USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
US Airways Strategic Analysis - May 5, 2005
Earlier this week US Airways reported a first quarter loss of $191 million, which was disappointing, but beat analyst estimates.
See earnings press release
See related story
Then the company filed its March Operating Results with the U.S. Bankruptcy Court, which indicated the airline made an operating and net profit.
Monthly Operating Report
According to the Charlotte Observer, US Airways made $65 million in net income in March, the first month it has turned a profit since filing for bankruptcy protection in September, the company said in a court filing. Last week, the airline reported a net loss for the quarter of $191 million. Detailed figures released Monday showed that March's gain was outweighed by heavy losses in January and February. In March, the airline said it made $19 million in operating income and also benefited from changes made in its bankruptcy reorganization. Traditionally, US Airways' strongest quarter has been from April through June. March could have been especially strong this year because Easter fell in March instead of April, analysts said.
See Story
Then yesterday US Airways revised its first-quarter results to show losses increased by $91 million to $282 million because the management left out expenses from termination of the AFA and IAM DB pension plans.
The Pittsburgh Tribune Review reported, the additional $91 million expense for the January-March period does not affect US Airways' operating results or its cash position, Robert Mann Jr., head of R.W. Mann & Co. Inc., an industry consultant based on Long Island, N.Y. noted. "They are just trying to get the bad news behind them," said the analyst.
US Airways still had $91 million in pension liabilities for the quarter and erred by booking it on its balance sheet. It then fixed that by recognizing the amount as an expense on its income statement, which expanded the quarterly loss.
See Story
The Tribune Review noted, more worrisome, said Mann, is the fact that US Airways' revenue last quarter fell more than 4 percent. This, despite added capacity and the rare inclusion in the period of Easter holiday traffic and revenue. "Everybody else got a lift out of it, and US Airways came up short," said the analyst. The difference is fare-price pressure from discounters in the Northeast, which accounts for most US Airways flights.
See Story
What Mann fails to realize was the negative effect of the RC4 and the other union(s) resistance to change and the S.1113 fight. This fight caused passengers to book away from the airline because of the widespread national news media attention the company would liquidate. However, when the liquidation threat subsided and the company began its “Clear Skies Ahead†campaign the airline posted positive earnings results with crude oil prices above $50 per barrel.
Some of the blame can be placed on management and Chairman David Bronner’s liquidation talk, which I believe was intended to be a “club†over labor to seek concessions, but I unequivocally believe the January and February revenue deterioration below industry standards can by directly attributed to labor. The strike press releases and resistance to change caused more job loss than necessary, deeper employee cuts than necessary, and a dramatic drop off in revenue.
Meanwhile, US Airways keep’s adjusting its new business plan as it works with creditors and investors to obtain exit and merger financing. The most recent news came yesterday when the company said it will further reduce its mainline fleet by an additional 10 aircraft, which will be B737s, thus the year-end mainline fleet count will be reduced to 250 aircraft. There is reason to believe this reduction is being required by the creditors in exchange for their upcoming exit/merger financing, which was reportedly discussed today in a meeting between CEO Bruce Lakefield and potential investors in New York City.
According to today’s Charlotte Observer, with fuel costs remaining high, ditching the planes will save the airline an undisclosed amount of money and make it more palatable to investors. As we continue to talk with possible investors, the elimination of unprofitable flying is a key topic of conversation," said Bruce Ashby, US Airways' executive vice president of marketing and planning, in a message to employees.
See Story
Separately, yesterday US Airways senior management held two meetings with labor. The Labor Advisory Council (LAC) meet with management in Washington and senior vice president of maintenance John Prestiphilipo, vice president of customer service Donna Paladini, and vice president of operations Ed Bular held a special Check Airman meeting in Charlotte.
According to ALPA, the LAC met to “hear a report from senior management on various issues including first quarter results, non labor cost saving initiatives and employee performance incentive programs. We hope to be able to provide you with more details of the meeting with specific slides that will soon be posted on the pilots only website. The Company also initiated a discussion about various strategic alternatives, in light of the public confirmation that US Airways and America West are in discussions about a possible transaction. Executives of the Company did not disclose specifics on any alternative or on discussions with potential investors, but they gave the LAC background on their analysis and made it clear that the preference was on pursuing alternatives that preserved the jobs of US Airways employees.â€
See Story
The Check Airman meeting covered some of the same topics at the LAC meeting, but also discussed the new on-time initiative called, “All Together. On Time.â€, there were updates on US Airways’ new maintenance programs and vendor work, and a presentation was made by ALPA Trip Construction Productivity leader Chip Mayer on increasing Pilot/Flight Attendant “trip paring†productivity.
In conclusion, as US Airways finalizes its plan of reorganization and appears headed for a merger with America West Airlines union leaders seemed to understand the need for a further fleet reductions, which is being required by the creditors.
According to today’s Observer, leaders of US Airways' pilot and flight-attendant unions, whose jobs tend to be directly affected by changes in the size of the fleet, said they are disappointed in the cuts but that they understand the reasons for them. Both unions said they are short-staffed and that the reduction of planes could bring staffing demands more in line with existing manpower. "It's just an unfortunate reality of what's going on right now," said Jack Stephan, a spokesman for the US Airways chapter of the Air Line Pilots Association. Getting rid of planes that are not fuel-efficient or require expensive maintenance makes sense, said Mike Flores, a flight-attendant union leader from Charlotte.
