Guest sfb Posted April 24, 2003 Share Posted April 24, 2003 Thursday April 24, 2003 Issued at 0140 PDT RJ revolution 'drawing to a close,' says analyst ATW The ability of US Major airlines to achieve significantly lower labor costs spells bad news for the fast-growing Regional airline segment of the market as well as the future for 35/50-seat regional jets, says JP Morgan equity analyst Jamie Baker. In an extensive report published yesterday, Baker said, "We believe the RJ revolution is drawing to a close." He noted that mainline labor unit costs rose 37% from 1994 versus just 8% at the Regionals. This, in his view, was the primary driver for the rapid growth of the Regional sector. In effect, Major airlines outsourced routes that no longer could be flown profitably given higher labor costs and declining revenue. Now, "with mainline labor expenses expected to fall by 20%-30% over the next two years and with Regional pay unlikely to match, the marginal appeal of continued Regional growth is quickly diminishing. As such, we expect to see significant cancellation or deferrals of RJs on order." He said the RJ backlog numbers some 500. Furthermore, Regional airlines that operate under fee-per-departure arrangements already are under pressure to reduce the fees they charge to their financially beleaguered codeshare partners. Although a relaxation of scope clauses could permit additional 70/90-seat RJs to enter the Regional airline fleet in codeshare, it also is possible that these aircraft will be flown by mainline pilots. "American is a case in point: Its concessionary pilot contract transfers 70-seaters currently in operation plus all future deliveries from Eagle to the mainline," Baker wrote.-- PF Link to comment Share on other sites More sharing options...
Guest DashTrash Posted April 24, 2003 Share Posted April 24, 2003 Orders revive Bombardier's turbopropeller business Dash 8 regains the skies Nicolas van Praet CanWest News Service Thursday, April 24, 2003 ADVERTISEMENT MONTREAL - Bombardier Inc.'s floundering turbopropeller plane business, considered nearly dead by some analysts, appears to be bouncing back from the brink. Toronto airline entrepreneur Robert Deluce is set this morning to announce the first order of what he said would be 15 Dash-8 Q400 planes from Bombardier. The planes would be part of his fleet of planes for a new airline to be based at Toronto's island airport. And yesterday, FlyBe, a British-based regional airline, ordered 17 Q-400s from Bombardier with an option to buy 20 more. The firm part of the order is valued at US$362-million and the total amount could reach US$818-million, Bombardier said. "As airlines are getting more and more cost conscious, you're going to see that probably they'll go for a blend between the turboprop and the regional jet," said Pierre-Yves Terrisse, an analyst with Desjardins Securities in Montreal. "We believe that there's definitely a niche on routes that are 300 to 400 miles and less for the turboprop to see some good demand." Mr. Deluce said his order is valued at $500-million. That could bring the total value of Q-400 contracts for Bombardier to $1.69-billion if all options are exercised. That would be a dream for Bombardier, which has seen its turboprop orders dwindle down steadily. The planemaker's Dash-8 deliveries, which includes models from the Q100 to Q400, were slated to decline from 52 in 2001 to 15 by 2005, according to an analyst report released yesterday by UBS Warburg. In mid-March, workers at Bombardier's de Havilland plant in Downsview, Ont., where the Q-series are made, agreed to 650 job cuts in exchange for keeping the plant open. Bombardier had already shut the plant down for four months to reduce excess production. "The Dash-8 doesn't have much of a prospect," one analyst said in early March. But while orders are not coming in by the truckload, there do appear to be some firms more than willing to use the aircraft. Mr. Deluce, whose company is called Regional Airline Holdings Inc., said he plans to start service next year. (The Gazette) © Copyright 2003 National Post Link to comment Share on other sites More sharing options...
Guest Skirt Posted April 24, 2003 Share Posted April 24, 2003 "American is a case in point: Its concessionary pilot contract transfers 70-seaters currently in operation plus all future deliveries from Eagle to the mainline," With the inevitable pay cut to AC on the horizon, could the same thing happen here north of the 49th? Very interesting. (6) Link to comment Share on other sites More sharing options...
Guest DashTrash Posted April 25, 2003 Share Posted April 25, 2003 I'm sure that the whipsaw is going fast and furious between ACPA and ALPA. I know that ALPA presented an eighty page PowerPoint presentation on restructuring the airline that was very favorably received by management. How about ACPA? Probably doesn't matter anyway as it looks like liquidation is likely the final outcome. Too many problems, too many disparate interests and too few creditors willing to pony up the cash. The pension issues alone are enough to sink this Titanic. Looks like I'll get to spend the summer at the cottage after all, instead of the "office". [smiley thing here] Ciao....dt Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.