Southwest, Aa Not Worried About A New Us Airways

[FWAAA]

nycbusdriver, Now here's a post worth repeating..

[post="273643"][/post]​

It would really be worth repeating had it contained up-to-date hedging coverage ratios:

"We are 83 percent hedged for second quarter 2005 with crude oil prices capped at $26 per barrel. Based on current market conditions, we expect our jet fuel costs per gallon for second quarter 2005 to exceed first quarter 2005's 90.3 cents. We remain 85 percent hedged for second half 2005 at $26 per barrel; 65 percent in 2006 at $32 per barrel; over 45 percent in 2007 at $31 per barrel; 30 percent in 2008 at $33 per barrel; and over 25 percent in 2009 at $35 per barrel.

http://phx.corporate-ir.net/phoenix.zhtml?...5437&highlight=

Sure, WN's advantage won't last forever, but it will easily outlast all others. Like the joke of the two hikers encountering the bear, I don't have to outrun the bear, I only have to outrun you.

And WN's fuel hedging will easily help it through these next few years, long after some of the other airlines have liquidated.

 

[insp89]

It would really be worth repeating had it contained up-to-date hedging coverage ratios:
http://phx.corporate-ir.net/phoenix.zhtml?...5437&highlight=

Sure, WN's advantage won't last forever, but it will easily outlast all others. Like the joke of the two hikers encountering the bear, I don't have to outrun the bear, I only have to outrun you.

And WN's fuel hedging will easily help it through these next few years, long after some of the other airlines have liquidated.

[post="273648"][/post]​

"long after some of the other airlines have liquidated"

I noticed you neglected to name some of the airlines that will be liquidated...

As WN's fuel hedging advantage continues to erode, and the so-called "legacy" carriers continue to lower their costs, Your liquidation theory is becoming less likely as every day passes...Sorry to disappoint you..

 

[DCAflyer]

I don't think LUV really cares about Star, frankly. They don't fly internationally, and they face the US/UA combination today and hand them their head.

AA might be, except for the fact that "project barbell" can't provide decent service to anything west of ORD and east of PHX. OTOH, hubs in DFW and ORD certainly help in this regard.

[post="273450"][/post]​

There is a difference between "can't" and "doesn't presently." The new company plans a mid-continent build-up once the merger is complete, but it appears the dynamics of such a process is unclear at this time. I suspect that with the cash on hand that the company will have, as well as access to credit, Parker will be poised either procure a facility for an additional hub or to effectively compete in the bidding process of parts of whatever airline ends up in Chapter 7.

 

[BoeingBoy]

As WN's fuel hedging advantage continues to erode, and the so-called "legacy" carriers continue to lower their costs

[post="273656"][/post]​

Perhaps a look at how US has done in "lowering" CASM since entering BK 2 would be somewhat illustrating of this continuing lowering of costs....

US system-wide operating CASM by month:
Oct 13.02 cents
Nov 12.08 cents
Dec 12.50 cents
Jan 13.23 cents
Feb 12.87 cents
Mar 12.01 cents
Apr 12.68 cents

From pre-labor savings to April, all the cost cutting has lowered CASM a whopping 1/3 of a cent. Of course, fuel is largely responsible for that, so.....

Consider that the highest cost for fuel per ASM for any of these months was 2.91 cents in April. As Clue has intimated in the past, if US could somehow get free fuel our cost would still be significantly above WN's - over 25% higher, in fact.

So the "erosion" of WN's fuel hedge advantage will tend to slightly untilt the playing field, but counting of that for success is a futile exercise.

Jim

 

[whatkindoffreshhell]

767jetz:

I find your anger and venom interesting, since you work for a failed company who has been "shunned" by the US Airways' "executive suite".

In regard to your personal comments, I'm quit happy at US Airways, I enjoy my job, and I have made about $500,000 more than I would have at United with better working conditions. With all due repsect, you can continue to lob "jabs" my way, but do not let the facts interfere with your thought process.

I find it interesting that you regularly visit the US Airways board and attempt to spare with me, but I have not ventured over to the United board. When would now be a good time for you to focus on your company, who has its own issues?

By the way, there are new financial community reports that United may have to go the same route as US Airways to obtain exit financing. I am hearing that United may have to shed maybe as many as 100 of its mainline jets in exchange for financing so the airline can be "rightsized" and the aircraft sent offshore where the lease rates are higher.

Best regards,

USA320Pilot

[post="273579"][/post]​

Okay board, my turn. I'll take it this time.

usair320--I'm not a pilot but a customer so spare me your proclamations of civility.

