Chapter 11 Now rather than Later

 
Old Sep 14, 2005, 3:54 pm
  #61  
mid
 
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Originally Posted by HeathrowGuy
Just hope DH is around for Xmas...
Time will tell. Their death has been widely predicted almost since they began operations.

A key difference I think is how the employees at DH act: they are doing everything they can to keep this airline running. That matters a lot. I had a flight to BOS that was going to be delayed because the crew was delayed arriving from another city and had exceeded their FAA allowable flight hours for that day without a rest period.

They got a pilot to volunteer on his day off to come in and fly as the FO.

Try getting that done at UA. The employees at NW basically pushed them into CH11. Remember that an airline isn't just the planes; it's the people that are the heart of the company.

At the end of the day, it will be the people of DH that decide if it's worth the sacrifice.
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Old Sep 14, 2005, 5:37 pm
  #62  
 
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Originally Posted by HeathrowGuy
With any luck, the madness that is Indy Air will soon come to a long-overdue end...
I fail to see how DH could have wronged you so badly that you can't wait to see them drop off the map (unless you work for UAL). Whatever your grievance is with DH, I still think that your comments are over the top. Even though I work in the industry I don't shoot off insensitve statements like "with luck" Delta or Northwest, or even United would go completely under, for a variety of reason, including the significant impact on their passengers and the even greater hardship this would put on their employees. You may be speaking in purely general industry terms, but there is a huge human factor involved, and I was taught not to wish bad on anyone... even your rivals.
Very uncool HeathrowGuy, very uncool!
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Old Sep 14, 2005, 6:55 pm
  #63  
 
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Originally Posted by HeathrowGuy
More like to show up at Indy Air's doorstep is the repo man:

"Merrill Lynch estimates that there is a more than 90% chance that Delta Air Lines (nyse: DAL - news - people ) and FLYi (nasdaq: FLYI - news - people ) unit Independence Air will file for bankruptcy within the next few days."

http://www.forbes.com/markets/2005/0...markets15.html

With any luck, the madness that is Indy Air will soon come to a long-overdue end...
The fact of the matter is that these analysts are still engaging in much guess work. The statements from Merrill are case in point. They put NWA's bankruptcy probability at 30% less than DL's, yet the filings were a mere hour apart.


Cheers.
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Old Sep 14, 2005, 6:58 pm
  #64  
 
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Originally Posted by jasondc
...those RJs arent going away. DH sold their deposits on the remainig A319s they had on order and gave up their delivery slots for the additional A319s they had on order. that means that they wont be gettin any additional A319s in the near future..
Correct, but that is not the end of the discussion, not only regarding the A319s, but also in relation to the RJs.


Cheers.
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Old Sep 14, 2005, 7:07 pm
  #65  
 
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Originally Posted by GotCalcio4
If US or UA ever treated me or my family poorly, I wouldn't fly them. I'm sorry, but UA and US are much more valuable than DH to the industry. The day DH liquidates, many won't even blink. If UA liquidated, that would be a different story.
No doubt a UA or DL liquidation, which is not likely, would have a more farreaching impact on the industry and on more consumers, employees, etc. Yet, while such a scenario could be significant to many, a DH liquidation would be just as significant to another group of people, even if that group is not as large. Still, I don't think you can put value on something totally by quantity.

Furthermore, there is a converse to this argument. Because UA and DL are so large, their demise could have a much more positive impact on the industry and consumers than the same taking place at DH (I'm wearing another's shoes here as I don't think a DH demise is a good thing, period). Clearly many want DH to fail, but you said it yourself, that won't change the industry-wide capacity much. The US airline sector needs to see a couple majors kicked to the curb.


Cheers.

Last edited by Cohiba; Sep 14, 2005 at 7:11 pm
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Old Sep 14, 2005, 7:15 pm
  #66  
 
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Originally Posted by mid
A key difference I think is how the employees at DH act: they are doing everything they can to keep this airline running. That matters a lot. I had a flight to BOS that was going to be delayed because the crew was delayed arriving from another city and had exceeded their FAA allowable flight hours for that day without a rest period.

They got a pilot to volunteer on his day off to come in and fly as the FO.
Try getting that done at UA.
I was once on a delayed UA flight from CLE where the inbound flight had been delayed causing most of the cabin crew to go 'illegal'. The pilots were still legal, and were planning on ferrying the plane back to Chicago. However, an off-duty FA volunteered to work the flight (in plain clothes), giving them sufficient crew to take off with pax. So there are people on UA that care. (However, I mentioned this story to a friend who was a UA FA, and she became upset that he had gone against some union rule of some sort and shouldn't do something like that - so not everyone puts the company first!)

