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apodino
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US Regional Airlines after Coronavirus

Wed Apr 15, 2020 6:50 pm

So far since COVID-19 has struck there have been a lot of developments in the Regional industry. Trans States, which was already going under anyways, ceased operations much earlier than planned. Compass has also ceased operations. Additionally, SkyWest has sought and been granted relief from the CARES act as a Major Airline (Which they are by the legal definition of the term.) The RAA is reporting two other airlines are looking for relief, and is claiming they are erroneously considered Major Airlines due to the size of their payrolls. They are not identified in this release, but if you read between the lines, its clear the two regionals are Mesa and Republic. It says they are still trying to negotiate with the government on what they will get out of the CARES act.

One issue is that many of the other regionals are not subject to the terms of the CARES act and its going to be harder for them to secure relief from this. So let me run down most of them and try to give some analysis.

SkyWest - They have gotten relief from the CARES act and they have the added benefit of being non-union. They will be fine.
Republic - Considering that they operate E-Jets for every major partner out there, I think they will be protected somehow. I think they will get CARES money eventually.
Mesa - Their financial situation I don't believe is as strong as the other two, and Mesa does not have the best reputation in the business. They are already losing flying for target issues. CARES may save them short term, but they are going to have to clean up other areas long term.
ExpressJet - Although they are not officially a WO, everyone knows that they pretty much are a WO of United. Because of that, they will be fine.
CommutAir - Ditto.
Air Wisconsin - I don't see this ending well for them. They still have nothing but CRJ-200s, they refuse to buy new airplanes, Scott Kirby wants to reduce 50 seat flying, and without the willingness to buy new airplanes, they have absolutely no leverage with any Major at the moment, not to mention that they have a CEO in place who has a history of guiding failing airlines through Bankruptcy. The owners may just be willing to pack it in and pocket their money.
GoJet - One red flag is all the other TSH airlines went under. Can they actually survive long term?

Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?

Basically long term this is the way I see it for the Majors.

United - SkyWest, Republic, ExpressJet, CommutAir.
Delta - SkyWest, Pinnacle, Republic
American - SkyWest, Envoy, Republic, PSA, Piedmont
Alaska - Horizon, SkyWest

Air Wisconsin will be gone, and I actually could see Mesa and GoJet out as well. SkyWest and Republic will be the two main regional partners for the majors, with everyone else being Wholly Owned's.

Thoughts, discussion?
 
splitterz
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:08 pm

I don’t think GoJet is going anywhere with those 550s.
 
bigb
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:10 pm

Didn’t know Pinnacle is still around? You do know Pinnacle is no longer officially around right? I think you meant Endeavor.
 
silentbob
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:13 pm

apodino wrote:
Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?


I think merging those two seniority lists is unlikely in the short to medium term. First, American wants multiple wholly owned subsidiaries in order to limit the damage should there be a labor action. Second, the 145 flying at Piedmont is essentially "free" as it doesn't impact the large RJ portion of the scope clause. They aren't in a position to purchase more CR7s to add to the fleet and they would have kept the PSA CR2s if they were intending to merge the lists, as those were relatively newer CR2s.

I think you'll see Piedmont doing all the 50 seat flying on the east coast with Envoy eventually going all 175. Way too many variables to really make any detailed, long term assumptions.
 
SkyLife
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:29 pm

I believe at least 2 more regionals will fail during this period. I think Mesa and Air Whiskey are most at risk. Mesa has 32 of their AA airplanes due to expire in capacity agreements next year. I would think the WO’s would want that flying and want to staff it rather than outsourcing it. If frequencies don’t get back to normal the WO’s already have the jets to do it. PSA has been expanding into DFW already. Envoy is picking up the Compass flying. I could see more flying back in house.

http://investor.mesa-air.com/static-fil ... 187e452acb

Air Whiskey only has 50 seaters and I believe this exposes them as I could easily see the regionals slash frequencies and upsize to a CR7/CR9.
 
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NWAESC
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:30 pm

Well, I thought Mesa was as good as dead when I worked there 20+ years ago, yet here we are. I don't know how it'll work specifically, but somehow I think they live. YV is the Keith Richards of aviation.
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FLIHGH
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 7:31 pm

silentbob wrote:
apodino wrote:
Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?


I think merging those two seniority lists is unlikely in the short to medium term. First, American wants multiple wholly owned subsidiaries in order to limit the damage should there be a labor action. Second, the 145 flying at Piedmont is essentially "free" as it doesn't impact the large RJ portion of the scope clause. They aren't in a position to purchase more CR7s to add to the fleet and they would have kept the PSA CR2s if they were intending to merge the lists, as those were relatively newer CR2s.

I think you'll see Piedmont doing all the 50 seat flying on the east coast with Envoy eventually going all 175. Way too many variables to really make any detailed, long term assumptions.


Purchasing used CR7/9s turned out to be more difficult than originally anticipated, but there was interest over the last few years. I think PSA is likely done receiving any new (to them) CRJs unless they are at the expense of Mesa.
 
DiamondFlyer
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 8:04 pm

FLIHGH wrote:
silentbob wrote:
apodino wrote:
Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?


I think merging those two seniority lists is unlikely in the short to medium term. First, American wants multiple wholly owned subsidiaries in order to limit the damage should there be a labor action. Second, the 145 flying at Piedmont is essentially "free" as it doesn't impact the large RJ portion of the scope clause. They aren't in a position to purchase more CR7s to add to the fleet and they would have kept the PSA CR2s if they were intending to merge the lists, as those were relatively newer CR2s.

I think you'll see Piedmont doing all the 50 seat flying on the east coast with Envoy eventually going all 175. Way too many variables to really make any detailed, long term assumptions.


Purchasing used CR7/9s turned out to be more difficult than originally anticipated, but there was interest over the last few years. I think PSA is likely done receiving any new (to them) CRJs unless they are at the expense of Mesa.


The pressure on used CR7's came from United's laughable CRJ550 experiment. Suddenly they were valuable again, and we will see if that remains to be the case in 6 months time.
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NLINK
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 8:15 pm

I think in this situation that having regionals actually can hurt you, especially non wholly owned ones. The reason why is because with contracts it is more difficult to move quickly but if they are wholly owned or like SouthWest one airline they can park AC and cut costs much quicker. Pros and cons for utilizing contractors as in anything.. I do think we will see these smaller markets become the losers when it is done.
 
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JBo
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 8:16 pm

The wholly owned regionals are just that - wholly owned - so they'll likely receive some of the CARES funding by virtue of being under the same corporate umbrella as their mainline parents.

I've said it before, but C5 and ZW are the weakest links being both the smallest and exclusively operating 50-seat aircraft.

The bigger question though is the independent regionals - Silver Air, Cape Air, etc. - who don't have branded contract partnerships with the majors.
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MIflyer12
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 8:27 pm

NLINK wrote:
I think in this situation that having regionals actually can hurt you, especially non wholly owned ones. The reason why is because with contracts it is more difficult to move quickly but if they are wholly owned or like SouthWest one airline they can park AC and cut costs much quicker.


I'm going to disagree with you there. It's a whole lot easier to cut costs in bankruptcy than it is outside of bankruptcy. IMHO before this is over a few U.S. regionals will have a run thru Ch11 (or Ch 7).

AA/UA/DL do like the whipsaw, and there have to be enough viable carriers bidding to have a threat of whipsaw, but I don't see them being willing to spend much money to keep non-owned regionals viable.

Which carriers size their regional fleets as a function of mainline count, by total, 76-seat, 70-seat, or other? That's going to put a lot of pressure on regionals.
 
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FLALEFTY
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 9:00 pm

JBo wrote:
The wholly owned regionals are just that - wholly owned - so they'll likely receive some of the CARES funding by virtue of being under the same corporate umbrella as their mainline parents.

I've said it before, but C5 and ZW are the weakest links being both the smallest and exclusively operating 50-seat aircraft.

The bigger question though is the independent regionals - Silver Air, Cape Air, etc. - who don't have branded contract partnerships with the majors.


