ACA reaction to court decision?

[WhiteCloud]

The judge tossed out ACA's request for a contract decision. What are they doing or going to do about the dillemma of acquiring new jets without a solid agreement with UAL?

 

[Pilot877]

If you work for ACA, that information came out in a Daily Briefing a few days ago.

 

[nfg]

Could somebody post the gist of the daily briefing for us non-ACA working, ACA-wannabe working, and/or just plain ol' curious types? Thanks

 

[Av8tor]

Denial of Motion Means Everything Continues As Before,

No Specific Changes Expected As A Result

As you may have heard, there was a hearing yesterday in the U.S. Bankruptcy Court overseeing the United situation. ACA had filed a motion asking the court to set a specific timetable for a decision by United to officially reaffirm its ongoing contract with ACA.



In a bankruptcy situation like this one, United technically has the right to terminate the contract of its partners—like ACA and the other United Express carriers. And while there’s been no indication that this is part of United’s current thinking, it is still a legal possibility. That creates additional uncertainty about our future plans with United, and makes it very difficult for ACA to secure the financing for the deliveries of the remaining CRJs we have ordered from Bombardier. So, ACA appealed to the court to clear things up by setting a timetable for this official affirmation. However, that motion was denied by Judge Eugene Wedoff following yesterday’s hearing.



Today, ACA Executive Vice President and Chief Financial Officer Richard Surratt talks about what happened at yesterday’s hearing and what it means for our immediate future, as well as the media speculation that United may be considering some big changes in its operations at IAD.



Q: The decision yesterday seems to go against ACA—but what does it mean? Are we any worse today than we were yesterday?

A: No, not necessarily, we’re still exactly where we were before the hearing—in a period of considerable uncertainty. While this definitely should be considered a setback for us, it doesn’t change the immediate status quo in any way. We will continue to operate for United exactly as we have been, and get paid for that flying as we are right now.



The judge’s ruling means that United will be able to set its own timetable for the final decision about whether to continue working with us. We believe ACA remains a valuable partner to United, and that our operations at IAD and ORD are still an important part of their overall financial recovery. But yesterday’s decision means we are faced with tremendous uncertainty. We do not know exactly when UAL will act on our contract—this process could go on for many more months.



Q: There has been speculation that without this affirmation of our contract with United, we may not be able to accept new CRJ deliveries. Is this true?

A: We issued a press release on December 11th stating that we had secured the financing for all our CRJ deliveries through the end of February. We actually accepted delivery of the first of our two February aircraft this morning. That’s our 78th CRJ. The second February delivery has actually been rescheduled by Bombardier for March 5th. We expect to take delivery of that plane at that time, and put it into service in the United Express program as soon as it gets here.



However, beyond the delivery of that aircraft, we are faced with a true dilemma of how to finance aircraft amidst the uncertainty of not having an affirmed contract with UAL. Without secure financing, it is unlikely that we will be able to accept all of the aircraft on our delivery schedule this year. The investment community and banks are not in a position to offer aircraft loan commitments to us until they have some comfort that UAL is going to be successful, and continue its long-term partnership with ACA.



At this moment, we are discussing all the options we have available, and will make a decision in the coming weeks. The next planned delivery we have scheduled beyond CRJ #79 is slated for March 19th.



Q: What about the stories that United may be considering a shutdown of operations at IAD?

A: There have been a few media stories about this, and it’s important to realize that the quotes being attributed to United officials demonstrate the virtually unlimited range of choices United may be considering.



Yes, some United people have said that they are looking at every conceivable scenario—including major changes at IAD, LAX, DEN and a whole host of other possibilities. But we do not believe that there is a specific plan underway right now to shut down United’s operations at IAD, or anywhere else for that matter. In fact, United’s media spokesman Joe Hopkins was quoted as saying yesterday the company has no current plan to close—or even make wholesale cuts—at IAD or any of their five hubs.



Among the other things that were brought up at the hearing yesterday, United reported that its operations at IAD, including the traffic that ACA flights generate, creates a great deal of profit for them. We don’t think it makes sense—especially in a bankruptcy situation—to do anything that would risk a loss of this critical revenue, but of course, the decision is entirely United’s to make.



Q: What is your message to ACA employees in light of everything that’s happening right now?

A: You will likely continue to see lots of media stories speculating about the chances of UAL's survival, and that means we are not immune from their situation, even though our operation still seems like “business as usual” today.



We are going to need to depend on the resources and support of all our employees as we move forward. Although we are not in a position to know exactly what we may need at this point—based on how United’s situation will ultimately be resolved—we do know we will need to work together cooperatively to overcome the obstacles that we are now anticipating.



At the risk of repeating the things we’ve said all along, our job remains exactly the same. We need to continue to run our operations—for both United and Delta—at the peak of our abilities. We need to be prudent about costs at every turn so that we will be in the best competitive position against other regional operators who would like to grow the way we’ve been able to in the past. And we need to “control the things we can control”. The employees of ACA have faced challenges before and we will again have to partner together to assure a future for ACA.



If you have any specific questions about any of these recent developments, let us know by sending an email to [email protected]. We will make sure to get you all the information you need. ACA’s new communications website “ACAWay.com” will be online starting tomorrow—to provide you with all the information you need about what’s happening with our company. Look for information about how you can log in and see ACA news and information as it comes out—in real time—every day.