Follow the Money--USAir and America West

[FlyBoeingJets]

"Executives boasted that the combined airline would be one of the industry's strongest with about $10 billion in annual revenue and $2 billion in cash. The deal would save the combined airline about $600 million, the executives said.

Most of the financing came from outside investors. Investment firms including ACE Aviation Holdings, parent company of Air Canada; Boston-based PAR Investment Partners; Virginia-based Peninsula Investment Partners; and Eastshore Aviation Holdings, which is owned by Air Wisconsin Airlines Corp. and shareholders, contributed $350 million. European aircraft manufacturer Airbus invested $250 million in exchange for the airline becoming a launch customer of the upcoming Airbus A350.

The airlines also received $675 million through debt refinancing and other investments from credit card companies. Commitments of $425 million in additional cash came from "strategic partners and vendors," which the airlines did not identify.

America West shareholders would own 45 percent of the new airline, while the new investors would own 41 percent. US Airways' creditors would own about 14 percent.

The Retirement Systems of Alabama, which wrote off a $240 million investment in US Airways last year, plans no more investment -- for now -- in a proposed merger of the bankrupt airline with America West.

David Bronner, CEO of the state pension system, said RSA was asked to invest in the proposed merger, but he declined because RSA would not be given a big enough role in directing the new company.


"They just want your money and don't want you to have any control," Bronner said in an interview Friday with The Associated Press.

His position on investing could change, he said, if the pension fund were ever offered a significant role on the merged airline's board.

In the proposed merger, America West Holdings Corp. would get six seats on the board of directors, US Airways Group Inc. would have four, and three new investors would each get one seat.

"Normally the people who put in new money have the majority of the seats, which is what's unusual about this deal," Bronner said in the interview.

When US Airways made the first of two trips into bankruptcy its exit was sped along by a $240 million investment from Alabama's pension fund for state workers and education employees. At that point, the pension fund got the majority of seats on the airline's board and Bronner became chairman of the US Airways board.

Bronner remained as chairman when the airline made its second trip into bankruptcy last year, but the pension fund wrote off the $240 million investment as a loss.

Bronner said he will remain as chairman until US Airways comes out of bankruptcy, but once that happens, RSA's role will be over except that it is still providing financing for two or three of the airline's planes.

RSA's $240 million investment in US Airways represented 1 percent of the pension system's total investments.

Looking back on the deal, Bronner said it paid benefits because it allowed Alabama officials to meet executives of France-based EADS, parent company of European aircraft maker Airbus, and helped get Mobile on EADS's list of four finalists for an aircraft plant. When RSA invested in US Airways, the airline started offering ticket discounts to state workers and education employees, and the Alabama Bureau of Tourism and Travel designated US Airways as "The Official Airline of Alabama Tourism." Bronner said Friday it is too early to say what will happen to those relationships."



Boy did Bonner and the RSA lose out. He was too early. Looks like the other creditors took a beating with only 14% of the merger. The trend to cut costs will continue in order to attract this kind of money.


I'm thinking Delta will be fighting a tough battle if they don't go to BK to erase some debt.

 

[AlbieF15]

Wow. This management team found a way to not only rake over its own crew force and rob them of retirement plans, but managed to nail a whole state's public servants along the way. Now they'll spread their brand of management across the Mississippi and likely hurt some AWA folks.

I try to stay detached, but the business laws that allow a DEAD company to rob from its own employees and continue to stay in business seem to be failing somehow. Maybe the DOT will allow it if only to try to find a way to stick Airbus industries in the eye with some future bad debts.

Understand this isn't personal against US Air folks--many who I consider the victims of this managements wrath. I just am amazed at how much damange this company which hasn't been profitable in YEARS has been able to do to others in the industry.

 

[General Lee]

I'm thinking Delta will be fighting a tough battle if they don't go to BK to erase some debt.




Well, wouldn't that be a reason to go to court? I bet it would. Also, the pension would be gone too. Analysts stated yesterday that there is a good chance Delta has warded off Chap 11 for another year, and the longer we stay away, the more time our initiatives have to become reality and come to fruition. But, we do have some daunting bills coming up, and going to the courthouse may be the only way to deal with those. I am sure our management has some sort of plan in place, and maybe a plan B also.


Bye Bye--General Lee (read the quote below)

 

[IB6 UB9]

I am sure our management has some sort of plan in place, and maybe a plan B also.

You are sure...or you hope? You seem to have stroked a lot of characters bleating like a sheep about some plan that you and I are both yet to see. What's the hold up...l want to see the plan!

