Thats what i said.. see (..). Yes. Most of OO's other flying is short term 5 years or less.. XJT/ASA will fall into that category... XJT living 2 years at a time. I bet they get more $$$ for the short term ones. But use the steady 175 long term contracts to settle investors..

 

The CPA's are for short term because the airlines taking the 50 seat jets are still ramping up to take over the planes. The parking schedule is about 2 - 3 planes a month and will continue until SkyWest has all the 50 seat planes removed under the XJT and the skywest names.

They are adding the profitable larger RJ's under the skywest name. It was in a public SEC filing a few years back if you want to go dig it out about the plans for the 50 seat fleets, but somehow some XJT pilots still have their head in the sand and think they will end up with something bigger at some point.

 

Yeah, I missed that on my first read. Although, the rest of their flying is not all short term (2 years or less). Their pro-rate flying, by the nature of that flying, are one to three months by individual aircraft. But for example, their DAL flying is good through 2022, their AA 700 flying (of which they are adding a whole bunch more) is good through 2020.

If they could get profitable long term deals for XJT, they would do that instead of one and two year deals. Mainline wants dual class RJs for the foreseeable future so they agree to those deals. It's just that Inc is putting all those aircraft at Skywest exclusively. It has nothing to do with anything other than they rather have Skywest operate those aircraft.

 

This is really simple…

INC is just optimizing their profitability.

XJT hasn’t been profitable for a long time and still isn’t based on the last INC earnings call. So They try to discontinue unprofitable flying. This is no different from the SkyWest side where all the UA 700 go away mostly because they are just not very profitable.

Once those aircraft EMB145 or CRJ 700 come of contract it is really about managing the tail risk of the lease financing - a place where many of the CRJ 200 already are. Ideally, they match any contract extension against the residual lease timeline which tends to be 2-3 years. And that is exactly what you see. After that it is all gravy if they get extended – or INC returns the plane, adjusts the work force via attrition and goes home happy.

So they are going for shorter term opportunities that also happen to be priced at a premium. Again, no difference between XJT and SKYW. A lot of the 50 seater flying at SKYW is short-term as well. I don't think UA is thrilled about this approach but that’s why they are propping up C5. Presumably they are willing and able to operate at lower price than INC wants to do either under XJT or SKYW. Note that a lot of the "new" SKYW flying is not with UA but AA....

Personally, I believe the 50 seaters will be here for a lot longer than everyone wants to make us believe. So these 2-3 deals will continue to roll barring any major economic downturn.

As for new dual class cabin flying, it simply comes down to unit cost. Pilot productivity is higher at SKYW than XJT and as a result unit cost are a lower (PBS vs. hard line with vacation touching and I am sure a host of other things). So the 175 stuff goes there – very basic economics really.

 

I agree with you. But your only looking at the pilot aspect.. MX at XJT is very unproductive. And another big hurdle is the E145 product. Its the oddball of the fleet. And dont say its the same as the 175. Engines for example can tell you a huge tale.. GE =175 and CRJ fleet.. huge savings..

 

True. I only spoke to the pilot aspect.

I honestly, I don't know much about XJT MX - how efficient or inefficient they are. But I am pretty sure that the XJT fleet is large enough to have an efficient MX program. Minimum efficient scale is around 20-25 airframes for most airliners. You will still have some scale effects after that but you enter an area of diminishing marginal returns.

 

Once again the ASA side fails to get mentioned. We have PBS. We dont have vacation touching. We just continue to get lumped in with XJT and ground down to nothing.

 

There (mx) contract has some things that are like the pilot contract. Not advantageous to managment... yes 100 airplanes is a big enough size to be efficient, but there 100 airplanes partners dont want.. i would ask why ASA/XJT lists are not combined.. its been longer then most majors time wise to combine them... XJT is a great place to work.. but time to move on..

 

One little problem with your details. UA owns the 145's. UA owns a lot (almost half) of C5. SkyWest made the statement a couple of years ago they were getting out of the 50 seat market.

SkyWest chose to give the gifted people the larger jets that are replacing the 145s and it appears they will shut down the unionized portion of their companies.

Yes I am only talking about the L-XJT side for those whinny asa guys.

 

Please show us where Skywest said that! They've actually stated the opposite quite frequently.