A Tale of Two Airlines

I took to the sky for the very first time at the controls of an avocado green and white Cessna 172, N4664L. I saw a picture of the old girl recently…hasn’t changed a bit. Same paint job, interior unchanged. The images rekindled positive memories of an outstanding flight instructor and a summer learning the skills that became the foundation of my career in aviation. The date was September 13, 1986...13 years to the day before I landed what I thought was my dream job.

I was a junior at J.J. Pearce High School in Richardson, Texas in 1986 when I chose Aviation Science as an elective course. Taught by the varsity golf coach, the class was basically a Private Pilot ground school course and the leaping off point for my career. On a regular basis, our class was visited by a local flight instructor, former Braniff and current (at the time) corporate pilot and photographer for Steak and Ale who volunteered his time and offered to take anyone who wanted go, flying in his little green and white Cessna 172. We went three at a time…each of us getting about 15 minutes at the controls. After flying with the entire class, he chose one person who, in his opinion, possessed the ability and the desire to make a career of aviation, and taught that person to fly for free…well, almost free. It was more of a time swap deal. One hour in his yard for one hour of instruction. He chose me and I spent the summer mowing, trimming, clipping and learning the skills of aviation.

Thirteen years to the day from my first flight, I stepped onto the property at American Airlines as a gainfully employed airline pilot. Dream job obtained. Grey pin-striped suit, burgundy tie, brief case…we all looked the same…pumped up and feeling like we had just one the lottery. But I’d like to back up about 30 days and describe a unique perspective of two career paths. 30 days earlier, after years of preparation and training. Four years of college. One year as a CFI. One year flying cancelled checks single pilot at night with no radar or autopilot. Six years at a regional airline flying the EMB-120 Brasilia and the ATR-72 and years of applications and updates. Then, in one day, I got two calls. One from American and one from Southwest. Here’s what happened.

The airline industry can be a perilous place to hang your hat. My father, retired in 2004, was hired by Delta when the airline was a regional carrier with no international presence at a time when the desirable airlines were names like Pan Am, TWA and Eastern. Leap ahead 36 years and Delta is the largest airline in the world and all my father‘s first picks are fading memories. In 2004, the pay rates at Delta were unmatched anywhere in the world and may never be achieved again in commercial aviation. A B777 Captain at the time could easily bring home something north of $300,000 per year. Who knows what the future holds…another 30 years in the future and Delta could be on the same list as the other bygone greats. No one knows, and that is the most significant pitfall of an airline career.

A pilot is married to an airline for life due to a little thing called seniority. The guy who has been there the longest is number 1 on the list. The guy hired last is at the bottom and everyone hired in between populates the list in a position relative to his hire date. Everything, and I mean everything, is determined by seniority. Monthly schedule, base, equipment, vacation, compensation, the list goes on…everything is based on seniority and you can’t take it with you. As a new hire pilot at American Airlines in 1999, I earned a little less than $24,000. Today, I make 11 year MD-80 FO pay…roughly $100K per year. If American Airlines closed up shop tomorrow, if I was furloughed, fired or just chose to leave and work for another airline, my seniority would reset to day one. I would start over at the bottom in every sense of the word…and that is why pilots are careful about where they work and never leave unless forced to do so.

As soon as I was hired by a regional airline, I put my career plan in high gear. Part of that plan was that moss would never grow on this stone. I would spend every waking moment attacking the idea of working for my airline of choice. I thought I was sitting pretty at the time. I was making descent money, working for a reputable, stable airline and upgrade to Captain was in sight. There was no pressing desire to move to another “stair step” airline. That is, another step to a company where I would not spend my career. I wanted my next step to be my last. So I made a short list of what I thought were the best U.S. airlines and sent my first application to a major before I finished new-hire training at my regional airline. American, Delta, Continental, United, Northwest, Southwest, UPS and FEDEX all made my list. Yours may vary. Mine would certainly look different today.

UPS and FEDEX never responded to me at all. You never quite know why one airline jumps and another gives you the finger and my story was no different. Continental, Northwest and United responded to each of my updates with a pleasant enough postcard inviting me to try again later. Delta was a top choice for me, but my father was a pilot for them and they had a nasty nepotism rule that excluded me as candidate for employment. That would change later when they dropped their little “no family” rule, but it would prove too little too late for me.

