Us Airways Strategic Analysis

[funguy2]

Funguy,
We definately need a Strageic Analysis almost everyday.  I bet that's how much the plans change.  I agree with USA320Pilot that time and cash are running out faster than the company can put a plan together.  With fuel so high, and not coming down anytime soon, I just don't see any answers....

I'm looking forward to the next major announcement....

[post="253960"][/post]​

I agree with you (and USA320Pilot) that time and cash are running out... I've been saying that at least since March 2004. The situation has only deteriorated since then.

Whatever the next steps are, I will bet they will be painful for employees. The only solutions I can envision as being successful fall between liquidation and shrinking. I don't think US Airways will have enough cash (or enough of a plan) to remain its current size. To that end, the company has already rejected leases on 36 or so aircraft. I have to believe that, absent something else, more shrinking (or worst case, Chapter 7) are not the far down the road.

I don't beleive a merger of any kind is in the cards for US Airways right now. The industry players who may want to merge, don't have the money. The industry players who have the money, don't have the desire to acquire. The venture capitalists out there are not interested in investing in Richard Branson's Virgin America (despite his successful track record for setting up airlines), so I don't see any venture capitalists investing in this failing airline.

If US Airways is to be involved in an asset sale situation, I can see various airlines bidding for certain strategic parts of the company. However, this won't help employees much. I even view some aircraft as likely to see the desert. The demand for old 757's and "Classic" 737's is not very high, particularly in the USA. I don't see much that will change that reality any time soon.

[Added later] RE Paragragh 2: I guess there is no guarantee the company intends to go down a "successful" path... I meant successful to mean some kind of emergence or end to BK protection.

 

[USA320Pilot]

Jack Mama:

Expect news shortly that will boost liquidity and buy US Airways more time to lower unit costs.

Regards,

USA320Pilot

 

[usairways_vote_NO]

Jack Mama:

Expect news shortly that will boost liquidity and buy US Airways more time to lower unit costs.

Regards,

USA320Pilot

[post="253974"][/post]​

Stop with your generic fortune cookie posts anyone can do that. Gee Whiz. I could get a better prediction from the cookie or a 1 year olds perch.

 

[mweiss]

Hope777, as an FAA type rated Captain [blah, blah, blah]...

[post="253852"][/post]​

Another FAA type rated Captain who (I would assume) has thousands and thousands of hours behind the yoke (I believe he posts here under the name of BoeingBoy) said quite the opposite.

Clearly one of you is wrong. :huh:

 

[usairways_vote_NO]

Another FAA type rated Captain

[post="253983"][/post]​

Is that opposed to non FAA rated Captain like Captain Crunch?

 

[mweiss]

Is that opposed to non FAA rated Captain like Captain Crunch?

[post="253986"][/post]​

Yeah, I saw the absurd redundancy, too, but I figured it was more fun to echo it.

 

[Hope777]

Well, I would think Jim is Correct. The B737-300 are used on much shorter Stage lenghts thus INCREASING Fuel Consumption. Even with the Boeings Burning more Fuel, I still think on a per seat basis the Boeing is CHEAPER to operate. Plus, it has more seat then the HEAVIER Bus. A320, still waiting on Landing Fee Comparisons, the A319 vs B737-300. And the B737-400 compared to the A320 is even Larger Gap in Landing Fees. Mark My Word, turn around and ask a Dispatcher what the Fuel Burn per hour is for a A319 and a B737-300.

 

[ClueByFour]

Further cut costs – US Airways announced that it would remove 11 B737s from its fleet beginning in May. The average lease expense on these aircraft is about $85,000 per month or about $1 million per year. These aircraft are scheduled for millions of dollars in refurbishing and overhauls and burn much more fuel than a similar size Airbus aircraft.

Alas, they are not being replaced with Airbus aircraft. The only lift coming online is in the form of RJs, which have a much, much higher CASM than the little Boeings.

