Rumor SkyWest Inc. receives new jet financing?

[79%N1]

What do you care how many 50 seaters there are? You don't have to fly one, and they aren't taking your precious over-seas routes.....and don't tell me you are just so caring that you want all RJ pilots to fly the "heavy iron"........so, why the hell do you care?

 

[JettBoii]

How many app's does delta have on file?

 

[Gr82Aviate]

Management wanted the talks to start early, so I think they have something else they are thinking about. As far as airplanes, there are a lot of planes that need replacing, but that is already being addressed by Management. Have you seen the number of MD90s coming onboard lately? They supposedly cost around $7 million each used, including the engines.(third world countries? China and Japan? They tend to take fairly good care of their planes. The Saudia ones may have some dust in them, but they may become spare parts, allowing those planes to continue to live on forever) Throw in 120 717s that are out there, and 100 new 737-900ERs. Most of the airbus fleet is fairly new (not all, there are some that were bought back in 1988), and even the MD88s are in fairly good shape. I was told by a jumpseater that even the DC9s will be staying around for an extra year, 2014, and that maybe an extra sim (that makes 2) will be moved to ATL from MSP. Add to that every 757 you see with winglets are supposedly staying, and not being replaced by the 739s. I seem to fly those regularly. So, it appears the domestic market will be taken care of, and the company has been retrofitting the 744s/767ERs/ and some A330s for extended use. All of them have gotten crew rest mods, and new interiors for passengers. That means at least 10 more years for each.

So, scope OR pay, eh? I don't think so. I do think they will want some extra 76 seaters, and hopefully ALPA will squash that before it comes to us. They know the priorities according to that survey.



Bye Bye---General Lee

Maybe they want the "talks to start early", so they'd have time to retrain you as a refinery employee?

 

[General Lee]

Maybe they want the "talks to start early", so they'd have time to retrain you as a refinery employee?

Sure, but I would be the one running it.


Bye Bye---General Lee

 

[General Lee]

What do you care how many 50 seaters there are? You don't have to fly one, and they aren't taking your precious over-seas routes.....and don't tell me you are just so caring that you want all RJ pilots to fly the "heavy iron"........so, why the hell do you care?

It affects my profit sharing check. Btw, I hear hiring could start early next year (just a rumor).


Bye Bye---General Lee

 

[Jon Rivoli]

Future? Two dynamics are emerging: Ground outsourcing will continue and expand. But in the cockpit, the trend will be toward flying shifted back to the major, simply because of changes in airplane economics. As 50-seaters get retired, we can expect that 80+ seaters be the capacity floor - and they will be flown in-house. Plan on it.---Mike Boyd


Careful, Jon Rivoli doesn't want to hear any part of this.

Bye Bye---General Lee

Why? Mike Boyd has been wrong about everything for the past ten years.

Simple economics, the overall cost structure of a legacy carrier (not just pilot pay) requires that any aircraft they operate must be of sufficient size to cover the marginal cost of operation. Simply put, if the tug driver is making $30 / hr. plus bennies, you can cover those costs if he is pushing back a 777, you can't if he is pushing back a CRJ200.

What is the break even aircraft size where you can cover all of your costs and still consistently make money?

The bean counters that run SKYW (to include Steve Udvar-Hazy) put that number at about 150 seats.

In other words, you will not be flying anything smaller than that regardless of what you want in scope language. If you try, you will lose money. If you insist on trying that loss will have to come out of somewhere, namely the wages you could have been making on larger, profitable aircraft.

So what happens if you hold the line on scope? That very question was asked of Brad Rich in a conference call as larger aircraft are in the business plan for the future of SkyWest. The answer, 'We compete.'

As I mentioned above, you don't have the airplanes to replace the feed SKYW Inc. provides. No one does.

Faced with the prospect of losing 20% of their traffic AND having to compete in markets that they can't serve economically, having to invest in a bunch of marginally profitable aircraft; after all is said and done the result will be a code share arrangement. What ever scope restrictions you had will be abrogated and you will be compensated, because under the new arrangement Delta will be more profitable and can afford it.

