3 Legacy Airlines, 3 Strong Investment Rationales

[USA320Pilot]

3 Legacy Airlines, 3 Strong Investment Rationales

US Airways Investment Rationale

US Airways is much smaller than United and Delta, but has been able to compete very effectively in spite of its small size. US Airways does not have the global scale needed to draw as many high-paying business customers as its larger competitors. However, the airline makes up for that through extreme discipline on the cost side. For example, US Airways has some of the lowest labor costs in the industry. In addition, the company does not engage in fuel hedging, which insulated it from this year's wild swings in petroleum markets.

Even more importantly, US Airways has made a commitment to concentrate its resources in the markets where it is strongest: Philadelphia, Charlotte, Phoenix, and Washington (Reagan Airport). By the middle of this year, 99% of US Airways capacity will begin or end at one of these four airports. This focus has allowed the company to post very strong revenue results in recent quarters. In December, US Airways reported a PRASM gain of 11%, far outstripping United (one of the few other carriers to report this figure on a monthly basis). Furthermore, US Airways has been one of the few airlines able to go head to head against Southwest (LUV) and win. Southwest is drastically scaling back its Philadelphia schedule this year, thus ceding a monopoly position to US Airways on several additional routes. This should further bolster revenue performance this year.

Lastly, as noted above, US Airways finally completed a long-sought slot swap agreement with Delta. The company will gain 42 slot pairs at Reagan airport, allowing it to consolidate its focus city operation there. US Airways had long been serving LaGuardia with tiny regional aircraft that were unprofitable under current jet fuel prices. By eliminating that service over the course of the next six months, and replacing it with more profitable routes from Washington, US Airways should achieve additional profit improvement this year. (The company also got a nice cash incentive of $66 million from Delta to bolster the balance sheet.)

Click here to read the entire story.

 

[USA320Pilot]

What's Wrong With U.S. Airlines?

Recently, the American Customer Satisfaction Index published its annual ranking of America's worst customer service providers. Of the seven worst, four were airlines. American Airlines was rated seventh, Delta was sixth, U.S. Air was fifth and United was the second worst company in America for customer service (Charter Communications "won"). Airline service is a far cry from what we see on the Pam Am television series.

Hypothesis 1: The nature of airline travel makes customer service difficult, if not impossible.

Hypothesis 2: Customer service is not America's strong point.

Hypothesis 3: Unions have crippled the airline industry.

This hypothesis has legs. Think of great organizations like Nordstrom or Disneyland. When you walk through the door, you viscerally feel a service-obsessed culture. Nearly all major U.S. carriers are unionized. Unions can survive only if there is conflict between managers and non-managers -- if the culture is toxic. Increasing toxicity is the lifeblood of unions. The Association of Flight Attendants is the world's largest flight attendant union. Its trademarked rallying cry is CHAOS (Create Havoc Around Our System).

Click here to read the entire story.

 

[UPNAWAY]

Unions and Customer Service just do not go together. Ever had good service from a unionized French waiter?

 

[johnny kat]

USA320PILOT Wrote:

Airline service is a far cry from what we see on the Pam Am television series.....

Yeah, about that, have you watched PanAm? I saw last sunday's episode and noticed when the plane was inflight that the entire coach section was empty. And in previous episodes noticed that coach was seldom filled, it seemed like plenty of seats were unfilled. On a side note I remember my first flight back in 1976 also had a lot of open seats. I believe that fares were much higher then and less people flew which made personal service the norm. There is just no way with high passenger loads today the service is ever going to be what it once was. So hypothesis 1 is the correct answer.

 

[BoeingBoy]

While loads are up, especially compared with the regulated era, the amount of service offered is way down. No hot meals on a 45 minute flight even in first. It's amazing what a smile and pleasant demeanor can do for the perception of service, and neither costs a dime.

Jim

 

[700UW]

Unions and Customer Service just do not go together. Ever had good service from a unionized French waiter?

Your really ignorant.

Prove your accusations.

I flew this weekend and the CWA represented agents in CLT and LGA were top notch, and very polite.

Give it up all ready.

 

[N965VJ]

Unions and Customer Service just do not go together. Ever had good service from a unionized French waiter?

Everyone here knows I don't like unions, but please try harder if you're going to make a point. The FAs at DL gave AFA the boot, so by your logic they are the best in the industry. By the same token, WN, one of the most unionized airlines around, should have a terrible reputation for not delivering what they promise.

Care to guess what the key is?

 

[USA320Pilot]

Johnny Kat said: "USA320PILOT Wrote:"

USA320Pilot comments: Johnny, I did not write anything. I cut and pasted comments from an article and then posted the link to the story.

 

[AAviator]

Johnny Kat said: "USA320PILOT Wrote:"

USA320Pilot comments: Johnny, I did not write anything. I cut and pasted comments from an article and then posted the link to the story.

No S--t. Thats all you ever do.

 

[Harry Callahan]

No S--t. Thats all you ever do.

Isn't that the truth :blink:

 

[usfliboi]

No S--t. Thats all you ever do.

What intelligent contributions do you make? I actually like all the news concerning US in one area? If you cant same something postive why do you need to show ignorance by insulting someone else who hasnt done anything to you? You dont do yourself any favors by allowing others to see your intelligence level!

