Bring a knife to a gunfight - ACA future

[embdrvr]

I don't have a warm fuzzy feeling about the future of ACA and the outlook for the pilot group. I think ACA management screwed the pooch by trying to sue UAL.

Think about it for a minute. ACA is going to go head to head against the only profitable airlines in the country, SWA and JBLU. They are currently saddled with a whole bunch of RJ's which are huge money losers when pitted against the 73's and 320's. The only reason a 50 seater was built was scope. They could be operated at a profit in the pre 9/11 economy because yields were much better than they are today. Bottom line is it doesn't cost much more to purchase and operate a 73 than it does an overpriced stretched Challenger. To have any chance of success they will have to undercut the competition. That will translate into every flight being operated at a loss. But wait you say, ACA will be getting Boeings or Airbuses. Those won't be on the property overnight. With their stock sinking like a torpedoed banana boat I'm not sure how many leasing or financing companies will touch them. In order to succeed they will need favorable financing which they couldn't even get on the RJ's from what I've heard.

They will likely lose money until they get real airplanes for the job. By then maybe the economy will improve and the yields will do likewise. The question in my mind is will they even be around a year from now? Sadly the pilot group and employees will pay the ultimate price and ACA top brass will walk away with their pockets full. Had they not sued UAL during the earlier negotiations maybe they could have negotiated an agreement like SKYW and AWAC managed to do.

Finally we have to remember that a large percentage of current ACA pax are not O&D. They are making connections on UAL and accumulating UAL frequent flyer miles. They will continue to book on UAL and simply fly on whoever UAL replaces ACA with.

 

[flx757]

Think about it for a minute. ACA is going to go head to head against the only profitable airlines in the country, SWA and JBLU.

I don't think they are the ONLY profitable airlines in the country. AirTran just posted a 2Q profit of $57.2 million, or 74 cents per share on record revenues of $233.9 million.

Even without such items as $38.1 million of government reimbursement for security fees, earnings were $19.1 million, or 28 cents per share.

 

[Carl_Everett]

I don't have a warm fuzzy feeling about the future of ACA and the outlook for the pilot group. I think ACA management screwed the pooch by trying to sue UAL.

Think about it for a minute. ACA is going to go head to head against the only profitable airlines in the country, SWA and JBLU.

I have read and listened to every piece of info that ACAI has put out over the last 24 hours. I have yet to hear anything about the RJ operation going head to head against SWA and JBLU. In fact Skeen even said SWA was not considered in the same league right now. Everything they said points to lack of LCC service at smaller cities. The examples I heard was CHS and SAV and similiar cities. These type cities do not have SWA or JBLU service. That is the market they are after during the start-up phase.

When the large aircraft start up, then they will start to compete with JBLU and SWA. ACA believes there is a market closer to IAD that needs LCC service without a 3 hour drive to BWI.

They are currently saddled with a whole bunch of RJ's which are huge money losers when pitted against the 73's and 320's. The only reason a 50 seater was built was scope. They could be operated at a profit in the pre 9/11 economy because yields were much better than they are today. Bottom line is it doesn't cost much more to purchase and operate a 73 than it does an overpriced stretched Challenger. To have any chance of success they will have to undercut the competition. That will translate into every flight being operated at a loss. But wait you say, ACA will be getting Boeings or Airbuses. Those won't be on the property overnight. With their stock sinking like a torpedoed banana boat I'm not sure how many leasing or financing companies will touch them. In order to succeed they will need favorable financing which they couldn't even get on the RJ's from what I've heard.

They will likely lose money until they get real airplanes for the job. By then maybe the economy will improve and the yields will do likewise. The question in my mind is will they even be around a year from now? Sadly the pilot group and employees will pay the ultimate price and ACA top brass will walk away with their pockets full. Had they not sued UAL during the earlier negotiations maybe they could have negotiated an agreement like SKYW and AWAC managed to do.

Finally we have to remember that a large percentage of current ACA pax are not O&D. They are making connections on UAL and accumulating UAL frequent flyer miles. They will continue to book on UAL and simply fly on whoever UAL replaces ACA with.

