Us Outlines Concessions Request For Pax Union

avek00

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Aug 28, 2002
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US Airways Outlines Concessions Request for Frequent-Fliers’ Union


ARLINGTON, Va., April 1, 2005 -- US Airways Group, Inc. (OTC: UAIRQ) today announced that the Company has submitted a request for concessions to FFOCUS, the union that represents US Airways frequent-fliers.

“There is no fun in doing this, and we take no pleasure in asking our frequent-fliers to make major sacrifices,†said US Airways President and Chief Executive Officer Bruce R. Lakefield. “However, we have come too far and accomplished too much to simply stop the process and not succeed.â€

Among the concessions requested by US Airways are the following:

• The mileage balances of all Dividend Miles members will be reduced by 15.4% immediately upon ratification by FFOCUS. A further 6.2% mileage balance reduction will take place six months after ratification, or on October 31, 2005, whichever comes first.

• Effective June 1, co-payment fee of $25 per segment will apply to Preferred First Class upgrades within North America from discounted fares. Chairman’s Preferred members will be exempt from the co-payment fee.

• Effective June 15, US Airways’ popular In-Flight Café program will be expanded to the First Class cabin on all flights within North America, and to the Main Cabin on Transatlantic flights. Transatlantic Envoy Class customers will receive a complimentary streamlined meal service.

• Effective July 1, a nominal charge will be implemented for all beverage products served in the Main Cabin on domestic flights.

In connection with the concessionary agreement, the Company will implement a frequent-flier mileage-earning plan that will allow its best customers to accrue additional miles based on the Company’s future pre-tax earnings. US Airways frequent-fliers will continue to benefit from many product offerings that are unique among low-cost carriers, including two-class service, international flights to Europe, the Caribbean, Latin America and Canada, service to airports that business travelers prefer, access to a global network via the Star Alliance, an award-winning frequent flyer program and friendly onboard service.

“Once the concessions are implemented, US Airways will be the beauty queen of the airline industry,†said Chris Chiames, US Airways senior vice president of corporate affairs.

The Company anticipates a cost savings of approximately $100 million once the changes are fully implemented. US Airways hopes that it will be able to achieve a consensual agreement with FFOCUS. Should a consensual agreement not be reached, the Company will be required to seek a judicial remedy.

Certain of the statements contained herein should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect the current views of US Airways Group (the "Company") with respect to current events and financial performance. You can identify these statements by forward-looking words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should," and "continue" or similar words. These forward-looking statements may also use different phrases. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the Company to continue as a going concern; the ability of the Company to obtain and maintain any necessary financing for operations and other purposes, whether debtor-in-possession financing or other financing; the ability of the Company to maintain adequate liquidity; the ability of the Company to absorb escalating fuel costs; the Company’s ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted by it from time to time; the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 proceedings; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the ability of the Company to obtain and maintain normal terms with vendors and service providers; the Company’s ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 proceedings on the Company’s liquidity or results of operations; the ability of the Company to operate pursuant to the terms of its financing facilities (particularly the financial covenants); the ability of the Company to fund and execute its Transformation Plan during the Chapter 11 proceedings and in the context of a plan of reorganization and thereafter; the ability of the Company to attract, motivate and/or retain key executives and associates; the ability of the Company to attract and retain customers; the ability of the Company to maintain satisfactory labor relations; demand for transportation in the markets in which the Company operates; economic conditions; labor costs; financing availability and costs; security-related and insurance costs; competitive pressures on pricing (particularly from lower-cost competitors) and on demand (particularly from low-cost carriers and multi-carrier alliances); weather conditions; government legislation and regulation; impact of the continued military activities in Iraq; other acts of war or terrorism; and other risks and uncertainties listed from time to time in the Company’s reports to the SEC. There may be other factors not identified above of which the Company is not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The Company assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of the Company’s various prepetition liabilities, common stock and/or other equity securities. Accordingly, the Company urges that the appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.

