What do we do Now?

[Stick-n-Rudder]

Yeah,

The financing is for 30 jets(EMB-190/195)through GE. APA's website is implying that JB's financial statments will change drastically during the 05-07 years. Apparently they will no longer operate "FREE" aircraft as they will, per their aggreement with Airbus, have to pay for the op's cost's.(Maint. and lease payments). Apparently JB cannot find additional finacing for future airbus aircraft? Again APA states that JB will have some hughe payments beginning 05. Aviation Week and Space Tech. had articles implying the same!

Pay a F100 capt. $180,000.00 dollars per year and a F1OO F/O $120,000.00 = $300,000.00. Or get Express to fly the same size aircraft under the "RJ" designation and save $200,000.00 per year!(Express F/A 's, CS and ground support not included.) The math is easy.

 

[usramperTPA]

----------------
On 6/10/2003 1:40:47 PM FM2436 wrote:

JetBlue Chief Executive David Neeleman said the move was designed to allow the carrier to fly to destinations not efficiently served with its existing Airbus A320 fleet, possibly including destinations outside the United States for the first time.

"We can reach into Canada if we want to, we can go into Mexico, we can go into the Caribbean," Neeleman said in a press conference. "There are so many market opportunities."

I wonder if JB will be the first lcc to attack our "growing" Caribbean presence? They already fly to SJU from JFK, the 190''s would be perfect to junp all over the Caribbean from there.
----------------​

 

[nyboilermaker]

Oldie-How are more mainline pilots going to be furloughed if the WOs get the 75 seat RJ? They won''t. It will bring mainline furloughees off the street and U generating more $$$ to help turn this place around.

???

 

[USA320Pilot]

JetBlue’s announcement that the company has a firm order for 100 EMB-190s with 100 options will create an interesting industry dynamic, but the order will not be aggregate to the discount airline’s earnings for more than two years. The airline plans to use these new aircraft to expand existing city pairs by creating opportunities in medium size markets, which will then augment its existing service in larger markets, but this strategy may be suspect.

Today Wall Street seemed to echo this sentiment when traders responded to the news by selling off the airline’s security with the share price dropping about five percent with investors expressing concern over the transaction.

With the transaction, the carrier is going to add complexity to its operation and create significant capital expenditure requirements/debt service, which will stress its balance sheet. Although JetBlue has been a significant success story, the added fleet type should add to the risk of the overall story. Interestingly, the carrier acknowledged this issue because the EMB-190 unit cost, on a stage length adjusted basis would be one cent higher than its A320, which is very significant for a low cost operator. This unit cost increase will eliminate 15 percent of its cost advantage, but, the company believes market opportunities should provide for comparable A320 margins.

Thus, JetBlue will not enjoy as great of a structural cost advantage with this product going forward, as it currently does with its A320 mainline service.

JetBlue's 100-seat cost advantage will depend to some extent on network carrier scope clauses. In the case of US Airways Group, with the company flying the EMB-170 at its regional subsidiary MidAtlantic Airways, the new subsidiary should achieve costs much closer to JetBlue than they now achieve in their mainline operation, which should be positive for the Arlington-based airline. Moreover, MidAtlantic’s EMB-170 unit costs will be better than the JetBlue EMB-190s and the smaller Embraer large RJ should provide a revenue premium with a two-class configuration, larger FFP branding, and other network carrier strengths that create passenger loyalty.

At today’s Merrill Lynch Transportation Conference, US Airways CEO Dave Siegel seemed to agree with this analysis. Siegel told analysts and the news media he did not understand the “business case†for the JetBlue order and he was “confused by the economics†because from this observers perch by adding the new fleet type, the carrier’s CASM advantage will somewhat dissipate.

Finally, it is also noteworthy that there will be no significant impact on JetBlue's earnings or strategic performance from the Embraer aircraft order to well beyond 2005 (2005 impact will be negligible) with only 18 aircraft delivered per year. Clearly, Wall Street voiced its skepticism to today announcement and the aircraft order obscures JetBlue's longer-term earnings growth outlook because the transaction appears to defy conventional low-cost wisdom.

Best regards,

Chip

 

[lindy]

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On 6/10/2003 12:59:54 PM PITbull wrote:

As U threatens to exit PIT Hub, I am sure JetBlue is waiting in the wings to come in and expand their presence.

