The Current State of US Airways

magsau

Veteran
Aug 20, 2002
787
0
I just found that nifty Chip feature of outlining bad news......No offense to the good people of US. This was strictly for you know whos benefit. A quote taken out context can often paint a distorted picture.[BR][BR]Best to all U and UAL employees.[BR]
 

FrugalFlyer

Senior
Aug 20, 2002
254
0
[blockquote]
----------------
On 11/10/2002 6:21:01 AM chipmunn wrote:

In 2003 the company will add 60 to 80 RJs to the US Airways Express network to fill in mainline restructuring voids. With last Thursday's court approval to add 20 Mesa 50-seat RJ additions; plus Midway start-up, Freedom Air 70-seaters, possible Chautauqua RJ additions, and late in 2003 MDA start-up (with a fast track emergence), additional RJs will begin flying in December and the network could see 6 to 7 additional RJ aircraft each month in 2003.

In addition to the additional RJ deployment, domestic alliance development will add additional traffic, feed, and revenues and late next year the company will begin work on joining the Star Alliance, which will add incremental revenues in 2004.

Chip

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[/blockquote]

the sad thing is that US needed the RJ's and an alliance a long time ago
hopefully this will not be too little too late
 
OP
C

chipmunn

Guest
Magsau:[BR][BR]By the way, UA does not meet the loan guarantee requirements either. Both carrier's are adjusting their application to obtain the 7 percent profit margin, which will permit Fitch Rating -- as an outside auditor, to provide a favorable recommendation to the board.[BR][BR]Chip
 

N603P

Newbie
Sep 16, 2002
14
0
PLEASE save this for someone else.We operate one of the best AIRLINES in this country. As our wages and benefits fall we still do our jobs day in and day out.Go to another board and abuse them!
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
wings,

For a company in US Airways position, cash on hand is everything. To continue flying into cities that were cash negative is completely irresponsible. As difficult as it is to see your airline shrinking (mine is, too), it is only shrinking away the pieces that are a drain on the carrier's liquidity. Yes, closing cities or converting them from mainline to express hurts the overall value of your network, but that gets factored into costing out the economics of such a decision. You can pretty much take it as a given that those cities were draining cash from US Airways. If they were marginal mainline cities, converting them to express is what may put them over the hump and make them profitable. Usually, if you pull out mainline service and put in Express, you get more frequency to make up for the reduction in seats from mainline jets to RJ's or props. Sometimes you even get pretty much a flat change in seats. BUT, you're putting out a more quality schedule because your increase in frequencies gives your customers more travel options that covers more of the day, thereby increasing the overall benefit to your network.

On the face of things, shrinking stinks. A general shrink to profitability strategy never worked for carriers like Eastern, Pan Am and TWA back in the late 80's and early 90's. But things are different today. The relationship between mainline and express operations is much more leveraged today than it was a decade ago. So the synergies that are now in place to recapture lost traffic from mainline to express make up for a big chunk of the shrinkage. Also, alliances today are much stronger. A decade ago, they were virtually non-existant. The UA/US codeshare will mitigate much of the damage done by shrinking that would have been a death knell 10 years ago. So you cannot compare the old shrinking strategy to what is taking place now. This industry simply has too much capacity. There is no getting around it. So carriers must find a way to carve out the cash-draining, unprofitable flying from their networks while re-capturing as much of the lost traffic as they can. Stronger relationships with Express carriers, and the alliance with UA will help them do that. Keep the faith.
 

Res

Senior
Aug 20, 2002
361
1
www.usaviation.com
It's nice to know that our give backs are keeping the planes painted.....amazing...I'm no longer shocked by the companies use of funds anymore ..think I've just become numb...
 
OP
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chipmunn

Guest
Fleet Plan/Pilot Manning

US Airways December schedule and pilot bid was to fly 279 aircraft with 4488 active pilots. The January bid announced the furlough of 471 pilots, with 326 in January and 145 by April. These layoffs will reduce the bottom seniority number to 4017. The company informed the pilots union the January bid would still have 279 aircraft; however, the company intended to reduce flying to better match capacity with demand. Some observers believe the pilot head count reduction is due to three points: Reduced block hours, eventual elimination of the training float, and possible productivity changes.

US Airways has begun painting its silver B-737s and expects to have the entire 279 aircraft fleet in the dark blue paint scheme by March 31. There will be one aircraft painted per week and tomorrow the company will have a B-737 returned from Aero Corp., the Lake City paint contractor, which will leave 21 aircraft in the old paint scheme. Reports indicate the company believes the benefits of having the entire fleet with the same paint scheme, as far as the passenger perception of the company, during a formal reorganization, outweighs the cost burden. This strategy was used by Continental Airlines during their successful bankruptcy reorganization. However, from a thought-provoking perspective, does it make sense to paint an aircraft and incur an expense if you were going to remove the jet from service?