Answer the question: where are the banks and real money (not synergies and anticipated cost-savings and loans-with-strings-to-buy-unneeded/nonexistent-planes?

Yes, it will be stunning to see you survive at the Tempe-based carrier. Will Doug Parker whisper in your ear too?

Correct me if I'm wrong, but don't you "work for a failed carrier who has been shunned by other airlines" and the general flying, paying customers?

Your insecurities are revealed by your sad insistence on proclaiming you've made $500K more by choosing to work at usair. As Billy Shakespeare from the Stratford-based company once said "you doth protest too much".

Ya know, I'd like to see this HP acquistion go thru just for the entertainment you provide by spinning like a madman.

Stunning. Yes saaaaaay it again. Stunning.

 

[wnbubbleboy]

There was much hoopla about SWA starting service at PIT. My question is: How has the new PIT service affected loads out of CLE? All those PIT folks who would drive to CLE to avoid USAirways high prices now have the convenience of flights from their home town airport. But now those seats out of CLE go empty. Maybe SWA is reaching the point in their service that has plagued USAirways for so long. SWA may now be beginning to compete with themselves. This will only exacerbate the anemic load factors.

[post="273527"][/post]​

CLE won't be around much longer IMHO. They (CLE) have favored CO too long and restricted our growth out of CLE. Watch for us to move everything south to PIT who is more receptive. Right now I have a feeling of deja vu. I have a feeling I have posted this before.

 

[insp89]

Perhaps a look at how US has done in "lowering" CASM since entering BK 2 would be somewhat illustrating of this continuing lowering of costs....

US system-wide operating CASM by month:
Oct 13.02 cents
Nov 12.08 cents
Dec 12.50 cents
Jan 13.23 cents
Feb 12.87 cents
Mar 12.01 cents
Apr 12.68 cents

Now consider that the highest cost for fuel for any of these months (April) was 2.91 cents. As Clue has intimated in the past, if US could somehow get free fuel our cost would still be significantly above WN's - over 25% higher, in fact.

So the "erosion" of WN's fuel hedge advantage will tend to slightly untilt the playing field, but counting of that for success is a futile exercise.

Jim

[post="273664"][/post]​

Jim, Jim , I don't remember stating that I was counting on WN's continuing erosion of their fuel cost advantage as a recipe for success.. But it sure will help.

I do remember something about a merger between AmericaWest & Usairways being in the works..

I do believe with a management team in place that actually knows what they are doing, This combined airline can actually work on the non-labor costs that our present and past management have failed to address...Anything futile about that ?

 

[BoeingBoy]

And that is the $64 million question at this point. If HP management can get the combined CASM down to HP's current level, I'll breathe a lot easier. Until then, hedging advantages eroding and everything else is only interesting material for disucssion.

If WN's hedging advantage disappeared tomorrow, it'd close the cost difference by less than 1 cent. The heavy lifting will be reducing the other costs.

Jim

 

[Cosmo]

By the way, there are new financial community reports that United may have to go the same route as US Airways to obtain exit financing. I am hearing that United may have to shed maybe as many as 100 of its mainline jets in exchange for financing so the airline can be "rightsized" and the aircraft sent offshore where the lease rates are higher.

Could you please post or provide a link to those "financial community" reports? Or at least name the people and/or organizations issuing them? Otherwise, this appears to be yet another case of offering your unsubstantiated opinion as fact.

 

[insp89]

And that is the $64 million question at this point. If HP management can get the combined CASM down to HP's current level, I'll breathe a lot easier. Until then, hedging advantages eroding and everything else is only interesting material for disucssion.

If WN's hedging advantage disappeared tomorrow, it'd close the cost difference by less than 1 cent. The heavy lifting will be reducing the other costs.

Jim

[post="273672"][/post]​

Jim, I do believe you are taking Southwest's fuel advantage due to fuel hedging a little bit lightly..

Fuel hedging that Southwest has done for the last couple of years has allowed them to "set" the fares for the industry...[Which simply means they can make a profit while the rest of the industry is in the red ].

Now, as time marches on, and Southwest's Fuel Hedging advantage will begin to erode, Southwest's ability to "set" the fares for the industry will also erode..

 

[BoeingBoy]

Well, I'd put it slightly differently....

WN's cost structure has allowed them to be profitable at fare levels that leave the legacies in the red. Part of that cost structure is their fuel hedges, but only a part.