Silver and Cape Air do have specialized niches that can keep them going, if they survive the COVID-19 crisis. Silver does a good business out and back to The Bahamas from Florida. Cape Air has their namesake market (Cape Cod) pretty much to themselves and they also have a decent amount of EAS contracts sprinkled around the country. However, these aren't normal times...

I wonder if the GoJet CRJ550 program with United will continue after the crisis is over? The 50-seat, premium-heavy CRJ7 layouts made sense when the economy was still booming, but I wonder if premium demand will return in the coming months? Also, with GoJet's corporate parent (Trans State Holdings) collapsing, their credit rating has to be suffering.
 
uadc8contrail
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Re: US Regional Airlines after Coronavirus

Wed Apr 15, 2020 10:07 pm

splitterz wrote:
I don’t think GoJet is going anywhere with those 550s.


one could only wish that gojet would disappear and get those 550's over to skywest, but in reality united does not care about operational reliability as long as hulas and his flying circus will fly those ua planes for next to nothing. have no idea why ua kept trans states around as long as they did.
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DiamondFlyer
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 1:41 am

uadc8contrail wrote:
splitterz wrote:
I don’t think GoJet is going anywhere with those 550s.


one could only wish that gojet would disappear and get those 550's over to skywest, but in reality united does not care about operational reliability as long as hulas and his flying circus will fly those ua planes for next to nothing. have no idea why ua kept trans states around as long as they did.


Skywest isn't much better than GoJet these days to be honest. They've taken on way more flying than they could have a chance at staffing, prior to COVID-19, that is.
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apodino
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 2:52 am

NLINK wrote:
I think in this situation that having regionals actually can hurt you, especially non wholly owned ones. The reason why is because with contracts it is more difficult to move quickly but if they are wholly owned or like SouthWest one airline they can park AC and cut costs much quicker. Pros and cons for utilizing contractors as in anything.. I do think we will see these smaller markets become the losers when it is done.

Which is actually one reason why I think going Wholly owned is going to be more and more common. Another thing that Wholly Owned's offer is the flowthrough agreements, and this not only allows the Major's more say in who the regional's hire, but it also makes it easier for those regionals to attract Pilot's in an environment where finding Pilot's at the regional level has become very tricky. (TransStates cited this as the reason they had to cease operations actually). Given the barebones way that things are run, both GoJet and Mesa are going to really struggle in the pilot recruitment area going forward.

One thing to keep an eye on in this. Would SkyWest pilots consider going ALPA after this? There was a lot of chatter over there. I have a friend who has been there a while and says its not a fun place to work. And if SkyWest does something really foolish during this down time, they could poke the bear just enough.

Another thing to note is AA has been looking to streamline their regional ops for sometime. With Compass gone, I believe they are down to six regional partners. If Mesa goes, that would be five. Three are wholly owned too.

Delta interestingly enough I believe is down to three regional partners. Endeavor (I did refer to them as pinnacle in the thread opener, old habits die hard :), SkyWest, and Republic.

United still has Seven, and much of the United structure is still left over from the Tilton/Smisek days of basically using the regionals to fly everything domestic. I don't see Air Wisky lasting, Mesa is on thin ice, and TSH has major issues that could affect GoJet.

One other thing in play here. Scope. Because the majors are having to park a lot of mainline airplanes, this actually affects scope because now they have to reduce the Regional Fleet since Scope is a percentage item in most Pilot contracts. This will hit American the hardest because they have retired a bunch of AC types at the start of this.
 
uadc8contrail
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 2:58 am

DiamondFlyer wrote:
uadc8contrail wrote:
splitterz wrote:
I don’t think GoJet is going anywhere with those 550s.


one could only wish that gojet would disappear and get those 550's over to skywest, but in reality united does not care about operational reliability as long as hulas and his flying circus will fly those ua planes for next to nothing. have no idea why ua kept trans states around as long as they did.


Skywest isn't much better than GoJet these days to be honest. They've taken on way more flying than they could have a chance at staffing, prior to COVID-19, that is.


on the staffing side you are correct, but GoJet does more reactive mtc VS preventive mtc on the 550s and it shows. regardless, ua is stuck with hulas for the next 10 years or until they unload them before that.
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strfyr51
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 3:27 am

DiamondFlyer wrote:
uadc8contrail wrote:
splitterz wrote:
I don’t think GoJet is going anywhere with those 550s.


one could only wish that gojet would disappear and get those 550's over to skywest, but in reality united does not care about operational reliability as long as hulas and his flying circus will fly those ua planes for next to nothing. have no idea why ua kept trans states around as long as they did.


Skywest isn't much better than GoJet these days to be honest. They've taken on way more flying than they could have a chance at staffing, prior to COVID-19, that is.


SkyWest seems to be one of the better run regionals. And they're flying for nearly everybody so? they must be doing something right or they wouldn't have Planes, Pilots, nor Mechanics. and none of the 3 are leaving in droves. Their key may be having cross-trained staff who can do what needs to be done no matter what the paint on the side of the airplane. Their Parts allotment skills must be pretty good as well as their reliability rate seems to be what's keeping them in business. the rest? Is all window dressing.
 
airtran737
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 3:49 am

apodino wrote:
So far since COVID-19 has struck there have been a lot of developments in the Regional industry. Trans States, which was already going under anyways, ceased operations much earlier than planned. Compass has also ceased operations. Additionally, SkyWest has sought and been granted relief from the CARES act as a Major Airline (Which they are by the legal definition of the term.) The RAA is reporting two other airlines are looking for relief, and is claiming they are erroneously considered Major Airlines due to the size of their payrolls. They are not identified in this release, but if you read between the lines, its clear the two regionals are Mesa and Republic. It says they are still trying to negotiate with the government on what they will get out of the CARES act.

One issue is that many of the other regionals are not subject to the terms of the CARES act and its going to be harder for them to secure relief from this. So let me run down most of them and try to give some analysis.

SkyWest - They have gotten relief from the CARES act and they have the added benefit of being non-union. They will be fine.
Republic - Considering that they operate E-Jets for every major partner out there, I think they will be protected somehow. I think they will get CARES money eventually.
Mesa - Their financial situation I don't believe is as strong as the other two, and Mesa does not have the best reputation in the business. They are already losing flying for target issues. CARES may save them short term, but they are going to have to clean up other areas long term.
ExpressJet - Although they are not officially a WO, everyone knows that they pretty much are a WO of United. Because of that, they will be fine.
CommutAir - Ditto.
Air Wisconsin - I don't see this ending well for them. They still have nothing but CRJ-200s, they refuse to buy new airplanes, Scott Kirby wants to reduce 50 seat flying, and without the willingness to buy new airplanes, they have absolutely no leverage with any Major at the moment, not to mention that they have a CEO in place who has a history of guiding failing airlines through Bankruptcy. The owners may just be willing to pack it in and pocket their money.
GoJet - One red flag is all the other TSH airlines went under. Can they actually survive long term?

Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?

Basically long term this is the way I see it for the Majors.

United - SkyWest, Republic, ExpressJet, CommutAir.
Delta - SkyWest, Pinnacle, Republic
American - SkyWest, Envoy, Republic, PSA, Piedmont
Alaska - Horizon, SkyWest

Air Wisconsin will be gone, and I actually could see Mesa and GoJet out as well. SkyWest and Republic will be the two main regional partners for the majors, with everyone else being Wholly Owned's.

Thoughts, discussion?


I don't even know where to start. Your logic of "they will be fine" for multiple airlines is beyond flawed. United has said that 50 seat airplanes might not be a part of their fleet plan after this is done. ExpressJet is already losing airplanes to SkyWest which will leave them with nothing but 50 seat airplanes. ExpressJet, CommutAir, and Air Wisconsin are extremely vulnerable in the United network. ExpressJet doesn't meet the criteria for the Warrants that the Treasury Department wants, nor does CommutAir, so they may on the outside looking in. I don't know how many more GoJet airplanes have to be converted to 550's, plus there are the Mesa CRJ's that have to be converted as well. Mesa is on solid ground with UA because they have a long term deal locked in with the 175 so they should have some stability.

