America West FlightFund (Discontinued Program) - SURVEY: Who you gonna fly if HP bites the dust?

Anybody making alternative plans? What are your options?

Another question: will Continental still recognize HP Elites if HP is no more? Not that they are treated with much respect today.

HP is not going to go out of business completely. There are routes that America West flys that will have someone else jumping in on. But there will be routes that are not continued.

Let's face it, for a metro area the size of Phoenix, it has excellent air service. You can get to nearly every city in America non-stop from Phoenix, which is not all that common when you look at the top 10 or 20 largest metro areas.

You will see a competitor moving in on routes that generate good revenue. Continental and Northwest are the most vulnerable because they use America West code-shares out west and without America West they'll have little coverage. In the long run I'd expect Continental to jump in and grab the few profitable routes, and increase service to the lower west coast via Houston.

Ssssssssorry, ssssssnake, HP's not going anywhere. And you won't be able to roll up my HP stock and smoke it, but maybe avek can set you up with some TWA paper.

HP will go out of business. It's a matter of when. They are losing so much money and they have no viable business.

They currently are running 90% load factors and bleeding $1 million per day. Why? Because they do not have a real business.

What burns me up is that they ruin it for other airlines who could be financially viable. Like TW and Pan Am before them, on their last legs they fly full planes with pax glad to pay $200 for transcon trips, so that other airlines who need profits cannot compete.

This bailout is a very, very bad thing for the airline industry and for all of us frequent travellers.

The $200 transcon is Southwest's gimmick, and they make more money than anyone. It's all about revenue management.

Tell you what, richard, you buy some UAL stock and I'll hold my HP stock. After six months, let's see who's doing better. Deal?

Ah, well, I understand. Barring any more terrorist attacks, just watch for HP to post a profit in Q2 -- Q3 at the latest.

You will probably get there faster on GreyHound - - - -

------------------
"A Southwest line never gets longer, It only gets wider"

[This message has been edited by dcwcce (edited 12-30-2001).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Richard writes:

This bailout is a very, very bad thing for the airline industry and for all of us frequent travellers. </font>

What's good for the industry and what's good for frequent flyers ain't one and the same.

If/when HP goes belly-up competition goes down-prices go up. You can bet on it! http://www.flyertalk.com/forum/rolleyes.gif

motnot wrote:

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">The $200 transcon is Southwest's gimmick, and they make more money than anyone. It's all about revenue management.</font>

Respectfully, it's not about revenue, it's about profits. That is why HP is not going to survive, they have no ability to generate a profit. In the long run, they will at best break even and usually lose money until they cannot go on.

I would rather have a handful of financially strong airlines (e.g. making money) rather than 8 or 10 airlines that are bleeding red ink as we have now.

isn't the real question: "If HP bites the dust, who's going to operate out of the 45 gates they own in PHX?"

I think the answer to your question lies in what happens at PHX more than anything else.

It could be one carrier come in a swoop up 30 - 40 gates, OR you could get a get 3 - 5 carriers get 9 - 15 gates each...

after all of that is sorted out, then you begin to look at "who's giving me the best deal" in terms of Elite status, perks, mileage transfers, Club Memberships, etc...

On a related note...


January 3, 2002 - Wall Street Journal Capital Report
The Risks Of Aiding Airlines

ONE OF THE FIRST THINGS Congress did after Sept. 11 was to put the federal government in charge of restructuring the deregulated U.S. airline industry.

That's not what Congress said, but it's the result. And because of the obvious risk to the economy and the skill of airline-industry lobbyists, Congress acted so quickly that it risks exacerbating the industry's pre-existing problems.

With White House encouragement, Congress gave the industry $5 billion outright in easy-to-justify compensation for harm done when the government grounded commercial airplanes. But overriding objections from some in the administration, Congress also offered $10 billion in government loan guarantees and created a three-member board to dole them out.

This board -- one seat each for the Department of Transportation, the Treasury and the Federal Reserve -- decides which airline shall live and which shall die.

