ACA could fly for U

a320av8r

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US Airways Frontrunner For Picking Up ACAI Capacity


May 05, 2003 (Airline Financial News/PBI Media via COMTEX) -- US Airways
may be interested in recruiting the services of regional carrier Atlantic Coast
Airlines [ACAI] if United Airlines [UAL] is forced to liquidate under Chapter 7,
according to two financial analysts. However, they are divided about whether
American Airlines [AMR] also would want to pick up extra regional capacity from
Atlantic Coast.

If United is tipped into liquidation, displaced capacity at Atlantic Coast would
be utilized in the market, with US Airways and American Airlines being the two
most obvious sources of demand, according to Jim Higgins of Credit Suisse First
Boston. He noted on April 28 that US Airways'' restructuring plan incorporates an
unknown number of regional jets, but can add over 400. At this time, the carrier
has about 150 jets committed or in operation. Higgins does not believe US
Airways will operate 400 RJs, but Atlantic Coast''s 79 or so RJs would provide an
opportunity for a relatively quick influx of regional jet capacity for US
Airways, although at operating margins he strongly believes would be
single-digit rather than the 12-13 percent that have prevailed.

United''s chances of avoiding liquidation increased when the International
Association of Machinists ratified labor concessions on April 30 and flight
attendants ratified concessions the day before that will save the carrier more
than $1 billion a year for six years.

Higgins went on to say that the less widely known candidate for displaced
Atlantic Coast capacity would be American Airlines, which has significant scope
relief in its new pilots contract to add RJs. As a means of helping the carrier
maintain revenue competitiveness, American''s pilots have granted it the right to
fly more than 600 50-seat regional jets (or 110 percent of its narrowbody fleet)
at its wholly owned American Eagle and contract regional carriers, versus a
current base of about 165 RJs.

While Higgins does not believe that American would need anything close to that
higher number, he sees American adding perhaps 160-200 RJs. Currently the number
of regional aircraft (including turboprops) that American flies is about 35
percent of its mainline fleet size, versus about 51 percent and 62 percent at
Continental Airlines [CAL] and Delta Air Lines [DAL], respectively. American
also has gotten the right to fly 70-seat RJs, but they must be moved to flying
by American pilots at proportionate wage rates to the 50-seaters and therefore
appear unlikely to be possible sources of growth for free-standing operators,
according to Higgins.

He said he has no specific information that either US Airways or American
intends to tap Atlantic Coast for flying, but he sees such a move as reasonably
possible. In any event, he is most interested in those two carriers''
contribution to reduced downside risk for Atlantic Coast, in the form of
potential takers of its capacity, should United liquidate.

Jamie Baker of JP Morgan agrees that US Airways may be interested in gaining
regional airline capacity by using Atlantic Coast. But he does not believe that
other major carriers - including American Airlines - would want the extra
regional capacity that would become available.

In an April 23 analysis, he looked at specific major airlines that might
be
partners for both Atlantic Coast and SkyWest Airlines [SKYW], another regional
carrier that flies for both United and Delta. With the possible exception of US
Airways, he essentially throws cold water on the prospects of finding new major
partners.

With their major partners seeking significant cost reductions, a strategy for
Atlantic Coast and SkyWest would be to seek new growth opportunities elsewhere,
Baker pointed out. SkyWest has publicly acknowledged meaningful negotiations
with alternative partners. That sounds like a good idea, but only on the
surface, according to Baker. He lists the following large potential customers
for Atlantic Coast and SkyWest and gives an assessment of the likely prospects:

Continental Airlines. Not likely. Continental currently owns 53 percent of its
regional partner, ExpressJet [XJT]. With Continental''s financing flexibility
otherwise exhausted, Baker does not believe it would take on a new regional
partner and risk jeopardizing the value of ExpressJet. Furthermore, XJT is
guaranteed to remain Continental''s exclusive RJ provider in its hubs until 2007.

Northwest Airlines [NWAC]. Not likely. Northwest is currently contributing stock
of its wholly owned subsidiary, Pinnacle, to its pilot pension fund. Like
Continental, Northwest seems unlikely to risk jeopardizing the value of Pinnacle
by taking on Atlantic Coast or SkyWest.

American Airlines. Not likely. American remains focused solely on its continued
restructuring and ability to avoid Chapter 11. He does not believe American is
in any financial shape to take on an additional regional partner, and a recent
23 percent reduction in mainline pilot pay otherwise reduces the marginal appeal
of regional aircraft. Furthermore, American''s revised pilot contract transfers
70-seat RJs in operation (and on order) from the Eagle to mainline.

