workbench
Posts: 163
Joined: Wed Aug 11, 1999 3:22 am

Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 11:37 am

All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years. All the carriers are on deaths door step, some more than others. If the past 5 years is enough to take out these airlines, then they should go out of business. They should have planned ahead and known they could go through rough times, and they should have more money in the bank to tough it out. If they dont, then thats bad management and a bad business plan. WN and all of the other LCC, are making $$$, the legacy carriers are not. They should be allowed to go out of business. I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 11:56 am

So, your solution is to let all of the international legacies fail. Let me remind you, these are the airlines that are carrying our flag around the world. Should we just give up any international market share we have, and let the foreign carriers take all our business? And domestically, everyone has to fly WN. Yeah, really bright idea... Yeah sure

The airlines can be fixed, they just need some fresh new faces in the mangement, not the same 60 years olds with "experience." That "experience" is what's keeping legacies from moving into the 21st century.
 
DLKAPA
Posts: 7962
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RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:01 pm

Hey workbench did you know that... nah I'm not gonna waste any time on you ::takes a dump and walks away::
And all at once the crowd begins to sing: Sometimes the hardest thing and the right thing are the same
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:02 pm

Have you been in a time warp? This post seem like it's from the year 2001.

Exactly "none" of your tax dollars have gone to bail out legacy carriers over LCC carriers.

Legacy carriers have made enourmous strides in lowering costs. In fact, most of them AA/CO/HP/US have margin levels in the LCC range now. The 2Q reports coming in two weeks will show this.
 
commavia
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RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:06 pm

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions.

Perhaps I could see your argument on the pensions at UA, US, and perhaps NW and DL down the road, but to say that your "tax dollars are going to bail out these poorly managed companies," in a blanket statement like that, is just ridiculous.

To date, only one legacy airline -- US -- received any money from the ATSB. And, while I would agree that this money was a total waste as US' inept management squandered it just as they did the money they were flush with in the 1990s, that still doesn't qualify or justify your comments. Not a single other US legacy airline has received any "bailout" from the U.S. government.

Instead, several -- namely AA and CO -- have tried very hard to refine their operations and restructure without the help of the government or bankruptcy. And, at least in the case of these two airlines, they are succeeding -- slowly and surely -- but succeeding, nonetheless.
 
padcrasher
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RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:12 pm

HP had a loan they paid back with interest. Recently bankrupt "LCC" ATA recieved a loan as well. They've just cut capacity 50% just like "near bankrupt" Independence air.

Yes those LCCs are doing great.
 
padcrasher
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Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:23 pm

Quoting Commavia (Reply 4):
Instead, several -- namely AA and CO -- have tried very hard to refine their operations and restructure without the help of the government or bankruptcy. And, at least in the case of these two airlines, they are succeeding -- slowly and surely -- but succeeding, nonetheless.

Boy Commavia, you just can't see forward past the latest Quarterly reports. You ignore guidance, don't account for restructuring charges, totally ignore the fact Delta has gone from having the highest costs amoung the majors to having the lowest costs **midway** through a cost overhaul. You write off Song.

Man I'm going to enjoy the next year...LOL
 
727EMflyer
Posts: 538
Joined: Wed Mar 09, 2005 3:22 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:34 pm

Let me introduce you, workbench, to a little thing called evolution. The legacies evolved out of nothing into a rigid, regulated, cost controlled network that gave mainline jet service to most of the country. Deregulation came along and they evolved into a few giants that did the job well and wove the country with a network of mainline where it worked and regional prop's in the gaps. The whole time connections to the world sprang out from the best anchors across the country. Newton said for every action there is an equal and opposite reaction. In this case, when the small carriers were eaten up, new ones (LCC's like WN) evolved into their places. The legacy giants, however, were fat and happy with no need to eat these new pests. Rather they brushed them aside, living alongside them. The pests, however, were lazy. They grew large and strong eating only the largest, ripest fruit on the ground, since there were not enough small berries to fight over and the sweet fresh ones still up on the trees were too high to reach without a lot of work. Now, should the giants leave, the pests will have to grow into their place, climbing the trees and picking the berries, unless they want a new beast to evolve around them.

Yes, WN is profitable, B6 does OK, and a handful of others like F9 are giving the legacies a run for their money. But they only serve very specialized markets! In WN's case, they flooded the prime leisure routes in Florida and the Southwest as well as cashed in on high O&D routes. They serve less than 70 cities all together, fly nothing international, and won't touch the small market cities and towns that make up so much root structure of the legacies. Should UA and company vanish tomorrow, Southwest and the like will have to make a major investment to answer to a demanding, yet slim, market at home, and an even bigger investment to bring Americans abroad. This will riddle them with debt create a huge liability they must keep under control. If they don't do it, someone else will, and at a better cost, and they will eat these LCC's from the ankle up.
 
commavia
Posts: 9807
Joined: Mon Apr 25, 2005 2:30 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 12:52 pm

Quoting Padcrasher (Reply 6):
Boy Commavia, you just can't see forward past the latest Quarterly reports.

You know why I can't "see forward past the latest quarterly reports?" Because they speak for themselves! In the January to March 2005 period, historically the weakest quarter for the travel industry and the seasonally lightest air travel period, AA managed to eke out an operational profit of $23M, one of only three major airlines in the entire U.S. to do so. The other two, for those keeping score, were WN and B6. AA managed to eke out this operational profit, even accounting for a dramatic 36% increase in fuel expense, and a contribution of $138M to its pension plans (which it is still fully funding). And, on top of all that, AA also increased its cash balance by $200M from $3.3B to $3.5B, more than any other airline in the U.S., even WN.

Now, let's contrast that with Delta. During the first quarter, Delta posted an operating loss of $957M -- that's a nearly $1B dollar difference from AA's result. Of this $957M loss, $531M, or about 55%, was attributable to "Pension settlements, asset writedowns, restructuring and related items." That leave's another 45% of their monumental loss that is solely attributable to other non-"restructuring cost" expenses. And, that doesn't even consider their actual net loss of $1.1B, compared with $162M at AA, which glaringly illustrates the enormous debt load DL is carrying at the moment.

So -- please tell me -- what, exactly, am I missing in these mystical quarterly reports that would immediately indicate to me that DL is doing so much better than AA, or CO for that matter?

Quoting Padcrasher (Reply 6):
You ignore guidance, don't account for restructuring charges

Remind me again, Padcrasher -- what are the analyst estimates for loss on AMR and DAL per share?

