US Airways Dividend Miles (Pre-FlightFund Merger) - Siegel says US to "restructure", take loan guarantees

http://www.thestreet.com/_yahoo/funds/ericgillin/10018180.html

QUOTE FROM ATRICLE:

"The results we are announcing today are not only extremely disappointing, they are unacceptable," said President and CEO David Siegel. To lower costs, Siegel said the company would restructure and seek help from the federal government -- applying for a loan from the Air Transportation Stabilization Board. US Airways would be the second major carrier, after America West, to apply for the federal loan."

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IMO, good money after bad... Does "restructure" mean file CH 11? Does CH 11 allow "restructuring" labor contracts? I don't see where US is worth more whole than broken up, either way...

Or, more important to me:

"Siegel said the plan would include greater use of lower-cost regional jets and an alliance with other U.S. and international carriers. "

Although I won't hold my breath either.

They can have all the "lower-cost regional jets" they want, but if they continue to fly them at higher wages and lower productivity than the competition, they oughta do the taxpayer a favor and NOT delay the inevitable by taking the loan guarantees...

I think UAL will be just around the corner in also seeking that bailout money. UAL Q1 results due out tomorrow...probably not very
good news.

duxfan, "lower cost" refers to labor cost at the regional airline, not the aircraft itself.

Now that US has approval from the pilot association to add 70 additional RJ's. Does this mean the Express subsidiaries will take over more mainline routes with their crews or will mainline pilots now operate the RJ's? Will the additional planes be pained with US livery or US Express Livery?

If US's goal is to reduce the labor cost to turn a profit does that imply that fares will not change when equipment moves from B737 to RJ? I do not understand how replacing mainline eqp with RJ's will alone save US from financial death. I do understand they may be less costly to operate IF the crew is paid at Express scale and not mainline and that there is one or two less FA's than on mainline jet.

However, let me express, no pun intended, thoughts from a pax perspective. If US becomes mostly an RJ airline flying former mainline routes with a smaller craft, all coach (cramped) seating where my carryon no longer is a "carryon" but a "leave by the door" then I will probably move to an airline that still flys larger jets. What differentiating factor will exist to make me want to stay with US rather than move to the larger competition?

Beyond offering non-stop service there is nothing left. Second to non-stop service, the upgrades to F and FF aliance are major reasons to be loyal to one carrier. I can't see how changing the mix of craft will alone save US.

I have come to accept that F no longer means a nice meal (nice = service, real glass/china, sundaes, etc) and now means slightly bigger seat with free wine/beer/liquor and better chip/pretzel selection that Y. Oh and I still have the chance to check in in the F line at the airport. (Major time saver these days)

I think what is going to happen is a complete change in the level of service US offers which will drive away business. I suggest that if this is truely US's plan then they need to find ways to make the RJ experience better than the rest since RJ's will be more predominant in their fleet. I still want to understand what routes will convert to RJ.

If RJ's create more non-stop routes between non-hubs but strategic business travler markets or allow greater frequency between outstations and hubs then I say US has a chance. For example, US needs to play offense NOW, heck they could even play defense and have a chance to continue. Instead they are playing dead.

SW has proved over time that you can fly point to point and be profitable. Now I'm certainly not an advocate for US resembling SW but with RJ's (all coach) and no food what would be the difference?

I am only focused on my origin city as that impacts my travel plans. Here are some suggestions for US to take on the competition.

Why not attack the competition at their own hubs? US could run a few frequencies a day.

ORF-ORD (currently RJ via UA and AA)
ORF-ATL
ORF-STL
ORF-DFW

AA and UA operate RJ's very successfully to ORD from ORF and the fare never went down when mainline left. Was over $800 R/T on UA metal and then when they left and UX took over route, fare did NOT go down. So that is now a profitable (or more so) route and US could definetly compete.

That is just one example. I'm sure there are others. I love the employees of US. They are dedicated, loyal, and hardworking people. I just think that US HQ is out of touch with reality and the business traveler's needs and wants. Since the business traveler is the most profitable I suggest they ask a few of us how to make US more competitive. We could tell them a few things, trust us. We have lots ot time to think about it as we are on the plane quite a bit of time each week ( or sitting in the airport waiting for a plane).

