Good analysis of FlyI's woes

 
Old Nov 4, 05, 7:27 am
  #1  
Original Poster
 
Join Date: Jan 2002
Location: Washington, DC, USA
Programs: UA MM, MB LifeTit
Posts: 1,707
Good analysis of FlyI's woes

This guy spells out very nicely what many of us have thought for some time:

http://www.marginalrevolution.com/ma...d_fa.html#more
EricH is offline  
Old Nov 4, 05, 9:02 am
  #2  
 
Join Date: Jun 2005
Posts: 536
good article.
oswaldjacoby is offline  
Old Nov 4, 05, 10:00 am
  #3  
FlyerTalk Evangelist
 
Join Date: Jul 1999
Location: ORD/MDW
Programs: AA, HH, MR elite. Fly mostly AA/WN/B6.
Posts: 18,773
He's right as far as he goes, but it's not only the regional jets that are killing FlyI. Presidential Airways tried exactly the same trick in the late 1980s -- an independent, no-interlining LCC hubbing at IAD -- only with 737s and Bae146s. Presidential didn't last two years. Nobody has yet explained to me why Indy is any different. They sure haven't doen any better; even worse in fact. You know what they say about people who fail to study history...
BearX220 is offline  
Old Nov 4, 05, 10:05 am
  #4  
FlyerTalk Evangelist
 
Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
Posts: 31,790
I'm probably wrong but Independence Air looks to me like "Plan B" when FlyI and UAL couldn't agree on lower fee-per-departure rates. Of course the FlyI executives will paint the past two years as the culmination of a long-term plan to succeed where Presidential Air failed, but I'm just very cynical. IMO, it all looks like decisions made on the fly - very spur of the moment "save the company" type moves.
FWAAA is offline  
Old Nov 4, 05, 10:19 am
  #5  
FlyerTalk Evangelist
 
Join Date: Jul 1999
Location: ORD/MDW
Programs: AA, HH, MR elite. Fly mostly AA/WN/B6.
Posts: 18,773
Lesson: don't start a whole new airline just to spite an old one. Spite doesn't belong in a business plan.
BearX220 is offline  
Old Nov 4, 05, 8:13 pm
  #6  
 
Join Date: Mar 1999
Location: SFO
Programs: United 1K
Posts: 2,260
Excellent article. I learned a lot.
jaguar is offline  
Old Nov 5, 05, 1:28 am
  #7  
 
Join Date: Jun 2001
Location: IAD
Programs: Chase Million Miler, SPG Gold, HHonors Gold, Hyatt Platinum
Posts: 2,728
Originally Posted by FWAAA
I'm probably wrong but Independence Air looks to me like "Plan B" when FlyI and UAL couldn't agree on lower fee-per-departure rates. Of course the FlyI executives will paint the past two years as the culmination of a long-term plan to succeed where Presidential Air failed, but I'm just very cynical. IMO, it all looks like decisions made on the fly - very spur of the moment "save the company" type moves.
I'm fairly certain that "stick it to United" was part of the plan. One of the things that is for certain though, is that sticking with UA under UA's terms would have been met with the same death wish they're currently facing. If you're going to get shot anyway, shouldn't you at least die running?
DHAST is offline  
Old Nov 5, 05, 1:30 am
  #8  
 
Join Date: Jun 2001
Location: IAD
Programs: Chase Million Miler, SPG Gold, HHonors Gold, Hyatt Platinum
Posts: 2,728
Originally Posted by jaguar
Excellent article. I learned a lot.
The funny thing is that there is nothing in that article that any person who really follows aviation doesn't already know.
DHAST is offline  
Old Nov 5, 05, 11:33 am
  #9  
FlyerTalk Evangelist
 
Join Date: Apr 2001
Location: DCA
Programs: AMC MovieWatcher, Giant BonusCard, Petco PALS Card, Silver Diner Blue Plate Club
Posts: 22,219
Very true.

