US Airways wants flexibility on aircraft leases

[gilbertguy]

 

[DLFlyer31]

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On 9/10/2002 1035 PM chipmunn wrote:

5. Dave Siegel has told employees at road show meetings in 3 to 5 years US will be out of the turboprop business.
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[/blockquote]

If this is true, then there's a ton of markets that US will be abandoning in the next 3-5 years. Think about routes like GON-PHL, TLH-JAX or hundreds more. These routes can't support 30+ seat RJ's with any real frequency.

Some routes could support the RJ's if US's hubs have enough connecting opportunities, but I'm not even sure if that will be the case given the way CLT and PIT are being downsized.

I guess US could still codeshare with prop operators, but not have any wholly owned. Otherwise, US will be abandoning a lot of cities.

 

[chipmunn]

Chip said: Dave Siegel has told employees at road show meetings in 3 to 5 years US will be out of the turboprop business.

DLFlyer31 said: If this is true, then there's a ton of markets that US will be abandoning in the next 3-5 years. Think about routes like GON-PHL, TLH-JAX or hundreds more. These routes can't support 30+ seat RJ's with any real frequency. I guess US could still codeshare with prop operators, but not have any wholly owned. Otherwise, US will be abandoning a lot of cities.

Chip comments: The ALPA restructuring agreement provides for 150 37-seat RJs. In addition, none of the wholly-owned carrier's currently operates 19-seat turboprops. When Dave made his comment in PIT if I remember correctly he was talking about the Allegheny situation and how it pertained to US Airways Group. In my opinion, MDA and the other wholly-owneds will transition to an all jet operation and any turboprop flying would be done with contract code-share partners.

Chip

 

[ChairPrefRes]

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On 9/11/2002 3:43:48 PM autofixer wrote:

Not to mention, where are the 400 R(replacement)J(jets) going to go? They sound pretty fancy with first class seats and all.
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[/blockquote]
With U's new low cost structure and 400 rjs added to the mix I dare say it wont be just the cities we now service on the route structure...I think a few airlines better start watching their 6

 

[motnot]

Chip wrote: There comes a point that the three-hub system must have sufficent aircraft to operate and be profitable. I suspect with the recent major shcedule change and the comments by Ben Baldanza, we are close to that point.

motnot's comments: Maybe the three-hub system is part of the problem, especially when U has three other focus cities at LGA, DCA and BOS.

I spent some time recently looking over U's route structure, and the problem is that they have WAY TOO MANY tiny spokes. There's great coverage, but probably too much for U's condition and the fact that of its three hubs, only PHL really should be a big operation.

CLT's not bad, althought seems too large for its own good, and no one like to say it, but PIT is completely unnecessary.

You've got to serve what you can profitably, and cut what you can't. Maybe that equation changes drastically with the cost cuts, but at best I see U treading water as an independent carrier.

 

[Pacemaker]

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On 9/10/2002 816 PM USAirBoyA330 wrote:

Please read the artical before posting half false information. 150 airplane ENGINES and aircraft! Gees...this is how rumors get started.

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ALPA has identified the aircraft in question: 87 737s, 22 757s, 6 767s. As someone already pointed out, Dave is batting 1.000; he should have no trouble getting the 245 number thrown out.

Paper or plastic? Ya wanna Supersize your oder?

 

[ClueByFour]

[blockquote]
CLT's not bad, althought seems too large for its own good, and no one like to say it, but PIT is completely unnecessary.

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Until it rains at PHL or CLT. Particularly PHL.

PHL is worthless as a connecting hub.

 

[autofixer]

Not to mention, where are the 400 R(replacement)J(jets) going to go? They sound pretty fancy with first class seats and all.

 

[Rudy]

For what it's worth, there has been some talk on the line about Boeing making some attractive offers for aircraft to USAirways. Could it be possible that Dave is going to dump old, high lease rate aircraft for new reasonable lease rate aircraft?

 

[motnot]

If this is true, then there's a ton of markets that US will be abandoning in the next 3-5 years.  Think about routes like GON-PHL, TLH-JAX or hundreds more.  These routes can't support 30+ seat RJ's with any real frequency.

These are exactly the kind of routes that I'm talking about that U needs to eliminate. Sure, TLH-JAX may have some goverment business, etc., but a MAJOR AIRLINE does not need service of 19-seaters in its name between two non-hub cities. Since routes like these are often done by other companies (Colgan, etc.), U doesn't even make much money off them. I don't think it's worth the hassle.

