Dl Fare War + Wn@pit + Existing Losses

[enilria]

I know this is a similar thread to others, but I think nobody is joining the impact of the Delta armageddon fare war which impacts US Airways more than anybody, Southwest's expansion into PIT, and the ludicrous extension by the pushovers at ATSB.

I know people want to keep jobs, but like the IAM says there comes a point where many employees are better off working at Wendy's.

The Delta fare war will supposedly cost United alone $500m according to Wall Street, so I'm betting its almost that much just for US Airways since US has much more route overlap with Delta. I know, I know "the fares were already low". They weren't low in Asheville, Erie, Portland, and the other backwaters that Delta just trashed. These were the last havens of $800 walk-up fares and now they are gone too. This is big. Further, AA lowered fares further in retaliation to Delta which is an additional whammy.

WN's entry into PIT will be another $100m off the bottom line. True, it's not the $500m it would have been when the hub still existed.

Finally the ATSB gives US Airways money to buy new Canadian and Brazilian planes? 1) US Airways shouldn't be spending dime one of taxpayer money buying new planes when they are fighting liquidation and 2) they certainly shouldn't be transferring taxpayer money to Embraer and Bombardier which aren't even U.S. companies.

This whole situation is ridiculous. People are falling all over themselves to save US Airways when an airline desperately needs to die to stem the bleeding from everybody else. At least the RSA is strangely quiet. They've decided they don't need to hand out money when the ATSB and GE will do it.

 

[firstamendment]

I know people want to keep jobs, but like the IAM says there comes a point where many employees are better off working at Wendy's.

[post="238946"][/post]​

Post like these are sooo tired and overexaggerated!! :down:

Wendy's? I have an idea for the IAM and any group that believes this to be true with their round three concessions. TRY IT FOR SIX MONTHS!! Some of you need to get a grip and I would challenge the mindset of anyone who would quote any union during contract talks that involve concessions. Our AFA leaders made the same kind of claims. Hum, I can make 42K a year at Wendy's?

 

[justaumechanic]

I know this is a similar thread to others, but I think nobody is joining the impact of the Delta armageddon fare war which impacts US Airways more than anybody, Southwest's expansion into PIT, and the ludicrous extension by the pushovers at ATSB.

I know people want to keep jobs, but like the IAM says there comes a point where many employees are better off working at Wendy's.

The Delta fare war will supposedly cost United alone $500m according to Wall Street, so I'm betting its almost that much just for US Airways since US has much more route overlap with Delta. I know, I know "the fares were already low". They weren't low in Asheville, Erie, Portland, and the other backwaters that Delta just trashed. These were the last havens of $800 walk-up fares and now they are gone too. This is big. Further, AA lowered fares further in retaliation to Delta which is an additional whammy.

WN's entry into PIT will be another $100m off the bottom line. True, it's not the $500m it would have been when the hub still existed.

Finally the ATSB gives US Airways money to buy new Canadian and Brazilian planes? 1) US Airways shouldn't be spending dime one of taxpayer money buying new planes when they are fighting liquidation and 2) they certainly shouldn't be transferring taxpayer money to Embraer and Bombardier which aren't even U.S. companies.

This whole situation is ridiculous. People are falling all over themselves to save US Airways when an airline desperately needs to die to stem the bleeding from everybody else. At least the RSA is strangely quiet. They've decided they don't need to hand out money when the ATSB and GE will do it.

[post="238946"][/post]​

Well your going to get some back lash for your taxpayer money comment
considering its bank money they are using right now and the fact that all
of the loan is backed by assets of the company..

Keep in mind US Airways owns nothing.. They in reality have no cash at all. It is all secured via assets.. The fact that the ATSB gave them until June changes nothing. The suprise to me was they gave them the OK to buy planes but not hedge fuel.. You would think it would be the other way around..

This will probably be the last time the ATSB will give them an extension. The company gets to drop down to 300 million cash in the bank.. If the fare wars and teh Southwest Start-up hurt as much as everyone says and there is a spike in the price of fuel its going to be a tough road for US Airways..

