FWAAA

http://biz.yahoo.com/prnews/050429/dcf009.html?.v=8

More than a quarter billion lost in the first quarter and yet another optimistic press release. I'll paraphrase: "If we can only cut our wages enough, maybe we can get to break even."

haveric

I honestly don't understand (a) how, after all of these cuts, they still can't come even close to having a sustainable operation and (b) why GE doesn't just pull the plug, let the planes sit in the desert for awhile, and wait until the other airlines fill the gap and snap them back up?

FWAAA

Several articles in the mainstream press recently blaming GE for decimating the finances of remaining legacy airlines due to propping up UAL and USAir and keeping far too many domestic legacy seats in the air, drastically reducing yields at all legacy airlines.

I'm a fan of GE, but eventually someone's gonna question whether it's a good idea for one large company to accumulate that much power over the entire US legacy aviation market.

ByrdluvsAWACO

So they're burning through roughly 93 million a month with their lowered costs. Assuming the same burn rate, another 90 million went up in smoke in April.

What else can they cut? I'm real leary about HP getting involved with US.

haveric

Doing some very rough calculations, if they are burning $3 mil a day, that is equal to about $120 per employee. Basically, they might break even if all employees were volunteers.

US AIRWAYS FAN

Isn't 1st Quarter the slowest of all quarters? US has even said even after all their cuts they will not make a profit this year so this does not come as a surprise at all. I am going to be more interested what happens during the 2nd and 3rd quarters.

FWAAA

Sure, the first quarter is always the poorest performing three months of the year. The really bad news for US is that revenue was way down from last year's first quarter; costs fell as well, but nowhere near as much.

Profit? Who's talking about profit? Running out of cash is the primary concern right now.

abeflyer

Didn't US already announce it lost $119million in February. I forget the actual loss for Januray but if I remember correctly it was a little higher than February. If my recollections are correct, then March was almost breakeven. Someone remember actual January figures?

GalleyWench

January operating loss was $134.4 million
February operating loss was $85.7 million
March operating profit was $19.1 million
Total operating loss for the quarter was $201 million

I read that May and June bookings are already ahead of projections, 2nd and 3rd quarters are usually the strongest of the year. Fuel expenses were 48% over last years expenses, and employee expense was cut by 26%.

martin33

we'll know more when the march operating report is filed with the bankruptcy court or 10-Q with the SEC. as GW pointed out, subtracting the monthly numbers from the quarterly gives a March operating profit of $19 million. On a net basis there was a loss because interest payments run about $25 million net a month. this year brought an unusually good March for the airlines because Easter came so early. the downside of that will be felt in April's numbers.

on the good side, cost per seat mile mainline fell, to under 8.5 cents. on the horrible side, systemwide revenue per seat mile ("unit revenue" or "RASM) fell 9.7 percent from last year's first quarter. US Air's fares are in complete free fall.. to put that number in perspective: for the first quarter DL's RASM decreased 2.9%, CO's RASM increased 3.8 percent, and AA's RASM increased 3.7 percent.

on the good side, bookings look up for May and June. on the bad side, WN and FL enter the PIT and CLT markets, respectively, starting in May. it is almost certain, therefore, that RASM will keep falling. it is harder to see how CASM can fall much further, however...

as they used to say for all good tv cliffhangers--- don't turn that dial

abeflyer

Thanks Galleywench for the numbers. (I often wonder if I've been on one of your flights--sure would like to say hello).

Actually they look pretty good to me with an operating profit in March-- that would put US in the same league as SWA and AWA, so I think the worst is past.

The machinists were downsized in March and 150 FA like Teddy from PIT are retiring before the end of the year so payroll costs will continue to go down in the 2nd and 3rd quarter as senior staffing is cut and non-repetitive severance packages paid out.

Now if I am an investor, instead of a bankruptcy attorney like I am, I would see that US in the poorest quarter can turn a profit one month when the rest of the legacy carriers didn't (altho remember only US an UA due to bankruptcy have to report monthly so we have to guess at this).

I think the doomsayers should start to quiet down if they look at the month by month trend. Cash burn was bad in January but has come down considerably so by March cash was increasing.

I know myself I am more worried about my UA trip to FAR in first week in June than my US trips to DEN next week or SFO later in the month. There the FA are threatening strike and why not--they really haven't gotten a plan or cut their costs to show things are turning around.

I have my wife already talking about a fall trip to Scotland or Venice and am not worried about if US will be there. I assume they will be.

I think this also speaks well to investors about a possible AWA merger. Costs down--run two airlines under one holding company to avoid labor issues--and code share everything-- with common FF program and back office. ^

GalleyWench

abeflyer,
Would love to meet you on one of my flights! I always tell people, I'm the one with the cockroach pin on my sweater or apron, depending on the season.
Just wanted to add that in addition to our MEC president Teddy retiring, a total of 500 f/a's took that particular buyout. Some are leaving in June, some in September and the remainder in December. On top of that there are another 400+ f/a's retiring during that same time period. I sure do hope that they replace some of them, we're already cut to the bone and to drop the staffing by almost 1000 by year's end is going to be tough to cover without additional f/a's coming back to work.
I have always been the eternal optimist, something will work out and if it doesn't I also know that there will be life after US.

ClueByFour

It's actually pretty smart on GE's part--if US tanks, they are behind only the ATSB for the scraps, and they can suck out what will then be the taxpayer's dollars to get lease money for another few months.

ClueByFour

LUV and AWA made money after not only operations, but paying debt and interest. Huge difference.

fly747first

In the short-run, firms can only reduce their costs by cutting labor. Capital is pretty much fixed in the short-run, and airlines can't do much about it. Fuel prices are going up and US Airways is lowering fares on many of its markets in order to compete with low-cost carriers. Has anyone checked out the latest First Class fares MIA - PHL - MIA? It's only about $520, it shows how desperate US Airways is. Of course, AA is also matching this fare.

At this critical point, cutting labor is not enough to make profits.