That may be true in ORD, but at IAD many customers connect thru IAD on another ACA flight. As for frequent flyer miles, you have me there. ACA will not be able to offer frequent flyer miles like UAL does. That is until a code share/miles agreement is done with another airline.

 

[46Driver]

Some quick counterpoints. ACA's best option was to go it alone considering what United was offering. Not only the reduced fee for departure but also UAL not signing a long term contract with ACA and UAL asking for a clause to be reduce and/or completely get rid of ACA with MESA/Trans States. Also, lets not forget that UAL is in bankruptcy and their future is uncertain at best. One of pilots described it as cutting loose the lifeboats from the Titanic.

Now what do we have. First and foremost are good managers - Tom Moore and Kerry Skeen know how to make money. Second, the enthusiasm of the employees - everybody is quite happy about the decision. Those are the intangibles. For the concrete, we have the gates at IAD and Dulles is a better place to run a LCC than BWI. Second, the routes we are looking at (IAD - CHS, IAD - MOB, etc) have been proven successes in the past and we can make a profit on those thinner routes which the bigger aircraft of SouthWest, Jet Blue, etc bypass. Third, many cities are hungry to have a LCC to reduce mainline fares and will subsidize us flying into their cities. The traffic numbers in IAD show that 60% of the passengers ACA flies into IAD connect on another ACA flight. Another 20% are IAD roundtrips - thus a lot of these are our own passengers. Finally, as stated above, UAL left us no choice. It is best to strike now: there is money in the bank, big airplane prices are dirt cheap, our 2 biggest competitors in our IAD market (UAL and USAir) are weak, MESA and Trans States do not have the aircraft and crews ready, and JetBlue and AirTran haven't reached critical mass yet but are set to expand rapidly. It was now or never.

Finally a wild card simply to speculate. Could we as a LCC do flights to Europe? That is what I am wondering - it is a niche that Southwest, JetBlue, and AirTran do not have with their aircraft. Can a 757 or 737-800 make it across the pond?

 

[dasburt]

ACA morf into JET BLUE EXPRESS

Ok guys and girls just to muddy up the waters a bit.

An Idea about ACA's future.

Jet Blue is buying the new jet from Brazil and is going to start up a Jet Blue Express carrier. Why not just buy out ACA and you now have a working airline to place the new aircraft.

I wonder if Jet Blue Management might just be thinking something like this.

Just an idea Ladies and Gentlemen.

Dasburt

 

[govisual]

the idea that rj's can't work in a low cost carrier probably isn't true. midway out of raleigh started out strong primarily with rj's. yes, i'm aware of the end result, but they had a fighting chance, perhaps a better chance than aca had w/ united. my hat's off to them for giving it a shot.....

 

[Bako Cap]

Jet Blue have been staunch that their pilots will fly their aircraft. But, then again I have heard that one before.

 

[embdrvr]

I hope my post turns out to be wrong. You guys raised some good points. I'm just not too convinced about the viability of doing anything with 50 seaters except feeding mainline and even that's sketchy. If they had some way of scrapping the -200's completely I think they'd have a better shot.

 

[General Lee]

With Southwest's fares so low out of BWI, ACA will have to be fairly close with the fares. They claim they will fly RJs (until they get larger aircraft)----which have 50 seats. For the shorter flight distances from IAD they will probably try to match those SW fares---let's say $59 one way from the DC area (IAD) to Manchester, NH (both go there). 50 passengers times $59 dollars equals $2450 dollars. Can that cover the gas (at around $30 a barrel now), the insurance, the lease payments, and crew costs for that segment of time? RJs need to have higher fares, especially in shorter segments. I think the ACA management will ask for huge paycuts to help pay for all of this, and the new airplane leases. Southwest can spread it's costs out on a 737 with 128 or so seats. I hope it works.

Bye Bye--General Lee

 

[embdrvr]

Something is wrong in this world when I start agreeing with General Lee. The above post is the first I've seen in a while that does not incorporate a reference to Comair requiring furloughees to give up their mainline seniority number. GL, did you get on some sort of 12 step program?