Reality - Deflation and a fare market

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On 11/20/2002 4:03:35 PM DLFlyer31 wrote:

KCFlyer,

The majors are trying out more reasonable fares and it continues to fail.

Example:

TLH-MDW on Delta
21 day Advanced purchase fare: $186
Walk-up fare: $380

Both of those fares seem pretty reasonable to me for a 900 mile trip. Of course, DL is offering these fares because of AAI. However, according to your logic with this reasonable pricing, DL should be doing great on this route. DL does this on hundreds of other routes as well and guess what....DL still loses a boatload of money. So now what do you recommend DL do?
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Have these fares been advertised? Or is this stealth marketing? Have any comparisons of the before and after loads and performance of this route been made? If so what are the results? If not then why not?

Do these fares match and/or beat those of AAI? If they do then why? Can't Delta compete on something other than price, price, price? If you act like price, price, price is all that matters don't get offended when consumers take you up on it. It's a self-fulfilling prophecy.

What is your evidence for failure? That Delta continues to lose money can not be laid at the feet of this example without more data.
 
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On 11/20/2002 4:54:23 PM KCFlyer wrote:

THAT's what frustrates travellers...that's why I say airlines are DARING a business passenger to book a flight. Even that last minute fare doesn't guarantee that won't get charged out the *** should they make a change. Simplify the damn fares. Show me what the outbound leg costs and what the return leg costs. And don't toss in these bogus change fees. Charge a fare price without any games and you'll find that business travellers will not hesitate to pay
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Airlines will continue to play fare games etc. because they still believe that it is a priveledge for the customer to be able to buy a ticket instead of thanking them for their business.
The airlines should cut the BS and offer somthing that conveys VALUE to the customer. The $129 advance fares are great, but when the unrestricted fares are $1290, well I'll try to plan my travels in advance because I know that should my plans change, heaven forbid, I'm going to be fleeced by the airline.
Now supposse the unrestricted fare was decreased from about 10 times the lowest fare to say 3 times the lowest fare, well then I (and probably lots of others) would be willing to pay more.
 
Chip, I have been told by ALPA that he bottom seniority number after January will be 4008 and adjusted for attrition it will really be 3828. Just Info. This will put the bottom pilots into their 16th year. Eject, eject, eject!
 
PineyBob:

Industry wide air travel demand showed an improvement in October over an extremely weak September, but showed no improvement over levels achieved during the summer.

Unfortunately, this data provides no hope for a near-term revenue recovery for US and the entire industry.

A review of domestic unit revenue shows and 7.2 percent increase in October; however, meaningful price comparisons are difficult year-over-year due to the impact of September 11 last October. However, when compared to 2000, revenue per available seat mile fell 18.6 percent versus a 21.1 percent decline in September.

Late November and December traffic will be stronger, but there is no visibility into meaningful pricing
improvement. Airlines are exercising capacity discipline, however, a meaningful profit recovery will most likely not materialize until demand begins to recover, which now appears will not occur until the spring of 2004.

In October US notifed regulators in an SEC filing that it wanted to cut annual costs by $100-$300 million per year or up to $1.6 billion annually to achieve profitability.

According to an ALPA report, when the Company filed its application with the ATSB for a $900 million loan guarantee, it had to present a business plan that included projected revenue, which would help the ATSB determine if the loan could be repaid. The business plan satisfied the ATSB, and the loan was conditionally approved in July. The funds will be made available to US Airways upon emergence from bankruptcy—but only if the business plan still meets the conditions for issuance of a guarantee.

US Airways’ July and August revenue figures were near the projections contained in US Airways’ business plan filed with the ATSB. However, the industry-wide September and October downturn (which looks to be continuing through the end of this year and well into the next) has led to a revenue short fall. When US Airways reported its third quarter financial figures, operating revenues for the third quarter were $1.75 billion, down 11.9 percent from the third quarter of 2001, and operating expenses were $1.93 billion, down 29.4 percent. US Airways’ pre-tax loss was $373 million for the third quarter 2002, compared to a pre-tax loss of $766 million last year.