So that left American and Southwest. American’s response to my attention was no different than the rest at first. Southwest was different. Their minimums were higher and a little more complex than the rest, so I had been focused on the other airlines for quite some time before I met the minimum requirements at Southwest. At this point, almost 6 years had elapsed since I sent in my first major airline application, but only 2 months since I applied at Southwest. I was astounded by how fast things worked with this great airline and quickly shifted all my hopes and dreams to Southwest. I was hired by Southwest two weeks later and put into a “pool” of available pilots. Sadly, there was no rhyme or reason to the method of pulling pilots from the pool, and I stayed there for months. All that momentum came to a screeching halt.

Then, in August of 1999 in the presence of a good friend and pilot with whom I had a friendly, yet vigorous, competition to see who would be hired first, the phone rang. It was American Airlines calling to offer me a job and unlike Southwest who placed me in a pool of available pilots, American offered me class date. Remember, seniority is everything…and seniority starts on your first day. It can never be taken away and never improved. You get what you get and you don’t throw a fit…as my 9 year old would say. I had always said that I would only apply where I really wanted to work and accept the first class date that came up. So I accepted. Happily…and I won the competition too!

Later that same day, smile still firmly affixed, the phone rang again. It was Southwest Airlines. You’ve got to be kidding me, I thought. My two top picks on the same day. It was the toughest decision I have ever had to make. At the time, American paid more, had a better retirement, flew bigger, more exciting airplanes and flew them around the world. Captains at the time were receiving yearly bonus checks large enough to purchase a new Cadillac and Southwest just seemed like a better paying regional airline job. At least that’s how I rationalize my decision today. Plus, I always said I would take the first job I was offered and never look back, so I stuck to my plan and accepted the job at American Airlines.

I won’t know until the day I retire if I made the right decision. My employment history at AA has been a roller coaster ride. I was hired at a time when the airline was taking on 100 pilots per month. By September 2001, when everything changed, I had almost 3000 pilots junior to me on the seniority list. Since then I have steadily lost seniority due to the shrinkage of this once great airline. When I was hired in 1999, my seniority number was just over 10,000. The pilot ranks at American swelled to over 13,000 with vigorous hiring and the merger with TWA in 2000. At one point I was displaced out of my home airport and forced to commute to reserve in a distance city. A situation that lasted almost 4 years. Today, I am based where I want to be based and have a 20 minute drive to work. But with almost 11 years seniority, the right seat of the MD-80 is the only thing I can hold, I’m on reserve, unable to hold a regular line of time and upgrade to the left seat is at least 10 years in my future…if at all. At Southwest, I would have been a Captain 5 years ago, in the same city where I live now, making double what I currently earn. Did I make the right choice? You may have your own opinion. I know I have mine, but time will tell.

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Airliner Graveyard

I recently delivered two pristine McDonnell Douglas MD-82's to Roswell, New Mexico for long term storage. Strange day to say the least, emotionally and otherwise, as I sent two perfectly good aircraft to an arguably early grave. The day started with the simple task of parking my car. I could have parked within walking distance of the jet, which was parked across the airport at the hangar, but at the end of the day I was going to deadhead home from Roswell on a revenue flight and...well, the airline is a lot more interested in helping me find my way to the jet at the beginning of the day than helping back to my car at the end...so, I parked at the terminal and began my journey to the other side of the airport.

The crew scheduler who assigned me the trip the day before knew nothing of the process except that the aircraft would be at the hangar, not the terminal. A fact with which I was already familiar. So, I did what any pilot does when he doesn't know what to do, I called the Chief Pilot. That is, I called the Chief Pilot's secretary, because they, not the chiefs, are the ones with all the answers. I was provided with the phone number I needed to set up transportation and managed to get to the hangar. Once there I had to determine which aircraft was to be ferried that day and where the logbook was located. Flight planning was already done, but I was responsible for requesting fuel and servicing the aircraft for departure. Just finding the jet was no easy task, as there were about ten MD-80's scattered in and around the hangar, all a significant walk from where I was planning my flight.