This is a press release parody, protected by the First Amendment under Hustler Magazine v. Falwell - it is not to be taken seriously or used for anything other than entertainment purposes.
 
But seriously, I'd still advocate doing away with free travel awards. Take fares down and provide lots of amenities and upgrades in exchange for FFmiles that are either earned or bought.

So the ff would buy a reasonable fare (no need to manage award travel capacity) and use miles to upgrade to first, 'purchase' drinks and meals, maybe even get other priority handling of bags and ground transportation. The only 'status' benefits that would be available without a payment of 'ffm' would be in boarding and timing of upgrades and seat assignments with a class of service purchased with cash or miles. (I guess I'm ignoring potentially confounding tax implications)

Look guys, seriously, the reason for loyalty programs is waning. My participation in Dividend miles since 2001 cannot have possibly been a net positive for U. (It did inspire a couple of purchases and spending decisions on my part based on a sense of obligation and appreciation from me toward U, but not enough to cover the cost of benefits provided to me. I was just a silver until last month.)

Simple coupons could be provided to the costumer at check-in along with a seat assignment or the information could be incoded on your FF card as a back up.

Coach full buffet could be 1000 miles and First class full buffet could be 2500 miles depending on service offered. All costumers at time of booking could be offered 5000 miles for $100 to $150.
 
er, no thanks. I don't find that appealing at all. They can stay out of my business and schmooze somebody else. That sounds like something an IT person would convince a company to do, so the IT firm could make money. Can I please be free from constant huckstering sometime this decade?
 
PineyBob said:
So they send an e-mail that says " Europe Special just for Piney Bob" It picks out 2 cities that I haven't been to and offers me an e-saver type fare along with a kicker, "You've already flown to AMS twice this year fly a third time cna get 10,000 bonus miles. US just pried $500 out of my pocket to make a third trip.
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Bob,

If you mean $500 R/T, that's not such a good idea. Works out to less than 7 cents per mile yield - 6.7 to be exact. Plus the future liability of the extra miles awarded.

Now if you mean $500 O/W ($1000 R/T), that's a different story - US could make a little money on that.

Of course, there's that whole "incremental cost" thing, but ideally US should not sell a ticket at much under the cost of moving the seat. If we do, it just means we have to sell that many more tickets over cost.

For example, WN's introductory fares from PIT to MDW ($29 O/W) works out to 7.25 cents per mile. They're almost breaking even on that.

Jim
 
April Fool's Day is so much fun! So far we have no more award tickets and intrusive sales tactics. Here's my idea:

Merge US Airways, UA, and Southwest. Institute Southwest's one class of service and frequent flyer program, but replace their management team with US Airways and UA management.

For the frequent flyer program integration, replace every 100,000 UA or US miles with one Rapid Rewards ticket.

As an incentive to keep US and UA frequent flyers in the new United Southwest Airways, upgrades will be awarded in the form of going up 5 positions in the check-in queue for those flying 25,000 miles a year; 10 positions for 50,000 flight miles, and 15 positions for 100,000 flights miles. For example, if you flew 60,000 miles last year, and you are #53 to check in, you would still get an A boarding pass (53-10=43, and A is normally 1 to 45).
 
Bob,

The only problem with those low fares is that they don't work with a "rational" fare structure. At the low end of the fares you mentioned - $258 R/T and assuming AMS - the yield is a little over 3 cents. You've got to sell "BloFares" to offset that kind of yield if you want to be profitable.

A rational fare structure should have the lowest fares a little under breakeven with the other fares making it up and adding a profit. Even WN doesn't sell tickets with as low a yield as the lowest fares you mentioned. If they provided PHL-AMS service, their lowest fare would probably be about $448 R/T. Of course, the walk-up coach R/T would probably be under a grand.

As you're fond of saying, WN doesn't have the lowest fare a significant portion of the time. By charging reasonable fares, they get enough passengers without having to offer "loss leader" fares.

In short, if you want to say goodbye to "BloFares" then you have to be prepared to kiss those "anything to bring money in" fares goodbye too.

Jim