On the AA side, Envoy has over 20 140's parked in MZJ and they aren't coming back along with some 145's. PSA has parked the CRJ 200's, and PDT has also parked 145's. Mesa just had three more planes taken off the AA contract and the remainder of the 900's could be replaced by the wholly-owned carriers. The Compass planes are in the desert and will be to Envoy in the fall. A merger of the three WO's would make sense on paper, but AAG loves having three carriers to have an internal whipsaw one another.

SkyWest and Republic are going to look much smaller when this is all said and done. Republic has stated that even with CARES Act money (which they are in the same boat as XJT) they cannot make payroll for their current complement of employees. SkyWest is getting funding, but they along with Republic are going to see their flying continue to be much lower than before. United and Delta are both vastly overstaffed and will end up having to adjust their regional feed to meet scope clause requirements. You are smoking the best stuff if you think that mainline pilots are about to cave on scope when the industry is falling out from under them. If Republic survives they will be smaller. SkyWest will be as well. While Alaska doesn't have a scope clause to worry about, I can see them protecting their feed for QX over OO.

Over at Delta you will most likely see a reduction in the SkyWest flying as well as Republic. They will reallocate flying to EDV where they can, but EDV will see 200's parked and there will be major adjustments on their side.
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F9Animal
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 4:34 am

Another option instead of just going belly up is a possibility that we could see some regional consolidation perhaps? Skywest is a beast, so I can see them coming out of this. I don't think any of the regionals or majors will come out of this the way they were before this God awful Covid-19.

I am surprised Air Wisconsin hasn't diversified it's fleet, and tried to snatch more flying. How are their financials?
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FLALEFTY
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 4:40 am

I really think when crisis is past and the recovery is started, look for major-branded regional service to end many small cities. I remember when Pinnacle Airlines collapsed in 2012-13, which ended Delta-branded service from Memphis to Muscle Shoals, Tupelo, Greenville, et. al. I think cities like Dothan, Albany, Brunswick, Golden Triangle and Monroe could be next to get cut.
 
FlyinRabbit88
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 4:42 am

airtran737 wrote:
Over at Delta you will most likely see a reduction in the SkyWest flying as well as Republic. They will reallocate flying to EDV where they can, but EDV will see 200's parked and there will be major adjustments on their side.


Just remember SkyWest had a lot of their CR2 flying as “At Risk” and SkyWest makes a pretty good profit on that type of flying. Wouldn’t be surprised if SkyWest increases CR2 flying in the Midwest and western cities that have reduced mainline or other regional service. If they can jump into a city with already low break even numbers, SkyWest will jump start it. SkyWest tends to be able to roll with the punches and being more flexible because it’s non union.
 
silentbob
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 11:31 am

FLALEFTY wrote:
I really think when crisis is past and the recovery is started, look for major-branded regional service to end many small cities. I remember when Pinnacle Airlines collapsed in 2012-13, which ended Delta-branded service from Memphis to Muscle Shoals, Tupelo, Greenville, et. al. I think cities like Dothan, Albany, Brunswick, Golden Triangle and Monroe could be next to get cut.

A lot of people are going to be surprised come October
 
CRJ5000
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 12:28 pm

FLALEFTY wrote:
I really think when crisis is past and the recovery is started, look for major-branded regional service to end many small cities. I remember when Pinnacle Airlines collapsed in 2012-13, which ended Delta-branded service from Memphis to Muscle Shoals, Tupelo, Greenville, et. al. I think cities like Dothan, Albany, Brunswick, Golden Triangle and Monroe could be next to get cut.


I think you may be right about some cities losing DL service, but I think DHN and MLU would stick. DHN has a lot of high fare military traffic from Ft. Rucker, and I couldn't see them cutting the birthplace of DL out altogether in MLU.
 
apodino
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 3:57 pm

airtran737 wrote:
apodino wrote:
So far since COVID-19 has struck there have been a lot of developments in the Regional industry. Trans States, which was already going under anyways, ceased operations much earlier than planned. Compass has also ceased operations. Additionally, SkyWest has sought and been granted relief from the CARES act as a Major Airline (Which they are by the legal definition of the term.) The RAA is reporting two other airlines are looking for relief, and is claiming they are erroneously considered Major Airlines due to the size of their payrolls. They are not identified in this release, but if you read between the lines, its clear the two regionals are Mesa and Republic. It says they are still trying to negotiate with the government on what they will get out of the CARES act.

One issue is that many of the other regionals are not subject to the terms of the CARES act and its going to be harder for them to secure relief from this. So let me run down most of them and try to give some analysis.

SkyWest - They have gotten relief from the CARES act and they have the added benefit of being non-union. They will be fine.
Republic - Considering that they operate E-Jets for every major partner out there, I think they will be protected somehow. I think they will get CARES money eventually.
Mesa - Their financial situation I don't believe is as strong as the other two, and Mesa does not have the best reputation in the business. They are already losing flying for target issues. CARES may save them short term, but they are going to have to clean up other areas long term.
ExpressJet - Although they are not officially a WO, everyone knows that they pretty much are a WO of United. Because of that, they will be fine.
CommutAir - Ditto.
Air Wisconsin - I don't see this ending well for them. They still have nothing but CRJ-200s, they refuse to buy new airplanes, Scott Kirby wants to reduce 50 seat flying, and without the willingness to buy new airplanes, they have absolutely no leverage with any Major at the moment, not to mention that they have a CEO in place who has a history of guiding failing airlines through Bankruptcy. The owners may just be willing to pack it in and pocket their money.
GoJet - One red flag is all the other TSH airlines went under. Can they actually survive long term?

Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?

Basically long term this is the way I see it for the Majors.

United - SkyWest, Republic, ExpressJet, CommutAir.
Delta - SkyWest, Pinnacle, Republic
American - SkyWest, Envoy, Republic, PSA, Piedmont
Alaska - Horizon, SkyWest

Air Wisconsin will be gone, and I actually could see Mesa and GoJet out as well. SkyWest and Republic will be the two main regional partners for the majors, with everyone else being Wholly Owned's.

Thoughts, discussion?


I don't even know where to start. Your logic of "they will be fine" for multiple airlines is beyond flawed. United has said that 50 seat airplanes might not be a part of their fleet plan after this is done. ExpressJet is already losing airplanes to SkyWest which will leave them with nothing but 50 seat airplanes. ExpressJet, CommutAir, and Air Wisconsin are extremely vulnerable in the United network. ExpressJet doesn't meet the criteria for the Warrants that the Treasury Department wants, nor does CommutAir, so they may on the outside looking in. I don't know how many more GoJet airplanes have to be converted to 550's, plus there are the Mesa CRJ's that have to be converted as well. Mesa is on solid ground with UA because they have a long term deal locked in with the 175 so they should have some stability.

On the AA side, Envoy has over 20 140's parked in MZJ and they aren't coming back along with some 145's. PSA has parked the CRJ 200's, and PDT has also parked 145's. Mesa just had three more planes taken off the AA contract and the remainder of the 900's could be replaced by the wholly-owned carriers. The Compass planes are in the desert and will be to Envoy in the fall. A merger of the three WO's would make sense on paper, but AAG loves having three carriers to have an internal whipsaw one another.

SkyWest and Republic are going to look much smaller when this is all said and done. Republic has stated that even with CARES Act money (which they are in the same boat as XJT) they cannot make payroll for their current complement of employees. SkyWest is getting funding, but they along with Republic are going to see their flying continue to be much lower than before. United and Delta are both vastly overstaffed and will end up having to adjust their regional feed to meet scope clause requirements. You are smoking the best stuff if you think that mainline pilots are about to cave on scope when the industry is falling out from under them. If Republic survives they will be smaller. SkyWest will be as well. While Alaska doesn't have a scope clause to worry about, I can see them protecting their feed for QX over OO.

Over at Delta you will most likely see a reduction in the SkyWest flying as well as Republic. They will reallocate flying to EDV where they can, but EDV will see 200's parked and there will be major adjustments on their side.


