Space Wrangler
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Bombardier shifts jet deliveries to US Airways, wins South Korea transit work
Canadian Press
Tuesday, July 27, 2004
TORONTO (CP) - Bombardier Aerospace has altered a major contract with US Airways in order to supply a larger proportion of bigger regional jets over a longer period of time.
Bombardier said Tuesday it has revised the $3.3-billion-Cdn deal announced in May 2003 with the financially troubled American airline.
Instead of 60 of its 50-seat CRJ200 planes and 25 CRJ700 or CRJ900 aircraft capable of carrying 70 to 90 passengers, Bombardier is to supply 37 CRJ200s and 48 of the larger planes - still a total of 85 aircraft under the firm contract.
"In addition, the schedule for delivery of the remaining aircraft has been extended from April 2005 to March 2006 to accommodate US Airways' current financial restructuring and re-fleeting plans," Bombardier stated.
"As this agreement was anticipated, there will be no effect on Bombardier's current production rate or overall planned delivery schedule for the current fiscal year."
US Airways Group Inc. said Tuesday its second-quarter earnings more than doubled from a year ago to $34 million US, but it expects further losses in the second half of this year.
Standard & Poor's warned last week that the viability of US Airways, which emerged from a bankruptcy restructuring early last year, "remains uncertain given the company's weak financial profile, geographically concentrated route network and increasing exposure to low-cost competition."
Despite the second-quarter profit the airline lost $143 million US in the first six months of 2004.
In another announcement Tuesday, a consortium led by Bombardier's rail-equipment division ....blah, blah, blah.....
I certainly hope UAIR could be turning the corner...I spoke with a good friend, who is a senior advisor to the Governor of Alabama today and he says when the 2Q earnings came out that lots of folks in his office were pretty pleased and that Bronner was (behind closed doors), as well. However, mgmt continues to poor mouth, as seen in the example below from the NY Times:
US Airways Plans a Major Overhaul of Its Flights
[size=-1]By MICHELINE MAYNARD[/size]
http://graphics7.nytimes.com/images/misc/spacer.gif
Published: July 28, 2004
US Airways plans a major overhaul of the way it flies, concentrating on direct flights to and from major airports on the East Coast and dismantling its hub in Pittsburgh, executives said yesterday. It will also wade into the highly competitive New York-to-Florida market, they said.
The moves, which are meant to defend US Airways' share of traffic in its most valuable markets, will take effect in the autumn.
But the airline warned that the plan, and the company's solvency, depended on cutting $800 million a year from employee wages and benefits. It is pushing its unions to accept the cuts before Sept. 30.
Otherwise, according to Bruce R. Lakefield, the chief executive of US Airways, the airline may be unable to fulfill obligations to its aircraft lenders, would run the risk of defaulting on its federally guaranteed loans, and would be in danger of falling back into Chapter 11 bankruptcy.
The transformation plan "can only happen if we confront the difficult issues and make the difficult choices," Mr. Lakefield said in a recorded message to employees. "We don't want others making those choices for us."
Yesterday, US Airways also reported a $34 million profit for the second quarter. The airline, which had the highest operating costs, mile for mile, among major airlines in 2003, said it had brought them down closer to those of its peers. It earned $13 million in the quarter last year.
While any black ink at all is generally heartening news for the airline industry, Mr. Lakefield said US Airways' latest performance was not good enough. The second quarter of the year is normally its best, and the airline depends on it to get through the rest of the year.
Unless workers grant the concessions, he said, the airline would post significant losses in the second half, when air travel falls off steeply after the strong summer season and does not pick up again until Thanksgiving.
"These results should not fool anyone into thinking that our problems are behind us," Mr. Lakefield said. "Unfortunately, our greatest problems lie ahead."
In September, US Airways must comply with financial covenants in its loan package from the Air Transportation Stabilization Board, the centerpiece of the $1 billion refinancing plan that allowed the airline to emerge from bankruptcy last year. Aircraft financing deals with General Electric, Bombardier and Embraer are also due to expire then, the airline's chief financial officer, David M. Davis, said. If the airline has too little cash to comply with the terms of its loan guarantees, it will have to renegotiate the aircraft financing deals on less favorable terms, Mr. Davis said.
Still, Mr. Lakefield looked beyond the immediate challenges to outline where he wants to take the airline, which he has led since David N. Siegel resigned as chief executive in April.
The airline will shift away from the hub-and-spoke route system it has used for a decade, which blankets the eastern half of the country with flights meant to carry passengers to and from connections at its hub airports. Instead, Mr. Lakefield told analysts that the airline would emphasize direct flights to and from airports in Boston, New York, Washington and Philadelphia, its busiest destination, using aircraft freed up by the elimination of most connecting flights through Pittsburgh.
