Us Airways Said To Be Pursuing Big Asset Sales

[cavalier]

Umm, not taking sides here, but ... you're free now if you want to leave to find something new. If US goes Chapter 7, don't expect any severance pay either. I believe all they are obligated to pay is wages for work already done, assuming enough cash remains on hand.

What you don't understand is I don't care, period.

It’s now time for of the gutless wonders to stick out their scared little faces and start this kind of crap of fear and you MUST do crap. I will say it again. I DON’T CARE! I won’t give or even want to hear what they have to say.

 

[cavalier]

Ummm Cav, there is a thing called the Thirteenth Amendment. You are not a slave. You can quit your job. Any. Time. You. Want.

WOW, we agree. I am working on it and if it works out I'll be in the midwest......YES

In the mean time, I am ALL behind the unions.

 

[funguy2]

Last we have the expense of a HQ's in Metropolitan D.C. This is purely a luxury base Vs. an intelligent choice. The days of running to Alexandria to grease the judge are over....and the leadership should be closer to our power bases , not that of our government that has already given all it will give.

Excellent point!

I have discussed in another thread that even moving to some office space on the beltway or out in Herndon is probably preferable to CCY from a cost perspective! I think CLT is the obvious relocation point, however. How this didn't happen in 1989 is beyond me (combine CCY and INT to a CLT base).

 

[700UW]

Like I said, you people can't let the facts get out.

First of all no one from US has said they are selling anything and second you can't sell things you don't own. US Airways LEASES everything, they don't own, the gates, ticket counters, jetways or hangars.

But like I said, you all can't comprehend facts, lets just speculate.

 

[28yearsnojob]

:down: This crazy bunch of management paid 60 some dollars a share for
peidmont way back took all the gravy of the top.For a bunch of 737 junks

 

[USFlyer]

By "sell", they mean have another carrier who wants the gate space, ticket counter space, etc. buy US out and take over the leases. CLT can't take the gates back since it has a contract with US. But, if CO wants to open a hub in CLT, they can pay US to let them take over the leases and have US pull out. Ditto with aircraft leases. Ground support equipment. Etc.

 

[28yearsnojob]

:down: This crazy bunch of management paid 60 some dollars a share for
peidmont way back took all the gravy of the top.For a bunch of 737 junks

 

[funguy2]

If U is that close to the brink, would it not make sense for the other 6 to just wait and not buy any of the assets. If U folds completely, then they can scoop them up.

Just a different strategy

Another excellent point... And indeed what may happen... But, it would be only the second time I could remember this happening... In this industry, preserving or gaining market share often comes at the expense of preserving or gaining profitability. Thus, often airlines make ill advised grabs for territory with the idea of increasing market share, regardless of whether or not it is profitable... Look at AA acquisition of TWA. There are many examples of this.

The only other major item which nobody jumped on from a BK carrier that I can recall was that nobody tried to acquire EA's ATL hub at the end. Obviously AirTran/ValuJet and Delta gained control of the gates well after EA was dead. I suspect some of AirTran/ValuJet's DC-9's came from EA as well. Other major asset sales by struggling carriers:

Pan Am Pacific routes to UAL
Pan Am LHR routes to UAL
Pan Am South American routes to UAL
TWA LHR routes to AMR
Braniff South American routes to Eastern
Eastern South American routes to AMR
Eastern PHL hub to Midway (included several DC-9's)
Midway PHL hub to US Airways (no aircraft)
Eastern Shuttle to Trump (then to USAir)
PEOPLExpress sale of BK Frontier to CAL.
PEOPLExpress sale of PEOPLExpress to CAL (separate transaction, but very closely timed to Frontier transaction)

A few other notable assets that did not sell immediately during BK:
Midway's MDW hub (was almost acquired by NWA, but fell apart at the last minute)
CAL's DEN hub (not a BK issue, but CAL closed it down, did not sell it)

 

[ITRADE]

Time for my two cents.

US is in a real bind here. For a number of reasons.

While the company has made significant strides in reducing costs, its still not quite there yet. Business travel is returning (somewhat), but is still not there yet, and as is discussed below, may never return to what it was prior to 9/11. Throw in the market pressures and constraints and things only get worse.

US has significant core assets. It has slots at LGA and DCA. It holds leases to terminals/gates at at least two very desirable airports (PHL and CLT), at some not so desirable airports (PIT). US has a significant number of new planes that have lowish mileage on them (some are, of course, coming up on their first heavies). The company operates primarily into and around the most densely populated area in the country - an area with significant business and personal wealth is located. And, it is anticipated to become a large alliance member in the very near future.

Unfortunately, a lot of the positives are also negatives.

