(1) Doing a quick check of the 2008 Brewers schedule, it looks like there are around 36 charter flight segments for the Brewers, and all but 3 are clearly within the normal 717 range. I did not check the Royals schedule, but I would guess there are few if any...it would have to be something like starting a west coast road swing not from home but from an eastern city like CLE.
(2) The Bucks occasionally have road trips which have taken them from BOS to LA (for example) but I believe the M80's had to make a fuel stop already.
(3) As we've seen with the 717 doing some MKE-SEA trips this spring (very close to MKE-SAN and MKE-SEA) it does not appear impossible for them to fly a the 717 nonstop to and from the west cost. Part depends on the load, of course. Certainly charters have no mail or cargo, but I'm not sure exactly how many people and how much gear they fly. So I'm not sure that every west coast flight needs a fuel stop, but some may well.
(4) The charter contract may be part of the "official airline" linkages...Midwest is the official airline of Brewers, Bucks, Royals. (Not Packers, although the charter M80 is not large enough for an NFL team.)
(5) The cookies are irrelevant. Charter flights get full inflight service of their choosing, unrelatred to what scheduled service offers.
A key thing Midwest has always had going for it with sports charters is the seating. Charter-dedicated aircraft would probably remain all 2x2, and that's something that other airlines still cannot offer.
No certainty that that Midwest won't lose some charter business. But back before the M80's when the Brewers had west coast road trips, they regularly made a fuel stop in Grand Island with the DC9. I don't think it's a certainty that the charter business will go away. And with charter customers paying actual fuel costs, it's somewhat insulated against climbing fuel prices.
Nice summary FlyYX, and this has been my point all along that Midwest management is a day late and a dollar short.
So if TPG closed on the deal in January, and YX had $150 Million of unrestricted cash at that point, are we to infer that YX has blown through $150 Million in 6 months? Or was there some threshold at which panic set in, say 2/3 of cash?
Either way it looks like quite a cash bleed.
I think AirTran made big mistakes too while trying to get Midwest to agree to merge with them. Joe Leonard should have let the offer to Midwest expire mid 2007. Then when MEH stock tanked the end of 2007 he should have renewed his bid for Midwest at a lower price. AirTran could have purchased Midwest for a lot less... less than 200,000 dollars. I know the hedge funds were pressuring AirTran to close a deal but too bad for them if AirTran backed out in 2007. Nobody held a gun to their head and told them to buy MEH stock. Of course hindsight is 20/20, but Joe and friends were pretty close in their assessment of Midwest Airlines at the time. I call it as I see it and last year I did not see this coming and I did not believe AirTran. I still support Midwest and hope they survive, but this doesn't look good. We can only hope TPG has a plan that will work for Midwest. I'm gonna cross my fingers and hope for the best.
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Quote:
Originally Posted by flyYX
I still support Midwest and hope they survive, but this doesn't look good. We can only hope TPG has a plan that will work for Midwest. I'm gonna cross my fingers and hope for the best.
I know I seem harsh towards Midwest management, but I will always resent their hooking up with Northwest, and I don't care if the game was constructed so that NW is a passive investor, we all know that Northwest just wanted to keep an LCC competitor out of its backyard. It sucks to not have low-fare competition in Northern Wisconsin and the U.P. With the exception of Green Bay, now we don't even have Midwest.
Hoeksaema insisted that he had a good plan and that Midwest was still viable as a stand-alone, and he downplayed the risks. I can't blame TPG, all they have done is give Tim a chance to make good his promises and instead he fell on his face. TPG's plan if you have not figured it out yet is to make Midwest into an LCC. TPG is acting as an enforcer, a high-class one, but an enforcer nonetheless. "we gotta deal for you, here are the terms".
I understand your affection for Midwest, but from my stand point (CRJ-200 service to BWI bleah ) & no more Skyway, Midwest has been gone for a while.
So if TPG closed on the deal in January, and YX had $150 Million of unrestricted cash at that point, are we to infer that YX has blown through $150 Million in 6 months? Or was there some threshold at which panic set in, say 2/3 of cash?
Cash is a very different metric than profit or loss. Certainly they are not completely unrelated, but from quarter to quarter they are not necessarily correlated. More than occasionally cash goes up in quarters with a loss, or vice versa. If Midwest came in to the TPG relationship with $150m and posted $25m in losses since then (for example) that does not mean they would be down to $125 in cash.
