Before Everyone Starts To Feel Too Good...

[Fatherknowsbest]

I hear the Company is starting to feel real good about its future. Lakefield is quite impressed with himself these days. what a bunch of bunk!

Did US Airways hedge fuel this year? I don't think so. Is this a new problem?
No Company has screwed its Employees and shareholders for the last 7 years on the SECOND highest cost of flying.

Every paycut that US Airways Employees have taken since 9-11 has only gone to pay for higher fuel prices, and even this has not put US into the green.

I believe your new paycuts once again, will only help pay for higher oil.

If this Company would just do its job properly, (read hedge fuel) you would not be looking at near as many layoffs/outsourcing/paycuts.

Just because a Federal Judge, and GE don't want to be blamed for the demise of US Airways, does not mean that idiots don't still occupy CCY (imho).

That is why no matter what you hear from HQ, this Company is still toast.

I suggested hear recently when Oil prices dropped to near $40 to hedge,hedge,hedge.

Same old US Airways, business as usual.

 

[mweiss]

Did you happen to notice something unusual about US Airways lately? I'll give you a hint, it begins with "bank" and ends with "ruptcy."

They cannot enter into fuel hedging contracts without the bankruptcy judge's permission. The judge has not given permission to enter into such contracts. Even if they did, the terms would likely be sufficiently bad as to render the contract moot.

 

[Fatherknowsbest]

United started hedging fuel middle of 04. Tell me isn't UA in BK?

 

[BoeingBoy]

Fatherknowsbest,

FWIW, there probably won't be any hedging before June 30 - it's a violation of the new agreement with the ATSB:

(10) The Supplemental Cash Collateral Period, and the Debtors’ ability to use Cash Collateral during such period, will terminate immediately upon the occurrence of any event described in clauses (a), (d), (e)(1), (f), (g),(i)(1) or (3), (j)(1), (k)(1), (m), (n), (o), (p) or (q) below

(q) after the date of this Supplemental Order, the Debtors enter into any hedging, forward or option contract, call options, collars or swap agreements under Master Agreements for the purchase, sale or other transaction of aviation fuel, crude oil, heating oil or other commodity pursuant to an aviation fuel hedging program without the prior written consent of the ATSB Lender Parties;

Jim

 

[markkus757]

One thing you also need is sufficient credit in order to hedge. Nobody has worse credit in the aviation industry right now as far as the majors are concerned.

 

[Winglet]

Fuel hedging needed to be done long ago . . . just like everything else. Too late now.

 

[delldude]

how long before some tent dweller pops one off in a refinery in the middle east or even better a coordinated attack on several...guess it will be pass the hat number 4 right??

 

[Fatherknowsbest]

BoeingBoy....someone wants us to fail is how I read that. Thanks for the info.

 

[speedbird86]

So at the end of the day, what will US CSM be? I would hope somewhere in the neighborhood of 9 cents. If it's still going to be near 12 cents it's a lost cause. IMO.

 

[BoeingBoy]

November consolidated operating CASM (consolidated operating expenses per system ASM) was approximately 11.3 cents. For comparison, the equivalent figure in the 3rd quarter was 12.5 cents.

Presumably, the 4th quarter report will give mainline CASM, but based on the above I'd expect it to be 10 - 10.5 cents.

Jim

 

[speedbird86]

Presumably, the 4th quarter report will give mainline CASM, but based on the above I'd expect it to be 10 - 10.5 cents.
Jim

[post="239733"][/post]​

That's much better for sure. But do we think that will be enough? Does MDA play into those numbers?

 

[BoeingBoy]

The CASM number reported in the quarterly reports, at least in the past, was for mainline only and excludes the W/O'ed, MDA, and affiliate carriers.

Will it be enough? That depends on revenues. In Nov, our consolidated operating RASM (consolidated operating revenues / system ASM's) was about 10.8 cents. This compares to the equivalent figure for the 3rd quarter of 11.4 cents.

Of course, aside from the revenues there's the fuel wildcard. At about 1/6 of our operating expense, every 6 cent per gallon increase in price ups our CASM about 1 cent (which can be at least partially offset by fuel saving efforts and tankering fuel from low cost airports to high cost airports). After spot prices dipped below $1.20 a gallon at the end of last year, they're back up to nearly $1.30 (if you want to track spot prices the government puts out a weekly report here)

Jim

 

[Pacemaker]

IOW costs are still 50% higher than LCC competition and higher than all legacy carriers. US Airways cannot compete, simple as that.

 

[speedbird86]

I guess it really all boils down to the price of a gallon of fuel. The word from OPEC is that they will be cutting production in the next couple of months which will almost guarantee the cost will rise. Given that with the 1Q not being revenue friendly historically, things could get real ugly real fast come spring.

I noticed that fuel is quite a bit cheaper at the Gulf States port. Do airlines have a chioce as to where they purchase fuel?

 

[mweiss]

Do airlines have a chioce as to where they purchase fuel?

[post="239932"][/post]​

Yes, but they have to fill the planes where they buy it. One of the options you have as an airline, if the fuel is cheap enough, is to put extra in the tanks at a cheaper station. The downside is that you're now burning additional fuel carrying around the extra, so it had better be enough of a price difference to justify the extra burn. And, of course, you can only put as much on as you have tank capacity to carry.

It's done quite a bit. If you want to get really sophisticated, you can rotate your equipment through the cheaper zones to maximize this effect, provided it doesn't cost more than you otherwise save.