Bankruptcy Coming?
- Thread starter USA320Pilot
- Start date
First, you forgot about the advancement of technology. (such as the proliferation of teleconferencing)USA320Pilot said:
Second, you need to quit playing the legacy airlines off as victims -- they are not. LCCs are not a "last one year" thing. Neither is Iraq. Neither is Internet booking. These are not "erroding fundimentals" -- they are SHIFTING.
Business today has to have a vision of where it is going, and a tremendous drive to get it there -- neither is true for US Airways. (and nearly all legacy airlines)
While Southwest was gearing up and homing their technique USAir was "experimenting" with crap such as Business Select. While Southwest was focusing on keeping costs down, USAir was selecting a billion different airplane makes and models to fly. While JetBlue enters the market with some great perks such as DirecTV, US Airways cuts back on economically trivial, but VFF important things such as glassware in F.
It’s not the Iraqi War or SARS. It's 10 years of fuzzy vision of where you wanted to be, and a moderate to severe lack of top end leadership. I completely reject your reasoning here.
Tim Nelson
Veteran
The facts that you fail to recognize are that the IAM already recognized the fundamental changes in the industry and the members adjusted accordingly to give US AIRWAYS a labor cost advantage over legacy carriers, even at Southwest we have a [non-pilot] labor cost advantage.USA320Pilot said:
This suggest that it is not about money at all but rather a plan to continually beat down the unions.
regards,
Yep you believe management!USA320Pilot said:
Same people who said your pension is safe.
And please explain to me who in management gave you the 18 day figure since one was never accomplished in-house and if you put the correct manpower it can be done in the right time frame.
Oh by the way MAE is averaging 18 days or more on the S-checks.
So try again, since you don't ever learn.
- Thread Starter
- #50
Rwerksman:
With all due respect, I believe you need to re-read my post. SARS, fuel prices, the Iraqi War are all cyclical events, but changes in IT, Internet booking, and LCC market penetration are permanent fundamental shifts in the way the industry operates.
Moreover, I find that many people who post on this message board purposely elect to not address the issues.
I have already articulated three huge management mistakes, but nobody can deny the changing marketplace.
The sluggish economy, September 11, rising security costs, Acela, Internet booking, alternate ground transportation, fuel prices, and LCCs have changed balance sheets and the marketplace forever.
Do I like it? No. Do I want the good ol†days to return? Absolutely.
But I am not blinded by emotion to recognize that deteriorating fundamentals are much of our problem.
Let’s further examine one cyclical cost problem and one fundamental problem in more detail to illustrate these points:
US Airways budgeted for its annual fuel expense to be about 86 cents per gallon, however, current estimates now have the company’s average price per gallon at $1.06 cents per gallon. Each 1-cent increase in the price of jet fuel costs the company about $11 million per year. The 20-cent increase in the average gallon of jet fuel will cost US Airways $220 million over budget. The figure would have been worse with the average gallon of fuel projected to be $1.14 per gallon if Neal Cohen had not hedged about 35% of the company’s total allocation.
In addition, Washington revenue is going to be under assault similar in scope to Philadelphia starting in about two weeks when Independent Air begins operation on June 16. The former United Express carrier will operate RJs in 35 markets from their Dulles hub with fares as low as $49 one way. True, not every seat will have this fare, but Washington yield will be under further pressure in a market that provides about 5% of US Airways’ total revenue. Then next year the company will begin operating A320 aircraft with pay and benefits less than JetBlue.
None of these competitive issues are due to US Airways mismanagement and either we adjust or the company will enter bankruptcy and then seek to impose pay and benefits cuts deeper than what could have been obtained by consensual negotiations.
Can anybody tell me where I am wrong in regard to skyrocketing fuel prices or further revenue deterioration in regard to the Independence Air problem?
Respectfully,
USA320Pilot
With all due respect, I believe you need to re-read my post. SARS, fuel prices, the Iraqi War are all cyclical events, but changes in IT, Internet booking, and LCC market penetration are permanent fundamental shifts in the way the industry operates.
Moreover, I find that many people who post on this message board purposely elect to not address the issues.
I have already articulated three huge management mistakes, but nobody can deny the changing marketplace.
The sluggish economy, September 11, rising security costs, Acela, Internet booking, alternate ground transportation, fuel prices, and LCCs have changed balance sheets and the marketplace forever.
Do I like it? No. Do I want the good ol†days to return? Absolutely.
But I am not blinded by emotion to recognize that deteriorating fundamentals are much of our problem.
Let’s further examine one cyclical cost problem and one fundamental problem in more detail to illustrate these points:
US Airways budgeted for its annual fuel expense to be about 86 cents per gallon, however, current estimates now have the company’s average price per gallon at $1.06 cents per gallon. Each 1-cent increase in the price of jet fuel costs the company about $11 million per year. The 20-cent increase in the average gallon of jet fuel will cost US Airways $220 million over budget. The figure would have been worse with the average gallon of fuel projected to be $1.14 per gallon if Neal Cohen had not hedged about 35% of the company’s total allocation.
In addition, Washington revenue is going to be under assault similar in scope to Philadelphia starting in about two weeks when Independent Air begins operation on June 16. The former United Express carrier will operate RJs in 35 markets from their Dulles hub with fares as low as $49 one way. True, not every seat will have this fare, but Washington yield will be under further pressure in a market that provides about 5% of US Airways’ total revenue. Then next year the company will begin operating A320 aircraft with pay and benefits less than JetBlue.
None of these competitive issues are due to US Airways mismanagement and either we adjust or the company will enter bankruptcy and then seek to impose pay and benefits cuts deeper than what could have been obtained by consensual negotiations.
Can anybody tell me where I am wrong in regard to skyrocketing fuel prices or further revenue deterioration in regard to the Independence Air problem?