Oh yeah, that's right, it's an average $.13 loss for AA for this quarter, $.27 loss for next quarter, and $3.39 for the full year, while it's a $2.48 loss for this quarter for Delta, a $2.50 loss for Delta for next quarter, and a whopping $13.21 loss for the year.

Yeah, you're definitely right -- I'm way off base in saying that AA -- and CO -- are in a significantly stronger position than DL.

I think the analysts' guidance speaks for itself.

Quoting Padcrasher (Reply 6):
totally ignore the fact Delta has gone from having the highest costs amoung the majors to having the lowest costs **midway** through a cost overhaul.

On the general question of costs, while I totally dispute your assertion that Delta has the "lowest costs among the majors" -- and have no intention of arguing it back and forth with you going forward, as we have already done this in another thread, and really so no point -- the operation of airlines revolves around not just costs, but also revenue. Delta's costs are still too high, and they are obviously not doing so hot on the revenue side of the ledger, either. Their revenue increased 3.3% YOY in 1Q05, compared to 5.3% at AA and 8.6% at CO. Just for comparison, as well, DL's Q1 costs increased 17.5% YOY, while they went up 9.6% at CO and a comparitively miniscule 5.6% at AA. This is, of course, all including fuel. Please -- let's not get into the debate again about whether or not to include fuel. The day that airline's stop paying the fuel bill, we'll discuss their cost reduction efforts net of fuel.

Quoting Padcrasher (Reply 6):
You write off Song.

There's a reason. I think it is a financial joke. Maybe you have some deeply secret information I don't have, but I personally don't think Song is a financial success whatsoever. Don't get me wrong -- I think it is performing better financially than the overall DL mainline on a size-relative basis, but that's not saying much. What cost advantage does Song actually have? It pays some employees somewhat less, okay, it flies its 757s a bit longer each day than the average DL plane, and it crams more seats into the plane. But, when B6 can undercut the Song price on flight after flight, route after route, and make money while Song struggles to match and profit, all of that means absolutely nothing. It's costs are almost certainly higher than B6 -- it's primary competitor in most key markets -- and I don't think even you will dispute that. That's why I think it keeps expanding -- while it is still losing money, it is losing less money than DL mainline would be in the markets it serves.

[Edited 2005-07-03 05:54:59]
 
workbench
Posts: 163
Joined: Wed Aug 11, 1999 3:22 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 7:33 pm

Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will. In my guesstimate, all the legacy will eventually dump their pensions and the tax payers will be left holding the bags of private enterprize.

Why is WN and the other LCC's doing well. They are smart!. They have hedged fuel, they saw the future, the legacy carriers did not, they never thought oil would go up in price. Wow those CEO's at AA/DL/NW/CO are real smart!. They continue to fly routes where they loose money,
"just to compete".

Virtually all of the legacies are bankrupt, yes some have cash in bank but it is all borrowed money.

My whole theory is let them fail.! If 5 years of hard times is causing this much trouble for them then they havebeen and always will be poorly run, and poorly managed with a bad business plan.

Hey lets rake the business man over the coals every time he flies by stiking him with the highest fare possible. No one will ever comeby and undercut our prices and IF they do, they will still flyus. We are American...!
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Sun Jul 03, 2005 11:43 pm

Quoting Workbench (Reply 9):
Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will.

Nope, to date the PBGC has used only it's own funds. No Federal bailout has been needed.

Quoting Workbench (Reply 9):
Why is WN and the other LCC's doing well. They are smart!. They have hedged fuel



WN was the only airline that hedged significantly. Other majors and LCC hedged not at all or to a much smaller extent. I don't see how this makes most LCC's "smart".

Quoting Workbench (Reply 9):
Virtually all of the legacies are bankrupt

Let's examine that. Just two US Airways and United are bankrupt. ATA on the LCC side is bankrupt. Southeast airlines less than a year ago closed down. LCC Independence air is the airline most near bankruptcy.
 
padcrasher
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RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 12:00 am

Geez Commavia it goes right over your head. I'm telling you what you will see in the future as I go by the guidance offered in 1Q reports. You on the other hand retort back by looking at the reports that are snap shots of the "past".

I'm told you 4 Months ago DL has the lowest costs of the majors "presently" If you consider HP and WN as LCCs as most do, then the 2Q report will prove me correct once again. (Like when you got all bent out of shape when I proved to you DL already has costs lower than AA)

Now it's not all about the costs?....OK fine. Let's watch the margins continue to improve for Delta as they continue to be flat for AA and CO.
 
1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 12:12 am

First of all Workbench, I see you ban has expired, too bad.

Secondly, as someone who is supposedly going to law school you are seriously myopic and ignorant to the reality of business.

1. The legacy carriers were growing rapidly in 1999-2000 and profitable like never before, their boards of directors and the stock market demanded (greedily) growth and increased performance, banks extended huge amounts of finanancing as they were attempting to grow also. This was in the time of the .COM boom and the financial markets had very over optimistic ideas of what a company should do to grow.

2. The "management" could not have known about the Asian financial meltdown, 9/11 and SARS, all of which continued to hammer air travel as the economy in the US melted down.

3. Banks and leasing companies as well as the government are now in the Legacy's management drivers seat. The banks DO NOT want airplanes turned in due to a shut down. Because:
A. The glut of planes on the market would ruin lease rates/resale values.
B. Airbus and Boeing would face severe pressure if 400 planes showed up on the used market at rock bottom prices, ruining their sales and affecting EC and US GDP, thus creating a revenue drain on gov't tax coffers.
C. The US government would rather guarentee loans than pay up to 18 months unemployment for 60,000 people, not to mention the egg on the polititians faces when our "economic recovery" was slowed down.
D. You do not "pay cash" for things in business, you use leverage to make a better return on the assets you do have, read a business finance book before you make more of an uninformed impression on people who read this thread.
E. As far as taxes go, deal with it, at some point we have to pay off our deficit, it will just get worst, welcome to reality.

Quoting Workbench (Thread starter):
All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years. All the carriers are on deaths door step, some more than others. If the past 5 years is enough to take out these airlines, then they should go out of business. They should have planned ahead and known they could go through rough times, and they should have more money in the bank to tough it out. If they dont, then that's bad management and a bad business plan. WN and all of the other LCC, are making $$$, the legacy carriers are not. They should be allowed to go out of business. I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defaulted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.



Quoting Workbench (Reply 9):
Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will. In my guesstimate, all the legacy will eventually dump their pensions and the tax payers will be left holding the bags of private enterprize.



