2nd Qtr From Lakefield

[mwereplanes]

Here is a story within a story:

SAN FRANCISCO (CBS.MW) - The CEO of US Airways said the beleaguered airline may break even in the second quarter, according to a filing Friday with the Securities and Exchange Commission.

Bruce Lakefield, the airline's president and chief executive, said the full-year outlook is "clouded," and cautioned that the company must get its costs in line in order to stay in compliance with its federal loan guarantee.

"If we don't get labor cost reductions we have targeted, combined with the effects of abnormally high fuel prices and expansion of low-cost competition, we could see losses in the third and fourth quarters comparable to what we experienced in the first quarter," said Lakefield in the filing.

However, he stated that the second quarter is traditionally the airline's strongest and the one it relies on to help carry it through the rest of the year.

US Airways (UAIR: news, chart, profile) reported a first-quarter loss of $177 million, or $3.28 a share, compared with a profit of $1.64 billion, or $24.02 a share, reported a year earlier. The loss excluded reorganization items associated with the airline's emergence from bankruptcy protection.

Related to the cost cutting measures, Lakefield said that discussions with the Air Line Pilots Association were "serious and meaningful," but said that more work was still needed with all of US Airways' labor groups.

US Airways is facing growing competitive pressure from discount airlines such as Southwest Airlines (LUV: news, chart, profile), especially at its Philadelphia hub.

Shares of US Airways closed down 8 cents at $2.22.


Notice how he did not allude to operational changes when referring to cutting costs. Also note how fuel prices has now entered the tired old mantra. Left out of the discussion is the poor management and outrageous operational inefficency of how we operate the airline. Once again there is no leadership. Only the same old crap of labor and other excuses. Lakefield is here and nothing has changed. Bronner never met a leader. Or if he did he wasn't paying attention.

mr

 

[delldude]

i'm hearing they already modified the grand plan...or i mean the knee jerk reaction plan...
clt the gateway to the carribean i hear.
if you live in fla,i believe the carribean is a flight thru clt for you.hahaha....
great plan....
orlando soon to be new gateway to carribean???
who are these braniacs who devise these detailed plans?
AND THEY HAVE THE GAUL TO DEMAND WAGE CUTS FROM US??

 

[AtlanticBeach]

if you live in fla,i believe the carribean is a flight thru clt for you.hahaha....

Actually, this works well for most of the Southeast. Why would US try to fight AA on their home turf? If Airways cedes central and south Florida to American which has nonstop flights from MIA, FLL, MCO and TPA, there is still a substantial market that this company can exploit.

The summertime delays on Eagle are horrendous at night. IDBs after boarding are routine due to weight and balance issues. Returning from the Carribean requires either a Saab or ATR to many Florida locations.

This Floridian stopped taking American to the Carribean in 1997. I get home earlier now, transiting through Charlotte. This is one area that I don't believe is worthy of complaint.

P.S.- For those of you who say that the pre-payment to ATSB did not cause the 1Q04 loss, please look carefully at the OP of this thread. Notice that the company booked the ATSB guaranteed loan as ordinary income. No assets requiring depreciation were purchased with the loan. Repayment did have a significant effect on earlier results, as did other items.

 

[nycbusdriver]

Why would US try to fight AA on their home turf?

It's sad that Florida is American's home turf. USAir OWNED Florida in August, 1989 when they officially took over Piedmont. It was THEIR home turf to piss away, and piss away they did. With a vengeance!

 

[WestCoastGuy]

Same thing can be said about the West Coast. When USair took over in 1988, PSA dominated the market. Within 3 years, US decided to turn tail and run and today there is not ONE ROUTE left that they inherited. BAD Management goes back over a decade in the company and continues to this day. Do they all read the same play book when they walk in door????

 

[EyeInTheSky]

PSA and Piedmont FLA routes are gone; no reason to continally cry over this because its a big waste of time. A lot of money was wasted for years on lack of cooperation from all parties. Let's just get on with today and forget the past it serves no purpose in today's aviation environment.

 

[700UW]

Piedmont Shuttle owned FL and it accounted for 32% of Piedmont's gross revenue.

 

[ringmaruf]

PSA and Piedmont FLA routes are gone; no reason to continally cry over this because its a big waste of time. A lot of money was wasted for years on lack of cooperation from all parties. Let's just get on with today and forget the past it serves no purpose in today's aviation environment.

Amen.

 

[Fatherknowsbest]

Eye in the sky.............that's pretty transparent you know. Sooner than you want to belive Airways will just be a footnote about Corporate greed. No more no less, of course the human toll will be awful! That's what happens when mergers happen for no other reason than because they.....can. No thoughts No plans - just do it! Would make a great book one day. I might even write it!




