Doug Parker Letter Regarding Transatlantic Cancellations – August 29, 2007

August 29, 2007

Dear US Airways Employee,

Several of you have sent me copies of a column that ran earlier this week in Joe Brancatelli’s blog at USAToday.com. Brancatelli focuses on this past summer’s international operation from Philadelphia and our poor on-time performance. The on-time statistics he cited are accurate, publicly available information, and indeed are no surprise to US Airways’ employees — we know we’ve had a very difficult summer for PHL international operations and we’ve spoken candidly about the causes and the planned fixes for next year.

Brancatelli makes a number of incorrect conclusions from the data and I’ll address those below, but the biggest misrepresentation he makes is that management does not care about the situation. That is both offensive and false so I wanted to take some time to let you know the facts. This is longer than the usual letter, but I want to be thorough, and I appreciate you taking the time to go through the information here.

First, let me be crystal clear – we’re aware that we have not run a good international operation this summer and we’re not pleased about it. When it comes to on-time arrival statistics, though, Brancatelli fails to mention the biggest contributor of all, which is the well-publicized severe ATC delays that affected all of the Northeast this summer.

When the domestic operation is delayed, as it was at record levels this summer, airlines rightfully delay their international flights even more, as we wait for connecting travelers to arrive in the hub. Not doing so would inconvenience these passengers tremendously, as the next international flight doesn’t leave for another day (and likely has no seats available as we were all extremely full this summer).

These ATC delays and subsequent holding of international trips led to poor on-time performance for all international operations in the Northeast. For example, publicly available information that was not mentioned in the blog includes this sampling of on-time results for our Northeast international competitors for June through August:

– Delta from JFK to:
o Moscow, 21% on-time
o Budapest, 41%
o Manchester, 43%
o Rome, 50%

– Continental from EWR to:
o Manchester, 42%
o Dublin 47%

Our international on-time performance was even worse than our competitors for some of the reasons I discuss below, but to publish our numbers in isolation without providing the context of others in similar ATC environments is misleading at best. It is also important to note that while our on-time performance suffered, our people did an excellent job of ensuring that these important flights did operate — our international completion factor for this period was 99%, despite the difficult ATC environment.

Having said all of this, the fact remains that there were issues other than ATC problems that had a negative effect on our international operation this summer. It’s important that we all understand what led to these issues and what we’re doing to avoid a repeat in the summer of ’08:

1) Scheduling: We had an aggressive growth schedule in Philadelphia this summer because we committed to growing the international operation, and we needed to live up to a commitment to the City of Philadelphia to do so. Last summer, and again this year, the City threatened to take three widebody international gates that we currently
use and convert them into domestic gates for Delta.

To demonstrate our commitment to the international operation, we scheduled more flying than we normally would have on the available gates, building a schedule that required us to do what’s called “nesting” of 19 international flights on 16 gates. Nesting allows us to operate two international departures from a single gate by towing the first plane to arrive on the gate to a remote pad after it is deplaned, having a second plane arrive and depart on that gate, and then bringing the first plane back to the gate to get loaded for its departure. This is a common practice at many airports and it works on good days. But when things get behind, which they did all summer because of ATC and weather, it doesn’t work so well, as we all experienced.

The good news is that our increased schedule had some positive impact within the City. While it is still unclear whether or not we will lose some gates on the international concourse, what is clear is that the City enjoys the service and would not like to lose it.

We have told them that we will not subject our customers and employees to such a nested operation next year, though, so if they choose to move a domestic airline onto the international concourse, we will have no choice but to eliminate some of our international flying. We are still working with them on a potential resolution to this dilemma, but the very strong consumer response to our new flights has certainly helped our cause.

2) Maintenance: We did have higher aircraft out-of-service time for our international fleet this year than we’ve experienced in the past as well. The aircraft now need more routine maintenance than they did in past summers and we simply hadn’t adjusted the schedule to provide enough time, so we ended up with more delays. We will remedy this next summer by either not flying as many international routes (if PHL takes some international gates) or using different equipment to fly some routes like PHL-SJU and CLT-CUN which were flown this summer with international aircraft.

We also continue to have problems storing sufficient parts in PHL. Brancatelli’s column incorrectly suggests that we store international parts in Phoenix that should be stored in PHL. That is not true — there are no widebody-only parts stored in Phoenix. We do, however, have inadequate parts storage facilities in PHL, which leads us to place more
parts than we’d like in Charlotte. We’re working with the Philadelphia Airport to obtain more space and that, in addition to getting the entire maintenance inventory onto one computer system, will improve our delays attributable to maintenance dramatically.

3) Interiors/Onboard Offering: The financial distress of the former US Airways left the interiors of the international fleet, particularly the 767s, in worse condition than any of us would like. In May, we approved a $20 million program to upgrade our widebody interiors. Unfortunately, it takes more than a year to receive and install the parts and new seats, which means that we won’t see these interior improvements until next year.

As we upgrade the airplanes, we’re also bringing consistency and upgrades to the onboard product. Our new program rolls out in January and includes new and upgraded Envoy Class meals, wines and amenities. Later next year, we’ll begin installing new near-lie-flat seats and handheld InFlight Entertainment units in Envoy, along with new InFlight Entertainment computer servers and flat monitors in Economy on the B767 fleet. Also next year, we’ll be moving to common galley configuration for increased stowage and oven space on the transatlantic B757 ETOPs aircraft.

To sum up, these are the primary problems and what we’re doing to address them. Rest assured that we care very much about these issues and will ensure that they are addressed. Our international routes have been extremely successful this summer despite our operational challenges and we have exciting plans for future expansion. But we know full well that we can not expect to remain profitable in the international markets if we operate as we did this summer, nor can we expect profitable expansion.

I am confident that we’ll get there because I know how badly each of wants to see it happen. Thanks for all you’re doing to take care of our customers.

Doug