I don't completely understand what the wholly-owneds do, but if this is it, then Siegal should get rid of them.

No many people are gonna fly TLH-JAX-CLT-XXX when they can take a quick hop on DL to ATL and then wherever they want to go.

It's like OMA-MCI. Hardly anyone flies that (it's nearly as quick, and much cheaper, to drive), and I think it's U's only flights out of OMA. U should just close down OMA. No one's going to fly OMA-MCI-PIT/PHL/CLT-XXX. If MCI were a real U hub, then maybe, but all that Express flying out of MCI is worthless in my mind.

 

[AtlanticBeach]

In previous years, I have flown JAX-TLH and JAX-TLH-PNS quite often. Usually, it is just the crew and me (possibly 3 or 4 others who drive onto Panama City) to TLH. There used to be 3 B1900's a day. It's now down to 2 daily. Folks get on in TLH, mostly for MSY, the stop after PNS.

I've done the westbound a couple of dozen times, but the eastbound in the afternoon was pretty unpredictable due to weather, and I usually had to come home via ATL (which I dislike due to carrier involved).

All that being said, the service never did look like a money maker and will only be missed by a few people.

 

[chipmunn]

Hi Rudy:

Rudy said: For what it's worth, there has been some talk on the line about Boeing making some attractive offers for aircraft to US Airways. Could it be possible that Dave is going to dump old, high lease rate aircraft for new reasonable lease rate aircraft?

Chip comments: Rudy, there is reason to believe both Boeing & Airbus have made attractive offers to the company. Like most airlines, when the company took delivery of aircraft in the 80's interest rates were in the 11 percent area and today they are about half of that. In the case of the B-737 US has some aircraft on the books that have between $250,000 to $270,000 per month payments, where there are new Boeing & Airbus aircraft parked in the desert that can be obtained for half of the current lease payments, or about $125,000 per month.

Since the company has a one-time bankruptcy shot to shed itself of high-lease payment aircraft after 60 days, to prune itself for a couple of months in the short-term, and take delivery of identical aircraft and cut its aircraft ownership expense in half, wouldn't it be prudent for management to try and do so?

Chip

 

[Pacemaker]

Chip:

In response to your comment that the company would seem to require a reasonalbe minimum fleet size to operate three hubs - I think we are seeing a transformation into a two-hub system for mainline, with PIT functioning as an Sj hub. I think it's quite possible that PHL and CLT along with the Shuttle and DCA routes could be comfortably flown with less than 200 aircraft. I feel the company is asking for relief on another 100+ aircraft for a reason. I don't think it's that far-fetched to imagine an all A19/320/321 fleet of around 160 in the near future, with codesharing on west coast and international routes. We'll be told that regrettably the lessors wouldn't play ball and forced our hand; the judge will do what he thinks is in the interest of the stakeholders and Dave's average will remain at 1.000.

 

[Rudy]

I feel the company is asking for relief on another 100+ aircraft for a reason.

Nowhere have I heard that Dave wants to go below the 245 aircraft. He has stated that he will try to operate 270 or so if he can.

All the talk about a 160 plane fleet is probably just bunk spoken by us employees that have been beat up for a long time. This feeling although understandable, is most likely misplaced.

Dave has a chance to shed some things that we are paying above market rates for and maybe has a chance to replace them at bargain rates. Please remember that interest rates are at a 50 year historical low.

If Boeing and/or Airbus wants to keep their lines running, and the banks are offering cheap money, doesn't it make sense to do so?

I for one am praying for better days ahead. Not to mention...2003 is the year before a presidential election year. Historically, the economy turns around effectively helping the incumbant get reelected.

 

[ITRADE]

[P][BR]The Caribbean expansion is obvious and logical. However, excepting Port of Spain, Curacao, Bonaire, and maybe Kingston, US has picket off most every city that can be served from the mainland U.S. with a jet. What would US's next step be - increased frequency? Remember, many of US's Caribbean flights are Saturday or Sat/Sun only services.[BR][BR]I see that US is making its way south with San Jose, CR being announced. If US wants to continue south, I'm going to assume that CLT is going to be the beneficiary with service to places like Mexico City, Acapulco, Caracas, Quito, etc. Of course, if US really wants to expand central/south America, it should really consider getting some of its LatinPass partners into a more extensive arrangement where they actually code share to the secondary and tertiary airports like Medellin, Isla de Margarita, etc.[/P]
[P]As always, I've update the eye_trade Caribbean route map to reflect new additions. Of course, it was US Airways that actually followed my route map!!! [/P]