Washington (PA) Observer-Reporter: US Airways needs to cut more costs

[chipmunn]

[BR][FONT face=Times New Roman size=3]N513AU, can you tell me how you would save the airline with fares at 20-year lows, rising fuel costs, rising security expenses and war-risk insurance premiums, the dramatic fall off in traffic, and the threat of war in the Middle East?[/FONT][BR][BR][FONT face=Times New Roman size=3]In addition, the ATSB requires a 7 percent profit margin with 7 years, which has to be audited by Fitch Rating. Can you explain to me how the company can obtain the loan guarantee per the OMB guidelines in light of the deteriorating fundamentals above?[/FONT][BR][BR][FONT face=Times New Roman size=3]Chip [/FONT]

 

[N513AU]

[blockquote]
----------------
On 10/24/2002 12:40:53 AM chipmunn wrote:


[A href="http://www.observer-reporter.com/338070272038851.bsp"][FONT face="Times New Roman" size=3]http://www.observer-reporter.com/338070272038851.bsp[/FONT][/A][/P]


[FONT face="Times New Roman" size=3](US Airways spokesman Chirs) Chiames said the airline believes the $1.4 billion to $1.6 billion in cuts is what it will need to do to satisfy the government's concerns (for a loan guarnatee). If the airline achieves those cuts, it believes it can turn an annual profit of $500 million. "We've got to demonstrate a profit margin that will be adequate to repay our debt, fund the pension," Chiames said. [/FONT][/P]
----------------
[/blockquote]

Remember how all of us no people said they'd be back around again for more? They're back. Guess what, you'll give up more, throw more of YOUR COWORKERS out on the street, and they'll still come back for more. Pretty soon, the reaper will come for you too. You can sell out everyone else for a little while, but the bell will soon toll for you as well.

How many failed airlines does it take to learn that you can't save an airline by shrinking it? This cutting costs entails shrinking the airline and as it gets smaller, its ability to generate revenue shrinks and cannot be regained.

The end is near for US Airways. We are all doomed. Yes, there will be a few cavemen with their 40+ years of company time, but the writing is on the wall.

Anyone else notice how quiet our friend Dave has been lately. He's looking to THROW YOU OUT ON THE STREET AND STARVE YOUR KIDS.

Still glad I voted no. Too bad the IAM gets more ballots than I do.

 

[chipmunn]

[P][A href=http://www.observer-reporter.com/338070272038851.bsp][FONT face=Times New Roman size=3]http://www.observer-reporter.com/338070272038851.bsp[/FONT][/A][/P]
[P][FONT face=Times New Roman size=3](US Airways spokesman Chirs) Chiames said the airline believes the $1.4 billion to $1.6 billion in cuts is what it will need to do to satisfy the government''s concerns (for a loan guarnatee). If the airline achieves those cuts, it believes it can turn an annual profit of $500 million. We''ve got to demonstrate a profit margin that will be adequate to repay our debt, fund the pension, Chiames said. [/FONT][/P]

 

[Lakeguy67]

Hope, real smart, sell your gates to the competition so they can steal your business. Thank god you are not running this airline. Why dont you as CEO just go chapter 7, then you dont have to worry about anything. This company has played run and hide to long, we gave up FL (Piedmont Shuttle), gave up CA (PSA) and gave up BWI. You are suppose to learn from your mistakes, not recreate them.

 

[cavalier]

N513AU, can you tell me how you would save the airline with fares at 20-year lows, rising fuel costs, rising security expenses and war-risk insurance premiums, the dramatic fall off in traffic, and the threat of war in the Middle East?

In addition, the ATSB requires a 7 percent profit margin with 7 years, which has to be audited by Fitch Rating. Can you explain to me how the company can obtain the loan guarantee per the OMB guidelines in light of the deteriorating fundamentals above?

Chip

Maybe it's not supposed to happen Chip, maybe this is U's fate, nothing more nothing less. The last time the grim weeper came around he took with him large piece of labors soul, now there isn't anything left. It doesn't matter who the bad guy is, it really doesn't because labor has passed demarcation and is demoralized. Dave sees this too and his reason for the weekly praise to the great employees. I don't sit behind a computer making rationalizations on what is needed to save this dying company. No, what I do is go to work everyday and see what reality is in my co-workers soul. They are no longer willing to give Chip. Lots of these people are from Eastern telling me they gave and gave, and to what end. Labor is no longer the answer. I believe if Dave comes back to labor again he will only accelerate destiny. Mark my words here; if a vote is required for another round of cuts, it will NOT happen. Count me as a NO vote also.

 

[Hope777]

We can add to the bottom line several ways. First, lets start to actively find contract work at our stations. Instead of letting go more people with 20+ years, lets use our assets to make money for us. Second, if we are not going to look for more work, lets sell some of our unsed gate space which can fetch us some much needed ca$h. With the November schedule coming out with less flights and the January schedule with even more flight cuts,we dont need the excess gates.

 

[autofixer]

I knew they would come back too...I voted no also. I believe an emotional vote is never the correct one(be it politics or any other matter), and that is all the yes votes could ever be with the information that we were provided. My contention all along was/is, how will U compete with the low cost carriers if our costs are still at 10+ cents per seat mile AFTER the restructuring? U is weak and is STILL a prime target for the WNs of the world. It MAY be true that U can compete with AA or UA or DL, but how about Jet Blue or Air Tran or South West. It is a sad state of affairs, but that does not change the facts.

