Why our management are idiots !

[deltawatch]

After the next merger ..... which hub will be closed ...... CLT? PHL? PHX?

 

[sharktooth]

Undoubtedly PHL has more O&D than PIT - more people who pay less per mile to fly than those in PIT. And just like PIT, PHL fails as a hub without the connecting traffic - you did know that over 50% of enplaned passengers at PHL are connecting.....

and, CLT?

FWIW, PIT's total fees per enplaned passenger were less than PHL's when US started cutting service.

I don't know if you knew that US was on the hook, courtesy E.C. when the airport was built, for a half billion dollar bond, pretty much crippling the US ability to borrow during the 90s and up to bk 1. By refusing to re-negotiate terms during difficult times, agony county pretty much ended the ability of US to borrow during that time period. Too bad, because that did nothing good for the local economy.

 

[usramperTPA]

I am gonna go off topic a bit here, but I had to chime in on the title of this thread "Why our management are idiots!". I for one, have seen an endless parade of incompetant Managers and CEOs in my many years with this company. But, on the flip side, I have also seen an equally endless parade of incompetants, fools and ignoramus rank and file employees as well. I have seen some of my coworkers mistreat customers belongings, have seen agents and F/A's speak to customers in disrespectful and downright uncaring manners. I have seen pilots pull every trick in the book to not have to take a trip when they were short on time for the day. I have seen mechanics get all huffy and mad when they were pulled out of a breakroom to check out an issue a flight crew was having with an a/c. I even once had to take one of my own co-workers aside, and remind the person that stealing from a customers' bag is wrong and I was not going to allow it. I do not believe that this is widespread behavior, but we also make our mistakes and have un-professional moments. So, to all of the wannabe armchair quarterbacks out there, we have our share of idiots in our ranks as well. And on a second note, why stir up the already pissed-off PIT folks with another diatribe about how much of a mistake US made by downsizing PIT? Haven't these folks been through enough?

 

[Dog Wonder]

and, CLT?

Less than 20% of CLT traffic on US Airways originates in CLT, over 80% connects.

Who said the hub cities were no longer useful?

 

[LD3]

The cost of operating out of PIT would more than make up for any fuel savings realized due to the runway layout. Compare the costs in CLT and PIT.

This is a paste of an email from an AAD of CLT:

From time to time you hear Jerry talk about the cost to the Airlines for each enplaned passenger here at CLT. Our cost for each enplaned passenger last year was $1.21 This rate is the lowest in the country. The clipping below is self explanatory and indicates the importance of maintaining low costs. I thought you might find this article interesting. We have a lot to be proud of...

This is a paste from a AAAE report:

Airline payments. Over the past several years, PIT’s airline cost per enplaned passenger
has been reasonable ($6.03 in 2000 and $6.36 in 2001), particularly in light of the timing,
magnitude of investment, and efficiency of PIT’s facilities. However, the cost per e.p. is
vulnerable to a significant increase due to decreases in connecting passengers. For example, the
cost per e.p. for 2002 increased to $7.48 and is currently projected by ACAA to be $9.07 in 2003
even though operating expenses and debt service decreased each year. Cost per e.p. is increasing
because passengers declined 9.7 percent in 2002 and are projected to decline an additional 11.2
John F. Brown Company 3
percent in 2003. ACAA consultants estimate the cost per e.p. could rise as high as $25 if US
Airways rejects its lease and there is a significant decrease in connecting passengers.1

 

[sharktooth]

Less than 20% of CLT traffic on US Airways originates in CLT, over 80% connects.

Thanks. That percentage has been pretty consistent over the years. That means that over 80% of CLT passengers transit CLT airport, making CLT a very expensive operation, indeed.