Once at the jet, things didn't get any easier. To make matters worse, the Captain I was assigned to fly with had not planned on having so much trouble getting from the terminal to the hangar and showed up about 45 minutes late. I performed my pre-flight walk around inspection, loaded the FMS and prepared the cockpit. The cockpit was like any other 80, the cabin was another story. Anything that was not permanently attached to the airframe had been removed. Nothing in the gallies. No supplies in the lavs. No unnecessary fluids of any kind...DO NOT USE THE LAVS! No I didn't make that mistake. When the Captain finally arrived, I had the jet ready to go and we left on time. No one, was impressed.

By the time we were ready to depart, a mechanic had already removed the chocks, closed the aft stairs behind us, given us the all clear for engine start and left. The ground crew for a normal start and push-back would include two wing walkers and a tug driver with whom we are in constant contact. Today, we were on our own. We started engines and taxied out from the hangar without assistance from any ground personnel, mark that up for another strange feeling. When you can't see your wing tips from the cockpit, taxiing out without extra eyes on the ground is unnerving to say the least.

A normal takeoff weight for an MD-80 is somewhere between 125,000 and 160,000 pounds. This jet, at just over 80,000, wanted to fly and was ready to leap into the air about the time we managed to get the power set for takeoff. To illustrate, there is a point on our departure that we usually struggle to cross at the mandatory "5,000 or above" restriction...we were level at 10,000 before this point. En-route was pretty uneventful except for the fact that we were alone. No passengers, no flight attendants...no one calling to complain about the temperature...I wondered if this was how UPS and FedEx guys felt. Quiet.

Landing, as you can see in the video, is difficult when landing at this weight. The extra weight on the struts during a normal weight landing helps to smooth out a less than perfect touch down and in this case, there was no extra weight. My landing was a little long and a little firm, but hey, we walked away. After all, any landing you walk away from is a good landing...but everyone knows that's just what you say after a crappy landing. After clearing the runway we were happy to find an eager "follow me" truck to lead us through the maze of lonely jets on our way to the final resting place of this old friend.

With about an hour until our flight home, we accepted the hospitality of an airport employee who generously offered to give us the grand tour. We hopped in his car and meandered up and down the various rows of abandoned planes. Some of what I saw that day did not surprise me at all...old 727s and early model 737s that were long past their prime. DC9s that hadn't flown in years. 747s that were nearing the end of their life when I was learning to fly. Other sights were a surprise, like a line of Air Canada 767s that looked freshly painted and ready for service. Four American Airlines F100s left over from the company's ill-timed decision to get rid of 100 seat jets. A line of UPS DC8s with new high bypass engines while old, seemed out of place. On a side note, it is my understanding that the DC8s were the casualty of a bureaucratic pissing match between UPS and the FAA over maintenance records. The list goes on.

The MD-82 I sent to it's grave was a nice flying, well equipped machine with GPS, moving map, EGPWS, TCAS and more. Much of the equipment I only dreamed of having a short time ago. Now we're sending such aircraft to the desert. Money is always the bottom line in these decisions, but not always the way you might thing. After all, the old MD80 is significantly less efficient than the 737 that is it's replacement. But metal fatigue is an even greater issue. As an aircraft ages, all its structures and components experience metal fatigue. Once this internal deformation exceeds its limit, the structure needs to be replaced. On an aircraft of this size, the cost to undertake such a procedure would be prohibitive. No matter how great they look from the outside...the useful life of these jets has come to an end.




If you enjoyed the video, you can find more like it on my YouTube page.

www.youtube.com/contrail777

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More on Baltia Airlines

My first post regarding start-up Baltia Airlines has generated quite a few comments, and now that more information about the airline is available, I figured that I'd write a follow-up post. For those of you who aren't familiar with Baltia, it was originally established in 1989 but has only made real strides towards getting off the ground within the last year and a half or so. (I do recommend that you check out my previous post - it gives a better history of Baltia.) I'd say that the airline's odds of long-term success are pretty long, but the company has continued to make progress.

I wrote back in December about how Baltia got a used 747, pictured here thirty years ago in Pakistan International Airlines colors and, more recently, sitting in the Arizona desert awaiting service. (There's a recent set of photos on Flickr showing the airplane getting prepared for service with Baltia.) Well, the airline recently released a video featuring that 747 - those green stripes are still a dead giveaway that the plane is ex-PIA - as well as the airline's CEO and what appears to be a number of their employees.

