It's a grand game, isn't it? Actually I love how TPG has played this. Leave the same guy in charge( as a figurehead) who was running Midwest into the ground. Let him really fail, and then ah shucks we need concessions or else BANKRUPTCY. Better yet the same guy is in charge to blame! They are such a nice bunch of guys at TPG, of course they'll provide financing, if you take a %40 paycut.
And he is 10 million dollars richer. Maybe some of that could help the employees.
If this is a grand scheme to shut down Midwest, then why bother with the union negotiations for wage concessions? Why waste money on a consultant? Why try to restructure agreements with Boeing and Skywest?
Quote:
Originally Posted by deelmakur
Meantime TPG, and NW, with a half biliion invested, say nothing.
What makes you so sure that TPG is silent in this matter? Because you have not see anything in the news media? The employee bulletin posted here did give us this glimpse of TPG's stance:
"Q: What is the role of TPG in this restructuring?
A: Our ownership is extremely supportive of this plan. Our board is being continuously updated on our progress. Some employees may be wondering why TPG can't just inject some additional financing to help us through this. They have agreed to provide additional support in the interim, but they need to see a workable plan so their investment makes sense. Remember, they acquired us to be a profitable venture so their investment pays back as well."
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Shutting it down doesn't mean they bankrupt it. After Frank Lorenzo used bankruptcy to void his union deals at Continental, the government stopped that. Actually, I believe airlines are dealt with differently, in that regard, under rules established orignally for passenger railroads, many years ago. They are considered "esential services", which is why you see government intervention every time a strike is threatened. They won't want to trash it.It has useful assets. As for TPG, you have to find me an instance where an equty group has done a deal with no debt. They just do not pay all cash. They raise institutional money, then put in as little equity as possible, layering in as much debt as the deal can hold. Their time horizons are relatively short. They pump the business up, sell it for a big profit, repay the debt (to them, it's like having rented the money), and pocket the spread. With the tax deductibility mitigating their interest expense, and cap gain taxes in the mid teens, the returns are awesome. In fact, the LESS equity, the bigger the return, TPG appears to have simply fronted NWA, so they wouldn't violate anti trust, etc. Either that, or they completely changed their business model.This one doesn't pass the smell test, even in the land of cheese.
Not a good sign. You'd think they would need those to cover some of the MD80 routes. There must be some further reductions planned in routes/frequencies. Hopefully YX finds some way to survive in this environment.
It will be interesting to see how FL responds once the schedule revisions come out. It's possible that FL could replace NW as the #2 at MKE.
Not a good sign. You'd think they would need those to cover some of the MD80 routes. There must be some further reductions planned in routes/frequencies. Hopefully YX finds some way to survive in this environment.
It will be interesting to see how FL responds once the schedule revisions come out. It's possible that FL could replace NW as the #2 at MKE.
Wow! This is unbelievable! Parking the 717s don't make sense to me.
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Quote:
Originally Posted by flyYX
Wow! This is unbelievable! Parking the 717s don't make sense to me.
That's because you and I lack the total context, i.e. cost and revenue. It no doubt is bad, the bleeding might even be spectacular (hence the huge cuts).
That's because you and I lack the total context, i.e. cost and revenue.
Yeah I know.
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Originally Posted by hazelrah
It no doubt is bad, the bleeding might even be spectacular (hence the huge cuts).
If the unions say no to this deal and basically force Midwest into bankruptcy, things will even be worse. Besides the current cuts being proposed the bankruptcy court may tell Midwest they have to give up gate space at MKE to save money. Midwest may still be around in five years but be a very small airline with only 4 gates at MKE and nothing at MCI.
How is NWA defending their turf by letting Midwest go to the brink of bankruptcy???
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Quote:
Originally Posted by flyYX
Wow! This is unbelievable! Parking the 717s don't make sense to me.
Keep in mind that this information has come from flight attendants, not Midwest itself. The statement may have been taken out of context. For example, Midwest may be using the parking of additional aircraft as a negotiating ploy to obtain concessions from the union (i.e. if you don't agree to the congessions requested we'll be parking additional aircraft, etc.).
As of right now, only 22 717s are in scheduled service as is. One is kept as a spare for operational and maintenace purposes. The others have been used for charter flying (Hillary Clinton's campaign). A few additional trims in frequencies here and there (BOS and DFW from 5x to 4x daily as an example), the swapping of the CRJ for off-peak 717 flights, etc. could take care of the two other planes without causing drastic cuts overall. Midwest may not be planning to backfill as much MD80 flying as expected either, especially in leisure markets.
