Holy Crap! ACA to rejct UAL offer!

[derg]

Atlantic Air to reject United offer--report
Monday July 28, 12:50 am ET


WASHINGTON, July 28 (Reuters) - Atlantic Coast Airlines Holdings Inc. (NasdaqNM:ACAI - News) plans to reject a new contract with bankrupt United Airlines (OTC BB:UALAQ.OB - News) and become a low-cost airline in the Washington region, the Washington Post reported on Monday.

Kerry Skeen, chairman and chief executive of the Dulles, Virginia-based company said Atlantic "decided the terms United has been proposing for a new contract aren't acceptable," the newspaper said.

United officials declined to comment to the paper.

The two airlines have been in talks for months over a long-term deal, but Skeen told the newspaper the low-cost carrier plan had been considered for two years and was a plan "much more attractive for our shareholders and employees".

Atlantic plans to sell tickets mainly through its Web site, and already has its own customer services agents and baggage handlers at many airports.

Its hub would be at Dulles International Airport, where most of the airline's 4,800 workers are based.

Skeen said the airline is contemplating a new name and plans a large advertising budget, as well as adding big jets to its fleet in a few years.

Atlantic said it planned to remain a regional operator for Delta Air Lines Inc (NYSEAL - News), for which it provides Delta Connection regional service.

The airline's three unionized employees groups -- the flight attendants, pilots and mechanics -- will need to approve the plan, the newspaper said. Skeen told the newspaper the airline would not have to lower its employees' pay or lay off hundreds to workers to reduce costs.

The airline's new plans are to be announced on Monday, according to the paper.

 

[Mr_Creepy]

This is not surprising. United has done this to several of it's feeders before. I remember when they wanted to replace Mesa with Great Lakes at DEN they offered a subpar 6 month "transition" contract. I was actually kind of proud of Risley when he told them to stuff it.

 

[derg]

Almost like a reverse "West Air".

 

[Mr_Creepy]

Doug that's not right!

West Air hung themselves out to dry. We had made an agreement that we would stick together on any contract and West Air backed out on us at the last minute. As a result they were stuck with a more costly contract (although they didn't get paid more - it was mostly work rules.)

There were a lot of hurt feelings and deep wounds after that contract negotiation, and I am ashamed to admit, most of it was caused by personal agendas by our ALPA leaders at the time.

 

[derg]

D'oh!

I heard most of my information from jumpseating in the final days of Westair between LAX and VIS so I didn't get a chance to hear the Paul Harvey "The Rest of the Story" (tm).

 

[Mr_Creepy]

There is STILL bad blood between the old West Air guys and the Mesa Regime that was in place at that time.

It was regrettably ugly.

I refuse to take sides, but I will say that I wish West Air had stuck with us.

 

[derg]

Westair was a good company and I either wanted to work for them or Skywest when I was a flight instructor.

Back in those days, I thought I'd be able to get away with finding a regional in my homestate, then slide into UAL and get based in SFO or LAX.

How plans change!

 

[Kingairer]

How long are you guys gonna give the new ACA? I just think they are going to have to start out alot smaller then they are right now. Throwing 80 rjs on routes and calling them a LCC isnt going to cut it. Youve got airtran and sw at BWI, jetblue at IAD, USAirways at all 3, not to mention the DL, AE, US shuttles to the Northeast. Not to mention they are going to have to compete with whoever UAL places on the routes that ACA once did for UAL. I think its going to take alot of advertising to begin with.

 

[derg]

I dunno.

I've got some really good friends that are working for ACA including a very good jetcareers forumite.

But man, I'm kind of afraid for them because they're going to be taking on some serious players in a very competitive region.

They've got to build up a reservations system and support network almost from scratch, not including massive advertising to create a new brand name or increase public awareness of "Atlanta Coast Airlines".

 

[Kingairer]

One place I can see them winning long term are places like Wilmington NC, Fayteville, Asheville, Roanoke etc. etc. (you can tell what area im accustomed too) These places, and places like it, could use a low fare carrier. But as soon as they offer this kind of service, the carrier who replaces them in IAD who will be flying the same routes will be offering simialr fares, plus the UAL name and benifits. I just dont see them being able to be as big as they are now and be profitable. One thing is for sure, its going to be interesting to watch.

 

[derg]

Boyd Consulting on ACA Website

Atlantic Coast Airlines Independence
That RJ Glut Is Here

The announced plans by Atlantic Coast Airlines to establish its own airline sends lots of messages. Transitioning from being a small jet supplier (SJP) into an independent airlines is not an easy task.

The first is a message is to Wall Street and the veneer analysts who have been crowing about the future of "regional airlines." The fact is that in most cases, these small jet providers aren't airlines, and they are not dependent not on the flying public for their revenues, but instead upon the major to whom they provide aircraft. If the major pulls the plug, or at least yanks their chain, the SJP has limited wiggle room.

The next message is that the number of 50-seat "regional jets" in operation and on order may be way in excess of what the US transportation system needs. ACA, as it stands today, needs to find a home for 85 RJs if the United deal ultimately falls through. That's a bunch of airplanes.

Message three: The number of small jet providers may be in line for some culling-out. If United can get along without ACA, dumping 85 RJs on the market, the picture gets real ugly.

Final message: simply having 85 50-seaters on the ramp does not make an airline. While it would be great if ACA can make a go of being an independent airline, it's going to be tough. Establishing an independent brand identity will be a real challenge. Getting consumers to switch loyalties won't be easy. And, please, a 50-seat jet is not a vehicle that can truly provide a low-cost operation. At 11 to 13 cents a seat mile, it will be hard to get a foothold in major markets from Washington. Short haul service would mean flying to major markets where the skies are already black with scheduled service. Short haul service from mid-size and smaller communities may not have the volume to support the costs of 50-seaters. And longer-haul service (say, over 2-hours) makes the CRJ an ergonomic issue to the people sitting in those small seats and tight cabin space.

To make a go of an independent airline with RJs, ACA will need to provide a high quality operation and be able to capture the high-yield business traveler. The first is a slam-dunk. The second is an open issue.

 

[Kingairer]

DO you think any of this is going to change the way mainline airlines work with contract carriers? Do you think they will be more willing to work with one so they dont repeat this situation. Or do you think UAL is apathetic and says ok bring on TSA and Mesa.

 

[IrishSheepdog]

That Boyd Consulting article was a very good analysis of the ACA issue.

I'm kinda on the fence about the whole thing. For many reasons, I only think they have about a 40% chance of surviving alone at the moment.

 

[mrivc211]

How long are you guys gonna give the new ACA? I just think they are going to have to start out alot smaller then they are right now. Throwing 80 rjs on routes and calling them a LCC isnt going to cut it. Youve got airtran and sw at BWI, jetblue at IAD, USAirways at all 3, not to mention the DL, AE, US shuttles to the Northeast. Not to mention they are going to have to compete with whoever UAL places on the routes that ACA once did for UAL. I think its going to take alot of advertising to begin with.

How right you were my friend, how right you were. You should become an airline analyst. Let's start a new company called the Kingairer Group and predict the future of airlines. We'll have an IPO for airline futures stock. We'll make millions and and and.......damn I gotta 5:45am show in carlsbad tommorrow.....get to bed!