 

[Mugs]

Wow. This management team found a way to not only rake over its own crew force and rob them of retirement plans, but managed to nail a whole state's public servants along the way. Now they'll spread their brand of management across the Mississippi and likely hurt some AWA folks.

I try to stay detached, but the business laws that allow a DEAD company to rob from its own employees and continue to stay in business seem to be failing somehow. Maybe the DOT will allow it if only to try to find a way to stick Airbus industries in the eye with some future bad debts.

Understand this isn't personal against US Air folks--many who I consider the victims of this managements wrath. I just am amazed at how much damange this company which hasn't been profitable in YEARS has been able to do to others in the industry.

Who really robbed them of their retirements Albie? Management or the new marketplace? When every one of the legacy employees lose their defined benefit plans, will the managements have stole them all or will the marketplace have taken them away?

Maybe the "business laws" that you find unfair should then dictate that every entrant into this industry offer a generous and expensive retirement plan. Obviously, that is pure fantasy and has not been the case. Afterall, in order to change the marketplace you have to beat up the competition. The most important weapon in doing so is a cost advantage which means, ooops!, no generous pension plans (among other things) for the employees.

So who has damaged what? Sounds to me like you are leaving the new entrants out of the equation here. Yet, you simply assign the "damage being done" to the old carrier that at the very least did for many years offer a good retirement plan to its employees. Sometimes one type of damage creates another, and that is what we have now.

 

[General Lee]

You are sure...or you hope? You seem to have stroked a lot of characters bleating like a sheep about some plan that you and I are both yet to see. What's the hold up...l want to see the plan!

Well, have you not seen our huge pay cuts? Oh, that's right, you are too busy $crewing your future new hires with the E190 rates. You don't care, you're on the bus. Who cares then, right? We have huge initiatives to cut costs, HUGE. We are on OUR WAY to saving $5 billion a year, which is huge for an airline 5 times the size of your airline. But, high fuel hasn't helped. We will probably take more cuts if that makes you feel better. Grinstein says now he wants another $1 billion in savings, and the lack of unions at Delta (compared to other airlines) will help him achieve that. IF we can save $5 billion a year, I bet some of that could go to paying off the huge debts. I don't know, but they seem to keep telling everyone they are planning not to fail. Do I HOPE THEY ARE RIGHT? YOU BET. It's tough when you have huge pension payments to people who have already retired. My Defined Benefit plan was scrapped, and so was my pay and some work rules. Don't tell me you can't see anything that has changed, you don't even see what is happening in your own backyard. But don't worry, you're on the bus. You will probably never have to fly the E190. Who cares, right? We have furloughed how many people? Did you know that we have let go of a lot of people? Did you know that we changed our whole ATL hub to more efficient turn times that have really helped with congestion and lowered our fuel bills due to the shorter takeoff lines. Did you know we helped institute new RNAV departures out of ATL that save a lot of fuel(and helps Airtran too)? Did you know that we closed a hub that wasn't doing well? (DFW) We are expanding Song to compete with B6, and starting new Song service from JFK to LAX, SFO, SEA, Aruba, and SJU. How about you ask me that question again.....


Bye Bye--General Lee

 

[ivauir]

Who really robbed them of their retirements Albie? Management or the new marketplace? When every one of the legacy employees lose their defined benefit plans, will the managements have stole them all or will the marketplace have taken them away?

I know I'm too naive or simplistic to really understand all this fancy manegment talk. Heck until 6 short months ago I was just a caveman frozen in the ice. Now I've been thawed out and put in the right seat of a jet. I don't know much. I don't know this Chapter 11, or 7 or what FMC stands for, but I do know one thing: your word ought to be binding. These companies that promise something and then take it away should have been forced to liquidate before breaking that promise. I'd be hellasorry for the lose of jobs, but they shouldn't be able to rob the good folks who have provided for so long just to keep the doors open another 8 months.

But what do I know my knuckles drag when I try to walk errect.

 

[Cardinal]

ivauir, despite dragging his knuckels, has it figured out. The government allowed, even aided an egregious act that then became the market standard. If mom let's one kid get away with disobedience, and suddenly all the children are running wild, whose fault is it? The mom that set a precedent or the kids that are simply taking advantage of their new found freedom?

At least their gonna make any remaining UAIR management move to Tempe. That oughtta cull the ranks of the thieves.

 

[Boeingman]

Ivair is right on. These companies who are terminating their pensions should be mandated to fund their obligations by liquidating some of their assets to pay these retirement debts.

 

[Boeingman]

That oughtta cull the ranks of the thieves.