Now I know 700 and USA320 are going to throw darts at this.. For once though I simply am stating the facts as they are presented to everyone in the open media. Also to they company still has to cough up 100 million by tomorrow or the GE deal is in trouble.. However like they always do they will come up with some scheme.

 

[TomBascom]

It's not a fare war. At least not yet.

DL is doing what US should have done with GoFares.

There is no choice -- this is the revenue side of the future. The sooner the legacies stop gouging their best customers and rationalize fares the sooner the business can be operated on solid economics and something other than "lowest price" can differentiate airlines.

 

[WorldTraveler]

First, the US government is not about to be the force that shuts US Airways down and thus are willing to extend the loan so that the creditors are the ones that have to make the decision to pull the plug. The ATSB is the senior most secured creditor and will not lose anything. If it gets to the point that the government's security is at risk, the creditors will have already reached the point that they have to pull the plug or else begin to erode their security.

Second, the creditors are not willing to pull the plug because they do not have a place to put those aircraft. The LCCs that will certainly swarm in are not likely interested in US' aircraft. If they were, the creditors would be much more likely to pull the plug.

Third, analysts say that US' revenue lost due to the simplified fares is closer to $200M than the $500M plus that AA, UA, NW, and possibly CO might lose. Fares in the east coast have been falling for a number of years which is why it made sense for DL to simplify fares now but not earlier. CLT still has very little low cost competition but it is also a small local market. It's possible that lower fares out of CLT might bring some passengers back to CLT and US that have been fleeing to GSO and RDU.

Fourth, DL has moved into many of the traditional markets where US was strong with their RJs and have already taken a significant amount of revenue. The loss of revenue from gaining competitors in long-time monopoly markets is far bigger than the loss to US from simplified fares.

Fifth, WN and other LCCs will continue to attack US because it has been successful and US has not done a very good job of retaining its traffic. Likewise, DL has done a good job of siphoning off traffic in some of US' top connect markets using RJs and that is not likely to change, esp. given that there is a good chance that the 10 RJs which Independence returned to GE could end up at Delta since DL agreed to allow GE to place up to 12 RJs at DL.

Sixth, although the European union has been quiet for a little while, they might restart their crticism of US government support of its airlines - particularly since the deal allows US to acquire aircraft. The EU has been better about playing hardball with airlines than has the US government.

I'm sure there's more to be said but this is enough. While one has to question how the biggest industry downturn has yet to claim any airlines when history shows that at least one legacy airline has failed in every downturn in the business cycle, there are logical reasons why US continues to be propped up - whether you like it or not. Ultimately, all airlines will have to stand on their own and no one can say for certainty whether any airline, esp. the legacies, will be long term survivors.

 

[Rico]

This whole situation is ridiculous. People are falling all over themselves to save US Airways when an airline desperately needs to die to stem the bleeding from everybody else.

Why should someone as small as US Airways be the one to die off and make room for everyone else. If one of the larger Legacies, like whoever you happen to work for, was willing to die instead, there would be so much more room for everyone else.

 

[us10]

U is not buying RJ's.The Judge agreed to let U lease (Rent) 6 A/C which will generate more revenue than the cost to operate.

us10

 

[boeing787]

Bull$#it they don't have a place for all those airbuses. One need look overseas and the problem is solved. This PIG of an airline needs to be shut down permanently. I can only hope that DL and LUV flush this turd. Stop killing the rest of the airline industry. You had your chance twice...game over!

VOTE NO! :down: :down: :down:

 

[WorldTraveler]

..but those aircraft would likely not be delivered to US soil if the US gov't did not allow funds to be used for expansion. Of course, the RJs make sense. The question is whether taxpayer money should be used to allow a business to expand. We have been down this road before with US, but US would not have loans today if the US government had not backed them.

Incidently, other commercial loans do allow funds to be used for capital expenditures and, if DL's case, even acquisitons. But those are commerical loans and not government backed.

 

[us10]

boeing787,

Take a chill pill, we're not going to role over and die just to make your life easier.

us10

 

[Winglet]

Why should someone as small as US Airways be the one to die off and make room for everyone else. If one of the larger Legacies, like whoever you happen to work for, was willing to die instead, there would be so much more room for everyone else.

