U Bk

[diogenes]

You can pretty much discount the work effort - U employees, until late, have consistently placed the company high in the DOT metrics.

Not wages - there was parity with the legacies forever (and less, for agents), lower than parity since 2002, and sub-LCC wages are approaching.

It is absolutely true U has deployed its assets, including the workforce, in far less than optimal conditions, for over a decade.

As the Good Book says, "..where there is no vision, the people perish."

The cold hard truth is, U has been saddled with third rate management for far too long. They have never approached the skills of a Davis or Kellerher, and thus cannot put their assets to the most productive and profitable use. As the marketplace will not long subsidize losers, $$$ had to be found, and U has only one choice - employees.

Now, the Palace is asking for subsidies of such magnitude from the employees, that any moron could turn a profit.

The proverbial rock and hard place.

God bless us all.

 

[usair_begins_with_u]

How did it come to this?

Wolf+Gangwal+Siegle+Bronner+Lakefield

 

[PRINCESS KIDAGAKASH]

How did it come to this? One word "DEREGULATION". The airline industry was one industry that should not have been deregulated! It doesn't follow the usual supply and demand of a market economy. When the "legacy" carriers are gone, the Southwest's,Jetblue's, and Airtran's will be the next target for cost cutting by a new type of airline called the "ULTRA LOWEST COST AIRLINE." I guess when the "LAWN DARTS" start falling out of the sky maybe something will be done to bring back some sanity in this God forsaken industry!

 

[Dont call me Shirley]

Deleted...OOPS

 

[Dont call me Shirley]

You can pretty much discount the work effort - U employees, until late, have consistently placed the company high in the DOT metrics.

Not wages - there was parity with the legacies forever (and less, for agents), lower than parity since 2002, and sub-LCC wages are approaching.

I

[post="179755"][/post]​

In the event that US survives, subsidized by sub LCC wages, the other legacy carriers are sure to join the race to the bottom.
Will the LCCs - whose success really lie in operational efficiency not "cheap labor" - become the "prestige carriers'" to work for with better benefits and pay than the legacies whose low pay will subsidize their inherient ineffciencies.?

Who woulda thunk?

 

[ELP_WN_Psgr]

How did it come to this? One word "DEREGULATION". The airline industry was one industry that should not have been deregulated! It doesn't follow the usual supply and demand of a market economy.

Could you give some examples where the airline industry fails to follow the normal laws of supply & demand as found in a market exonomy?

I beg to differ with you. What U suffers from is failing to recognize that it has to compete in a market economy.

You had deregulation. You had fares come down. You had more people fly. You had airlines add flights, hence employees. Bob Crandall figured out you could meet or undercut the LCCs (at that time, WN and PeoplExpress were about it) b7 charging one fare to business travelers (flexible, refundable ticket) and a low dollar fare to Grandma.

Over time, Joe Business Traveler got a case of the butt at Grandma, for lack of a better way to put it. he got tired of subsidizing her travel. So Mr and Ms Businessperson started climbing on the LCCs and found out that it was no worse, and in many cases better, than the product they'd been putting up with over at the legacy carrier. That fueled the dramatic increase in market share we've seen captured by the LCCs.

What would have happened without deregulation? You'd have had airlines jacking their fares up, and the haves would have flown, and the have-nots would have driven, and the airlines would be a whole lot smaller than they are today, and a lot of folks who were hired since 1978 would be doing something else for a living. A lot of folks who built commercial airliners would never have been hired by Boeing or whoever. Construction firms that erected magnificent airline terminals would never have needed to hire all the construction workers they did, because there would be no need for the behemoth hub terminals at some places.

Lower fares = more passengers. Higher fares = fewer passengers. I, for the life of me, cannot understand WHY USAirways persists in this belief that the demand for air travel is not elastic. They will slash and burn their fares in markets with competition, but charge the most outrageous sums of money where there is none. They'd have been a whole lot better off to set the fare at something rational, that reflects trus costs of providing the service, so that markets would not stagnate. I know a whole lot more folks would fly from PHL to BUF every day than a hundred or so (total O&D) if the average fare wasn't over $300. One way.

 

[Trin03]

One of the things that US Airways Corporate Honchos do not have is vision.

They do not have the sight of advanced thinking and forward thinking.

If they did... I do not believe they would be in Bk today.

 

[whatkindoffreshhell]

All this nonsense spewing about labor wages being the same as the LCC's is ridiculous!

