Us Airways Pilots Get Look At Airline's New Plan

[ALM Antillean Airlines]

US Airways management presented its pilots with a new plan entitled Plan Going Forward at a meeting last week.

The Air Line Pilots Assn., which represents the airline's pilots, said the plan involves "participation by all parties to create a hybrid of both hub-and-spoke flying and point-to-point flying to address the ongoing revenue shortfall."
Excluding unusual items and tax, US Airways posted a $129 million net loss in the fourth quarter ended Dec. 31 and a $655 million net loss for 2003. Although it slashed billions in expenses during bankruptcy, Executive VP and CFO Neil Cohen said the company must cut costs a further 25% in order to compete with low-cost carriers. Competition will only grow stronger this summer when Frontier Airlines and Southwest Airlines launch service in May from Philadelphia, US Airways' second-largest hub in terms of mainline departures and its largest international hub.

Reportedly, US Airways has flirted with the idea of selling some of its assets, including its Shuttle service between Boston, Washington and New York, its US Airways Express regional jet service and possibly one of its three hubs in Pittsburgh, Philadelphia and Charlotte, in order to regain financial stability. It recently confirmed that it retained Morgan Stanley to investigate potential asset sales but emphasized this was just an exploratory measure and no decision has been made to sell anything.

 

[ClueByFour]

CCY and Bronner should have entitled this plan "Bend Forward" to "align employee expectations with the business plan" at least as it pertains to the pilots, particularly those at the junior end of the scale.

 

[USA320Pilot]

Clue:

If US Airways is successful in converting the airline to a Network/LCC Hybrid Carrier, this action will create profound changes for the entire industry. I have viewed the power point presentation provided by the company and I believe from a business perspective, the plan could be compelling.

Jack Stephan's comment to the Pittsburgh Tribune-Review that "this is going to be a total makeover," is accurate, with negotiations set to begin shortly, after the RJ scope LOA is complete.

In an interview, David Bronner told the Charlotte Observer he stressed to pilots that the highest priority for US Airways is to become profitable, which would open a host of new opportunities. "I said `You've got to help me - you know where we're screwing up,'" Bronner said. "I want to win," he added. "I want them to win. I don't want us to be the steel industry (and) I don't expect them all to work for Wal-Mart salaries. But when we're in a crisis, when we're in the middle of the desert, we have to get to the other side."

Bronner also commented on several other future scenarios for US Airways.

He said it's too early to tell whether the airline will sell assets after retaining investment banker Morgan Stanley to seek offers. But to maintain credibility with Morgan Stanley and bidders, it's important to make a decision within a few months, he said. "If you stay in the red, you sell assets," he said. "Once you get in the black, it's a new game."

Retirement Systems of Alabama, which gained control of the airline during its bankruptcy, won't put more money into US Airways now. "You never want to throw good money after bad ... to save something that's bleeding," he said. But if the airline turns profitable, it could invest in acquiring more assets. Bronner emphasized that he is not a typical corporate investor who is "in to get anything and everything we can." Pilots said they were impressed by Bronner's assertions that he invests for the long term and is focused more on saving middle-class jobs than on quick profits. "My interest is more in the people and in sustaining the airline in this environment," he said.

Moreover, the eight point business plan, described in detail to ALPA, includes:

The plan calls for efforts to:

-- Lower the airline's costs, while keeping the best elements of its existing business model.

-- Leverage the airline's existing strengths in the northeast, where it dominates. I understand, this could include acquiring used B767-200s on the cheap, which will be available shortly, that will be used to expand Philadelphia transatlantic service to Star Alliance hubs such as Copenhagen, Oslo, and Vienna; as well as service to Birmingham. In addition, I understand Lufthansa wants the company to add significant service to JFK airport, which could become a common flight crew domicle LGA.

-- Increase productivity to the same standards of low-cost carriers.

-- Provide consumers with new amenities they are willing to pay for, such as e-mail service and meals.

-- Implement simple, restriction-free pricing that reduces fare disparities.

-- Market directly to consumers, through vehicles such as the Internet, to reduce the airline's dependency on middlemen to sell tickets. For example, one of the major cost cutting initiatives is to get more customers to book on our web site. Why? According to the company, the sost of ticket distribution is:

Travel agent - $41.54
US Airways Reservations - $42.16 (there is a customer service component included)
Online Agents - $21.12
US Airways.com - $16.24

-- Reclaim East Coast market share lost to low-cost carriers.

-- Expand the airline's reach into the West, which has a lot to do with the new agreement between the ACAA and US Airways on Pittsburgh operations.

In conclusion, I believe it is very compelling that ALPA's resolution to engage in discussions to further restructure the airline, which passed by acclamation and a 12-0 vote, with the hardliners in support of the action is significant.

Respectfully,

USA320Pilot

 

[BoeingBoy]

USA320Pilot said -

"the sost of ticket distribution is:

US Airways.com - $16.24"


Now I certainly don't know what it costs LUV or JBLU to sell a ticket over their website, but this sure seems high to me. A little math show that our lowest cost distribution channel results in a cost of over 2 cents per revenue passenger mile or about 14% of the revenue we get per passenger mile.

In other words, if every passenger bought their ticket through the website, 14% of the revenue would be consumed by just selling the ticket, leaving only 86% of the revenue to cover everything else involved in getting that passenger from point A to point B.

