BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
- Banned
- #16
To take a stab at answering the question that is the topic of this thread (Why Isn't Restructured Us Airways Taking Off?) I'll submit this...
US Airways has NOT restructured. Sure, the employee contracts have changed but there is some change in contracts every time they are renotiated. This is not restructuring. Sure, the vendors have accepted changes in their contracts, but that is not restructuring. Sure, we're adding RJ's but they are just a different type of airplane and airlines have added new aircraft types and parked others since their inception so that is not restructering.
Restructuring is changing the way we operate our business. So what has changed about the way we do business? I would submit that very little has changed. We still primarily operate an old-style hub & spoke system.
For argument's sake, let's suppose that Dave is able to achieve another $300 million a year in cost savings from the employees. Add in the (up to) $300 million a year in "other" cost savings that he has mentioned before. That's $600 million a year or $150 million a quarter, or just over an 8% reduction in costs using 3rd quarter 03 numbers. That equates to a reduction in CASM of less than 0.8 cents, again using 3rd quarter numbers.
Now look at the possibilities of just one true restructuring inititive - rolling (or depeaking) hubs. An independent study found that AMR used 5 less aircraft and 4 less gates at ORD by going to a rolling hub concept. The number of flights stayed the same at 333 per day, or roughly the same as PHL and CLT. Going to rolling hubs at both these airports should theoretically allow us to redeploy 10 aircraft to other uses - point to point flying, adding service (either frequency or new cities), or whatever. What effect would this have on our CASM? I honestly don't know but I would be willing to bet that it would be at least as big as the hypothetical $300 million in additional employee concessions and have the added benefit of increasing revenues (which concessions don't do).
Jim
US Airways has NOT restructured. Sure, the employee contracts have changed but there is some change in contracts every time they are renotiated. This is not restructuring. Sure, the vendors have accepted changes in their contracts, but that is not restructuring. Sure, we're adding RJ's but they are just a different type of airplane and airlines have added new aircraft types and parked others since their inception so that is not restructering.
Restructuring is changing the way we operate our business. So what has changed about the way we do business? I would submit that very little has changed. We still primarily operate an old-style hub & spoke system.
For argument's sake, let's suppose that Dave is able to achieve another $300 million a year in cost savings from the employees. Add in the (up to) $300 million a year in "other" cost savings that he has mentioned before. That's $600 million a year or $150 million a quarter, or just over an 8% reduction in costs using 3rd quarter 03 numbers. That equates to a reduction in CASM of less than 0.8 cents, again using 3rd quarter numbers.
Now look at the possibilities of just one true restructuring inititive - rolling (or depeaking) hubs. An independent study found that AMR used 5 less aircraft and 4 less gates at ORD by going to a rolling hub concept. The number of flights stayed the same at 333 per day, or roughly the same as PHL and CLT. Going to rolling hubs at both these airports should theoretically allow us to redeploy 10 aircraft to other uses - point to point flying, adding service (either frequency or new cities), or whatever. What effect would this have on our CASM? I honestly don't know but I would be willing to bet that it would be at least as big as the hypothetical $300 million in additional employee concessions and have the added benefit of increasing revenues (which concessions don't do).
Jim
