FlyBoeingJets
YES, that's NICE
- Joined
- Mar 20, 2003
- Posts
- 1,802
The CEO says no more contorting for the US Mail.
Is this Good or Bad for SWA??
06-12-2006 | SWA Discontinues Carrying U.S. Mail
Southwest has made the decision not to renew our contract with United States Postal Service (USPS) to carry U.S. Mail. We were unwilling to comply with the new and onerous terms of the proposed USPS contract. Further, USPS makes no commitment regarding future volumes, while our revenue from carrying the mail has steadily declined.
The elimination of the 7.7 million pieces of mail (at 88.5 million pounds) that we transport annually creates a significant opportunity for us to grow our Cargo business, which is a more controllable commodity than mail and has a higher rate of return. We believe that reallocating the resources previously dedicated to our mail service to focus on carrying additional Cargo and Customer bags will more than make up for the $30 million in mail revenue that we can no longer count on. However, we must not forget that mail has been a large part of our business, and we will need to work urgently and very hard to do whatever it takes to make up for the loss of this significant revenue source. Rest assured, we have already been evaluating alternatives to grow our Cargo business.
In addition, the elimination of our mail product will improve our operations under the wing by streamlining ramp activity and improving operating performance. We anticipate that this decision may help reduce the number of mishandled bags and improve our ontime performance.
Even though we did not renew our contract, it is imperative that we continue to scan mail through June 30. We are under contract with USPS until that date, and the failure to scan mail will be a loss of revenue for us.
This does not mean that we will never carry mail in the future. If USPS will do business with Southwest in a way that makes operational, environmental, and financial sense for Southwest Airlines, we will carry the mail. It makes no sense for us to contort our operations.
Is this Good or Bad for SWA??
06-12-2006 | SWA Discontinues Carrying U.S. Mail
Southwest has made the decision not to renew our contract with United States Postal Service (USPS) to carry U.S. Mail. We were unwilling to comply with the new and onerous terms of the proposed USPS contract. Further, USPS makes no commitment regarding future volumes, while our revenue from carrying the mail has steadily declined.
The elimination of the 7.7 million pieces of mail (at 88.5 million pounds) that we transport annually creates a significant opportunity for us to grow our Cargo business, which is a more controllable commodity than mail and has a higher rate of return. We believe that reallocating the resources previously dedicated to our mail service to focus on carrying additional Cargo and Customer bags will more than make up for the $30 million in mail revenue that we can no longer count on. However, we must not forget that mail has been a large part of our business, and we will need to work urgently and very hard to do whatever it takes to make up for the loss of this significant revenue source. Rest assured, we have already been evaluating alternatives to grow our Cargo business.
In addition, the elimination of our mail product will improve our operations under the wing by streamlining ramp activity and improving operating performance. We anticipate that this decision may help reduce the number of mishandled bags and improve our ontime performance.
Even though we did not renew our contract, it is imperative that we continue to scan mail through June 30. We are under contract with USPS until that date, and the failure to scan mail will be a loss of revenue for us.
This does not mean that we will never carry mail in the future. If USPS will do business with Southwest in a way that makes operational, environmental, and financial sense for Southwest Airlines, we will carry the mail. It makes no sense for us to contort our operations.