Anderson and Smisek know all of this and likely would like to skip the drama and get right to maximizing profits.

JA is very conservative and definitely doesn't want drama so he will delay making any major moves so long as SKYW remains profitable. All the while he has been growing SkyWest into an 800 lb. gorilla. Over $750 million cash; add to that all of the "pre-paids" and you are up to about $1.2 billion with very little debt, over 700 aircraft serving 48 states, Canada, Mexico and the Caribbean. By number of operation per day SKYW Inc. ranks 2nd or 3rd in the world. The little airline that started by flying Pipers out of St. George, Utah has come a long way.

Why waste a lot of time and billions of dollars on a losing battle? Focus on your strengths and maximize the effort there. More wide body aircraft means more money for you. More smaller jets means less. There is no going back to the "good ol' days", the future will not look like the past and Mike Boyd don't know Shinola.

Peace.

 

[General Lee]

Why? Mike Boyd has been wrong about everything for the past ten years.

Simple economics, the overall cost structure of a legacy carrier (not just pilot pay) requires that any aircraft they operate must be of sufficient size to cover the marginal cost of operation. Simply put, if the tug driver is making $30 / hr. plus bennies, you can cover those costs if he is pushing back a 777, you can't if he is pushing back a CRJ200.

What is the break even aircraft size where you can cover all of your costs and still consistently make money?

The bean counters that run SKYW (to include Steve Udvar-Hazy) put that number at about 150 seats.

In other words, you will not be flying anything smaller than that regardless of what you want in scope language. If you try, you will lose money. If you insist on trying that loss will have to come out of somewhere, namely the wages you could have been making on larger, profitable aircraft.

So what happens if you hold the line on scope? That very question was asked of Brad Rich in a conference call as larger aircraft are in the business plan for the future of SkyWest. The answer, 'We compete.'

As I mentioned above, you don't have the airplanes to replace the feed SKYW Inc. provides. No one does.

Faced with the prospect of losing 20% of their traffic AND having to compete in markets that they can't serve economically, having to invest in a bunch of marginally profitable aircraft; after all is said and done the result will be a code share arrangement. What ever scope restrictions you had will be abrogated and you will be compensated, because under the new arrangement Delta will be more profitable and can afford it.

Anderson and Smisek know all of this and likely would like to skip the drama and get right to maximizing profits.

JA is very conservative and definitely doesn't want drama so he will delay making any major moves so long as SKYW remains profitable. All the while he has been growing SkyWest into an 800 lb. gorilla. Over $750 million cash; add to that all of the "pre-paids" and you are up to about $1.2 billion with very little debt, over 700 aircraft serving 48 states, Canada, Mexico and the Caribbean. By number of operation per day SKYW Inc. ranks 2nd or 3rd in the world. The little airline that started by flying Pipers out of St. George, Utah has come a long way.

Why waste a lot of time and billions of dollars on a losing battle? Focus on your strengths and maximize the effort there. More wide body aircraft means more money for you. More smaller jets means less. There is no going back to the "good ol' days", the future will not look like the past and Mike Boyd don't know Shinola.

Peace.

Boyd wrong about EVERYTHING? He said 50 seaters were going to become tin cans a couple years ago, and he's right. They just aren't economical. There is no way around that.

With higher gas prices, larger planes are needed, but that doesn't mean DCI has to have them. DC9s (all paid for) have been put on plenty of DCI routes (that used to be 727 routes), along with A319s. The 717 might be the best fit of all on those shorter segments, which makes guys like you nervous. The price might be right (if the deal does go through), and that has certainly been the case with the MD90s (at around $7-8 million each including the engines---doing the same job as a 737-800 at 1/4 the price). Just think what the 717 could do for the new LGA expansion? The 100 seater would be a perfect fit, and at NYC prices with plenty of businessmen flying, it would very likely be very profitable.

