Comair/ASA rumor....

[~~~^~~~]

I think DAL has plans to own us before it is all over....

Not in the plans at Delta, or CHQ, Republic Airlines or Wexford LLC. For starters CHQ is currently the sucking sound at the bottom of our cost structure. You have MCO because you contracted it for less than ASA, or Comair, could operate the service. ASA and Comair management both decided the margins were too thin and passed on the flying.

Not that we hold the pilots personally responsible, you guys are trying to improve your lot in life and we support your effort to get to a living wage and benefit package. Unfortunately as long as your managers continue to underbid flying and are willing to contract for a 4 to 5% margin (if everything goes perfect, which it seldom does) then we have to negotiate against an unrealistically low replacement cost.

Yes, you guys are the Mesa of your industry. We would like to see you become the Delta of the regional pilots. Get a good contract and help us out, please!

Treme wrote a really good post. The only part of his analysis that he left out was that CHQ is not a real, sustainable, operation as is. For example their pilot cost structure will go up ( a bunch with the US Air Mainline guys coming over for Republic ) and working out of 1/2 the fourth floor of the IND airport administration building is not sufficient infastructure support to manage a real airline. Eventually your costs will catch up with Comair's, but with margins so thin, something will have to give and ultimately it will result in an unprofitable quagmire. CHQ runs on some really thin ice and it is a tremendous credit to the crews that your airline turns in the performance numbers it does. A lot has to do with newer equipment and motivated employees. Over the longer haul, both the equipment and the employees age.

We certainly saw this at ASA. When Delta bought us they were surprised and had to spend millions to take us from a 135 type operation that had 121 service to the point where we could simulate a "real airline." None the less, the transition still is not complete, which is the subject of this thread.

ATL is the world's busiest airport and our ramp rivals an aircraft carrier for utilization of space. It is a challenging situation and our rampers move a heck of a lot of flights. The Company has obviously set a price point on service. Yes, we could do it the way Delta does, but no it would not be profitable. A CVG type operation is just not economically realistic, does not matter who is running the show, service costs money.

 

[Palerider957]

Squiggly line:

I think you hit it on the head. Delta/ASA want the performance numbers eminating from ATL to improve, but the are at a loss. They have added (some) new equipment, and the departure coordinators, which has been a help. The REAL (that is, not FLICA) on time numbers haven't really budged. Perhaps they think the Comair group can bring in some new ideas, I think they will hit the same walls ASA has.

I reacall somewhere that the MCO flying was never really profitable for DAL. They kept the routes to maintain market share.

As for CHQ, I'd like to see them get a respectable contract (I'd like to see us get one as well).

Skull one--relax brother, relax......nothing on these boards is worth getting that worked up over.

 

[Machdog1]

Thanks for the post chic whaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa. Good luck over there with your contract! Praying for ya brother!!
Sincerely,
Lame A@##$ss

 

[DoinTime]

Wexford also owns a little company called the Solitaire Leasing Group in Europe. Solitaire leases hundreds of ERJs and needs someplace to put them at cost. Wexford also has (and/or had) significant financial interest in Midway, National Airlines, Shuttle America, and, of course Republic.

Solitaire = a game played by one person

Does this mean that Chitaqua is really just playing with themselves?


b.t.w: didn't National Airlines go tits up last year?

 

[FLB717]

My quess is a simple one. Put CMR on shared routes with ASA and when/if ASA shuts down in two or three years over a little contract dispute CMR must fly the routes under the RLA while ASA walks in square circles. that is basicly what happened the CMR my DAL. Not fair in the brotherhodd issue but one that is difficult to beat in court. In other words they will have to fly the routes. But only the flight numbers flown prior to any shut down. My .5 cents dont spend it in any one place.

 

[~~~^~~~]

Put CMR on shared routes with ASA and when/if ASA shuts down in two or three years over a little contract dispute CMR must fly the routes under the RLA while ASA walks in square circles.

That is exactly the plan and it is working well. CHQ provides an additional buffer by allowing Delta to "acquire" additional RJ's without the capital expense.