US Airways. A distinct maybe. US Airways is hungry for RJs, without question.
However, its current pilot contract forbids partnering with non-union carriers.
SkyWest is a non-union carrier. While there may be some hope for Atlantic Coast
at US Airways, the same should not be assumed for SkyWest.

Delta Air Lines. Not likely. Delta''s regional program, DCI, is the industry''s
largest and may serve as a significant source of financing for the airline at a
later date. In addition, Delta recently signed up Chautauqua in both Florida and
Ohio. If Atlantic Coast or SkyWest were aggressively seeking incremental Delta
opportunities, Baker asks why Delta would award the service to Chautauqua. The
answer, he said, is that Chautauqua''s bid was lower. The leverage that
accompanies Delta''s portfolio of five regional airlines limits the likelihood of
SkyWest extracting favorable terms.

Baker went on to say it is exceedingly unlikely that alternatives to United or
Delta would match the otherwise lofty departure rates that SkyWest and, to a
lesser extent, Atlantic Coast, currently receive. In short, he does not believe
investors should be misled by the prospects for new partners, particularly if
new partners pay market rates.

[Copyright 2003 PBI Media, LLC. All rights reserved.]

Airline Financial News, Vol. 21, No. 18 [Copyright 2003 PBI Media, LLC. All
rights reserved.]
 

AtlanticBeach

Senior
Aug 20, 2002
341
2
An intriguing opportunity.

ACA is notorious for their substantial delays and less than friendly ground personnel, especially at IAD.

ACA equipment w US or USX employees would be a much better result, especially if mainline size is stable or grows.
 

BoredToDeath

Advanced
Oct 19, 2002
119
0
How many times does it have to be said?

STOP THE OUTSOURCING!!!!!!!!!!!!!!!!!! NO MORE!!!!!! ENOUGH!!!!!!!!!!!!!! GET IT?

How many contract carriers do we need? Really? It''s getting stupid now. This company owns 3 perfectly able companys that can do all of the Express flying(PDT, ALG, and PSA). Just give us the equipment, get rid of the contract carriers and bring all the furloughed Mainline and WO people back to work. How freakin hard is it for this managment to do that!

And you Mainline people better start to support your WO brothers and sisters or soon U won''t have any employees. It''ll just be one small company that sells ticketts on 50 different airlines all painted the same!
 

dfw79

Senior
Aug 20, 2002
308
0
How about do what is most profitable for the company? Merge the 3 WOs into 1. Let mainline/U pilots fly the 170s and larger. Then contract out all the RJs under 50 seats to other airlines and let them eat the higher costs on the short hop runs like CAK-PIT. More money for the company...the higher the stock price goes...the more money in everyones pockets.
 

BoredToDeath

Advanced
Oct 19, 2002
119
0
----------------
On 5/6/2003 11:46:42 AM dfw79 wrote:


How about do what is most profitable for the company? Merge the 3 WOs into 1. Let mainline/U pilots fly the 170s and larger. Then contract out all the RJs under 50 seats to other airlines and let them eat the higher costs on the short hop runs like CAK-PIT. More money for the company...the higher the stock price goes...the more money in everyones pockets.

----------------​
Contracting is not profitable. With the contract carriers operating on a "fee for departure" basis, they can operate those planes completely empty and make money from U while U loses money on those flights.

Since the WO''s operate on the same premise, U does''nt lose a whole lot because even if the flights are not that full the money that U pays to the WO''s goes back into U''s pockett as profit that U makes off of the WO''s.

Second my first concern is the employees not the stock holders. I''d rather watch this company go down in a great ball of fire than watch another contract carrier come here. This place has gotten out of hand with furloughing employees and hiring more managers. Sorry that doesn''t make sense to me.

The ideal thing that needs to happen but requires the full support of the Mainline MEC as well as the MEC''s of the WO''s, is to merge the Mainline and WO companies into onelist while also accepting our pay rates for the turboprop and regional jet aircraft. Buy doing such they would make RJ''s profitable to fly at Mainline. This would hurt the first few years of pay of those that would come here in the future but all of U''s flying would be done in house. If the rumors of how many RJs U is going to order are true then we would have plenty of work for all those that are furloughed now and those that would be at the bottom of the merged list.

As RJ''s come on board we would be able to get rid of contract carriers on a one for one basis.

By doing this you accomplish two things. One all the money stays in house and U would be able to create the best working environment in the industry. I guarntee you that with all employees operating under onelist the customers would see and feel the difference in service and never be tempted fly on any other airline. And thats whats gonna make the stock go through the roof.
 