First of all, I never suggested that the pilots will cave on Scope. I completely agree with you 100 percent, Scope is one issue that you will not see any Mainline pilot union give an inch on. I mentioned scope because as you also point out, with the Mainline carriers being forced to park planes, the regionals are also forced to park planes as well in order to meet scope.

As for ExpressJet and Commutair...one of the worst kept secrets in the industry is their parent companies are really nothing more than shell companies controlled by United-Continental holdings. ExpressJet I think will get the 170's long term that you allude to. I don't know all the details of the SkyWest agreement, but I am guessing there is a guaranteed flying in their contract, so the reduction in flying that comes from Scope had to come from somewhere else, and ExpressJet is the easiest one as an airline that United actually controls. That being said, if you look deeper at the scope clause, the scope clause limits the 70 seat flying. The airlines that perform this are Mesa, SkyWest, and Republic. Yes SkyWest and Republic will get smaller. But Mesa will have to give up something too, and since their American situation is dire, I don't see how they survive with a smaller UA operation than what they currently have. Republic and SkyWest, though they will be smaller, have a lot more diversity and thus while I feel they will be smaller, the companies themselves will survive.

As for Delta Endeavor does not currently operate the E-Jets, but Delta is also going to have to reduce the regional fleet as a whole (Prior to this mess, it was already capped at 450 airframes). This will hurt them all I agree, but not as much as loss of other flying will.

At American, Compass just went under and their flying went to Envoy. Basically American Eagle looks like this now. Piedmont is doing the 50 seat flying. PSA CRJ-700, Envoy and Republic share the 170 flying in the east, and SkyWest and Mesa are handing the feed out west. Mesa seems like they will be out at AA soon. Another question with this network is, how many frames have to come out due to Scope, given all the frames AA mainline just parked? As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.
 
KlimaBXsst
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 4:02 pm

Jungle jets will proliferate.

Embraer 145s fitnesses ratio is conducive to social distancing for the typical couples or single traveler.
Aesthetically the A 340 got it right!
 
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FLALEFTY
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 4:43 pm

apodino wrote:
airtran737 wrote:
apodino wrote:
So far since COVID-19 has struck there have been a lot of developments in the Regional industry. Trans States, which was already going under anyways, ceased operations much earlier than planned. Compass has also ceased operations. Additionally, SkyWest has sought and been granted relief from the CARES act as a Major Airline (Which they are by the legal definition of the term.) The RAA is reporting two other airlines are looking for relief, and is claiming they are erroneously considered Major Airlines due to the size of their payrolls. They are not identified in this release, but if you read between the lines, its clear the two regionals are Mesa and Republic. It says they are still trying to negotiate with the government on what they will get out of the CARES act.

One issue is that many of the other regionals are not subject to the terms of the CARES act and its going to be harder for them to secure relief from this. So let me run down most of them and try to give some analysis.

SkyWest - They have gotten relief from the CARES act and they have the added benefit of being non-union. They will be fine.
Republic - Considering that they operate E-Jets for every major partner out there, I think they will be protected somehow. I think they will get CARES money eventually.
Mesa - Their financial situation I don't believe is as strong as the other two, and Mesa does not have the best reputation in the business. They are already losing flying for target issues. CARES may save them short term, but they are going to have to clean up other areas long term.
ExpressJet - Although they are not officially a WO, everyone knows that they pretty much are a WO of United. Because of that, they will be fine.
CommutAir - Ditto.
Air Wisconsin - I don't see this ending well for them. They still have nothing but CRJ-200s, they refuse to buy new airplanes, Scott Kirby wants to reduce 50 seat flying, and without the willingness to buy new airplanes, they have absolutely no leverage with any Major at the moment, not to mention that they have a CEO in place who has a history of guiding failing airlines through Bankruptcy. The owners may just be willing to pack it in and pocket their money.
GoJet - One red flag is all the other TSH airlines went under. Can they actually survive long term?

Pinnacle, Envoy, PSA, Piedmont, Horizon - I lump all the official wholly owned's together. I don't see any of these airlines going anywhere. What I could see is for some of the American Eagle partners to be merged into one seniority list. Maybe PSA and Piedmont?

Basically long term this is the way I see it for the Majors.

United - SkyWest, Republic, ExpressJet, CommutAir.
Delta - SkyWest, Pinnacle, Republic
American - SkyWest, Envoy, Republic, PSA, Piedmont
Alaska - Horizon, SkyWest

Air Wisconsin will be gone, and I actually could see Mesa and GoJet out as well. SkyWest and Republic will be the two main regional partners for the majors, with everyone else being Wholly Owned's.

Thoughts, discussion?


I don't even know where to start. Your logic of "they will be fine" for multiple airlines is beyond flawed. United has said that 50 seat airplanes might not be a part of their fleet plan after this is done. ExpressJet is already losing airplanes to SkyWest which will leave them with nothing but 50 seat airplanes. ExpressJet, CommutAir, and Air Wisconsin are extremely vulnerable in the United network. ExpressJet doesn't meet the criteria for the Warrants that the Treasury Department wants, nor does CommutAir, so they may on the outside looking in. I don't know how many more GoJet airplanes have to be converted to 550's, plus there are the Mesa CRJ's that have to be converted as well. Mesa is on solid ground with UA because they have a long term deal locked in with the 175 so they should have some stability.

On the AA side, Envoy has over 20 140's parked in MZJ and they aren't coming back along with some 145's. PSA has parked the CRJ 200's, and PDT has also parked 145's. Mesa just had three more planes taken off the AA contract and the remainder of the 900's could be replaced by the wholly-owned carriers. The Compass planes are in the desert and will be to Envoy in the fall. A merger of the three WO's would make sense on paper, but AAG loves having three carriers to have an internal whipsaw one another.

SkyWest and Republic are going to look much smaller when this is all said and done. Republic has stated that even with CARES Act money (which they are in the same boat as XJT) they cannot make payroll for their current complement of employees. SkyWest is getting funding, but they along with Republic are going to see their flying continue to be much lower than before. United and Delta are both vastly overstaffed and will end up having to adjust their regional feed to meet scope clause requirements. You are smoking the best stuff if you think that mainline pilots are about to cave on scope when the industry is falling out from under them. If Republic survives they will be smaller. SkyWest will be as well. While Alaska doesn't have a scope clause to worry about, I can see them protecting their feed for QX over OO.

Over at Delta you will most likely see a reduction in the SkyWest flying as well as Republic. They will reallocate flying to EDV where they can, but EDV will see 200's parked and there will be major adjustments on their side.


First of all, I never suggested that the pilots will cave on Scope. I completely agree with you 100 percent, Scope is one issue that you will not see any Mainline pilot union give an inch on. I mentioned scope because as you also point out, with the Mainline carriers being forced to park planes, the regionals are also forced to park planes as well in order to meet scope.

As for ExpressJet and Commutair...one of the worst kept secrets in the industry is their parent companies are really nothing more than shell companies controlled by United-Continental holdings. ExpressJet I think will get the 170's long term that you allude to. I don't know all the details of the SkyWest agreement, but I am guessing there is a guaranteed flying in their contract, so the reduction in flying that comes from Scope had to come from somewhere else, and ExpressJet is the easiest one as an airline that United actually controls. That being said, if you look deeper at the scope clause, the scope clause limits the 70 seat flying. The airlines that perform this are Mesa, SkyWest, and Republic. Yes SkyWest and Republic will get smaller. But Mesa will have to give up something too, and since their American situation is dire, I don't see how they survive with a smaller UA operation than what they currently have. Republic and SkyWest, though they will be smaller, have a lot more diversity and thus while I feel they will be smaller, the companies themselves will survive.

As for Delta Endeavor does not currently operate the E-Jets, but Delta is also going to have to reduce the regional fleet as a whole (Prior to this mess, it was already capped at 450 airframes). This will hurt them all I agree, but not as much as loss of other flying will.

