Today's Alpa Meeting With Lakefield

[mweiss]

Variable costs are costs that change with capacity... For example, if we fly more, we buy more fuel, if we fly less, we buy less fuel.

[post="168405"][/post]​

That's true, though not necessarily in a linear fashion. Imagine, for example, increasing the number of ASMs 15% by simply increasing average stage length by 15% and flying the same number of segments. CASM should drop, since a great deal of fuel and wage dollars are "wasted" by getting from gate to cruse and back.

Nonetheless, as you noted, the biggest savings come from amortizing the fixed costs across a larger number of ASMs.

Furthermore, there is the short term problem that it will be difficult to increase ASM's while closing a hub.

How so? Unless the planes are being parked or are flying fewer hours in the day, the number of ASMs shouldn't change, even if you close a hub.

Lastly, you need to consider the declining yield and RASM that come with utilization flying (although, overall this is probably offset by increasing RASM of point-to-point traffic instead of connecting traffic).

What's übercool about point-to-point is the quintuple whammy on profits:

1. Average fare rises due to greater percieved utility
2. Provided the market's large enough, load factors should increase, again due to the greater perceived utility of a nonstop
3. RASM goes up, even without the average fare increase, because the number of ASMs used to get the passenger to the destination goes down, which spreads the R over fewer ASMs
4. CASM drops for the same reason as mentioned above for the RASM rise
5. CASM also drops because of fewer takeoffs and landings between the passenger's origin and destination

Quite an impressive showing, wouldn't you say?

 

[N628AU]

Cav:

A shutdown of US Airways and the closure of maintenance, training, operations, reservations and other facilities would have a devastating effect on the local economies of both Pittsburgh and Charlotte. Tax revenue would be under pressure, small businesses would cease to exist that depend upon airport associated revenue, and the overall local economics would suffer badly.

For example school enrollment would drop, people would move from the community seeking employment, and property taxes would rise. Many companies would not want to have their corporate offices in these locations, which could cause more collateral damage to those reasons.

Yes, the collateral damage would be significant for Western Pennsylvania and North Carolina if the business enterprise fails.

Respectfully,

USA320Pilot

[post="168006"][/post]​

You obviuosly have no clue about Charlotte or North Carolina's economy. It is hardly dependent on any one company (except maybe B of A). Charlotte is the second largest banking in the US and has the headquarters for both B of A and Wachovia downtown. Kannanpolis, just north of Charlotte, just saw Pillowtex close it's doors for good last year, and about 5,000 people there lost their jobs (an ironically close number to the US employment level in Charlotte). It was the biggest mass layoff in NC history. Neither decimated the economy. Was there some pain? Yes. Was it the end of life as we know it? No. Is it in everyone's best interest for U to survive? Yes. Will I be jumping from a bridge if the place folds? No.

 

[BoeingBoy]

mweiss & funguy2,

Stimulating discussion of the potentials and possible pitfalls of increased utilization that I missed this afternoon but the wife said I had to go out and make some money.

For my 2 cents worth before I call it a night (short layover @ GSO so came home):

One or both of you are correct that my analysis only covered the cost side of the equation. The revenue side is obviously much more complex with many more variables. plus some amount of pure unknown. I would certainly hope that there are markets that could be profitably served with the increased flying, especially as the unit costs would be lower overall making currently marginal/unprofitable markets look better.

However, you are also correct in that increased a/c utilization has multiple benefits. I've focused on strictly the a/c cost part - what effect increasing utilization would have on overall mainline CASM due to the low incremental cost of operating the plane more. Other factors that come into play would be the possibility of using less gates at some airports due to the streamlining of operations that was needed to increase the utilization, shortened taxi times because of those streamlined operations at the hubs resulting in less fuel burn and crew cost, less take-offs and climbs with more p2p or longer stage length flying again saving fuel (at least for the 737 flying that we do now probably 1/3 to 1/2 the average fuel burn is from the gate to cruise altitude), etc.

Anyway, enjoyed reading your discussion and look forward to seeing more when I get back home on Monday.

