AmWest, USAirways Decision Soon?

[storminpilot]

http://www.azcentral.com/business/articles/0503amwest03.html

AmWest, US Air decision expected


Dawn Gilbertson
The Arizona Republic
May. 3, 2005 12:00 AM

Will April talks bring a May merger?

That's the $500 million question in the airline industry as Tempe-based America West Airlines and US Airways feverishly work on a deal that will somehow join the carriers.


No one from America West or US Airways is commenting - except to say the two sides are still talking - but some industry observers believe any announcement will come sooner rather than later.

A source involved in US Airways' bankruptcy case said the goal has been to reach an agreement as early as this week. Whether that's achievable is unclear.

Mesa Air Group CEO Jonathan Ornstein, whose Phoenix-based company is weighing an investment to help US Airways get out of bankruptcy, said things appear to be moving quickly.

He would not say whether Mesa, which gets more than 70 percent of its revenue flying regional flights for the two carriers, has decided to invest.

"I imagine that this will all be resolved in the not-too-distant future," he said.

Bear Stearns airline analyst David Strine said in a report last week that it believes the two carriers are on an accelerated timetable in part because of US Airways' urgency to file a reorganization plan.

The airline's largest creditor, General Electric's aircraft leasing arm, had given it until Saturday to file a plan. Such a plan details how a company will repay creditors and reorganize its finances to emerge from Chapter 11.

That deadline passed without any filing over the weekend. No new deadline has been set, at least publicly.

"We are talking with GE about the timing for filing our plan of reorganization," US Airways spokesman David Castelveter said Monday.

In a hotline message to employees Friday, US Airways CEO Bruce Lakefield said the two carriers are still in discussions.

"We continue talking with America West about a potential strategic transaction," he said.

He added, "I am optimistic about our future and I'm even more optimistic in the role you will play in that future."

The big unknowns are what any transaction will look like, and who the money behind it will be. America West has said it doesn't have the cash to pull off such a deal, and US Airways certainly doesn't. So they have been scouting for outside investors.

A host of potential investors have been mentioned including GE, Retirement Systems of Alabama, Mesa, Air Canada, and Lufthansa. Investment groups like Texas Pacific and other big-money bargain-hunters also have been mentioned. TPG has a controlling interest in America West and previously tried to buy US Airways during its first trip through bankruptcy court. It was trumped by Retirement Systems of Alabama, a state pension fund whose CEO is now US Airways' chairman.

As for what any deal might look like, there are so many uncertainties that Strine laid out four possible scenarios in his report last week.

They were, from most to least complex: an outright combination, like American and TWA; formation of a new holding company, like Air France and KLM; a joint venture, like Northwest and KLM; or a code-share agreement, like United Airlines and US Airways and Southwest Airlines and ATA.

Of course, there is a chance that no agreement will be reached. America West made a high-profile run at ATA's assets last year, but never submitted a bid because it couldn't make the deal work financially.
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[Formula1]

I hope this deal gets hashed out sooner than later as well, those of us in the pool at AWA are patiently wondering if we will be able to come to work there or if we are just going to get flushed out of the pool because of a merger!

I am assuming that if nothing happens then AWA might start running classes again very soon, but then there is always the next merger talks with xyz airlines(fill in the blank). Oh well.

Patiently waiting.

 

[TWA Dude]

Formula1: It's good that you're able to wait patiently but untill you actually start class I'd recommend keeping the broader job search going. Should this thing come to pass they'll be immediately reducing capacity.

And BTW, just because a "deal" is announced doesn't mean it'll happen, a la UA-US a few years ago. A lot of entities, not the least of which all the unions, must come together to allow this to happen. I'm not saying it can't but I remain skeptical.

 

[blzr]

Does anyone know if Vegas has odds on this merger, and if so, what would it be?

 

[Wiskey Driver]

Formula1: It's good that you're able to wait patiently but untill you actually start class I'd recommend keeping the broader job search going. Should this thing come to pass they'll be immediately reducing capacity.

And BTW, just because a "deal" is announced doesn't mean it'll happen, a la UA-US a few years ago. A lot of entities, not the least of which all the unions, must come together to allow this to happen. I'm not saying it can't but I remain skeptical.

That's sound advice. There have been statements made about reduction of a/c if the deal goes forward. The money man or woman in this is GECAL and they are not going to allow the a/c they are financing to take desert naps!! I think that it just may happen this time around. I don't know which is more fun this industry or playing blackjack on my LAS and RNO overnights, it's all a gamble...

WD.

 

[crashpad]

I think the union is the least of which will be a factor in whether this comes together.

 

[Tomct]

Well, for AWA's sake, I hope it does not go through! There will be a lot of unhappy people at AWA if this happens. I believe the most junior guy at US right now is like 18-20 years. AN FO!!
Bad JU JU my friends!

 

[Formula1]

Yes, and I believe there are aproximately 1900 pilots on furlough from US AIR- that would not be good. Although I am sure alot of the furloughed US Air guys and gals are probably already working somewhere else- including some already at AWA, Jet Blue, Air Tran, and various others or they have given up on the whole aviation scene altogether.

