Has anyone heard what U's new CASM is and how it compares to the other airlines since the last rape and pillage took place?
New Casm?
- Thread starter GeezLouis
- Start date
GeezLouis said:
If you're a bank/financier asking this question, the answer is: "lower than anyone else."
If you're an employee asking this question, the answer is: "still higher than the LCC's. It's time to test the theory you've all been spouting about 'working for free and still have higher costs' than SWA. Meet you folks at the negotiation (i.e. concession) table."
If the two answers are different, then somebody's not doing their homework...and it's not the company.
mweiss said:
Now thats a company response if ever I heard one.
US Airways will never have lower costs than Southwest.. Never.
Why? Before all of this started we were in the area of 10.5 CASM
Southwest was around 7.4 CASM. You are looking at 3.1 CASM
difference..
Do you have any idea what it would take to cut 3.1 cents CASM off?
With the US Airways route structure it is virtually impossible.
Its company crap.. Southwest Aircraft utilization is in the area
of 13 hours per day on a 737.. Can you imagine US Airways
getting that type of utilization out of the Airbus and the 737? Not
with a hub and spoke system..
Its a company dream to think that they can get costs that low.
Put on top of that the happy people that work here.
I'm sorry...I forgot mechanics were reading this. Let me put it in terms you can understand.justaumechanic said:
If the company is telling a potential lender something contrary to the public filings, the lender is not going to buy it.
If the company is telling the union leadership something contrary to the public filings, the union leadership is stupid if they buy it.
Therefore, if the numbers do not match among all three, then somebody is not doing their homework.
You keep claiming that the company is lying to you...maybe it's because you don't bother to check for yourself. :huh:
Here is my post in the 4Q Results thread as it pertains to CASM. I was a little surprised myself:
CASM, while still high, is within comparable range, and better than NW's:
Airline (Mainline only) - CASM - CASM ex-fuel
NW - 11.36cents - 8.87cents
US - 10.96 - 8.79
AS - 10.79 - 7.83
UA - 10.68 - 8.34
DL - 10.40 - not listed
AA - 10.25 - not listed
CO - 9.98 - 7.82
FL - 8.32 - 6.00
HP - 7.98 - 6.00
WN - 7.59 - 6.22
B6 - 6.32 - 4.74
So, $1.1bil in annual concessions represents about 15% of total costs. Thus, we can expect CASM (all else equal) to drop by about 15% next quarter. That would be 9.31cents CASM and 7.47cents CASM ex-fuel. So, the concessions get US Airways firmly to the lowest cost legacy carrier and within 15% of the LCC's. Of course, the employee concessions were the "easy" 15% from management's standpoint. Other structural changes to get more is much more difficult to acheive.
Again, the problem with this for US Airways is that mainline capacity is being reduced, and higher cost E170's and CRJ700's are being added.
There is proof here that US Airways is making strides. I am surprised at my own "guesstimates" for CASM including the concessions. On the cost side, the company is coming close to being positioned for success.
I guess the questions now revolve around the revenue impact of the DAL restructuring. It seems clearer to me now, that DAL's fare restructure is a full assault on US Airways. An attempt by DAL to get US Airways' cash balance even lower, before it can attempt to generate cash using the new, lowered cost structure. Its become a game of chicken, with the goal to be that US Airways goes away.
US Airways prospects today are much brighter than three months ago... Although, again, success is not assured. The new reduced revenue picture, particularly at smaller cities where US Airways was not competing as intensely on price (the Binghamtons, and Roanoake, and Charlestons), remains gloomy, and thanks to Delta, a wild card.
CASM, while still high, is within comparable range, and better than NW's:
Airline (Mainline only) - CASM - CASM ex-fuel
NW - 11.36cents - 8.87cents
US - 10.96 - 8.79
AS - 10.79 - 7.83
UA - 10.68 - 8.34
DL - 10.40 - not listed
AA - 10.25 - not listed
CO - 9.98 - 7.82
FL - 8.32 - 6.00
HP - 7.98 - 6.00
WN - 7.59 - 6.22
B6 - 6.32 - 4.74
So, $1.1bil in annual concessions represents about 15% of total costs. Thus, we can expect CASM (all else equal) to drop by about 15% next quarter. That would be 9.31cents CASM and 7.47cents CASM ex-fuel. So, the concessions get US Airways firmly to the lowest cost legacy carrier and within 15% of the LCC's. Of course, the employee concessions were the "easy" 15% from management's standpoint. Other structural changes to get more is much more difficult to acheive.
Again, the problem with this for US Airways is that mainline capacity is being reduced, and higher cost E170's and CRJ700's are being added.
There is proof here that US Airways is making strides. I am surprised at my own "guesstimates" for CASM including the concessions. On the cost side, the company is coming close to being positioned for success.