Just keep your stock price headed up so I can eat while walking in ATL. I bought at $2.40 a share.

Still wish we had become "Value Prop" instead of Delta Connection. What is the status of the Air Wisconsin RJ flying, and why do they always leave their landing lights on while waiting for a gate on ramps 3 & 4?

 

[FLB717]

That was a great price to buy, My Grandfather did the same with 500+ shares. He says it the only stock that has done well in over a year. Wish I had the cash at the time to buy, oh well a strike and then first year pay with debt does slow things a little As far as the landing light at AW couldnt tell ya.

The one thing to remember is that is you park 120 RJs/ATRs/E120s they are still parked and DFW would be a slow place with ATL right behind them..close (yes I know everone else would still fly) and that WILL cost a LOT of money. I hope and think that the positioning of RJs from CMR is just posturing and not a prelude to a real shutdown. Leo and Co. lost a great deal of money last time and it would be even worse impact on the whole company now. Stand tall and feel good..the economy sucks but your position does not.

 

[Skull-One]

Not in the plans at Delta, or CHQ, Republic Airlines or Wexford LLC. For starters CHQ is currently the sucking sound at the bottom of our cost structure. You have MCO because you contracted it for less than ASA, or Comair, could operate the service. ASA and Comair management both decided the margins were too thin and passed on the flying.

Let me rephrase....

"I think Delta *planned* to own us." Perhaps since the economy tanked that has changed. However, IIRC, our "RJET" IPO was going to result in about 30-35% ownership by Delta (they were to receive a lot of our stock). I could be wrong....memory....failing....ugh....

Some conspiracy theorists are saying that's why our Management team is in such an uproar to get Republic going and have jets at Shuttle America. That way they'll have something to play with when CHQ gets sold.

I dunno.

As for underbidding the MCO operation....just remember that 99% of that is due to the cost of our airplane. I've already run the numbers on it and crew costs vs. ASA are under $3M a year. (I think it was $1.2M/year.) That's not enough to justify us getting the MCO operation!

 

[Skull-One]

Here's part of an analysis in which we were told CHQ beat out ASA and Comair because our F/Os make 34% less than ASA/CMR....

______________

"34% of nothing is still nothing.


Worst case scenario (350 F/Os on 2nd Year Pay) = $3.78 Million per year. That's the whopping difference. Considering our company is going to make $21 Million.............and that our F/Os on 1st and 2nd year pay number only....256.

Simplified calculation (the difference between first and second year pay isn't enough to matter in this case).


75 Hours/Month * 12 = $900 per pilot per month
$900 X 12 = $10,800 per year per pilot
$10,800 per year * 256 pilots = $2,764,800 saved per year.


The bonuses paid out to our Management could probably take up a large chunk of that. Saving gas probably takes up more.

Now consider that our airplanes cost $7 million *APIECE* less and this $2.74M doesn't seem like much, does it? Also, that number will drop every single week as more pilots reach third year pay once our growth slows. In time it will be somewhere around $200,000/year. Big woop.

We didn't get our MCO flying based on $2.76M/year.

Indeed, we only have fewer than 60 F/Os in MCO right now.

60 F/Os * 75 Hours/Month * 12 Months * $12/Hour = $648,000

That's the difference. $648,000 !

We didn't get this d a m n e d contract for that!"

 

[DoinTime]

Pay scales are only part of a contractual compensation package. I don't know if its accurate but I would venture that ASA and definitely CMR have a significantly higher pay PACKAGE than CHQ. Something interesting to note as well is that this is not just about pilot pay. Somehow pilots seem to think that the whole world revolves around them. Look at the pay rates of all the other employees groups that work at CHQ and compare them to the rest of the industry. I bet you are going to find that your flight attendants make less, your rampers make less, your office staff makes less, your mechanics make less, your dispatchers make less, ect..... I would also venture that on average employees at ASA and CMR have more years of service in than employees at CHQ.

Take all of these factors into account and that maybe CHQ is willing to work a contract that doesn't provide a profit margin that other carriers would find acceptable and then you can come up with a number that makes more sense.

