News Digest - May 17

Clip · 05-17-2002, 07:45 PM

US Airways asks for concessions

Washington Post

US Airways, which is struggling to stave off bankruptcy, is talking to other major airlines about alliances designed to boost revenue and convince a government loan guarantee board that it has a plan to return to profitability, David Siegel, US Airways president and chief executive, said.

Siegel, in an interview, declined to identify the airlines, but a source close to the Arlington-based carrier said US Airways was talking to United Airlines, Northwest Airlines and Continental Airlines. The talks were in the early stages and still very fluid, the source said.

The agreements to form "code-sharing" alliances would not involve any exchange in equity. Instead, if US Airways had a code-sharing agreement with United, for example, passengers could book a flight through US Airways that actually uses United for a leg of the route. The airlines would probably split the additional revenue.

The code-sharing arrangement would help US Airways attract more passengers, because it could book many more flights nationally and overseas than it currently can handle. US Airways mainly flies on the East Coast, with only a handful of West Coast and overseas routes. An alliance with Northwest and Continental, which are strong in the Midwest, and United, which has many West Coast and overseas routes, would expand US Airways' reach. In addition, a deal with United would presumably make US Airways part of United's Star Alliance, a 14-member airline network that includes such airlines as Lufthansa, All Nippon and Singapore.

Because of that strategy, Siegel said US Airways was not talking to Delta Air Lines, which also has a strong presence on the East Coast.

Spokesmen for United and Northwest declined to comment. A spokesman for Continental said the airline was constantly in such talks and would only comment "when they amounted to something."

Siegel said he expects to announce an alliance by the end of the year. But sources close to the company said the airline is racing to meet a much quicker deadline. US Airways plans to seek about $1 billion in loan guarantees from the federal Air Transportation Stabilization Board. The deadline for those applications is June 28.

In order to win the loan guarantees, the airline must show it can become a financially viable operation. Its plan is to cut costs through labor concessions and boost business through the alliances.

------------------------------------

EasyJet-Go Fly proposal looks good for Boeing

Seattle Times

Boeing received promising news from across the Atlantic when two European airlines that have been actively shopping for new aircraft confirmed plans to join forces.

EasyJet and Go Fly, London-based carriers that offer discount flights throughout Europe, collectively operate 54 Boeing 737s. That fleet is one of the reasons EasyJet has proposed to buy Go for $544 million.

"Both airlines are built on common business models," said EasyJet Chief Executive Ray Webster. "These models encompass similar values, cultures and fleets."

The combined company would operate under the EasyJet brand and continue to fly its distinctive, all-orange planes. It would soar past Ryanair, based in Dublin, Ireland, as Europe's largest low-cost airline.

Each carrier had been negotiating with Boeing and Airbus to purchase up to 75 planes for their respective fleets. Until recently, Airbus appeared to have the momentum.

Go Fly executives said two weeks ago they had entered exclusive negotiations with Airbus. EasyJet, meanwhile, had expressed interest in deviating from its all-Boeing fleet and splitting its future orders between Boeing and Airbus.

But on May 8, EasyJet announced plans to take a controlling interest in Deutsche BA, British Airways' German subsidiary, which flies 16 737s.

If EasyJet also adds Go, its fleet will balloon to 70 Boeing planes.

Since EasyJet management must combine cultures, computer systems and personnel from three different companies, analysts predict it will not want the added complexity of shifting to Airbus planes.

05-17-2002, 08:29 PM

Great Article, very informative.

TL925 · 05-18-2002, 01:41 AM

Sounds like good news for Boeing. There have hardly been any orders this year for either Airbus or Boeing, so it looks like the two are duking it out for every order this year. It seems like Airbus has been winning so far, but hopefully an order from easyJet will even things out.

Bill G · 05-19-2002, 06:35 PM

Great Articles Gabby. Thanks for keeping us informed.

Good news for Boeing. Hope things work out for us at US Airways.

