Us Airways Analysis

USA320Pilot

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With new labor agreements with its unions now in place, US Airways is now focusing on another key component of its transformation with its upcoming February schedule change. On February 6 schedule highlights include: increased aircraft utilization, two additional banks in Charlotte going from eight to ten, Philadelphia converting to a “rolling hubâ€, increase service from Washington National to six other airline (OA) hubs, increase aircraft size on numerous routes from key East Coast focus cities (Boston Logan, New York LaGuardia, and Washington National) with higher O&D traffic, and the launch of the new Latin American/Caribbean/Mexican service from its new Fort Lauderdale-Hollywood International gateway.

As US Airways continues to make progress in cutting costs designed to transform the carrier to a competitive and profitable business enterprise. The end-result is to be the first airline to convert the company to a LCC/network hybrid carrier, with a CASM less than Southwest Airlines and AirTran Airways that can obtain a RASM premium.

There are a number of initiatives underway to become a competitive business enterprise and three important points are the route network’s restructuring, aircraft rationalization, and some maintenance outsourcing.

The network is being restructured to focus on low cost domestic service, principally with large RJ aircraft such as the EMB-170 and CRJ-700 (it is expected the company will place orders for 97-seat EMB190 and 90-seat CRJ-900 aircraft) and more mainline point-to-point service. In addition, there will be more international long haul flying to Europe, the Caribbean, Latin America, and Mexico designed to average down units costs, while maintaining a relative revenue premium. The intent is to reduce unit costs with increased long-haul flying by keeping aircraft in the airline longer and to create a more refined focused turn process, much like Southwest, to increase aircraft utilization. The February schedule will see increased utilization to create 224 additional departures and 22 new routes. This is the equivalent of adding 25 aircraft to the network without writing a check, with mainline utilization increasing from 10.5 to 11.5 hours per aircraft per day.

The increased utilization will permit more point-to-point flying that supports expansion of Caribbean, Latin American, and Mexican flying from the company’s new international gateway at Fort Lauderdale- Hollywood International airport starting next week. New domestic service from the Southeast Florida gateway includes nine new domestic destinations including Boston, Hartford, Newark, Baltimore, Orlando (RJ), Key West (RJ), New York (LaGuardia), Providence, and San Juan. Fort Lauderdale will see new service to seven international markets with new service to Cancun, Guatemala City, San Salvador, San Jose, Panama City, Kingston, and Santo Domingo.

City Nov 04 Feb 05
Boston 108 110
Charlotte 512 567
Washington 186 190
Fort Lauderdale 27 44
New York 204 204
Philadelphia 461 493
Pittsburgh 229 239
System 3287 3456


Source: Company reports

US Airways will continue its European growth with two new flights added this spring from Philadelphia to Venice and Barcelona. This will increase the number of destinations from Philadelphia to Europe to 13 with service to London, Manchester, Frankfurt, Munich, Amsterdam, Paris, Madrid, Rome, Glasgow, Dublin, and Shannon. In addition, the company operates service from its Charlotte hub to London and Frankfurt and this summer will offer 15 daily European departures using 15 of its 19 widebody fleet.

Also noteworthy, according to thehub.com, complementing US Airways’ announcement of the launch of Philadelphia-Barcelona service this May, US Airways and Spanair were granted approval by the U.S. Department of Transportation (DOT) to expand their codeshare agreement. US Airways customers may travel to Malaga and Palma de Mallorca, Spain, through Spanair codeshare flights connecting in Barcelona. This will be in addition to existing codeshare connections via Madrid. In turn, Spanair will offer service between Barcelona and Madrid to Philadelphia, and to 21 U.S. destinations beyond, through their codeshare on the US Airways flights.