The move is in part a defensive measure against new low-fare competition. Southwest Airlines began flights to Philadelphia in May, and a start-up, Independence Air, began flying from Dulles International near Washington in June, competing with US Airways' big operation at Reagan National about 30 miles away.
In Pittsburgh, where US Airways has already eliminated a third of its flights, the schedule will be adjusted to primarily serve local demand, it said yesterday, hinting that more cuts are in store. Pittsburgh airport officials have said that they expect US Airways to cut back and that they are meeting with other airlines, including low-fare carriers, about picking up some of the service that US Airways plans to drop. Starting in September, US Airways said it would strengthen schedules from New York to Florida, another area increasingly dominated by low-fare carriers.
JetBlue Airways, which now flies between Kennedy Airport and Fort Lauderdale, Fla., plans to add flights from La Guardia in September, bringing its total to 21 flights a day. Delta Air Lines' new low-fare brand, Song, also flies to Florida from New York. And American Airlines, a unit of AMR, said yesterday that it would offer round trips between New York and Orlando, Tampa and West Palm Beach for as little as $98.
But US Airways, which is already offering $98 round-trip flights on some Florida routes, sees more potential in the market, and hopes to exploit it using its existing operations at La Guardia.
Just a few months ago, US Airways tried to sell its gates there, along with its East Coast shuttle and other assets, to raise cash.
Some analysts said they thought that move was mainly intended to push the unions into talks on a third round of wage and benefit cuts, following the two the airline negotiated while in bankruptcy. Since then, US Airways has begun discussions with its pilots, flight attendants and other workers, though the machinists' union has resisted new talks. Yesterday, the airline said it was no longer trying to sell the assets.
Rivals said they were not surprised at US Airways' moves. "When you're doing something that isn't working, you have to try something else," said David F. Ulmer, vice president for planning at JetBlue.
Mr. Ulmer noted that US Airways served the big East Coast cities for years before its low-fare competitors came along, and briefly tried offering cheap flights within Florida under a failed venture called MetroJet. "They've been there and done that," he said. Even so, he said, "the lowest-cost producer will always have the advantage," and JetBlue's costs are still well below those of US Airways.
A new round of concessions from the unions would probably put US Airways in good shape to take on the low-fare carriers, said William T. Warlick, the analyst for Fitch Investors Service. But the competition will fight back hard, he said: "They're well prepared and ready to get into a market share game, if that's what US Airways wants."
Canadian Press
Tuesday, July 27, 2004
TORONTO (CP) - Bombardier Aerospace has altered a major contract with US Airways in order to supply a larger proportion of bigger regional jets over a longer period of time.
Bombardier said Tuesday it has revised the $3.3-billion-Cdn deal announced in May 2003 with the financially troubled American airline.
Instead of 60 of its 50-seat CRJ200 planes and 25 CRJ700 or CRJ900 aircraft capable of carrying 70 to 90 passengers, Bombardier is to supply 37 CRJ200s and 48 of the larger planes - still a total of 85 aircraft under the firm contract.
"In addition, the schedule for delivery of the remaining aircraft has been extended from April 2005 to March 2006 to accommodate US Airways' current financial restructuring and re-fleeting plans," Bombardier stated.
"As this agreement was anticipated, there will be no effect on Bombardier's current production rate or overall planned delivery schedule for the current fiscal year."
US Airways Group Inc. said Tuesday its second-quarter earnings more than doubled from a year ago to $34 million US, but it expects further losses in the second half of this year.
Standard & Poor's warned last week that the viability of US Airways, which emerged from a bankruptcy restructuring early last year, "remains uncertain given the company's weak financial profile, geographically concentrated route network and increasing exposure to low-cost competition."
Despite the second-quarter profit the airline lost $143 million US in the first six months of 2004.
In another announcement Tuesday, a consortium led by Bombardier's rail-equipment division ....blah, blah, blah.....
© Copyright 2004 The Canadian Press
I certainly hope UAIR could be turning the corner...I spoke with a good friend, who is a senior advisor to the Governor of Alabama today and he says when the 2Q earnings came out that lots of folks in his office were pretty pleased and that Bronner was (behind closed doors), as well. However, mgmt continues to poor mouth, as seen in the example below from the NY Times:
US Airways Plans a Major Overhaul of Its Flights
[size=-1]By MICHELINE MAYNARD[/size]
http://graphics7.nytimes.com/images/misc/spacer.gif
Published: July 28, 2004
US Airways plans a major overhaul of the way it flies, concentrating on direct flights to and from major airports on the East Coast and dismantling its hub in Pittsburgh, executives said yesterday. It will also wade into the highly competitive New York-to-Florida market, they said.
The moves, which are meant to defend US Airways' share of traffic in its most valuable markets, will take effect in the autumn.