Airlines can post losses and still have their cash increase.
Being low on cash puts you in danger of shutdown, and you need solid cash reserves to make it through bankruptcy.
I think it's safe to say that Midwest has seen large losses in the past few quarters...pretty much everybody but Southwest and Allegiant has been posting losses. But being in serious straits does not mean they've come anywhere near losing $150m.
Apologies if this has already been mentioned or alluded to...my web access has been very spotty the last few days. But does anyone think the promise of a TPG capital infusion if concessions are agreed to, is in fact the captial and/or backing to finally get an M80 replacement.
If true, that would make some sense of the comment in the employee Q&A bulletin which alluded to looking at fleet options for long haul flights, an option other than simply serving MKE-west coast on the 717 via MCI.
Without TPG backup I don't see how they can possibly replace the M80's in the near term. Perhaps this is the carrot TPG is holding out for internal restructuring.
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Quote:
Originally Posted by knope2001
Apologies if this has already been mentioned or alluded to...my web access has been very spotty the last few days. But does anyone think the promise of a TPG capital infusion if concessions are agreed to, is in fact the captial and/or backing to finally get an M80 replacement.
If true, that would make some sense of the comment in the employee Q&A bulletin which alluded to looking at fleet options for long haul flights, an option other than simply serving MKE-west coast on the 717 via MCI.
Without TPG backup I don't see how they can possibly replace the M80's in the near term. Perhaps this is the carrot TPG is holding out for internal restructuring.
I've been wondering about this as well. It was no accident that the phrase about different fleet options was inserted into the employee Q&A. Considering how nearly every airline is slashing service and/or pushing back aircraft orders, this may actually be a very good time for Midwest to pick-up some new or gently used aircraft.
What's really surprising is how hardly anyone has picked-up on that little blurb.
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I've been wondering about this as well. It was no accident that the phrase about different fleet options was inserted into the employee Q&A. Considering how nearly every airline is slashing service and/or pushing back aircraft orders, this may actually be a very good time for Midwest to pick-up some new or gently used aircraft.
What's really surprising is how hardly anyone has picked-up on that little blurb.
I was thinking the same thing, but I didn't go any further with it because I didn't want to get my hopes up again. Not all aircraft being pulled out of service will be old junk. Also there will be a lot of deferred orders at Boeing and Airbus for the next year or so. I can see opportunity opening up out there. Will Midwest be able to act upon these new opportunities? Or will Tim H. be sitting on his hands as he usually does?
Hoeksaema insisted that he had a good plan and that Midwest was still viable as a stand-alone, and he downplayed the risks. I can't blame TPG, all they have done is give Tim a chance to make good his promises and instead he fell on his face. TPG's plan if you have not figured it out yet is to make Midwest into an LCC. TPG is acting as an enforcer, a high-class one, but an enforcer nonetheless. "we gotta deal for you, here are the terms".
I understand your affection for Midwest, but from my stand point (CRJ-200 service to BWI bleah ) & no more Skyway, Midwest has been gone for a while.
I don't consider Midwest becoming an LCC a bad thing as long as they can stay focused on customer service and be able to cater to the business class flyer. If Midwest would pick the right aircraft for all 2x2 seating, they would be profitable. I'd like to see the CRJ-200's disappear too and they may if oil keeps going up. Will Skywest and Air Wisconsin be able to survive? They too better have a plan in place.
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Quote:
Originally Posted by BlueHorseShoe2000
I've been wondering about this as well. It was no accident that the phrase about different fleet options was inserted into the employee Q&A. Considering how nearly every airline is slashing service and/or pushing back aircraft orders, this may actually be a very good time for Midwest to pick-up some new or gently used aircraft.
What's really surprising is how hardly anyone has picked-up on that little blurb.
I mentioned the other day that YX might acquire some Airbus equipment from Frontier. There are some relationships between managements and it wouldn't be surprise.
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I mentioned the other day that YX might acquire some Airbus equipment from Frontier. There are some relationships between managements and it wouldn't be surprise.
I thought about this too.... Frontier will probably have to cut their fleet in order to come out of bankruptcy. Maybe a deal can be made to take over the leases of some of their A319's. I don't think they are that old either. I think Southwest is really hammering Frontier in Denver too. It will be sad if Frontier has to go out of business. Frontier's problem is they never had any success expanding outside of Denver.