At the end of the day, it will be the people of DH that decide if it's worth the sacrifice.
Alas, they might not have the choice to make. Again, it seems like the dot-com boom. Many companies had great loyal workforces who went the extra mile for the company. However, the burn rate consumed the cash before the model could bear fruition.

At the moment, there seems to be very little chance for for success. On the other hand, if UA and DL had kept DH on as a commuter a little longer (bringing in more cash), and US liquidated and UA ditched the IAD hub (leaving unfilled demand and reduced price pressure in DC), and fuel prices remained low - then FlyI might be bragging now about their great success story. Alas, that didn't happen, and DH is left with what appears to be a failed business model limited recourses.
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Old Sep 14, 2005, 8:09 pm
  #67  
 
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Originally Posted by Cohiba
No doubt a UA or DL liquidation, which is not likely, would have a more farreaching impact on the industry and on more consumers, employees, etc. Yet, while such a scenario could be significant to many, a DH liquidation would be just as significant to another group of people, even if that group is not as large. Still, I don't think you can put value on something totally by quantity.

Furthermore, there is a converse to this argument. Because UA and DL are so large, their demise could have a much more positive impact on the industry and consumers than the same taking place at DH (I'm wearing another's shoes here as I don't think a DH demise is a good thing, period). Clearly many want DH to fail, but you said it yourself, that won't change the industry-wide capacity much. The US airline sector needs to see a couple majors kicked to the curb.
If DL or UA were to go away, many existing routes would not exist. Some airports would lose their only airline service. If DH were to go away, it would primarily eliminate excess capacity. Of all of DH's routes, only five are not served by other airlines. And of those five, four are served by other airlines via DCA:
IAD-PBI (alternative: US: DCA-PBI)
IAD-RSW (alternative: US: DCA-RSW, AirTran: DCA-RSW, BWI-RSW)
IAD-HSV (alternative: US: DCA-HSV, DL: DCA-HSV)
IAD-SDF (alternative: US: DCA-SDF)
The only airport that is not served by alternative nonstop flights from Washington is SWF. (However, SWF could be considered the outer reaches of the New York Metro area, with HPN just over 30 miles away, and EWR and LGA around 50 miles - all with plentiful service from Washington D.C.)

An interesting statistic shows increases in airport traffic - most of it claimed to be the 'idependence bubble'. FlyI has dumped excess capacity in the market. The market is not ready to pay sustainable prices for the capacity. Eliminating Indy would reduce capacity with very little impact on routes. Eliminating DL would reduce duplicate routes with AirTran out of ATL, though it would would also eliminate many other routes not served by anybody else (especially international routes) Eliminating United would reduce some of the overlap with Indy at IAD and with AA at ORD. However, many small towns in the midwest would lose their service to ORD. At IAD, eliminating United would eliminate more domestic cities than the elimination of FlyI. Furthermore, the international flights would pretty much be gone. Having to drive 45 minutes to get to SWF is not a big deal. Having to swim 4200 miles to get to Munich is.
http://www.airportsusa.com/snapshottemplate.htm
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Old Sep 15, 2005, 4:19 am
  #68  
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Originally Posted by L Dude 7
If DL or UA were to go away, many existing routes would not exist. Some airports would lose their only airline service. If DH were to go away, it would primarily eliminate excess capacity. Of all of DH's routes, only five are not served by other airlines. And of those five, four are served by other airlines via DCA:
IAD-PBI (alternative: US: DCA-PBI)
IAD-RSW (alternative: US: DCA-RSW, AirTran: DCA-RSW, BWI-RSW)
IAD-HSV (alternative: US: DCA-HSV, DL: DCA-HSV)
IAD-SDF (alternative: US: DCA-SDF)
The only airport that is not served by alternative nonstop flights from Washington is SWF. (However, SWF could be considered the outer reaches of the New York Metro area, with HPN just over 30 miles away, and EWR and LGA around 50 miles - all with plentiful service from Washington D.C.)

