F9 update
06-25-2008 | 02:18 PM
#1
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F9 update
Dear Team Members,
As I have been telling you all for the past several weeks, we have more difficult decisions ahead. Today, I need to tell you about the latest change in our organization that will affect many of you.
We have just filed the final portion of our fall schedule, and it includes a significant reduction in capacity. It also reflects a reduction in our Airbus fleet. In all, we expect to reduce mainline capacity year-over-year by approximately 17% for the September through March timeframe. That will include frequency reductions in some markets and seasonal reductions in Anchorage, Vancouver and Jackson Hole. To cost-effectively achieve the capacity reduction, we plan to reduce our Airbus fleet by seven aircraft. These reductions will be phased in starting mid-August and completed by the end of September.
I’m sure the first question you now have is: how will this affect our workforce? Certainly the reduction in workforce will be proportional to our reduction in capacity, but we don’t have other specifics to share at this point. We needed to get the capacity reduction in place first as the fall schedules had to be loaded, and I wanted to let you know in as timely a manner as possible. We have been evaluating our organizational requirements as well and will be announcing the needed changes over the course of the next few days and weeks. We are reviewing our options with respect to workforce reductions, but I need to be honest in telling you that we will have furloughs and layoffs during this process. We will continue to keep you informed as we move through the process. We also intend to give all covered employees the notice required by the WARN Act so that they can plan accordingly.
No doubt, you also wonder why we are taking these measures. There are several aspects to consider. First, by removing these aircraft from our fleet, we focus on preserving cash, and, as you all know, cash is an absolutely critical asset in the current environment. By removing these aircraft, it does not mean that we have given up on other liquidity alternatives. In fact, we are hard at work and making real progress on several liquidity-enhancing transactions, including DIP financing. The other reason for these moves is to reduce our capacity with the mindset of improving our pricing power in the current environment. You have heard me say for quite some time that there is too much capacity in the marketplace right now. Our reduction, along with previously announced reductions by other carriers, should help in getting us the average fare we need to navigate in these current conditions. Finally, this is yet another step in ‘extending the runway.’ Certainly it is a major step with serious repercussions, but it is a necessary step to ensure our Company’s survival.
You all know by now what we have to do to survive as a company: reduce our costs, increase our revenue and ride out the current storm that is affecting every US airline. Our plan is to continue extending the runway through the initiatives described in this letter and others in process. I still believe industry conditions are slowly playing in our favor, and I know we are running a great operation. There are encouraging signs on a number of fronts that we have discussed recently, but that doesn’t change the fact that we are facing some of the greatest challenges the airline industry as a whole has ever seen, and these conditions require hard decisions. It is critical that we all dedicate ourselves to performing our jobs to our utmost ability. We must provide the best possible services to our customers in these trying times.
We thought long and hard about making these changes, and I know many of you will feel the pain of these moves. Unfortunately, this is the reality of the business that we are in, and ultimately we felt these moves gave us the best chance to be successful. I wish there were other alternatives, but this is clearly the best option right now. Your officers and directors will be working with you in the coming days and weeks to let you know exactly how these reductions will play out. I will do my best to communicate with you as well.
All the best,
Sean
As I have been telling you all for the past several weeks, we have more difficult decisions ahead. Today, I need to tell you about the latest change in our organization that will affect many of you.
We have just filed the final portion of our fall schedule, and it includes a significant reduction in capacity. It also reflects a reduction in our Airbus fleet. In all, we expect to reduce mainline capacity year-over-year by approximately 17% for the September through March timeframe. That will include frequency reductions in some markets and seasonal reductions in Anchorage, Vancouver and Jackson Hole. To cost-effectively achieve the capacity reduction, we plan to reduce our Airbus fleet by seven aircraft. These reductions will be phased in starting mid-August and completed by the end of September.
I’m sure the first question you now have is: how will this affect our workforce? Certainly the reduction in workforce will be proportional to our reduction in capacity, but we don’t have other specifics to share at this point. We needed to get the capacity reduction in place first as the fall schedules had to be loaded, and I wanted to let you know in as timely a manner as possible. We have been evaluating our organizational requirements as well and will be announcing the needed changes over the course of the next few days and weeks. We are reviewing our options with respect to workforce reductions, but I need to be honest in telling you that we will have furloughs and layoffs during this process. We will continue to keep you informed as we move through the process. We also intend to give all covered employees the notice required by the WARN Act so that they can plan accordingly.
No doubt, you also wonder why we are taking these measures. There are several aspects to consider. First, by removing these aircraft from our fleet, we focus on preserving cash, and, as you all know, cash is an absolutely critical asset in the current environment. By removing these aircraft, it does not mean that we have given up on other liquidity alternatives. In fact, we are hard at work and making real progress on several liquidity-enhancing transactions, including DIP financing. The other reason for these moves is to reduce our capacity with the mindset of improving our pricing power in the current environment. You have heard me say for quite some time that there is too much capacity in the marketplace right now. Our reduction, along with previously announced reductions by other carriers, should help in getting us the average fare we need to navigate in these current conditions. Finally, this is yet another step in ‘extending the runway.’ Certainly it is a major step with serious repercussions, but it is a necessary step to ensure our Company’s survival.
You all know by now what we have to do to survive as a company: reduce our costs, increase our revenue and ride out the current storm that is affecting every US airline. Our plan is to continue extending the runway through the initiatives described in this letter and others in process. I still believe industry conditions are slowly playing in our favor, and I know we are running a great operation. There are encouraging signs on a number of fronts that we have discussed recently, but that doesn’t change the fact that we are facing some of the greatest challenges the airline industry as a whole has ever seen, and these conditions require hard decisions. It is critical that we all dedicate ourselves to performing our jobs to our utmost ability. We must provide the best possible services to our customers in these trying times.
We thought long and hard about making these changes, and I know many of you will feel the pain of these moves. Unfortunately, this is the reality of the business that we are in, and ultimately we felt these moves gave us the best chance to be successful. I wish there were other alternatives, but this is clearly the best option right now. Your officers and directors will be working with you in the coming days and weeks to let you know exactly how these reductions will play out. I will do my best to communicate with you as well.
All the best,
Sean
06-26-2008 | 03:18 PM
#7
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Joined: Mar 2006
Posts: 3,333
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“Democrats have a plan to lower gas prices…join Democrats who are working to lower gas prices now.” – Then-Minority Leader Nancy Pelosi (D-CA), Press Release, April 19, 2006
Yeah, it’s all Big Oil’s fault…
I agree surrendering has always been easier; just ask the French...
06-26-2008 | 06:37 PM
#8
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Joined: Jul 2007
Posts: 4,772
Likes: 1
From: 744 CA
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