Bring a knife to a gunfight - ACA future

[General Lee]

EMBDRVR,

Well, I am working on it. I did make a small reference to it yesterday in another thread, but I do not delve into it as much. I will try to avoid it in these threads, but that doesn't mean I will forget it.


Airboard,

I agree that UAL handed you a bad deal, but I think it really is risky to go at it alone with no name recognition (compared to United Express). I hope it works.

Bye Bye--General Lee

 

[climbhappy]

name recognition

General Lee,

did valujet have any name recognition after the crash, and what about airtran with 10 to twelve tired old 737-200 ( before the ad agency said "change your name and paint the planes"), now they're climbing up delta's skirt. No offense meant!

did jetblue have any recognition? only the best financed start up with 130 mil in seed capital before they ever flew.

People make a difference and their attititudes. ask gordon bethune , whose book, from worst to first chronicled how he changed the culture of a bunch of self deprecating people to where they are now.

if keegan(correct name?) can rally his troops to the call of proving the critics wrong, this may well be the airline story of this decade!

 

[NEDude]

I have to disagree with the statement that IAD is better for a LCC than BWI. BWI is perfectly suited to pick up traffic from three major cities - DC, Baltimore and Philadelphia.

I think this will be interesting to watch however.

Best of luck to all of you Blueridgers, hope it goes well.

 

[j41driver]

Think about it for a minute. ACA is going to go head to head against the only profitable airlines in the country, SWA and JBLU. They are currently saddled with a whole bunch of RJ's which are huge money losers when pitted against the 73's and 320's.

Where does it say we plan on competing directly with JBLU and SWA with CRJ's?

 

[j41driver]

Re: ACA morf into JET BLUE EXPRESS

Jet Blue is buying the new jet from Brazil and is going to start up a Jet Blue Express carrier. Why not just buy out ACA and you now have a working airline to place the new aircraft.

There is not going to be a JB Express carrier. When the EMB's show up they will be, for lack of a better term, mainline aircraft and will be flown by pilots on the jetBlue seniority list. It's not going to be a different carrier at all. Unless something has changed since they announced the EMB order.

 

[tittyjet]

nevermind, it's just not worth it.

 

[Marko Ramius]

Is a MBA really needed?

To look at some of the basic math around this deal? ACA quoted a current CASM figure of 18-19 cents per mile which they say will drop to around 15-16 cents per mile with increased utilization. So they need to make in excess of 15-16 cents per mile to make money. Makes sense up to here, but here's where the train goes off the track IMO. Who the he!! is making that kind of yield today? Especially on domestic routes. Fine they may not put their carrier head to head with other LCC's, but they still in fact trying to become a low COST carrier. There is nothing low about 15-16 cents per mile, most LCC's are in the neighborhood of 6-7.5 cents per mile. The mainline carriers like UA that they are distancing themselves from all have lower CASM's then ACA. They also have lower RASM on ticket prices that are in excess of what ACA claims it will charge. Granted the CASM will fall with the addition of larger A/C, but the system wide CASM will still likely be higher than all of their competitors as long as the RJ's are in the fleet and it's unlikely that ACA will get enough financing to replace them all in short order. The larger A/C will likely have to subsidize losses on the smaller ones just like biz pax did for leisure pax for so many years. ACA was no doubt in a corner, and this is likely the best thing for them to try, but I can see no amount of spin that makes this look like a good idea. All the same best of luck to ACA in making it work and proving us haters wrong!

 

[Marko Ramius]

Another thing that is interesting to me is the blind faith in ACA upper management. Granted they have an outstanding 14 year run, but they do have some culpability in this situation as well. While part of the reason UA took a hardball stance with ACA likely has to do with their UsAir codeshare, this situation has been brewing pre-BK. UA management was extremely unhappy with how ACA pushed for and won fee per departure hikes in early 2002. Interim CEO Jack Creighton admitted to employees that the deal was basically highway robbery but that there was little that could be done about because they couldn't afford to lose the feed at a critical time. There were quite a few aritcles at the time about this if anyone remembers. They applauded ACA for using it's leverage over a UAL that was in a cash conservation/downsizing mode, but cautioned that the move had considerable risks should UA's situation worsen or end up in BK. Well they went BK, the tables turned and now UA management has leverage. Not many people outside of the majors cared when the whipping stick was applied heavily to airports, aircraft lessors, and employees. Those things were all about "economic reality." It was only inevitable that they would do the same to their regional afilliates, and it's not surprising that UA management hasn't forgotten what ACA management did a year ago. I must tip my hat to Fast Eddie in all of this though, be it the blue meatball, palm, or blue ridge he's always out the door long before the flag falls.