An interesting statistic shows increases in airport traffic - most of it claimed to be the 'idependence bubble'. FlyI has dumped excess capacity in the market. The market is not ready to pay sustainable prices for the capacity. Eliminating Indy would reduce capacity with very little impact on routes. Eliminating DL would reduce duplicate routes with AirTran out of ATL, though it would would also eliminate many other routes not served by anybody else (especially international routes) Eliminating United would reduce some of the overlap with Indy at IAD and with AA at ORD. However, many small towns in the midwest would lose their service to ORD. At IAD, eliminating United would eliminate more domestic cities than the elimination of FlyI. Furthermore, the international flights would pretty much be gone. Having to drive 45 minutes to get to SWF is not a big deal. Having to swim 4200 miles to get to Munich is.
http://www.airportsusa.com/snapshottemplate.htm
I can't help but notice that in all of the arguments from the other side about why DH doesn't have a shot at making it are chock full of statements like "sustainable" and "legitimate" and "excess" and "duplicate".

Before DH came along, prices from IAD to MANY of those citites were absolutely out-of-this-world. When you can fly to Munich for less than you can to RSW from IAD, there is no point in making arguments about what prices are "logical" and "just".

And for most of us, that's the point. Living in DC a hop, skip, and a jump from IAD, the effect of DH has been enormous. And that's a GOOD thing.

People who argue that DH is distorting the market are just kidding themselves and wasting everyone else's time. I can't help but feel that they would also expect Burger King to pay $10/hr to the guy working the fry machine because you can't live on $5.75.

When you look as just how inefficient those majors are, how many millions they overpay their executives for losing billions, how many employees they need to do the same job that other companies do with one, it's becomes painfully obvious that THEIR business models are unsustainable. If they were, we would not have 4 of the largest 7 carriers in BK court right now.
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Old Sep 15, 2005, 8:52 am
  #69  
 
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mid,

Please explain how FlyI has a shot at making it. I'd really like to know. I don't want to see them fail, I am pleased they have brought cheaper travel to IAD, they have nice people, etc. However, an airline cannot sell (on average) tickets that do not even cover the cost of transporting the seat indefinitely. The 4 bankrupt carriers don't do that. So please tell me how FlyI can make it.

Airlines do not exist to provide transportation as cheap as possible. They exist to make money for their shareholders. Only Southwest has been successful doing that for an extended period of time and through all economic cycles. FlyI's fares are so cheap that they have no chance at making money at today's fuel prices and can't raise their fares because then even fewer people will fly them. Remember, FlyI would have lost money in Q2 even if they hadn't paid a dime for jet fuel. Do you really think the 4 major carriers operating under Chapter 11 protection would be losing money or be bankrupt if they didn't have to pay for fuel?

Fuel is speeding up FlyI's demise but it is not the cause of it. Perhaps if fuel was cheaper FlyI would be able to turn the airline around with more time.
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Old Sep 15, 2005, 9:04 am
  #70  
 
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Originally Posted by mid
I can't help but notice that in all of the arguments from the other side about why DH doesn't have a shot at making it are chock full of statements like "sustainable" and "legitimate" and "excess" and "duplicate".

Before DH came along, prices from IAD to MANY of those citites were absolutely out-of-this-world. When you can fly to Munich for less than you can to RSW from IAD, there is no point in making arguments about what prices are "logical" and "just".
AirTran flies from DCA-RSW. If you want to fly for less, you can make the hop-skip-and-jump there. During the summer, Munich flights have almost always been much higher than Florida flights. (off-season for Florida, peak season for Europe.) During the winter, however, there is a lot of excess capacity on the Europe flights. Thus fares are cheap. This is the same argument that has been used to support the low fares FlyI has been offering. Rather have a super-cheap seat than an empty seat. A key difference, however, is that the Munich flights tend to be profitable on a year-round basis. Thus the cheap fares in the off-season can be sustained.

And for most of us, that's the point. Living in DC a hop, skip, and a jump from IAD, the effect of DH has been enormous. And that's a GOOD thing.

