What's the Latest at ASA/Expressjet?
08-07-2014, 06:38 AM
#6851
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Posts: 610
So they tell DL and UA the rates don't work. DL and UA show them the signed contracts, just like the express carriers did to the majors during their own financial troubles. DL and UA will tell SKYW if they want reduce the flying prior to contract expiration, then they will need to pay the penalties outlined in the agreement. Just so happens DL and UA are trying to reduce the number of 50 seaters so they win with the reduction and they get to hit SKYW for a breach of contract.
The cuts are going to be deep and there will be plenty of pilots in the pipeline when this is over to stave off any shortage for quite some time.
The cuts are going to be deep and there will be plenty of pilots in the pipeline when this is over to stave off any shortage for quite some time.
08-07-2014, 06:40 AM
#6852
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Posts: 4,238
Im going to add one last thing. I don't think XJT side will get E175's have you noticed the cost associated with getting it on certificate.. Easily 40-60mill. Doubt they will want to spend this again unless they get awarded to many planes, and SKW cant handle that many...
08-07-2014, 06:48 AM
#6853
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Maybe they will start unloading their crj's onto XJT as they start flying more 175s. It seems unlikely that they purchased a company to destroy all the equity in it and operate at negative cash flow the entire time.
08-07-2014, 07:22 AM
#6854
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I am sure that wasn't the intent. However, it is the reality with the changes in the industry since they bought XJT. In addition the inability to secure contracts to rationalize the merged airlines is a big cost for a small company. Had they been able to realize some of the synergy from a combined xjt and asa this might be a different story.
08-07-2014, 07:29 AM
#6855
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What's the Latest at ASA/Expressjet?
Only the CRJs that have tail risk for Skywest, right? Are you talking about pro-rate? I always wondered why Skywest was hogging that flying up (not really) but I'm glad they are now giving some scraps to the ASA guys.
Back in the day at Pinnacle they touted "No bankruptcy is in the works" up until the day they declared bankruptcy. Of course they aren't going to forecast a bankruptcy. That would be harmful to the company if an executive said "yeah, we're thinking bankruptcy might work out well for us down the road...we aren't sure though".
1). Duh, of course it would harm the holding company.
2) Right, it's with the CPAs...Now, if they company can't renegotiate better rates with United then what do they do? They come after the labor group to cut costs. They can control labor costs through bankruptcy, they can't necessarily control the CPA once it has become a problem. They cut costs with vendors, hotel contracts, labor groups, bank loans, unfavorable aircraft lease deals..etc....all done through bankruptcy.
3) They could very well leave the CPAs in tact in bankruptcy if they were able to cut costs elsewhere.
I"m not saying they will declare bankruptcy but don't think for a second that a large company that is losing money every single quarter won't do what they need to to fix the problem. It's happened at SO many other airlines. You're not immune.
2) Right, it's with the CPAs...Now, if they company can't renegotiate better rates with United then what do they do? They come after the labor group to cut costs. They can control labor costs through bankruptcy, they can't necessarily control the CPA once it has become a problem. They cut costs with vendors, hotel contracts, labor groups, bank loans, unfavorable aircraft lease deals..etc....all done through bankruptcy.
3) They could very well leave the CPAs in tact in bankruptcy if they were able to cut costs elsewhere.
I"m not saying they will declare bankruptcy but don't think for a second that a large company that is losing money every single quarter won't do what they need to to fix the problem. It's happened at SO many other airlines. You're not immune.
Yes, and they said they have done their due diligence on this. And there are restructuring people in ATL as well. We went through this once before at xjt. They bring in a hired gun to restructure the company outside bankruptcy. In bankruptcy, management loses a lot of control. Nothing is a slam dunk case. Each stakeholder (vendors, lease holders, unions, etc) are vying for a piece of the Inc pie. The restructuring plan needs to be approved by the creditor'a committee and the judge. It's not solely up to Inc in what the restructuring plan is going to be. American Airlines (and even PNCL) are perfect examples of restructuring plans gone awry. AA ended up being forced into a merger with Airways and PNCL ended up being owned by DAL. This is a huge risk to take when your whole point of bankruptcy protection is to cut costs while having a perfectly viable entity into which to merge into.
Trust me, especially Inc, does NOT want to hand over ANY decisions over to a third party who does not solely have Inc's best interest. Which, coincidentally, is the same reason why they bought xjt when they did rather than to wait and possibly have to deal with a judge and creditors committee.
To me, this was made pretty clear on the call. And it makes sense. They are already restructuring by parking the money losing airplanes. And that's the biggest issue here, not all those costs. The costs are really not that out of line. It's the revenue side from crappy CPAs management signed off on.
Last edited by Nevets; 08-07-2014 at 07:42 AM. Reason: additional comments
08-07-2014, 07:34 AM
#6856
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Posts: 611
SkyWest is done with all the engine overhauls on the CRJ200s. So why is the company investing another $20M for CRJ200 engines? My only guess is that they intend to grab some out of the desert and put them back in service. Whether or not they are related to the Delta draw-down is complete conjecture.
08-07-2014, 07:39 AM
#6857
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Posts: 419
Some have posted that maybe United will "realize" they need the lift and extend some of their contracts. I think its completely possible that they will just do what Delta did and starting putting their own planes on those routes. Isn't that the plan anyway? To reduce 50 seat flying? IMO, the chances of any United 50 seat flying being renewed is zero. It would be nice though. We shall see by this time next year I suppose
08-07-2014, 07:45 AM
#6858
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Posts: 610
Some have posted that maybe United will "realize" they need the lift and extend some of their contracts. I think its completely possible that they will just do what Delta did and starting putting their own planes on those routes. Isn't that the plan anyway? To reduce 50 seat flying? IMO, the chances of any United 50 seat flying being renewed is zero. It would be nice though. We shall see by this time next year I suppose
08-07-2014, 07:49 AM
#6859
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Position: EMB 145 CPT
Posts: 2,934
What's the Latest at ASA/Expressjet?
SkyWest is done with all the engine overhauls on the CRJ200s. So why is the company investing another $20M for CRJ200 engines? My only guess is that they intend to grab some out of the desert and put them back in service. Whether or not they are related to the Delta draw-down is complete conjecture.
Right, but I'm sure they pick the ones with tail risk before they pluck them out of the desert. Do you know how many of the CRJs coming off CPA have tail risk?
Some have posted that maybe United will "realize" they need the lift and extend some of their contracts. I think its completely possible that they will just do what Delta did and starting putting their own planes on those routes. Isn't that the plan anyway? To reduce 50 seat flying? IMO, the chances of any United 50 seat flying being renewed is zero. It would be nice though. We shall see by this time next year I suppose
Yes, but DAL has the 717 to do that and still taking deliveries. UAL doesn't have any small narrow body aircraft on order yet. I'm not saying this means that they will extend 50 seaters. I'm saying that this is why DAL has been able to do that.
Last edited by Nevets; 08-07-2014 at 07:52 AM. Reason: additional comments
08-07-2014, 08:11 AM
#6860
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Joined APC: Jul 2013
Posts: 611
I do not have the specifics on that at this time, but assuming that 22 of them are coming from L-ASA and 4 from SKW is a pretty good clue of how that all breaks down.
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