(I wrote it btw)
gleff is offline  
Old Nov 9, 05, 4:46 am
  #10  
Original Member
 
Join Date: May 1998
Location: Las Vegas, NV, USA
Programs: AAdvantage ExecPlat, United 1k, United Club (life), Virgin Silver, Marriott/SPG/Hilton/Accor Gold
Posts: 5,030
After the AA partnership unraveled, I thought Midway's last strategy was to operate for US Express.
TransWorldOne is offline  
Old Nov 9, 05, 8:13 pm
  #11  
 
Join Date: Feb 2004
Posts: 1,658
Originally Posted by TransWorldOne
"We will not cut benefits from OnePass, our industry-leading frequent flyer program, because we remain committed to rewarding our most loyal customers."
-- Gordon Bethune (two weeks before significantly cutting benefits of the OnePass program)

"You have got to tell everybody the truth, you get a lot more respect."
-- Gordon Bethune (after lying about OnePass)
You forgot "We're not going anywhere."
-- Marty Shugrue in TV ads for Eastern in the days before they collapsed
SealBeach is offline  
Old Nov 14, 05, 10:33 pm
  #12  
 
Join Date: May 2003
Location: RDU
Programs: TSA/INS/FBI Platinum (stopped last 12 of 13 int'l returns - the computer broke once)
Posts: 2,582
Originally Posted by TransWorldOne
After the AA partnership unraveled, I thought Midway's last strategy was to operate for US Express.
It was, after an attempt to run a smaller airline on their own. The US partnership was a last gasp reincarnation after 9/11 ATSB money (or some other money related to that) came through that didn't last very long. I had a ticket on them (that I abandoned and conceded the money) for a flight about a week before the final Midway shutdown.

http://en.wikipedia.org/wiki/Midway_Airlines
http://www.usairways.com/midway/
StSebastian is offline  
Old Nov 21, 05, 5:45 pm
  #13  
 
Join Date: Oct 2001
Location: Somewhere...
Programs: AA PLT/3MM, UA GM/1MM, DL DM/1M, WN AList+
Posts: 1,545
Originally Posted by DHAST
I'm fairly certain that "stick it to United" was part of the plan. One of the things that is for certain though, is that sticking with UA under UA's terms would have been met with the same death wish they're currently facing. If you're going to get shot anyway, shouldn't you at least die running?
Even with the assumption that DH could not survive the 'new' deal with UA (which I have never have bought into - somehow Mesa seems to be able to work within these 'onerous' post-BK UA terms)...the brain trust in Sterling fought tooth and nail at the start of this adventure to make sure the folks at Mesa didn't acquire them to continue to use DH assets at IAD to perform exactly the same thing they had already been doing at IAD.

And, oh by the way, this would have actually given DH stockholders something for their investment instead of the worthless paper they are now left with.

11/17/05 - Mesa Air 4Q Profit Increases 40 Percent

PHOENIX (AP) - Regional carrier Mesa Air Group Inc. said Wednesday that its fiscal fourth-quarter profit grew 40 percent as passenger traffic rose moderately during the period.

Quarterly income jumped to $15 million, or 36 cents per share, from $10.7 million, or 25 cents, the year before. On an adjusted basis, earnings were 35 cents per share, above the average view of 31 cents per share from analysts polled by Thomson Financial.

Operating revenue totaled $309.1 million, a 19 percent increase from $260 million a year earlier.

The airline flew 1.69 billion revenue passenger miles -- a paying customer flown one mile -- up 8.3 percent from 1.56 billion last year. Capacity increased 10.8 percent, but load factor, or occupancy, slipped to 72 percent from 73.7 percent.

For the year, profit more than doubled to $56.9 million, or $1.35 per share, from $26.3 million, or 63 cents, in 2004. Adjusted earnings of $1.31 per share topped analysts' estimate for $1.25 per share. Revenue expanded 27 percent to $1.14 billion.
The fools built a business plan based on spite sprinkled with a heavy dose of betting on a UA liquidation (or at least a pull-back from IAD).

I do feel bad for the DH workforce that went along for this fools ride...

Last edited by CoMooter; Nov 21, 05 at 5:48 pm
CoMooter is offline  
Old Nov 22, 05, 3:41 am
  #14  
 
Join Date: Jun 2001
Location: IAD
Programs: Chase Million Miler, SPG Gold, HHonors Gold, Hyatt Platinum
Posts: 2,728
Originally Posted by CoMooter
Even with the assumption that DH could not survive the 'new' deal with UA [deleted relevant points about Mesa 'cause I'm lazy]...
I do feel bad for the DH workforce that went along for this fools ride...
Hi,

I used to be an employee of ACA, and have had many friends over there. Unfortunately, with the demise of FlyI, most of my friends are now at "greener" pastures. I guess they say in the airlines, that once an employee, always an employee -- I just don't give a rip about the stockholders, because publicly traded airlines are an absolutely stupid place to "invest" money. Anybody who doesn't know that, shouldn't be putting money in the stock market. Ok, to be more polite about it, if one wants to invest in the airlines, they must do so only after performing due diligence. In other words, caveat emptor or know what you're getting into.