Quoting Workbench (Reply 9):
Virtually all of the legacies are bankrupt, yes some have cash in bank but it is all borrowed money.

Duh, all the airlines have borrowed money, what do you think a publicly traded company is? Stock is ownership in a company and is in effect "borrowed money" maybe you should learn how to read a balance sheet.
Golf Foxtrot you are cleared for departure
 
Braniff727
Posts: 656
Joined: Sat Sep 23, 2000 2:25 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 12:16 am

Quoting Workbench (Reply 9):
Wow those CEO's at AA/DL/NW/CO are real smart!.

You're right, they aren't smart. The fact is they haven't found a way of competing with UA and US who are charging the flying public less than it costs them to operate while under the protection of Chapter 11.

If only those "dumb" CEOs could find a way to charge less than their chief competitors, while not having to pay bills...

Your statement is absurd on so many levels. There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law. UA alone has been at an unfair advantage for nearly THREE YEARS! Hedging fuel or not, that's a long time of keeping fares artificially low.

You have employees who have been working for the companies for a lot longer, meaning higher pay, where as B6, F9 and FL do not. The airlines have been getting, or trying to get concessions on salaries, but you have to deal with unions and contracts, which as I'm sure you can see is not easy.

All of that is just the tip of the iceberg. There are so many other differences in the costs of legacies versus LCCs that there's no time to type them all out. The fact remains, you have made a blanket statement, based on no facts what so ever.
Climbing
 
padcrasher
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Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 12:27 am

Quoting Braniff727 (Reply 13):
There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law.

I'll say this about United. Their restructuring since going into Chapter 11 has been dismal. It's been a joke compared to what AA was able to accomplish without going into bankruptcy and in half the time.

But UA has walked hand in hand with their creditors into court each time, both asking for more time. It's not like the creditors ever offered an alternative plan, or opposed what United was doing. So I don't see this as abuse of the bankruptcy process.
 
dartland
Posts: 514
Joined: Wed Apr 20, 2005 5:09 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 12:32 am

Well said 1MillionFlyer -- you beat me to it.
 
ckfred
Posts: 4734
Joined: Wed Apr 25, 2001 12:50 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 1:39 am

You also have to take into consideration the collapse of the dot.coms and the tech sectors. According to a friend of mine at AA, tech companies were flying people like crazy doing work in anticipation of Y2K.

Once the year 2000 came and the vast majority of computers worked, most buyers of computer equipment and services. Tech spending really didn't see any revenue growth until 2004. So that cut into flying.

Then the dot.coms, who were flush with cash from IPOs were flying everywhere either in First Class or at the last minute at full-fare coach. When this sector went under, this revenue stream for the airlines dried up.

And let's not forget the wonderful people at the TSA who have made getting on a flight so time consuming, that many people now drive many short-hop routes.
 
LawnDart
Posts: 861
Joined: Fri May 20, 2005 11:33 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 2:22 am

Quoting Commavia (Reply 8):
Now, let's contrast that with Delta. During the first quarter, Delta posted an operating loss of $957M -- that's a nearly $1B dollar difference from AA's result. Of this $957M loss, $531M, or about 55%, was attributable to "Pension settlements, asset writedowns, restructuring and related items." That leave's another 45% of their monumental loss that is solely attributable to other non-"restructuring cost" expenses. And, that doesn't even consider their actual net loss of $1.1B, compared with $162M at AA, which glaringly illustrates the enormous debt load DL is carrying at the moment.

Delta has a couple of "environmental" issues that American doesn't, namely they compete with low-fare carriers on a far greater percentage of their network than AA.

By low-fare, I'm talking WN, FL (not as successful as many people would believe), B6, Independence and mostly USAirways. Under protection of the bankruptcy courts, US has been able to abrogate a lot of their financial contracts and obligations, and then turn around and price their product below cost in many cases.

Independence Air's management is smoking crack...I certainly can't figure out what their LCC business plan is, but it sure as hell ain't successful. A top executive at Independence (before they went "Independent") once said that an airline based on CRJ flying without a major partner would never succeed - I guess he was correct. Hmm...hope they can accelerate the delivery of those remaining A319s.

Delta is also the largest carrier serving Florida, not the highest yielding market in the U.S., but certainly one of the most competitive.

Quoting Commavia (Reply 8):
but I personally don't think Song is a financial success whatsoever. Don't get me wrong -- I think it is performing better financially than the overall DL mainline on a size-relative basis,

You think, but you don't know. Neither do I, because Song's financial results are not broken out from mainline. Song is a reaction to increase encroachment on the aforementioned Florida market...it may be a good response, it may not. But credit Delta with trying to do something, and acknowledge the generally positive reviews from passengers. Now, if Delta could take that marketing a transfer it to mainline...

Quoting Workbench (Thread starter):
All of the legacy carriers have bad management and a bad business plan. These carriers have been in business for 70+ years.

ALL the LEGACY carriers??? Upstart carriers, by and large, are known for their bad management, that's why 99% of them fail within years of starting service. The fact that legacy carriers HAVE been in business for 70+ years testifies that they've done something correctly in the past, and maybe, just maybe, they'll survive into the future.

And your rant about your tax dollars bailing out the airlines doesn't hold water when you consider the fact that the commercial airline industry is one of the most, if not THE most, heavily taxed industries in this country. YOU owe the airlines a couple of billion $$$.
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 3:10 am

Quoting Braniff727 (Reply 13):
Your statement is absurd on so many levels. There are so many things that have been working against the legacies, the biggest of which is UA / US raping the industry while being allowed to abuse bankruptcy law

True except for one thing: the biggest thing working against the legacies is themselves, namely their own bad management and business plans, as Workbench maintains. The biggest reason for such insanity in my own observations, as well as some of the more astute minds on Wall Street, is that legacy airline CEOs have a pronounced tendency to let their hyper-inflated egos do their decision-making.

Therein lies what may be the biggest difference between the legacies and Southwest. Herb Kelleher undoubtedly had/has an ego maching those of the CEOs of the legacy airlines; however, Herb did not allow his ego to get in the way of making sound business decisions or to dupe him into making foolish knee-jerk decisions, ala the typical legacy CEO. Thanks to Herb's success in keeping his ego out of business decision-making, he even foresaw the 1999-2000 period as the anomaly that it was and steered clear of building a house of cards that was sure to collapse, ala the legacies.

My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise.
 
aa777jr
Posts: 2269
Joined: Tue Feb 17, 2004 12:03 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 3:13 am

Move to Canada and work on your wood.
A liberal is a man who is right most of the time, but he's right too soon.
 