 

[zethya]

Undoubtedly PHL has more O&D than PIT - more people who pay less per mile to fly than those in PIT. And just like PIT, PHL fails as a hub without the connecting traffic - you did know that over 50% of enplaned passengers at PHL are connecting.....
Jim

I don't know where you're getting your number for PHL. These are the latest Total Enplaned/Enplaned O&D percentages for the following
airports. So why again does a 35% connecting rate prove that US should dehub PHL and move back to PIT?
ID Enplaned Total / Enplaned O&D = Connecting %
ATL 38M / 13M = 66%
PHL 14M / 9M = 35%
EWR 13M / 10M = 23%
JFK 13M / 9M = 32%
ORD 31M / 14M = 55%
DTW 16M / 8M = 50%

"PHL fails as a Hub without connecting traffic" is applicable to EWR, JFK, ORD, ATL, DTW, etal.. If you want to imply that PHL fails as an airport without connecting traffic - that's absurd. It has over 18M Domestic O&D passengers and without US's 31%, the air fare/passenger mlle would likely increase significantly as well as the entry of additional carriers and routes. PHL (airport) has a catchment of 7M! The growth problem with PIT is simple - the metro area cannot support many more flights than already exist. If it could, why aren't other carriers entering the market or existing carriers significantly increasing service as US exits? PIT and CLT are very similar in their limited capability to grow without heavy support from connecting traffic - the catchment just cannot support more than is already there. Moving a portion of PHL domestic connecting traffic to PIT creates at least 2 route system problems; how do you guarantee performance on the high Yield international flights without support from a large number of existing domestic route connections and how do you select which flights to transfer to PIT as relievers without compromising the acceptable Loads on heavily supported domestic PHL O&D flights? Any thought of transferring international services to PIT would likely fall on financially astute deaf ears. PIT international O&D (excluding Canada) is about 200K/year. PHL's is 4M (excluding Canada). Your "theory" that aircraft burn more fuel waiting for takeoff at PHL than PIT and it should be a major reason to re-hub PIT is at best based on personal experience rather than sound evidence - else CO, DL, AA and others should dehub more delay prone EWR, LGA, JFK and ORD for the same reason. If airlines want adequate passengers for their business, they need to and DO have to put up with the delays associated with the NE corridor. Many ask if CO can make CLE such a successful reliever for EWR, why can't US do the same for PIT? One obvious answer is that CO has been using CLE in such a mode for many years and expanding it slowly in a careful step like fashion is a lot less complex and financially risky than starting from scratch - which would be the case with PHL/PIT. Additionally, US's management team is obviously not CO. IMO, building up CLT, which is already essentially a PHL reliever for US, is likely a much less risky solution than any attempt to refocus PIT. I do believe however that carefully selected PHL flights could be moved to PIT as relievers - for example some Caribbean flights with proven, heavily supported, domestic connecting traffic, which originate West of PIT. If the US management team cannot even get their act together on a single flight to China, how can one have confidence they can retain/grow overall profitability by selectively downsizing their largest profit center?

I'd be most interested to view your and others suggested flights/routes and supporting connections to be transferred to PIT and the rationale, which would likely not compromise the profitability of PHL and the airline.

 

[nostradamus]

This management is sitting on a gold mine.

First hint of Doug's problem. He asked for employee sacrifice and cut a 5.8 million dollar check for himself. He was taken aback by the employees that were questioning this move. The awa employees that were part of Jonestown and were moving on the monopoly board with him agreed. The employees that disagreed with his moves had experience and discounted his self serving move that took advantage of 911 victims ploy. Experienced employees looked upon this as the same old song, the awa employees backed his attempt of geriatric genocide.

Doug is in it for Stephen Wolf gratification. He sent out an excuse he was trying to do what is best for his family. There is an amazing new concept.

Get him out, get someone else in or write off you investment, go back to the diamond mines that employ innocent children so you can justify getting on your knees in front of a man. Enjoy your shoes made from adolescents that have no say. It is ok, you are so much better than them.

Doug tried to emulate Wolfs profit taking, with American Airlines treatment of TWA pilots. Not so fast Doug.

 

[BoeingBoy]

and, CLT?

Something like 75% connecting.