Regards,
Father

 

[oldiebutgoody]

Why is Lakefield AGAIN taking an issue which is relatively positive, UAIR'S breaking even in Q2, and turning it into something very negative? If I remember correctly, the original plan which was submitted to the ATSB to justify the loan guarantee said that UAIR would break even by the end of 2004, then start showing profits in 2005. Sounds like UAIR is right on track, EVEN WITHOUT RAPING THE EMPLOYEES AGAIN! Could this just be a case of "kicking them while they're down"? Also, what kind of description uses the word "cloudy" when describing future potential to Wall Street? Could it be that things aren't THAT BAD, and they're trying to keep the perception that MORE cuts are needed? Sorry to the neigh sayers if I don't immediately believe anything that these guys say, but they've lied so much in he past, how can anyone believe them (yes, I consider Lakefield to be Siegel reincarnate, both were just "talking heads" for the RSA).

 

[javaboy]

just an observation.

No disrespect to Mr. Lakefield, however, as an asset manager of the highest caliber, he should appreciate the investigation into "what do we get for our money" question. or if he wishes what is our projected ROI on 300million (as a side note that same amount equated to 80% voting power and 32% of the company) so why can we not assume that at least that much will be turned over for the "investment" in which you seek?

or one step further? could it be that....
1. the hatchet man does the dirty work (takes the pain but handsomely rewarded)
2. the asset man puts his best efforts to struturing the deal
3. the as of yet unnamed actual experienced airline man finally shows up to run the show having been presented this on the proverbial silver platter?


would not the "bottom line" in any investment (RSA) is to maximize your ROR on it? and then you do your analysis of what is the cost of waiting for a higher price vs current value? if this is true would not "righting the ship" as it were through running it as opposed to simply taking turns at the lets ask for more money back stand? thus if the efforts were focused on running the airline, increasing top line revenues would not it follow suit the stock price and thus the outstanding capital value of the company would also rise at the same time it makes the asset more attractive to prospective buyers, which again drives up the price since most of the company is in fact held in private funds? which begs the question why not focus on running the airline, creating more value for the customer, tell them WHY its better to ride US than SWA or insert your favorite competitor here. Let them know that assigned seats means you do not have to board like a city bus stop in summer, with some dignity, or that yes your bags can be checked right through to your destination even interairline transfer. or sure come visit the club one time free on us see what SWA can not offer. then point out that UAIR offers as low or even lower fares than SWA in some cases. its called marketing. shed the mantra of USAirways "the high cost carrier in the northeast" for something else. Change public perception of your product and your product is infact changed. The perception is that SWA is the lowest fare going, hence the first call is to them or website visit. change that idea, and guess what that revenue comes here instead of there.

 

[oldiebutgoody]

just an observation.

No disrespect to Mr. Lakefield, however, as an asset manager of the highest caliber, he should appreciate the investigation into "what do we get for our money" question...

Exactly! And another thing. If Lakefield, as CEO, and the rest of the BOD are supposed to represent ALL the shareholders, and NOT just the RSA, might there be some legal problem with some of these actions, press releases, etc, which are clearly aimed at benefitting the RSA at the expense of the company? The RSA does NOT seem to be concerned with running an airline, but rather stripping it down, lowering costs with the goal of jacking up the stock price. Seems that running a GOOD airline is WAY DOWN on the priority list!

 

[Smartest Loser]

So Lakefield says U might break even on the second quarter….Ummmmm,

This has me thinking, given there past business experiences why not just show a profit of one ($1) dollar and get the federal government off your back…!! The ASTB loan states U must be profitable by 2005, technically that would qualify.

Oh wait, that would mean getting rid of the big stick used to extract concessions.

 

[vc10]

Same thing can be said about the West Coast. When USair took over in 1988, PSA dominated the market. Within 3 years, US decided to turn tail and run and today there is not ONE ROUTE left that they inherited. BAD Management goes back over a decade in the company and continues to this day. Do they all read the same play book when they walk in door????

PSA dominated those routes in part because of a low-ish (not as low as Southwest, but better than US Air) cost structure. When US bought PSA it immediately imposed US's cost structure on the old PSA network. To compensate for that, US Air raised PSA's fares.

Big problem: at the time, there was loads of excess capacity in the airports that PSA flew to. So Southwest entered and undercut US Air and the rest is history.

It wasn't mismanagement to get out of the way of Southwest---that was a foregone conclusion. The mismanagement was buying PSA in the first place.

US Air wasn't alone in that stupidity. At almost the same time, American bought Air California (AirCal), PSA's traditional rival, with almost exactly the same result---a few years later, they were blown out by Southwest. In fact, you could argue that American was even stupider, because they repeated the mistake by buying Reno Air in the 1990s!

Even Delta felt the pain. Western also had a traditional presence on the west coast, and Delta inherited it---and by the early 1990s was largely gone, courtesy of Southwest. Misery loves company...

 

[delldude]

word from lavatory stall 2 late friday was orlando to become focus city possibly.