ACA is going independent!
- Thread starter davetheflyer
- Start date
i got this off the ACA employee website... it's a Q&A with our president Tom Moore.
Q: When do we really think we will be able to get started with the new airline?
A: I think at this point most of us have gotten comfortable with the reality that we are not in total control of the timing, since it is tied up in the United bankruptcy court process. But for the sake of planning, we are envisioning that we will welcome our first passengers some time late next spring. That’s the best estimate of when United will likely attempt to emerge from bankruptcy and release us from our obligations under the current agreement. We expect that they will hold us to our current contract until that time. Then, when they reject our contract, we will go forward with the new operation immediately thereafter. Although it’s legally possible, we still firmly believe that there is virtually no chance that UAL would affirm our existing contract.
Q: What are the next big steps in the planning process?
A: We are making progress every day at HDQ in many areas, but the thing that is most time-sensitive right now is the development of our narrowbody program. And even though the idea of getting started next spring may seem like quite a long time away, we actually have some critically important milestones that need to be accomplished right now. Here’s the timeline as I see it:
Before the end of August, we have three objectives:
Receiving formal responses to our proposal from the two manufacturers (Boeing and Airbus). We know that our fleet will consist of 15-25 narrowbody aircraft, and they will have to come from one of those two companies.
Reaching a new tentative agreement with our pilots. The new agreement will need to address the narrowbody aircraft and related issues, and set the standards for pay rates and work rules for the new low-fare carrier on a going-forward basis so we can be successful in the long term.
Understanding what kind of financing commitments we will be able to get for the new aircraft. As we have said, in this bankruptcy environment, it has been very difficult to get financing for the CRJs we were originally planning to add for United. Now, we are working with the financing community to get the commitments we will need to acquire the narrowbodies for our new, independent operation. We have already had good discussions with several leasing companies, which could be an alternate source of aircraft if we are not able to come to terms with Boeing or Airbus on new aircraft.
Q: What are the alternatives if these objectives cannot be met?
A: We are very hopeful that these things will both happen—and that we will be able to create “win-win” partnerships with our pilots, manufacturers and financing partners. But we have very tight time commitments for all of this if we are to achieve our targeted launch date.
The alternative would be to develop a strategic partnership with another operator who could bring certain strategic benefits to the table including financing and an ability to help shorten the time required for launching the narrowbody service. That would mean we would still fly under our own independent brand, and continue with the CRJs, but the narrowbodies would be operated by a partner company. While I don’t want to ignore the fact that this strategic partnership is a possibility, the best thing we can all do is focus on meeting our timeline internally rather than focusing on the implications if we can’t reach all three agreements.
Q: What other timeline elements are you planning for right now?
A: By the beginning of October, we would need to have three things in place:
A final decision on our fleet plan
A ratified agreement with our pilots on a revised contract that includes the larger jets
Financing commitments ready to move forward
These decisions would then be taken to the ACA Board of Directors during their October meeting. We would then be working with the FAA on certification of the new aircraft. If all these elements fall into place, our goal is to begin operating the narrowbodies in early June. This is an extremely aggressive schedule. Getting a new fleet type introduced in less than one year will require a lot of hard work and cooperation at all levels.
Q: Are we still talking with United about continuing our current contract? They seem to be saying that we are, and appear to be holding out hope that we will still be a United Express partner for years to come.
A: Since we made our announcement, several airlines, including United, have expressed an interest in conducting business with us under various possible arrangements. In fact, given United’s press releases so far, it’s clear that United has some interest in developing some kind of relationship with us in the future, but I don’t expect that we would go back to the kind of ”fee-per-departure” relationship that existed in the past. We are busily moving forward with the planning of our new low-cost airline. Of course, we continue to acknowledge that we are under contract with United at the present time, and will keep operating exactly as we have been until that contract is terminated by United and the court.
Q: Is there a possibility that we may still be a regional airline that codeshares with other major airlines? What does all this mean?
A: First of all, what it means is that we have a very good plan that is very attractive to other airlines. That’s something we should all be pleased about. It is encouraging to see how many potential partners have contacted us with ideas about how we can work together. We are willing to explore all reasonable alternatives, but nothing is firm, and we continue to believe that we will implement our plans as previously announced.
Some kind of strategic partnership—in which we would receive marketing support through sharing codes on certain routes, or sharing mileage programs—might help our new airline to succeed even faster and better than if we go out entirely on our own. Remember, much of the risk and uncertainty associated with creating a new airline centers around developing a brand and marketing image. By partnering with another airline, it may be possible to achieve the best of both worlds by moving forward with our own independent airline while reducing some revenue risk associated with utilization of an existing brand or marketing support package.
Still we must remember that while everyone may want to be our friend this week, soon these same “friends” will be fighting us as competitors. None of the major airlines wants another low-fare carrier right in their backyard.