 

[Skull-One]

I've already *DONE* that. If you had read the previous posts you would see that the absolute high end of cost savings for our operation would be in the neighborhood of $3M per year (realisitcally closer to $1.5M).

We use our MX and flight crews. Everything else is done by ASA/COMAIR. The savings from gate agents and rampers is non-existant (we don't use ours!). The total compensation package for flight crews and MX works out to no more than $3M/year difference.

The factor in all this that is standing out is the airplane. The Embraer is cheaper in every area than the CRJ. Cost to acquire alone saves around $7M a copy. Multiply that by 20....30....50 airplanes and that is some serious coin. Employee compensation is negligible by comparison.

 

[~~~^~~~]

Crew costs run 11 to 14% of direct operating costs on a 50 seat jet. Also, the E-145 is about $170 less a block hour than the CRJ. The ERJ burns less fuel, goes slightly slower. The CRJ "catches up" cost wise on longer legs where its speed makes up for the fuel burn.

The other part of the CHQ equation is that, again, I reiterate, that your company does not have a realistic cost structure on the operations side, yet. It is not just the pilots that are at the bottom end of the industry pay structure. The infastructure to run an airline the size yours hopes to grow to costs big money (hence the IPO). Eventually these costs will be incurred.

What concerns me about the airline industry in general is that operators will begin flying with an unsustainable business model. With paper thin margins upstart airlines depend on below average wages, attractive equipment leases and government grants (how did CHQ build their hangar space). Eventually something happens to increase costs, or decrease revenues, and the house of cards falls.

Atlantic Coast is facing this with the United mess. Now they are making the bold move of going it on their own. If they can get codeshare agreements and have the other airlines market and distribute their tickets they might make it. If Delta, United and American do not play along, ACA is history in 24 months.

CHQ has their own version of the "United Mess" in play with American and US Air. Unfortunately, I am not sure CHQ management understands the costs involved with jets for jobs. For example -
Who pays for training? What are the seat protections? What if a US Air pilot does poorly in CHQ training, are they on probation, or is it a guaranteed pass?

Right now CHQ does an amazing job with the resources they have. A big part of that is the work performed by the flight crews. How hard will US Air crews work for CHQ (republic) when they have no stake in the outcome of the CHQ business?

In all the areas these upstarts stretch their resources, the most critical is the pilot group. If pilots are willing to do more with less (outstation maintenance, dispatch, on time performance) then the airline thrives. If the airline takes pilot loyalty for granted and the pilots withdraw enthusiasm, then it is all over as soon as the cash runs out.

I have no frame of reference for measuring pilot enthusiasm at CHQ. Their pilots seem a pretty happy bunch, despite their wages. However, with the jets for jobs deal, I would not take pilot loyalty for granted at CHQ. When jets start flying with disgruntled US Air furlougheees who are unfamiliar with the equipment and jealous CHQ pilots see their best jobs taken by another employee group, it seems a situation ripe for employee morale problems. With a shoe string operation to begin with - I'm simply not optimistic about CHQ's future unless management takes care of their pilots.

 

[Treme]

Do nut underestimate that pilot group and its pilots Fins.

I still contend that Chautauqua is the single greatest threat to the continued expansion and long-term viability of ASA/Comair.

 

[~~~^~~~]

Treme: I don't disagree with you. With ALPA blocking our attempts to gain "Connection" scope, it could be any nameless 135 operation that just got a 121 certificate and a few RJ leases. CHQ has just got big enough to be noticed. It could be anyone.

In fact, you want to buy a Navajo with me and start flying ATL-MCN-VLD and back? We could let Captains fly for free, let FO's pay for Multi Time and use DUATS for dispatch. The City of Atlanta would be glad to have a new competitor at the airport and would probably lease us Northwest's maint hangar for $5 a year and give us a huge tax credit for bringing jobs to the City. Next year we will sub lease ACA's RJ's and expand to Orlando.