Take away the hedges and they still have an advantage over the legacies due to all the other structural efficiencies they enjoy, from a single fleet type to high utilization of all assets. Hence, they could still "set" the fares for the industry - at least the legacy part.

That's where the "heavy lifting" for management comes in. Though WN's hedge advantage may erode over time, we don't have the luxury of waiting for that to save us. We have to get our cost structure down to a point where the HP/US combination can make money despite WN's hedging advantage allowing them to "set" the fares. Alternatively (or in combination), we have to find a way to charge more than WN without losing passengers - effectively raising RASM.

Unless management can do that, waiting for WN's hedging advantage to erode enough to allow us to compete is probably a recipe for failure.

Jim

 

[funguy2]

There is a difference between "can't" and "doesn't presently." The new company plans a mid-continent build-up once the merger is complete, but it appears the dynamics of such a process is unclear at this time. I suspect that with the cash on hand that the company will have, as well as access to credit, Parker will be poised either procure a facility for an additional hub or to effectively compete in the bidding process of parts of whatever airline ends up in Chapter 7.

[post="273661"][/post]​

I disagree.

In the first place, the combined US-HP will offer lots of options to folks between ORD and PHX. Folks in MSP, MKE, ORD, MCI, DFW, IAH, and DEN will immediately be able to fly to the Northeast, Florida, California, Europe, and soon Hawaii, on the merged carrier. This is far better than either airline can offer individually. In fact, I heard an HP VP say something like the merged US-HP will be the number 3 airline at DFW, as an example. I have previously cited numerous examples of where the combined company can "connect the dots", like OMA-PHL and XNA-PHX, etc.

Secondly, you only need a hub in the midwest, if you are going to try to offer service WITHIN the midwest... For example, US Airways will have a hard time competing in the MSP-IAH market. In my opinion, the midwest is currently served well, even by LCC standards.

The new US Airways will need to 1. lower costs and 2. leverage those lower costs in appropriate markets. Short haul service from MCI is not a market where the new US Airways will be able to leverage low costs. Short-haul service from LGA, BOS, and DCA... Now those are markets that a low-fare US Airways can leverage its low costs into a powerful advantage.

Third. The glory-days of hubs is behind us. Yes, hubs are still important and will be part of the national air system for a long time. However, the days of every city trying to support a hub is gone. Marginal hubs at COS, MCI, CMH, PIT, RDU, BNA have all failed. IMO more marginal hubs will fail. There has already been a mention of CLE failing as a hub in this thread. Maybe a real possibility. In my opinion, other possibilities are MKE and STL. All of these places, in my opinion, will continue to be important FOCUS cities, where CLE-NYC and CLE-LAX and CLE-Florida (and substitute any city noted for CLE) will always be good markets. But how many people are really flying from CLE to ALB? Or STL-DSM? Etc? Those flights exist primarily to feed the hub, not cater to local traffic. I believe we will see these kinds of flights continue to disappear (as they have from MCI and PIT and RDU, etc).

Absent a major shakedown in the industry, like a UAL liquidation (which I tend to think is unlikely - possible - but unlikely), I cannot imagine a scenario where US Airways has a Midwest hub.

Without an airline liquidation, I don't really envision any full hub closure, like CO at DEN, in the future either. I think we will see hubs downsize to Focus Cities... Like AA did at BNA and RDU, like AA is doing at STL and US is doing at PIT (and NW is building at MKE and IND).

 

[insp89]

Well, I'd put it slightly differently....

WN's cost structure has allowed them to be profitable at fare levels that leave the legacies in the red. Part of that cost structure is their fuel hedges, but only a part.

Take away the hedges and they still have an advantage over the legacies due to all the other structural efficiencies they enjoy, from a single fleet type to high utilization of all assets. Hence, they could still "set" the fares for the industry - at least the legacy part.

That's where the "heavy lifting" for management comes in. Though WN's hedge advantage may erode over time, we don't have the luxury of waiting for that to save us. We have to get our cost structure down to a point where the HP/US combination can make money despite WN's hedging advantage allowing them to "set" the fares. Alternatively (or in combination), we have to find a way to charge more than WN without losing passengers - effectively raising RASM.

Unless management can do that, waiting for WN's hedging advantage to erode enough to allow us to compete is probably a recipe for failure.

Jim

[post="273682"][/post]​

I agree there is a lot of work to do in the non-labor cost area.

I don't remember suggesting that we "wait" for Southwest's fuel hedging advantage to erode, I just pointed out that Fuel Hedging is one advantage that will be eroding in the future.