Hope777, as an FAA type rated Captain who has flown thousands-and-thousands of hours in both the B737 and A320 family aircraft, I think I fully understand aircraft capacity, fuel flow, and fuel consumption. With all due respect, the Boeings burn more fuel than the Airbus aircraft.

Sure. But that's not all Hope said. To wit:

Also, Why don't you mention that the AIRBUS Aircraft have MUCH HIGHER Landing Fees due to the Extra Weight of the Aircraft. Check with your Sources at LGA, the A319 is approx $300.00 MORE dollars to Land at LGA then the B737-300, which carries MORE passengers.

[post="253840"][/post]​

Losing the 737s is not a positive development. The only replacement lift is even higher in cost. It's more burning of the furniture.

 

[AAviator]

OK, we know 320 pilot can spin ANY information. But can he dance like this guy?
http://www.webwasteland.com/media/everybodydance.wmv

 

[TheLarkAscending]

Lark, what does that 25-year Vet have to say?

Tsk, tsk, 320! Maybe you're unaware, so perhaps you might wish to check with your influential in-the-know people "on-the-street", but when one is actually employed within that arena, there is a code of conduct, ethics and confidentiality that must be followed, otherwise the SEC has a little problem with the entire situation. And as much as I love the man, he really looks better in black and white solids, so we plan on keeping him out of stripes. In order for you to be privileged enough to know what he has to say, you would have to become his employer. 320 are you willing to meet or exceed his current annual salary and bonus until he retires? Didn't think so.

Let's see now, hmmm, risking my family's welfare and security vs satisfying your little quip...nah, you're simply just not worth it. Thanks for playing and, as always, for the laughs!

However, since you've asked what he has to say, and as he has just arrived here at home, he said that it would be okay for me to tell you that he finds you highly amusing...if that helps you at all?

Peace -

Lark

 

[Piedmont1984]

USA320PILOT

You might suggest to Mr. Lakefield or Mr. Ashby the next time you chat it up with them that the Crystal City property is overly expensive and, considering its strategic proximity to the levers of power, a huge dissapointment.

On a variety of lobbying issues over the past years, our track record is no better than that of other airlines who headquarter outside the beltway.

Better to set up temporary and more Spartan digs in PHL or CLT, preferably PHL, so they can view at close quarters what goes on there. Couldn't hurt - would save lots of badly needed cash.

Regards,

Piedmont1984

 

[NuGuy]

Stop with your generic fortune cookie posts anyone can do that. Gee Whiz. I could get a better prediction from the cookie or a 1 year olds perch.

[post="253981"][/post]​

LOL, if our illustrious 320 captian wrote fortune cookies, they would say "Soon, you will be done with dinner"

Nu

 

[usairways_vote_NO]

I find it interesting the normal "naysayers" and malcontents try to bash my posts,

[post="253972"][/post]​

What is really interesting is the naysayers have been constantly right while you are either totally wrong or post your endless mighta's, coulda's, and maybea's then the jump fence when one of them happens. How much better off is USAirways now then a year ago? They aren't. The naysayers and malcontents were right you wern't. Face it.

 

[sfb]

As negotiations continued US Airways needed to seek deeper cuts from labor due to passengers booking away from the company, which created lower revenue and coupled with the increase in oil prices, hurt liquidity. The updated version of the Transformation Plan could support oil prices probably in the mid-$40 range, but not prices at nearly $55 per barrel.

Do tell, exactly what caused passengers to book away from the company? Could it have been statements in the press about a potential liquidation made by the Chairman of the Board?

Fare increases – This would seem to be a logical solution, but in today’s low fare environment that is not an easily obtainable solution, to simply pass the increased cost onto the consumer. LCC’s like Southwest, who is hedged in 2005 with its total fuel cost equal to oil prices at about $30 per barrel, and jetBlue are not increasing fares. However, the recent initiative by Northwest to increase short-haul round trip fares by $10 and long-haul fares by $20.

It’s unclear how much this initiative will raise revenue, but it’s a significant number.

Didn't US more-or-less destroy some of the benefit it might have seen from the fare increases initiated by Northwest when the company chose to start yet another fire sale this week?