1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 3:25 am

Quoting Tango-Bravo (Reply 18):
True except for one thing: the biggest thing working against the legacies is themselves, namely their own bad management and business plans, as Workbench maintains. The biggest reason for such insanity in my own observations

You apparenty didn't read my post, go back to 1999 and see what you would have done. It is ridiculous to think this is just a black and white discussion.

Quoting Tango-Bravo (Reply 18):
My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise

I am not a legacy lover, just a realist, You are the people placing generic straw-men statements onto this board with no idea what you are speaking about.

The legacies bet on growth and got spanked, check Daimler Crysler, Krispy kreme Donuts, Sun Microsystems, and many other non-avaition related companies and you will see the same thing.
Golf Foxtrot you are cleared for departure
 
greasespot
Posts: 2955
Joined: Sat Apr 24, 2004 10:48 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 3:30 am

Everyone says the legacies have bad managment or policies.....Can someone please tell me what that was, other than Delta guarenteing theri pilots would be the best paid in the industry forever....people always post that is because of managment that the legacies are where they are....but never elaborate....I would like some example of concrete bad managment policies.

I believe they are where they are just because of evolution in the industry. there was nothing they could do to stop it. It, the industry has just changed to much thanks to the internet. IE: people now have more power to find the lowest fair with minimal work. Before they had to call each airline or go through a tavel agency. All time consuming so people just stayed with their favorite airline.

GS

Note:
Unless they change the laws ....I believe in two years all legacies will have been into bankruptcy or going there.....2 words....Dump pensions... since UAL and US did it they will do it also....See these two if they ever emerge from bankruptcy will have a cost advantage the others will not have...
Sometimes all you can do is look them in the eye and ask " how much did your mom drink when she was pregnant with you?"
 
1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 3:52 am

Thanks Greasespot!

I love how people come into the thread throw out broad accusations with no idea what they are talking about.

Workbench was recently kicked off the site for saying that airline workers were "servants", as a 16-20 year old I am sure he is an expert in airline management  Smile
Golf Foxtrot you are cleared for departure
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 4:10 am

Quoting Tango-Bravo (Reply 18):
My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan and making points that have the legacy-lovers scurrying for their usual straw-man defenses for the subjects of their affections. They say the love is blind; legacy-lovers who regulary post at a.net have done nothing to cause me to believe otherwise.

Blah blah blah blah blah. Workbench just got about every one of his assertions blown out of the sky. You Southwest fans love living in the past. Talking about now, or what will happen in the future really puts a damper on the Southwest hype.
 
commavia
Posts: 9807
Joined: Mon Apr 25, 2005 2:30 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 4:44 am

Quoting LawnDart (Reply 17):
Delta has a couple of "environmental" issues that American doesn't, namely they compete with low-fare carriers on a far greater percentage of their network than AA.

Oh, believe me, you won't get any argument about that from me. I have heard that DL draws about a third of their revenue from just Florida, the mecca of low-fare and leisure-focused air traffic. Furthermore, I completely agree that DL faces arguably more exposure from and competition with low-cost airlines -- like B6, FL (at their own hub!), DH, NK, etc. -- of any of the legacy carriers. This, cumulatively, is part of why I said that it has not been able to adequately correct its finances the way AA and CO have in the post-9/11 world.

Quoting LawnDart (Reply 17):
You think, but you don't know. Neither do I, because Song's financial results are not broken out from mainline. Song is a reaction to increase encroachment on the aforementioned Florida market...it may be a good response, it may not.

That's true, and I'm the first to say it -- I have absolutely no firm, statistical proof that Song is still a money-loser. However, I feel pretty safe in making that assumption as Song without a doubt has a significantly higher CASM than B6, its main competitor, and because I can't imagine how much of a cost savings Song can actually realize over DL mainline. They crammed some more seats into the 757s, pay the FAs a little less, and fly the 757s a little more (although I doubt it is all that much more utilization). As to your comments about the reason for Song, I completely agree and don't dispute it for a second. DL reacted to the new breed of low-fare competition the face with a new concept -- cheap flights to popular cities on high-density aircraft and with some nice amenities like AVOD and meals for purchase. Whether or not it works, I don't know -- I have my doubts -- but I don't know.

Quoting LawnDart (Reply 17):
But credit Delta with trying to do something, and acknowledge the generally positive reviews from passengers. Now, if Delta could take that marketing a transfer it to mainline

I give DL all the credit in the world for "trying to do something," I just personally think it was the wrong something. While several other airlines -- ironically, the ones doing better financially -- have all tried to fix the mainline operation rather than segmenting off a particular piece of the flying to a lower-cost subsidiary, DL has chosen the same basic approach as they did in the 1990s: if you can't beat 'em, emulate 'em the best you can.
 
workbench
Posts: 163
Joined: Wed Aug 11, 1999 3:22 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 5:25 am

Quoting 1MillionFlyer (Reply 12):
. The legacy carriers were growing rapidly in 1999-2000 and profitable like never before, their boards of directors and the stock market demanded (greedily) growth and increased performance, banks extended huge amounts of finanancing as they were attempting to grow also. This was in the time of the .COM boom and the financial markets had very over optimistic ideas of what a company should do to grow.



This is my point exactly. In the same time period you did not see WN go out and add hundreds of flights all over the place. You did not see WN go out and buy Reno Air and TWA, integrate them then walk away. You did not see WN go into dozens of new markets only to walk away from them later. You did not see WN going out and gouging the business man just because they were greedy and times were good for all.
Southwest kept the same smart business plan they always have with slow - moderate growth, maybe 2 new airplanes a month, 1 or 2 new cities a year and treating its customers fairly and consistantly.
The legacy carries did all of the wrong things, now they are paying for it. The money they have in the bank is all borrowed money. Sure I can go out and get a all cash loan for $20,000.00...but I really dont have that money. It is not earned money from profitability....
The money WN has in the bank is all earned money...Something no legacy carrier can claim......
That is bad business and bad management......
Companies in this situation SHOULD FAIL!
 
Braniff727
Posts: 656
Joined: Sat Sep 23, 2000 2:25 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 5:35 am

Quoting Workbench (Reply 25):
The money WN has in the bank is all earned money...Something no legacy carrier can claim......

Can you please site a source that no legacy carrier has any money in the bank that isn't earned?

Thanks.
Climbing
 
workbench
Posts: 163
Joined: Wed Aug 11, 1999 3:22 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 5:38 am

Quoting Braniff727 (Reply 26):
Can you please site a source that no legacy carrier has any money in the bank that isn't earned?

