Brasilia losing money for SKYW?

[RoyalAviation2]

Lately I've heard that the bro has been losing money for SKYW and they are thinking about turning them into Embraer for ERJ's. Don't know how accurate this would be since SKYW is under contract for the Brasilias until 2010 I beleive. From what the person told me, Embraer would cover the training costs. What do you all think about it?

P.S. there are some routes that would just never turn a profit with a jet, aka LAX ONT or LAX SNA or LAX CLD(carlsbad). I don't see this rumor happening in the near future.

 

[Bluto]

Seriously doubt it. Adding a new type of jet to the fleet would make little sense at this point. Major mx costs for a very similar airplane to the CRJs Skywest already operates. A more likely story is that Skywest will convert some of their CRJ orders to Dash 8-400s. Unfortunately, the new weight restrictions are wreaking havoc on some Brasilia routes. I'd believe the Dash rumor before the ERJ one. Any hint as to your source?

 

[Russ]

ONT-LAX is already done in the CRJ. The runway at CRQ is a bit short for a RJ to operate to. Not sure but I think AE is doing SNA-LAX in their jet. SAN-LAX is another short leg the jet does. Same for DEN-COS. Probably forgetting some other short distance city pairs, but it is being done. Profitably or not I don't know.

ONT-LAX, six minutes in the RJ. Don't want to be the PNF on that one.

 

[sstearns2]

Lately I've heard that the bro has been losing money for SKYW and they are thinking about turning them into Embraer for ERJ's. Don't know how accurate this would be since SKYW is under contract for the Brasilias until 2010 I beleive. From what the person told me, Embraer would cover the training costs. What do you all think about it?

P.S. there are some routes that would just never turn a profit with a jet, aka LAX ONT or LAX SNA or LAX CLD(carlsbad). I don't see this rumor happening in the near future.

Skywest gets a fee for departure. United pays Skywest our cost to fly the leg plus some percentage. Skywest makes the same money if the airplane is full or empty. United is not trying to make money off the small airplanes flying the short legs. The goal is to fill up the big planes with high paying passengers. It's kind of like when the casinos in Vegas spend $10,000 to send their biz jet out to pick up a high roller who then drops a half million in the casino. If you only look at the biz jet flying around picking up customers, then it looks like your loosing money with it. You have to look at the whole revenue picture.

Scott

 

[bayoubandit]

Scott,

While we do get a fee for departure, the entire IAH system and to my knowledge parts of the 120 SLC system are "at risk".

It makes sense that is why they want to take over pricing down is IAH. According to CEO with the ticket prices down they are unable to make money on the "at risk" routes. SLC breaks even at best from the horses mouth. Of course, that could be said to manage expectations also.

 

[sstearns2]

Your right IAH and a handful of the E-120 routes for DAL and UAL are 'at risk'. I've also heard on the conference calls that the 'at risk' routes break even at best. That's my whole point. Our major partners don't make money directly from our short haul flights; they make money by using our flights to funnel the high dollar traveler into their long haul flights.



I'd bet that if you compared the revenue generated directly from the UAL E-120 system to what UAL pays Skywest to operate it, it looks like UAL is loosing a bunch of money with it. It doesn't make sense until you take into account all the revenue created by the passengers who get off the Skywest flight and onto the UAL flight who otherwise might have taken another airline.



My impression is that management looks at the IAH CAL deal as kind of an experimental training ground. It gives our operations people a chance to learn how to operate an independent airline and we get to cozy up to CAL in case any opportunities appear in the future. The IAH operation is tiny compared to the UAL and DAL contracts (low risk), looking at the CAL operation just as a way to make money in the short term kind of misses the point.

Scott

 

[embdrvr]

Do you really think there is much chance for growth with Continental? After all they own ExpressJet and those pilots have a good scope clause that keeps all jet flying within their pilot group. There may be some incremental growth opportunities for 1 or 2 more EMB's but I don't see the relationship with CO doing a whole lot for SKYW unless ExpressJet gets sold to a third party.

 

[Rogue5]

ExpressJet was spun off a year or so ago, it is not owned by CAL anymore (That's why they are "ExpressJet" now, not "Continental Express"). They have a contract with CAL to perform all jet service until '05 or '07 (someone help me out with this one), after that everything is up for grabs...

 

[Chairman]

In 2007 XJT will no longer have the exclusive agreement with CAL for there jet flying and will have to bid on it just like every one else. You know CAL can't wait to have a little price competition.

 

[Splert]

When they fly on the UEX side of the ledger the BRO can't lose money for SkyWest . They maybe losing money for UAL, but, not for SkyWest.

XJet and 2007 anymore questions why SkyWest will never buy another 'feeder'.

Splert

 

[Bluto]

...they own ExpressJet and those pilots have a good scope clause that keeps all jet flying within their pilot group.

Actually, the scope over at ExpressJet only limits jet flying in their current domiciles: IAH, EWR, and CLE. Anything other than that could be contracted out to other carriers any time.

 

[BluDevAv8r]

Actually, the scope over at ExpressJet only limits jet flying in their current domiciles: IAH, EWR, and CLE. Anything other than that could be contracted out to other carriers any time.

Actually, that is not a contractual provision, as you suggest. It is a mutual agreement between CAL and XJT as defined in the Capacity Purchase Agreement, which is the marketing agreement that defines the terms and conditions under which ExpressJet will provide services to CAL.

We currently have very little "scope protection" as XJT pilots and virtually zero when it comes to other airlines providing feed for CAL. The CPA protection provides for jet exclusivity in the hubs until Jan. 1, 2007.

-Neal

 

[Obi-Wan]

In 2007 XJT will no longer have the exclusive agreement with CAL for there jet flying and will have to bid on it just like every one else. You know CAL can't wait to have a little price competition.

I believe Gordon is on the XJT board of directors.
CAL and CAL mgt still own a $hit load of XJT stock. Although I think they will use the CPA in 2007 as leverage i would highly doubt that they will give all the flying to Skywest, so dont cream your panties yet. the main differnce now is that the money still goes back to them. i belive they would have this arrangement instead of making Atkins ritcher. We just started flying back to kileen which which went to skywest 1 year ago. XJT turned down the flying to free up the planes for expansion. We also have 401 hard lines and over 100 reserve ,thats over 500 lines lines just in IAH and growing. obviousely someone is happy with XJT's performance. This is no regional mickymouse operation, any pilot here who has previousely worked at a smaller airline can attest to that.

 

[145EXR]

dont forget..they just sold a bunch of our xjet stock a few months ago to fund the cal pilot's pension fund...wouldnt look too good if our stock just tanked due to loosing the cal contract!