US Airways... Are You Insane?

OK so let me see if I can get this right. I am an airline who is in trouble because my costs are too high. Costs are too high for many reasons such as from bad contracts, bloated staffing etc etc.

 I enter bankruptcy to correct this situation.

My largest cost base doesn't want me to cut his benefits and staffing levels. (Understandable on all sides).

An external suitor who still hasn't got his house (like sorting pilot seniority lists) in order, makes deal to keep said cost levels high. (At the same time screwing his own unions).

Did I miss something?

Just for clarification - I don't doubt the sincerity of all concerned. It just seems to be illogical. 

Cheers










(Picture taken from AA 757 over Lake Michigan)

Continental Two Step?

So UAL's United Airlines having jilted its fellow Star Alliance Partner US Airways is not promoting a deal with Continental as the wave of the future.

Having been the "rebuffer" already in merger talks in April, CO would be very unwise to hook up with the rather long in the tooth Chicago based carrier in an alliance partnership. Its fellow Texan, AMR corp is very keen to have Texas a solid OneWorld Alliance market.

For those of you who have not been following the Forsythe Epic Saga of Airlines - here is a recap of CO's position.

Rejected United on April 26th. Recovered its Golden Share back from Northwest (even if the Delwest marriage doesn't go through). Has danced with AMR for a partnership and entry into the OneWorld Alliance. Is constrained until 2010 from leaving its current alliance Skyteam unless Delwest does go through then it can leave 9 months after that formal Union takes place. CO is not a party to the 6 way Skyteam Anti-trust immunity (AF-KL-CS-AZ-NW-DL).

CO is therefore every-one's favorite gal to sleep with but she is playing hard to get. The only one, the two time visitor to Chapter 11 has not slept with at this point is the sole other US airline still standing who also has taken two visits to the Chapter 11 courthouse - US Airways. (Aloha doesn't count anymore as it is no longer offering passenger service).

So decisions decisions. Perhaps there is a possibility of a happy arrangement where there is regular fraternization with more than one player. A Texas Two-Step with AMR and a Pas De Deux with United? Perhaps even CO can take a leaf out of Alaska Airlines playbook where lots of players get to sleep with the Eskimo. Domestically that means CO-NW-AA-DL and HA. Internationally a further few with CX-QF-LN-KL-BA and AF are all partners.

Boy this is getting more complicated than SOAP.

American Saabs Away

American is putting meat onto its 11% reduction in capacity. Gone are several marginal and unprofitable routes including a popular ORD-HNL service. A restructuring of all the service in SJU will occur. Many MD80s will be dumped but also look to see A300 capacity cut and a resulting reduction in capacity in the Caribbean. Finally Saab Saab - the SF340Bs will be retired by the end of the year.

ATRs would be a better bet - however I suspect we will see Embraer 135/145s replacing the Saabs.

Cheers

Timothy

Sabre and EDS extend Outsource Agreement to 2014

Citing the relationship as contributing to Sabre's continued business transformation, the two Dallas area based companies have extended their agreement for another 6 years.

Probably business as usual, there is no need for Sabre to re-enter the mainframe business or go back to managing the "bunker" in Tulsa.

However there is a bit of under the covers work that is interesting - mostly in what was not said rather than the rah rah announcement.

For some time Sabre (which BTW stands for S-emi A-utomated B-usiness R-esearch E-nvironment) has been looking at what to do with its aging core platform. With Travelocity businesses (including LastMinute.com) on a much better footing and driving boat loads of transactions - now is the time to look at the other major parts of the business, namely the airline reservations and the GDS services.

Sabre's airline reservations business reached a peak with the US Airways outsource (long before bankruptcy #1). Since then they have lost market and mind share to the upstart Amadeus and its ALTEA (I don’t have the acronym) business. Carefully grabbing outsource deals from first Qantas and then BA, Amadeus has demolished the legacy infrastructure providers. The last casualty being Lufthansa Systems which closed down its FACE project during the summer. With astounding success, Amadeus now provides services to most of the world's top airlines. They are to be complemented on an incredible sales success. But the delivery is long from over. With a significant gestation period and a fall back to the use of BABS as the master inventory system, the Amadeus team has a very steep hill to climb to master all of these new customers. Whither Sabre in all this?

Sabre now needs a new system. There has been much talk and rumour of a deal with Unisys (the bride/mother left at the altar after Lufthansa Systems FACE project was cancelled). The rumours have yet to be verified but the sources are sound. Build it or Buy it? No trivial task whichever one is chosen. No army of Indian outsourced programmers is going to make this one easy. Whatever happens, there needs to be a new core and its needed soon or Sabre could lose its anchor customer American Airlines, in much the same way as Cendant/Travelport lost United Airlines to the STAR Alliance/Amadeus CITP - Common Information Technology Platform.

So chaps what's it to be? There are still some nice plumbs sitting on the table waiting to be eaten. If not, heaven forbid will the business go to AiRes or ITA, even Navitaire? Time's awastin'

Cheers

Timothy