US Airways Stand Alone Strategic Analysis/Business Plan

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USA320Pilot

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Just one more point...The EMB-170 & EMB-175 are expected to have a break even load factor of 50%, which is significant.

These RJs will look and feel like a mainline aircraft and will be a competitive advantage, which will provide point-to-point profits and bring in more feed to the mainline network.

At this point, no other airline has this benefit and even B6 must have a 60% load factor to break even with its EMB-190, which will not have meaningful deployment for four years.

Best regards,

Chip
 
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Itrade said: “Why not take some of those pretty new ERJ-170s and fly them from LGA to FLL or LGA to MCO and BOS to FLL and BOS to TPA???â€

Chip answers: Last week I had the opportunity to talk with Dave Siegel and US will use the EMB-170 as a weapon and you will see this aircraft aggressively deployed. Management is keeping its plans close to its vest, but I bet you’ll see the aircraft in a market like LGA to MCI.

PineyBob said: “I have what I think is a better idea going forward. since the 757 fleet is aged and near end of life, why not rip every F/C seat out, jam as many seats in as possible and fly point to point to every city in FL from DCA, LGA, BOS, ACY and run Spirit out of business.â€

Chip answers: Piney, the company is converting its B757 seat configuration to what is called “high density†seating. First class will be reduced from 24 to 8 seats and coach expanded to 193 seats for a total capacity of 201 seats. The 31 “high density†B757s will operate into markets up against DL’s Song and low cost operators in leisure markets. Expect more news on this program shortly.

A320Driver said: “I have a new idea (NOT). Why not replace 737s with A319/320s, I mean, wasn't that the plan to begin with? Why add another fleet type when you don't have to. Also, I thought we got the Airbus at a bargain price. We had options for up to 400 A/C, so why are we talking "Jungle Jets" for the mainline?â€

Chip answers: A320, the EMB aircraft reduce US Group fleet types with the Dornier 328, Dash 8, and B737 leaving the property potentially leaving the property. In addition, the A318 economics do not support such a move because it weighs about 30,000 pounds more than the EMB-190/195. The increased weight dramatically increases the fuel burn rate and operationing cost. What’s important to note is the EMB-190 is larger than the F100 and the EMB-195 is larger than the DC9 – thus these are mainline type aircraft in size and capability. The two Embraer aircraft are built by a company who produces RJs, but these aircraft are not RJs and will be a good addition to the fleet.

People need to shift their paradigm on this aircraft and recognize it’s a mainline type aircraft and not as you say a "Jungle Jet".

DCAflyer said: 465 Express small jets, 129 Mainline small jets, 150 Mainline "large" jets, almost half of which will be A-319's.

Chip said: The ALPA contract says anything larger than a 51-70 seat aircraft with a maximum gross weight greater than 75,000 pounds, except the EMB-170, EMB-175, or the CRJ-700, will be flown on the mainline (This is why the CRJ-705 Variant is not permitted to be operated except on the mainline). The EMB-190/195 aircraft can only be operated on the mainline and is a mainline type aircraft similar in scope to other 100-seat aircraft, e.g. the F100 and DC9. It’s unit costs are much lower than the A318 or B717 and it has significant commonality with the AMB-170/175.

From a pilot perspective before the EMB-190/195 can be deployed there needs to be a pay rate established, however, with the sating capacity the EMB-190 will put pressure on F/A because it can be flown with only 2 F/A’s versus the B737 that requires 3.

DCAFlyer asked: "Question for Chip: Why does U need a Buenos Aires office if we are only codesharing in SA? By this logic, won't we need offices in Hawaii and Australia too, among other places?"

Chip answers: DCAFlyer, I will not get into this, but your right and you know my thoughts on potential corporate expansion/transactions. The analysis above is based on a static company, which I do not believe will occur. US’ long-term plan is much more involved and there will be other plans announced as time goes on.

Mbmbbost said: "Along those lines, I would love to see BOS/LAX or BOS/SFO routes."

