US Airways Plans to Cut $1.6 Billion in Annual Costs

[chipmunn]

[FONT face=Times New Roman size=3]I understand the company is threatening to reject 9 additional B757s for which the bondholders have had it up to their eyeballs and are threatening to call Siegel's bluff. If the company rejects those 9 aircraft, the total number in the fleet would fall to 20, I believe, which is typically the magic threshold that all airframers claim is required for enough critical mass to justify a fleet type. If this occurs, it is possible that management could reject all of the B757s.[/FONT][/P]

[FONT face=Times New Roman size=3]In addition, I understand the company is considering adding service from Philadelphia to Dublin, Ireland.[/FONT][/P]

[FONT face=Times New Roman size=3]Chip[/FONT][/P]

 

[chipmunn]

[A href=http://biz.yahoo.com/djus/021022/2005001122_2.html]http://biz.yahoo.com/djus/021022/2005001122_2.html[/A]

 

[Art at ISP]

Chip,

Although I can see the logic of rejecting additional 757's, am I correct in the assumption that the type rating for crew purposes is common with the 767? I thought crews are cross trained so you can fly either or.

Regarding the 757 vs. A321, I understand there are serious performance issues with the A321, as it is somewhat underpowered, and can have trouble flying transcon with heavy loads. From an efficiency standpoint, isn't the 757 a much better performer?

Regarding labor givebacks, I think these are over and done. The company stated yesterday I believe that they would not ask for further concessions. If they did, it would destroy morale completely, which would cause untold new problems.

I remain faithful and loyal to US, as I firmly believe you folks are the best in the business. For us US1's please keep up the good work, and keep doing your best--believe me it is appreciated--at least by us.

 

[UAL777flyer]

It wouldn't at all surprise me to see US get rid of the entire B757 fleet in the short-term and bring in more A321's to replace them over the longer-term. Going to an all-Airbus narrowbody fleet would give them great efficiency in pilot and mechanic training costs, as well as more versatility in how they fleet each of their schedules.

 

[AOG-N-IT]

Well Chip....all the fancy terms and analogies will not make your Economy of Scale produce any of the 4 forces of flight..If we can't get the parts for a given type. Well it may produce one of the forces..Most likely it will be Drag

 

[chipmunn]

UAL777flyer your analysis is correct regarding the A-321s and Airbus holds 3 of the 13 creditor committee positions including chairman of the committee.

Yesterday there was a meeting of the creditors committee known as 341 meeting. The 341 meeting is a meeting where the creditors asked representatives of the company questions relating to the company’s financial affairs.

At the meeting US lead bankruptcy firm Skadden & Arps told the creditors that US already has achieved $1.3 billion in annual savings. But costs targets must be increased to $1.4 billion to $1.6 billion to obtain the loan guarantee due to decreasing industry-wide revenues.

US is hoping the remaining cuts can be obtained from aircraft lessors, but if not they will have to come from another source, probably labor, if the company is going to be able to emerge with access to additional funds.

In the long-term, eliminating the older B-757s in favor of the A-321s makes economic sense. In reagrd to the B-767s, all eleven leases are held by the US Equity Plan Sponsor, the RSA.

Chip

 

[ClueByFour]

Chip,
If all 757 leases were rejected, or even 9 additional leases, how would the resulting hole in lift be filled?

 

[chipmunn]

I rountinely fly the A-321 transcontinental and I do not believe there are serious performance problems with the A-321. The aircraft is somewhat climb limited and the B-757 does perform better, but I believe the issue is one of economics versus performance.[BR][BR]During TWA's last bankruptcy reorganization the airline eliminated its L1011s and replaced them with B767-300ERs (interestingly these aircraft are now being removed from service by AA).[BR][BR]With Airbus having three and labor two of thirteen creditors committee seats, if the creditors who hold the B-757 leases continue to be unwilling to renegotiate the leases, it would not surprise me to see A-321s brought into the fleet to replace the B-757s, similar to what TWA did with their widebody aircraft.[BR][BR]In addition, if RSA remains the Equity Plan Sponsor we could see the A330s replaced by B767-300ERs. [BR][BR]The fleet count could end up with something like this:[BR][BR]A330s - 0[BR]B767-300ERs - 13 (Asiana Airlines aircraft)[BR]B767-200ERs - 11[BR]A-320 family - 152[BR]B737s - 107[BR]Total - 283 [BR][BR]In regard to the Asiana aircraft, I can confirm this is an option because in August Dave Siegel and I specifically discussed this topic. [BR][BR]Chip

 

[chipmunn]

AOG:

The issue is one of lease rates, fllet simplification, and economices of scale, not just maintenance expense.

I do not have all of the financial information to make an analysis, but the options I discussed are possible.

Will it occur, I do not believe anybody truly knows because of all the moving pieces. However, the bottom line is for the company to profitably operate aircraft, regardless of the type.

Chip

 

[AOG-N-IT]

[blockquote]
----------------
On 10/23/2002 11:09:53 AM chipmunn wrote:

UAL777flyer your analysis is correct regarding the A-321s and Airbus holds 3 of the 13 creditor committee positions including chairman of the committee.

Yesterday there was a meeting of the creditors committee known as 341 meeting. The 341 meeting is a meeting where the creditors asked representatives of the company questions relating to the company’s financial affairs.

At the meeting US lead bankruptcy firm Skadden & Arps told the creditors that US already has achieved $1.3 billion in annual savings. But costs targets must be increased to $1.4 billion to $1.6 billion to obtain the loan guarantee due to decreasing industry-wide revenues.

US is hoping the remaining cuts can be obtained from aircraft lessors, but if not they will have to come from another source, probably labor, if the company is going to be able to emerge with access to additional funds.

In the long-term, eliminating the older B-757s in favor of the A-321s makes economic sense. In reagrd to the B-767s, all eleven leases are held by the US Equity Plan Sponsor, the RSA.

Chip



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[/blockquote]
There's a plan Chip!! Ditch a plane that we have damn near unlimited support for...in favor of something that we can't even borrow a part for in the US. The A321 outside of it's limitations in performance...is a nightmare for us. Got any idea how long Acft 167 in PHL has been sitting and waiting for stuff to show up??? I'll bet the awnser is No. The B757 is one of the easiest planes we have to support...and it delivers!! Cost is not about purchase price..it's about ownership. Airbus is screwing us into the tarmac...and we have not done all that's needed either. The Events of Sept 11th..nor the Chapter 11 filing have anything to do we what we have not prepared for during better times. Go ahead and promote the addition of more A321'a and the alike. You will be promoting a quickening of U's potential downfall. Mark my words when one or more of these turds can't be repaired in time to make revenue , and we don't have a 757 to take it's place. You people are either blind or simply crazy!! We have nobody to help us in the US when an A321(Specific) item is needed. WE do not have friends like AA/HP,N7 or CO to ask for a loaner part...or a cup-o-parts like we do with the RB211-535's on our B757's....You have effectively cut your own darn throats by being stylish. This in your humble opinion is going to save money how? I'll eagerly await the corporate party line on this facade.