Management plans to make up for this shortfall by decreasing its expenses, as it has conditions attached to the ATSB loan.

According to the ALPA MEC Chairman, the Company has said publicly that if it doesn’t meet those conditions, it stands the risk of losing the loan, and has made a formal request to all US Airways labor groups in an attempt to again reduce costs.

Chip
 
LDKIAM, USAirBoy330, AOG-N-IT, I do not like this situation any more than anybody else; however, I would like to hear your comments regarding my last post to PineyBob?

Chip
 
Ya know Piney, I've always been reminded of the comparison between the airlines and integrated steelmakers is remarkable! Both capital-intensive, highly-cyclical and organized labor. Did you know that ISG (the investor group that cherry-picked LTVs assets) is now performing due diligence on Bethlehem? Of course ISG won't assume all the legacy (i.e.retiree pension/healthcare) costs nor the brownfield issues. And the labor headcount is 25% of former levels. Chants of let's make steel and we're the best workers don't pay the bills. Certainly it doesn't contribute to revenue.

Yeah, I read the Aviation Week article. Provocative stuff. But in the same issue I thought the article on Boeing's new plane (not the Sonic Cruiser) was much more interesting for its' potential impact on the industry.

All this rejoicing over concession agreements -- well, when you take 10% off a price that had previously been marked up by 70% then it not such a great deal, for anyone.

Do you think the PBGC has any influence over the ATSB?
 
PineyBob, I am insulted, not one rank and file employee went before Congress to get handouts, it was the CEOs, bob, in my industry there has been over 100,000 employees laid off, not one CEO was fired, and at Boeing there have been 30,000 layoffs and another 5,000 announced today.
 
Chip Chip Chip, there you go again:

[EM]According to the ALPA MEC Chairman, the Company has said publicly that if it doesn’t meet those conditions, it stands the risk of losing the loan, and [/EM][EM][FONT style=BACKGROUND-COLOR: #ffff00]has made a formal request to all US Airways labor groups in an attempt to again reduce costs.

[/FONT]Chip
[/EM]
[EM][FONT style=BACKGROUND-COLOR: #ffff00]LDKIAM, I agree I am not up to speed on the internal issues regarding the IAM. There is no reason or purpose for me to do so, but I do understand our company and economics.[/FONT][/EM]

[STRONG]Also the IAM's GVP of Transportation Robert Roach and Airline Coordinator Jimmy Varsel (who is on the creditor's committee) are both in CLT and stated that [FONT style=BACKGROUND-COLOR: #ffff66]US Airways has not approached us for further concessions.[/FONT] So Chippie, why do you post false truths and bogus news articles that are not backed up by fact and reliable sources?
LDKIAM

[/STRONG]November 20, 2002


TO: THE DISTRICT 141-M MEMBERS EMPLOYED BY US AIRWAYS


Dear Sisters and Brothers:

There have been media reports that US Airways has been in discussions with your Union regarding additional IAM member concessions. While this is certainly not true, the IAM is carefully monitoring the carrier’s financial condition. We have advised US Airways management that they must find solutions to any financial problems they are having within the terms of our collective bargaining agreements and its recently ratified modifications.

When US Airways asked the IAM to present the company’s restructuring proposals to our membership for a vote, they indicated that the proposals were all that was needed from IAM members to successfully emerge from bankruptcy. Management also agreed not to seek further cost reductions from IAM members through bankruptcy court proceedings. We expect US Airways management to live up to the commitment they made to our membership.


Fraternally,


Scotty Ford
President and General Chairman

[EM]Chip
[/EM](you sound scared in this one)
[EM][FONT style=BACKGROUND-COLOR: #ffff00]The company made a presentation to all of the unions regarding US Airways financial situation and has discussed concessions. From your posting from the IAM website, it appears there have been no formal discussions between Labor Relation and IAM Negotiators, who have been very active at UA, where your union reached a TA earlier today.[/FONT][/EM]


[WIND UP DELETED]
 
PineyBob,

What's wrong? Can't dispute the facts or respectfully defend your opinion so instead you resort to slinging mud? How mature. But to answer your question, yes UA has tasks for me to perform but getting a rise out of you is so much more fun.