Sure, maybe you now have the same hourly rate, but the LCC's productivity rates are much much higher compared to you sadsacks at USAir.

And none of you would've voluntarily left USair during the fat/stupid times to join LUV or anyone else.

Thank your union work rules for that bamboozle.

Sure, you're management could've done better (as could the mgmt of any of the other legacy carriers) but you folks still have your collective heads in the sand.

Or someplace else about three feet off the ground.

Good luck and I truly wish you well because nobody enjoys losing their job. But you are still clinging to the old 'industry-leading' mindset.

 

[PRINCESS KIDAGAKASH]

Here's your example. In a normal market when demand is high,prices go up, not down. In the airline industry, ticket prices are going down when the airlines have 80%+ load factors! In a typical market economy you don't add to the problem by adding more production either! Let me ask you this ELP_WN_Psgr. When Southwest goes bankrupt(Don't laugh!It could happen sooner than you think!), are you really gonna be willing to get on an airplane that is flown by a computer(no human pilot's), worked on by minimum wage mechanic's by an outside vendor, and attended by minimum wage outsourced flight attendants? If you think this is an impossibility,THINK AGAIN!

 

[ITRADE]

You're forgetting that supply was increasing as well.

 

[RowUnderDCA]

You can pretty much discount the work effort - U employees, until late, have consistently placed the company high in the DOT metrics.

Not wages - there was parity with the legacies forever (and less, for agents), lower than parity since 2002, and sub-LCC wages are approaching.

It is absolutely true U has deployed its assets, including the workforce, in far less than optimal conditions, for over a decade.

As the Good Book says, "..where there is no vision, the people perish."

The cold hard truth is, U has been saddled with third rate management for far too long. They have never approached the skills of a Davis or Kellerher, and thus cannot put their assets to the most productive and profitable use. As the marketplace will not long subsidize losers, $$$ had to be found, and U has only one choice - employees.

Now, the Palace is asking for subsidies of such magnitude from the employees, that any moron could turn a profit.

The proverbial rock and hard place.

God bless us all.

[post="179755"][/post]​

i think that part of the problem is that if u were to go to the "optimal' part of the market, it would become too crowded too. I suspect that u management still doesn't think that it can simply become WN. I think I agree. I don't agree that PI could not have become WN 15 years ago. U is trying to be a new kind of LCC, because just being WN really won't work.. they'd just go out of the frying pan and into the fire. A better model is to leap frog the business plans and offer the best of hub and spoke and the best of point to point at a cost competitive price. Transition to that is hard.. But even transitioning to being WN would be hard too.

 

[ELP_WN_Psgr]

Here's your example. In a normal market when demand is high,prices go up, not down. In the airline industry, ticket prices are going down when the airlines have 80%+ load factors! In a typical market economy you don't add to the problem by adding more production either!

The first thing you have to ask yourself is why do the airlines have 80% load factors? They have them because the fares are low.

Two things can happen:

If you could, you would want to raise prices.

But you have airlines who can make money at the low fares, hence they wish to add capacity. So you can't raise the fares, because then you will be undercut by a competitor, and your business will migrate over to them.

And airlines don't have to make a lot of money on each passenger to warrant them wanting to add capacity. Since you brought up Southwest, take them as an example. Last quarter...they probably made about $9 in operating profit on every passenger they carried. So they can do two things...they can raise the price and try to squeeze more money out of each passenger they carry, or they can add capacity, so they carry more passengers from which they manage to make about 9 bucks profit per each. In their mindset, it is better to lower the fares and carry more folks, becuase that has the advantage of growing your company, which means you can hire more people, which means your work force is more junior, which lends itself to a lower average labor cost and lower CASM.

What you have cited is prima facie evidence that the airline industry is absolutely subject to the whims of a market economy. You say that LF is 80% while fares are low. That suggests to me that (a) a lot of people want to fly because of low prices (DEMAND) and (B) airlines don't wish to add a lot more capacity because of low prices (SUPPLY CONSTRAINTS). If that is not behavior IAW the forces of a market economy, I don't know what is.

 

[Segue]

One of the things that US Airways Corporate Honchos do not have is vision.

They do not have the sight of advanced thinking and forward thinking.

If they did... I do not believe they would be in Bk today.

[post="179788"][/post]​

What kind of "forward thinking" do you envision?

Perhaps you could provide an example of where they have NOT TRIED to reduce costs in the past. If they had never tried, I would understand.

