A Massive Change Is Coming For...

Tue Mar 14, 2000 4:46 am

This is absoloutely 110% pure specualtion:

As you know, USAirways finally settled their suit with British Airways. A week or so later, CEO of British Airways, Bob Ayling resigned. Reportedly many sources are saying BA is seeking USAirways' CEO, Stephen Wolf to replace Ayling. This could be why US and BA settled their legal suit. USAirways is already in the middle of a possible FA strike and negotiating a possible merger with AA. USAirways stock has dropped to its new 52 week low of $18. a share and stockholders are already speculating of a possible replacement of Wolf. If Wolf were to go to BA, USAirways would undoubtedly go under. First of all, Flight Attendants would strike because there would be no one to negotiate a contract with. This would hurt US even more. Second, American would most likely show up real quick and make a bid on the troubled airline!!! USAirways has made many mistakes in the last year, First off, trying to build Dulles as a hub, and then six months later, pulling out, Second off, the Airbus order, it has to be costing big bucks to integrate these aircraft into an all Boeing fleet. Personally I could be completely wrong, but the way i see it is that USAirways is in a very bad bad position, maybe even worse than TWA is.

to add to this mess, Wolf has already promised to shut the airline down, if FA's strike.

Please, if you dont like my views on this dont post any negative and mean comments, positive criticizm is always welcome.
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Joined: Tue May 18, 1999 4:41 am

RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 5:29 am

I agree with you PanAm. At this point it is being reported that it is very likely that Wolf will be hired at British Airways. Everyone knows that British Airways has recently been going downhill, just like USAir in the early 90s. Maybe Wolf could work a few more miracles.

As for the Airbus order, It was stupid to an extent to switch from All-Boeing to Airbus, but it looked good due to the cost savings in commonailty. Now, the pilots at US Airways were used to the way Boeing's flew, but were forced to switch when the new planes were ordered, as were the flight attendants. Remember what happened when the A-320s arrived?? It has been said that US Airways wants to go back to Boeing for some planes, mostly due to the fact the pilots have encouraged it and that they fit into the future plans.

My guess is that the US Government wouldn't allow AA to buy US Airways, since AA is already big enough. If the airline does go, its assets will likely be divided, like PanAm.
Philly Phlyer
Posts: 356
Joined: Sun May 23, 1999 12:05 pm

RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 7:21 am

I will not disagree that US Airways has made some mistakes this year, but I think you need to do a little more research. Before you state that US Airways is "in a very bad bad position, maybe even worse than TWA is" I would suggest that you look over their financial statements and SEC filings. There is no comparison between the two. US Airways is VERY healthy financially, is much larger, is growing and has many fortress hubs.

As to the threatened "shut-down" if the FAs do not agree to terms, this is not a shut-down as in going out of business, but a curtailment of all flights instead of letting the FAs play their CHAOS game. Under CHAOS, the FAs would shut down random flights with no warning. As such, the airline gets the horrible press like AA did a year ago (stranded passengers, ruined vacations, etc.) and would not have any full fare business travelers on ANY flights (they already have booked elsewhere). As such, almost all routes would fly half empty with heavily discounted seats. Best to not fly at all. This is an example of management playing hardball.

The Airbus order is an example of having to take some short term costs for long-term savings. US Airways is getting the narrow-body aircraft at 50 cents on the dollar. The ultimate payback is enormous when you consider the low cost, fuel savings and fleet flexibility that will be achieved. It is very expensive to retrain the pilots, but those costs will more than be covered by the savings.
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RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 7:36 am

If the FA's strike the airline can only go so long w/o incoming money. But if you are right and the FA's do there little chaos thing would the management shut down the airline or would it keep trucking?
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Joined: Sun Dec 05, 1999 7:03 am

RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 8:58 am

Some very good points have been made here. However, I believe the move to an all-Airbus fleet was brilliant. US Airways made an investment that has already started to pay for itself in terms of just how much can be simplified. I'm not saying that commonality is the way to cure every operational problem, but it seems to have helped US.

From what I've been told, Grengwald (forgive my spelling) has been running much of the show.

As far as a shutdown, I think that's just a management tactic to get the flight attendants back to the table. Keep in mind that Wolf knows the industry, and he knows what he's doing. This isn't the first time he's played this game, and he usually wins.

And by the way, if US and AA merged, US could come out as the dominant partner. US is in a MUCH better financial position as far as liquid assets. AA may have a bigger fleet and serve more destinations, but right now, US has deeper pockets.

As far as the Dulles thing goes, US Airways saw that UA was making a killing there, and they tried to get some of that market with MetroJet. It didn't work. A smart CEO knows when he's beaten.

RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 10:18 am

I understand the thing about shutting US down is just a managment tactic, it is trying to get employees that love US and dont want them to shut down to turn on the employees (the FA's) that are striking. US is trying to get more employees on their side rather than the FA's side with threatening a shutdown. I would really like to see Wolf have the balls to shut his own airline down. The US gov't would interfere, saving Wolf from having to shut his airline down. As for the airbus, yes it is going to save US tons in the long-run, but why waste the money integrating them in the short haul. Boeing jets have to be fuel efficient enough? US would not have to spend sooooo much integrating airbus into their fleet if they would have gone with Boeing. How fuel efficient is the 738 compared to the 320? Anyways--Why would US think of merging with AA if they were already too big? They are already negotiating a merger, so why are they? If AA is already too big, why are they negotiating?????
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Joined: Thu May 27, 1999 3:30 am

RE: A Massive Change Is Coming For...

Tue Mar 14, 2000 10:44 am

I think people who criticize the airbus buy are missing some major points. If US had bought Boeing, they would still be waiting for the planes. Instead, they went Airbus, and already have 40+. Boeing with its own labor problems was quite unable to provide planes fast enough. Just ask Southwest. Also, the Airbus replaces at least 3 types in the airline's fleet: DC9, MD80, and 732, and in the longer term future, 733 and 734. 8 years from now, I would expect 320x, 757/767, 330 and perhaps 717 in the fleet.

Oh, and in no way is US going all Airbus anytime soon. Those are words that have been put in their mouth by speculators on this forum.

As for the shutdown, come on. Cease of operations does not equal going out of business, just like a strike does not mean going out of business.

The AA/US deal is for real. They actually overlap on only 4% of their route structure, and compliment each other quite well, although a merger would be weird since the fleet types are quite orthogonal.

As for Wolf leaving, you're right. That is 110% speculation.  

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