I guess the questions now revolve around the revenue impact of the DAL restructuring. It seems clearer to me now, that DAL's fare restructure is a full assault on US Airways. An attempt by DAL to get US Airways' cash balance even lower, before it can attempt to generate cash using the new, lowered cost structure. Its become a game of chicken, with the goal to be that US Airways goes away.
US Airways prospects today are much brighter than three months ago... Although, again, success is not assured. The new reduced revenue picture, particularly at smaller cities where US Airways was not competing as intensely on price (the Binghamtons, and Roanoake, and Charlestons), remains gloomy, and thanks to Delta, a wild card.
I didn't suggest that they have no reason to. I'm suggesting that, if they do have reason to believe that the company is lying to them, it's nothing but pure laziness that prevents them from finding out the truth.REACC1 said:
funguy2 said:
You can get a rough idea of Delta's CASM excluding fuel by dividing mainline fuel expense ($739 million) by mainline ASM's (32.7 billion) for a fuel CASM of 2.26 cents, putting CASM ex fuel at 8.14 cents. Similarly, American Airlines, Inc. (as a subsidiary of AMR) spent $1.088 billion on fuel with mainline capacity at 42.9 billion ASM's, for a fuel CASM of 2.54 cents and CASM ex fuel of 7.71 cents.
Well, there's a slight problem with that assumption -- being that the company already had gotten a significant chunk of the concessions last quarter through the pilots' ratification of concessions in October and the 21% wage cuts obtained through the 1113(e) process. Labor costs will continue to come down as the company moves to outsource and offshore various functions, but other line items will increase as a result. Third-party maintenance, outsourced ramp, outsourced reservations, etc. might be cheaper, but they are certainly not free. The $1.1 billion in concessions does not equate to $1.1 billion in cost savings.
This is mainly a problem if the company is unable to achieve a yield premium on routes served by the RJ's; it remains to be seen if the E170 on a route like PHL-IAH can garner higher yields than CO's mainline service (with a first class cabin) or WN's low-fare non-stop to HOU.
What seems to continue to go unrecognized is that Delta's CASM above doesn't reflect the impact of their new contract with their pilots or the additional cuts being imposed across the other workgroups there. The same is true at CAL; both will probably see CASM excluding fuel drop below 7.5 cents as their cost cuts take effect. United will also see its CASM fall as further concessions are squeezed out of its unions, although the future there is cloudier given their mechanics' recent rejection of concessions.
I agree that things look much brighter given that one of the biggest obstacles (IMHO) was a possible strike by one of the unionized labor groups. But you are absolutely right that the reduced revenue picture, along with stubbornly high fuel costs, will remain a significant stumbling block. I remain skeptical that the company intended to introduce GoFares in any market where low-fare competition did not demand it.
Yeah.. There is some discussion in the other thread about the $1.1bil in cost savings...
Since most of the 4Q was at a court imposed reduce wage scale, maybe the best way to "guestimate" CASM going forward is this.
Instead of taking $1.1bil off off Annual costs, take 75% of that or $825mil... The logic being that most of the savings were realized in 4Q04.
So that gets you to 11% cost savings from labor.
Also, since that is an ANNUAL number, I should apply it to the ANNUAL CASM numbers, not the quarterly number... The ANNUAL Mainline CASM was 11.34cents and CASM ex-fuel and items was 9.48cents. Taking 11% off of those results in CASM at 10.10cents and CASM ex-fuel at 8.43 cents. A further 35% cost cutting program would be required to get to Southwest's CASM ex fuel. That seems a little more in line with where I expected things to be.
Since most of the 4Q was at a court imposed reduce wage scale, maybe the best way to "guestimate" CASM going forward is this.
Instead of taking $1.1bil off off Annual costs, take 75% of that or $825mil... The logic being that most of the savings were realized in 4Q04.
So that gets you to 11% cost savings from labor.
Also, since that is an ANNUAL number, I should apply it to the ANNUAL CASM numbers, not the quarterly number... The ANNUAL Mainline CASM was 11.34cents and CASM ex-fuel and items was 9.48cents. Taking 11% off of those results in CASM at 10.10cents and CASM ex-fuel at 8.43 cents. A further 35% cost cutting program would be required to get to Southwest's CASM ex fuel. That seems a little more in line with where I expected things to be.
"Mainline Cost per Available Seat Mile, Excluding Fuel, Down 14 percent to 8.79 cents"
So was this the CASM for Dec 31, 2004? Or is this the CASM now that the IAM has approved their contracts?
Just wondering.
So was this the CASM for Dec 31, 2004? Or is this the CASM now that the IAM has approved their contracts?
Just wondering.
It would necessarily be 12/31 (or, more precisely, an average over 9/1-12/31). IAM's new contract hasn't had a chance to show up anywhere.
IAM's new contract doesn't show up, but there are presumably some cost reductions from the IAM-represented labor groups, given that (1) a 21% pay cut was in effect for most of the period and (2) the Airbus heavy maintenance had been outsourced during the quarter.