But not their pocket books. Just wait and see the bonus and golden parachutes handed out over this one. It already started with U asking the bankruptcy judge for a $55 million "rentention" payout. As usual, the unions do nothing of substance. Impotence at it's best.

I noticed that no one has mentioned that U already tried and failed at having a Western presence by buying and then dismanteling PSA. What has substantially changed since the lack of a central US hub was the reason U abandoned this strategy of a Western based carrier?

 

[Mugs]

I know I'm too naive or simplistic to really understand all this fancy manegment talk. Heck until 6 short months ago I was just a caveman frozen in the ice. Now I've been thawed out and put in the right seat of a jet. I don't know much. I don't know this Chapter 11, or 7 or what FMC stands for, but I do know one thing: your word ought to be binding. These companies that promise something and then take it away should have been forced to liquidate before breaking that promise. I'd be hellasorry for the lose of jobs, but they shouldn't be able to rob the good folks who have provided for so long just to keep the doors open another 8 months.

But what do I know my knuckles drag when I try to walk errect.

Can you think of a single liquidation that generated enough cash to fund the outstanding retirement obligations? Maybe it has happened, I don't know. I doubt shutting USAir down and selling it off three years ago would have changed the outcome as far as the defined benefit plans there are concerned.

 

[Airbusnut1]

Hey General,
What's this with the "we" $hit

I don't see your name on the board of Delta, making decisions on what to do.
Just ramblings here on these threads.
Go back to flying your airplane, and don't be holier than thou and your USAir brothers.

 

[Airbusnut1]

And General,

Was that you who taxied the 777 into the jetway in LGW yesterday.

Nice going Ace

 

[AAflyer]

And General,

Was that you who taxied the 777 into the jetway in LGW yesterday.

Nice going Ace

He flies the 767 you nimrod.. Not a very professional post.

AAflyer

P.S.It is an A320, what the heck is an AB320, is that the new flight simulator you command in your basement.

 

[DaveGriffin]

I believe GL is a 757-200 FO.

Though he supports all the DALPA predatory practices against its junior pilots, I’ll bet even GL doesn’t support the idea of a ‘nuclear option’ to force mandatory liquidation of assets in a BK to fund the massive shortfalls in defined benefits plans.

That REALLY scr*ws the junior guys, as well as nearly everyone else who isn’t close to retirement.

 

[General Lee]

And General,

Was that you who taxied the 777 into the jetway in LGW yesterday.

Nice going Ace

Yeah, that was me. I am now a 777 Captain...... Yeah, ok ACE. Did you fly that airbus into the trees? Nice going RETARD. The AB-320? Is that the new designator? Air Berlin A320? They are getting some you know. Airbus---AB. Oh, ok. I fly the BO-757 and BO-767.


Bye Bye--General Lee

 

[General Lee]

I believe GL is a 757-200 FO.

Though he supports all the DALPA predatory practices against its junior pilots, I’ll bet even GL doesn’t support the idea of a ‘nuclear option’ to force mandatory liquidation of assets in a BK to fund the massive shortfalls in defined benefits plans.

That REALLY scr*ws the junior guys, as well as nearly everyone else who isn’t close to retirement.

Dave,

Did you ever really fly at DL? If you did, you would know that we on the 75/76 fly all types---the 757, 767-200, 767-300, 767-300ER (4 different overhead panels, 4 different airplanes)----not just the 757-200. You really worded that wrong. Hmmmm. Would I support the "nuclear option"? No way. Most of the guys left with at least half of their retirement, which is still better than none. As far as the junior guys-----we still have 1100 pilots that are over 50 and can leave and take the lump sum. After that we will have about 5900 pilots left. I say 5900 is the majority, and we can't leave with the lump sum. The Nuclear Option would be preferred, by the majority. Sad but true. There are also 40,000 other people who would like to keep their jobs too, by the way.


Bye Bye--General Lee

 

[DaveGriffin]

Dave,

Did you ever really fly at DL? If you did, you would know that we on the 75/76 fly all types---the 757, 767-200, 767-300, 767-300ER (4 different overhead panels, 4 different airplanes)----not just the 757-200. You really worded that wrong. Hmmmm. Would I support the "nuclear option"? No way. Most of the guys left with at least half of their retirement, which is still better than none. As far as the junior guys-----we still have 1100 pilots that are over 50 and can leave and take the lump sum. After that we will have about 5900 pilots left. I say 5900 is the majority, and we can't leave with the lump sum. The Nuclear Option would be preferred, by the majority. Sad but true. There are also 40,000 other people who would like to keep their jobs too, by the way.
Bye Bye--General Lee

So GL;
Which airplane do you spend the most time in each month?