Take AA for example, they started 2001 with roughly $3 billion cash. Since then they have lost $7 billion. Do the math. They have mortgaged everything they own right down the paperclips. They started 2001 with roughly $12 billion in debt, now they are $22 billion in debt. Do the math. Where did that money come from? The tooth fairy?
 
1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 6:09 am

Quoting Workbench (Reply 25):
This is my point exactly. In the same time period you did not see WN go out and add hundreds of flights all over the place. You did not see WN go out and buy Reno Air and TWA, integrate them then walk away. You did not see WN go into dozens of new markets only to walk away from them later. You did not see WN going out and gouging the business man just because they were greedy and times were good for all.
Southwest kept the same smart business plan they always have with slow - moderate growth, maybe 2 new airplanes a month, 1 or 2 new cities a year
Companies in this situation SHOULD FAIL!

You are completely missing the point, Southwest has LOTS of borrowed money
again, Financial leverage is needed and helps a company when managed, Southwest bought Morris Air as well as just invested in ATA.

Southwest is a very very good company, but the Legacies have been too, they just got caught in a real mess as mentioned above.

Southwest:

1997
Southwest starts out the year with service to our 50th city - Jacksonville, Florida. Jackson, Mississippi becomes the 51st city added in August. Triple Crown One is introduced and joins the fleet - a tribute to the Employees of Southwest Airlines. In December, Southwest accepts the delivery of its first Boeing 737-700. Southwest is the launch customer for Boeing of the next generation Boeing 737-700.


2005 WN Fleet

B-737-301 2
B-737-317 4
B-737-3A4 9
B-737-3G7 5
B-737-3H4 150
B-737-3K2 2
B-737-3L9 2
B-737-3Q8 9
B-737-3T0 2
B-737-3T5 4
B-737-3Y0 5
Total 737-300 = 194

B-737-5H4 25
Total 737-500 = 25

B-737-7AD 1
B-737-7H4 211
B-737-7Q8 1
Total 737-700 = 213

213 new planes since 1997 at 40 Million a pop (aircraft, spares, etc), that is 8.5 Billion dollars that was not paid for by cash! (and it is "ONLY" 2.2 planes per month. not including hiring new employees, maintenance etc.)

From their financials:1.3 Billion in Cash, 6.3 Billion in debt (including common stock, NOT including excess of par)

Current Liability is 2.1 Billion so there isn't enough cash to pay all the bills due this year, That is why you use debt. *This is a very good ratio regardless

Again, learn something about finance before making these comments.

Quoting Workbench (Reply 27):
Take AA for example, they started 2001 with roughly $3 billion cash. Since then they have lost $7 billion. Do the math. They have mortgaged everything they own right down the paperclips. They started 2001 with roughly $12 billion in debt, now they are $22 billion in debt. Do the math. Where did that money come from? The tooth fairy?

That is not 7 Billion in cash, that includes cash and non-cash including depreciation, of which AA has had 1.2 Billion a year in depreciation or 3.6 BILLION of NON CASH charges.


Learn to read a 10K SEC filing and please don't try to comment on things you have not researched. If you are going to be a Lawyer, you will need to learn to get the facts before commenting.
Golf Foxtrot you are cleared for departure
 
LawnDart
Posts: 861
Joined: Fri May 20, 2005 11:33 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 7:55 am

Quoting Workbench (Reply 25):
You did not see WN go out and buy Reno Air and TWA, integrate them then walk away.

Whatever happened to Transtar? WN didn't even bother to integrate them, they just took the DAL facilities and then walked away...same thing they'll do with ATA at MDW.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 8:11 am

What does "walk away" mean? AA is still in RNO and STL. WN bought Morris Air and reduced their SLC operation.

workbench is like 0 and 5 with this thread....LOL
 
SonOfACaptain
Posts: 1695
Joined: Thu May 27, 2004 5:36 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 8:42 am

Quoting Commavia (Reply 4):
To date, only one legacy airline -- US -- received any money from the ATSB. And, while I would agree that this money was a total waste as US' inept management squandered it

Squandered? That loan is the main reason why US is still flying. They didn't "squander" it. They lived off of it until they could initiate their recovery plan.

Quoting Workbench (Thread starter):
All the carriers are on deaths door step, some more than others.

Name a company who hasn't struggled after 70 some years.

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.

Then there will be a shortage of airlines, which equals to a shortage of seats, which means the price of tickets will raise. That or it will be a lottery to get some seats to go visit grandma. Then the industry will be in chaos. At that point, you will regret seeing all the legacy carriers gone.

Also, if you think new airlines will just replace the legacy carriers overnight, you have to be crazy.

Quoting Workbench (Thread starter):
known they could go through rough times

Rough times are nothing new for the legacy carriers. Let' see. There was WWII. Korea and Vietnam didn't help. The hijackings of the 70's didn't help them make money. Deregulation ruined the industry. Parts of the Cold War scared the living hell out of the people, and when you are scared, you don't fly. There was the fuel shortage, and Gulf war, and the........I think you get the point. The truth is, airline struggles are nothing new. Don't give up on them just because they are losing money. The New York Yankee's were horrible in the late 80's and early 90's. It seemed like the glory days were over. But you know how they have done since then.

-SOAC
Non Illegitimi Carborundum
 
boeingfever777
Posts: 1990
Joined: Tue Jul 28, 2009 1:35 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 9:58 am

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.

You have no idea what you talk of to start with! You are a student in your profile, since when does high school/college pay ppl to attend school? You don't even pay taxes so please!

Quoting Workbench (Reply 9):
Yes my tax dollars are bailing them out, the defaulted pensions that have already occurred and the ones that still will.

Pension Benefit Guaranty Corporation is using there own $$$ not the tax payers.

Quoting 1MillionFlyer (Reply 12):
Secondly, as someone who is supposedly going to law school you are seriously myopic and ignorant to the reality of business.

Doubt he is. From what I can tell he can't even read a SEC filing correctly.

Quoting 1MillionFlyer (Reply 22):
Workbench was recently kicked off the site for saying that airline workers were "servants", as a 16-20 year old I am sure he is an expert in airline management

LOL... that is funny and made my day! Thanks 1millionFlyer!  Smile

Quoting Workbench (Reply 27):
Take AA for example, they started 2001 with roughly $3 billion cash. Since then they have lost $7 billion. Do the math. They have mortgaged everything they own right down the paperclips. They started 2001 with roughly $12 billion in debt, now they are $22 billion in debt. Do the math. Where did that money come from? The tooth fairy?

