Originally Posted by
CLazarus
Yah, I read all of that and listened to the Town Hall already. Would love to hear from someone who can speak to some of the tradeoffs management makes in these situations. Helps me better read the tea leaves. For example, just over on post #64 of the TSA thread Tplinks said the downtime and cost of converting an 76 seat RJ to a 70 seater is minimal - kind of a bummer actually. I'd hoped the expense of such a move might keep the company from furloughing anyone hired before 23 Jan 2016 (1-C-1-h). Guess not. The sort of thing I'd be interested to know is if it is better to retain a 20 year old WB coming due for heavy checks soon vs. a 25 year old that just came out of heavy checks.
I had an epiphany this morning about 50 seaters. I don't think for a moment they will "all" be gone when this shakes out. However, there will soon be a poop ton of cheap ass 319s and -700s on the market. When we start to stabilize, if we snapped them up it would position us to leapfrog our average gauge upwards from the smallest of the Big Three to the biggest. Management was saying as recently as last fall that our average gauge should be the biggest. If we started this while pulling up from the dive we could be very well positioned for future growth, bringing a lot of Express flying back in house, and even short circuiting a lot of mainline furloughs. I'm going to prepare a memo for SK stat!!! ;-)
Before the trolls start chucking spears, I know we have way, WAAY bigger problems to deal with at the moment. I was just surprised to hear Oscar/Scott say what they said about 50 seaters... but it makes a lot more sense to me now. We could indeed get rid of an awful lot of them without simply giving up existing routes. I'll be interested to see what develops after the seatbelt sign comes off again.
I believe that the comment was strategically placed to appeal to the audience. Remember that SK even acknowledged that the 50 seat question wasn’t asked but he answered it anyway.
Pretty much all 50 seater are owned free and clear by now. You can pick up a 200 for about $300K without engines. A set of midtime engines sets you back another $2M or so. The majority of these engines are owned by SKYW. They even lease some of their inventory to DL.
Bottom line - they can offer 50 seat service at rock bottom price as long as oil is cheap, pilots are available and there is gate space. The latter was the most limiting factor up to a few months ago.
UA is a network carrier. The more you feed into a hub the more it perpetuates the network effect. The opposite is true too. The more you draw it the hub becomes exponentially less attractive to the point were it would make more sense to abandon a hub altogether rather than splitting traffic between UAs existing hubs. CLE and LAX would be the most likely casualties.
you want to maintain as many spokes as possible and that is where the 50 seater will continue to have a role - specifically if we do not give up any scope.