I don't know if you knew that US was on the hook, courtesy E.C. when the airport was built, for a half billion dollar bond, pretty much crippling the US ability to borrow during the 90s and up to bk 1.

If by "on the hook" you mean the long-term leases which provided much of the revene that the airport used to make the bond payments, then US (and the other long-term lease holders) were "on the hook". Not any different from just about every other airport in the country. US didn't directly issue the bonds, wasn't directly responsible for payments, and obviously (thanks to BK) that "hook" didn't have a barb on the end to keep US from spitting it out.

Jim

 

[sharktooth]

If by "on the hook" you mean the long-term leases which provided much of the revene that the airport used to make the bond payments, then US (and the other long-term lease holders) were "on the hook". Not any different from just about every other airport in the country. US didn't directly issue the bonds, wasn't directly responsible for payments, and obviously (thanks to BK) that "hook" didn't have a barb on the end to keep US from spitting it out.

Jim

US gave away leases (shops - $139 million worth) as well as other potential sources of income as part of the US/BA package.

The "on the hook" refers to carrying the debt which carried unattractive financial consequences, especially during economic downturns when borrowing seems necessary.

You may misunderstand how bond issues work. One cannot just "unload" debt like a bond obligation, at least in ch 11. My understanding was that agony county was pretty arrogant although I am certain blame can easily be shared on all sides.

 

[BoeingBoy]

You are apparently confused - the airport issued the bonds, not US. The airport bonds were not a part of US' debt. If your theory were true, US would still be responsible for repaying the bonds since they were not rejected in either BK.

"The new terminal at Pittsburgh International Airport commenced operation in October 1992. The construction cost of the new terminal was approximately $800 million, a substantial portion of which was financed through the issuance of airport revenue bonds. As the principal tenant of the new facility, USAir will pay a portion of the cost of the new terminal through rents and other charges pursuant to a use agreement which expires in 2018. [1994 Annual Report]

Jim

 

[sharktooth]

You are apparently confused - the airport issued the bonds, not US. The airport bonds were not a part of US' debt. If your theory were true, US would still be responsible for repaying the bonds since they were not rejected in either BK.

"The new terminal at Pittsburgh International Airport commenced operation in October 1992. The construction cost of the new terminal was approximately $800 million, a substantial portion of which was financed through the issuance of airport revenue bonds. As the principal tenant of the new facility, USAir will pay a portion of the cost of the new terminal through rents and other charges pursuant to a use agreement which expires in 2018. [1994 Annual Report]

Jim

No theory. I never said they were bonds issued to US.

Obligation is always a part of debt. You can hide it all you want with all the various mechanisms available but, like the "nic" will be, it is always there.

 

[Be Careful What You Wish For.]

Obligation is always a part of debt.

BB is showing that the "obligation" resides with the authority that issued the bonds.

 

[sharktooth]

BB is showing that the "obligation" resides with the authority that issued the bonds.

Thanks. But, what is USAirs obligation? If they insure the bond, do they not have some sort of obligation, a kind of Lloyds of London sort of "we back this"? ALPA back then said that particular bond was causing problems for US to borrow money. Why would they say that if there was no linkage?

 

[BoeingBoy]

If they insure the bond, do they not have some sort of obligation, a kind of Lloyds of London sort of "we back this"?

Wrong again - US didn't insure the Pit airport facility bonds either.

US' obligation was contained in the leases they signed for the new terminal/ramp/baggage space. The payments (rents) paid by US constituted part of the airport's revenue stream, which was used to make payments on the bonds. Ultimately, all US was "on the hook" for was the rent stipulated by the leases - until the leases were rejected at the end of BK1.

Just think back to what was happening at the time. US started losing money in late 1989, the economy turned down, Gulf War I, US didn't make a profit till well in the 90's. Could it be that the higher lease costs due to the mid-field terminal, together with losses, put a crimp on US' ability to borrow more money? Absolutely. But that's different than saying that US was "on the hook" for the bonds themselves.

Jim