Light Years
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madders said:
It was actually Atlantic Coast (now Independence Air) that the three wholly owneds were to be sold to. A fourth, Potomac Air, was to evolve into DCAir.
Us Airways Reaches $125 Mln Deal For Restructuring
- Thread starter JayBrian
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It was actually Atlantic Coast (now Independence Air) that the three wholly owneds were to be sold to. A fourth, Potomac Air, was to evolve into DCAir.
Rico said:
What pressure? If the UAL example holds true, then ACA (now FlyI) and Air Wisconsin must be the more expensive providers, since UAL dumped ACA and is bidding out the current AirWisconsin work.
So, exactly how does Air Wisconsin threaten an already cheaper Mesa? Does the conversation go something like this:
Lakefield to Orenstein: "Mesa had better lower your rates!"
Orenstein to Lakefield: "Why?"
Lakefield to Orenstein: "Because we will cancel your contract and get Air Wisconsin!"
Orenstein to Lakefield: "And pay more for spite?"
Lakefield to Orenstein: "Absolutely!"
Orenstein to Lakefield: "Can't wait to see the BK judge approve that!"
I agree with your premise, Rico, that having the Express partners bid against each other should result in a lower cost Express system... I just don't think it occurs by adding a higher costs provider to the mix (at least from what we can logically deduce).
funguy2 said:
funguy:
Bottom line, there is something going on that the
huddled masses (employees below VP level) are
not privy to. A AAA ball team that has never been
in the major leagues (AWAC) is now trying to put
a low curve ball into the left field stands, with the
cooperation of the pitcher, and no matter what
anyone speculates on, there is some dealing
going on behind the scenes. The quesiton is,
what is the significance of this home run attempt,
and what will it do in the greater scheme.
It depends. It is easy to look at AWAC and call them expensive, but taking into account the fact that they operate the bacJets (the most expensive "regional jet" flying), and have had to add/subtract the DO328's, and most of all, ramp up at an insane speed to rapidly accomplish UAL's desire to replace ACA operations at mutiple hubs...
Then you can kinda understand some of the reasons they have had higher costs.
Take away the Bac Jets, and the operational challenges bestowed upon them, and it remains to be seen how expensive they are.
But look at it this way, if AWAC flies USX for the very same amount Mesa and CHQ charge us, then we lose nothing, and gain the 135 Mill AWAC brings to the table. If the leverage that AWAC's possible arrival forces savings from Mesa and CHQ (if those carriers stay), then we are money up once again (and still have the 135Mill)
It is either the same costs with 135 Million into our pocket, or lower costs with 135 Mill in our pocket.
Not much of a downside IMO
I would much rather keep all flying in house, but if we have to deal with affiliates, I would prefer the ones that help us rather than just profit from us.
BoeingBoy
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I love your reasoning, Rico....
First you say:
Then you simply ignore that "if" and say this:
As to the Bae-146 being the "highest cost" "regional jet", I'll give you the benefit of the doubt and assume you're talking about cost per segment or block hour. While a factor, I think we can agree that FlyI has proven that having low segment costs doesn't a LCC make.
On a CASM basis, or a direct operating CASM basis to be exact, the Bae146 is no more expensive to operate than the CRJ-700 - not exactly high cost by RJ standards.
There is one other little item, at least according to media reports of the deal. Apparently, AWAC can decide whether or not to place RJ's with US, not the other way around. If true, it doesn't matter whether they are lower or higher cost than Mesa or any of the other affiliates.
Sure sounds like a possible downside to me, but the details of the agreement when filed with the BK court could make some interesting reading.
Jim
ps - by the way, it's $125 million, not $135 million.
First you say:
[Emphasis mine]Rico said:
Then you simply ignore that "if" and say this:
Rico said:
Rico said:
As to the Bae-146 being the "highest cost" "regional jet", I'll give you the benefit of the doubt and assume you're talking about cost per segment or block hour. While a factor, I think we can agree that FlyI has proven that having low segment costs doesn't a LCC make.
On a CASM basis, or a direct operating CASM basis to be exact, the Bae146 is no more expensive to operate than the CRJ-700 - not exactly high cost by RJ standards.
There is one other little item, at least according to media reports of the deal. Apparently, AWAC can decide whether or not to place RJ's with US, not the other way around. If true, it doesn't matter whether they are lower or higher cost than Mesa or any of the other affiliates.