 

[satpak77]

I don't see this happening. There are like 5 parties that need to "sign off" on this deal.

I think US Airways will die before this deal comes to reality.

 

[LearLove]

Yes, and I believe there are aproximately 1900 pilots on furlough from US AIR- that would not be good. Although I am sure alot of the furloughed US Air guys and gals are probably already working somewhere else- including some already at AWA, Jet Blue, Air Tran, and various others or they have given up on the whole aviation scene altogether.

not that it makes a diff but....

With resignations and retirements the number is down to 1500 and change as posted by U MEC on the code-a-phone. Guess that means they are taking the resignations of guys going to JB and other places for real. Usually these are tucked in a desk and tossed aside when/if recalls happen, however this information is from the union be it though from a senority list published by the CP's office.

Take it for what its worth...

 

[B6Busdriver]

not that it makes a diff but....

With resignations and retirements the number is down to 1500 and change as posted by U MEC on the code-a-phone. Guess that means they are taking the resignations of guys going to JB and other places for real. Usually these are tucked in a desk and tossed aside when/if recalls happen, however this information is from the union be it though from a senority list published by the CP's office.

Take it for what its worth...

JetBlue doesn't require one to resign their seniority. For what it's worth I've heard there is upwards of 300 U furloughees at JB.

 

[Formula1]

The guys from US Air that are currently at Jet Blue would probably not want to leave there to come back to US Air. I think that is one of the main reasons that Jet Blue does not make you resign your seniority at your previous employer.

All if not most of those guys are all Captains now at Jet Blue and have a bright future ahead (brighter than most anyways) to look foreward to- a growing airline vs. a shrinking airline.

 

[Wiskey Driver]

Yes, and I believe there are aproximately 1900 pilots on furlough from US AIR- that would not be good. Although I am sure alot of the furloughed US Air guys and gals are probably already working somewhere else- including some already at AWA, Jet Blue, Air Tran, and various others or they have given up on the whole aviation scene altogether.

The sad part for them is that in the last USAirways contract they signed away their rights in fragmentation so those on furlough will remain on furlough.

WD.

 

[xanderman]

The sad part for them is that in the last USAirways contract they signed away their rights in fragmentation so those on furlough will remain on furlough.

WD.

Do you know this to be a fact Wiskey? Being a junior F/O at AWA you can understand my interest...
Andy

 

[PositiveRate]

so what is the realistic outlook for us AWA newbies? should i be losing sleep?

 

[UALjan15]

PR,

I know it's hard, and I'm not so good at it myself, but stop paying attention to the "tabloids" that are predicting any number of unfounded scenarios. Fly your bus, keep your logbook current, float apps if you want, and as every Cactus pilot seems to have figured out--have a backup plan outside of aviation. Do these things and you'll sleep better.

DR
3111

 

[FDJ2]

The sad part for them is that in the last USAirways contract they signed away their rights in fragmentation so those on furlough will remain on furlough.

WD.

Whiskey, specifically what fragmentation rights were signed away? That's a bit of a broad statement. Aren't the furloughed U pilots still ALPA pilots with U seniority numbers and recall rights?

 

[B6Busdriver]

so what is the realistic outlook for us AWA newbies? should i be losing sleep?

Don't lose sleep about things you can't control.

 

[BeCareful!]

Whiskey, specifically what fragmentation rights were signed away? That's a bit of a broad statement. Aren't the furloughed U pilots still ALPA pilots with U seniority numbers and recall rights?

Actually, FDJ2, it even worse than that. Furloughed U pilots are reportedly going to have to pay back dues to ALPA and restitution to the company for allowing them to refer to themselves as "Furloughed U Pilots" since 2002. Wiskey Driver is right, and not only that, Air Wisconsin pilots are going to jump ahead on the APL and reside above all the former mainline pilots.
And that's just the beginning. Since it's obvious to anyone on this baord that regionals are where the real profits are being made, what's being discussed is a seniority integration based on how well your airline does financially. What they are going to do is take a "snapshot" and place everyone where they choose. This should allow an AWA 737 captain to immediatly bid the 767, and an Air Wisconsin CRJ FO to move into the A330 right seat as a line holder. The only real fences are reportedly going to keep the furloughed U pilot out of the picture permanently, just as Wiskey Driver alluded to.

Hey, man, don't shoot the messenger; this is the new ALPA. Merger policy is a moving target, and everyone knows that pilots at airlines where good management resides are: (1) better pilots, (2) more deserving, and (3) better able to utilize weekends and early summer vacations with their children.

 

[TWA Dude]

so what is the realistic outlook for us AWA newbies? should i be losing sleep?

Once on a TWA trip I was flying with our MEC sec/treas. I said to him, "I just wish I could wake up in the morning and not have to worry about looking for another job." His response was, "You get used to it."
You're asking a question nobody here can possibly answer and opinions are just that. I just hit the one-year mark and I'm not losing any sleep over this. My eyes are wide open but I've been through it before so I know I'm better off being well-rested.

 

[Wiskey Driver]

Do you know this to be a fact Wiskey? Being a junior F/O at AWA you can understand my interest...
Andy

Yes!!!!! LOA 93

 

[Wiskey Driver]

so what is the realistic outlook for us AWA newbies? should i be losing sleep?