At American, Compass just went under and their flying went to Envoy. Basically American Eagle looks like this now. Piedmont is doing the 50 seat flying. PSA CRJ-700, Envoy and Republic share the 170 flying in the east, and SkyWest and Mesa are handing the feed out west. Mesa seems like they will be out at AA soon. Another question with this network is, how many frames have to come out due to Scope, given all the frames AA mainline just parked? As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.


Prior to the COVID-19 crisis, Expressjet gained more United Express E145 flying from (the now-defunct) Trans States, but lost their E175 flying for United to SkyWest. This transition will likey continue, but the situation is fluid. It is entirely possible that a large chunk of E175's may have to be parked for an extended period (beyond the immediate crisis) to stay within United's scope clause.

https://en.wikipedia.org/wiki/ExpressJet
 
eugdjinn
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 5:13 pm

Inside the UAX fold, I think it's worth mentioning that Mesa did just sign a ten year agreement on the 175s they operate for UA. So, while their AA side is potentially evaporating, they have somehow secured what looked like a future with UA. Granted, COVID gives that force majeure option to UA for an easy out, still, that is a lot of 175s to re-home.

To that, I agree, it certainly looks like an awful lot of overhead to run Air Whiskey and GoJet when you are basically talking about two Bombardier operating 50 seat houses that could and might should be combined...? I've been watching for them to combine, as the only real way forward for AW is through the magic trick GJ pulled off, and it certainly looks as though Hulas wants out. Too, the operating costs at AW have to be getting up there with so many senior people, don't they?

Finally, I think this crisis may well spell the end of a trend for the regional airlines doing ground handling - and that is the real question inside the AA wholly owneds. All three, PSA, Piedmont and Envoy have substantial ground handling operations. (SkyWest used to, and has walked away from a lot of theirs, over the last 15 years, and I think will end them rapidly now.) But as the last to merge, AA hasn't taken on that page of the Delta merger playbook and moved the ground-handling to one management group and the flying to the others. I think this is perhaps the economic push that forces that on them. I've long thought it would be Piedmont that would wind up being the management group that would win out as the ground handler, and the other two with the air operations. That's easy now if PSA brings back it's CRJ200s where needed, since they have complementary bases. And since the three airlines run on AA employee numbers, and seniority dates, it would be easy to fold people in from one to another list. Just hard on lives...

That said, I too think Mesa will leave the AA team, and may find itself for sale (is SkyWest buying?) and Republic will shrink it's AA work to NYC maybe and limited MIA. In the long term, it makes sense for Republic to operate in NYC for all three, and for SkyWest to operate LAX for everyone.
 
alasizon
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 5:27 pm

eugdjinn wrote:
Finally, I think this crisis may well spell the end of a trend for the regional airlines doing ground handling - and that is the real question inside the AA wholly owneds. All three, PSA, Piedmont and Envoy have substantial ground handling operations. (SkyWest used to, and has walked away from a lot of theirs, over the last 15 years, and I think will end them rapidly now.) But as the last to merge, AA hasn't taken on that page of the Delta merger playbook and moved the ground-handling to one management group and the flying to the others. I think this is perhaps the economic push that forces that on them.

PSA doesn't do any ground handling anymore and hasn't for a while. Inside the AA circle it is all either Piedmont or Envoy. Having two ground handlers to bid against eachother for the internal work is a great thing for AA as it ensures that the "right" wholly-owned gets the contract based on price and performance as opposed to being awarded a station just because they are wholly-owned. The two cultures also don't mesh as the two are run completely differently under two different leadership styles and it is very obvious for those who work with both organizations on a regular basis. Likewise, I personally think we are going back to the days of "handle or be handled" which will push out some of the third parties and bring more work to the internal ground handlers for better cost and performance control at a time when costs mean everything.

eugdjinn wrote:
That said, I too think Mesa will leave the AA team, and may find itself for sale (is SkyWest buying?) and Republic will shrink it's AA work to NYC maybe and limited MIA. In the long term, it makes sense for Republic to operate in NYC for all three, and for SkyWest to operate LAX for everyone.


Who are you proposing does all the E175 flying in CLT, DCA and PHL that YX does today? Those birds are owned by YX so you can't just shift them to MQ. No reason to think YX will contract by any large measure.
Airport (noun) - A construction site which airplanes tend to frequent
 
silentbob
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 5:31 pm

apodino wrote:
As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.

During previous discussions of mergers among regionals, I was told that the up front costs to merge two (or more) of them would be significant and it would take years for the savings to materialize. At that time, PSA and Piedmont had a shared back office, but PSA has grown their internal footprint dramatically since then.
 
alasizon
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 5:42 pm

silentbob wrote:
apodino wrote:
As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.

During previous discussions of mergers among regionals, I was told that the up front costs to merge two (or more) of them would be significant and it would take years for the savings to materialize. At that time, PSA and Piedmont had a shared back office, but PSA has grown their internal footprint dramatically since then.


There would be very limited savings if a merger were to occur. Both carriers don't have a lot of slack in their maintenance or crew operations so there is no real synergy to gain. Piedmont still operates the SSO and provides services to PSA employees still. Likewise, Piedmont is the "owner" of the American Eagle training team that covers all three carriers on the ground/frontline side. Just about the only costs you would save are some of the Executive functions and even then, the combined carrier would the need some more middle management which isn't going to be the cost savings everyone thinks it is.
Airport (noun) - A construction site which airplanes tend to frequent
 
bigb
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 6:09 pm

alasizon wrote:
silentbob wrote:
apodino wrote:
As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.

During previous discussions of mergers among regionals, I was told that the up front costs to merge two (or more) of them would be significant and it would take years for the savings to materialize. At that time, PSA and Piedmont had a shared back office, but PSA has grown their internal footprint dramatically since then.


There would be very limited savings if a merger were to occur. Both carriers don't have a lot of slack in their maintenance or crew operations so there is no real synergy to gain. Piedmont still operates the SSO and provides services to PSA employees still. Likewise, Piedmont is the "owner" of the American Eagle training team that covers all three carriers on the ground/frontline side. Just about the only costs you would save are some of the Executive functions and even then, the combined carrier would the need some more middle management which isn't going to be the cost savings everyone thinks it is.


Aircraft Mainteance Synergy can be had
Operations (OCC functions) Synergy can be had
Hell, facilities can be consolidations (PDT HQ, PSA HQ, MQ HQ) should all be down in DFW.
 
MIflyer12
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 7:21 pm

apodino wrote:
As far as the Wholly Owned's go, yes management loves to have the whipsaw effect, but you also have added costs of three management teams, and all the personnel. Streamlining this streamlines redundant costs, and that will help the balance sheet going forward.


How do you explain multiple wholly-owneds at a carrier, then? AA has had plenty of time to head in your direction - and they haven't.
 
PSU.DTW.SCE
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 7:52 pm

I'm curious on how all the at-risk flying that Skywest performs plays-out in the future.
Yes, a good portion of it is EAS funded/subsidized routes, but there are others that are purely pro-rate/revenue share arrangements non-EAS.
In the near-term, the economics of these routes are going to be terrible, but who is ultimately responsible for determine the schedule into these markets.
For example, much of the DL DTW CR2 flying is by OO. Routes like PLN, APN, CIU are EAS. Markets like ERI, SCE, AVP etc are not EAS but at-risk.
 
alasizon
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 8:04 pm

PSU.DTW.SCE wrote:
I'm curious on how all the at-risk flying that Skywest performs plays-out in the future.
Yes, a good portion of it is EAS funded/subsidized routes, but there are others that are purely pro-rate/revenue share arrangements non-EAS.
In the near-term, the economics of these routes are going to be terrible, but who is ultimately responsible for determine the schedule into these markets.
For example, much of the DL DTW CR2 flying is by OO. Routes like PLN, APN, CIU are EAS. Markets like ERI, SCE, AVP etc are not EAS but at-risk.


