US Airways' problem was not that they exited their first bankruptcy too soon -- it was that they exited bankruptcy with a half-a$$ed business plan. The executive summary: "We're going to do what we were doing before, just smaller and with more high-cost RJ
's." People conveniently ignore that their mainline cost structure has been at or below the target numbers from the business plan. Unfortunately for US Airways, their revenue numbers have been MUCH worse than the business plan envisioned. I suppose management felt that the LCC's were going to stay out of their hubs and focus cities. Then again, jetBlue had already started service at BOS
before US Airways emerged and AirTran was operating a dozen flights a day or so at PHL
. It should also have been clear that Southwest would continue to beef up its presence on the high-fare East Coast.
In any case, US Airways had little or no choice as to when it would emerge from bankruptcy protection. Their credit card processing agreement was due to expire on March 31, 2003, and no one was willing to enter into a credit card processing agreement with them (due to all the potential financial liabilities if US Airways were to liquidate). Since you cannot do business as a major airline without the ability to accept credit cards, they faced either exiting from bankruptcy by March 31 or shutting down.
I know it's a bit off-topic, but the amount of time spent in its first bankruptcy is irrelevant to why UAIR has done so poorly since. I guess perhaps if they had stayed in bankrputcy longer they might have realized how stupid the business plan was, but I doubt it. The new plan is still (more or less) more of the same, just with lower fares on more routes due to LCC competition, more high-cost RJ
's, and more flying internationally where LCC's don't compete.
As for United, I remain unimpressed with what some tout as an "innovative" business plan. The p.s. product is more marketing than anything else; the 762 fleet needed to be retired and 763's are too large for United's traffic on the transcons without reducing frequency, which would have handed AA
even more of the market. Using Ted to maintain or increase market share is only sensible if
United is losing less money on those routes than it would have by leaving the product the way it was. People talk about Ted increasing market share but little is made of if losses are greater or smaller.
And the fact remains that even with the pluses cited by boosters of the airline (attractive international routes, strong hubs, etc.), United is still losing money hand-over-fist. Until the company comes up with a viable business plan (and the current one seems to basically be, ditch the pensions and cut pay), speculation as to its fate is entirely valid.