Congress gave the board a set of wonderfully contradictory precepts. Approve loan guarantees only for airlines for which "credit is not reasonably available," Congress said. That can be stretched to make nearly any airline eligible. But, Congress added, only approve those loans that are "prudently incurred" and "a necessary part of maintaining a safe, efficient and viable commercial aviation system." That can be used to deny almost any application.

The board's written decisions will focus on narrow financial issues, but it can't avoid the bigger picture. "The whole spirit of deregulation was that the government shouldn't pick winners and losers. But that's what they're now engaged in doing," says economist Alfred E. Kahn, the architect of airline deregulation. "Let's not pretend otherwise."

THE PROBLEM IS that the loan-guarantee board lacks the tools and expertise to do the job right -- that is, figuring out how to ensure vigorous competition, financially strong air carriers and safe air travel. But it does have enough resources do it wrong.

The airline industry was on the verge of wrenching change before Sept. 11. With competition from upstart, low-cost carriers, some airlines were going to fail and some well-paid workers were going to be forced to choose between pay cuts or layoffs. That was the point of deregulation.

The logic is to allow the failure of airlines that were in so much trouble before Sept. 11 that they would have failed anyhow, while saving those troubled airlines that would have survived if not for Sept. 11.

But the board's first decision shows how hard it is to apply that distinction in practice. America West Airlines, viewed in the industry before Sept. 11 as a likely candidate for failure, asked the government to guarantee $380 million of a $445 million loan led by Citibank. It's clear how risky bankers think this loan is: Citibank is on the hook for only $4.5 million.

This would have been an easy application to reject. The Transportation Department, eager as always to help airlines, last week voted to okay it. The Treasury voted to reject it, implicitly arguing that America West was too close to a bankruptcy filing to justify government aid.

Fed Gov. Edward Gramlich sided with the airline, casting the deciding vote, as he probably will do with some future applicants. But even the majority acknowledged a "significant risk" that the airline might go under anyhow. And it did set some stiff conditions, including a demand that America West give the government the equivalent of a 33% stake. The airline, which was unprofitable before Sept. 11 and is now losing $1 million a day, says it can live with that.

Analysts at Merrill Lynch & Co. drew a quick lesson: "Given that most major carriers are better off financially than America West," it advised clients, "we think it very unlikely that other carriers who go down the loan-guarantee path will be rejected."

THAT MAY BE PREMATURE. Congressional pressure to approve each airline's application will be strong. But the White House isn't calling the shots; that's clear from administration appointees' split on the America West case. And Fed governors have substantial political independence.

The $10 billion loan-guarantee kitty protects U.S. travelers from disruptions like those that followed suspension of flights by cash-strapped European airlines Sabena and Swissair last year. That can be viewed as a sensible insurance policy.

A quick rebound in the economy and air travel will allow the loan-guarantee board to avoid hard decisions. If business improves, fewer airlines will seek government aid because of all the accompanying conditions.

But if the board turns away too many applications, it could reduce competition, an especially bad idea on routes where there already is too little of it. And if it approves too many, it will allow the industry to defer the inevitable consolidation and cost-cutting that is necessary for airlines and travelers to prosper. That could lead to even more government intervention in one of the success stories of deregulation.

Write to David Wessel at mailto:capital@wsj.comcapital@wsj.com</A>

***
For more on the loan-guarantee board, see its Web site at www.ustreas.gov/atsb/8 (http://www.ustreas.gov/atsb/8)

***
For the board's America West decision, see www.treas.gov/press/releases/po899.htm9 (http://www.treas.gov/press/releases/po899.htm9)

***
For a relevant speech by David Walker, chief of the General Accounting Office and a non-voiting member of the loan-guarantee board, see www.gao.gov/cghome/iac1128.htm10 (http://www.gao.gov/cghome/iac1128.htm10)

URL - http://interactive.wsj.com/archive/retrieve.cgi?id=SB1010008712590973200.djm

Copyright © 2002 Dow Jones & Company, Inc. All Rights Reserved.