- Banned
- #1
By Tim Schooley
Pittsburgh Business Times
Updated: 8:00 p.m. ET Aug. 22, 2004
With US Airways signaling it could go into bankruptcy for a second time next month, local travel agents find themselves booking flights away from the airline amid worries it might not be there when it comes time for their customers to take off.
Paul Busang, the president of Gulliver's Travels Inc., a Shadyside based travel agency that focuses mainly on leisure travel, quickly counted up $4,600 US Airways lost in the span less than two hours last week.
One set of four clients who expected to use US Airways to take a January vacation to Panama had their flights switched to America West. Mr. Busang said he has other examples of clients actively avoiding flights on US Airways and expects more.
"It's a self-fulfilling prophecy," he said. "If you keep telling everybody you're going to go out of business, they will go out of business."
Currently, US Airways' main investors and corporate leadership are negotiating for $800 million in concessions from its labor unions as part of an effort to make $1.5 billion in cuts it says it needs to remain solvent.
A report developed by a firm called Glanzer & Co. for the pilots union of US Airways predicts that the airline may need to file for bankruptcy by Sept. 15, in part because of looming pension obligations. If that happens, industry observers and even US Airways leadership predict the airline will find it very difficult to emerge from bankruptcy court. Getting more financing to stay in business would be just as unlikely.
With Sept. 15 less than a month a way, travel agents are scrambling to make sure their clients get the flights they need on other airlines.
Jeffrey Underwood, president of Carlson Wagonlit Travel/Underwood Travel Associates Inc., sees the biggest issue in group bookings. "If and when they go bankrupt, all of a sudden you have a problem of how to reroute people," said Mr. Underwood. "What we've done is we've tried to place as many groups as we could with other airlines."
For Mr. Underwood, group bookings represent 30 percent of his business. They include bookings for many of the athletic teams at the University of Pittsburgh.
"Are you safe through September or October?" he asked. "The biggest gamble right now is the group (bookings)."
To avoid such a risk, Mr. Underwood said he had changed the plans for a group of 60 heading to Denver in the upcoming months.
Instead of booking a US Airways flight that may not exist by the time of their trip, he booked the group on a flight by America West, through Phoenix.
"I chose not to gamble," he said. "I tell my clients if we have to fly a connection, we fly a connection." That can mean, Mr. Underwood added, he might council clients to pass over a lower fair on a direct flight to avoid flying US Airways.
"You can have a ticket for $29, but if it's on a shaky airline, you're probably not going to spend $29," said Terry Trippler, an industry consultant based in Minneapolis. "Somebody should sit down with US Airways brain trust and explain that to them."
Mr. Trippler saw such a self-fulfilling prophecy as a possible "nail in the coffin" for US Airways as it had been before for other airlines such as Eastern and Vanguard
"The cash spigot is just shut off, and that's what they need to operate," he added.
Beyond concerns over whether the flights will be available, Mr. Underwood's group clients must pay a group deposit to reserve their flights. He wonders if his clients will be able to get their money back from a US Airways flight.
"If they go out of business and close their doors, are you ever going to see a group deposit returned?" he said.
Mr. Underwood added that he began to consider the possibility that US Airways won't exist to serve his clients five or six months ago and has been making his plans accordingly since then.
He's sure he's not alone.
"You're just getting the results of one agency," he said. "But I have to believe that everyone is doing the exact same thing."
Mr. Trippler noted that travel agencies remain a powerful sales force for airline flights, booking more than half the flight tickets in the United States.
That depends on what kind of business the travel agency does.
While leisure and group tours depend on advance bookings, corporate travel booked in the short term continues to pick up, said David Arendes, principal of Travel Systems Inc., based in Robinson.
"The whole situation is a wait-and-see proposition. Something will be resolved by the middle of September," said Mr. Arendes. "All we can do is go on with business as usual."
The irony is, at least for some travel agencies, business is booming. Mr. Arendes said his company's revenue this year is up over the year before; he sees the industry as now out of the hole it was in after Sept. 11, 2001. Mr. Busang reported that his business, a relatively small firm that does $6 million in yearly revenue, is up 37 percent over last year through the month of June.
"The phone stated ringing Dec. 26 last year and it has never stopped ringing," said Mr. Busang. "There's this pent up demand. We've just been sending them in droves."
Douglas Millar, the president of Downtown-based Travelers Service Co. Inc., the region's ninth largest travel agency, said he believes presidential politics could keep US Airways planes in the air until well after the election season.
With Republican President George W. Bush behind his Democratic challenger John Kerry in the polls, Mr. Millar suspects the president may need to get involved to improve his standing with Pennsylvania voters.
"Pennsylvania is a huge swing state," he said. "In my opinion, in the short term, I just can't imagine the Bush administration letting this airline go down."
Pittsburgh Business Times
Updated: 8:00 p.m. ET Aug. 22, 2004
With US Airways signaling it could go into bankruptcy for a second time next month, local travel agents find themselves booking flights away from the airline amid worries it might not be there when it comes time for their customers to take off.