For discussion purposes, lets assume that US Airways increased its round trip fares for about 75,000 customers per day by $10 and not include those long-haul flights where the increase was $20 per round trip. That would boost the company’s revenue by $750,000 per day or about $22.5 million per day. If this number is accurate, the increase in revenue would offset about a $11.25 increase in crude oil prices and its effect on the carrier’s jet fuel expense over budget.

This is too simplistic an analysis, since it fails to account for the possibility that US Airways may see fewer tickets purchased in total given higher fare levels. And, again, the fire sale initiated earlier this week will cut into increased revenue as well.

Boost revenue – Earlier this week according to US DAILY, usairways.com again has set a new record for both ticket sales and revenue, thanks in large part to the systemwide fare sale. In overwhelming response to the low fares available across US Airways’ network, close to 331,000 customers visited usairways.com yesterday. By midnight, almost 21,000 tickets were sold. This represents a 54 percent increase week over week and is almost double the volume of tickets sold during the same time frame last year. This also drove a 46 percent increase in revenue year over year.

Note the section I highlighted. US sold nearly double the number of tickets versus a year ago with a 46 percent increase in revenue. Assuming "almost double" is a 90% increase, that says that yield on those tickets was down 23% year-over-year -- a catastrophic fall given how high energy prices have climbed.

Further cut costs – US Airways announced that it would remove 11 B737s from its fleet beginning in May. The average lease expense on these aircraft is about $85,000 per month or about $1 million per year. These aircraft are scheduled for millions of dollars in refurbishing and overhauls and burn much more fuel than a similar size Airbus aircraft.

Isn't much of the Airbus fleet due for overhauls in the next year or two? How do monthly lease expenses on the Airbuses compare to those on the Boeings? How much higher are landing fees for the heavier Airbuses, and what sort of impact does this have on the short-haul routes that are so common in the US Airways route system?

Looking forward at the next several months is probably a better indication of the issues we are facing. PTY and SAL have advance bookings in the 25% range for April (i.e., % of seats booked now for travel in April) compared to an average of just under 50% for Caribbean destinations. For May, the markets are booked in the 3% range, compared to about 30% for the average Caribbean destination.

Those kinds of numbers are not encouraging. It is always possible that the markets will book up late and we would get an pleasant surprise. But they are not performing to our expectation and it is far more likely we will lose money on them if we continue to fly them.

What hurts US here is a lack of experience in these markets. Arguably, many Caribbean routes fill up early because blocks of seats are purchased by consolidators or vacationers who plan several months in advance. It's possible that many of the "VFR" travelers buy their tickets closer to the actual date of travel. That sort of info (booking patterns) is probably very closely guarded at AA and CO. Losing BBB probably didn't help US in this respect since he came to the company from TACA.

As US Airways marches towards its March 15 deadline to file its plan of reorganization with the bankruptcy court the company will continue its efforts trying to raise money, talk to all interested parties, and see what shakes out, which could lead to some sort of corporate transaction or other means to deal with fuel prices. US Airways is “thinking out of the box†to address its financial problems, but the company will probably have to do things focusing on the short-term rather than long-term. Thus, expect more significant news in the not-so-distant future.

I find it troubling, with four business days to go before the GE-imposed (and already extended once) deadline for filing a plan of reorganization, US management still has no one (publicly, at least) to provide the additional financing the company requires for bankruptcy emergence. Even as troubled as United is, they have had several parties express interest in providing equity sponsorship for UAL's emergence.

 

[justanadd]

DellDude:

On a positive note, the company is managing its cash

Separately, the ALPA Negotiating Committee briefed the MEC today that management continues to spend money to implement the CASS interline jumspeat system for pilots. This system would allow US Airways pilots to once again fly on the jumpseat of other carrier's after the background checks and TSA work is complete.

Regards,

USA320Pilot

[post="253884"][/post]​

No offense but sounds like a proirty to me for a bankrupt carrier?