No doubt the video is meant to reassure potential investors - see, we have an actual plane! and employees! - and certainly it looks as though something is up and running, if not yet fully operational. Supposedly they're still raising cash and are trying to get off the ground now by the fall, but I'm not too optimistic. (Some interesting points from the SEC filing: $2 to $4 million is expected to be raised this year, while their CEO, Igor Dmitrowsky, received $123,395 in compensation last year.)

In my opinion, the choice of aircraft could have been better. Unless things have changed since I last spoke to them in August, they're planning on having 296 seats on the main deck of the 747 in a four-class layout. And there are only going to be 12 seats on the upper deck, according to VP of Finance, Barry Clare:

"First class has only twelve seats," explains Clare. "It's sort of a gimmick because we want to show that we have that kind of service available. Even though service will be superior throughout the entire aircraft, first class service will really be far superior. The entire upper deck... will be dedicated as a first class lounge, with a bar and gourmet chefs, live entertainment, strictly for the first class passengers... If the [first class] seats get filled, great; if not, it's there to show that Baltia Air Lines has that kind of service."

If they can make it happen, it certainly does sound luxurious. But one has to wonder how much money would be lost if the first class seats (which ostensibly could be replaced by a bunch more coach seats) fly empty.

Looking at their 747 from an age aspect - it isn't necessarily much to worry about, since there are some impeccably maintained DC-3s out there that are sixty years old and perfectly safe to fly on. But airplanes, just like cars, require more maintenance (and therefore, more cash) as they age. The Boeing maintenance cost model dictates that as a plane's flight hours increases by 1%, its total airframe maintenance costs increase by 0.25%. This plane is 35 years old, so chances are that it will need some work. That's not to say that you can't successfully use an older aircraft; Northwest (now Delta) has a couple of DC-9s in the 40-year old range, although those are scheduled to exit service by the end of the year. If the aircraft are cheap enough up front - the Baltia 747 cost $475,000 - then perhaps it could work.

A better idea might have been to pick up a smaller aircraft with better economics - maybe a used Boeing 767-200ER, since there are a couple of them sitting around, or some other sort of twin-engine jet. Capacity would be diminished, to be sure, and since it seems like Baltia is planning some sort of cargo service, it could have an impact. But Baltia has also been championing direct, point-to-point flights that - let's face it - aren't likely to attract a whole lot of people, or at least not enough to consistently fill up a 747 enough to make it profitable. It might have a monopoly on the New York - St. Petersburg route, but some other routes that it's seeking to enter, such as New York - Moscow and New York - Kiev, are already flown by two airlines each (Delta and Aeroflot with the 767-300 and A330 for Moscow, and Delta and Ukrainian carrier AeroSvit, with the 767-300 for Kiev). In the instance of New York - Moscow, for example, Delta and Aeroflot operate more efficient aircraft and are able to offer connecting flights, along with frequent flier miles that can be used on a bunch of different airlines (SkyTeam), and probably will be able to offer a lower price.

So, we'll see when they can finally get off the ground. Baltia has some interesting ideas ("Dinner will be served by invitation on the Captain’s Deck in the fashion of the grand trans-Atlantic ocean liners," or "On Westbound flights, we will serve a continental lunch after takeoff, a mid-Atlantic lunch halfway across, and a New York deli meal an hour before landing"), but I'm not optimistic about their viability. (If you have any further information about Baltia that you'd like to share, please feel free to drop me an email.)

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The end of Virgin Atlantic's 'splendid isolation'?

photo by 900hp from Flickr, licensed under CC

The proposed tie-up between British Airways and American Airlines is moving closer to getting the green light from US authorities, and as such, Virgin Atlantic President Richard Branson is apparently worrying (saying - Branson doesn't seem like the type that worries a lot) that his airline might have to find a partner in response.

He's no doubt speaking in response to the continuing trend of consolidation in Europe. Air France and KLM have been merged for six years now, and the Lufthansa Empire has expanded its reach into Belgium (Brussels Airlines) and the UK (bmi) in addition to Austria (Austrian Airlines) and Switzerland (Swiss). Closer to Virgin Atlantic's home turf, British Airways and Iberia have already announced an intention to merge, and it's the prospect of a three-way combination between BA (Virgin's longtime archrival), Iberia and American that has been giving Branson the most grief.