The 7$ billion cash includes cash/non-cash also including depreciationwhich American had 1.2 Billion a yr in depreciation or $3.6 billion of non-cash charges.

Where did you learn to read a SEC filing or do you know how?
Faire du ciel le plus bel endroit de la terre.
 
coa764
Posts: 309
Joined: Sat Feb 28, 2004 1:32 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 10:06 am

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions

16-20 and a student, I can't imagine you really give up to much in tax  dollarsign   dollarsign   dollarsign   dollarsign 
Please oh please Mr Moderator Nazi, dont delete my thread.
 
commavia
Posts: 9807
Joined: Mon Apr 25, 2005 2:30 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 10:47 am

Quoting SonOfACaptain (Reply 31):
Squandered? That loan is the main reason why US is still flying. They didn't "squander" it.

Yes -- squandered. Period, end of story, in my book. US (mostly Dave Siegel) took the money the government and U.S. taxpayers gave them and ran with it. They wasted it, flushed it down the toilet, and squandered it.

Rather than using that money to fund operations until they could formulate a new business plan, work out a new business model, and get rolling again, they simply used it to continue funding their financial black hole as they went back to their employees for concessions for, oh, say, the thousandth time (hyperbole, of course) and not actually fix or restructure anything.

Quoting SonOfACaptain (Reply 31):
They didn't "squander" it. They lived off of it until they could initiate their recovery plan.

Please tell me -- when did they "initiate their recovery plan?" When did that happen? All I have seen, during the Siegel period and now the Lakefield period -- Lakefield is a definite improvement, IMO, but still not ideal -- is a continual string of labor concessions followed by more failure. What more evidence do you need that US squandered its bailout money than that they filed for bankruptcy -- for the second time in as many years -- after they received the money?

Their "recovery plan" to date, in my view, pretty much consists of: more and more labor concessions, continuing to shrink mainline down to a shadow of its former self, shifting more and more flying over to non-owned contract RJ operators, closing their third largest hub rather than working with the airport on a deal, begging their own RJ contract operators for money, and introducing the always-fun "GoFares" that compete with WN on price and are raking in millions upon millions in losses for US, who can never and will never compete with WN on price.
 
luvfa
Posts: 333
Joined: Wed May 25, 2005 10:05 pm

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 10:52 am

Quoting Padcrasher (Reply 30):
WN bought Morris Air and reduced their SLC operation.

WN just pulled out of Morris' unprofitable routes and added frequency on our more popular routes, SLC-LAX, PHX, LAS
 
Planesmart
Posts: 1769
Joined: Sun Dec 05, 2004 3:18 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 1:11 pm

Focus on the words legacy & well managed.

Most of these airlines, or their ancestors had enormous assets. Hotels, land, other buildings, shareholdings. Some paid cash for aircraft.

The world started to change. The pace of change gathered momentum. The response of exces in these airlines was to sell the non-core assets. After they were all gone, they started to sell off core assets, and lease them back.

Execs responsible have long gone. But their offspring learned well (or badly), and have been busy maintaining the same lifestyle.

There is much more to a successful LCC than cost minimisation, but you wouldn't know it from most legacies attempts to launch an LCC.
 
milemaster
Posts: 1001
Joined: Tue Mar 20, 2001 10:19 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 1:18 pm

Quoting Workbench (Thread starter):
I am pissed that my tax dollars are going to bail out these poorly managed companies, my tax dollars are going to fund defalted pensions. This is a capitalist society, and the government needs to allows theses airlines to fail.

Somehow I doubt tax dollars generated by a 16-20 year old are going to be contributing to much of anything, let alone any cause you may fear would be a misuse.

I enjoy reading your posts, it's like you really believe in what you're saying.
 
ikramerica
Posts: 13772
Joined: Mon May 23, 2005 9:33 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 2:04 pm

I actually find it interesting that the big legacy in the best shape pre-911 is also one of those in the best shape now, namely CO. The reason is, they had a model and business plan that was working, and if you have one of those, you can weather bad times. That's the whole point of a good business plan. It can get you through unforeseen problems in one piece.

Did they have to rework contracts? Sure, but that's because the whole industry has changed. But they didn't need to change their fleet plan, nor did they have to change their route structure or stop growing. They "depeaked" hubs but didn't switch to a different service model, and most customers can't tell the difference between a peaked or depeaked hub other than a less hectic airport. The only aircraft change was they were able to accelerate the retirement of their MD80s, which helped simplify their fleet even more and reduce costs. They had to postpone taking some planes, but then were able to accelerate others. Overall, they didn't cut out meals, or pillows, or blankets, or charge for movies or curb side checkin. They just keep on keeping on. To me, that means they had a good long term plan.

AA had a good plan, too, but was a bit less ready for the problems, partly because they were larger, partly because they were involved in 911, partly because they had just introduced a luxury product (more room throughout coach) right before the nature of the changed market made that a bad idea, partly because they had just absorbed TWA and hadn't fully recovered from it, and partly because they had a bad CEO that followed a good one, and it rotted from the top down. Once he was axed, the other AA employees were more willing to make the necessary changes, the TWA transition was complete, the MRTC was rescinded, some older planes were retired sooner, things are improving. AA is also growing again, they will be profitable.

Both of these carriers had relatively good business models pre-911, and still do. Drastic changes like adding low-cost units and confusing customers by constantly shifting products weren't necessary.

So the premise that ALL large legacies had bad management and/or business plans is bunk. And not all LCCs are flying successes. it's just the failures we tend to forget because they are small.

UA, NW, DL, yes, they have problems that aren't new, and one of them needs to go under for the good of the industry, in all honesty. But that's 1 out of 3, not all. And before I get slammed by anyone who works for these three, I wish all employees of the one that doesn't make it is able to find work with another carrier, as the other legacy and LC carriers will pick up most of their assets and routes, as will probably a new LCC airline.

Looking at the load factors this weekend it is obvious that we do not have a glut of seats in the US (as some simple minded analysts seem to parrot), just a few legacies with costs that will sink them. So since we still need the capacity, we still need the employees to serve it. Just not working for one of those three airlines. Which means we won't have "60,000 unemployed for 18 months" or any other doomsday scenario like that.
Of all the things to worry about... the Wookie has no pants.
 