Meanwhile, according to the Charlotte Observer, Charlotte IAM members have been told that US Airways is closing many of its specialty maintenance shops, eliminating about 280 jobs, including 150 in Charlotte. Company spokesman David Castelveter confirmed that workers in the shops were told this week that their positions will be abolished by the end of March. The job cuts are allowed under a contract that employees with the International Association of Machinists ratified last week. The work will be sent to outside vendors, Castelveter said.

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The Beaver County Times reported, in addition to the mechanical shops to be closed in Pittsburgh including hydraulics, instrumentation, auxiliary power unit and electrical, those closing in Charlotte include wheel and brake, flight control, lavatory, oxygen, accessory, calibration and avionics shops. US Airways workers to be absorbed into the system, as other employees retire, accept an early-out package or move to other jobs. Mechanics have until March 1 to decide whether to accept the early buyout package.

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US Airways continues to negotiate with aircraft leaseholders in an attempt to lower costs. This effort is being lead by the Seabury Group with the intent to have the emergence fleet plan in place by February 15 when the company is scheduled to file its plan of reorganization. The table below indicates what the fleet plan may reflect:

Aircraft Type December 31, 2005 December 31, 2006 December 31, 2007
A330 9 9 9
B767 10 10 10
B757 30 30 30
A320 family 117 117 117
B737 105 97 90
EMB-170 (MDA) 28 28 28
CRJ-700 (PSA) 8 8 8
CRJ-200 (PSA) 37 37 37
Dash8 (Piedmont) 41 41 41
Total 385 374 367

(1) US Airways may add B737s, if they can be obtained at a reasonable price, to replace those being returned to GE. In addition, the company could lose more mainline aircraft and have a fleet less than 251 aircraft on December 31, 2007.
(2) MDA is expected to add more EMB-170/175/190 aircraft.
(3) PSA is expected to add more CRJ700/900 aircraft.
(4) US Airways has 29 Airbus aircraft on form order for deliveries in 2008 through 2010. The order includes 10 A330-200s, 16 A321s, and 6 A320s.

Source: Company reports

US Airways received bankruptcy court approval on January 27 for the final three union’s contracts, all of which were represented by the IAM. The pre-bankruptcy company annual concession “ask†and final concessions are listed below:

Union Pre-bankruptcy Concession % Increase
TWU $6 million $6 million 0
ALPA $295 million $300 million 2
CWA $122 million $137 million 12
AFA $116 million $157 million 38
IAM $263 million $373 million 45
Total $802 million $977 million NA

(1) US Airways management employees provided $200 million in concessions.

(2) ALPA International E&FA Lead Economist Amy Alperi values the pilot’s average annual concession over the term of the CBA at about $365 million per year.

(3) The AFA concession was for $94 million per year, which excluded $63 million in defined benefit plan termination and retiree health care changes, which were obtained by court order.

US Airways total post bankruptcy advertised labor savings are $1.17 billion, which is $175 million more than the company’s initial “askâ€. In addition, the “ask†percentage increase grew day-by-day. The table below lists the union new labor accord order and clearly indicates the earlier a union reached a deal, the lower the increase of the concession. The union that had the highest increase in their post bankruptcy concession was the IAM, with a whopping 45% increase in their concession and participation in the Transformation Plan.

US Airways is expected to announce 2004 and fourth quarter financial results on Monday, January 31. The company is expected to post a loss, which could be about $200 million for the quarter. In my opinion, the airline will make other announcements simultaneously with the earnings report to soften the blow and maintain customer confidence. For example, the company could announce who will be the airlines exit financing investor that could be RSA that then takes the company private.

Best regards,

USA320Pilot
 

ClueByFour

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Aug 20, 2002
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USA320Pilot said:
US Airways is expected to announce 2004 and fourth quarter financial results on Monday, January 31. The company is expected to post a loss, which could be about $200 million for the quarter. In my opinion, the airline will make other announcements simultaneously with the earnings report to soften the blow and maintain customer confidence. For example, the company could announce who will be the airlines exit financing investor that could be RSA that then takes the company private.
[post="243646"][/post]​

Losing $200 million and another mini-meltdown at PHL due to the weather will overshadow the spectre of Dave Bronner tossing bad money after more bad money.