He's been outspoken against the BA-AA deal for quite some time, but it seems now as though he's come to terms with its apparent inevitability - and what that means for his airline in terms of survival. Virgin Atlantic has remained fiercely independent for its entire existence (although Singapore Airlines owns 49% of the airline, the maximum amount allowed), and while it has codeshare agreements with a handful of airlines, it has never joined an alliance. But if it wants to compete with a larger British Airways, it might need to look at finding a partner. “If it becomes impossible for us to remain an independent airline and survive, we may come to a situation where we have to consolidate," Branson said.

Naturally, this begs the question - with which carrier would Virgin Atlantic consolidate with? bmi (also known as British Midland) would appear to be the logical choice, according to Branson: “I don’t think bmi has a future as a stand-alone airline if it stays in the same shape... something will happen – the two of us would be stronger together than separate.” On the surface, this seems like a good match. bmi is a member of Star, the alliance that Virgin Atlantic seems to be on good terms with (stakeholder Singapore Airlines is also a member), and is also a rival of the dreaded British Airways. Virgin Atlantic is also strictly a long-haul carrier (much like Singapore), meaning that it loses out on some passenger traffic that would be connecting through Heathrow or Gatwick on their way to other European destinations (although codeshares do help here). bmi, on the other hand, has a few longer-haul destinations but for the most part sticks close to home. So, Virgin's long-haul network should perfectly complement bmi's short-haul - right?

Complicating things is the fact that Lufthansa now owns bmi outright, and is in the process of restructuring it - and, in the process, cutting quite a few inter-European routes. Gone are Paris, Brussels, Amsterdam - service to some of these, as well as few other cities, has been supplanted by Lufthansa-owned or operated carriers. For example, the 'bmi' flights from Heathrow to Frankfurt and Milan are operated by Lufthansa. This is all well and good for bmi, perhaps, but it makes it less attractive as a merger partner, as it wouldn't have many European routes of its own to bring to the table. And bmi wouldn't have all that much to gain from a merger, either. Virgin Atlantic has a nice long-haul vacation getaway network set up at London Gatwick, but their other long-haul service at Heathrow, while substantial, pales in comparison to that of British Airways. Its relative isolation (i.e. no alliances) also makes it less attractive as a merger partner, since bmi could ostensibly benefit from being an alliance member (as it currently is, in Star).

So while bmi might seem the obvious choice, it's not necessarily an ideal fit. But if Virgin Atlantic faces a 'merge or die' scenario, then bmi might start looking a lot more attractive.

A tidbit to ponder: according to the Times article, Singapore apparently is seeking to sell its stake in Virgin Atlantic, which might expand merger possibilities. And another interesting point about Virgin Atlantic: Branson has stated that its new strategy will be to look towards leisure travel for growth, rather than business travel. Right now, he says, the airline's business is 70% at London's Heathrow airport and 30% at Gatwick, although "this will have to start balancing out."

And Branson is still sticking to his trademark optimism. He has still promised to battle it out in court against the BA-AA deal's regulatory approval if needed - however much of a 'done deal' it already is - and he has also noted that BA's ongoing labor strife (they're "shooting themselves in the foot," he says) has only helped to benefit his airline's revenue.

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Passenger Bill of Rights

Yesterday, I had my first encounter with the Passenger Bill of Rights, otherwise known as the Tarmac Rule. It was in no way a positive experience. Bottom line? The law of unintended consequences strikes again. I genuinely do not think those who drafted this law intended these results.

First, let me give you my basic interpretation of the law. It is generally accepted practice to start the clock at the "out" time, which is the time that the aircraft begins movement away from the gate for the purpose of flight. The fact that you may have been in your seat for some time before the "out" time is not relevant to the law. For a domestic flight, an airline is required to offer food and water to passengers at or before the 2 hour point and allow passengers the opportunity to exit the aircraft at or before 3 hours. If adequate food and water is not available, the aircraft must be back to the gate within 2 hours. The fines for violating this law are astronomical at $27,500 per passenger. This flight, with 124 passengers, would incur a fine of $3,410,000 for exceeding the limits of the law by even one minute.