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Quote:
Originally Posted by flyYX
I thought about this too.... Frontier will probably have to cut their fleet in order to come out of bankruptcy. Maybe a deal can be made to take over the leases of some of their A319's. I don't think they are that old either. I think Southwest is really hammering Frontier in Denver too. It will be sad if Frontier has to go out of business. Frontier's problem is they never had any success expanding outside of Denver.
I think that we all need to take a few steps backwards. Midwest is laying off employees left and right. They are also cutting employee salaries left and right. What makes you think that they can afford to take over leases on new aircraft? I thought that they were trying to re-negotiate the leases on the aircraft they already have. Who in their right mind would finance them?
I worked through what Midwest could do with 20 lines of 717 if indeed that's what's left of mainline. I worked a "summer" schedule and a "winter" schedule. These are just speculative, but they represent what Midwest reasonable *could* do with 20 aircraft to try and fulfill their planned schedule.
Both summer and winter schedules keep equal or 1x less frequency in nearly all business markets, with a few downgrades from 717 to CRJ. Only three top leisure markets (LAS PHX MCO) even get a single frequency in summer, with all leisure marekts getting 1x in winter except MKE-MCO (with 2).
While this would see Midwest turning over the bulk of the high-volume / low-yield MKE leisure traffic to other airlines, it would still offer nonstop service for those who seek out Midwest.
Here are the details of what Midwest *could* do with 20 lines of 717 flying. Unless noted, frequency and aircraft remain unchanged.
*****Summer Schedule*****
Change is compared to existing August 2008 schedule
Mainline Business markets
Milwaukee
5 BOS
5 LGA
4 EWR (one 717 downgraded to CRJ…all CRJ)
4 PHL (one 717 downgraded to CRJ…1x 717 + 3 CRJ)
5 DCA (one 717 downgraded to CRJ…4x 717 + 1 CRJ)
3 ATL
4 DFW (reduction of one flight)
6 MCI (reduction of one flight)
4 OMA
5 MSP (one 717 downgraded to CRJ…all CRJ)
3 DEN
Kansas City
2 BOS
5 LGA
3 DCA
1 SAN (reduction of one flight)
2 LAS
2 SFO (increase of one flight)
1 SEA
6 MKE (reduction of one flight)
Omaha
2 DCA
4 MKE
Leisure Markets
1 LAS (reduction of 3 flights)
1 PHX (reduction of 1 flight)
1 MCO (reduction of 2 flights)
0 TPA (suspended during summer)
0 FLL (suspected during summer)
0 MCI-MCO (suspended during summer)
LAX one 1-stop & 1 connection
SFO one 1-stop & 1 connection
SEA one 1-stop & 1 connection
*****Winter Schedule*****
Change is compared to existing planned Winter 2008/2009 schedule
Mainline Business markets
Milwaukee
4 BOS (reduction of one flight)
5 LGA
4 EWR (one 717 downgraded to CRJ…all CRJ)
4 PHL (one 717 downgraded to CRJ…1x 717 + 3x CRJ)
5 DCA (two 717 downgraded to CRJ…3x 717 + 2x CRJ)
2 ATL (reduction of one flight)
4 DFW (reduction of one flight)
5 MCI (reduction of two flights)
4 OMA
5 MSP (one 717 downgraded to CRJ…all CRJ)
2 DEN
Kansas City
1 BOS (reduction of one flight)
5 LGA
3 DCA
1 SAN
1 LAX
1 SFO
1 SEA
5 MKE (reduction of two flights)
Omaha
2 DCA
4 MKE
Leisure Markets
1 LAS (reduction of 3 flights)
1 PHX (reduction of 1 flight)
2 MCO (reduction of 1 flight)
1 TPA (reduction of 1 flight)
1 FLL (reduction of 1 flight)
1 RSW (reduction of 1 flight)
1 MCI-MCO
MKE-LAX 1-stop
MKE-SFO 1 connection
MKE-SEA 1 connection
I think that we all need to take a few steps backwards. Midwest is laying off employees left and right. They are also cutting employee salaries left and right. What makes you think that they can afford to take over leases on new aircraft? I thought that they were trying to re-negotiate the leases on the aircraft they already have. Who in their right mind would finance them?
Don't rain on their parade. It's all they have left.
Seriously, the idea that Midwest is going to acquire new aircraft before they have figured out how to dispose of the ones that they cannot currently fly profitably is really drinking the koolaid. IF they survive the winter, then it might be time to think about aircraft acquisition.