Hope U management knows what the hell they are doing; from the sounds of Siegel's statments on CNBC about our future...."Uncertainty".

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Pitbull...DELETED BY MODERATOR.. you certainly do not seem to grasp business concepts very well. PIT has some of the highest operating costs of any airport in the country due to debt service. In addition, they recently announced an increase in landing fees.

Jet Blue may put several roundtrips into PIT should US Airways remove the hub. Don't plan on any major influx. There is very little o/d traffic. The archaic tax structure of Allegheny County does little to entice new business. Now, you have Gov. Rendell proposing new taxes. Yes, this is a real friendly business state. If you don't have business, you don't have passengers, thus, no new airlines with more than a modicum of flights.

Pit...you may now return to the altar you built to the Gods of Unionism. For it is in unionism that you trust and it is in your archaic thinking that you find solace in Allegheny County.

 

[ClueByFour]

If anybody checks the DOT stats, I think you find several things. One notable thing is that PIT has more O/D traffic than CLT does.

Or so I''ve been told.

 

[blueoceans]

"If anybody checks the DOT stats, I think you find several things. One notable thing is that PIT has more O/D traffic than CLT does"

Yes, but check the US Census. The population of PIT has declined steadily since the 1950''s, and is projected to continue to decline each year until at least 2010. During the same time period, Charlotte''s population is expected to grow by 35%.

 

[PITbull]

Lindy,

Now that you have shown you have such profound INSIGHT on CITING the problems of the Pittsburgh Airport (that U created in the early 90s), can you use your brain AND YOUR mouth to explain the SOLUTIONS???????????????????

 

[ClueByFour]

----------------
Yes, but check the US Census. The population of PIT has declined steadily since the 1950''s, and is projected to continue to decline each year until at least 2010. During the same time period, Charlotte''s population is expected to grow by 35%.

----------------​

That may or may not materially impact the current R&D numbers. According to the US Census Bureau, the PIT MSA had 2.1 million people in 2001. The CLT MSA had 546,000. I seriously doubt the population of PIT is going to drop by %50 in the next 7 years. Don''t let numbers and data get in the way of a flippant remark, tho.

Even if they do, the implication above was that PIT has weak O&D numbers. They are better than CLT''s O&D numbers. The difference is the debt service cost. Dave and Dave are used car salesman, and are being somewhat dishonest.

And this is why, kids, regardless of US bailing on PIT that the county/state should offer the sweetheart deal to somebody else. Will PIT have a hub like it did circa 2000? Nope.

Will US get anything close to the revenue or yeild from PIT? Nope. Is there somewhere else they can pick that up without getting lunched the the LCCs? Nope. Et tu, Dave?

 

[blueoceans]

The city population of Charlotte is approx 580,000 and it''s current MSA is 1.6 Million. In 2011 the Charlotte MSA is expected to be approx 1.9 Million.

"I seriously doubt the population of PIT is going to drop by %50 in the next 7 years."

The U.S. Census site does state that Pittsburgh has lost 50% of it''s population since 1950. So, it takes 50 years.

 

[DLFlyer31]

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On 6/10/2003 9:05:07 PM Chip Munn wrote:

Moreover, MidAtlantic’s EMB-170 unit costs will be better than the JetBlue EMB-190s and the smaller Embraer large RJ should provide a revenue premium with a two-class configuration, larger FFP branding, and other network carrier strengths that create passenger loyalty.
​

---------------

I''d love to see some support for this assertion. If the EMB190 does have a cent higher cost than A320, that would mean it''s CASM would be around 7.5. So you''re telling me that the EMB170 will have a lower CASM than that? I find that hard to believe.

-----------
Finally, it is also noteworthy that there will be no significant impact on JetBlue''s earnings or strategic performance from the Embraer aircraft order to well beyond 2005 (2005 impact will be negligible) with only 18 aircraft delivered per year. Clearly, Wall Street voiced its skepticism to today announcement and the aircraft order obscures JetBlue''s longer-term earnings growth outlook because the transaction appears to defy conventional low-cost wisdom.

Best regards,

Chip
----------------​

Clearly, Wall Street wasn''t so skeptical as JBLU has already made up all of yesterday''s loss.