Our flight was scheduled from DFW to a city in the northeast. The weather at departure time was actually pretty good. Partly cloudy skies, light winds...no big deal right? Not when ATC and a large airline get involved. There was a serious line of weather east of the airport that was spawning severe thunderstorms and even a reported tornado. The storms were all at least 15 miles east of the airport and moving away, but they were disrupting all the departure routes to the east. Our flight was departing out one of the north departure corridors, but many of the east-bounders were re-cleared out to the north, so our departure would be affected.

With the weather to the east, we convinced our dispatcher to add 2000 pounds to our fuel load due to the possibility of increased taxi times. But since the weather along our route and at our destination was good, we decided not to load any significant extra fuel. 2000 pounds may or may not sound like a lot, but everything is relative. On this aircraft, 2000 pounds would last about 2 hours on the ground, but only about 20 minutes in the air. As it turned out, the Tarmac Rule, not our fuel, would dictate the outcome of the day.

I won't bore you with all the details, but we were cleared to one runway, then another, and then back to the original. I'm sure the ground controllers at DFW were trying to do their very best, but every time they changed our runway, our delay got longer and our position in line for takeoff got worse. As it became obvious that we would not be able to takeoff within the limits of the law, we began discussions with our flight's dispatcher to coordinate our return to the gate.

Just getting back to the gate took over 30 minutes due to all the taxiway congestion. We finally arrived back at our starting point and parked with two minutes to spare. By this time, the Captain and I had been on duty for 13 hours and would be illegal to continue. This is where the "Law of Unintended Consequences" comes into play. Since there were no reserve crews available, the flight was cancelled. All 124 people aboard this flight were put in hotels for the night and re-booked on flights the next day that were already full.

I believe that if we had remained in line for takeoff, that we would have exceeded the limits of the law by no more than 10 minutes. But due to the inflexible nature of the law, we were required to return to the gate. 124 passengers inconvenienced.

Are the outcomes of this flight and hundreds like it acceptable casualties in the effort to protect passengers from excessive ground delays? I don’t think so, and I know 124 people who would agree.

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Is US Airways the 'ugly girl'?

flickr photo by Caleb's Photography

It's been posted elsewhere already, but in case you haven't heard, Continental CEO Jeff Smisek got in a little hot water after referring to US Airways, in decidedly un-diplomatic language, as an 'ugly girl.' “I recognized that United was the best partner for Continental, and I didn’t want to marry the ugly girl; I wanted to marry the pretty one,” he said.

A bad choice of words, no doubt. Smisek evidently apologized to US Airways CEO Doug Parker, who called the words "chauvinistic and offensive." "Jeff sent me an apology, stating that he “got carried away in the moment,” “really felt badly” and “had no good excuse.” I believe Jeff was sincere in his apology, have accepted it on behalf of all of us and am ready to move past it," Parker wrote in a letter to US Airways employees (you can read the whole thing at the end of the post).

Parker also defends US Airways' performance in the letter, pointing out that his airline's profit margins, on-time performance, and stock performance were all better than Continental's recently. But why did United, which had recently considered a merger with US Airways, ultimately choose Continental instead? Why did US Airways get dumped? Two things to keep in mind, according to Parker:

1. United chose Continental because it has "dominant positions in major business markets like Newark and Houston that allow them to collect even higher revenues than we can with our network," which is presumably more leisure-based.
   
2. Even if US Airways did get dumped, it doesn't mean that it isn't a "valuable standalone company" with "strong" prospects.
   

In closing, Parker notes that he's "looking forward to aggressively competing against the new United Airlines – and winning." He has effectively shrugged off the 'ugly girl' remark, and done so in a professional and detailed manner. But could US Airways be considered the 'ugly girl'? Here's the text:

May 4, 2010

Fellow Employees:

A number of you have contacted me asking about Continental CEO Jeff Smisek’s “ugly girl” comment yesterday. In case you haven’t seen it, when announcing their plans to merge with United Airlines yesterday, Mr. Smisek said, “I didn’t want him (United CEO Glenn Tilton) to marry the ugly girl. I wanted him to marry the pretty one.” The ugly girl was a clear reference to US Airways. Like me, many of you found his comment both chauvinistic and offensive to the hard-working people of US Airways.