Sure sounds like a possible downside to me, but the details of the agreement when filed with the BK court could make some interesting reading.
Jim
ps - by the way, it's $125 million, not $135 million.
BoeingBoy
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Here's a couple of articles from Wisconsin papers about the deal.....
Air Wisconsin to aid US Airways
Other Article
And this quote for Rico:
"The investment, announced late last week, could help revive US Airways service to Madison, Livingston said, and it guarantees Air Wisconsin a partner if its relationship as regional carrier for United Airlines fizzles."
Jim
Air Wisconsin to aid US Airways
Other Article
And this quote for Rico:
"The investment, announced late last week, could help revive US Airways service to Madison, Livingston said, and it guarantees Air Wisconsin a partner if its relationship as regional carrier for United Airlines fizzles."
Jim
Well, i cannot say I am big fan of your reasoning Jim, you tend to always look for something wrong with anything to do with US Airways. When was the last time you said anything positive about this place...?
I also find it diffcult to believe that a worse deal than the ones we are currently saddled with for Mesa and CHQ can be forced upon U. I am betting that language in this agreement will specify such. But we will both just have to wait and see. And it is clear that it does create additonal leverage to use in any negotiations with Mesa and CHQ, where there had been none beforehand. Now they can be replaced, that was not quite the case earlier.
Feel free to reread a few pages back in this thread where I said the very same thing Jim. I fail to see how this is supposedly a bad for us, in comparison to being forced to use the services of our "partners" Mesa, TSA, and CHQ
As for the bacjet CASM, I apologize, I used the numbers for the follow on AVRO in use by Mesaba. Those are the most expensive RJ's And yes, 135 was a typo, must have been thinking back to the part 135 days for some reason.
No Jim, I would rather wait and see, and treat this as a good thing until proven otherwise. I have a feeling that this is just one small part of a larger puzzle, so getting all worked up (happy or sad) over this is premature.
But even you have to admit, that you too would rather see us working with affiliates that help us, rather than just profit from us like Mesa and your nephew's CHQ have done.
BoeingBoy
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Rico said:
Probably because it doesn't require any work looking - it's usually just sitting there in plain sight.....
Rico said:
From a service standpoint, you may be right - I don't have any personal experience as a passenger on any of these three carriers.
From a financial standpoint, that'll depend on how the deal works out. As someone said (funguy, I think), it's hard to see being forced to take higher cost feed (if that's the case) as good news. But as you say, we'll have to wait and see.
Rico said:
I guess PSA, ALG, PDT, and MDA weren't enough leverage, huh...
Rico said:
I also read your thoughts on the possibliity of "losing control" in BK and how that would be a bad thing. Apparently, this agreement takes some of the control over who will or will not provide affiliate flying out of our hands. Losing control is either a bad thing and that part of this agreement is bad, or it's a good thing and you were wrong before.
In case you haven't noticed, US has been trading a little control for some money here and a little more control for a little more money there for the last few months.
Rico said:
Actually, I'd rather get rid of the affiliates completely and bring all the flying in-house, but Bruce, Dave, etc haven't called and asked my opinion lately.
Somehow, though, I have a hard time believing that Air Wis is doing this out of some sense of charity or "shared sacrifice" - but, hey, I could be wrong.
By the way, have you forgotten that JO even asked the Mesa employees to take temporary paycuts with the savings to be passed on to US? Didn't ever see if he got any takers, but he made the offer. So saying that he hasn't done anything to help isn't quite right either....
Jim
Well Jim, I guess that I just fail to understand why you are still here if you dislike the place so much. There are other things to do in aviation, and other places to do them at. Life is too short to be unhappy
Sorry if my optimism bothers you. But I think that despite the odds, U has come a long way, and I also think our current management is doing the best they can playing with the cards Wolf/Seigel dealt them.
There is a big difference between agreeing to use a established and quality regional carrier to provide your feed (in return for a needed investment), swapping them out if need be for other affiliates that you were pretty much stuck using in the past...
And a Corporate Transaction that will strip assets from a viable carrier and leave it dead, or near death...
Last I heard, Mesa Air Group was looking to "lower it's exposure to US Airways", that does not sound like a strong "partner" to me.
Sorry if my optimism bothers you. But I think that despite the odds, U has come a long way, and I also think our current management is doing the best they can playing with the cards Wolf/Seigel dealt them.