Well PR that's one that no one can really answer... This business is the same as gambling sometimes you win sometimes you lose.

WD.

 

[Twotter76]

Air Wisconsin pilots are going to jump ahead on the APL and reside above all the former mainline pilots.

This should allow an AWA 737 captain to immediatly bid the 767, and an Air Wisconsin CRJ FO to move into the A330 right seat as a line holder. The only real fences are reportedly going to keep the furloughed U pilot out of the picture permanently, just as Wiskey Driver alluded to.

Funny I work for Air Wis and they haven't even told us if our 70 options for placing aircraft are going to be used, much less what you are alluding to. I find it somewhat difficult to accept and don't want it anyway. Those guys have been screwed over enough without a scenario like you propose. We are as worried about the merger as the junior AWA guys I bet...

 

[BeCareful!]

Twotter76 -

I didn't think I would have to point out the sarcasm in my post....

Relax: you won't have to fly the A330 any time soon

 

[Wiskey Driver]

Funny I work for Air Wis and they haven't even told us if our 70 options for placing aircraft are going to be used, much less what you are alluding to. I find it somewhat difficult to accept and don't want it anyway. Those guys have been screwed over enough without a scenario like you propose. We are as worried about the merger as the junior AWA guys I bet...

Twotter, being one who worked for AWAC as well I wouldn't be telling you something new when I say that they NEVER told us anything until the eleventh hour. With that said I don't know about this other twist but make no mistake USAirways will not just lay down and say give it to me!!!! Nothing worse than a cornered individual, they will fight to the death...

WD.

 

[Soulfly]

It won't matter anyway's guys.

If AWA and Airways merge, it won't be long before the new entity will be out of business. While SWA sits on the sideline drinking a little Wild Turkey and watching the trainwreck unfold. Then they pick up the pieces they want while laughing all the way to the bank.

Replacing Airways management won't change the fact that the dark blue airplanes aren't making money.


What's that line in Top Gun about the truck driving school?

 

[ash5855]

so what is the realistic outlook for us AWA newbies? should i be losing sleep?

Hey P.R., All the advice thus far is pretty good advice. try not to worry about things you can't control. I, also a junior AWA pilot, am in the same boat as you. Unfortunately, I couldn't stop thinking about merger scenarios either.

This has lead me to do alot of research on ALPA merger policy. Particularly how it pertains to our possible merger.

First of all, ALPA merger policy has nothing to do with DOH. The underlying theme is to protect carreer expectations of the pilots and not create a windfall for one group at the expense of the other.

What are the career expaectations of a furloughed, junior, or even senior pilot at USair?
How about us?

I believe the worst case scenario for AWA pilots wouldn't be that bad at all.

The fair and equitable scenario would probably be an "Allegheny-Mohawk" type merger (the basis for current ALPA merger policy) in which "currently employed" pilots at each airline will be merged in such a way that all keep their relative seniority and seat. unfortunately for USair furloughees, they would remain furloughed.

Doing even further research into the possibilties of this merger I came to find out that ALPA merger policy may be all a moot point because a seniority list merger is really all about leverage. This is where things could get very interesting..

During one of their last round of concessions, USair pilots did give up some big rights with regards to merger and fragmentaion. LOA93..(in part)

Change in Control:

If the Company is under Chapter 11 bankruptcy protection during the
duration of this Agreement, ALPA agrees that the provisions of Sections 1
(C)3 and 1(D), as amended, and the provisions of Section 1(J)1 will not
apply with respect to any issuance of equity or redistribution of equity
associated with endeavoring to achieve, or achieving, a confirmed plan of
reorganization in such Chapter 11 case.

Here is the important contract section the LOA 93 eliminates:

1.C.3. In the event that the Company is merged with another airline, the
Company’s pilots shall, upon such merger, be provided labor protective
provisions no less favorable than those specified by the CAB in the
Allegheny-Mohawk merger.

This thing could end up a windfall.. and I don't mean for USair pilots..

 

[PositiveRate]

Thanks guys...I figure what's going to happen will happen, and I'm along for the ride at the moment. I'm just not all that worried right now, but it will be interesting to see how this all unfolds. Haven't lost any sleep yet. That can always change, of course.

PR

 

[Wiskey Driver]

It won't matter anyway's guys.

If AWA and Airways merge, it won't be long before the new entity will be out of business. While SWA sits on the sideline drinking a little Wild Turkey and watching the trainwreck unfold. Then they pick up the pieces they want while laughing all the way to the bank.

Replacing Airways management won't change the fact that the dark blue airplanes aren't making money.


What's that line in Top Gun about the truck driving school?

Well SF this is were you are wrong!! Airways east coast market especially the shuttle is very lucrative. NY, DC, PHL, BOS, just to name a few. That is the attractive part to all this. Poor mgt can mess up the best of things. USAirway was one of the carriers that came out of Dereg stomping!!!! The right MGT and correct operations COULD in fact hurt SWA in PHL and PITT. But again it's all spectulation...

WD.