F9 - Any truth to this rumor?

[Cardinal]

Announced yesterday (12/5) that 10% of non-operational headquarters staff are being laid off, same as Delta.

 

[StaySeated]

The dreaded "right-sizing" memo.

Right sizing is another way to say that we are going to replace "mainline" flying with a lot of RJ's. Back when RJ's were first developed, it made sense to replace a 150 seat 737 with a 50 seat RJ in some markets. Grand Rapids and similar size cities went from 737's and dc9s to crjs and erjs almost overnight in the late 90's.

When you start replacing a 114 seat 318 with a 80 seat EMB 175 you are not "right-sizing", you are "right-laboring".

This isn't a dig on the current scope language. Scope has never and will never work. Show me one airline that has iron clad scope. Not possible, no such thing exists. The last airline to sell their souls for scope protection was Trans World Airlines. I guess you can say they effectively prevented rj's from taking their flying.

The economy along with some poor direction is driving some big changes at Frontier. If you think this quarter is going to be bad, wait until the first quarter of 2008 ( our fiscal calendar 4th quarter 2008) when our hedges are at zero!

Merger rumors have been around for years, but I would be amazed if we were still a "whole different animal" by summer of 2008. Really great people and a great place to work compared to others in this industry, but economy of scale will force a merger or worse.

Thankfully, (sarcasm intended) our debt position has increased so horribly that we are no longer an ideal candidate to be purchased and split into pieces.

Hopefully I am wrong and we have some master plan to survive the highest oil in decades combined with an insane airport fee structure (DIA) and intense competition from a legacy exiting BK and a little airline from texas with a billion dollars in the bank.

Add in the fact that we have a young, sharp CEO that took a paycut to come here. Then take a look at how the "leaders" and BOD of MEH or other recently merged airlines made insane windfalls after their mergers. MEH execs will make more after their payout than they have in the last five to ten years combined, depending on the idiot, I mean individual.

Execs, creditors, shareholders, labor. That is the hierarchy and that is the hierarchy that drives the decisions in this and most industries.

 

[FBN0223]

Frontier is a great company. Unfortunately, because it is a relatively small airline lacking a domestic route structure beyond Denver with virtually no international presence it will be forced into the consolidation game as many of the legacy carriers are soon to be. Many will make lots of money on Denver's premiere airline. Would be nice, for a change, if it were to be the F9 employees but that's probably not going to be the case.

 

[metroplex]

Heard that Midwest might be furloughing ,17 pilots....

 

[D-Bo]

When you start replacing a 114 seat 318 with a 80 seat EMB 175 you are not "right-sizing", you are "right-laboring".

You get it. Doesn't seem like too many others there do unfortunately. Good luck.

 

[Whiskey Tango]

The economy along with some poor direction is driving some big changes at Frontier. If you think this quarter is going to be bad, wait until the first quarter of 2008 ( our fiscal calendar 4th quarter 2008) when our hedges are at zero!

Merger rumors have been around for years, but I would be amazed if we were still a "whole different animal" by summer of 2008. Really great people and a great place to work compared to others in this industry, but economy of scale will force a merger or worse.

First OPEC said that the fundimentals don't support oil at $90 a barrel. OPEC didn't increase production because they are afraid of a crash. Remeber the early ninties when you could buy gas for 90 cents a gallon? Worldwide demand will probably decrease as economies slow. China has been growing like mad and can't seem to get a handle on their almost 5% inflation. I think the are in for a "correction" Many people think that crude prices are being driven mainly by specualtion and will also see a correction. You don't buy hedges at the peak.

Second I'm not sure there are many airlines out there that are in the market to aquire an airline. Everybody is also grappling with a drastic increase in their costs. I don't think it would be prudent to use up all of your cash to buy another company. You would be betting everything on oil going back down. I think it will but I wouldn't bet the farm on it. In addition banks aren't exactly anxious to lend money these days. I think that lending money to an airline would be the last thing they want to do until they can figure out exactly how much they stand to loose from the mortgage industry.

 

[FBN0223]

.
Everybody is also grappling with a drastic increase in their costs. I don't think it would be prudent to use up all of your cash to buy another company. You would be betting everything on oil going back down. I think it will but I wouldn't bet the farm on it.

It's called OPM or "others people money".

 

[Whiskey Tango]

I realize that its OPM but the financial industry is in the middle of a crisis of their own. They are not willing to take any risk right now.