Do you think the DL CEO is nervous about Brad saying he would want to compete? RA wouldn't think twice about dumping contracts and smacking an upstart, like Delta and the rest did to Indy Air. That airline was fairly well funded, but got SMACKED. If you want to go down that road, with high gas and mostly 50 seaters (CRJ2s and E145s), then do it. How long did "Expressjet" last in ONT, btw? A huge encatchment area, and it still got smacked. Delta has shown that it can replace feed with a LOWER cost operator at the change of a hat too. Gojets probably would love to have more feed. That is your competition, not Delta or the others. And I would say your business depends on DL just as much as we need the feed, although parking PNCL RJs could always be reversed and could be put on your routes. That's the key. If you don't like it, you could be replaced. If you on the otherhand wanted to take feed away and start your own business (tried before, not good), it would be even WORSE for you guys. You will likely take the scraps, and say thanks. Also, you may not have been to ATL lately, but there are PLENTY of MD88s and 737s sitting around, thanks to Capacity cuts. We are also slightly fat on pilots, maybe by 700, all waiting for retirements to start in waves. (it was determined it was cheaper to be fat on pilots---and with that DL is still VERY profitable). If feed was ever taken away, I bet some of those planes could be used on turns to some of those cities, minimizing the affect of the loss of feed. And, passengers would probably love it.

Another thing that has broken your cost model is Ancilary revenue. Something that never was a factor before. Change fees, bag fees, etc has changed the game in revenue. In Q3 last year alone, DL made $840 million in ancilary revenue. That was twice what anyone else made, and that was ONE quarter. Delta made a billion dollars plus in net last year, and ALSO paid down $2 billion in debt. What does all that mean? You are dealing with someone who makes a heck of a lot more than you do, and holds the cards.

So, if Delta does get those 88 717s or 75 A319s, it will change a lot domestically. Right now Delta uses 20 or so DC9-50s as the "100" seater on short domestic flights around ATL and DTW. Think what 88 (or more, I've hear 120 717s are out there available) 717s could do? Again, throw them into LGA and that could be the perfect plane for profits there. DL is still getting an additional 22 MD90s this year too, and 100 737-900s. Those won't be going to INTL routes, so they will likely take back a lot of what was transferred after 9-11. You can't change what high oil is doing to your regional industry, and Brad and the others are probably very worried. No more golden contracts with locked in profits. If he takes the Indy Air route, it will likely turn out the same. It doesn't look like RA will only focus on INTL widebodies, and that means you guys will have to do some adjusting. Look at what is happening to PNCL right now. A couple years ago they had 100 Saabs, bought Colgan, RJs all over the place. Now, that isn't the case. Crazy stuff. I am not trying to slam you guys, I am just saying the industry seems to be going back to larger planes "is better." And, it also seems the CEOs may want the mainline crews to crew those planes, and the mainline pilots agree. Maybe that will mean more mainline jobs for everyone eventually. And that all goes back to your friend Mike Boyd. He was right about high gas and RJs. They don't mix well.


Bye Bye---General Lee

 

[Nevets]

Why? Mike Boyd has been wrong about everything for the past ten years.

Simple economics, the overall cost structure of a legacy carrier (not just pilot pay) requires that any aircraft they operate must be of sufficient size to cover the marginal cost of operation. Simply put, if the tug driver is making $30 / hr. plus bennies, you can cover those costs if he is pushing back a 777, you can't if he is pushing back a CRJ200.

What is the break even aircraft size where you can cover all of your costs and still consistently make money?

The bean counters that run SKYW (to include Steve Udvar-Hazy) put that number at about 150 seats.

In other words, you will not be flying anything smaller than that regardless of what you want in scope language. If you try, you will lose money. If you insist on trying that loss will have to come out of somewhere, namely the wages you could have been making on larger, profitable aircraft.

So what happens if you hold the line on scope? That very question was asked of Brad Rich in a conference call as larger aircraft are in the business plan for the future of SkyWest. The answer, 'We compete.'

As I mentioned above, you don't have the airplanes to replace the feed SKYW Inc. provides. No one does.

Faced with the prospect of losing 20% of their traffic AND having to compete in markets that they can't serve economically, having to invest in a bunch of marginally profitable aircraft; after all is said and done the result will be a code share arrangement. What ever scope restrictions you had will be abrogated and you will be compensated, because under the new arrangement Delta will be more profitable and can afford it.