As everybody knows, the three hubs are all within a 500 mile diameter of each other. This create overlap and redundancy. As such, there are inherent losses built in the the airline's network. That being said, its quite difficult for US to part with one hub without damaging the two other hubs. US could lose PIT. But it would place strains on CLT and PHL by 1) increasing the flight burdens at already burdened airports, 2) further restrict and reduce the connectivity of east-west traffic, and 3) eliminate what is probably the one hub that can best withstand bad weather.

Another problem related to the hubs/routes is the close proximity of the cities. The fact that many of the routes flown by US are less than 300 or 400 miles in length creates significant problems. First, owing to the events of 9-11, it has become significantly more inconvenient to fly. The days of taking the taxi to the airport, checking in 35 minutes prior to scheduled departure and sauntering up to the gate are OVER. You must realisticly be there 55 minutes prior to departure and endure annoying processes including 1) pulling out your driver's license at least three for four times, 2) taking off your shoes, belt, watch, jacket, hat, or any other item that might concieveably contain metal, and 3) waiting in multiple lines. These annoyances have forced some passengers to completely forego some short trips entirely and simply resort to other methods including ....

Conference calls and video conferencing. While archane even five years ago, conferencing is big, big, big these days and has reduced a significant amount of discretionary travel. Where a deal required four or five trips, a deal may require as little as one or two trips (initial consultation and final consummation). So, these business travelers are lost and will not return to flying.

The security hassles and technology advances have affected the profitability of the once vaunted Shuttles. While you will certainly still get top dollar passengers, you're getting fewer of them. Toss in the fact that there are essentially four NE Shuttles (AA, DL, US, and Amtrak), and you've got a LOT of supply for a smaller quantity of demand.

You've also got interior problems. Work groups don't trust management. Management is not excited about dealing with militant work groups. Efficiencies exist in staffing, routing, management overhead, fleet utilization, etc.

Finally, you've got external forces in the name of competing carriers. JetBlue, AirTran, Southwest, and the like continue to pressure US. All three are either based on the East coast or are making the East coast their primary area of expansion. So you must deal with them. You cannot run as there is nowhere else to run.

So what to do. Just a few thoughts.

#1 On the cost side, you can do some things. As folks have mentioned, employ a rolling hub system at both CLT and PHL. The banks at both airports are huge and can be reduced. This will both increase aircraft utilization, reduce excessive headcount, increase gate efficiency, and improve costs. If the company is concerned that the rolling hub system will create connection breaks, consider operating smaller aircraft on the routes where smaller planes can operate with higher frequency. For those cities with only 2x or 3x daily service, you'll have to hold them in the middle or end of the bank. But others can work around those times to ensure connectivity.

#2 I don't expect the unions to give much in the way of further concessions. That has been made clear by the militants or the board. Frankly, I don't feel that they should be giving up items in the form of pay cuts or benes. If there are to be changes, you should consider streamlining work rules and improving productivity. And, unfortunately, if you find that you're going to cut heads, you'd have to cut where the outsourcing is possible - i.e. utility. Sorry guys, but the work can be done by most anybody for less money.

#3 On the revenue side, you will really want to look at what America West did to their revenue structure. You may already be testing this out by seeing who bites on the reduced F class fares in selected markets. If you find that this is working, stop doing what you're doing on the 757s and place at least 16 seats into them, and curtail any plans to reduce A319 and A321 F class seating. You're not only reducing potential F class revenues, you're also reducing the incentive for US1s and US2s for continuing to support your airline.

#4 Get out of CCY. Its time for US management to wear your hearts on your shoulder, tell it like it is and pray that the work groups accept your message as truth. You've got serious internal PR problems. Hiding in the Crystal Palace does nothing but create a besieged Hitler-in-the-Bunker attitude. Even if you think that the union heads don't want to hear it, you've got to get the message out to the rank and file.

#5 To the rank and file. I honestly believe that the folks in CCY are trying to run the company. They have had a lot of rubble and wreckage left to clean up from at least 10 - 12 years of prior mismanagement. If they seriously wanted to make millions of dollars, pillage a company, and retire to some sunny beach on Maui, then they certainly came to the WRONG company and the WRONG industry. These MBA types could have easily made more money and had a better lifestyle at consulting firms, top manufacturing firms, and other companies. The fact that many came to US Airways - knowing the troubles that it has faced over the past decade or so - clearly indicates that they believed that they could make things work and make the airline a success. Again, if they were in for a quick buck, then the airline industry would be the LAST place to make that quick buck.

#6 Court your passengers. The nickeling and dimeing that has been going on has done more harm than good. Your US1s and US2s bring LOTS of revenue to the airline, and while we are extremely supportive of US Airways, love the employees who work here, etc., we simply are getting tired of the unclean aircraft, the chincy service (primarily food/beverage), and continuous flip-flopping on policies and services. Take some time, pull up a mailing list, call together a group of your US1s, US2s, and US3s from the big geographic areas and listen to what they have to say. They are stock brokers, sales managers, attorneys, consultants, educators, and businessmen from every corner of the economy. They have a pulse on what passengers like, what draws them to a carrier, what repulses, them and what they know to make a entity successful.