But the airline warned that the plan, and the company's solvency, depended on cutting $800 million a year from employee wages and benefits. It is pushing its unions to accept the cuts before Sept. 30.
Otherwise, according to Bruce R. Lakefield, the chief executive of US Airways, the airline may be unable to fulfill obligations to its aircraft lenders, would run the risk of defaulting on its federally guaranteed loans, and would be in danger of falling back into Chapter 11 bankruptcy.
The transformation plan "can only happen if we confront the difficult issues and make the difficult choices," Mr. Lakefield said in a recorded message to employees. "We don't want others making those choices for us."
Yesterday, US Airways also reported a $34 million profit for the second quarter. The airline, which had the highest operating costs, mile for mile, among major airlines in 2003, said it had brought them down closer to those of its peers. It earned $13 million in the quarter last year.
While any black ink at all is generally heartening news for the airline industry, Mr. Lakefield said US Airways' latest performance was not good enough. The second quarter of the year is normally its best, and the airline depends on it to get through the rest of the year.
Unless workers grant the concessions, he said, the airline would post significant losses in the second half, when air travel falls off steeply after the strong summer season and does not pick up again until Thanksgiving.
"These results should not fool anyone into thinking that our problems are behind us," Mr. Lakefield said. "Unfortunately, our greatest problems lie ahead."
In September, US Airways must comply with financial covenants in its loan package from the Air Transportation Stabilization Board, the centerpiece of the $1 billion refinancing plan that allowed the airline to emerge from bankruptcy last year. Aircraft financing deals with General Electric, Bombardier and Embraer are also due to expire then, the airline's chief financial officer, David M. Davis, said. If the airline has too little cash to comply with the terms of its loan guarantees, it will have to renegotiate the aircraft financing deals on less favorable terms, Mr. Davis said.
Still, Mr. Lakefield looked beyond the immediate challenges to outline where he wants to take the airline, which he has led since David N. Siegel resigned as chief executive in April.
The airline will shift away from the hub-and-spoke route system it has used for a decade, which blankets the eastern half of the country with flights meant to carry passengers to and from connections at its hub airports. Instead, Mr. Lakefield told analysts that the airline would emphasize direct flights to and from airports in Boston, New York, Washington and Philadelphia, its busiest destination, using aircraft freed up by the elimination of most connecting flights through Pittsburgh.
The move is in part a defensive measure against new low-fare competition. Southwest Airlines began flights to Philadelphia in May, and a start-up, Independence Air, began flying from Dulles International near Washington in June, competing with US Airways' big operation at Reagan National about 30 miles away.
In Pittsburgh, where US Airways has already eliminated a third of its flights, the schedule will be adjusted to primarily serve local demand, it said yesterday, hinting that more cuts are in store. Pittsburgh airport officials have said that they expect US Airways to cut back and that they are meeting with other airlines, including low-fare carriers, about picking up some of the service that US Airways plans to drop. Starting in September, US Airways said it would strengthen schedules from New York to Florida, another area increasingly dominated by low-fare carriers.
JetBlue Airways, which now flies between Kennedy Airport and Fort Lauderdale, Fla., plans to add flights from La Guardia in September, bringing its total to 21 flights a day. Delta Air Lines' new low-fare brand, Song, also flies to Florida from New York. And American Airlines, a unit of AMR, said yesterday that it would offer round trips between New York and Orlando, Tampa and West Palm Beach for as little as $98.
But US Airways, which is already offering $98 round-trip flights on some Florida routes, sees more potential in the market, and hopes to exploit it using its existing operations at La Guardia.
Just a few months ago, US Airways tried to sell its gates there, along with its East Coast shuttle and other assets, to raise cash.
Some analysts said they thought that move was mainly intended to push the unions into talks on a third round of wage and benefit cuts, following the two the airline negotiated while in bankruptcy. Since then, US Airways has begun discussions with its pilots, flight attendants and other workers, though the machinists' union has resisted new talks. Yesterday, the airline said it was no longer trying to sell the assets.
Rivals said they were not surprised at US Airways' moves. "When you're doing something that isn't working, you have to try something else," said David F. Ulmer, vice president for planning at JetBlue.
Mr. Ulmer noted that US Airways served the big East Coast cities for years before its low-fare competitors came along, and briefly tried offering cheap flights within Florida under a failed venture called MetroJet. "They've been there and done that," he said. Even so, he said, "the lowest-cost producer will always have the advantage," and JetBlue's costs are still well below those of US Airways.
A new round of concessions from the unions would probably put US Airways in good shape to take on the low-fare carriers, said William T. Warlick, the analyst for Fitch Investors Service. But the competition will fight back hard, he said: "They're well prepared and ready to get into a market share game, if that's what US Airways wants."
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