Anderson and Smisek know all of this and likely would like to skip the drama and get right to maximizing profits.

JA is very conservative and definitely doesn't want drama so he will delay making any major moves so long as SKYW remains profitable. All the while he has been growing SkyWest into an 800 lb. gorilla. Over $750 million cash; add to that all of the "pre-paids" and you are up to about $1.2 billion with very little debt, over 700 aircraft serving 48 states, Canada, Mexico and the Caribbean. By number of operation per day SKYW Inc. ranks 2nd or 3rd in the world. The little airline that started by flying Pipers out of St. George, Utah has come a long way.

Why waste a lot of time and billions of dollars on a losing battle? Focus on your strengths and maximize the effort there. More wide body aircraft means more money for you. More smaller jets means less. There is no going back to the "good ol' days", the future will not look like the past and Mike Boyd don't know Shinola.

Peace.

What assumptions were made by the SKW bean counters? And whatever those assumptions are, I'm sure they are not fixed numbers. If CAL had decided to operate XJT's ERJs for XJT's pilots pay rate and CAL pilot work rules, they'd save massive amount of money. Exact same thing that AMR was trying to do with small aircraft flown by APA pilots. Essentially two sets of work rules and pay depending on size of aircraft for one pilot list.

By the way, SKW is down to about $500 billion and also have about $1.5 billion in debt.

 

[General Lee]

What assumptions were made by the SKW bean counters? And whatever those assumptions are, I'm sure they are not fixed numbers. If CAL had decided to operate XJT's ERJs for XJT's pilots pay rate and CAL pilot work rules, they'd save massive amount of money. Exact same thing that AMR was trying to do with small aircraft flown by APA pilots. Essentially two sets of work rules and pay depending on size of aircraft for one pilot list.

By the way, SKW is down to about $500 billion and also have about $1.5 billion in debt.

$500 BILLION? Wow, they could own Latin America.... just jokin...


Bye Bye---General Lee

 

[Jon Rivoli]

RA had an aneurysm four years ago when Delta's regional feed was making record profits while mother D was hemorrhaging cash picking up the tab for fuel. He still hasn't recovered and much of what he has done since has been to make sure that in the future Delta's regional feed will share the pain. Call it rage, but you would be more profitable now were it not for some of his decisions.

Old airplanes may be cheep, but you lose out on depreciation allowance, MX expence and efficiency.

Buy all of the 717's you want and operate them at a loss; they don't generate enough revenue to cover costs. I'm not talking about pilot salaries, I'm talking about the healthcare costs of retiree's and the wages of everyone from rampers and gate agents to HR administrators and purchasing agents.

It's a one way ticket, airlines grow and move into larger equipment and as revenue goes up so do costs. You can't go back. Smaller aircraft can't generate the revenue to cover the increased expense.

Think of it this way; it takes almost exactly the same amount of labor to operate a 50 seat airplane as it does a 747 (throw in a few more FA's), yet a 747 can generate 10-20 times the revenue. Why the hell would any sane person want to do the same work for a fraction of the revenue? Would you go back to flight instructing in a 152? Hell no! You're a 767 fo making the big bucks. You aren't going back to flight instructing and Delta isn't going back to 100 seat airplanes. Especially when they can subcontract it out to some one who can make money doing it.

If RA goes ahead and buys 163 second hand 717's and 319's, plan on getting bent over to help eat the cost. Isn't that the NWA business model? Run the company into the ground then file chapter 11.

As for "smacking down" an upstart regional, good luck with that. You can't replace 300 planes on short notice and neither Gojets nor anyone could come up with the planes or crews in any reasonable time frame.

Indy Air is everyone's go to, they attempted to go head to head with United at a time when fuel costs were just starting to rise (oil was about $10 bbl in 2001), United still had their 737's (even the 200's) and 727's and they had piss poor management that squandered their cash.

Express Jet was doing just fine until they got spit roasted between SKYW and Continental.