OK, I'm typed out. Will ponder more later.

 

[funguy2]

By "sell", they mean have another carrier who wants the gate space, ticket counter space, etc. buy US out and take over the leases. CLT can't take the gates back since it has a contract with US. But, if CO wants to open a hub in CLT, they can pay US to let them take over the leases and have US pull out. Ditto with aircraft leases. Ground support equipment. Etc.

Correct... And sometimes to the acquiring airline, the ability to acquire all the pieces needed is worth a premium. AA could have waited for TWA to go Chapter 7 bankruptcy, then went to the BK auction and bid for each individual TWA facility lease, aircraft lease, bag tug, gate podium, etc. However, it was worth a premium to AA to acquire the whole thing as one big package.

 

[700UW]

And, unfortunately, if you find that you're going to cut heads, you'd have to cut where the outsourcing is possible - i.e. utility. Sorry guys, but the work can be done by most anybody for less money.
we simply are getting tired of the unclean aircraft

All ready been done, over 2,000 of the LOWEST paid people in the company let go and the airplanes show it. Gee ITRADE, you can go to each of the remaining 1,002 utility folks at the line and in the hangars homes and tell them how you feel.

Those folks gave up more then anyone. How about we outsource Dave, Neal, Doug and Jerry cause they don't know how to run an airline.

On one hand you say get rid of the people who clean the planes and on the other you say you are tired of dirty planes, wow, make up your mind.

 

[cavalier]

700

I don't know who you are, but I like you.

I work in Pit nite shift, because I HAVE to, to hold my job. I am one of those A&P militants Itrade identified. Even the people left are not where they want to be, like myself being on nite shift. Every week it’s nothing but more doom and gloom. There are so many people gone that the ones left are expected to kill themselves to keep the A/C in the air, and what you hear if you #### is, “be glad you’re workingâ€￾. It goes on and on and yet we have people calling us militants. It’s amazing somebody has not lost it completely and made headlines. Then we look on these boards and see gutless wonders begging us to let Dave shove it to us again, while smiling and being nice. I am being as nice as I can be on these boards, in fact I am a sweetheart compared to what I really feel like.

 

[700UW]

Funny how they call us militants for standing up against liars and union busters, but if we would bend over and grab our ankles, they love you.

Boy if George Washington, Martin Luther King, Abraham Lincoln and hundreds of others in history would have bent over instead of standing up for what they believe in, PORTION DELETED.

 

[sentrido]

can utility and baggage be combined?
can F/A's clean the cabin?
I've never done these jobs so how do the people that think about it?
what if no jobs were lost?

When I was still working at US I honestly spent a lot of my time sitting on my ass cause of the hub/spoke. Planes would sit at the gate for 1-1/2 to 2 hours. I wasnt being used efficiently.I cant think of anyone that was. Thats managments fault. What the hell are they waiting for? They dont need the unions to do that. I know im ramblin a little, but i dont think they have a plan. They always send me those stupid letters whenever they got somethin to say, what would stop them now? they are waiting to see what they can get.

 

[SpinDoc]

As an industry observer, I applaud the asset sale news. Before you flog me, hear me out.

1. The US Airways Shuttle is barely able to keep an average load factor of 50%. With mainline pilots and flight crews operating it, it surely must be a big money pit. It's a brilliant idea to divest of
this service while it is still a semi-going concern. It is an astute business decision that should have been made after Donald Trump lost it in BK many years ago.

2. Sell US Airways Express. Why not combine PSA, Allegheny, and Piedmont, spin them off or sell them to Mesa, and then re-hire them as a fee for departure carrier? The costs associated with these entities have to be large. Why not let Mesa pay the wages, benefits, and retirement costs. Good idea CCY.

3. Sell off gates and other assets at BOS and LGA. Well..... DUH..... when you sell the Shuttle, you won't need these assets anymore. Whoever doesn't see that is not the sharpest tool in the shed.

4. Sell a hub. If I were Dave x 2, I would wait awhile for that. When WN hits PHL, US Airways may need PIT or CLT to absorb the assets and capacity that will quickly be abandoned to WN. Kind of like what happened in BWI 10 years ago. It will come to pass because US Airways senior management doesn't have the fortitude to hold off the WN invasion. PIT makes a really nice hub and is operationally much better than PHL. How many days of the year do you have ATC or WX problems in PIT? Less than 30. In PHL, it's more like 26 out of 30 each month. How much money is US Airways pouring into a hole in PHL to make up for the operational problems that currently exist?

Just my thoughts as an industry observer.