No, if anything the affiliates applied leverage upon the subsidiary carriers. It was only after multiple concessionary rounds that even one of the Wholly Owned carriers recieved any of the RJ flying.
Cute...
There is a big difference between agreeing to use a established and quality regional carrier to provide your feed (in return for a needed investment), swapping them out if need be for other affiliates that you were pretty much stuck using in the past...
And a Corporate Transaction that will strip assets from a viable carrier and leave it dead, or near death...
What's not to notice. But the fact is, he who has the cash has the control. You make it sound like that is a new concept. Feel free to explain what you would do differently if you were the CEO of US Airways, in the situation, and market reality that we are in.
I agree, in house is the way to go IF the in house unions do not screw it up... As for AWAC, I dunno... I guess I would prefer an affiliate that has a vested interest in our survival and success, rather than one that is just here to collect their fee for departure.
Do not getr me started on John Ornstien. Put it this way, has U seen a dime of that so called charity...? Or was it instead a means to fill up Mesa's war chest.
Last I heard, Mesa Air Group was looking to "lower it's exposure to US Airways", that does not sound like a strong "partner" to me.
BoeingBoy
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Rico said:
I think you'll have a hard time finding anywhere I've said that I dislike it here, so at least do me the favor of addressing what I say instead of trying to discredit it with fabricated motives.
Rico said:
Well, to be precise, U has been carried a long way by the suffering and sacrifices of employees. Despite the advantages of two bankruptcies, our non-labor CASM is almost exactly the same as it was in the summer of 2002.
Surprisingly, I tend to agree that, at this point in time, management is doing about everything they can to keep this company afloat with the cards they've been dealt - but remember that current top management dealt some of those cards by not undertaking structural change sooner. Unfortunately, we may be approaching the point where we need to draw to an inside straight with all the chips at stake.
Rico said:
So help me out here. Having higher cost W/O'ed feed didn't provide leverage in negotiations with the affliiates but if Air Wis proves to be more expensive than those same affiliates they'll still provide leverage. Have I got that right yet???
Rico said:
You'll get no argument from me that higher quality feed is an improvement over low quality feed, even if it means some cost increase. The investment is also a plus. However, all this started over your assertion that there wasn't a downside to this deal and my pointing out a possible downside - cost.
As for being "stuck" with the affiliates we currently have - we've now had two bankruptcies to correct that and despite USA320's statements there has been nothing to indicate that the status of those contracts is going to change. It's too late now to look it up, but there is a deadline for abrogating contracts - the company asked and the judge approved an extension, I just don't remember what the deadline is off the top of my head.
Rico said:
And there's where you don the rose colored glasses. First, the vested interest - where is it? Right now they're simply a secured lender, a very secured lender. If & when we emerge from BK, then and only then will they have a vested interest since at that point they become an investor. But apparently along with the vested interest comes the right to become a fee for departure affiliate on their terms with mostly 50 seat RJ's (that you keep saying aren't economical any longer). So even then their vested interest is covering what is very much self-interest.
Jim
Ok, you fooled me, I could have sworn you hate this place with you neverending crusade to cast a dark cloud over things Jim 
. I will take your word that you are not what you seem.
Anyways, back to the discussion.
But, nowadays, it is not just the issue of cost Jim, but ability. Are you able to pull 70 RJ's out of thin air...? No...? Well then Mesa and CHQ and even TSA will laugh at your threats to replace them. Because if you do not have the ability, the threat is empty.
Mesa, CHQ, and TSA are now faced with a new variable, in that if they want to keep their fleet flying, they either have to find a new place for their planes in a hurry, ot actaully deal with US Airways. Sure, UAL will need em if they ditch AWAC, but the agreement they hae with UAL pays a lot less than what U pays. So there is room for negotiation.
Oh yeah it is self interest, but it is a vested interest too Jim. Because IF U folds, and UAL offloads AWAC, where exactly are they supposed to fly. You seem proud of yourself to think they are "secured lenders", but really, they will be in a world of pain if they cannot , yet needed to be able to fly for U. There will be no more "Independance Air experiments" Jim, so where exactly would AWAC and all of those jets go...?
And again, you cannot say it is "on their terms", other than their buying the right to fly for USX, which is more than we got from our current affiliates (who got to do so for free).
My point stands, that IF we can get AWAC to do what the current affiliates are doing at the same cost, we are ahead of the game. Time will tell if that is the case.