 

[General Lee]

So GL;
Which airplane do you spend the most time in each month?

Well Dave,

It depends on which turn I get or the type of trip. If I get STT (St Thomas) I fly the 757. If I get SJU (San Juan) I get the 767-300 or 767-200. If I get 3 or 4 day trips, it is all mixed up. When I did ANC nonstop from ATL last year I flew the 767-300. It changes.


Bye Bye--General Lee

 

[FlyBoeingJets]

Ivair is right on. These companies who are terminating their pensions should be mandated to fund their obligations by liquidating some of their assets to pay these retirement debts.

Ahh...the strength of our capitalist society. Praise the entrepeneur and fresh, vibrant companies. Out with the old, in with the new. In case you didn't catch the sarcasm, I wish people would stop hiding behind these seemingly positive catch phrases. If you want to keep the worker on edge, uptight and kill their livelihood, say so. Don't beat around the bush.

These are axioms best not forgotten...

Knowledge is power
Upward mobility also means downward mobility.
Globalization means jobs leaving a higher standard of living country.
Immigrants want your job.
The Smart (i.e. rich) use the law to their advantage.
There is no substitute for integrity.


And what are Business Ethics?? Are they different than what everyone else calls eithics?

 

[wndshr]

GL question??

question for GL


is there a majority of furloughees that are bypassing recall? somebody said that DAL was recalling at least two..maybe 3 to get 1?

 

[ivauir]

Can you think of a single liquidation that generated enough cash to fund the outstanding retirement obligations? Maybe it has happened, I don't know. I doubt shutting USAir down and selling it off three years ago would have changed the outcome as far as the defined benefit plans there are concerned.

Of course I cannot think of such an example; the law is structured so that the golden parachute crowd may raid/missmanage and underfund the pension plans willy-nilly. They are allowed to run a company into the ground with no thoughts as to long term viabiility, make promises (with no intention of keeping them), and borrow money they'll NEVER pay back. Then when their house of cards comes crashing down they declare BK, take their 4.5 MILLION bonus for less than two years of "work" nd leave the working stiffs with nothing. Maybe USAIR would have to liquidate long ago to meet their pension obligations, I don't know ... but I know what the word "obligation" means.

You've argued that it is the marketplace that has brought them down, but I contend that it is their manegment's inability to adapt to this marketplace that has brought them down. What gauls me is that our laws are structured to allow them to limp along sucking money out of anything in a hundered mile radius. I think the only winners here are the manegment guys.

My point is simply that this is wrong. I know I am tilting at windmills; it is the way the world works, but that doesn't make it right.
Yes, I know junior guys would suffer in the resulting liquidation; but in the grand scheme of things I'd rather be unemployed at 35 (BTW I was unemployed at 35 with a wife and and 2 kids) then lose my pension at 55.

 

[General Lee]

question for GL


is there a majority of furloughees that are bypassing recall? somebody said that DAL was recalling at least two..maybe 3 to get 1?

That may be true. The bottom guys on the list have been out the longest, and probably got another job. 400 were furloughed on Novemeber 1st, 2001. That will be 4 years this November. Most have moved on I am sure.


Bye Bye--General Lee

 

[Mugs]

Ivauir,

It is the marketplace ultimately. Ever wonder why nobody is going to come out of this with a defined benefit pension plan? You can argue about incompetent management all you want. However, the fact is that the market no longer supports that type of benefit. Very few defined benefit plans have been started in the last 20 years, and many have been terminated. I guess it is easy to forget how difficult it is to adapt to the new market realities when you don't have such obligations built in to your structure to begin with. It is easy to yell about someone else not covering an obligation when you don't have such an obligation yourself. I find it ironic when those that work for companies that never had the large expenses associated with offereing such a benefit to decades of employees point fingers at the failings of those companies that did. I am not defending the management of U, UAL, or any of the other basket cases. However, suggesting that they somehow could have adapted to the new marketplace while maintaining the benefits of the old marketplace is ridiculous. The bar, unfortunately, has been reset. Even if the weaklings had shutdown 3 years ago, it is obvious what type of competition would have moved in to fill their shoes.

 

[ivauir]

... suggesting that they somehow could have adapted to the new marketplace while maintaining the benefits of the old marketplace is ridiculous...

Thusfar they've failed to adapt to the new market place AND failed to meet their obligations. I guess what we disagree on is the method used to adapt.

Peace