First, you should know that Jeff sent me an apology, stating that he “got carried away in the moment,” “really felt badly” and “had no good excuse.” I believe Jeff was sincere in his apology, have accepted it on behalf of all of us and am ready to move past it.

Having said that, the emails I’ve received from many of you suggest this comment hit a nerve so I wanted to give you my views. As one of you simply put it, “Why are we the ugly girl?” The answer, of course, is we are not and there’s no better evidence of that than our recent performance.

In fact, we are performing better than Continental on almost all of the important metrics of our business. Financially, we each reported first quarter financial results in the past two weeks, and while we both lost money, we both lost much less than last year. However, US Airways’ rate of improvement was much better than Continental’s driven by both higher revenue growth and better cost control. On an absolute basis, our profit margins are now higher than Continental’s.

Operationally, we’re performing much better than Continental in the primary customer service metric of on-time performance. US Airways jets arrived on-time more often than Continental’s during the first quarter 2010, and we also outperformed them in on-time during all of 2009 and 2008. We are also now neck and neck with Continental in areas like baggage and complaints.
This is all being noticed by the outside world, as US Airways stock price is up 42 percent so far this year, while Continental’s is up 15 percent, even after announcing their merger.

Bottom line, I think both of our airlines are doing a great job in a challenging business – but if I were them I wouldn’t be pointing fingers.

So why did United choose to merge with Continental rather than US if we’re performing better financially and operationally than they are today? I think the answer is straightforward and one we’ve discussed many times – while we have a strong route network centered around PHL, CLT, PHX, DCA and the Shuttle, Continental has dominant positions in major business markets like Newark and Houston that allow them to collect even higher revenues than we can with our network. United preferred that network to ours and while we may disagree with that decision, it was United’s to make and we need to respect it and move on.

None of this means we don’t have a valuable standalone company. To the contrary, we’re producing better standalone results than our peers like Continental. We announced last week that we expect to report a profit in the current quarter of this year, which is further evidence of our standalone value. As consolidation makes our industry less fragmented and more efficient, our standalone prospects will only become stronger.

As we move forward, let’s not worry about the words of our competitors – no matter how inappropriate they may be – but rather let’s continue to show the world what we can accomplish by working together and performing our jobs in a professional and focused manner.

Thanks so much for your commitment to US Airways. I’m proud to be a part of your team and am looking forward to aggressively competing against the new United Airlines – and winning — for many years to come.


Doug

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A few thoughts on the United-Continental merger

I thought I'd share a few thoughts on the just-announced United-Continental merger. There's a lot out there about the terms of the deal and other specifics, but just to recap, the $3 billion merger (which has yet to be officially approved) would create the world's largest airline. The airline would be based in Chicago and keep the United name (but the Continental logo) and would be led by Jeff Smisek, the current Continental CEO.

(Yes, that is a 787.)

Here we see the consummation of Glenn Tilton's dream - for several years now, nearly every other word out of his mouth has been either "merger" or "consolidation." And it's a great fit, network-wise: there's little route overlap, which should help the deal get anti-trust approval pretty easily. (For another perspective, check out Dan Webb's post at Things in the Sky.)

But I'm going to focus on one aspect of the merger here: branding. There's a picture of Jeff Smisek and Glenn Tilton shaking hands in front of the new United logo, which is nothing more than the Continental logo with "United" in there instead. And the paint job would be exactly the same as Continental's - again, with the name "United."

Maybe it's just me, but it looks pretty bad. I've come to associate the United name with that familiar block typeface and the "tulip" logo, which has been around for almost 35 years now. I can see that perhaps management wants to appease Continental employees concerned with the disappearance of their name. And this would certainly be a relatively low-maintenance rebranding, too; just replace the word "Continental" with "United" everywhere and you're done. Apart from the fact that United's the one that's technically doing the buying here (despite the 'merger of equals' talk), one of the reasons that the United name is the one that's staying is because it has a stronger global reputation.

I'm hoping that once the merger gets final approval, some more time and effort goes into designing a better brand - if they're going to keep the United name, they should also keep the logo.

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