Chip comments: US is in negotiation with MWAA to build an additional terminal at DCA and the U.S. House has approved legislation for more beyond perimeter flights from DCA. US would like to operate A319s to both LAX & SFO from DCA. At LGA, the company is in discussion with the NYPA to build a large terminal where the old TWA terminal is located and connect the two terminals with a walkway at the current gate 1. The airline is negotiating for new long-range LGA service to SJU, LGA & SFO. In BOS, the company is going to adjust the terminal and is in negotiation to do so, but I do not know what the specific plans are. The company is going to expand BOS service and in my opinion, you could see “high density†B757 service to Florida and A319 service to LAX & SFO.

Best regards,

Chip
 
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Pacemaker:

Pacemaker, I agree with you that US will be involved in a "corporate transaction" and from a macroeconomic perspective this industry must consolidate. Leo Mullin''s comments about to many hubs is correct and the Bush Administration is for consolidation and natural market forces.

We should know more in less than a year, but unless somebody comes out of the woods with an offer that cannot be refused, I suspect US could be a survivor in the potential industry consolidation.

Best regards,

Chip
 

deelmakur

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Bronner only gets a payday if the company refloats, or is bought. Since it still has strategic assets, a sale probably gets him a much better one. Meanwhile, the recovery appears to be predicated on greater use of PHL and Express type operations, arguably the weakest areas of the whole enterprise. On the other hand trolling for new business in bankrupt Argentina is surely creative.
 
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Usairboy:

That''s the first I heard of the 185-seat coach class cabin, however, your point about staffing is valid. If the company wants to keep the 3 F/A staffing model versus 4, then they could configure the aircraft with another row of coach class seats and increase the coach class cabin to 191 seats with 8 in first class.

This would provide six additional leisure market seats to sell. Unfortunately from a rank-and-file union perspective, the company is trying to reduce headcount to cut expenses.

Chip
 

USAirBoyA330

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Chip:

I confimed this twice with Inflight and the 757''s will have a TOTAL of 193 seats. 8 F/C and 185 in the Main Cabin. The company is not about to hit the 201 mark and put another F/A on the aircraft. That would mean recalls and they are not about to give any good news on that front.
 

diogenes

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On paper, the EMB may look pretty good.

I have two concerns.

1. Operational reliability - anyone remember the F100''s? It doesn''t do a lot of good to buy an a/c that has has a great acquisition price, but is a hangar queen. It costs a bunch to fix them, and it costs a bunch to strand passengers. From the chatter, the EMB''s leave something to be desired in this department.

2. Capabilities - I don''t give a damn what it says on paper - can the a/c take off with full pax, cx., and fuel, and traverse its route? Or, do we have to leave stuff behind, fuel not being an option? I''ve already seen this on the EMB145''s. You get a string of bad weather, and a bunch of stuff gets left behind in a hurry. Will the holds accomodate the bags for a full pax load, AND freight shipments, or does that get left behind too? This is a major problem - the call center is booking freight on RJ''s that can''t possibly accomodate them.

Just some stuff to think about.

My guess is the Palace is so eager to use these a/c to bust scope, and hence labor, they don''t really care about operating the airline.
 

ITRADE

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On 7/1/2003 6:27:07 PM diogenes wrote:


My guess is the Palace is so eager to use these a/c to bust scope, and hence labor, they don''t really care about operating the airline.

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How is this busting scope when ALPA specifically OKayed it.
 

ITRADE

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On 7/1/2003 7:28:48 PM diogenes wrote:

Hi, ITRADE,

I looked a little further back, historically. U ALPA''s scope, pre-9/11, prohibited the RJ activities now occurring at U (the wisdom of that is whole ''nother discussion). While that scope was in place, "just call me Dave" himself was quoted in a PlaneBusiness discussion as saying the EMB 140 and 145''s just rolling off the line were "designed to be scopebusters."


Thanks for the drama, but you still don''t point how how they''ve violated scope. The ERJ 140s and 145s were perfectly within scope of US''s first RJ deal - the issue was only quantity. The latest RJ deal also includes provisions for the 70 seat RJs - ERJ-170s and CRJ-700s.

Instead of being left in the dust every single time as has happened with other issues, US finally decided that it could not afford to be dusted again and did the large RJ deal. ALPA saw the reality of this and agreed to the deal.