Like I said before, Management [or lack thereof] is the reason for Usairway's non-labor cost problems,

They were too busy kissing up to their rubber stamping bankrupcy judge and shafting labor to worry about actually running a airline..

Tomorrow will not be soon enough to hand over the airline to a "REAL" management team...

OH, and BTW, I hope even Judge Mitchell will have enough common sense NOT to hand over the $55 MILLION for the so-callled retention bonuses....

These same people were not required to participate in the concessionary wage reduction program to the extent as others..

While labor was forced to cough up AT LEAST 18 to 20 % in pay cuts, MIDDLE MANAGEMENT GAVE UP A WHOPPING 1 %........

They have ALREADY received their severance by keeping their paycheck intact..

 

[767jetz]

I find your anger and venom interesting, since you work for a failed company who has been "shunned" by the US Airways' "executive suite".

[post="273579"][/post]​

You crack me up! Oh, OK… So UA is taking it’s time restructuring right the first time and is on the verge of emerging from bankruptcy once the IAM issue is resolved, with the backing of the 2 biggest financial institutions in the world (that’s right, banks not loan sharks) while retaining our unparalleled route structure, expanding our Ted market, winning back our high yield customers (and yours for that matter), increasing our international reach to Asia, and opening up more pilot positions in large gauge aircraft while recalling pilots and flight attendants, yet we are a failed company? In that case I guess your company failed twice and did so miserably since everyone including it’s current management admits that without a merger USAir will cease to exist. You need a serious reality check, sparky.

By the way, when you use quotation marks around words like “shunned†and “executive suite†and “stunned†it doesn’t give it any more credibility. 🙄

In regard to your personal comments, I'm quit happy at US Airways, I enjoy my job, and I have made about $500,000 more than I would have at United with better working conditions.

[post="273579"][/post]​

Your dream of doing better at US than UA is a farce. First of all you couldn’t possibly know what your total earnings and compensation would have been at UA, so your $500,000 number is arbitrary and fictional. I know several 570’s who have been flying 767’s and 777’s internationally for many years before any concessions, at a far higher level of total compensation than you ever saw at US, even considering the loss of ESOP stock, and they beg to differ with your assertion.

By the way, there are new financial community reports that United may have to go the same route as US Airways to obtain exit financing. I am hearing that United may have to shed maybe as many as 100 of its mainline jets in exchange for financing so the airline can be "rightsized" and the aircraft sent offshore where the lease rates are higher.

[post="273579"][/post]​

So where are these reports from the financial community that prove your assertions about UA’s ability to emerge? Who ever your sources are, they are wrong, as usual. Or are you going to lie again :down: and post some Op-Ed article stating the opinion of one uninformed person and claim it represents the views of the “financial community.†Give us a break! Your “100 jets†claim is so far off you sound like an idiot even typing it. And you call other people clueless? I won’t reveal any specifics, but let’s just say the number of jets still in play is less than 1/5th of that.

And don’t hold your breath on obtaining any UA assets in ORD or DEN. UA will emerge intact. You’re welcome to Frontier, since we are kicking their butts in DEN though. Your analogy of shunning UA is pretty humorous. It’s like the rapist who was fought off by one victim, claiming to shun that victim to find another. I am happy for you that you finally found another unsuspecting victim to force yourself on. Just remember that US is in STAR because of UA, and if you remain part of STAR it is because we didn’t kick you out.


By the way, here is an article about UA you might have missed.
United Airlines Named Best

Here are some interesting quotes from the article:

"The OAG awards, which have been called the "Oscars of the Airline Industry," celebrate the very best in global air travel and publicly recognize the highest standards within the industry."

and...

"In addition to Best Transpacific Airline, United also was a nominee for Best Airline Based in North America, Best Transatlantic Airline, Best Economy/Coach Class, Best Executive/Business Class and Best International First Class."

Doesn’t exactly sound like a failed company to me.

 

[firstamendment]

:
"In addition to Best Transpacific Airline, United also was a nominee for Best Airline Based in North America, Best Transatlantic Airline, Best Economy/Coach Class, Best Executive/Business Class and Best International First Class."

Doesn’t exactly sound like a failed company to me.

[post="273705"][/post]​

Keep hemoraging millions and those great service perks will go BUH BYE. Something has to give. Are you willing to take even more cuts to subsidized the great service you give? I will promise you, they will come back for more. Why do you always have to get into it in the u boards? you ARE as bad as A320..if not worse.