, but I'd have to go back and check to be sure.

Jim

 

[mweiss]

As a US outsider but with some knowledge of the industry, I cannot believe that US transformation will be successful if it involves moving assets from PIT which is costly but has decent revenues to NE-Florida and other highly competitive leisure point to point markets.

[post="168112"][/post]​

You need to understand that 80% of the PIT traffic (as a hub) was connecting traffic. Connecting traffic has lower yields than nonstop, and higher costs. Thus, while the yields of PIT O&D may well have been good, its impact was overwhelmed by the lower-yield, higher-cost connecting traffic.

 

[BoeingBoy]

Ok, here it is...

"US Airways is unable to achieve a meaningful price differential vis-à-vis Southwest. In fact, in short haul markets (up to about 700 miles) Southwest is
generally able to charge slightly higher average fares. Figure 21."

From the December 2003 Unisys scorecard.

Jim

 

[A320 Driver]

The $700 million is relatively easy to explain, just harder to implement. Increasing a/c utilization by 15% would get you to within spitting distance of the goal.

If they are going to increase utilization "like turning on a light bulb", I'd like to know two things. Why haven't they done it already (and none of that nonsense about "can't without contract changes" since we both know it's a case of won't not can't), and who's going to be riding all those new flights while we wait for schedules to be loaded into res systems, tickets to be sold, etc.

Jim

[post="168124"][/post]​

That sums it up exactly. It's easier to bully the employees into concessions than to make the necessary changes. Same old middle management...same old problems. If they were serious about a transformation plan, the VP of OPS office would have been temporarily vacant after Lakefield took over.


A320 Driver B)

"Nothin but dogs here. If you flew a quail through the room, they'd point"
Barney Fife


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