See Story
Regards,
USA320Pilot
Earlier this week US Airways reported a first quarter loss of $191 million, which was disappointing, but beat analyst estimates.
See earnings press release
See related story
Then the company filed its March Operating Results with the U.S. Bankruptcy Court, which indicated the airline made an operating and net profit.
Monthly Operating Report
According to the Charlotte Observer, US Airways made $65 million in net income in March, the first month it has turned a profit since filing for bankruptcy protection in September, the company said in a court filing. Last week, the airline reported a net loss for the quarter of $191 million. Detailed figures released Monday showed that March's gain was outweighed by heavy losses in January and February. In March, the airline said it made $19 million in operating income and also benefited from changes made in its bankruptcy reorganization. Traditionally, US Airways' strongest quarter has been from April through June. March could have been especially strong this year because Easter fell in March instead of April, analysts said.
See Story
Then yesterday US Airways revised its first-quarter results to show losses increased by $91 million to $282 million because the management left out expenses from termination of the AFA and IAM DB pension plans.
The Pittsburgh Tribune Review reported, the additional $91 million expense for the January-March period does not affect US Airways' operating results or its cash position, Robert Mann Jr., head of R.W. Mann & Co. Inc., an industry consultant based on Long Island, N.Y. noted. "They are just trying to get the bad news behind them," said the analyst.
US Airways still had $91 million in pension liabilities for the quarter and erred by booking it on its balance sheet. It then fixed that by recognizing the amount as an expense on its income statement, which expanded the quarterly loss.
See Story
The Tribune Review noted, more worrisome, said Mann, is the fact that US Airways' revenue last quarter fell more than 4 percent. This, despite added capacity and the rare inclusion in the period of Easter holiday traffic and revenue. "Everybody else got a lift out of it, and US Airways came up short," said the analyst. The difference is fare-price pressure from discounters in the Northeast, which accounts for most US Airways flights.
See Story
What Mann fails to realize was the negative effect of the RC4 and the other union(s) resistance to change and the S.1113 fight. This fight caused passengers to book away from the airline because of the widespread national news media attention the company would liquidate. However, when the liquidation threat subsided and the company began its “Clear Skies Ahead†campaign the airline posted positive earnings results with crude oil prices above $50 per barrel.
Some of the blame can be placed on management and Chairman David Bronner’s liquidation talk, which I believe was intended to be a “club†over labor to seek concessions, but I unequivocally believe the January and February revenue deterioration below industry standards can by directly attributed to labor. The strike press releases and resistance to change caused more job loss than necessary, deeper employee cuts than necessary, and a dramatic drop off in revenue.
Meanwhile, US Airways keep’s adjusting its new business plan as it works with creditors and investors to obtain exit and merger financing. The most recent news came yesterday when the company said it will further reduce its mainline fleet by an additional 10 aircraft, which will be B737s, thus the year-end mainline fleet count will be reduced to 250 aircraft. There is reason to believe this reduction is being required by the creditors in exchange for their upcoming exit/merger financing, which was reportedly discussed today in a meeting between CEO Bruce Lakefield and potential investors in New York City.
According to today’s Charlotte Observer, with fuel costs remaining high, ditching the planes will save the airline an undisclosed amount of money and make it more palatable to investors. As we continue to talk with possible investors, the elimination of unprofitable flying is a key topic of conversation," said Bruce Ashby, US Airways' executive vice president of marketing and planning, in a message to employees.
See Story
Separately, yesterday US Airways senior management held two meetings with labor. The Labor Advisory Council (LAC) meet with management in Washington and senior vice president of maintenance John Prestiphilipo, vice president of customer service Donna Paladini, and vice president of operations Ed Bular held a special Check Airman meeting in Charlotte.
According to ALPA, the LAC met to “hear a report from senior management on various issues including first quarter results, non labor cost saving initiatives and employee performance incentive programs. We hope to be able to provide you with more details of the meeting with specific slides that will soon be posted on the pilots only website. The Company also initiated a discussion about various strategic alternatives, in light of the public confirmation that US Airways and America West are in discussions about a possible transaction. Executives of the Company did not disclose specifics on any alternative or on discussions with potential investors, but they gave the LAC background on their analysis and made it clear that the preference was on pursuing alternatives that preserved the jobs of US Airways employees.â€
See Story
The Check Airman meeting covered some of the same topics at the LAC meeting, but also discussed the new on-time initiative called, “All Together. On Time.â€, there were updates on US Airways’ new maintenance programs and vendor work, and a presentation was made by ALPA Trip Construction Productivity leader Chip Mayer on increasing Pilot/Flight Attendant “trip paring†productivity.
In conclusion, as US Airways finalizes its plan of reorganization and appears headed for a merger with America West Airlines union leaders seemed to understand the need for a further fleet reductions, which is being required by the creditors.
According to today’s Observer, leaders of US Airways' pilot and flight-attendant unions, whose jobs tend to be directly affected by changes in the size of the fleet, said they are disappointed in the cuts but that they understand the reasons for them. Both unions said they are short-staffed and that the reduction of planes could bring staffing demands more in line with existing manpower. "It's just an unfortunate reality of what's going on right now," said Jack Stephan, a spokesman for the US Airways chapter of the Air Line Pilots Association. Getting rid of planes that are not fuel-efficient or require expensive maintenance makes sense, said Mike Flores, a flight-attendant union leader from Charlotte.
See Story
Regards,
USA320Pilot