Bill G

05-17-2002, 07:45 PM	#1
Clip Model Goddess Join Date: Sep 1999 Location: Portland, Oregon Age: 37 Posts: 1,313	News Digest - May 17 US Airways asks for concessions Washington Post US Airways, which is struggling to stave off bankruptcy, is talking to other major airlines about alliances designed to boost revenue and convince a government loan guarantee board that it has a plan to return to profitability, David Siegel, US Airways president and chief executive, said. Siegel, in an interview, declined to identify the airlines, but a source close to the Arlington-based carrier said US Airways was talking to United Airlines, Northwest Airlines and Continental Airlines. The talks were in the early stages and still very fluid, the source said. The agreements to form "code-sharing" alliances would not involve any exchange in equity. Instead, if US Airways had a code-sharing agreement with United, for example, passengers could book a flight through US Airways that actually uses United for a leg of the route. The airlines would probably split the additional revenue. The code-sharing arrangement would help US Airways attract more passengers, because it could book many more flights nationally and overseas than it currently can handle. US Airways mainly flies on the East Coast, with only a handful of West Coast and overseas routes. An alliance with Northwest and Continental, which are strong in the Midwest, and United, which has many West Coast and overseas routes, would expand US Airways' reach. In addition, a deal with United would presumably make US Airways part of United's Star Alliance, a 14-member airline network that includes such airlines as Lufthansa, All Nippon and Singapore. Because of that strategy, Siegel said US Airways was not talking to Delta Air Lines, which also has a strong presence on the East Coast. Spokesmen for United and Northwest declined to comment. A spokesman for Continental said the airline was constantly in such talks and would only comment "when they amounted to something." Siegel said he expects to announce an alliance by the end of the year. But sources close to the company said the airline is racing to meet a much quicker deadline. US Airways plans to seek about $1 billion in loan guarantees from the federal Air Transportation Stabilization Board. The deadline for those applications is June 28. In order to win the loan guarantees, the airline must show it can become a financially viable operation. Its plan is to cut costs through labor concessions and boost business through the alliances. ------------------------------------ EasyJet-Go Fly proposal looks good for Boeing Seattle Times Boeing received promising news from across the Atlantic when two European airlines that have been actively shopping for new aircraft confirmed plans to join forces. EasyJet and Go Fly, London-based carriers that offer discount flights throughout Europe, collectively operate 54 Boeing 737s. That fleet is one of the reasons EasyJet has proposed to buy Go for $544 million. "Both airlines are built on common business models," said EasyJet Chief Executive Ray Webster. "These models encompass similar values, cultures and fleets." The combined company would operate under the EasyJet brand and continue to fly its distinctive, all-orange planes. It would soar past Ryanair, based in Dublin, Ireland, as Europe's largest low-cost airline. Each carrier had been negotiating with Boeing and Airbus to purchase up to 75 planes for their respective fleets. Until recently, Airbus appeared to have the momentum. Go Fly executives said two weeks ago they had entered exclusive negotiations with Airbus. EasyJet, meanwhile, had expressed interest in deviating from its all-Boeing fleet and splitting its future orders between Boeing and Airbus. But on May 8, EasyJet announced plans to take a controlling interest in Deutsche BA, British Airways' German subsidiary, which flies 16 737s. If EasyJet also adds Go, its fleet will balloon to 70 Boeing planes. Since EasyJet management must combine cultures, computer systems and personnel from three different companies, analysts predict it will not want the added complexity of shifting to Airbus planes. __________________ Jet Delta's Big Flies

05-19-2002, 06:35 PM	#4
Bill G Insane Collector Join Date: Aug 2000 Location: St. Charles, MO Posts: 1,248	News Digest Great Articles Gabby. Thanks for keeping us informed. Good news for Boeing. Hope things work out for us at US Airways. Bill G __________________ *Ozark Flies Your Way* FEES DON'T FLY AT SOUTHWEST

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05-17-2002, 08:29 PM	#2
Romania is #1 Guest Posts: n/a	Great Article, very informative.

05-18-2002, 01:41 AM	#3
TL925 Master Collector Join Date: Jul 2000 Location: London Age: 26 Posts: 529	Sounds like good news for Boeing. There have hardly been any orders this year for either Airbus or Boeing, so it looks like the two are duking it out for every order this year. It seems like Airbus has been winning so far, but hopefully an order from easyJet will even things out.