I don't brag about anything. Anyone who knows me (which you don't), knows that bragging is the last thing that I ever do. If you take my posting as bragging, that's your problem, not mine. Try to remember that a lot gets lost in the online translation. I comment on topics/threads that interest me and when I have some knowledge or insight on something, I will share it. I will be the first to admit I'm not a genius or all-knowing. But I work for an airline. Many posters on these boards do not. So forgive me for trying to educate and inform some people about how things are done in this industry. You say you're in Sales Training. I don't know all that much about Sales. So maybe my attempt at telling you how to fix your problems wouldn't come across too well. That is my point. I'm sorry you seem to take such offense to my attempt to quell the bad information that gets posted on many airline topics. If I know something is wrong, I will point it out. If that rubs you the wrong way, I could care less.

I don't have all the answers. I never profess that I do. Neither does Chip. We both are merely trying to inform. Chip, as a US employee, has more at stake than I do. His only agenda is to see his company succeed. The guy cares more about his company and its' employees than anyone gives him credit for. He repeatedly subjects himself to constant ridicule and insults from immature babies who shall remain nameless for they know who they are. Whatever happened to respectfully disagreeing with someone? But ya know what? These boards allow people to hide behind their anonymity and therefore slam and flame at will and ride off into the sunset. I'd imagine that face to face debate would eliminate much of that stuff. Hmmmmmmmmmmm, I wonder why that is. Some people on these boards need to seriously grow up. If you don't like someone's opinion, than refute it with your own, but do it respectfully. Is that so tough? Or do you feel like a more worthwhile person if you hurl a few insults along the way? Chip posts information. He doesn't post insults or personal attacks. I don't agree with everything he writes, but at least I can call him a professional, which is more than I can say for others.

As for my motives on this board, I've mentioned more than once that I've been through 2 airline bankruptcies. So forgive me if I have some knowledge and insight into how this plays out. I have nothing but the utmost respect for US and its' employees. I want to see them succeed and prosper. I've been in their shoes twice. And I'm on deck with #3. So I know what it's like to have your pay and benefits cut ad nauseum in the hopes of saving your failing company. I'm perfectly willing to admit I don't have all the answers and that others know more than me on many subjects. But there are also many subjects that I have A LOT of knowledge on. Especially as they relate to this industry. I work in this business. Many on this board don't. Therefore I think I have more insight into how it works than many others, but certainly not all others. That comes from having spent over 14 years in various functions with 2 airlines.

Your parallels between Beth Steel and UA are interesting. I don't disagree for a moment about the arrogance that has helped to slowly kill UA. You're 150% correct. Since I've been at this company, I've been absolutely amazed at the attitude of senior management. They don't listen to the people who actually do the work. They don't value employees. They think their way is the only way. The list goes on and on. They only have themselves to blame for the failures of this company. But ya know what? This airline isn't going to go quietly into the night like many predict. We're going to turn things around. Sure, it'll be painful along the way. But a little pain is good for a company like UA who is now getting their corporate come-uppance after years of arrogance. But we have a new firebrand CEO who is a kick-ass and take names kind of guy. An inspirational leader. Something we've needed for years. But if you think we're going to keel over and go away, I've got news for you: it ain't gonna happen. Wish upon it all you want, but UA isn't going away. Sure we'll struggle until we restructure. But a new day is dawning for this airline. Of that you can be sure.

And if you think I just surf on the web all day, you're more ignorant than I previously thought. But you're entitled to your opinion, however ridiculous it may be![img src='http://www.usaviation.com/idealbb/images/smilies/3.gif']

Sounds to me like your ego is a little bruised at the ATSB process. The airlines are merely making use of an option afforded to them. Is your industry taxed as heavily as the airline industry? Not even close. Is your industry being forced to subsidize the massive security changes post-9/11? Nope. If you don't like the process, whine and complain to your Senators and Congressmen/women. But be sure and change your diaper first!
 
