ACA to go it alone!

[Beechnut]

I have to say, this is the most fascinating thing to happen to the airlines in the past two years. I hope you guys do alright, but I also hope this means more growth for the other UAX guys out east. (Mesa excluded)

S.

 

[tittyjet]

Webcast at 10:00, eastern

WEBCAST ADVISORY: Atlantic Coast Airlines This Morning, Monday, July 28th, at 10:00am Eastern
July 28, 2003 05:06:00 AM ET


DULLES, Va., July 28 /PRNewswire/ -- As a follow-up to this morning's Atlantic Coast Airlines ACAI press release announcing the company's plan to begin a new operation as an independent low-fare carrier operating from Washington Dulles, the company will conduct a live webcast this morning (Monday, July 28, 2003) at 10:00am Eastern to discuss the details. You are invited to listen.

The webcast will be hosted by:
-- Kerry Skeen, Chairman and Chief Executive Officer
-- Richard Surratt, Executive Vice President and Chief Financial Officer
Instructions to hear the webcast:

The live webcast can be accessed directly through the ACA website at www.atlanticcoast.com (go to the "For Investors" section).

NOTE: Replays of the webcast will be available for five business days following the live event.



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[I.P. Freley]

Where have I been?

Not worrying particularly much about the relations between United and ACA, that's where.

Seems like a simple enough question if someone would be so kind as to answer it...

 

[exphojump]

UAL has abused us for a while. The amount of gate space they have given us in ORD is an insult. The employees have consistently treated us as unwanted partners and a threat. Pull up to PHL, LGA, JFK, EWR, CLE, DTW, CMH and see how badly the UAL ramp/ramps/csrs have treated us over the years or sit in the penalty box in ORD for 2+ years. The bad blood builds up.

Then after Chapter 11 they kill our CASM by under utilizing us.

The final slap was hiring Bain consulting. UAL held a gun to the pilots heads and demanded we take Mesa rates or disappear, except they used a third party to do it. None of our previous efforts were factored in, no loyalty.

Long Live ACAI!!!!

 

[I.P. Freley]

Okay, thanks for your reply exphojump.

As for the ORD gate space, wasn't that part of the country AWAC's playground? I was under the impression that the Chicago hub was primarily "theirs" and the IAD hub was primarily "yours".

 

[Humblepilot]

Re: United went too far!

Give em hell boys! I am sick too death of watching United use and abuse it feeders. United's pilots and managers screw themselves over with poor decision making and then want to slash prices with what is already the most underpaid positions in the industry (the regionals)! I would love to see United get burned big time on all the routes ACA will fly! If only the other regionals had said enough is enough (like ACA) United would have had to honor their current contracts because replacing all regional flying would have been too much for Mesa to accomplish overnight.

If I read this correct, ACA pilots will now no longer be taking pay cuts either since the proposed cuts were based soley on a renewed contract with United. I would call this (directly or indirectly) a victory for Regionals and Pilots in general. Someone needed to take a stand. I hope it works out for ACA. Good luck to you all!

Sedona,

First I will always support my former brothers at ACA but do you even understand how ACA got to the size it has? UNITED!!! Second of all while the mechanics and the pilots had positions on the board, what decisions did the pilots make you didn't like? I don't like the bottom feeding done my UAL management either, but if you were running a business and you were coming out of BK what would you do?

What made me die laughing is when you stated the pilots will no longer have a pay cut. You crack me up. Talk to some pilots who have been in the airline industry more than a few years. And if you know Kerry Skeen, you will know where the money is coming for the new and bigger airplanes. Out of the EMPLOYEES WALLETS!!!! Ask the older Blue Ridgers about the dangling of the RJs and the wage issues before the growth. And I am betting the salaries for the larger equipment will be well below scale in the industry.

I would love to see ACA be a success as long as the success is share with the employees. But knowing the history, I seriously doubt it.

Frats,
Humble

 

[Beechnut]

That's the old thinking I.P. Around 2000 that's how it was. ACA in the east, AWAC in Chicago and Denver and SkyWest on the west. Since then we've been bleeding into each other's biggest bases. SkyWest in Denver, AWAC in LAX (for awhile) and Dulles and ACA into Chicago. Then ACA outgrew AWAC around the time AWAC pilots were about to strike in Chicago. So.... the short of it is, NO ONE has rights to any one base other than the fact that ACA owns their own gates in Dulles.

S.

 

[I.P. Freley]

Well, "around 2000" is the last time I had talked to any ACA pilots in depth, so that was the basis of my assumptions.

I used to jumpseat back-and-forth from IAD to BTV on a regular basis in late 2000 and early 2001, often in the cockpit, and with one exception the crews were always pleasant and happy to help a brutha out going to and from the girlfriend's place. I wish all of you well and hope this new business plan works out for you. I was just trying to figure out where all the animosity was coming from.