I think it speaks volumes that the company has had the latest "TP" in mind for almost a year, and has still done nothing but beat labor in Chapter 11. This, more than anything else, speaks to the confidence that the educated consumer has in CCY's ability to do anything but run the place into the ground (again) after this round of concessions is squandered.
 

GeezLouis

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Jan 8, 2004
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USA320Pilot said:
Mechanics have until March 1 to decide whether to accept the early buyout package.
[post="243646"][/post]​

What does this "Early Buyout" for the Mechanics consist of?
 

700UW

Corn Field
Nov 11, 2003
37,637
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USA320Pilot said:
Mechanics have until March 1 to decide whether to accept the early buyout package.
Best regards,
USA320Pilot
[post="243646"][/post]​
More misinformation from the master of misinformation.

There is no early buyout in the Mechanic and Related Final Offer Concessionary Contract. There is NO buyout period!

Why do you constantly post false information?
 

us0004us

Senior
Aug 20, 2002
282
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USA320Pilot said:
For example, the company could announce who will be the airlines exit financing investor that could be RSA that then takes the company private.

[post="243646"][/post]​

any comments regarding

the price of the common stock

if the company were to become

privately owned?
 
OP
U

USA320Pilot

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May 18, 2003
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Clue:

Your "ax to grind" and being bitter is becoming more and more amusing as the company continues to move forward and your predictions continue to fail. how can that be?

700UW:

The information you referred to came from an article, but you forgot to mention that. You purposely placed my saluatation and name with the quote to try and discredit me (which is really a compliment) because you purposely mislead people. You're truly "pathetic" becuase you cannot debate the issues and appear to be a beaten man.

I doubt you have the courage to answer this question, but was the IAM successful in their approach to participate in the new business plan, with the union providing the airline with the largest percentage increase from pre-bankruptcy "ask" to the new labor accord?

Best regards,

USA320Pilot
 

700UW

Corn Field
Nov 11, 2003
37,637
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Were you at negotiations?

You do not know what happened or transpired. The company had no intention of ever reaching an agreemet with the IAM, the IAM on 1/5/05 gave the company a full and comprehensive proposal worth $282,000,000 that provided what they needed while ensuring job protections for the M&R Group, the company refused it and never gave a reason why.

Since you were not there nor an IAM member I would not expect you to understand what happened.

And I guess you better check the information before you post it since you will NEVER take responsibility for posting false information like you do over and over again.

Even my young son admits when he is wrong, why can't you do the same?

It is getting easier everyday to show the board that you are the minisiter of misinformation.
 
Sep 9, 2002
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USA320Pilot said:
Clue:

Your "ax to grind" and being bitter is becoming more and more amusing as the company continues to move forward and your predictions continue to fail. how can that be?

700UW:

The information you referred to came from an article, but you forgot to mention that. You purposely placed my saluatation and name with the quote to try and discredit me (which is really a compliment) because you purposely mislead people. You're truly "pathetic" becuase you cannot debate the issues and appear to be a beaten man.

[post="243731"][/post]​


What about you and your 10001 predictions, opinions, insights etc most that have never came to pass? You are truly the master of being that blind squirrel. You post so much garbage that no one could ever research all your posts to see how many nuts you found let alone the nuts that never came to fruitation. Or is that nutation?

Why do you refuse to take responsibility for the misinformation you post and instead try to deflect blame to the messenger that takes you to task for your posting of that misinformation and then why do you try to change the subject? I know and you know why. Because if you are discredited in your posts nothing that you post can be taken worth more then a grain of salt. Which is why I never read your long posts and so rarely take you to task about your misinformation anymore. I admit your long boring redundant garbage has worn me down and I can't take reading it anymore.
 