 

[PRINCESS KIDAGAKASH]

Examples of how deregulation has worked so well. PAN-AM(BANKRUPTED-OUT OF BUSINESS),TWA(BANKRUPTED THREE TIMES-FINALLY PUT OUT OF MISERY BY AA),BRANIFF INTERNATIONAL(BANKRUPTED-OUT OF BUSINESS),EASTERN(DESTROYED BY FRANK LORENZO-OUT OF BUSINESS),CONTINENTAL(ALMOST DESTROYED BY FRANK LORENZO-BANKRUPTED TWICE,NOW A SHELL OF WHAT IT ONCE WAS), UNITED(BANKRUPT-MAY NOT SURVIVE), USAIR (BANKRUPTED TWICE-WILL NOT SURVIVE), DELTA(GOING BANKRUPT SOON-SURVIVAL UNPREDICTABLE), AA(WILL ALSO BE FORCED INTO BANKRUPTCY DUE TO BANKRUPTCY LAWS THAT ALLOW BANKRUPT CARRIERS TO CONTINUE OPERATING), NORTHWEST(RUN BY THE WORST MANAGEMENT TEAM IN THE INDUSTRY-WILL GO INTO BANKRUPTCY JUST TO CLOBBER IT'S EMPLOYEE'S)

FRONTIER(The original one),People's Express,New York air,Trans-star,Muse air,PSA,Piedmont(the original),Florida express,Western,Ozark,and numerous others are now gone.

AMERICA WEST(the only one left of the airlines that appeared during the early days of deregulation and it has been bankrupted twice and probably be bankrupted again.

SOUTHWEST- The only consistably profitable airline and the only reason it exists is because of LOVE FIELD and HOUSTON HOBBY. If it had been forced to compete at DFW or HOUSTON INTERCONTINENTAL, it would be a long dead airline. Even it will be doomed if something is'nt done to stop the stupidity in this god forsaken industry!

Jetblue,Airtran-These airlines are here today and will be gone tommorrow. They will be the victims of the carnage that they helped create.

 

[us10]

The first thing you have to ask yourself is why do the airlines have 80% load factors? They have them because the fares are low.

Two things can happen:

If you could, you would want to raise prices.

But you have airlines who can make money at the low fares, hence they wish to add capacity. So you can't raise the fares, because then you will be undercut by a competitor, and your business will migrate over to them.

And airlines don't have to make a lot of money on each passenger to warrant them wanting to add capacity. Since you brought up Southwest, take them as an example. Last quarter...they probably made about $9 in operating profit on every passenger they carried. So they can do two things...they can raise the price and try to squeeze more money out of each passenger they carry, or they can add capacity, so they carry more passengers from which they manage to make about 9 bucks profit per each. In their mindset, it is better to lower the fares and carry more folks, becuase that has the advantage of growing your company, which means you can hire more people, which means your work force is more junior, which lends itself to a lower average labor cost and lower CASM.

What you have cited is prima facie evidence that the airline industry is absolutely subject to the whims of a market economy. You say that LF is 80% while fares are low. That suggests to me that (a) a lot of people want to fly because of low prices (DEMAND) and (B) airlines don't wish to add a lot more capacity because of low prices (SUPPLY CONSTRAINTS). If that is not behavior IAW the forces of a market economy, I don't know what is.

[post="179909"][/post]​

Well said, you have put your finger directly on the "Legacy Airline" dilemma.I am not a big fan of our management but they do seem to be out ahead of the other "Legacy Airlines" at least in recognition that there are long term fundamental changes that will continue to negatively impact revenue.Transforming the airline to align our costs with the predicted revenue doesn't come from innovative thinking but necessity.

Comparing our rates of pay ect. to SWA probably isn't valid.SWA is a financial powerhouse with 11 Billion in market value and over 5 billion in tangible stockholder equity.Our stock probably will have little or no value and our tangible stockholder equity is minus 2.8 billion dollars.Like Continental (if we are to survive) we'll be required to work for below market rates as we fight our way back to financial health and relevance in a very difficult industry environment.

U pays out 42% of revenue ( approx. 2.4 Billion annually) to employees in wages and benefits.Prior to BK they wanted/needed to cut 800 million fully 1/3 of this amount a huge want/need.Now after filing who knows what it will take to satisfy a new equity investor's requirements.I'm not trying lower our expectations but I think each employee will have to come to terms with this very difficult situation we face.

Some will say it's not worth it 'lets just shut it down".Hopefully the majority will opt for survival only time will tell.

US10