SonOfACaptain
Posts: 1695
Joined: Thu May 27, 2004 5:36 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 4:42 pm

Quoting Commavia (Reply 34):
Rather than using that money to fund operations until they could formulate a new business plan, work out a new business model, and get rolling again

Soooooooo how are they still flying, especially when everybody was writing their obituary three years ago! It is a miracle that US is still flying, and they didn't get to be in this position by laying out on a lawn chair on the roof of Crystal City drinking up a case of beer. US has worked hard to keep the flag flying and to say otherwise, well then that just proves that you know nothing about US.

Quoting Commavia (Reply 34):
as they went back to their employees for concessions for, oh, say, the thousandth time (hyperbole, of course) and not actually fix or restructure anything.

Trust me, from somebody who has been affected by these pay cuts, and I mean greatly affected by them, I understand the pain the employees are going through, but it is necessary. US needed those pay cuts to survive, and as employees of US, it was their duty to perform them. I they did, and they need to be applauded for that. Little fact for ya'll. US has gotten rid of HALF of its work force since 9-11. That is more than any other airline. US employees have had it rough, no doubt about it, but they know what had to do to survive, and they got the job done. I tip my hat to them.

Quoting Commavia (Reply 34):
US (mostly Dave Siegel) took the money the government and U.S. taxpayers gave them and ran with it.

Do you even know the story of Dave Siegel? He came in to reduce costs. The first thing he did was the huge pay cuts. After that he said those pay cuts would be enough, that US was done with going to the employees for help. He was right, except for one thing. Fuel. Fuel went sky high, as with the costs. So to maintain his objective he HAD to go back to the employees for pay cuts. At that point the employees cried fouled. They had been told more pay cuts would not have been needed so they called for his removal, which they got. Siegel had a plan, he just wasn't in charge long enough for it to work. Nobody gave him a chance. FYI, when Lakefield was put in charge, US got its pay cuts from the employees, the same one Siegel was after.

Quoting Commavia (Reply 34):
Please tell me -- when did they "initiate their recovery plan?"

Straight from....
http://www.transformingusairways.com/html/milestones/index.html

Cost Savings

  • The three IAM units, representing US Airways machinist ratify agreements on January 21, 2005.

  • Association of Flight Attendants, representing US Airways flight attendants ratified a new agreement on January 5, 2005.

  • New comprehensive aircraft lease and financing agreements with GE Capital Aviation Services (GECAS), and GE Engine Services (GEES) provide US Airways with improved liquidity, reduced debt, lowered aircraft ownership costs, enhanced engine maintenance services and leases for new regional jets. The agreement will save the airline up to $80 million annually.

  • The airline implemented compensation and benefits changes to its management and non-union employees that result in annual cost savings of $45 million.

  • The Communications Workers of America (CWA), representing US Airways’ airport customer service and reservations call center employees, ratified an agreement with the company on December 23, 2004.

  • The Air Line Pilots Association (ALPA), representing US Airways’ pilots, ratified a new labor agreement on October 21, 2004.

  • The Transport Workers Union Local 546, representing flight simulator engineers, ratified a new labor agreement on October 6, 2004.

  • The Transport Workers Union Local 547, representing flight crew training instructors, ratified a new labor agreement on October 6, 2004.

  • The Transport Workers Union Local 545, representing US Airways’ dispatchers, ratified a new labor agreement on September 30, 2004.

    Fleet and Schedule Adjustments

  • The airline launched new service to Latin America and the Caribbean from Fort Lauderdale/Hollywood International Airport, and added more non-stop business destinations from Ronald Reagan-Washington National Airport.

  • US Airways has improved aircraft utilization and hub operations, resulting in a February 2005 schedule that has 25 new routes and 230 more daily flights, using no additional aircraft.

    Lower Fares

  • US Airways now has GoFares on numerous routes in Pennsylvania, Florida, and Washington, D.C.

  • US Airways introduced more low GoFares from several Pennsylvania cities, including Pittsburgh, to seven West Coast destinations. These fares are in addition to the GoFares already in place to and from Philadelphia



Just a small taste of the "recovery plan".

Quoting Commavia (Reply 34):
Their "recovery plan" to date, in my view, pretty much consists of: more and more labor concessions, continuing to shrink mainline down to a shadow of its former self, shifting more and more flying over to non-owned contract RJ operators, closing their third largest hub rather than working with the airport on a deal, begging their own RJ contract operators for money, and introducing the always-fun "GoFares" that compete with WN on price and are raking in millions upon millions in losses for US, who can never and will never compete with WN on price.

I am not even going to touch this paragraph. Your claims are completely absurd, and backed by absolutely no credible facts. Trust me. Your knowledge of US is limited, at best, with all do respect. I am not here to pick a fight with you, that is the last thing I want to do. I wrote this post on behalf of all the hard-working employees of US who want to see US survive and are doing everything they can to do so.

-SOAC
Non Illegitimi Carborundum
 
commavia
Posts: 9807
Joined: Mon Apr 25, 2005 2:30 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 11:10 pm

Quoting SonOfACaptain (Reply 39):
Soooooooo how are they still flying, especially when everybody was writing their obituary three years ago!

They are still flying because they have managed to beg and borrow bribe money from multiple companies to keep them in the air, and because GE is so desperate to keep US flying so it doesn't have to face the exposure to all the airplanes it leases to US. If these companies had not been so willing to throw money down the black hole that US has become, it would absolutely, IMO, have collapsed in 2003 or 2004.

Quoting SonOfACaptain (Reply 39):
It is a miracle that US is still flying, and they didn't get to be in this position by laying out on a lawn chair on the roof of Crystal City drinking up a case of beer.

Sure they did. As I said, they have been taking the money they have been constantly given and spending, spending, spending it, as evidenced by the fact that they have been in bankruptcy twice in the span of as many years.

Quoting SonOfACaptain (Reply 39):
Trust me, from somebody who has been affected by these pay cuts, and I mean greatly affected by them, I understand the pain the employees are going through, but it is necessary. US needed those pay cuts to survive, and as employees of US, it was their duty to perform them.

I never disputed whether or not the pay cuts were necessary. I believe that in general, they were, as US had among the highest labor costs in the industry. My problem is that the US employees' cuts were not really followed up with any major structural, non-labor cost reductions. There was no enormous drive to cut, say, $2.2B in non-labor costs as occured at AA. At AA and CO, both companies only went to the employees after all of the other non-labor savings had been exhausted and they got concessions done right the first time.

Quoting SonOfACaptain (Reply 39):
Your claims are completely absurd, and backed by absolutely no credible facts.

