Mweiss:
I applaud your efforts to have a constructive discussion on the merits of the new business plan and every post was chest pounding.
Nobody has offered constructive debate and the plan will be eliminated or the company will fail. Therefore, chest pounding is really a waste of time because it will not effect the restructuring outcome.
Meanwhile, to get back to your topic there are other positive corporate aspects and the framework of management’s “Transformation Planâ€, which is designed to make US Airways truly competitive in today’s rapidly changing industry.
The company’s goal is to lower units costs from about 10 to 6 cents per available seat mile (excluding fuel), which is going to be accomplished in two basic areas. Two cents of the four-cent reduction will come from operating more efficiently with better aircraft utilization, seat configuration, scheduling, and lower distribution costs. The company plans on rolling the Philadelphia hub, using different Philadelphia runway patterns, increasing aircraft block hours from 10 to 11.5 hours per day with existing crews, reducing Pittsburgh service, and adding about 180 point-to-point flights per day from key Northeast airports in Boston, New York, Philadelphia, and Washington.
Key distribution cost reduction initiatives include increasing internet booking by 100%, reducing reservation sales agent call time from 5 to 3 minutes per call, adding more self service Kiosks, and installing boarding pass readers,
New domestic point-to-point flying is planned from US Airways’ key Northeast cities to larger domestic markets, which can support O&D traffic with higher yields and load factors.
The top ten U.S. domestic O&D markets in regard to revenue are New York, Washington, D.C., Chicago, Los Angeles, Dallas, Atlanta, San Francisco, Boston, Denver, and Houston. Interestingly, Philadelphia is number twelve, Charlotte is number fifteen, and Pittsburgh is number sixteen. In addition, the company plans on operating flights from US Airways key Northeast cities to all key leisure markets with Low Cost Carrier (LCC) type aircraft turn times and utilization.
The plan envisions expanding European and Caribbean service, with potential new transatlantic routes from Philadelphia to Star Alliance hubs of Warsaw (LOT Polish Airlines), Vienna (Austrian Airlines), Oslo & Copenhagen (SAS Scandinavian Airlines), and Birmingham (BMI). Note - BMI’s main operational base is London’s Heathrow airport.
US Airways will maintain its Charlotte to London and Frankfurt flights and with 15 Philadelphia transatlantic flights in the summer, the company will have 19 widebody aircraft to support 17 flights (9 A330s and 10 B767s).
There will be further new Caribbean routes; as well as new service to Nicaragua, Honduras, and Panama, and possibly to San Salvador and Guatemala City.
Other changes include a high density B757 seat configuration reducing First Class from 24 to 8 seats, reducing the size of the A321 first class cabin, possibly changing the entire fleet to a single class service for domestic operations, and adding a new and very competitive In-flight Entertainment (IFE) system.
The changes above are designed to reduce the CASM by about two cents, with the other two cents will come from new labor contracts, across-the-board, for all work groups.
Siegel compared US Airways’ situation to that of two other network carriers who faced the entrance of low fare king Southwest Airlines into their principal hub: TWA and America West. In the case of TWA they were successful at lowering their unit costs, but they lost their passenger base in the process and ultimately failed. America West changed its product much in the same way the Transformation Plan proposes and now has become a successful airline, who recently had its credit rating raised during a period of deteriorating industry fundamentals.
From a fleet plan perspective, US Airways and America West have similar mainline fleets with B737s, A320 family, and B757 aircraft plus 50 and 70-seat RJs. US Airways does have additional aircraft strengths with the EMB-170, A321, B767, and A330 aircraft. US Airways’ fleet plan will increase CASM with multiple aircraft types, however, these aircraft will provide a higher RASM and more profits. The plan envisions growing the mainline fleet to 320 aircraft.
Other plan benefits are:
Facility rationalization to lower unit costs such as Training, Reservation, CTO, a reduction of airport gates to lower unit costs. This will permit fewer gates and less ground equipment.
The key is reducing distribution costs with IT improvements and productivity, which will lower unit costs so the company can simplify the fares to LCC levels and make money.
More effective use of E-Commerce and use of automation.
Therefore, since US Airways’ new business model will emulate America West and especially since new chief executive officer Bruce Lakefield has compared our future to the contracts of America West (hub-and-spoke) and JetBlue (point-to-point), I believe we have just seen what the company’s idea of labors participation in the new business plan. Thus, this week I believe we can expect management to seek contracts similar in scope to the Phoenix-based airline’s labor costs, across-the-board for all Collective Bargaining Agreements.
Without these changes the plan will fail, therefore, ALPA knows the employee cuts are coming one way or another. Either they will come by consensual agreements or be court ordered, and if the cuts do not come, the airline will be liquidated to protect RSA’s investment.
Respectfully,
USA320Pilot