Q: When do we really think we will be able to get started with the new airline?
A: I think at this point most of us have gotten comfortable with the reality that we are not in total control of the timing, since it is tied up in the United bankruptcy court process. But for the sake of planning, we are envisioning that we will welcome our first passengers some time late next spring. That’s the best estimate of when United will likely attempt to emerge from bankruptcy and release us from our obligations under the current agreement. We expect that they will hold us to our current contract until that time. Then, when they reject our contract, we will go forward with the new operation immediately thereafter. Although it’s legally possible, we still firmly believe that there is virtually no chance that UAL would affirm our existing contract.
Q: What are the next big steps in the planning process?
A: We are making progress every day at HDQ in many areas, but the thing that is most time-sensitive right now is the development of our narrowbody program. And even though the idea of getting started next spring may seem like quite a long time away, we actually have some critically important milestones that need to be accomplished right now. Here’s the timeline as I see it:
Before the end of August, we have three objectives:
Receiving formal responses to our proposal from the two manufacturers (Boeing and Airbus). We know that our fleet will consist of 15-25 narrowbody aircraft, and they will have to come from one of those two companies.
Reaching a new tentative agreement with our pilots. The new agreement will need to address the narrowbody aircraft and related issues, and set the standards for pay rates and work rules for the new low-fare carrier on a going-forward basis so we can be successful in the long term.
Understanding what kind of financing commitments we will be able to get for the new aircraft. As we have said, in this bankruptcy environment, it has been very difficult to get financing for the CRJs we were originally planning to add for United. Now, we are working with the financing community to get the commitments we will need to acquire the narrowbodies for our new, independent operation. We have already had good discussions with several leasing companies, which could be an alternate source of aircraft if we are not able to come to terms with Boeing or Airbus on new aircraft.
Q: What are the alternatives if these objectives cannot be met?
A: We are very hopeful that these things will both happen—and that we will be able to create “win-win” partnerships with our pilots, manufacturers and financing partners. But we have very tight time commitments for all of this if we are to achieve our targeted launch date.
The alternative would be to develop a strategic partnership with another operator who could bring certain strategic benefits to the table including financing and an ability to help shorten the time required for launching the narrowbody service. That would mean we would still fly under our own independent brand, and continue with the CRJs, but the narrowbodies would be operated by a partner company. While I don’t want to ignore the fact that this strategic partnership is a possibility, the best thing we can all do is focus on meeting our timeline internally rather than focusing on the implications if we can’t reach all three agreements.
Q: What other timeline elements are you planning for right now?
A: By the beginning of October, we would need to have three things in place:
A final decision on our fleet plan
A ratified agreement with our pilots on a revised contract that includes the larger jets
Financing commitments ready to move forward
These decisions would then be taken to the ACA Board of Directors during their October meeting. We would then be working with the FAA on certification of the new aircraft. If all these elements fall into place, our goal is to begin operating the narrowbodies in early June. This is an extremely aggressive schedule. Getting a new fleet type introduced in less than one year will require a lot of hard work and cooperation at all levels.
Q: Are we still talking with United about continuing our current contract? They seem to be saying that we are, and appear to be holding out hope that we will still be a United Express partner for years to come.
A: Since we made our announcement, several airlines, including United, have expressed an interest in conducting business with us under various possible arrangements. In fact, given United’s press releases so far, it’s clear that United has some interest in developing some kind of relationship with us in the future, but I don’t expect that we would go back to the kind of ”fee-per-departure” relationship that existed in the past. We are busily moving forward with the planning of our new low-cost airline. Of course, we continue to acknowledge that we are under contract with United at the present time, and will keep operating exactly as we have been until that contract is terminated by United and the court.
Q: Is there a possibility that we may still be a regional airline that codeshares with other major airlines? What does all this mean?
A: First of all, what it means is that we have a very good plan that is very attractive to other airlines. That’s something we should all be pleased about. It is encouraging to see how many potential partners have contacted us with ideas about how we can work together. We are willing to explore all reasonable alternatives, but nothing is firm, and we continue to believe that we will implement our plans as previously announced.
Some kind of strategic partnership—in which we would receive marketing support through sharing codes on certain routes, or sharing mileage programs—might help our new airline to succeed even faster and better than if we go out entirely on our own. Remember, much of the risk and uncertainty associated with creating a new airline centers around developing a brand and marketing image. By partnering with another airline, it may be possible to achieve the best of both worlds by moving forward with our own independent airline while reducing some revenue risk associated with utilization of an existing brand or marketing support package.
Still we must remember that while everyone may want to be our friend this week, soon these same “friends” will be fighting us as competitors. None of the major airlines wants another low-fare carrier right in their backyard.
