SWAbubba
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Posts: 154
Joined: Fri Mar 15, 2002 2:15 am

Future Of Legacy Carriers- Article

Sat Dec 27, 2003 8:37 am

It's fairly technical, but makes for an interesting read...

http://www.unisys.com/eprise/main/admin/micro/doc/Dec_03_Scorecard.pdf
 
StevenUhl777
Posts: 3281
Joined: Sun Jul 08, 2001 11:02 am

RE: Future Of Legacy Carriers- Article

Sat Dec 27, 2003 9:07 am

Required reading for all armchair CEO/CFO's here on airliners.net !!!!  Big thumbs up

SWA's rising costs was something I found interesting, and they're going to have resolve simmering labor troubles now so they don't become a legacy carrier!

Underscores my belief that US utterly failed in their Ch. 11 restructuring efforts, and it will only be a matter of time before they refile for Ch. 11 and eventually Ch. 7.

And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
SWAbubba
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RE: Future Of Legacy Carriers- Article

Sun Dec 28, 2003 1:49 am

Steven,

SWA's continually rising costs are something we are all aware of and watching closely. Even though pay rates and health care costs are rising the addition of long-haul flights makes up for it to some degree on a per seat-mile basis. Another thing that will help bring the average costs down will be the resumption of growth next year- new employees obviously start at the bottom of the payscale and lower the average.

I think the FA's new contract (whenever it gets settled) will be the last large increase in employee costs you'll see for a while. The pilot contract is up in '06 but will likely focus on improved benefits vs straight pay.

I agree completely that US's bankruptcy didn't get their costs where they need to be. I think US will continue to shrink and will eventually stabilize as a niche regional carrier.
 
planemaker
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RE: Future Of Legacy Carriers- Article

Sun Dec 28, 2003 9:28 pm

SWAbubba:

Thanks for providing the link. The article made for interesting reading but I think that the authors were a bit selective in how they used the facts presented to suit some of their points (and in some cases they were incorrect.)

I think that they certainly sensationalized SWA's rising unit costs though they did say that SWA was addressing them, and that cost control has always been central to their managemant philosophy.

Aside from the rez center consolidation from 9 to 6, the gradual retiring of the 737-200's from the fleet, and the addition of blended winglets, I believe that that they overlooked the easiest way for SWA to potentially reduce their CASM, if SWA would choose to do so: swap some of the 124 737-700's on order with 737-800's. That would increase productivity significantly by the addition of about 40 seats per flight. (The authors incorrectly state that SWA has around 400 737's on order.)

The authors also failed to mention other examples of SWA poductivity gains that will result from online checkin; Ticketless Travel for Rapid Rewards Members using Award Tickets and Companion Passes; and, in the upcoming year, the ability to receive connecting boarding passes at the airport or online.

The example of BWI to illustrate what could/will happen at PHL I think is also a bit overblown. BWI was a unique situation and it shows it - BWI is ranked third for number of departures and non-stop cities served on SWA yet the station was only established in 1993. But I do agree that SWA's entry into PHL will be further restricting the oxygen flow that US Airway's needs to survive. However, entry into PHL is not the fatal blow that they hint at. SWA is not the only shark that smells blood in the water...


Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
SWAbubba
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RE: Future Of Legacy Carriers- Article

Mon Dec 29, 2003 2:17 am

Planemaker,

-800's would add a few seats but would also add a 4th FA, meaning crews would have to be scheduled seperately for that fleet. Generally we have prefered adding frequency on routes that justify it rather than adding capacity by increasing the number of fleet types.

As of the 3Q financial statement we have 140 firm orders and 274 options through 2012.

PHL is more congested than BWI, but it also has a larger population base. BWI and MDW both grew very quickly for us, I wouldn't be too surprised to see the same in PHL if the delays don't kill us.