I haven't heard one positive thing about Mesa, ever. The company's pay sucks, their work rules, suck, etc. As somebody who at one point in time was considering becoming an airline pilot, Mesa is not a place I'd like to work. ACA, before FlyI, was. Walmart might be a great corporation, but it sucks to work there. Same thing like Mesa. To watch ACA turn into another Mesa, or get bought out by Mesa, no thanks, and the employees knew it. The new UA "contract" would have left ACA in a lurch, and you don't have to buy it. Fact is, the contract basically allowed UA to jerk ACA around, cut their flying at will, and heck, terminate the contract at will, or the equivalent of it. That contract was not in ACA's best long term interest, and I'm not the only one who feels that way. As an employee, I could care less what the company stock is worth if the company is laying people off. Safe to say I wasn't an employee that held a lot of company stock.

I have some OPINIONS about the airline industry, and they are as follows:

1. Generally speaking, unions are a necessary evil in the airline world. They are a necessary evil in any industry where no individual posesses a unique skill. No airline "labor" employee posesses a unique skill. They are all trained to a specific standard.

2. The nature of union contracts drives wages to levels that are unsubstainable. During the bad times, the cheaper, junior employees are laid off, and the more expnesive employees are forced to take paycuts to lower the now "higher" average salaries.

3. Employees are rarely going to sacrifice what management wants. Management will take an airline into BK in order to force wage reductions.

4. BK kills off the value of the common stocks.

5. Common stock now worth nothing.

Say what you want about the "fools," but the BOD approved it, and the shareholders haven't ousted the BOD. Ergo, the shareholders haven't helplessly stood by. Every time I write that last sentence, nobody comes up with arguments to the contrary. IIRC, ACA's stock was trading at about $30 at its highest. I don't remember how much it tumbled when UA filed BK. After all, when a vast majority of your revenue is tied to a carrier in BK, and your contract has the potential to be terminated, what value does your product and corresponding stock really have?

As far as the pilots are concerned (typically the most vocal and vested labor group) they took a gamble too. A lot of them would have gone from being an RJ captain to an A319 captain, with a nice pay raise over night, as well as the ability to negotiate workrules better than Mesa. Mesa's considered the leech that started this whole cost war. Therefore, the pilots didn't blindly go along for the ride. As for the majority of the rest of the employees, the competing UAX carriers at IAD had to hire people to staff up the new flights. Lots of them came from ACA. If I had still been working there at the time of the switch, AWAC would have offered me up to three years of my seniority to go work for them. I probably would have, too.

Last edited by DHAST; Nov 22, 05 at 6:01 am
DHAST is offline  
Old Nov 24, 05, 9:12 am
  #15  
FlyerTalk Evangelist
 
Join Date: Apr 2001
Location: DCA
Programs: AMC MovieWatcher, Giant BonusCard, Petco PALS Card, Silver Diner Blue Plate Club
Posts: 22,219
Originally Posted by DHAST
The new UA "contract" would have left ACA in a lurch, and you don't have to buy it. Fact is, the contract basically allowed UA to jerk ACA around, cut their flying at will, and heck, terminate the contract at will, or the equivalent of it. That contract was not in ACA's best long term interest, and I'm not the only one who feels that way.
This may sound like hindsight, but I said it over a year and a half ago as well: Atlantic Coast shouldn't have thrown all its assets into becoming an independent airline. It should have negotiated contracts, with UA and/or others, to continue operating as a feeder carrier with part of its fleet... and slowly ramped up an independent airline. flyI could have been a separate company with ACA as holding company. It would have moved over to Airbus aircraft as they came online. And it would have had time to develop markets instead of operating hundreds of empty flights on day 1. It would have had lower costs and the holding company would have retained a fixed revenue stream from its RJ commuter operations. Might not have worked, but would have been better than the plan they went forward with.
gleff is offline  

Thread Tools
Search this Thread