[post="238958"][/post]​

Why? Because U's leadership and strategic business plan has been so bad for so long that they were losing money even when the other airlines were making it hand over fist.

Why? Because U is the only major airline to be in bankruptsy TWICE and be allowed to dishonor it's debts to creditors and dishonor it's legal contracts with it's employees.

Why? Because it has an irrational fleet and route structure.

Why? Because it had more than 2 years since it knew it was in DIRE trouble and needed to make necessary changes . . . . and changed have still not been made.

Why? Because it's executives have bleed the company with their bonuses and payoffs.


Why should Delta have to pay it's bills when U doesn't?

 

[enilria]

Third,  analysts say that US' revenue lost due to the simplified fares is closer to $200M than the $500M

[post="238957"][/post]​

Let's say it was $200m + $100m for WN invading PIT. Where is that $300m/year coming from? This is new pain above and beyond where they were before. They weren't even projecting profits for 2 years before this happend.

I guess you guys can expect to give back another $300m in wage concessions.

BTW, I notice nobody commented on my point the RSA has quietly backed away from this whole debacle.

One more point, it was posted that the ATSB money is bank money. That's only true if they don't default and in essence they defaulted last year. The banks are insured against losses by MY MONEY --- TAXPAYER MONEY.

Someone said that the ATSB was secured debt. If you read back you will see that the security is the cash they were given and are now spending. The security will be gone by June. At the time the ATSB gave them the money the company already had no mortgageable assets...in fact that was one of the requirements in order to get the ATSB loan was that there were no other sources of cash or mortgageable assets. The slots and gates that US Airways holds that are collateralized by the ATSB were already mortgaged to banks. The ATSB is in essence a second mortgage on those assets in the hope they are worth more than the first mortgage. The only real security on the loan is the cash the company is spending on airplanes and losses.

 

[WorldTraveler]

No one commented on that point because the RSA has no financial muscle in this situation. They are an equity holder and as such pick up any scraps that may be left which is very unlikely.

The reality is that the revenue picture is shrinking faster than the cost picture for all of the legacy airlines. That is why UA and US have been back for multiple rounds of concessions. The only reason the solvent four have only been through one round is because they know that rounds two and three are certain to devastate employee morale, something they are not willing to do in a service business. They can afford to take a bit of a hit now on the cost side because of their deeper pockets (obviously deeper is a very relative term).

DL will either prove to be extraordinarily smart or extraordinarily stupid by simplifying fares. No one doubts that there will be a short term revenue hit but in the long term the legacies will be more competitive. If US can survive the next few months, they could be a much stronger airline because of the simplified fare structure. The next few months are obviously extraordinariliy critical.

Winglet,
like or not, bankruptcy is part of the American business process. If US survives, they will have done so because they have used all the legal tools at their disposal. DL obviously had the opportunity to file bankruptcy but didn't - apparently because they know there are only 2 major airlines that have ever emerged from bankruptcy and become long term survivors. The odds are not in favor of any airline in bankruptcy.

 

[us10]

RSA is an equity investor and like all other equity holders will probably be left with nothing should U reorganize or liquidate.While RSA still controls the majority of board seats the board has a fiduciary responsibility to the creditors while in BK not the owners.

Management now works for the creditors not the equity holders so RSA has little standing and thus little to say.

us10

 

[Art at ISP]

It's not a fare war. At least not yet.

DL is doing what US should have done with GoFares.

There is no choice -- this is the revenue side of the future. The sooner the legacies stop gouging their best customers and rationalize fares the sooner the business can be operated on solid economics and something other than "lowest price" can differentiate airlines.

[post="238953"][/post]​

If US and other "legacy" carriers follow Delta's lead, this could be bad for LCC's!!

With the traditional carriers offering rational fares, the LCC's lose their advantage. I maintain that rational fares will result in improved yields in most cases...if the AVERAGE fare on a flight is higher, it's a revenue positive move.

I had hoped U would be the leader rather than the follower, but oh well...now I hope we at least climb aboard the RATIONALIZATION train....

My best to you all...