Jim

 

[shaka]

When you say expanded service to the West does that mean Pitt will get increased service??

Thanks

 

[diogenes]

Let me see if Ive got this right.

We gave, twice, for a plan to restore the cfompany.

And now, they want us to PAY to see the plan?

 

[USA320Pilot]

Shaka:

Shaka asked: "When you say expanded service to the West does that mean Pitt will get increased service?"

USA320Pilot answers: That depends on what the ACAA ultimately offers, which may not be enough anyway, dependent upon what happens to another carrier who is restructuring and how fast US Airways and its unions implement the "Going Forward Plan."

Respectfully,

USA320Pilot

 

[USFlyer]

"the sost of ticket distribution is:

US Airways.com - $16.24"

This figure probably factors in cost of hardware, IT staff, etc., none of which is really all that cheap (even if outsourced).

 

[BoeingBoy]

USFlyer,

I suspect you're right. It just seems odd that 14 cents of every dollar in revenue is spent just selling the ticket (at absolute best) while the other 86 cents has to cover everything else involved in providing the transportation.

Jim

 

[ClueByFour]

You know, assuming there is a plan, it strikes me that the question from the unions should be:

Why can't it be implemented with the massive amount of concessions already given.

Morever, why was almost a year and a half wasted since the bankruptcy process to come to this point?

Gee--RJs and point to point flying. Sounds a lot like what UA (existing large RJ feed + ted) and DL (existing large RJ feed + Song) have already implemented.

PIT will be CVG. CCY cannot afford to toss a hub with the yield premium that PIT has, especially in light of what is about to happen to PHL yields. In addition, it's not a coincidence that PIT-FRA has never gone away and that PIT-LGW is back. MDA won't fly without a hub--PHL is not suitable, CLT is too far south and has less O&D that PIT does.

Bronner is playing ALPA, since he knows that the mainline pilots are scared to death of losing the seat. If anyone tells you otherwise, I've got a bridge you might be interested in.

 

[diogenes]

You know, assuming there is a plan, it strikes me that the question from the unions should be:

Why can't it be implemented with the massive amount of concessions already given.

Morever, why was almost a year and a half wasted since the bankruptcy process to come to this point?

Gee--RJs and point to point flying. Sounds a lot like what UA (existing large RJ feed + ted) and DL (existing large RJ feed + Song) have already implemented.

PIT will be CVG. CCY cannot afford to toss a hub with the yield premium that PIT has, especially in light of what is about to happen to PHL yields. In addition, it's not a coincidence that PIT-FRA has never gone away and that PIT-LGW is back. MDA won't fly without a hub--PHL is not suitable, CLT is too far south and has less O&D that PIT does.

Bronner is playing ALPA, since he knows that the mainline pilots are scared to death of losing the seat. If anyone tells you otherwise, I've got a bridge you might be interested in.

Cx4

Step right up and get your kewpie doll!

Note to union guys, especially ALPA:

WE ARE NOT IN BK!

There is NOTHING in any contract to prevent the activities described in the plan going forward (why does that catchy little slogan remind me of Mao's Great Leap Forward - facism is as facism does, I guess!).

Tell the Palace to get on with it already.

At worst, make ANY addidtional concessions contigent on a totally objective benchmark, with concessions receding as the situation improves.

Additional note to ALPA:

You'd be wise to let your people vote, instead of a lame duck MEC making a unilateral decision. Isn't the word democracy SOMEWHERE in your constitution?
The current MEC recusing themselves is the only honorable course of action.

 

[Dizel8]

"I don't expect them all to work for Wal-Mart salaries."

Just most of them! Good luck guys and gals, this "hybrid plan" sounds a lot like the keyword of the '90's: Synergies.

Besides, is this the going forward or bendover plan.

The sad thing is, if you all work for free, they would still find a way to blame it on the U employees!

 

[autofixer]

How is UAIR going to run a hybrid airline, when they cannot even run a straight forward hub and spoke system? What was Metrojet anyway?

"Going Forward Plan"? Forward to what? That is truely meaningless gobydygook drival!

 

[PITbull]

USA320Pilot,

Bronner said he was more interested on saving middle-class jobs than a profit?

Then someone please tell me why in hell our 5 airbuses are sitting in his back yard
to be worked on by third party vendors?????????????????

Tell me why this nuckle head is outsourcing our work to the affiliates?????

Never mind, I'll ask him myself. :angry:

 

[USA320Pilot]

Clue:

Clue said: "PIT will be CVG."

USA320Pilot comments: Clue, that's possible, but I understand it's not the current plan. PIT could be more like DCA. Again, public reports indicate the plan is to expand the airline's reach into the West." Last Friday the Charlotte Observer said that if the airline (US Airways) turns profitable, it could invest in acquiring more assets.

As I said before, once US Airways stabilizes itself the company fully intends to be involved in a corporate transaction. This is now the fourth time the news media has discussed David Bronner's comments about acquiring assets for US Airways. Moreover, PIT's assets could be moved westward.

"It was refreshing to have a guy (David Bronner) speak of the challenges we face but have a message of hope at the same time," said Bill Pollock, ALPA MEC Chairman. "The hope is (to) transform US Airways into a carrier that can compete and profit," he said.

Regards,

USA320Pilot