People who argue that DH is distorting the market are just kidding themselves and wasting everyone else's time. I can't help but feel that they would also expect Burger King to pay $10/hr to the guy working the fry machine because you can't live on $5.75.
Using the food analogy, the major airlines are like Burger King. Present everywhere, and selling hamburgers for a few bucks. DH is the new upstart burger chain. They come in and open up restaurants right next to existing Burger Kings. They serve burgers for a penny each. They get praises for bringing down the price of hamburgers. However, they only sell hamburgers, fries, and coke. And they are not in all the locations of Burger King. Burger King has been forced to match prices on the humburgers. However, they have kept their other menu items at their regular prices, and even raised some to make up for lost revenue on hamburgers.
Hamburger lovers really enjoy the low prices of this new chain. However, chicken sandwhich lovers are a little upset.
When you look as just how inefficient those majors are, how many millions they overpay their executives for losing billions, how many employees they need to do the same job that other companies do with one, it's becomes painfully obvious that THEIR business models are unsustainable. If they were, we would not have 4 of the largest 7 carriers in BK court right now.
United reported an operating profit for last quarter. DH reported an operating loss. If DH is a 'lean' operation and UA still has a lot of fat to trim, then there is significant hope for UA's model - but not much for DH. Enjoy the low fares while you can. They will need to go up. Maybe DH can stay around and raise them to levels that can sustain it. Or maybe they will go away.
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Old Sep 15, 2005, 9:27 am
  #71  
mid
 
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Originally Posted by whlinder
mid,

Please explain how FlyI has a shot at making it. I'd really like to know. I don't want to see them fail, I am pleased they have brought cheaper travel to IAD, they have nice people, etc. However, an airline cannot sell (on average) tickets that do not even cover the cost of transporting the seat indefinitely. The 4 bankrupt carriers don't do that. So please tell me how FlyI can make it.

Airlines do not exist to provide transportation as cheap as possible. They exist to make money for their shareholders. Only Southwest has been successful doing that for an extended period of time and through all economic cycles. FlyI's fares are so cheap that they have no chance at making money at today's fuel prices and can't raise their fares because then even fewer people will fly them. Remember, FlyI would have lost money in Q2 even if they hadn't paid a dime for jet fuel. Do you really think the 4 major carriers operating under Chapter 11 protection would be losing money or be bankrupt if they didn't have to pay for fuel?

Fuel is speeding up FlyI's demise but it is not the cause of it. Perhaps if fuel was cheaper FlyI would be able to turn the airline around with more time.
United:
199.20 USD per person
Leg Flight info Date Depart Arrive Stops
1 United Airlines 804 Sep 15 10:00 pm IAD 11:32 pm BOS Non-stop


Independence Air:
Reg Fare $189.00 USD
Thu, 15 Sep 05
Flight 572
9:15 pm Depart Washington-Dulles, VA (IAD)
10:49 pm Arrive Boston, MA (BOS)

Just a sampling.

You guys always seem to believe that because they are selling some fares at rock bottom prices that means that they do that continuously. In fact, they maintain a price advantage right up until the day of travel against United but they narrow the spread a great deal. They don't sell every last seat at a rock-bottom price.

Also, DH has policies and prices that appeal to last minute travellers as well as leisure travellers. The thing is: a change fee on DH is something like $35. On United, it's about $100. If you travel for business like I do, then which one would you choose if there was even the slightest chance that you might have to change your flight?

A LOT of travellers on DH are finding out that they are more convenient from IAD for last minute travel and they are more flexible when it's necessary to change plans. I'm one of them. A BIG reason why I'm choosing them for travel to BOS is that they have a MUCH lower change penalty. I also get to leave from the B-gates at IAD (which I can walk to) than the G or C-gates. Another plus.
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Old Sep 15, 2005, 9:35 am
  #72  
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Originally Posted by L Dude 7
Using the food analogy, the major airlines are like Burger King. Present everywhere, and selling hamburgers for a few bucks. DH is the new upstart burger chain. They come in and open up restaurants right next to existing Burger Kings. They serve burgers for a penny each. They get praises for bringing down the price of hamburgers. However, they only sell hamburgers, fries, and coke. And they are not in all the locations of Burger King. Burger King has been forced to match prices on the humburgers. However, they have kept their other menu items at their regular prices, and even raised some to make up for lost revenue on hamburgers.
Hamburger lovers really enjoy the low prices of this new chain. However, chicken sandwhich lovers are a little upset.
No. UA is Chili's and DH is Burger King. Practically the same thing but for more money.

Originally Posted by L Dude 7
United reported an operating profit for last quarter. DH reported an operating loss. If DH is a 'lean' operation and UA still has a lot of fat to trim, then there is significant hope for UA's model - but not much for DH. Enjoy the low fares while you can. They will need to go up. Maybe DH can stay around and raise them to levels that can sustain it. Or maybe they will go away.
How much money did UA lose in the preceeding 4 qtrs? How does that compare to DH? How much were they losing before they filed? Keep in mind that they are operating in Ch11, which isn't a fair comparison since they got to stick it to a good number of their suppliers and of course, the employees.