Respectfully,
USA320Pilot
ClueByFour
Veteran
Yeah. US could have hedged gas at $.85 cents/gallon and failed to do so. Strike one.
After BWI, if US thought they were ever going to be "safe" again from LCC competition (in the Washington area, no less), then somebody in "strategic planning" at CCY has a very good view of the sand (because their head is apparently in it).
After BWI, if US thought they were ever going to be "safe" again from LCC competition (in the Washington area, no less), then somebody in "strategic planning" at CCY has a very good view of the sand (because their head is apparently in it).
Say what you will about USA320Pilot, but he is NOT the enemy: time and the bankruptcy court are.
It is of critical importance that US Airways not be forced to seek a second bankruptcy filing - not only will US' competitors go all out to kill the company by distressing the company's revenue stream (and perhaps, by making bids for various parts of the airline), but US will also find it nearly impossible to obtain financing of ANY kind. And unlike CO, US doesn't have undersized hubs and a mostly non-union junior workforce as a foundation for a post-2nd BK business plan. In short, US either restructures itself immediately or else dies in a six-month catastrophic fragmentation starting this fall.
It is of critical importance that US Airways not be forced to seek a second bankruptcy filing - not only will US' competitors go all out to kill the company by distressing the company's revenue stream (and perhaps, by making bids for various parts of the airline), but US will also find it nearly impossible to obtain financing of ANY kind. And unlike CO, US doesn't have undersized hubs and a mostly non-union junior workforce as a foundation for a post-2nd BK business plan. In short, US either restructures itself immediately or else dies in a six-month catastrophic fragmentation starting this fall.
EyeInTheSky
Veteran
avek00, what's going to happen is going to happen. All the paycuts and productivity changes won't change the fact that this airline is again headed for Chapter 11 bankruptcy protection. I can guarantee you this time it's going to look like the Texas Chainsaw Masacre. UGLY!
Good lord, I actually agree with Avek for once.
At least partially
. I think it is likely that because of the situation in Ch11 that Avek describes, management might just shut down and liquidate. If they run the number estimates and see themselves being put in a position of greatly increasing their risk due to the new financing people getting ahead of them, or dwindling of assets they will likely just shut down. I dont agree that employees cant minimize the liklihood of this happening. I think they can, and since I am pretty pessimistic on this, I think they will trigger it on the other hand.
At least partially
. I think it is likely that because of the situation in Ch11 that Avek describes, management might just shut down and liquidate. If they run the number estimates and see themselves being put in a position of greatly increasing their risk due to the new financing people getting ahead of them, or dwindling of assets they will likely just shut down. I dont agree that employees cant minimize the liklihood of this happening. I think they can, and since I am pretty pessimistic on this, I think they will trigger it on the other hand.I beg to differ. IMHO, while US will not be around for the long haul, another round of concessions combined with a new business plan could absolutley keep the airline afloat until a merger or sale can be brokered a few years down the road.EyeInTheSky said:
My take is a merger is still in US's future and quite honestly best interests. Downsizing PIT and rebuilding a point to point network along the east coast makes US an even more attractive merger partner, in my opinion. If Lakefield's business plan is what I believe it to be, US's network one year from now would fit nicely into several other carrier's respective networks without requiring a lot of rework in a merger.avek00 said:
PITbull
Veteran
I can add to this comment...Tim Nelson said:
Is also U's endeavor to rid themselves of jobs and as many employees as possible,
(example: CWA: kiosk machines, IAM: outsourcing inspite of IAM's proven plans shown to management that would save them millions to keep the work inhouse, AFA: FAA min staffing and policies to terminate senior, top out employees.)
MAA: Rjs given to the affiliates instead of MAA for our furloughed employees.
We are going to be bought out.
ELP_WN_Psgr
Senior
- Nov 29, 2003
- 419
- 0
Close. You're in the church but not in my pew.
Here's today's view from sunny El Paso:
USAirways is not going to be bought out.
Parts of it are going to be bought up.
And here is where it gets ugly. Orenstein and his folks at Mesa...to whom USAirways (along with America West etc etc) has been sending money to operate flights for you...are going to take some of that money and use it to pick over the carcass and buy the parts they want.
Talk at about ingratitude!!!
USAirways won't make it through another BK intact. The risk of propping the body up to make it a going concern again is far, far greater than the residual value from just chopping it up and selling it.
The management (or lack thereof) at USAirways doesn't really want to succeed at running an airline. They want to package something up with el cheapo employee costs so they can sell a nice tidy little package. Problem is - if the employees had wanted to work for Mesa, they would have applied for a job there, and the employees are not so dense that they can's see what is happening.
Think about it. It's never been a secret that nobody ever shrinks themselves to profitability. So what did they try to do? Shrink the company.
Instead of negotiating in good faith with the unions....to add a "B" scale for new hires (which I imagine would have probably been acceptable...since it would suggest that the so-called leaders were interested in growing the airline and making it profitable once again)...the upper management set out on the silliest course of self-destruction imaginable: get rid of all the junior, lower paid employees, negotiate a bankruptcy in which they got certain concessions from the labor groups...only to turn around a year or so later and start whining about wanting more concessions. Make up your mind.
In addition to the concessions they are wanting labor to cough up...management has also stated that they will implement certain structural changes to improve the company's oeprations and lower the costs. Excuse me, but what the heck are they waiting on? You don't need to wait for additional labor concessions to do what is necessary.....IF (and that's a big if) your goal is to save the airline.
For a while I thought it might be, but by now I am mostly convinced that's just a ruse. Put a coat of paint on the jalopy )in a pinch call up Earl Scheib), plug the leaky radiator with sawdust, and take out an ad in the local paper. "Used airline for sale...only flown by a little old lady tp church every other Sunday..."