Have a good weekend, everyone....

Jim

.

 

[WorldTraveler]

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.

[post="168146"][/post]​

In general it is true that connecting traffic in the same O&D is less profitable than nonstop service in the same O&D. However, replacing fairly high yielding service to small cities (which have relatively little LCC competition) with NE-Florida traffic in highly competitive markets will result in substantially higher losses than what US is seeing today. The Caribbean and Europe can produce yields higher than US' costs (although both are highly seasonal) but NE-Florida cannot, even factoring in significant reductions in US' costs.

US' problem w/ PIT was costs, not revenue. PIT's costs were too high to allow it to ever be a sustainable hub. PIT was built with little regard for the per passenger cost. Sadly, several other hubs (UA at DEN, AA at MIA, AA at JFK) have per passenger costs as high as or higher than US at PIT - which says alot about the future viability of those hubs. CVG and PIT have very similar local populations; DL's CVG hub and US' PIT hub competed for many of the very same O&Ds but DL's hub costs in CVG are a fraction of of US' in PIT. DL took a small local city and runs many passengers through an inexpensive operation at an airport where nearly 8 of 10 passengers connect.

It's about putting assets in places where the cost and revenue equation is most favorable. Closing PIT will address the cost issue but I'm very skeptical if the revenue plan involves a significant increase in NE-Florida flying.

 

[skyflyr69]

Since most of the "hardliners" wish to shut it down i sure hope George bush does something to reduce unemployment benefits.
i just think its wrong that folks get benefits over a 26 week period that they should go out and work at Mc d's or home depot.
its like the neighbor saying "my house is worth 200,000 dollars" but sells it for 180,000. Sorry neighbor , its only worth 180,000 then.
the market for airline employees has dropped so much that you types just can't grasp reality.
business 101: if agent A at airline B makes less than you guess what ? the market will eventually go to agent A at airline B.
WHY can't you guys grasp this?

 

[700UW]

Since most of the "hardliners" wish to shut it down i sure hope George bush does something to reduce unemployment benefits.
i just think its wrong that folks get benefits over a 26 week period that they should go out and work at Mc d's or home depot.
its like the neighbor saying "my house is worth 200,000 dollars" but sells it for 180,000. Sorry neighbor , its only worth 180,000 then.
the market for airline employees has dropped so much that you types just can't grasp reality.
business 101: if agent A at airline B makes less than you guess what ? the market will eventually go to agent A at airline B.
WHY can't you guys grasp this?

[post="168633"][/post]​

Great to see how much compassion you have.

Your theory is flawed, please explain to me why Southwest is doing so well, the only airline to be profitable for years and years and yet they pay their employees more then anyother major airline.

 

[av60]

Great to see how much compassion you have.

Your theory is flawed, please explain to me why Southwest is doing so well, the only airline to be profitable for years and years and yet they pay their employees more then anyother major airline.

[post="168634"][/post]​

Hmmmm
Maybe they don't have shirt tail riders??????????????

 

[PITbull]

Since most of the "hardliners" wish to shut it down i sure hope George bush does something to reduce unemployment benefits.
i just think its wrong that folks get benefits over a 26 week period that they should go out and work at Mc d's or home depot.
its like the neighbor saying "my house is worth 200,000 dollars" but sells it for 180,000. Sorry neighbor , its only worth 180,000 then.
the market for airline employees has dropped so much that you types just can't grasp reality.
business 101: if agent A at airline B makes less than you guess what ? the market will eventually go to agent A at airline B.
WHY can't you guys grasp this?

[post="168633"][/post]​

What we grasps here is that you are a loser.

There's a race to the bottom, and what needs to radically change concurrent with the industry is senior exective compensation, perks, bonsuses an retirment packages.

 

[700UW]

Hmmmm
Maybe they don't have shirt tail riders??????????????

[post="168797"][/post]​

Ticket agents and Reservations are IAM, F/A and Ramp are TWU and Mechanics are AMFA and yes they have cleaners too.

Try again elitist.