 

[USA320Pilot]

Dlflyer:

Dlflyer said: "I'd love to see some support for this assertion. If the EMB190 does have a cent higher cost than A320, that would mean it's CASM would be around 7.5. So you're telling me that the EMB170 will have a lower CASM than that? I find that hard to believe."

Chip responds: At US the EMB-170 will be operated at US Express with Express versus mainline unit costs across-the-board. The EMB-190 is not an RJ, it's a mainline aircraft with an aisle that is wider than the B737, the seat pitch will be 32 degrees(same as the Airbus), and 6'9" headroom.

In regard to the US EMB-170 order, all of the aircraft have been financed at "very favorable" terms by GECAS and a Brazilian bank, the employees will operate under AA Eagle pay and benefits (which are the lowest in the industry), and and according to Dave Siegel the US EMB-170 will have better unit costs than the JBLU EMB-190.

Regardless, the key for US is to recover its traditional revenue advantage, which it's well under way to do so. In March 2002, US had a 93 to 94% revenue disadvantage to other network carriers, but today now has a revenue "premium", which is expected to grow with its recent RJ order and alliances, with Siegel calling the EMB-170/5 a "revolutionary" product.

DLflyer said: "Wall Street wasn't so skeptical as JBLU has already made up all of yesterday's loss."

Chip responds: I agree and now over the past two days the security has traded flat; therefore, the announcement has had little upside effect on the stock price with little capital gain.

Best regards,

Chip

 

[Diesel8]

Soon we will have an "interesting corporate transaction" involving U and jetBlue. (Sorry Chip, no harm inetended, just could not resist)

As far as jetBlue's cost rising sharply in the future, based on all the evidence I have seen and that is publicly available,, that is not really true, although it will go up over time. Even if jetBlue had a mx cost as high as SWA, jetBlue CASM would still be among the best in business.

I would venture a bet, that the 190 for jetBlue has been financed on even better terms

(PS. I am aware that jetBlue is the darling of the hour and that things can/do change, no disrespect is intended)

 

[michael707767]

----------------
On 6/11/2003 2:46:24 PM Chip Munn wrote:

Chip responds: At US the EMB-170 will be operated at US Express with Express versus mainline unit costs across-the-board. The EMB-190 is not an RJ, it''s a mainline aircraft with an aisle that is wider than the B737, the seat pitch will be 32 degrees(same as the Airbus), and 6''9" headroom.

----------------​

Chip,
I thought the EMB-170 was going to be operated at Mid-Atlantic, which was to be a division of the mainline, and not a subsidiary. Has this changed? Also, the 170 has exactly the same cabin cross section as the 190, and thus is no more an RJ than a 190 by your definition. The 170 being essentially a shorter version of a 190 (I know there are some other differences, but they are not major) I still don''t see how we can operate the 170 at a lower cost than JetBlue with the 190.
Michael

 

[USA320Pilot]

Michael:

Michael said: "I thought the EMB-170 was going to be operated at Mid-Atlantic, which was to be a division of the mainline, and not a subsidiary. Has this changed?"

Chip answers: What we are talking about is semantics. MidAtlantic will be a separate company operated by the mainline. Regardless, the company is now moving forward with hiring in all departments, they will accept delivery of their first aircraft in November, and will have scheduled passenger service starting in January 2004 -- just 7 months away.

Michael said: "Also, the 170 has exactly the same cabin cross section as the 190, and thus is no more an RJ than a 190 by your definition. The 170 being essentially a shorter version of a 190 (I know there are some other differences, but they are not major) I still don't see how we can operate the 170 at a lower cost than JetBlue with the 190."

Chip answers: Email Dave Siegel, he studied the two aircraft and made the comments at the Merrill Lynch Global Transportation conference. Regardless, the JetBlue order will not see meaningful EMB-190 financial results for four years when the airline has 36 jets. The company is going to have start up costs that will depress earnings and is moving away from the low cost single fleet strategy, which has Wall Street analysts questioning the decision.

It will be interesting to see how this plays out. Obviously, JetBlue is a force to be reckoned with, but the order has risks and I believe US Airways will be better able to compete with JetBlue because the Kennedy-based airline will see a significant increase in its CASM, thus mitigating its key advantage.

Best regards,

Chip