 

[smellthejeta]

Okay, thanks for your reply exphojump.

As for the ORD gate space, wasn't that part of the country AWAC's playground? I was under the impression that the Chicago hub was primarily "theirs" and the IAD hub was primarily "yours".

No matter whose "turf" it is, when I was there awhile back, we were supporting 120 daily flights with 14 parking spaces. IAD, OTOH, has close to 44. Make no mistake, UNITED does the master scheduling.

 

[fracflyer]

The Washington post article mentioned a cost of 14 CASM(which may be a high estimate). For 2002 we had an average CASM of 15.5 with aircraft utilization of 9 or so hours 30 turboprops and 33 FRJs. The reason our CASM is high is because of UAL. The have slowly strangled us with aircraft utilization so that we show a high CASM.

On our own we could reach a utilization of 11 to 12 hours a day for a CRJ, get rid of J41s, add CRJ900s, and add a aircraft capable of handling higher loads and coast to coast ops, all of which lower CASM.

The range of a 717 is less than a CRJ. The model would be something like Airtran/Southwest. The CRJ seat is not that comfortable, but neither is a LUV seat.

Stage lengths of up to 1000nm. This would reach MIA, DFW, MCI, and eastern Canada.

Lets assume an average trip length of 1000nm.

1000nm x 50 seats x 0.14 is $7000.00 per trip

$7000.00/$150.00 is 47 seats to break even at 14 cents CASM

I think the 14 cent CASM is high. With an all CRJ fleet I believe 12 cents is more accurate, assuming the FRJ Delta connection ops are self contained. With larger aircraft and CRJ 900s we could lower it in a few years to the 8 to 10 cent range.

Ask yourself, would you pay $300.00 roundtrip to go from Shreveport, LA to Portland, ME or Jacksonville, FL to Milwaukee, WI?

ACAI would offer Southwest service and prices to markets not traditionally served by LCCs. This market has not been exploited yet. JBLU is attempting to, but will not get the EMBs on property till the end of 2005.

Looks like fuzzy math to me. Let's take a look. First, selling 47 out of 50 seats is a 94% load factor. No airline comes close to that. According to the SWA 10Q they've had an average load of 70.1% so far in 2003. Second, in order for ACA to "bring home" $300 on your theoretical round trip, you'd have to charge aprox. $400 for the ticket to account for the taxes and airport feee's. So, let's look at the numbers again based on these assumptions:

1. I'll assume you CASM stays at 15.5 and doesn't go up. (there are going to be significant costs associated with stand-alone marketing, a reservation system, new fleet type, etc.)

2. You'll get the same load factor as SWA 70.1% (Not going to be easy)

3. Taxes and Fee's, on average, increase ticket prices by 25%

Lets assume an average trip length of 1000nm.

1000nm x 50 seats x 0.155 is $7750.00 per trip


$7750.00/35 seats (70.1 load factor) = $221 each way or $442 round trip before taxes. That's $552 per pax just to break even.

Getting the CASM down is going to be key. Good luck!

 

[acaTerry]

Released at 10:15am eastern time:

www.newsflashbs.com

Following an ACA announcement to start a low cost carrier out of IAD, the Mesa Air Group announced plans to compete with ACA.
"This is a terrific opportunity for Mesa" said Jerry Ornstien, CEO of Mesa. "As soon as ACA states their cost, we will be sure to undercut them with our flying, at the expense of our pilots"

ACA's Tom Moore replied "It does not matter. We will simply give our pilots another pay cut to meet the challenge". He was not available for further comment due to a house purchase he had to make.

Bain consulting recommended UAL purchase ACA and use the new operation to whipsaw mainline into further cuts.

 

[ArcticFlier]

LMAO

Released at 10:15am eastern time:

www.newsflashbs.com

Following an ACA announcement to start a low cost carrier out of IAD, the Mesa Air Group announced plans to compete with ACA.
"This is a terrific opportunity for Mesa" said Jerry Ornstien, CEO of Mesa. "As soon as ACA states their cost, we will be sure to undercut them with our flying, at the expense of our pilots"

ACA's Tom Moore replied "It does not matter. We will simply give our pilots another pay cut to meet the challenge". He was not available for further comment due to a house purchase he had to make.

Bain consulting recommended UAL purchase ACA and use the new operation to whipsaw mainline into further cuts.

 

[Intruder One]

Good luck..........your going to need it.The first regional to break away,hope you make it.This indudtry could get real interesting.

 

[poydras]

Good luck to ya 'll

If I could I' d like to open up my own airline down in Nawlins.
that will include a swamp tour and a pot of gumbo for the passengers

Best wishes to ya' ll at ACA

 

[the turtle]

When I was first told of this news "Midway" came to mind.

Secondly, when ACA's pilot group negotiates rates for these "larger aircraft", and if these rates are 10-20% lower than industry average, won't that make you (gulp) MESA?!