Lots of rumors are floating around right now. We'll now more within the next two weeks as to what's really going on.
__________________ If you don't know where you are going, you might end up someplace else.
Lots of rumors are floating around right now. We'll now more within the next two weeks as to what's really going on.
I can only hope these are just rumors. I think cutting into the 717 fleet is putting Midwest in dire straits. I would be super po'd too if I was asked to take a wage cut as high as they are asking for the FAs and Pilots. I think I would say "no" and let Midwest file bankruptcy. Let the courts sort it all out. But I am not in their shoes so I have no idea what is going on in their minds right now. I can only imagine.
It's a grand game, isn't it? Actually I love how TPG has played this. Leave the same guy in charge( as a figurehead) who was running Midwest into the ground. Let him really fail, and then ah shucks we need concessions or else BANKRUPTCY. Better yet the same guy is in charge to blame! They are such a nice bunch of guys at TPG, of course they'll provide financing, if you take a %40 paycut.
I actually think that after all this mess is over with and if Midwest is still around, it is time for Tim Hoeksema to retire. You had your chance and now it is time to bow out.
Last edited by flyYX; Jun 25, 08 at 2:35 pm.
Reason: typo
As of right now, only 22 717s are in scheduled service as is. One is kept as a spare for operational and maintenace purposes. The others have been used for charter flying (Hillary Clinton's campaign).
Thanks Blue. I was working through the existing fall 717 schedule to see what the utilizaton was like before any potential changes are made. It is 22 717 lines of scheduled service.
The pilots and f/a union (very understandably guarding and pumping their position) are saying that parking the M80's and parking five 717's cuts Midwest fleet by 46%. That's a reduction from 37 to 20 planes.
Let's see what those 37 planes were scheduled to do this fall *before any of these cuts, including parking the M80's, were planned*:
M80 -- 12 aircraft
6 scheduled lines of flying
4 spares
2 charter aircraft
717 -- 25 aircraft
18 full-day lines of flying
4 lines flying abbreviated days (like starting at 11:00am or ending at 3pm)
3 spares
Now fall is indeed off-season, but that's some pretty weak utilization. I'm not saying that no 717 markets will see any flight reductions. And we're not likely to see as much M80 backfilling if they only do 20 lines of 717 flying. But looking at the details, it's not as likely to be as bad as it might seem in terms of flights.
For onboard crews, however, every single line of flying removed or consolidated means X fewer crews. So going down to 20 lines of flying is a big reduction in their work force. But with this large amount of slack and spare capacity parked *prior to the pending shakeup* it does make sense for them to trim this away.
Quote:
Originally Posted by BlueHorseShoe2000
Keep in mind that this information has come from flight attendants, not Midwest itself. The statement may have been taken out of context. For example, Midwest may be using the parking of additional aircraft as a negotiating ploy to obtain concessions from the union (i.e. if you don't agree to the congessions requested we'll be parking additional aircraft, etc.).
I do think that there's a disconnect between lines of flying and physically disposing of aircraft...and how the media is running with it. For crews, the key metric is knowing how many lines of flying there are to staff. With no M80's in the fleet anymore for charters, scheduled maintenance, and operational spare backup, the 717 fleet has to cover it all. If in fact the crew requirement will drop down to 20 lines of flying, that does not mean disposing of five aircraft.
Quote:
Originally Posted by BlueHorseShoe2000
Lots of rumors are floating around right now. We'll now more within the next two weeks as to what's really going on.
You can say that again! And unfortunately in negotiations like this, the amount of solid public information usually dries up but the rumors and high-spin statements fly.
That's because you and I lack the total context, i.e. cost and revenue. It no doubt is bad, the bleeding might even be spectacular (hence the huge cuts).
That's a really important point to remember during all this rumor and speculation (and I'm definitely right in there with the speculation.) We don't really know how serious the situation is, either at Midwest or in the industry as far as that goes.
I'd be curious to know two things...Midwest or the industry in general:
(a) How are advance *fall* bookings compared to the last few years? Plenty of reports for awhile now that summer loads are strong, but what about fall? Summer vacations are often booked far in advance. Just a handful of months back, the concerns on the economy, inflation, and gas price were less severe. Are advance leisure bookings holding up for fall compared to historical averages?
(b) How are close-in business bookings holding up against historical averages?
We can speculate but we don't really know, and what we don't know might be key in driving some painful decisions being made.