AP Tech

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Sep 4, 2002
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"Company Source", now I like that one!!!! I bet they can hardly see the strings when you speak at work being pulled by members of this crack managment team. Company states they will have a CASM less that LUV, I want proof as you can state anything you wish. Believe anything this managment team says, now that a joke. I do enjoy reading the new articles, can't wait to take my early out which I must decide on by March 1st which I have been told nothing about?

All this positive talk is nothing more than an attempt to pump up the company so as to look good for a sale or merger with another airline. Do a little reading on the Enron, WorldCom a few of the other hearing which are going on....they are full of "he said", "they told me","make the numbers work", "I was not aware" statements by those on trial. Look where those companys are now!

Sure the costs are down, looks good on paper, but when you sit on the ramp 30minutes waiting for an A/C to be unloaded due to agent shortages, wait to check in because there is only 1 agent and the Kiosks are not operating properly, need a tool to do a job and find out its at the vendor for calibration when as before we did it in house, waiting for catering. And these are just a few items which have been cut to save money, the list could go on and on! Looks good on paper but in the end will bite U right in the A**!!!! :down:
 

mweiss

Veteran
Aug 28, 2002
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USA320Pilot said:
Clue:

Your "ax to grind" and being bitter is becoming more and more amusing as the company continues to move forward and your predictions continue to fail. how can that be?
His "axe to grind"??? :lol: He points out that CCY has done nothing but go after wages, despite it being clear that wages aren't enough. It's a fact. No, wait...it's an assertion. Is it wrong? If so, show us the evidence!
 

ClueByFour

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Aug 20, 2002
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USA320Pilot said:
Clue:

Your "ax to grind" and being bitter is becoming more and more amusing as the company continues to move forward and your predictions continue to fail. how can that be?
[post="243731"][/post]​

The company is still in Chapter 11, pulling fire-sales to keep cash coming in the door, and has to ask the government to continue to spend money on a regular basis. Moving forward, indeed.

Now, I'll say it again: to date, CCY has done nothing but come after more concessions, despite cooking up the current "transformation plan" almost a year ago. FLL has not happened, rolling PHL has not happened, GoFares were and are a reactionary move only matching LCCs and Delta, etc.

Rose colored glasses at 11.
 

robbedagain

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Oct 13, 2003
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well it is nice to see that the company wants to put the rest of the transformation plan into action. now when GE takes back the 25 mainline jets, how wii this affect the full transformation plan? and if usair does go ahead with the outsource of the listed 21 cities, how do they expect an ontime performance? i heard yesterday that avp had only one person show up on time and then another one or two showed up1 1/2 hrs late then the other 2 quit. keep in mind it is FSS (fleet services) and if this is what usair wants then i dont see how it will make it, particularly in the winter months? would it have been easier if usair keeps its employees then to outsource them?
 

funguy2

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Aug 20, 2002
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Ok... As I have shown in another thread, Labor Concessions along get US Airways' CASM to the best of the legacies (assuming the others make no meaningful reductions) at 9.31cents or 7.47cents ex-fuel. Of course, this is about 15% higher than Southwest, but better than Continental.

So there are a couple of questions in my mind.

1. Will the schedule changes reduce CASM by another 15%. My guess is no. But there will be some additional CASM savings through efficiency.

2. Will the CASM reductions decrease RASM? If two new banks are being added to CLT, these are likely to be at off-peak times. This is good from a CASM standpoint... Using assets with largely fixed costs (in the short-term) like aircraft, gates, etc, will reduce CASM. However, off-peak flights are more likely to be sold at a discount, potentially reducing RASM. Thus, adding marginal flying only makes sense if the RASM is greater than CASM. We'll have to see if this is the case here.

3. US Airways still has a race against the clock. It appears to me now, that DAL's fare restructuing has the intent of not allowing US Airways to generate cash, even with lower costs, thus forcing one of the creditors to pull the plug eventually. We'll have to wait and see how this plays out.