IMO this is as good a deal as the company can get in our current situation, trading off current or future express feed to a new vendor that can supply needed financing. And once again Jim, I ask YOU. What would you do differently with this if YOU were the CEO of US Airways right now...?
The thing is, that IMO there is a lot going on behind the scenes that we, and that stupid Pittsburgh paper is unaware of. So to overanalyze this one development is premature. When the POR is finally out, I promise we can play "verbal tennis" with it. But until then, we are both only grasping at straws.
Anyways, have a good nite Jim. I promise if we ever overnight in the same place I will buy the first round. Then we can have a proper discussion instead of this cyber fluff.
Peace B)
. I will take your word that you are not what you seem.Anyways, back to the discussion.
Jim, if it is already more expensive to do it yourself, you will have a hard time talking a current vendor to do it cheaper than what he already gets, all they have to do is maintain a precentage below what you can do it for yourself, no more.
But, nowadays, it is not just the issue of cost Jim, but ability. Are you able to pull 70 RJ's out of thin air...? No...? Well then Mesa and CHQ and even TSA will laugh at your threats to replace them. Because if you do not have the ability, the threat is empty.
Mesa, CHQ, and TSA are now faced with a new variable, in that if they want to keep their fleet flying, they either have to find a new place for their planes in a hurry, ot actaully deal with US Airways. Sure, UAL will need em if they ditch AWAC, but the agreement they hae with UAL pays a lot less than what U pays. So there is room for negotiation.
You are no more aware of the cost situation than I am, you just choose to assume that it will somehow be worse than the bad ones we already have in place with the current affiliates. I do not.
Yeah right, just get rid of them, and them what, who exactly would we replace them with...? Up till this point, AWAC was spoken for. That is no longer the case.
Oh yeah it is self interest, but it is a vested interest too Jim. Because IF U folds, and UAL offloads AWAC, where exactly are they supposed to fly. You seem proud of yourself to think they are "secured lenders", but really, they will be in a world of pain if they cannot , yet needed to be able to fly for U. There will be no more "Independance Air experiments" Jim, so where exactly would AWAC and all of those jets go...?
And again, you cannot say it is "on their terms", other than their buying the right to fly for USX, which is more than we got from our current affiliates (who got to do so for free).
My point stands, that IF we can get AWAC to do what the current affiliates are doing at the same cost, we are ahead of the game. Time will tell if that is the case.
IMO this is as good a deal as the company can get in our current situation, trading off current or future express feed to a new vendor that can supply needed financing. And once again Jim, I ask YOU. What would you do differently with this if YOU were the CEO of US Airways right now...?
The thing is, that IMO there is a lot going on behind the scenes that we, and that stupid Pittsburgh paper is unaware of. So to overanalyze this one development is premature. When the POR is finally out, I promise we can play "verbal tennis" with it. But until then, we are both only grasping at straws.
Anyways, have a good nite Jim. I promise if we ever overnight in the same place I will buy the first round. Then we can have a proper discussion instead of this cyber fluff.
Peace B)
BoeingBoy
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Ok, Rico, I cry "uncle". It's obvious your countless years in this industry have made you the consummate expert in all things having to do with airlines. The media should ferret out your gems of wisdom and stop talking to those "know nothing" analysts.
I still can't believe that all this bandwidth started with just one statement you made.
A statement that left out one small but obvious detail - what if Air Wis' costs are higher and we still have to use them. I merely point out your omission and get reams of explainations of why you can't possibly be wrong.
So cherish your youthful optimism. Some day you'll learn that there's a difference between being optimistic and being oblivious, just as you'll learn that not only can you be wrong but that you often are....
Jim
I still can't believe that all this bandwidth started with just one statement you made.
Rico said:
A statement that left out one small but obvious detail - what if Air Wis' costs are higher and we still have to use them. I merely point out your omission and get reams of explainations of why you can't possibly be wrong.
So cherish your youthful optimism. Some day you'll learn that there's a difference between being optimistic and being oblivious, just as you'll learn that not only can you be wrong but that you often are....
Jim
BoeingBoy
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The CLT Observer has a story in today's paper with more details on the AWAC deal...
AWAC would get:
- 3 board seats
- 19.2 to 26.3% of new stock
Article (free subscription)
Jim
AWAC would get:
- 3 board seats
- 19.2 to 26.3% of new stock
Article (free subscription)
Jim