Cosmo

Veteran
Aug 20, 2002
840
0
Frankly, I believe that this discussion is a waste of time. In recent days, it has become apparent that United''s chances of surviving its trip through Chapter 11 bankruptcy proceedings have improved dramatically, although the carrier is certainly not out of the woods yet. And if United survives (which I think it will), then ACA will be right there alongside the major carrier feeding its hubs at ORD and IAD, if for no other reason than ACA has needed RJ capacity (82 CRJs) that would take United too long to replace. Plus, ACA now has the prospect of flying some of the 70 seaters that the new United-ALPA agreement will allow, which will benefit both ACA and its pilots. So I wouldn''t worry too much about ACA becoming another contract carrier for US Airways just yet. JMHO.
 

PITbull

Veteran
Dec 29, 2002
7,784
456
www.usaviation.com
I believe a few months ago when United was crying they won''t make it, and many on these boards were smacking their chops with the prospect of taking some of their traffic, I stated United would definitely survive...it''s part of the plan to get billions in labor contracts.

And, they will sit in BK the whole entire 18 months as they have much leverage and protection right where they sit.
 

MarkMyWords

Veteran
Aug 20, 2002
1,900
1
----------------
On 5/6/2003 5:43:54 PM PITbull wrote:


it's part of the plan to get billions in labor contracts.their traffic,

And, they will sit in BK the whole entire 18 months as they have much leverage and protection right where they sit.

----------------​

So are you saying that UAL, AMR, etc are faking these losses and are just trying to rape the union employees? That employee contracts, wages, benefits, etc are not a part of the problem? Oh wise one....please share with us the knowledge of what you would do to solve the financial crisis in the industry without employee concessions! I'm glad to know that all this bleak financial outlook stuff is all some accounting hocus pocus. Just a quick skip through bankruptcy court and POOF all those pesky contracts are gone! I am so glad it was that simple.
 

avek00

Senior
Aug 28, 2002
391
0
Don''t confuse United''s temporary stabilization with an ability to successfully emerge from Chapter 11 protection. United must first design a viable plan that radically alters the way it does business before it can even conceptualize a light at the end of the proverbial tunnel.
 

cavalier

Veteran
Aug 28, 2002
2,409
1
www.usaviation.com

----------------
On 5/6/2003 9:09:00 PM avek00 wrote:

Don''t confuse United''s temporary stabilization with an ability to successfully emerge from Chapter 11 protection. United must first design a viable plan that radically alters the way it does business before it can even conceptualize a light at the end of the proverbial tunnel.

----------------​
EXACTLY...it ain''t over till the fat lady sings....AND tons of jobs are forever gone, wages/salaries are much lower, heath benefits costs to employees MUCH higher, AND most of all about 10 million more people each and everyday flying and paying what it actually cost the airlines to eek out a small profit....SO, as was stated so well above...the proverbial tunnel, and it’s a very long and dark one to navigate.
 

DakotaHC8

Member
Aug 20, 2002
64
0
You know, this is another example of really ignorant reporters printing snippits from so called experts.

If you read the article, it proposes that adding ACA to the US Airways Family would bring value to US Airways, while it would not for most of the other major airlines

Why...?

Becuase it would lower the inherient value that these other major carriers have discovered in investing in their own...

As if US Airways would not find the same return in investment into it''s own regional airlines. DUH...

It just goes to show that outsourcing is not the end-all solution, and is not what a viable airline builds value for its shareholders with. Making Mesa or Wexford (chatauqua)more profitable only builds up value for these so called "partners", while our own balance sheet suffers.

If OUR people can do it just as cheap, and allow US Airways to maintain full control and all of the profits... Then it just as obvious as it is at the other major carriers that outsourcing is not the best answer for all situations.
 

CLIPPEDWINGS

Member
Apr 19, 2003
60
0
----------------
On 5/6/2003 11:07:57 AM BoredToDeath wrote:

How many times does it have to be said?

STOP THE OUTSOURCING!!!!!!!!!!!!!!!!!! NO MORE!!!!!! ENOUGH!!!!!!!!!!!!!! GET IT?

And you Mainline people better start to support your WO brothers and sisters or soon U won''t have any employees. It''ll just be one small company that sells ticketts on 50 different airlines all painted the same!

----------------​
I couldn''t have said that better myself.
 

gogogadget

Advanced
Aug 21, 2002
140
0
I think that most of the majors are and have been playing a game of "Guts". They intentionally fly close to a storm to scare the mess out of someone when they could just as easily avoided the storm by miles.

AMR''s Carty was quoted as saying he would drive the company into BK to get what he wanted. The others seem to know exactly how to manipulate the numbers do achieve the desired effect!

A good portion of the woes are real, and that is because we are close enough to the fire to feel the heat. The question is how did we get here? Why didnt the managers come to us well enough in advance to prevent this? Why is it that contracts or mergers can be completed in 30 days when Normal negotiations take years?

Things that make you go.......Hummmmmmmm?
 

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