For the at-risk markets, SkyWest is responsible for the schedule (to an extent, they have a time that they want to fly and the major partner dictates whether or not that time slot is available gate-wise and connectivity wise). They are also the ones responsible for maintaining service to both their at-risk and EAS markets (hence why the PIB/MEI service being moved from AA* @ DFW to UA* @ IAH is allowed as AA isn't the responsible party).
Airport (noun) - A construction site which airplanes tend to frequent
 
PSU.DTW.SCE
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 8:13 pm

Right, makes sense. Now taking it a step further, if OO no-longer finds it financially viable to run an at-risk market, within the timeframe of their contract, can they just exit the market or do they have to get permission from the mainline carrier who they are in the pro-rate agreement with? Would the mainline carrier perhaps want to revert to a capacity purchase agreement?
How does that relate to the requirement of the CARES act and not exiting markets, is that up to either DL or OO?
Its a lot more clear to me who has the decision-making authority in capacity purchase agreements, but less on these pro-rate arrangements.
 
alasizon
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 8:34 pm

PSU.DTW.SCE wrote:
Right, makes sense. Now taking it a step further, if OO no-longer finds it financially viable to run an at-risk market, within the timeframe of their contract, can they just exit the market or do they have to get permission from the mainline carrier who they are in the pro-rate agreement with? Would the mainline carrier perhaps want to revert to a capacity purchase agreement?
How does that relate to the requirement of the CARES act and not exiting markets, is that up to either DL or OO?
Its a lot more clear to me who has the decision-making authority in capacity purchase agreements, but less on these pro-rate arrangements.


If OO decides to want to exit a market, they can choose to do so under normal circumstances. The at-risk markets are just that, at-risk and can be exited at any time (traditionally on a schedule change date). Very rarely does the mainline carrier choose to convert an at-risk market to a capacity purchase market if it isn't performing well. As far as I can tell, OO can continue to meet its CARES obligation of serving a market as long as they continue to serve it either at-risk or as part of a CPA. They get to double dip in a way.
Airport (noun) - A construction site which airplanes tend to frequent
 
silentbob
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Re: US Regional Airlines after Coronavirus

Thu Apr 16, 2020 11:15 pm

bigb wrote:
alasizon wrote:
silentbob wrote:
During previous discussions of mergers among regionals, I was told that the up front costs to merge two (or more) of them would be significant and it would take years for the savings to materialize. At that time, PSA and Piedmont had a shared back office, but PSA has grown their internal footprint dramatically since then.


There would be very limited savings if a merger were to occur. Both carriers don't have a lot of slack in their maintenance or crew operations so there is no real synergy to gain. Piedmont still operates the SSO and provides services to PSA employees still. Likewise, Piedmont is the "owner" of the American Eagle training team that covers all three carriers on the ground/frontline side. Just about the only costs you would save are some of the Executive functions and even then, the combined carrier would the need some more middle management which isn't going to be the cost savings everyone thinks it is.


Aircraft Mainteance Synergy can be had
Operations (OCC functions) Synergy can be had
Hell, facilities can be consolidations (PDT HQ, PSA HQ, MQ HQ) should all be down in DFW.

There's almost no maintenance cost reductions to be found. Staffing won't be lower in the various maintenance bases, they will still need the same amount of parts in each base. You aren't going to be able to reduce head count in any significant way, as the work is distributed around the system. There isn't even that much fat in the maintenance management to cut.

OCC head count could potentially go down by a handful of people, but it's a relatively small number and would require facility consolidation. Which brings me to...

Facility consolidation, especially in DFW, brings a lot of potential issues and very few benefits. Again, management and support is fairly thin and you would only be looking at minimal savings on headcount reductions. Add in severance and or relocation packages and the act of consolidation adds a lot of up front cost. Compare the cost of commercial real estate in DFW to SBY, DAY and MDT and you're pretty likely to lose much of your long term savings. Even more so, when you compare the cost of living and salary adjustments that will have to be made for the corporate and back office staff that is retained.

TLDR; Lots of short term costs and not all that much, if any, benefit that will take years to make up for the up front costs.
 
amcnd
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 3:07 am

Lots of comments about “wholly owned” .. i disagree, i think its easier for a mainline to hack away at the WO’s because they control there contract. (No min block hours, ect) . A good example is OO/RP vs Endeavor right now.. DL came back and gave OO/RP more block hrs and parked more Endeavor aircraft..

Gojet is the wild card. Will the 550 survive? SkyWest is leasing them half there aircraft...

XJT 175’s are already flying at SkyWest.. Sets up a easier XJT/C5 merger..

I don’t see Mesa’s 900’s surviving this. But there UA 175’s seem solid..

All of this is subject to change by morning. But each airline will be 20-30% smaller. That could mean some airlines won’t have enough flying to survive with that amount cut.... October will be interesting.
 
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aemoreira1981
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 3:39 am

What about 7H? How will they fare from this; will they fly again?
 
Longhornmaniac
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 5:30 am

airtran737 wrote:
SkyWest and Republic are going to look much smaller when this is all said and done. Republic has stated that even with CARES Act money (which they are in the same boat as XJT) they cannot make payroll for their current complement of employees. SkyWest is getting funding, but they along with Republic are going to see their flying continue to be much lower than before. United and Delta are both vastly overstaffed and will end up having to adjust their regional feed to meet scope clause requirements. You are smoking the best stuff if you think that mainline pilots are about to cave on scope when the industry is falling out from under them. If Republic survives they will be smaller. SkyWest will be as well. While Alaska doesn't have a scope clause to worry about, I can see them protecting their feed for QX over OO.

Over at Delta you will most likely see a reduction in the SkyWest flying as well as Republic. They will reallocate flying to EDV where they can, but EDV will see 200's parked and there will be major adjustments on their side.


I want to clarify what was said. We (Republic) didn't say we couldn't make payroll. What was said is that our grants (along with everyone else's) are capped at 74% of what was requested, due to a pro-rating of the $25 billion. Those grant requests, by statute, reflect Q2-Q3 pay in 2019. In most cases across the industry, payroll in 2019 was less than the payroll in 2020. As a result, we're going to be eating into our cash reserves to make up the difference. Those cash reserves, according to available DOT data, are larger than nearly every 121 carrier. Bedford said in a letter to the employees yesterday that our projections involve eating into roughly $100 million of our cash reserves between April and December. They intend to try to get that down to $50 million, though as yet unannounced means.

As it stands, OO and YX are in the best position to weather this storm on the regional side. Because the CARES Act won't cover payroll for anyone, every airline is going to be consuming their cash reserves unless they're able to participate in the loan program in the Act, as well. OO and YX have the most cash on hand, the most assets, and the most diversified operations. There is a looming major shuffle in the regional world, and to my eye, OO and YX are among the best positioned among the regionals to take advantage of that.
Cheers,
Cameron
 
strfyr51
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 6:37 am

DiamondFlyer wrote:
FLIHGH wrote:
silentbob wrote:

I think merging those two seniority lists is unlikely in the short to medium term. First, American wants multiple wholly owned subsidiaries in order to limit the damage should there be a labor action. Second, the 145 flying at Piedmont is essentially "free" as it doesn't impact the large RJ portion of the scope clause. They aren't in a position to purchase more CR7s to add to the fleet and they would have kept the PSA CR2s if they were intending to merge the lists, as those were relatively newer CR2s.

I think you'll see Piedmont doing all the 50 seat flying on the east coast with Envoy eventually going all 175. Way too many variables to really make any detailed, long term assumptions.


Purchasing used CR7/9s turned out to be more difficult than originally anticipated, but there was interest over the last few years. I think PSA is likely done receiving any new (to them) CRJs unless they are at the expense of Mesa.


The pressure on used CR7's came from United's laughable CRJ550 experiment. Suddenly they were valuable again, and we will see if that remains to be the case in 6 months time.

the CRJ-550 is a pretty nice airplane if you haven't been on one. The cabin is roomy and comfortable. If you didn't know from the size of the airplane that it's smaller than the A319? I can assure you, You wouldn't care. That's a CRJ-700 scaled down to meet the Pilot's scope clause, It wasn't an experiment. It was expedient!
And? It's a Hit! Roomy and Comfortable. If they should ever get scope relief? They can then go back and increase the seat count with a modification.
 
strfyr51
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 7:03 am

NLINK wrote:
I think in this situation that having regionals actually can hurt you, especially non wholly owned ones. The reason why is because with contracts it is more difficult to move quickly but if they are wholly owned or like SouthWest ,
y can park AC and cut costs much quicker. Pros and cons for utilizing contractors as in anything.. I do think we will see these smaller markets become the losers when it is done.