 

[MrAeroMan]

You obviuosly have no clue about Charlotte or North Carolina's economy. It is hardly dependent on any one company (except maybe B of A). Charlotte is the second largest banking in the US and has the headquarters for both B of A and Wachovia downtown. Kannanpolis, just north of Charlotte, just saw Pillowtex close it's doors for good last year, and about 5,000 people there lost their jobs (an ironically close number to the US employment level in Charlotte). It was the biggest mass layoff in NC history. Neither decimated the economy. Was there some pain? Yes. Was it the end of life as we know it? No. Is it in everyone's best interest for U to survive? Yes. Will I be jumping from a bridge if the place folds? No.

[post="168451"][/post]​

Did the employees of Pillowtex make the amount of money the people employed at UAIR make? No.
Has the City and County economic committees sent out questionaires to the companies that have relocated to the CLT region and asked them what was the most important reason for their relocating to the CLT area. Yes.
Was the vast majority of those responses the fact that the CLT region had a hub airport with service to anywhere they wanted to go the first reason they cited? Yes.
Is the City and County nervous that losing UAIR or the City losing its hub status will hurt its image as well as it's ability to recruit large companies to set up shop here? You bet your sweet bippy they are!

Do you think it's a coincidence that BofA was one of the main lenders of the govt backed loans to UAIR? I don't.

 

[700UW]

Mraeroman you are wrong. BOA only backed $25 million of the unsecured $100 million of the loan

US Airways also closed on exit facilities that provide the company with $1.24 billion in liquidity, including a $240 million equity investment from the Retirement Systems of Alabama Holdings LLC (RSA), and a $1 billion loan - $900 million of which is guaranteed by the Air Transportation Stabilization Board (ATSB). The remaining $100 million of at risk funds are provided by RSA ($75 million) and Bank of America N.A. ($25 million). All funds were received today. The company repaid RSA $372 million owed on the debtor-in-possession facility, and also paid RSA $9.4 million of administrative rent, and paid structuring, loan syndication, collateral agent, loan administration and professional fees and expenses totaling approximately $48 million.

http://www.usairways.com/about/press_2003/nw_03_0331.htm

 

[USA320Pilot]

BOA replaced NPC as the credit card processor and owns the US Airways Dividend Miles Visa card. BOA has a huge stake in US Airways and vice-versa.

Respectfully,

USA320Pilot

 

[MrAeroMan]

Mraeroman you are wrong. BOA only backed $25 million of the unsecured $100 million of the loan

US Airways also closed on exit facilities that provide the company with $1.24 billion in liquidity, including a $240 million equity investment from the Retirement Systems of Alabama Holdings LLC (RSA), and a $1 billion loan - $900 million of which is guaranteed by the Air Transportation Stabilization Board (ATSB). The remaining $100 million of at risk funds are provided by RSA ($75 million) and Bank of America N.A. ($25 million). All funds were received today. The company repaid RSA $372 million owed on the debtor-in-possession facility, and also paid RSA $9.4 million of administrative rent, and paid structuring, loan syndication, collateral agent, loan administration and professional fees and expenses totaling approximately $48 million.

http://www.usairways.com/about/press_2003/nw_03_0331.htm

[post="168872"][/post]​

Get YOUR facts straight "Mr I Post Only Facts" or should it be "Mr I Post Only Those Facts That Make Me and My Corrupt Bloated Union Look Good"?

 

[700UW]

Get YOUR facts straight "Mr I Post Only Facts" or should it be "Mr I Post Only Those Facts That Make Me and My Corrupt Bloated Union Look Good"?

[post="169142"][/post]​

Glad to see you still have your lack of maturity and you can't even accept the fact that you were wrong.

But I would not expect anyless then baseless attacks from you. Keep up the good work.

 

[MrAeroMan]

Glad to see you still have your lack of maturity and you can't even accept the fact that you were wrong.

But I would not expect anyless then baseless attacks from you. Keep up the good work.

[post="169144"][/post]​

Lack of maturity?? Isn't that a case of, how did you put it? The pot calling the kettle black? Go back to practicing looking up your facts. You need the practice.