Without the backing of TPG, I doubt they have way to pull this off. With a capital infusion from TPG, it is hardly out of the question.
Quote:
Originally Posted by Tim34
Midwest is laying off employees left and right.
Have you noticed there are no details yet on layoffs? All the media reports of layoffs are *assumptions* based on parking the M80's, and some pundits (incorrectly) calculate estimated layoffs based on parking 45% of the fleet. (This is incorrect because several of the fleet are not in scheduled service now.) If there are no M80 replacements, it's an absolutely certainty that there will be widespread layoffs. But the official company word is that it is too early to talk about layoffs. That fits the possibility of M80 replacement.
Quote:
Originally Posted by Tim34
They are also cutting employee salaries left and right.
Quote:
Originally Posted by Tim34
I thought that they were trying to re-negotiate the leases on the aircraft they already have.
These are probably both areas that the Midwest business plan needs to find improvement in before TPG will commit to further Midwest investment.
Here's what I think it comes down to. I thnk we can all agree that Midwest is suffering significant losses, just as nearly everyone is. But beyond that, I think the recent news items and events don't necessarily point the way one might think.
***Events, and Common Assumptions from those Events***
Event: Midwest announces their plan to park M80's
Assumption: Midwest is losing so much money with every M80 flight that if the don't park them ASAP they'll run out of cash.
Alternate Scenario: Midwest has no prospect of ever breaking even with the M80's unless fuel plummets, so they have no place in the plan to turn around Midwest. Park them when the current peak season ends. Delaying the inevitable is pointless.
Event: Midwest asks employees for major wage cuts
Assumption: Midwest is losing so much money that they need to cut wages 65% to have any hope of surviving.
Alternate Scenario: Midwest's business plan presented to TPG includes has identified several places where cost improvements are sought. Reducing labor cost sifnificantly (although we do not know how much) is part of that plan
Event: Midwest states plans to renegotiate lease terms with Boeing and the contract with Skywest
Asumption: Midwest is losing so much money that they need to save money on existing contracts to have any hope of surviving.
Alternate Scenario: Midwest's business plan presented to TPG includes has identified several places where cost improvements are sought. Reducing costs for 717 leases and CRJ capacity purchased are part of that plan.
Event: Midwest mentions bankruptcy as a possibility if concessions and renegotiations are not successful.
Assumption: Midwest is in such immediate precarious shape that unless everything comes right into place, chapter 11 is the only way they could buy some time.
Alternate Scenario: Midwest needs the backing of TPG if they want to turn things around long-term, and to get it they must find the cost improvements detailed in their business plan. If they cannot achieve these cost improvements in a way satisfactory to TPG through negotiations, they will use the bankruptcy court to do so.
Event: Midwest states "We may look at other fleet options for direct flights from Milwaukee or continue to serve the west coast markets via Kansas City with Boeing 717s. We're in the process of nailing down the schedule and these decisions.
Assumption: Huh?? What are they talking about?
Alternate Scenario: If Midwest is able to achieve the cost points of the business plan presented to TPG, TPG will provide the necessary cash infusion to acquire M80 replacement aircraft. If not, they have no choice but to offer west coast service via Kansas City on the 717.
---------------
I'm still agreeing that Midwest is losing a lot of money
And I'm still saying things are very criticial at Midwest, but primarily becuase this is what they must do ASAP to demonstrate to TPG that they should invest further with Midwest...and lack of this investement will lead Midwest to stagnate at best. The "standard" assumption is that things are very critical at Midwest because they have burned through all their cash, which is not very likely at this point.
The more I think about this, the more I think this makes sense. What else would they be talking about when they say that TPG is willing to invest captial into Midwest if they can demonstrate their business plan? Just giving Midwest money to cover ongoing losses is pointless. Those financial resources instead need to be used to improve Midwest's financial outlook. And what is most needed for this? M80 replacement.
Seriously, the idea that Midwest is going to acquire new aircraft before they have figured out how to dispose of the ones that they cannot currently fly profitably is really drinking the koolaid.
What does the disposal of the old aircraft have to do with the ability to acquire new aircraft?
The only way Midwest has even a shot at acquiring M80 replacement is with the backing of TPG. Plain and simple. Without it, no go. With it, it's definitely dooable.
That being said, of course, it is hardly a done deal that Midwest will get their ducks in a row to satisfy TPG. That's what's going on now.
) & no more Skyway, Midwest has been gone for a while.