Well? the fly in your ointment is? Many of the larger regional airplanes like the E170's and E-175's plus boatload of CRJ550's and CRJ -700's are mainline OWNED! and the Regionals Bid to fly those airplanes. Should they Falter? The Majors who OWN said airplanes can re-bid the operating contracts if they can't meet performance.
Which the Mainline Crews wouldn't kick out of Bed for eating Crackers if it happened as it would keep them flying even if it's smaller equipment. Dispatching is Dispatching. Maintenance can still be had by bringing it in House and just opening maintenance stations using the Same mechanics working on them today. About the only thing that might change? Different paperwork and reporting. Not to mention the senior guys bidding to regional stations if the station becomes Bidable. For the Regionals? Possibly having to come under Union representation. I can assure you, the TWU, IAM, IBOT and every other union at a Major Has a contingency in place for just such an occurrence. the Upside in this scenario? There would be NO limit on the E175 thru E-195 flown in Regional service. NO seat or weight limit either. But?
No return to UAX, Eagle nor Delta Connection either. ALPA would throw a Party like the world series at Dodger Stadium.
 
eugdjinn
Posts: 190
Joined: Thu May 01, 2008 5:58 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 4:48 pm

strfyr51 wrote:
the fly in your ointment is? Many of the larger regional airplanes like the [excision] boatload of CRJ550's and CRJ -700's are mainline OWNED!


Um, no. Let's set that straight here. The only mainline owned 700 frames right now are the AA owned 700s at PSA, the original 25 GoJet 700s (United) and the DL owned 700 frames at Endeavor, which pale in number to the far larger number that are now SkyWest controlled frames becoming 550s. Chip Childs and team are gradually gaining control of more and more 700 frames, starting with the original 700 frames that were always SkyWest owned, then the ASA owned frames, and I believe they purchased at least half the Mesa owned 700s that flew for United. Even the 25 United owned original GoJet frames may have some ties to SkyWest now.... It's Tucson where SkyWest and Bombardier did the work to transform them, and I would be surprised if they didn't get the wing spar plates that remove the 25 year life limit on the wing spars. I don't know what the financial arrangements were, but it wouldn't surprise me at all to discover that in the event the experiment fails, the aircraft are suddenly SkyWest assets.

Too, I think Republic owns more of the aircraft its flying than you think.
 
DiamondFlyer
Posts: 3352
Joined: Wed Oct 29, 2008 11:50 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 5:05 pm

eugdjinn wrote:
strfyr51 wrote:
the fly in your ointment is? Many of the larger regional airplanes like the [excision] boatload of CRJ550's and CRJ -700's are mainline OWNED!


Um, no. Let's set that straight here. The only mainline owned 700 frames right now are the AA owned 700s at PSA, the original 25 GoJet 700s (United) and the DL owned 700 frames at Endeavor, which pale in number to the far larger number that are now SkyWest controlled frames becoming 550s. Chip Childs and team are gradually gaining control of more and more 700 frames, starting with the original 700 frames that were always SkyWest owned, then the ASA owned frames, and I believe they purchased at least half the Mesa owned 700s that flew for United. Even the 25 United owned original GoJet frames may have some ties to SkyWest now.... It's Tucson where SkyWest and Bombardier did the work to transform them, and I would be surprised if they didn't get the wing spar plates that remove the 25 year life limit on the wing spars. I don't know what the financial arrangements were, but it wouldn't surprise me at all to discover that in the event the experiment fails, the aircraft are suddenly SkyWest assets.

Too, I think Republic owns more of the aircraft its flying than you think.


They bought some of the Comair 700's from DL even, I believe.
From my cold, dead hands
 
eugdjinn
Posts: 190
Joined: Thu May 01, 2008 5:58 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 5:32 pm

alasizon wrote:
Who are you proposing does all the E175 flying in CLT, DCA and PHL that YX does today? Those birds are owned by YX so you can't just shift them to MQ. No reason to think YX will contract by any large measure.


Right at the moment, with the Compass birds in conformity and entering the Envoy fleet and enough 140s being sent to another potentially several year 'rest' in Marana, MQ is looking at 100 or so of it's own and has the pilots to fly them. I think that's enough for MQ to do most if not all of the needed 175 work for those cities. But frankly, those cities are PSAs and PSA has 900s which are the same size. First, those routes should be flown by PSA 900s, and only when and where needed by MQ 175s bridged over from DFW and ORD. I still think YX should do NYC and until MQ can get overwater ops certified, they should do the MIA routes that require that.

As to ground handling: full disclosure, I spent ten years on the ground, and I am not a proponent of divorcing ground handling from the airline itself. We function best when we remember we are ONE team, doing one job, turning the aircraft and caring for our passengers. However, the trend in the regional world is to divorce these functions, and contract the ground handling to people like DGS, UGE, Worldwide Flight Services, Simplicity and the like. In general, they overpromise, underbid, and wind up costing a great deal more than the companies they replace. I watched Envoy do it too, and do it badly, replacing previously SkyWest handled stations. Frequently, the great savings is that they don't offer much by way of flight benefits to their employees.

DGS was created during the Delta/Northwest merger by taking the ground handling components of several of their regionals and putting them together under one management company, while moving the airline part from that company into another. United was so resistant to using any part of the Delta merger playbook that they resisted creating a ground handler for years until it became obvious that contracting their ground handling to their competitors was foolhardy, and they got religion.

I haven't been to Charlotte in months, but I was under the impression it was PSA run... I guess I was mistaken. I thought there were still PSA ground handled stations. And I know that Piedmont and Envoy both do ground handling. Some very well, some poorly. In the long run, having two arms of what is AAG bid against one another is a lose-lose proposition. And it's time to look at consolidating under whichever team is stronger, I think that may well be Piedmont. Let PSA fly the 200s where 50 seaters are needed in the cities that they operate, and Envoy fly 140/145s in theirs. Allow Piedmont pilots/FAs/mechanics to move to either. And merge all the ground handling into Piedmont by date of hire. See how much of the middle and upper management can be eliminated by a generous retirement out package now, and let's move on.

Finally, I would only add my two-cent observation about regionals that place their HQ in the same town as a major and what that does for talent in the HQ. It's a bad idea. No regional is going to be able to pay great dispatchers, parts clerks, maintenance people, HR, etc. on a level as a mainline carrier. When ASA had someone who was top-notch in Atlanta, they would inevitably walk down the street and get a job offer for twice the money at Delta. Funny how that does not happen in St. George, UT. Until people there decide they are mobile and will move, they stay put. With that in mind, if I were going to merge, say, CommutAir and ExpressJet for United, and wanted them conveniently located in the middle of the big United hubs... I'd be talking to the city fathers of St. Louis and Kansas City about tax breaks and hangar space/office space.
 
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Rajahdhani
Posts: 565
Joined: Wed Sep 28, 2016 3:13 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 5:58 pm

strfyr51 wrote:
DiamondFlyer wrote:
FLIHGH wrote:

Purchasing used CR7/9s turned out to be more difficult than originally anticipated, but there was interest over the last few years. I think PSA is likely done receiving any new (to them) CRJs unless they are at the expense of Mesa.


The pressure on used CR7's came from United's laughable CRJ550 experiment. Suddenly they were valuable again, and we will see if that remains to be the case in 6 months time.


The CRJ-550 is a pretty nice airplane if you haven't been on one. The cabin is roomy and comfortable. If you didn't know from the size of the airplane that it's smaller than the A319? I can assure you, You wouldn't care. That's a CRJ-700 scaled down to meet the Pilot's scope clause, It wasn't an experiment. It was expedient!
And? It's a Hit! Roomy and Comfortable. If they should ever get scope relief? They can then go back and increase the seat count with a modification.