 

[Art at ISP]

usfliboi,

I agree with your post in principle, however, I don't think it's up to one poster, a company cheerleader, whose selection of articles are usually biased toward the company to be responsible for posting such news in one place. In a perfect world that would be done by the site admins, and I believe there is a news section somewhere on this site.

That said, I further object to the poster in question promoting openly his own site, which competes with this one, although I believe he has toned that down somewhat...said site being anything but "unbiased".....

On that note, the article in question is very interesting. US has found a way to make their model work at current scale, but I do not believe the brain trust in Tempe capable of managing any thing larger (in fact it can be argued they are not effectively managing an airline of this size but it depends on the metrics you're using).

At the end of the day, I think AA will remain independent, and will use the reorganization tools available in CH 11 to get their cost structure in line, and eliminate such liabilities as they can WITHOUT further burdening the taxpayers of this country. They already have a large enough network to survive without merging with another carrier, but need to shed some of the liabilities and adjust work rules with the help of the unions to make it work. It does NO ONE any good if the company folds or is sold off in pieces.

I apologize to those union loyalists here, but I do think the unions play a big part in the problems that the entire industry finds itself in.....and in government as well I might add. I am NOT saying management doesn't have an equal or greater hand, but there are ways for the union to help the company save money without sacrificing wages and the entire pension system. It needs to happen here and it needs to happen in government...just look at what the governor of NY is doing with regard to the teacher unions and teacher evaluations....that's big and it's only the beginning.

My best to you ALL--both here and at AA....

 

[usfliboi]

usfliboi,

I agree with your post in principle, however, I don't think it's up to one poster, a company cheerleader, whose selection of articles are usually biased toward the company to be responsible for posting such news in one place. In a perfect world that would be done by the site admins, and I believe there is a news section somewhere on this site.

That said, I further object to the poster in question promoting openly his own site, which competes with this one, although I believe he has toned that down somewhat...said site being anything but "unbiased".....

On that note, the article in question is very interesting. US has found a way to make their model work at current scale, but I do not believe the brain trust in Tempe capable of managing any thing larger (in fact it can be argued they are not effectively managing an airline of this size but it depends on the metrics you're using).

At the end of the day, I think AA will remain independent, and will use the reorganization tools available in CH 11 to get their cost structure in line, and eliminate such liabilities as they can WITHOUT further burdening the taxpayers of this country. They already have a large enough network to survive without merging with another carrier, but need to shed some of the liabilities and adjust work rules with the help of the unions to make it work. It does NO ONE any good if the company folds or is sold off in pieces.


Art,

Thanks for your post...My point is I dont really need to agree with the content nor his motivations.. I have had the priviledge of working with the above Captain and was impressed with his professionalism and his ablity to communicate to both his fellow employees and passengers. I actually agree with much of what he posts. What is different about him (concerning his post) is I feel he is fair with his opinions...and remember its an opinion.... I do believe we will merge with AA. I actually believe we have one of the better CEO's that we have had since 1989 ... Do I agree with everything Doug does or says? NO! But he is a buisness man and obviously knows what he is doing. Most that disagree with that opinion are deeply rooted in union politics ...Just a sayin

I do enjoy seeing his opinions whether I agree with him or not he has NEVER insulted others....NEVER! Thats what i respect!

Thanks

I apologize to those union loyalists here, but I do think the unions play a big part in the problems that the entire industry finds itself in.....and in government as well I might add. I am NOT saying management doesn't have an equal or greater hand, but there are ways for the union to help the company save money without sacrificing wages and the entire pension system. It needs to happen here and it needs to happen in government...just look at what the governor of NY is doing with regard to the teacher unions and teacher evaluations....that's big and it's only the beginning.

My best to you ALL--both here and at AA....

 

[Art at ISP]

Thank you for your response. I agree with some and disagree with other parts of his viewpoint, however, the fact remains he is anything but "unbiased".

With regard to Doug, he is a good businessman, and he is in fact better than other CEO's you've had, but where we disagree is in his and his team's attitude to both customers and employees. To discuss further is a conversation for another thread.

Your comment about union politics, however, is spot on.

Thanks for keeping it civil...too bad others can't.

 

[usfliboi]

Thank you for your response. I agree with some and disagree with other parts of his viewpoint, however, the fact remains he is anything but "unbiased".

With regard to Doug, he is a good businessman, and he is in fact better than other CEO's you've had, but where we disagree is in his and his team's attitude to both customers and employees. To discuss further is a conversation for another thread.

Your comment about union politics, however, is spot on.

Thanks for keeping it civil...too bad others can't.

Art...

Thats my point. We can have a conversation and not get heated even if we disagree. There may be some bias(with the Captains opinions) however he never has made insults while making them or even defending them. In regards to Doug's attitude towards others.....This management has done (I feel) a great job of attempts of commiunication. Many of the issues our company has experienced has been with deeply seeded union workers who although hate the pay and conditions, continue to work with UsAirways and make customers hate US! I see this more in PHL however the washing machine has been working overtime there and if you have not noticed a difference you soon will.

Can Doug and team do a better job....Sure! I will say in their defense they have struggled with what remains are left from both companies and their cultures! Are we a World class airline? No! A low cost carrier with First class attempts? Maybe! All and all though I give Doug and team a c+ for its relationship attempts...and a B from a buisness stand point and hope that that all continues to improve.

Hope to see you out on the line when you are heading to work sometime..

Thanks