Paul Busang, the president of Gulliver's Travels Inc., a Shadyside based travel agency that focuses mainly on leisure travel, quickly counted up $4,600 US Airways lost in the span less than two hours last week.
One set of four clients who expected to use US Airways to take a January vacation to Panama had their flights switched to America West. Mr. Busang said he has other examples of clients actively avoiding flights on US Airways and expects more.
"It's a self-fulfilling prophecy," he said. "If you keep telling everybody you're going to go out of business, they will go out of business."
Currently, US Airways' main investors and corporate leadership are negotiating for $800 million in concessions from its labor unions as part of an effort to make $1.5 billion in cuts it says it needs to remain solvent.
A report developed by a firm called Glanzer & Co. for the pilots union of US Airways predicts that the airline may need to file for bankruptcy by Sept. 15, in part because of looming pension obligations. If that happens, industry observers and even US Airways leadership predict the airline will find it very difficult to emerge from bankruptcy court. Getting more financing to stay in business would be just as unlikely.
With Sept. 15 less than a month a way, travel agents are scrambling to make sure their clients get the flights they need on other airlines.
Jeffrey Underwood, president of Carlson Wagonlit Travel/Underwood Travel Associates Inc., sees the biggest issue in group bookings. "If and when they go bankrupt, all of a sudden you have a problem of how to reroute people," said Mr. Underwood. "What we've done is we've tried to place as many groups as we could with other airlines."
For Mr. Underwood, group bookings represent 30 percent of his business. They include bookings for many of the athletic teams at the University of Pittsburgh.
"Are you safe through September or October?" he asked. "The biggest gamble right now is the group (bookings)."
To avoid such a risk, Mr. Underwood said he had changed the plans for a group of 60 heading to Denver in the upcoming months.
Instead of booking a US Airways flight that may not exist by the time of their trip, he booked the group on a flight by America West, through Phoenix.
"I chose not to gamble," he said. "I tell my clients if we have to fly a connection, we fly a connection." That can mean, Mr. Underwood added, he might council clients to pass over a lower fair on a direct flight to avoid flying US Airways.
"You can have a ticket for $29, but if it's on a shaky airline, you're probably not going to spend $29," said Terry Trippler, an industry consultant based in Minneapolis. "Somebody should sit down with US Airways brain trust and explain that to them."
Mr. Trippler saw such a self-fulfilling prophecy as a possible "nail in the coffin" for US Airways as it had been before for other airlines such as Eastern and Vanguard
"The cash spigot is just shut off, and that's what they need to operate," he added.
Beyond concerns over whether the flights will be available, Mr. Underwood's group clients must pay a group deposit to reserve their flights. He wonders if his clients will be able to get their money back from a US Airways flight.
"If they go out of business and close their doors, are you ever going to see a group deposit returned?" he said.
Mr. Underwood added that he began to consider the possibility that US Airways won't exist to serve his clients five or six months ago and has been making his plans accordingly since then.
He's sure he's not alone.
"You're just getting the results of one agency," he said. "But I have to believe that everyone is doing the exact same thing."
Mr. Trippler noted that travel agencies remain a powerful sales force for airline flights, booking more than half the flight tickets in the United States.
That depends on what kind of business the travel agency does.
While leisure and group tours depend on advance bookings, corporate travel booked in the short term continues to pick up, said David Arendes, principal of Travel Systems Inc., based in Robinson.
"The whole situation is a wait-and-see proposition. Something will be resolved by the middle of September," said Mr. Arendes. "All we can do is go on with business as usual."
The irony is, at least for some travel agencies, business is booming. Mr. Arendes said his company's revenue this year is up over the year before; he sees the industry as now out of the hole it was in after Sept. 11, 2001. Mr. Busang reported that his business, a relatively small firm that does $6 million in yearly revenue, is up 37 percent over last year through the month of June.
"The phone stated ringing Dec. 26 last year and it has never stopped ringing," said Mr. Busang. "There's this pent up demand. We've just been sending them in droves."
Douglas Millar, the president of Downtown-based Travelers Service Co. Inc., the region's ninth largest travel agency, said he believes presidential politics could keep US Airways planes in the air until well after the election season.
With Republican President George W. Bush behind his Democratic challenger John Kerry in the polls, Mr. Millar suspects the president may need to get involved to improve his standing with Pennsylvania voters.
"Pennsylvania is a huge swing state," he said. "In my opinion, in the short term, I just can't imagine the Bush administration letting this airline go down."
Sometimes it seems as though you try to refute ANYTHING 320 says! For that matter, almost ALL posters to these boards try to badmouth 320. Maybe I'm missing something here, but to me 320 is correct when he says without labor agreements, the company WILL LIQUIDATE!!! You don't agree with that???? Don't misunderstand, I am not saying we as employees should cave! Just the opposite, I say liquidate, and get this freaking mess over with so we may move on. This is easy for me to say, because I am moving on regardless of U!! My point here is I just dont get all the 320 bashing by most posters here!! I happen to think he is simply stating the FACTS, and the TRUTH!!! You know what they say, people dont like to hear the truth when it's not good news!!!! GOOD DAY!!!! 
