Chip, with all due respect, quoting what MR. Alabama said about interest in UAL six months ago when United was frankly close to Ch7 in the face of war and sars is of very litte relavence. I suggest you stop thinking about your absurd UCT dream and pay attention to whats happenning at your airline. Usair success is just as important to United as is vice versa.
h34r:
ps. howcome you never post any bad news about USair, only UNited!?
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Southwest move may mean adios for airline
Analysts: US Airways must slash costs more if it hopes to survive
Thursday, October 30, 2003
Frank Reeves, Post-Gazette Staff Writer
When Southwest Airlines Chairman Herb Kelleher announced this week that his discount airline planned to attack US Airways on its turf in Philadelphia, he tried to be polite.
But when pressed by a reporter, Kelleher acknowledged that US Airways' weak financial condition made it a tempting target -- so tempting that the Dallas-based airline broke with its usual strategy of avoiding congested airports and not taking on major carriers in their hubs.
"It would be unfair to say that we didn't take [US Airways' shaky financial condition] into account" when deciding to begin service in the spring in Philadelphia, Kelleher said.
Though he was quick to add that the nation's fourth largest metropolitan area had long been in the discount carrier's sights. "It's a very high priced market," which hasn't been developed to its potential, Kelleher said -- a statement underscored by the fact that despite its large population, Philadelphia's airport accounts is only the nation's 18th-busiest.
The boldness of Southwest's decision didn't go unnoticed by some industry analysts, who saw it as a sign of US Airways' vulnerability.
"There is definitely blood in the water," said analyst Ray Neidl of Blaylock & Partners in New York, comparing US Airways to a wounded animal that attracts sharks. "Southwest looked at US Airways' cost structure, realized it wasn't making money even after reorganization under bankruptcy, and decided that it was now to time to move before another low-cost carrier moved in.''
Kevin Mitchell, chairman of the Radnor, Pa.-based Business Travel Coalition, said that if he were US Airways management, he would find it most unsettling that Southwest apparently "
concluded that US Airways might not be around very long. And if US Airways went under, Southwest would own Philadelphia before another low-cost carrier came in."
Neidl said US Airways Chief Executive Officer David Siegel did a good job obtaining cost-savings concessions during bankruptcy reorganization. "But the revenues aren't coming back as fast as many thought. Siegel has got to get his [costs] down even more or go to a different business model," Neidl said.
One option might be for US Airways to become a strong regional airline.It is similar to the message Siegel's been preaching at every turn.
He again warned this week that low-cost carriers are "the toughest competitive challenge" US Airways and other a major carriers have ever faced. These weren't idle words. When Southwest began service at Baltimore-Washington International Airport in the 1990s, US Airways was the dominant carrier. Now it ranks a distant No. 3, having been easily supplanted by Southwest.
To fend off challenges from Southwest and other low-cost carriers, US Airways must reduce its cost structure, Siegel said. Even US Airways' code-sharing alliances and far-flung network won't enable it to compete with the discount airlines unless it can get costs low enough that what it charges for tickets is competitive with what the low-cost airlines charge.
At the core of the effort, as has been the case for more than a decade, are labor costs.
But if Siegel intends to seek more concessions from the airline's unionized workers, it is likely to be a hard sell. US Airways employees, who last year agreed to $1 billion in annual wage and benefit cuts, appear to be in no mood to give any more.
"We've certainly stepped up to the plate. Our concessions alone have taken the company out of bankruptcy," said Jack Stephan, spokesman for the Air Line Pilots Association (ALPA). "The ALPA well of concessions has dried up."
In two rounds of negotiations, US Airways' unionized pilots agreed to about $566 million in annual concession and allowed the airline to terminate the pilots' pension plan and replace it with a less generous one.
Stephan said the pilots are waiting to see whether Siegel and his "management team can a run an airline and not just say, 'We've got to take more from employees.' "
William Lauer, chairman of Tarentum-based Allegheny Capital Management, which previously had invested in US Airways, said that the airline and its unions "are heading into another round of negotiations."
And Mitchell, of the Business Travel Coalition, said the airline's need to cut costs and employees' resistance to further concessions "portends for a lot of pain and struggle over the next year. It guarantees that US Airways goes into a second round of bankruptcy."
If the airline again files for Chapter 11 protection, it would give it broad authority to abrogate existing union contracts and impose new work rules and salary cuts on its employees.
Still, while some analysts seem ready to concede that Southwest will quickly supplant US Airways as the dominant carrier in Philadelphia, Lauer isn't that pessimistic. He said Southwest faces some difficult challenges in Philadelphia.
The Southwest strategy relies on its ability to turn around flights quickly on its point-to-point routes. This may prove difficult at Philadelphia International Airport, which despite a decline in air traffic since Sept.. 11, still is congested because "there's not enough launch and landing space," Lauer said.