I don't think you can compare an airline operating under BK protection for the last 37 months with one that (essentially) just got started 12 months ago. DH is still paying their bills.
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Old Sep 15, 2005, 9:47 am
  #73  
 
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Originally Posted by mid
United:
199.20 USD per person
Leg Flight info Date Depart Arrive Stops
1 United Airlines 804 Sep 15 10:00 pm IAD 11:32 pm BOS Non-stop


Independence Air:
Reg Fare $189.00 USD
Thu, 15 Sep 05
Flight 572
9:15 pm Depart Washington-Dulles, VA (IAD)
10:49 pm Arrive Boston, MA (BOS)

Just a sampling.
Seriously????
Code:
Quoted fares do not include the September 11th Security fee of up to $5 each way and any applicable Passenger Facility Charges (PFCs) of up to $9 each way. Fares are also subject to the Federal Segment Tax of up to $3.20 per segment. A segment is defined as a takeoff and landing.
United displays fares inclusive of all those charges. Fare is exactly the same. Interesting, Southwest only wants $100.20 for a flight tonight BWI-BDL and $101.20 for BWI-PVD. Interesting.


You guys always seem to believe that because they are selling some fares at rock bottom prices that means that they do that continuously. In fact, they maintain a price advantage right up until the day of travel against United but they narrow the spread a great deal. They don't sell every last seat at a rock-bottom price.
As I pointed out, it is the same fare. UA matches most of their fares, they just allocate a lot less inventory to them. Additionally, FlyI's reported Q2 yield pretty much proves that they aren't selling many of those higher fares because their average passenger's fare doesn't even cover the cost of the seat.

Also, DH has policies and prices that appeal to last minute travellers as well as leisure travellers. The thing is: a change fee on DH is something like $35. On United, it's about $100. If you travel for business like I do, then which one would you choose if there was even the slightest chance that you might have to change your flight?
That is all well and good but is it making people fly DH? Are those people profitable? Obviously not!

A LOT of travellers on DH are finding out that they are more convenient from IAD for last minute travel and they are more flexible when it's necessary to change plans. I'm one of them. A BIG reason why I'm choosing them for travel to BOS is that they have a MUCH lower change penalty. I also get to leave from the B-gates at IAD (which I can walk to) than the G or C-gates. Another plus.
Again, that is all well and good, but why aren't they printing money then? Back to my original question: Please explain how FlyI has a shot at making it. You have stated that when UA and DH charge the same fare you will fly DH. There are other people like you. Apparantly, there are not enough for DH to even be CLOSE to breaking even. Are people going to wake up tomorrow and realize that UA sucks and they should fly DH? Please explain how FlyI has a shot at making it.
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Old Sep 15, 2005, 9:59 am
  #74  
 
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Originally Posted by mid
How much money did UA lose in the preceeding 4 qtrs? How does that compare to DH? How much were they losing before they filed? Keep in mind that they are operating in Ch11, which isn't a fair comparison since they got to stick it to a good number of their suppliers and of course, the employees.

I don't think you can compare an airline operating under BK protection for the last 37 months with one that (essentially) just got started 12 months ago. DH is still paying their bills.
You have to compare how much they lost relative to their sizes. Relative to their sizes, UA is doing a hell of a lot better. UA also has a few assets, like landing slots at LHR & traffic rights at NRT.

Is it fair that UA had pensions that date to a regulated industry? Is it fair that the entire industry pay scale is based on seniority from unions in a regulated environment?

Life isn't fair. Neither is business.
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Old Sep 15, 2005, 10:08 am
  #75  
 
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Originally Posted by mid
Also, DH has policies and prices that appeal to last minute travellers as well as leisure travellers. The thing is: a change fee on DH is something like $35. On United, it's about $100. If you travel for business like I do, then which one would you choose if there was even the slightest chance that you might have to change your flight?

A LOT of travellers on DH are finding out that they are more convenient from IAD for last minute travel and they are more flexible when it's necessary to change plans. I'm one of them. A BIG reason why I'm choosing them for travel to BOS is that they have a MUCH lower change penalty. I also get to leave from the B-gates at IAD (which I can walk to) than the G or C-gates. Another plus.
In the short run, FlyI is very pro-consumer. I do not think that you will find much argument there. The dot-coms were also very pro-consumer. You could get $10 off a 50 pound bag of dog food and have it shipped for free. However, these pro-consumer models don't earn enough money for the company to stay around. FlyI is not a philanthropy. It's a business.
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