Thanks for listening.

James

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US-CP; UA PE; Hilton Gold VIP; Crowne Plaza Gold

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by US1@ORF:
...
AA and UA operate RJ's very successfully to ORD from ORF ...
</font>

Do you see UA or AA flying RJs to PHL or PIT from ORF? No. The reason they fly the RJs successfully to ORD is because that is a hub for them both.

In an ideal scenario (ie., with money to expand), I would rather see US fly an RJ from ORF to PHL and take the displaced mainline A319 and fly it from PHL to somewhere like PDX or another long route with good yields.



[This message has been edited by Arrzee (edited 04-20-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by US1@ORF:
Why not attack the competition at their own hubs? US could run a few frequencies a day.

ORF-ORD (currently RJ via UA and AA)
ORF-ATL
ORF-STL
ORF-DFW
</font>

Because attacking fortress superhubs would be nothing short of suicide. Airlines, especially Delta and American, sit back at Atlanta and Dallas relatively quietly until any non-incumbent upstart is fool enough to try something wholly competitive. DL/AA will then drop fares to a [possibly illegal/anticompetitive] low level, flood the market with seats, and sit back and wait for the competitor to sufficate while choking on its own stupidity. At least US knows better than that.

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Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
~ConcordeBoy

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by US1@ORF:
If US becomes mostly an RJ airline flying former mainline routes with a smaller craft, all coach (cramped) seating where my carryon no longer is a "carryon" but a "leave by the door" then I will probably move to an airline that still flys larger jets. What differentiating factor will exist to make me want to stay with US rather than move to the larger competition? </font>


Quite simply, there is none. But in your situation, where do you expect to go? CO has gone mostly RJ to/from ORF. DL still has big jets, but is starting to put RJ's in the market. AA has big jets to DFW, little ones to ORD, NW has DC9's to DTW. The problem is that your home market just became a low yield, or even unprofitable station for a lot of airlines. Let me give you an example:

Say I need to fly from CLE to ORF tomorrow. I can fly on a CO nonstop (on an RJ), or connect at BWI on WN. $1162 on CO vs. a walkup fare of $267.50 on WN. What would you do? A year a go this wasn't a problem, but now it is. With their bloated cost structures and their determination to gouge the last minute traveller, the high-cost majors are trying to stick with their business plan by moving equipment to the locations in can generate the highest yields.

I fly NW more than ever, because CO has put the regional jets into too many major markets from here in CLE. For example CLE-DFW, 1019 miles, 3:09 flying time on a 50 seater! You might want to look at NW as well, depending on where you fly. Those DC-9's might be older, but they are full size, and have new interiors. Besides, you probably wouldn't mind seeing an old US DC-9 back at ORF if it meant keeping the RJ's out, right? http://www.flyertalk.com/forum/wink.gif good luck!

Yeah, I noticed that flight between DFW and CLE. I wanted to get there as quick as possible in the morning from DFW, and noticed that the 7:30am flight is an RJ all the way up to CLE. I'm not a morning person to begin with and don't think I can handle three hours in a RJ, let alone at 7 in the morning!

Of course I don't know how Continental's RJs are. If they are like USAirways, then no thanks. If they are like Northwest's Avro's (which are very comfortable IMHO) it would be ok.

They are virtually exactly like COs.. I flew them several times last year to Cincinnati from CLT..

yeah, they're just like chataquas RJ's. 1-2 seating, way too small for 3+ hours.

the only reason NW's RJ's are so nice is the pilot agreement. they are restricted to 69 seats or less, so NW configured the plane with FC and a total of 69 seats. but it makes the ride to DTW much nicer than a CO RJ or a Mesaba SF340!

US still has better routes and schedules along the East Coast though. It is hard to travel on one day trips to many places within the East Coast on another airline.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by richard:
US still has better routes and schedules along the East Coast though. It is hard to travel on one day trips to many places within the East Coast on another airline.</font>

very true. thats a strength US doesn't make enough out of. i can't get thru EWR or DTW to the est coast and get back in a day.