Sure, our business model is not sustainable, but we are managers. We can pay our salaries out of the loans we get to start our business, declare corporate bankruptcy two years later and keep the cash. Then start up a new business with a new name and tax ID and go all over again.

 

[~~~^~~~]

Do nut underestimate that pilot group and its pilots Fins.

I do not underestimate their pilots - the opposite is true - I think their management has underestimated their pilots. Human nature is human nature - when the best jobs go to US Air pilots, I expect there will be problems.

By the way...

"Don't misunderestimate me" George Bush Jr.

 

[DDpaysoff]

"34 percent of nothing is still nothing"

CHQ is in MCO, to maintain market share in a hub that can not operate at sufficient margains to sustain profitability. PERIOD. CMH, was a low cost opportunity to gain market share and protect DAL's second most profitable hub, CVG w/ predatory pricing. DFW, I have not quite figured out, but last I checked the flights CHQ is operating are low yielding former Brasilia routes that really can't compete w/ AMR eagle anyway.

I flew w/ a guy last week who made just over $50,000 as an F.O last year. There are not many, but they are out there. That's probably more than some of your captains are making. Keep in mind salary and overall compenstation package are two totally different things. When you factor in the 401K, Company funded retirement plan, Comprehensive medical package and salary now you get to see the big picture. Not, that I disagree w/ everything that you are saying, I think you are right on about some things.

However, in a market that DAL can operate at favorable margings, the wholly owned's will do the flying. I don't have time to get into it, but to keep it short if DAL was so profitable w/ CHQ flying wouldn't you actually be on some high yielding routes, instead of leftovers and a lot of subsidized flying?

Your low cost structure should not affect any growth at CMR/ASA. This CHQ flying has been going on for a year, and my company has grown by 380 pilots since last JUNE despite our "cost stucture".

Best of luck w/ your contract negotiations! I am sure you will receive full support from our group.

DD

 

[Skull-One]

If there were not a Comair/ASA to do the higher yield flying then we would probably get it. More accurately, if there were no high-yield flying there wouldn't be a Comair/ASA at its current price structure. DAL would whipsaw everyone down to a sustainable price level. It makes no sense to put a high-cost airline on a low-yield route...nor does it make sense to put a low-cost airline on a high-yield route at the expense of a high-cost airline.

The problem being that pilots are only 15% of the cost but we're also the easiest to slash...if you are the easy target you get picked off.

I still contend that our total benefits package is not that much inferior to those at ASA/Comair. We have 401(k) matching, medical and dental, etc. etc. etc. etc.. That is not the difference in getting a contract. If ASA or Comair had Embraer Jets I dare say CHQ would never have gotten a codeshare with DAL. We got it because of our equipment above and beyond all other factors. IOW, we were fortunate to have the right plane at the right time.

As for being sustainable, we've been doing this for more than thirty years. That's pretty sustainable. Our profits have been going up every year. I see no reason for CHQ to suddenly go into the red unless we pay pilots $150/hour or something...
Just my $0.02.

 

[Treme]

You gloating Jason?

What kind of response are you expecting from the Com/ASA pilots?

I dont think you're going to change a lot of minds. The fact is that I would guess that there is not a single Com/ASA pilot that wants Chautauqua around.

Your existance limits growth and expansion opportunities at their companies.

What exactly are you trying to gain by posting here? Everyone is well aware of the danger that your company and its cost structure poses.

 

[Cadillac]

Our Equipment

Slight detour in this great discussion,

Many Chq pilots bring up the low cost of the Emraer Jet and its low costs to operate as their basis for getting/keeping contracts.

Does anyone know if these less costly jets will fly as long as the Canadair/Dornier jets, or will they begin to fall apart sooner? Will the low initial cost catch up to them in MX and replacement in say, 7 years?

And if mesa is getting all of these new contracts with such low bids, how are they planning on doing so with CRJ's? It can't all be justified with their low pilot salaries, or can it?

 

[DoinTime]

If the ERJ was a better bird, cheaper to aquire, cheaper to operate, and lasted just as long then by far, everyone would be flying the ERJ. Take a look around.....this is not the case.