Also noteworthy, the ALPA restructuring agreement provides for a minimum fleet count of 275 aircraft out of bankruptcy and 245 aircraft in bankruptcy. Some observers believe upon emerging the company will be required to operate a minimum of 275 aircraft (including permanent pilot bid plus 8% for maintenance and spares), with a daily utilization rate measured of 10 hours, per the pilot restructuring agreement. This clause would support the November schedule change and hub optimization plan. This plan adjusted hub routes/schedule where Charlotte became omni-directional with larger, higher geographic banks, the Pittsburgh traffic flow will be directionalized with an east-west focus, and Philadelphia would continue with strong O&D traffic and the principal international gateway.

Therefore, all things being equal, it appears with US Airways painting its remaining old paint scheme aircraft, the fleet plan reduction could settle at 279 airframes.
 
OP
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chipmunn

Guest
Plan of Reorganization (POR)

US Airways notified its creditors at the October 22 S.341 meeting that it exceeded its $1.3 billion per year cost target, but needed to cut another $100 to $300 million per year in expenses if the airline was to return to profitability, obtain further debtor-in-possession financing, and qualify for the loan guarantee. The company said it expected to obtain most of the additional savings from aircraft lessors; however, Employee Relations has begun negotiations with the unions seeking further possible cuts in productivity, pensions, and possibly short-term wage reductions.

Meanwhile, the pilots are considering a management request to provide the airline with additional 70-seat RJ authority that is included in the revised loan guarantee application, provided the Freedom Air issue can be resolved.

Reports indicate the company must have the additional cuts from all stakeholders and additional RJ authorization in place with ratified agreements no later than December 9, when the airline’s POR must be submitted to the court, unless the airline requests an extension, which is considered unlikely. This could require union leaders to ratify any tentative agreements, versus sending out any accord for membership ratification. The update POR has an aggressive timeline and if not met, threatens the company’s ability to access additional funding and successfully reorganize.

The company’s fourth Omnibus Hearing is scheduled three days later where it is expected the debtor will have numerous agreement ready for court approval. The final Omnibus Hearing has been delayed by one week and will be held on January 16.
 

usfliboi

Veteran
Aug 20, 2002
2,070
270
Chip, According to the afa and their latest update, the company did not request additional productivity improvements, however said at some point it may have to. It also quoted j glass as saying that management would not take further cuts.. With that said, Where did you get the dec 9 date? If the company was in dire straits, i would assume they would have requested to begin talks and that didnt happen? Your take? Thanks!
 
OP
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chipmunn

Guest
Usfliboi:

December 9 was obtained from the bankruptcy court docket. It's the date the company must have all stakeholder cuts in place, including labor, to submit in the final Plan of Reorganization so motions can be approved at the December 12 Omnibus Hearing.

The company could ask the court to extend the December 9 deadline, but with no further access to funds and the airline still burning cash, an extension could force a liquidation.

The unions are bound by strict confidentiality agreements, which if violated could be SEC violations, from discussing specific information with the rank-and-file. This makes it difficult for the unions to provide its members with specific information.

Chip
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
Those of you who can't understand why US is choosing to paint the remaining old schemes to the current livery should do a thorough research of what took place at CO when Bethune and his team took over. Their situation as worse, in that they had much more than 21 aircraft that were painted in CO's old livery. Marketing studies were done in conjunction with CO's new business plan and that is what finalized the decision to paint the planes.

On the face of it, it seems a useless expense. But have planes flying around in different paint schemes and liveries has an affect on your brand recognition, product and standing in the marketplace. It's often difficult to readily measure the hurt that it does. But you'd be surprised what customers say in marketing surveys.

Chip's comment about painting planes and returning them is dead-on in my view. I have a hard time believing US Airways would bother painting aircraft that it planned on removing from its fleet.
 

jcrb

Member
Sep 6, 2002
31
0
[blockquote]
----------------
On 11/12/2002 12:29:20 AM Res wrote:

It's nice to know that our give backs are keeping the planes painted.....amazing...I'm no longer shocked by the companies use of funds anymore ..think I've just become numb...
----------------
[/blockquote]

When the average person sees a plane that still says USAir I guarantee you that it suggests to them that the plane is old and does not generate any positive impression in their mind about US.

On the bright side, as others have mentioned, if they were planing on getting rid of more aircraft they wouldn't be painting them would they?
 

jcrb

Member
Sep 6, 2002
31
0
duplicate post

(for the record my first post attempt gave me an error saying it could not succeed and had a retry button, it gave me the error every time I tried, even though it was in fact posting, perhaps the board admin needs to look into this, looks like a bug to me )

(Moderator- The Administrator is aware of the problem and is working on it. It has been discussed in several threads that there is a problem and that it is being looked at. In the meantime, if you get an error message, either go back to the home page or just hit the back button and then refresh the board you are on and your post should appear.)
 

OldGuyinPA

Veteran
Aug 20, 2002
700
8
www.usaviation.com
Brand Recognition...

The customers stand in line, arms folded, steam comming out of their ears..muttering...That Damm Useless Air. We're driving our customers away on a daily basis. Way to go Dave & Al.
 

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