 

[chipmunn]

Autofixer:

You're correct and some people want to live in denial. Here are a couple of facts:

1. Revenue continues to deteriorate and anticipated alliance revenue may not be obtained if the DL, NW, & CO alliance is approved.

2. In 1990s low cost competitors, who have employees willing to work more for about the same pay than the mature carrier counterparts, have grown from 3 percent in 1990 to 20 percent in 2003 of the CASMs. In addition, analysts believe these competitors could reach 40 percent of the market by the end of the decade.

Meanwhile, the revenue deterioration when combined with the potential loss of code share revenue threatens US Airways loan guarantee, which puts the company at risk of liquidation. Therefore, management has two choices to save the company: seek additional cuts from all stakeholders or downsize to further cut costs, to avoid liquidation.

It's really quite simple, for whatever reason industry-wide revenue is below expectations and the industry is under going enormous pain. In my opinion, labor will continue to give until it reaches a point that there are better options elsewhere, but at this point there are not better options for most employees outside of US Airways. However, I suspect management may not want to go back to labor, but will elect to downsize instead to reduce costs and better match capcity with demand, until which time ticket prices can be raised and revenue returns.

Chip

 

[Black Wind]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 10/24/2002 1049 AM chipmunn wrote:
[P]Autofixer:[BR][BR]You're correct and some people want to live in denial. Here are a couple of facts:[BR][BR][BR]Chip[/P]
[P]----------------[/P]
[P][STRONG]ahhhhh facts from chip[/STRONG][/P][/BLOCKQUOTE]
[P][/P]

 

[N513AU]

[blockquote]
----------------
On 10/24/2002 1:02:01 AM chipmunn wrote:

[FONT face="Times New Roman" size=3]In addition, the ATSB requires a 7 percent profit margin with 7 years, which has to be audited by Fitch Rating. Can you explain to me how the company can obtain the loan guarantee per the OMB guidelines in light of the deteriorating fundamentals above?[/FONT]

[FONT face="Times New Roman" size=3]Chip [/FONT]
----------------
[/blockquote]

Chip, do you have that damn phrase memorized. I think every post you have includes it. We are aware of the conditions of the loan guaruntee. ISN'T THAT WHY I JUST TOOK A MASSIVE PAY CUT? I thought the reason why we needed to vote yes was to get the loan. Now I guess it was just a ploy all along.

Pretty soon, we'll all be unemployed, thanks to the business geniuses that run US Airways. I love my job and I will be angry as hell when I lose it. Not just upset or disappointed but filled with rage and want to see those responsible for making that decision meet the same fate. I know that my career is finished when I get tossed out the door and that I probably will be unable to find a job in aviation again.

 

[Black Wind]

[P]
[BLOCKQUOTE][BR]----------------[BR]
[P][BR]In addition, the ATSB requires a 7 percent profit margin with 7 years, which has to be audited by Fitch Rating. Can you explain to me how the company can obtain the loan guarantee per the OMB guidelines in light of the deteriorating fundamentals above?[BR][BR]Chip [/P]
[P]---------------[BR][BR][STRONG]pay everyone those great MDA wages chip.[/STRONG][/P][/BLOCKQUOTE]
[P][/P]

 

[repeet]

(To quote myself from another thread)

Hey Dave, us workers are under paid and over worked. If you can't figure out how to run a company with an under paid and over worked work force, then we deserve to disappear.

And yes I'll hold a grudge. If you can't afford to pay me my reduced wage, then I too will expect to take my future trips with $99 fares.

 

[chipmunn]

N513AU:

Chip said: In addition, the ATSB requires a 7 percent profit margin with 7 years, which has to be audited by Fitch Rating. Can you explain to me how the company can obtain the loan guarantee per the OMB guidelines in light of the deteriorating fundamentals above?

N513AU said: Chip, do you have that damn phrase memorized. I think every post you have includes it. We are aware of the conditions of the loan guaruntee. ISN'T THAT WHY I JUST TOOK A MASSIVE PAY CUT? I thought the reason why we needed to vote yes was to get the loan. Now I guess it was just a ploy all along.

Chip answers: N513AU, yes the reason we took a pay cut was to meet a portion of the requirement to obtain the federal loan guarantee. The applicants business plan meet the target of a $1.8 to $1.9 billion bottom line change, with $1.2 to $1.3 billion in cost cuts and $600 million in additional revenue.

The additional projected revenue was $600 million per year, with $300 million from additional RJs and $300 million from the UA domestic/Star alliance.

However, the problem is that revenue is not meeting projections for a number of fundamental reasons and the code share revenue may be offset by the DL, NW, & CO alliance, if approved.

In fact, just today Newsweek reported that ailines lost $2.2 billion in the third quarter. Moreover, David Swierenga, chief economist for the Air Transport Association said, It has never been this bad,â€￾ he says. And it’s likely to get worse. Swierenga predicts the airlines could lose $3 billion or more in the fourth quarter-and $9 billion or more for the year. “Obviously, the industry is in precarious health,â€￾ he says.

Therefore, to ensure the loan guarantee is approved management told 341 meeting attendees last Tuesday it would seek an additional $200 to $300 million in cuts primarily from aircraft lessors.

The good news is that the airline already has achieved $1.3 billion in annual savings and management has promised not to seek additional contract concessions from labor, but more furloughs are expected to deal with the industry wide problem of over capacity and to further reduce expenses to obtain the loan guarantee.

Chip