So, what was US to do? Run 60% empty mainline aircraft? Run 11x Dash-8s? Other airlines have been freely deploying their larger RJs left and right around US''s home territory (Northwest, Delta, and American). Again, rather than be hosed and be retroactive as US has traditionally been, US decided to flight the fight on the RJ issue.
 

diogenes

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Hi, ITRADE,

I looked a little further back, historically. U ALPA''s scope, pre-9/11, prohibited the RJ activities now occurring at U (the wisdom of that is whole ''nother discussion). While that scope was in place, "just call me Dave" himself was quoted in a PlaneBusiness discussion as saying the EMB 140 and 145''s just rolling off the line were "designed to be scopebusters."

No one can deny mainline a/c and personnel are being replaced with express a/c and personnel. I am seeing the day to day consequences of this decision, and it''s not pretty. Express does not ''play well'' with mainline, either in the hubs (if freight or baggage fails to make an express flight due to lack of space/weight allowance, it sits at express, even if the next flight to the destination is mainline) or at the out stations. If an express flight rolls up with a maintainence situation, we station personnel are the last to know. Mesa is so anal, the pilot calls his dispatcher on his cell phone, who in turn trys to contact our local contract mechs. The only way we find out is when we are ready to board, they may finally deign to advise us. Too bad we knew the contract mechs were out on the FBO ramp, and could have run them down, HAD WE KNOWN TO ASK FOR THEM! TRADE, this s**t goes on ALL the time, and it''s killing us.

I know what I''m about to say sounds dreadful, and most outsiders would accuse me of being a drama queen, lazy, or having a very advanced victim''s complex. But I''ve worked for a superlative airline, and I know the difference. U management, from the PI/PSA mergers to right now, GETS OFF ON EMPLOYEE MISERY. I enjoy denying them that satisfaction as I get on with my life.
 

diogenes

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Hello, ITRADE, and you''re certainly welcome.

I don''t believe I posted U is violating scope; I said (actually, Dave said) they''re busting it. A difference with distinction. Violation means breaking existing rules; busting is throwing the rules out the window and making new ones. Sure, we agreed to it, with the Chapt. 7 gun to our heads. And management played all of the unions like a Stradivarius - they had to love the "screw your buddy" game.

Way back before any of this started, and way before 9/11, I argued we should bring small a/c, a la the F28''s,back onto the property. The ALPA payscales for these a/c were STILL on the books. We all can point some fingers at ALPA, but one finger can be pointed at managmement. Had they brought an F28 type a/c onto mainline in 1999, there is not one thing ALPA could have done to stop it.

I fully believe the reason we didn''t was managment had no interest in these a/c at mainline. Sooner or later, and 9/11 just accelerated the game plan, U management was going to vendor out a bunch of mainline flying.
 

cat 111

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Usair has always wanted to be a regional airline. Why not get rid of all the mainline a/c and just add r/j''s just like the company wants.They have United for the long hall domestic routes and Luthansa for the int''l routes. Why have a domestic route? Is this the game plan ????
 
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USA320Pilot

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Up to this point, management has not violated the ALPA scope clause. The only US Airways comment that indicated a potential scope violation was the company’s public statements of their desire to operate the CRJ-705 Variant. However, in a letter dated April 28, that US executive vice president of labor relations Jerry Glass sent to ALPA MEC Chairman Captain Bill Pollock, the company admitted the CRJ-705 violated the ALPA scope clause and the aircraft will not be deployed without ALPA consent.

Then Roy Freundlich, ALPA Communications Committee Chairman said on the June 26 code-a-phone, "Management updated the MEC on US Airways’ current SJ operations and reviewed the Company’s recent SJ aircraft order. Management asked the MEC to consider several RJ issues: First, to approve Republic Airlines as a Jets For Jobs carrier. Republic Airlines and Chautauqua Airlines are operated by the same parent company. The Chautauqua pilots, who are represented by IBT, conditionally approved a Jets For Jobs agreement, but it was not accepted by Chautauqua or US Airways management. Second, the Company is asking the MEC to approve the utilization of the 75-seat CRJ-900 Series 705, one of the aircraft recently ordered by management, which exceeds the maximum small jet weight limit restrictions of the July 2002 Restructuring Agreement. MEC members responded to both of management’s requests by stating that until management begins to properly administer the Contract in good faith and begins to engage in sincere efforts to repair the financial and labor relations damage that has resulted from their many insincere actions, MEC members will not consider additional requests for contractual flexibility."

Best regards,

Chip