More and more labor concessions: is anyone going to dispute that US has gone back to its employees multiple times seeking new and different forms of concessions including, among others, lower wages, less benefits, less vacation, more work time, more flexibility, the ability to outsource just about anything, etc., etc.? Again, I am not saying this was a bad thing, just that it has happened.

Shrinking mainline to a shadow of its former self: at the end of 2001, USAirways operated 342 mainline jets. Today, that number is 270 and projected to fall further in the future. The fleet has already shrunk 21% in four years, more than just about any other legacy airline.

Shifting more and more flying to non-owned contract RJ operators: again, this is simply the way it is. US is shifting more and more flying to Chautauqua, Mesa, Air Wisconsin (one of its bribery partners), etc. This is simply reality.

Closing PIT without giving PIT a chance: I fully recognize that US needed to make difficult network decisions, and that it was necessary to reduce mainline capacity systemwide, and furthermore that they definitely could have justified closing or significantly scaling back on of their hubs. However, they didn't even give PIT a chance, from what I saw, to make a competitive offer to maintain the hub. They just stonewalled and refused to deal, and closed the hub, leaving PIT wide open for WN to jump in and completely anhilate what was left of their market position there within a few years a la BWI.

Begging contract carriers for money: again, how can you really dispute this, SOAC? Air Wis is giving them millions of dollars, and so is going to get an RJ contract with the new US-HP. Republic is giving them millions of dollars, and so is going to get an enlarged RJ contract with the new US-HP. This seems like extremely prudent and responsible fiscal investment on the part of Air Wis and Republic, securing revenue and business through a small upfront investment, but let's call it what it is -- bribery.

GoFares: honestly, does anyone actually think that US could be making money on the GoFares in markets where it competes with WN? I doubt it. WN's costs are almost half of US', and it doesn't matter how US plays around with the fares, they will still never be able to overcome that fact. They will never be able to profitably compete with WN on fares, and they know that. I give them credit for trying GoFares, rather than just allowing WN to take over PHL, but GoFares alone cannot save US in PHL.
 
aa757first
Posts: 3140
Joined: Sun Aug 03, 2003 11:40 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Mon Jul 04, 2005 11:34 pm

The problem with US Airways is that they have no clear business plan. There plan is basically to cut costs anywhere and everywhere they can and then expecting passengers to pay a premium to fly on US Airways. Not going to happen.

AAndrew
 
1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 12:09 am

I am glad to see all the informed posts from intelligent people, Workbench may have learned a lesson this time.


US suffers from the most LCC competition because of the primarily east coast route structure. Only DL has a similiar issue.

As has been mentioned earlier, CO, AA, NW and UA have less LCC overlap.
Golf Foxtrot you are cleared for departure
 
Ealsys1
Posts: 211
Joined: Tue Jan 02, 2001 10:55 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 12:14 am

Why don't we all just ignore this teenaged son of a lawyer (now THAT'S an insult!) and let him go back to his room and pop his pimples. He only posts when he has an opportunity to bash or to encourage frivolous lawsuits. If you ignore him, he'll just go away!

Sam
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 12:38 am

Quoting Padcrasher (Reply 30):
What does "walk away" mean? AA is still in RNO and STL.

Bottom line is, bewteen Reno Air and TWA, AA has squandered $3 billion to shrink. No such parallel with WN and their acquisition of Morris Air.

Quoting Ikramerica (Reply 38):
I actually find it interesting that the big legacy in the best shape pre-911 is also one of those in the best shape now, namely CO. The reason is, they had a model and business plan that was working

The business equivalent of a consumer paying living expenses on credit cards and making only the minimum monthly payments a sound "plan?" Sounds more like a house of cards (no pun intended) to me; which exactly what CO is. They have bet the company on a more or less ideal world -- and, as usual, when management's pipedream fails to materialize, labor is called upon to subsidize management's folly. BTW, isn't it about time for the next round of labor concessions at CO?
 
commavia
Posts: 9807
Joined: Mon Apr 25, 2005 2:30 am

RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 1:15 am

Quoting Tango-Bravo (Reply 44):
The business equivalent of a consumer paying living expenses on credit cards and making only the minimum monthly payments a sound "plan?" Sounds more like a house of cards (no pun intended) to me; which exactly what CO is. They have bet the company on a more or less ideal world -- and, as usual, when management's pipedream fails to materialize, labor is called upon to subsidize management's folly.

Yes, CO has financed its operations post-9/11 largely through mortgaging assets and drawing down lines of credit, but so has every legacy carrier. IMO, CO's management has been very prudent and fiscally responsible in the past four years, and should be commended. I would hardly call it "management's folly." And, while I would not call CO the strongest legacy carrier, a title I would give to AA, I definitely think it would be #2.

Quoting Tango-Bravo (Reply 44):
BTW, isn't it about time for the next round of labor concessions at CO?

CO only went to its employees for concessions after it cut just about everything it could in non-labor costs.
 
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RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 1:21 am

Quoting Tango-Bravo (Reply 18):
My sincere thumbs-up to Workbench for raising the subject of the legacies' bad management / bad business plan

For the love of God, don't encourage him!  banghead 
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 1:26 am

Quoting Tango-Bravo (Reply 44):
BTW, isn't it about time for the next round of labor concessions at CO?

The flight attendant concession package involved a 0.0% paycut and Continental, aside from Southwest, is the only airline to have been voted in Fortune's Best Companies To Work For awards.

AAndrew
 
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RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 5:43 am

Quoting Ikramerica (Reply 38):
Looking at the load factors this weekend it is obvious that we do not have a glut of seats in the US (as some simple minded analysts seem to parrot),

Not only this (holiday) weekend; day-to-day load factors are at record levels as well, to the extent that service has taken a dive, thanks to the legacies' unpreparedness for what they have been able to forsee for weeks, even months (no magic; it's called advance bookings). Those "simple minded analysts" who parrot the myth of overcapacity definitely include the legacy CEOs, always mindful of opportunities to deflect the reasons for the sorry state of the airlines they manage badly onto circumstances beyond their control.
 
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RE: Legacy Carriers Bad Management/Bad Business Plan

Tue Jul 05, 2005 5:48 am

Quoting Tango-Bravo (Reply 48):
Those "simple minded analysts" who parrot the myth of overcapacity definitely include the legacy CEOs, always mindful of opportunities to deflect the reasons for the sorry state of the airlines they manage badly onto circumstances beyond their control.

there is major over-capacity why do you think yeilds are so low?

there are way too many seats, are you saying there are not enough?
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