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On 11/21/2002 4:20:33 PM PineyBob wrote:

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"Proud to Be a Piney From My Nose to My Hiney"
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[/blockquote]

Change from to with and to to up and we'll have a credible post from you.
 
Bob, take a prozac, if you don't like it don't fly and CEO's have no morals in business in any industry. I hope you don't cause an air rage incident!
 
PineyBob,

Finally, something we agree on. Your remarks about CEO and high-level exec exits are on the mark. For some reason, failures at the top are afforded the opportunity of a graceful exit that is rarely available to us worker bees. Now THAT is truly nice work if you can get it!
 
LDKIAM:

The company and all unions have met to discuss revisiting the cost side of the agreements. I guess it's semantics to say whether or not it's negotiating, but it has occurred.

By the way, I believe it's an insult to purposely mispronouce somebody's name. I find it interesting grown men and women need to do this instead of discussing issues.

By the way, IAM's negotiating strategy has come to my attention and it will be interesting to see if the membership likes the result.

Regardless, I have asked you a few questions in a couple of threads that you have not answered. Would you mind answering the questions?

Thanks.

Chip
 
[Wind Up Deleted]

Can you not fathom the fact the IAM has not met with the company to discuss revisiting concessions?
You baffle me by constantly posting false facts that you have nothing to do with and no clue of what is taking place.

I personally saw three of our negotiatiors today here in CLT, there are no talks scheduled nor have any talks taken place.

This past week, our GVP of Transporation was here, the Airline Coordinator ofthe IAM, the Presidents of DL 141 and 141M, numerous GLRs and AGCs were here till today in CLT at the ground safety conference.

[STRONG][FONT style=BACKGROUND-COLOR: #ffff00]So Chip why dont you answer the question of why you constantly post false information?[/FONT]
[/STRONG]
So Chip the only dialog that IAM has had with the company this week is the issue of back to back swaps in maintenance, and that was a call by the coordinator agc this week via a phone call.

So answer what I have posted, you are getting confused by all your posts and then you contridict yourself. Call the EAP, there is help out there for you yet.

Can you understand this?



[P align=center]November 20, 2002[FONT size=2]

[P align=center][/FONT]

[P align=center]TO: THE DISTRICT 141-M MEMBERS EMPLOYED BY US AIRWAYS[FONT size=2]

[P align=center][/FONT]

Dear Sisters and Brothers:

There have been media reports that US Airways has been in discussions with your Union regarding additional IAM member concessions. While this is certainly not true, the IAM is carefully monitoring the carrier’s financial condition. We have advised US Airways management that they must find solutions to any financial problems they are having within the terms of our collective bargaining agreements and its recently ratified modifications.

When US Airways asked the IAM to present the company’s restructuring proposals to our membership for a vote, they indicated that the proposals were all that was needed from IAM members to successfully emerge from bankruptcy. Management also agreed not to seek further cost reductions from IAM members through bankruptcy court proceedings. We expect US Airways management to live up to the commitment they made to our membership. [FONT size=2]

[P align=justify][/FONT]

[P align=justify]Fraternally,[FONT size=2]

[P align=justify][/FONT]

Scotty Ford
President and General Chairman
[/P]


[WIND UP]
 
LDKIAM, USAirBoy330, AOG-N-IT, I do not like this situation any more than anybody else; however, I would like to hear your comments regarding my last post to PineyBob?

Specifically, could you comment on how the following facts will affect US earnings, the company's ability to obtain further DIP financing and the loan guarantee?

A review of domestic unit revenue shows and 7.2 percent increase in October; however, meaningful price comparisons are difficult year-over-year due to the impact of September 11 last October. However, when compared to 2000, revenue per available seat mile fell 18.6 percent versus a 21.1 percent decline in September. Late November and December traffic will be stronger, but there is no visibility into meaningful pricing improvement. Airlines are exercising capacity discipline, however, a meaningful profit recovery will most likely not materialize until demand begins to recover, which now appears will not occur until the spring of 2004.

Thanks.

Chip