Good luck to you guys

 

[Flack]

Just what the industry needs. Another wannabee Low Cost Carrier. Only this time we get to witness the advent of Boeing or Airbus aircraft being flown at turboprop rates + 2%. Don't kid yourself fellas, the writing is on the wall.

PS- This industry needs an enema and some re-regulation before these airline executives destoy our profession. When will the madness end?

 

[climbhappy]

congrats to ACA

its' perfect timing and its' further proof of the downward pressure on ticket prices exacerbated by southwest from the beginning.

ACA will position itself perfectly for the recovery.

remember, Airtran started with a bunch of ol worn out dc-9s

to the mesa bashers,

isn't it clear the enemy is southwest . they have spawned airtran, jetblue, ATA, frontier, america west, spirit, song, valujet, and soon to be :

Atlantica

not to mention the the bankruptsies of united and us air.

no, aside from the sarcasm, people , including myself always want to get the most for the least. it's called the power of the consumer.

 

[KingAirer]

What does ACAs new airline have to offer that is not already there? There is going to be alot of competition. JetBlue already serves IAD, Airtran and Southwest have a good hold in BWI, and USAirways has a descent amount of service to all three DC airports. Not to mention that UAL is going to be replacing ACA on the routes they used to serve. Its going to be a tough road in my opinion, and i doubt they can profitbaly serve enough cities in the near future to use all of their current fleet.

 

[wackford]

What does ACAs new airline have to offer that is not already there? There is going to be alot of competition. JetBlue already serves IAD, Airtran and Southwest have a good hold in BWI, and USAirways has a descent amount of service to all three DC airports. Not to mention that UAL is going to be replacing ACA on the routes they used to serve. Its going to be a tough road in my opinion, and i doubt they can profitbaly serve enough cities in the near future to use all of their current fleet.

This reply is from an ametuer who can only make conjecture with the rest of you.

"There is going to be alot of competition"

There was “a lot of competition” when AirTran and JetBlue started up.

“JetBlue already serves IAD.”

Who cares, so does Northwest, Delta, Continental, and lots of other airlines…………
ACA plans to be the dominant LCC in IAD and dominate the D.C. area as “the” low cost carrier in the area.

“Airtran and Southwest have a good hold in BWI”

BWI is not IAD. It’s a long drive from Washington D.C., Arlington, and Fairfax. etc…………up to BWI.

“USAirways has a descent amount of service to all three DC airports”

US Airways is not a “low cost carrier.” I'm sure "descent" service was available in NY before JetBlue arrived.

“Not to mention that UAL is going to be replacing ACA on the routes they used to serve”

UAL is not a LCC and the new operation is not restricted to the routes that have been flown for UAL by ACA.

 

[tarp]

Wow!

I have sorely underestimated Tom and Kerry. They deserve a round of applause just for sheer chutzpa ("balls"). I can never talk trash about them again - they are "big dogs".

Now, just some thoughts.

My biggest fear is just name recognition. On this board, we all know ACA. But going to friends parties, wedding receptions and civic outings I get the usual "Where do you work?"
Me: "I'm a pilot for Atlantic Coast Airlines."
They: "Who?"
Me: (exasperated) "United Express out of Dulles."
They: "Oh, United. How's the bankruptcy thing going?"
Me: "I don't work for United, we're contractors to United."
They: "Oh." (walking away, going for another drink)

If we have to pack airplanes to make this thing work, we need a better name than ACA. (sorry, but it's true) If we could buy an old brand name, we would score much bigger points - my mind goes to the perfect fits for our market - Alleghany and Piedmont, followed by a luxury name like PanAm or TWA.

All those New Englanders could have flash backs to good old Agony Airlines(Alleghany). The Nascar circuit followers of the South would fly a plane with a big "Piedmont" logo on just to show that the "south will rise again." But ACA, Atlantic Coast, that "swirl" thing logo we've been promoting in "A" terminal for about a month. Marketing and sales are going to be key. As an unknown, we're going to have to offer "low,low fares" to entice travellers to try a new carrier. We don't have JetBlue's entertainment systems, we don't have happy SWA people running around our concourses, we are offering what Agony and Piedmont of the old days offered - a cramped cabin running to smaller market cities with nothing but a soda and bag of chips thrown at us.

I wish ACA all the best, but this is one tough road they've picked and we have not seen anything like the concessions they are going to have to ask for down the road.

My other thought is that I've got a trip through Albany this week. The United folks there are downright unfriendly to us on a good day. Do I need a flak jacket for work this week?

Gosh and I just had another good thought - if we're severing ties with United, does this mean we can dump those lousy Pepsi's and get CocaCola again? Ah, real Coke, real Sprite. A 717 parked at the hangar is nice, but Coke - now there's an incentive.