Side note, don't ever try to operated RJ's in SLC; Comair tried - toast, ASA - Owned, Expressjet - Owned, Mesaba - bankrupt/ we'll see. Stay out of Jerry's back yard.

I'm not scared and I am not trying to slam you guys either, though it's clear you've got your sack in a bind. Legacy pilots have seen their pay and benefits decimated over the last decade all the while seeing RJ's take over "their routes". The mistake you make is that it isn't cause and effect, no, the same causes led to both the growth of RJ's AND declines in compensation. Costs went up (primarily fuel) while revenues got squeezed ( say thank you to SWA )resulting in legacy carriers shedding unprofitable flying AND cutting pay.

The decline of this profession began with deregulation, all that has come to pass was the inevitable result.

Who the F__k is Mike Boyd anyway? If I predict that an earthquake is going to hit San Francisco, eventually I will be proved correct though after ten years no one will be listening to me. The economics of the 50 seater aren't good and their days are numbered, which is relevant to the topic of this thread.

Peace.

 

[Jon Rivoli]

If CAL had decided to operate XJT's ERJs for XJT's pilots pay rate and CAL pilot work rules, .......

They would lose their a$$es. It's much more than pilot compensation.

By the way, SKW is down to about $500 million and also have about $1.5 billion in debt.

Yes, I just read the report this morning. Go back and read it again, the difference is that the prepaids went up a corresponding amount. Pay ahead on leases, insurance and other expenses and you get steep discounts. Not a bad idea when interest rates are effectively zero. Get a ten percent discount on your insurance or leave the money in a CD? You decide.

Now, if I paid my mortgage ahead for the whole year, what does that do to my cash flow for the next year?

For a company with about $3.5 billion in revenues $1.5 billion in debt ain't much, especially if the interest rates are really low, which they are, which you can do when you have a lot of cash.

You will notice that the net of the balance sheet went down by about $700,000, hence the loss.

 

[General Lee]

RA had an aneurysm four years ago when Delta's regional feed was making record profits while mother D was hemorrhaging cash picking up the tab for fuel. He still hasn't recovered and much of what he has done since has been to make sure that in the future Delta's regional feed will share the pain. Call it rage, but you would be more profitable now were it not for some of his decisions.

Old airplanes may be cheep, but you lose out on depreciation allowance, MX expence and efficiency.

Buy all of the 717's you want and operate them at a loss; they don't generate enough revenue to cover costs. I'm not talking about pilot salaries, I'm talking about the healthcare costs of retiree's and the wages of everyone from rampers and gate agents to HR administrators and purchasing agents.

It's a one way ticket, airlines grow and move into larger equipment and as revenue goes up so do costs. You can't go back. Smaller aircraft can't generate the revenue to cover the increased expense.

Think of it this way; it takes almost exactly the same amount of labor to operate a 50 seat airplane as it does a 747 (throw in a few more FA's), yet a 747 can generate 10-20 times the revenue. Why the hell would any sane person want to do the same work for a fraction of the revenue? Would you go back to flight instructing in a 152? Hell no! You're a 767 fo making the big bucks. You aren't going back to flight instructing and Delta isn't going back to 100 seat airplanes. Especially when they can subcontract it out to some one who can make money doing it.

If RA goes ahead and buys 163 second hand 717's and 319's, plan on getting bent over to help eat the cost. Isn't that the NWA business model? Run the company into the ground then file chapter 11.

As for "smacking down" an upstart regional, good luck with that. You can't replace 300 planes on short notice and neither Gojets nor anyone could come up with the planes or crews in any reasonable time frame.

Indy Air is everyone's go to, they attempted to go head to head with United at a time when fuel costs were just starting to rise (oil was about $10 bbl in 2001), United still had their 737's (even the 200's) and 727's and they had piss poor management that squandered their cash.

Express Jet was doing just fine until they got spit roasted between SKYW and Continental.

Side note, don't ever try to operated RJ's in SLC; Comair tried - toast, ASA - Owned, Expressjet - Owned, Mesaba - bankrupt/ we'll see. Stay out of Jerry's back yard.

