Look out ExpressJet...

[gojo]

How big was Indy Air? How many aircraft? What you fail to get is that it costs money to go after another carrier in a price war. A fleet size of 85, with 37 cities is a bit more beatable than one with the world's largest fleet. When the bottom of your balance sheet no longer has parentheses, we'll talk further.

American Airlines had lots of cash in the bank too, and look at the path they chose.

 

[General Lee]

How big was Indy Air? How many aircraft? What you fail to get is that it costs money to go after another carrier in a price war. A fleet size of 85, with 37 cities is a bit more beatable than one with the world's largest fleet. When the bottom of your balance sheet no longer has parentheses, we'll talk further.

Big talker! Wow. $1.3 billion Q3 profit, and profit sharing for employees alone was $506 million. I don't need to talk to you anyway.


Bye Bye---General Lee

 

[Nevets]

A clip from the Q&A section of the SkyWest Inc, earnings Conference call:

(seems pretty clear how they intend to "right the ship")



Helane Becker - Cowen and Company

Okay and then can I just ask one more question? On ExpressJet, when did you ? I mean this has been a problem for years as you pointed out, so when did you decide that this has to ? there is like almost an end date?



Have you been talking about this at the board level for several months or just is this just start? I am kind of surprised you didn?t start to take some of these, could you guys are pretty good at being profitable and focused on your business. Then you didn?t start to take some of these initiatives last year rather than this year?



Brad Rich - President

So, look, we have been working on some of these initiatives very, very specifically for several years. And as you know, some of the ? several things that have ? that are ? let me just say there are things that have changed within ExpressJet and the network that we operate.



Some of the improvements and the cost reductions and the initiatives we have been working on have been overshadowed by other inefficiencies in the system. We have some cost increases in some, I mean, I hate to make excuses and call them uncontrollable.



But for example, in maintenance, we have some escalating costs, primarily due to age of ? either age of aircraft or the utilization on the airplanes that are causing increases in maintenance that are escalating higher than our rates are escalating.



So, we knew when we bought ExpressJet that we had to get some efficiency and productivity and integration savings and but we also knew that in the near-term, the results would underperforms relative to our normal expectations, because we didn?t have tail risk.



We knew the rates were on the very low end of the market, but as the natural terminations happen and we expect to ? the original thesis I will say was to renew and extend contracts at what would then be market rates. Well, in the meantime, the system has changed.



The system has been spread out. It was very concentrated in Newark and Cleveland and Houston and now we are flying in Chicago and Denver, the utilization on the airplanes have gone up.



The spare ratios are not adequate. I mean, there is just a number of complicating factors here that have kind of exacerbated the problem and in the meantime, we haven?t achieved the joint collective bargain agreements that we need to get and that?s delaying some of the efficiency and productivity improvements that we needed to realize.



And so, look all of this has just, I mean, yes, the board has been talking about this for a long time and yes, as you can imagine, the board is not very patient with this and so, things are just moved to a higher priority and a sense of urgency and that's where we are.

This whole earnings call is bs. This is one example of it. The context of this callers questions is from Rich's new 3 point strategy to make XJT profitable. But at the very beginning he states they have been working on them for years. Then he starts to make excuses about costs and inefficiencies. On the costs side he states increased maintenance because of more utilization. But more utilization and more block hours is good for revenue. He states that it's not offset by the rate escalation of the CPA. Well, who's to blame for that? Certainly not the pilots or any worker other than Inc management who negotiated the rate and escalation language.

Then he gives the excuse that they were expecting to underperform because they don't have tail risk. The only thing that not having tail risk means (from a cost/revenue standpoint), is that the block hour rate is commensurately lower since mainline pays the lease directly to a third party leaseholder. So yes, Inc gets less revenue but their costs are less as well since they don't pay for the lease or mortgage.

Then he gives the excuse that the system has changed because at first the flying was concentrated in IAH, EWR, and CLE but now it includes DEN, and ORD. Well, Skywest airlines seems to be doing ok by being spread out a lot more than that.

Next, he gives the excuse that spare parts are low. Hello? You guys sold off half the inventory when you bought XJT because you felt the inventory was too much. And now you complain that you don't have enough and have to buy back the same parts you sold with a 50% mark up? Who's fault is that?

Lastly, he blames the lack of joint contracts. Well, if a joint contract is that crucial to them, then they will need to offer something that isn't concessionary. Also, there are three other work groups who don't have joint contracts. Why haven't they gotten a TA at least?

Fact of the matter is that the fault of all of this falls squarely on Inc management's lap. It all stems from low ball bidding back when they tried to buy XJT in 08. They negotiated this CPA and now they are stuck with it.

If these Inc people truly cared about their employees as they so profusely proclaim on each and every one of these earning a call, they wouldn't pit us against each other solely to put more money in their pockets. They could just merge all operations, get rid of the costs of two managements and systems and call it a day. Instead, they continue with this unethical, immoral, disgusting practice of whipsaw. Shameful Jerry Atkin, very shameful!

 

[slick1]

If these Inc people truly cared about their employees as they so profusely proclaim on each and every one of these earning a call, they wouldn't pit us against each other solely to put more money in their pockets. They could just merge all operations, get rid of the costs of two managements and systems and call it a day. Instead, they continue with this unethical, immoral, disgusting practice of whipsaw. Shameful Jerry Atkin, very shameful!

Occasionally, a small kernel of truth falls out of this website. This ^^^^ right here is one!

Ya gotta love it when management's b.s. mask is ripped off of their face and the truth is laid bare for all to see.

 

[Freebrd]

Well written Nevets. Besides, the recent defeat of the TA WAS NOT a true 'joint' contract was it, not when they carved out different items for each pilot group.

Shame on YOU JA!

FUPM! :uzi: