Siegel says-SW to kill USAirways

[SWA/FO]

If jetBlue has such a big heart why did they place bids to buy some of U's old furniture? Why did they pick on Delta in ATL? I'd say jetBlue is working their business plan and right now it does not involve PHL or CLT.

CLT has some really high airfares. You heard it here first! SWA is going into CLT by the Fall. By October 2004.

 

[rjcap]

If jetBlue has such a big heart why did they place bids to buy some of U's old furniture?

Pretty soon everybody will be bidding on U's stuff.

Its called a fire sale.

I hear Branson is talking to Usair regarding some of its assets.

 

[dlredline]

After watching the video of his presentation, I kept asking myself: "Is this really the CEO of an airline?" He kept stammering and fumbling through his presentation, and all while using "cue" cards propped on the ground under the camera. "Clueless" is the optimum word that comes to mind. No wonder they seem so rudderless, THEY ARE!

The main concept of the presentation was the reduction of unit costs. U sits in the $.10/seat mile range while SWA and JBLU sits around $.06. In order to get to 6 cents to insure survival, Siegal needs (1) 2 cents from restructuring the airline, and (2) 2 cents from the employees. Operationally, they intend to:

- increased aircraft utilization (duh)
- more seats on each aircraft (with less legroom, of course, yah, that's smart)
- more efficient scheduling (something he should've already been doing)
- distribution costs

From the employees, he wants:

- productivity enhancements (rigs and work rules)
- pay reductions (rumored in the 25% range)
- reductions in benefits


As someone else mentioned, this all sounds fine, but attempting unit costs of six cents per mile simply will NOT happen at US Airways. JCMDave made no mention of Continental's unit costs, which are in the nine-cent neighborhood and keep in mind that Continental predicted being profitable this year were it not for the high fuel prices affecting the industry. He constantly blaimed Southwest for their plight, and interestingly looked closer to America West as the model they should emulate (hub carrier with similar fleet).

One important point he made was that 70% of US Airways' mainline flying is unprofitable (their average cost is $130/passenger, but their average ticket revenue is $115/passenger. You don't have to be launching stuff into space to read between these lines. MDA, MidAtlantic, or whatever you want to call it, is the future for U's mainline domestic operation (if GECAS doesn't pull the financing plug). And he also mentioned the "F" word (furloughs), saying there will be additional ones. Incredible! Great way to build the confidence in the troops. Overall, the presentation was very conceptual, with no real "plan" brought forth. Again, "clueless".

Some various Dave Siegel quotes:

"Sometimes you have to shrink first - you've got to prune the system to grow." (you've got to be kidding? Sure, this worked great the last time, Dave.)

"I also know that we need to change the culture." (just realized that, Dave? After 2 years on the job?)

"I'm personally committed to making sacrifices along with everybody else. I've done that and I'm willing to do that and I told Dr. Bronner - again a little speculation in the press - I've told him I'm willing to walk away from that multi-million dollar golden parachute that comes to me in April - I'm going to walk away from that and I'm committed to staying. And I also told him that I'm willing to accept the same kind of compensation, give me a new contract, that looks like how the CEOs of the other low-cost carriers get paid - pay me the same way - I want to do that. And I am prepared to lead this fight, I'm not going to cut and run. I'm prepared to lead this company and lead this fight against Southwest." (insert your own comment here)

"What we know now, unfortunately, is we can't deny what's happening with low-cost carriers." (double duh!)

I'm proud of my 15 years of service there, having worked in the training department and flown as Captain for a short time. I came across some of the finest people you can ever imagine. But I truly am embarassed by the man-child in charge at U, and after watching this video, I fear for the future of many fine professional aviators. Dave Siegel can't run an airline. That's more apparent than ever, now.

I do wish the pilot's of USAirways the best. The certainly deserve better than the hand dealt them.

Red

 

[Dizel8]

SWA F/O,

According to the higher ups at jetBlue, there was no bid for any USAirways asset. Take it FWIW.

 

[Spooky Magnum]

Interesting quote off another website...

Commenting on Mr. Siegels superior business sense...

"...to just jam them in and throw peanuts at them like Southwest does. This is the old way of doing business." - Dave Siegel

By the way Mr. Siegel, the "old way" is coming to PHI to kick your ass and then kill you!

 

[Indapool]

Seigel is an idiot

The best way to ensure U's demise is to make WN employees realize there is a fight on.

He rallied the troops alright, unfortunately, they work for Southwest.

Good luck to all those at U. You deserve better.

 

[Falcon Jet 1]

I second that, dont start a fight with Herb. Ask United what happens and that is when SWA had around 150 a/c.

 

[PHXFLYR]

I'm going to go out on a limb here and say that USAirways CAN survive the upcoming PHL dogfight with Southwest. How ,you might ask .... Simple , put the company back into Chapter 11, install a new management from top to bottom( only young motivated outside the box thinkers need apply..... Harvard MBA not required!!!) Pack said-team's bags and send them to sunny PHX and have them go to AWA and take notes on how to slash costs and restructure a sick airline. A few of my friends who work for AWA think USAir's situation is very much like the situation AWA faced in 1991. Back then AWA dominated the PHX hub with a product very similar to what SWA offered .(ie all-coach, snacks for meals,etc) Needless to say SWA enters the PHX market with USAir's drawn down of PSA's old routes with the insuing battle for PHX resulting in PHX-LAX tickets going for as low as $19 one-way!! Of course this and other management mis-steps along the way led to AWA filing Chap. 11 in the early 1990's . During their stay in CH 11 , however ,someone , somewhere realized 2 things. First SWA now had a lot of flights out of PHX (ie " they are here to kill us") and secondly if we are to survive we have to differentiate our product.(the old you can't "out -Southwest" Southwest axiom) So this person bless his beady little management heart ,realizing that his biggest competitor in and out of PHX is now SWA and their low-cost workforce, also realizes that he too has a low cost work force and decides to differentiate his product by adding First Class service and assigned seating. Bottom line , today out of PHX you have 2 vibrant low cost carrieres competing sucessfully offering 2 distinctly different products to the traveling public. I really think that if USAirways can get a young vibrant mgm't team on board and mirror what AWA has done in terms of a complete top to bottom overhaul of every aspect of the way the company does business from aircraft overhauls, to employee productivity , to wages and benefits ,to internet usage and strict almost draconian adherence to cost controls so as to maintain the lowest possible CASM ,then I see no reason why USAirways can't be a successfull competitor against SWA out of PHL in much the same way AWA is a successfull competitor against SWA out of PHX. Sort of an East Coast version of AWA ,if you will.

Standing by for in-coming

PHXFLYR

 

[SWA GUY]

PHXFLYR,

Good ideas. I think the Alabama Retirement folks wold have to do the management restructuring. And I'm not so sure they are up to doing so, even at this point there has been no changes coming down the pipeline.

Also, there is a helluva lot more competiton on the E coast.

The thing is that USAir needs to do is dramatically change their position, in that I mean define what they do and do it well. It may take another CHPTR 11 to just that. In fact it will most likely take CHPTR 11.

Who knows....

 

[T-Bags]

"to wages and benefits ,to internet usage and strict almost draconian adherence to cost controls so as to maintain the lowest possible CASM ,then I see no reason why USAirways can't be a successfull competitor against SWA out of PHL in much the same way AWA is a successfull competitor against SWA out of PHX. Sort of an East Coast version of AWA ,if you will."

And how much does a Capt make at AWA? Yippee, I can hardly contain my excitement.
Maybe we can all be "successful competitors", all making wages around half of what they are today. The prospect makes me giddy with joy