I'm not scared and I am not trying to slam you guys either, though it's clear you've got your sack in a bind. Legacy pilots have seen their pay and benefits decimated over the last decade all the while seeing RJ's take over "their routes". The mistake you make is that it isn't cause and effect, no, the same causes led to both the growth of RJ's AND declines in compensation. Costs went up (primarily fuel) while revenues got squeezed ( say thank you to SWA )resulting in legacy carriers shedding unprofitable flying AND cutting pay.

The decline of this profession began with deregulation, all that has come to pass was the inevitable result.

Who the F__k is Mike Boyd anyway? If I predict that an earthquake is going to hit San Francisco, eventually I will be proved correct though after ten years no one will be listening to me. The economics of the 50 seater aren't good and their days are numbered, which is relevant to the topic of this thread.

Peace.

Look Jon, I understand and appreciate your opinion. You have some good points, but I think you don't understand who really is in the driver's seat these days. Back after 9-11, when oil was a bit cheaper and RJs were "in", you guys had solid profits. You had GUARANTEED profits, and life was great. Now, economics are just not on your side. You claim that RA doesn't know what he is doing, when in fact he is the one controlling the game. He is buying used airplanes as a "bandaid" to keep relatively new airplanes around for another 10 years (or newer than some on property), and then will have more money to buy even newer ones. His main focus is to bring down the debt, which he skillfully has since 2008. Next year, after bringing down the debt, Delta will save an EXTRA $500 million per year in interest payments. Per YEAR. The revenue generation in the last few years has been HUGE, and the WSJ said Delta should make $1.86 BILLION this year in profit.

Your airline, on the other hand, has some major obstacles to tackle soon. Not only does your airline mainly consist of 50 seat jets (ASA, SKW, and XJT), but also it is bringing back some 37 seat jets for UAL from the desert. (E135s) WHY? Because Colgan is failing? Maybe. But EVERYONE knows, including Boyd, that the main reason is because you are still paying for those planes anyway in the desert, and you have to use them for something, even if it is at a loss. High oil is here to stay, and none of your 50 seaters can make money. You tried to fly some at break even in MKE for Airtran, and now that's gone. You are running out of places to put them, and the leases (on the E135s it looks like) are still there.

Now that revenues are back up, it is time for mainline pilots to go after things lost during the BK years. That includes money, and routes if possible. Thankfully, high oil is already taking care of the latter problem. There is nothing that can be done about 50 or less seats, you just can't cover the costs associated with high gas. Larger planes though, can spread out the costs, and add fees---can even allow for a profit. Also, I don't think it's 120 717s AND 75 A319s, it's just one or the other. RA seems to want to try planes at about 100 seats, and they would be at bargain rates. Boeing also is a part of the deal, since I believe they owe Delta money over the 787 delay.


Bye Bye---General Lee

 

[Mercyful Fate]

Yup General, go back after all those routes you lost to 50 seat RJs...I am sure that places like PSC, HLN, IDA and GTF would love to see mainline again...

 

[xjhawk]

Why don't you all just go to your respective CEO's and tell them what to do and why it makes sense. Its a given that the 200 (any 50 seat) is on the decline and in the near future more and more will be parked. What will they all replace them with? Look for a lot of 88 seaters at American and a similar scope relief at other airlines in order to compete. How will the scope relief be handled? Its all up to the pilots at the majors. Those in bankruptcy have their hands tied in the matter, but I am sure the others will have a figure in their mind about what it will take to release scope

 

[General Lee]

Yup General, go back after all those routes you lost to 50 seat RJs...I am sure that places like PSC, HLN, IDA and GTF would love to see mainline again...

You're right. Those cities were all flown by mainline planes, and you KNOW the people there would love to see them. In the Summertime I bet all of those could sustain 3 or 4 flights per day. During the rest of the year, probably 2. Funnel people on, and fill the flights. It worked for years. On the East Coast it is happening. Fayatteville, NC, and Gulfport, MS, both all RJ flights a few years ago, are now getting MD88s (GPT), DC9s, and A319s. I hope that continues.


Bye Bye---General Lee