To add - with such a seating arrangement - how many FA's are needed for the flight? If the CRJ-700 were in a standard configuration - how many?

I mean, this indeed may be a perfect approach to the post-Covid19 world if projections are to be believed - where we will see a rebound in domestic and regional traffic first (vs longer international routes), airlines in operation are hoping to avoid putting their agents at risk (and so minimizing the amount needed on an aircraft) with the added bonus of a 'roomier cabin' (an Easy Jet approach if needed), a lower costing crew (courtesy of a regional), proven regional/domestic capabilities and, increased range/better engine utilization/better fuel consumption (due to the roomier cabin) if needed. That's a proactively decent solution for the next months/years where it's those carriers will not have to worry about A321-ing their way to success on trunk routes to regain the business community - especially if frequency will be key in regaining the business community's travel in future. It will be a slow and steady climb for business travel - and what a better way than to have a premium heavy incentive - albeit at a regional cost? I mean, some passengers may balk at a decked out CRJ to fly on - but was/is this not Bombardier's specialty anyway?
 
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Rajahdhani
Posts: 565
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Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 6:02 pm

eugdjinn wrote:
Finally, I would only add my two-cent observation about regionals that place their HQ in the same town as a major and what that does for talent in the HQ. It's a bad idea. No regional is going to be able to pay great dispatchers, parts clerks, maintenance people, HR, etc. on a level as a mainline carrier. When ASA had someone who was top-notch in Atlanta, they would inevitably walk down the street and get a job offer for twice the money at Delta. Funny how that does not happen in St. George, UT. Until people there decide they are mobile and will move, they stay put. With that in mind, if I were going to merge, say, CommutAir and ExpressJet for United, and wanted them conveniently located in the middle of the big United hubs... I'd be talking to the city fathers of St. Louis and Kansas City about tax breaks and hangar space/office space.


To add, the lower cost of living and perhaps better access to services (living in less congested cities) should be marketed better to potential employees.
I mean, if you're going to have to work for less (compared to working for mainline), living in a city with lower costs, hurts less.
 
eugdjinn
Posts: 190
Joined: Thu May 01, 2008 5:58 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 6:33 pm

The real pressure on 700 values is that under the AA scope, every 700 can be outfitted with 9 first class seats and 56 coach seats and operated as a 'small' rj, the equivalent of a 44 seat EMB 140, 50 seat CRJ 200 or 50 seat EMB 145. They literally print money. And the 700 is incredibly nimble, it has phenomenal short field, wet runway, etc. performance, allowing it to go nearly anywhere. (I was told in 2004 that the breakeven then was about 17 passengers on a 200 and only one more on a 700 - to pay for the extra flight attendant. I cannot attest to the validity of that claim, but she's very efficient.)

Rajahdhani - you asked about number of Flight attendants on a 700 - its two. Right at the moment, the FAA is allowing GoJet to staff one on a 550 - though many of us who've worked the 700 think that is a mistake, especially with the closets on the 550, as the length of the cabin is unchanged and you are still relying on the flight attendant's voice alone to command an evacuation. If it takes two, without closets blocking sound, how can it only take one with them? It's not any shorter.
 
bigb
Posts: 1108
Joined: Fri Nov 07, 2003 4:30 pm

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 6:35 pm

eugdjinn wrote:
alasizon wrote:
Who are you proposing does all the E175 flying in CLT, DCA and PHL that YX does today? Those birds are owned by YX so you can't just shift them to MQ. No reason to think YX will contract by any large measure.


Right at the moment, with the Compass birds in conformity and entering the Envoy fleet and enough 140s being sent to another potentially several year 'rest' in Marana, MQ is looking at 100 or so of it's own and has the pilots to fly them. I think that's enough for MQ to do most if not all of the needed 175 work for those cities. But frankly, those cities are PSAs and PSA has 900s which are the same size. First, those routes should be flown by PSA 900s, and only when and where needed by MQ 175s bridged over from DFW and ORD. I still think YX should do NYC and until MQ can get overwater ops certified, they should do the MIA routes that require that.

As to ground handling: full disclosure, I spent ten years on the ground, and I am not a proponent of divorcing ground handling from the airline itself. We function best when we remember we are ONE team, doing one job, turning the aircraft and caring for our passengers. However, the trend in the regional world is to divorce these functions, and contract the ground handling to people like DGS, UGE, Worldwide Flight Services, Simplicity and the like. In general, they overpromise, underbid, and wind up costing a great deal more than the companies they replace. I watched Envoy do it too, and do it badly, replacing previously SkyWest handled stations. Frequently, the great savings is that they don't offer much by way of flight benefits to their employees.

DGS was created during the Delta/Northwest merger by taking the ground handling components of several of their regionals and putting them together under one management company, while moving the airline part from that company into another. United was so resistant to using any part of the Delta merger playbook that they resisted creating a ground handler for years until it became obvious that contracting their ground handling to their competitors was foolhardy, and they got religion.

I haven't been to Charlotte in months, but I was under the impression it was PSA run... I guess I was mistaken. I thought there were still PSA ground handled stations. And I know that Piedmont and Envoy both do ground handling. Some very well, some poorly. In the long run, having two arms of what is AAG bid against one another is a lose-lose proposition. And it's time to look at consolidating under whichever team is stronger, I think that may well be Piedmont. Let PSA fly the 200s where 50 seaters are needed in the cities that they operate, and Envoy fly 140/145s in theirs. Allow Piedmont pilots/FAs/mechanics to move to either. And merge all the ground handling into Piedmont by date of hire. See how much of the middle and upper management can be eliminated by a generous retirement out package now, and let's move on.

Finally, I would only add my two-cent observation about regionals that place their HQ in the same town as a major and what that does for talent in the HQ. It's a bad idea. No regional is going to be able to pay great dispatchers, parts clerks, maintenance people, HR, etc. on a level as a mainline carrier. When ASA had someone who was top-notch in Atlanta, they would inevitably walk down the street and get a job offer for twice the money at Delta. Funny how that does not happen in St. George, UT. Until people there decide they are mobile and will move, they stay put. With that in mind, if I were going to merge, say, CommutAir and ExpressJet for United, and wanted them conveniently located in the middle of the big United hubs... I'd be talking to the city fathers of St. Louis and Kansas City about tax breaks and hangar space/office space.


Just want to add some corrections DGS was around at least around 2004 and 2005 time frame because HOU delta flights and cargo was handled by DGS.

Also, PSA CRJ-200 fleet is way too small for us to keep less than 20 planes in the fleet. We have 17 that parked at the moment.
 
toltommy
Posts: 2782
Joined: Tue Dec 09, 2003 9:04 am

Re: US Regional Airlines after Coronavirus

Fri Apr 17, 2020 6:40 pm

eugdjinn wrote:
DGS was created during the Delta/Northwest merger by taking the ground handling components of several of their regionals and putting them together under one management company, while moving the airline part from that company into another.


Not exactly. DGS was created by Delta in the mid-90's. It was Regional Elite Airline Services that was created following the Delta/Northwest merger. Delta had agreed to keep a number of jobs in Minnesota for 3 years post-merger. Regional Elite Airline Services was formed from the ground handling operations of Mesaba and Comair to satisfy this requirement. REAS was even headquartered in NW's Building C headquarters. Almost exactly 3 years later, Delta shut down Regional Elite, and moved most (but not all) existing ground handling contracts to DGS. REAS hourly employees with years of longevity with the legacy companies suddenly found themselves back at year one pay, because it was not a merger. The legacy regional airlines themselves (Mesaba and Comair) stayed on their existing certificates, and remained in their respective headquarters. Delta later chose to shutter Comair, and merged Mesaba and Pinnacle (which they bought out of bankruptcy) into today's Endeavor. For as much as Delta liked having DGS to use to whipsaw ground handlers, they clearly decided they could whipsaw without a wholly owned. Hence the spinoff of DGS to Argenbright in late 2018.
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