Holly Hegeman names GECAS as the Sugardaddy behind AWA/UAIR

[lowecur]

She calls GECAS the patron saint for failed airlines. With over 120 a/c leased to UAIR and 60 to AWA, Hegeman states the two airlines are in serious discussion about a proposed merger with GECAS as the moneyman.

If this deal goes through, this would be a serious blow to Delta where GECAS has only 30 a/c leased. In the previous deal with DL, GECAS lent them money but the deal had many caveats including a pact that DL take on lots more RJs if lets say FLYi went bankrupt. GECAS is well protected in their $500M deal with DL per the following senior collateral protection: The financing would be secured by a portion of Delta’s accounts receivable, aircraft, real property, spare parts, flight simulators, ground equipment, landing slots and international routes and a pledge of stock of subsidiaries and other investments. The current market value and orderly liquidation value of this collateral are preliminarily estimated to be approximately $3.5 billion and $2.2 billion, respectively.

An AWA/UAIR deal would require at least $1.5B to make it viable for a few years. If GECAS puts up the money, my guess is DL and FLYi could be left on the vine by the end of the year.

 

[FlyBoeingJets]

Whatever the ramifications of this proposed merger, problems for DAL, merely a delayed USAir liquidation, etc., you know GECAS is looking at one thing. They want to keep their overall lease rates high and keep the leases at AWA and USAir generating revenue.

GECAS will make a calculation of money to be made on leases vs. cost of the deal. Less consideration will be given to the value of the equity they acquire.

I'm sure GECAS is looking to help, guide and acquire an interest in carriers with a good many leases. Other carriers will be not be on that list. I would not call it a conspiracy, but GECAS is doing a great job of planning out their future and ours.

 

[Redtailer]

Hegeman states the two airlines are in serious discussion about a proposed merger with GECAS as the moneyman.

I would take this with a grain of salt. This is coming from the same woman that stated with complete certainty that NW 70 scope releif was a done deal and the 70 seaters were on the way to XJ or 9E.

Laughable at best.

 

[crashpad]

Well, somebodys' going to merge someday, but 'who' is the million dollar question.

 

[lowecur]

I would take this with a grain of salt. This is coming from the same woman that stated with complete certainty that NW 70 scope releif was a done deal and the 70 seaters were on the way to XJ or 9E.

Laughable at best.

She "nailed" the SWA/ATAH deal before it hit the press. Not a sure thing, but these are two airlines that fit together very nicely and have their unilateral umbilical cords attached to GECAS.

 

[General Lee]

DL has many other parties interested in its continued flying. AMEX, GE, every Skyteam member, local governments, 50,000 employees, etc. Most of your predictions have come up short so far Lowecur. I thought you initially said USAir was going to be gone 2 years ago? This business changes by the minute... Now go back to promoting GEICO's newest policy---you have people waiting....



Bye Bye--General Lee

 

[TWA Dude]

It takes more than just billions of sugar-daddy bucks to make a merger work. It takes great leaders who can convince disgruntled employees that it's the best thing for them (whether it is or isn't). An impossible task, IMHO.

 

[lowecur]

It takes more than just billions of sugar-daddy bucks to make a merger work. It takes great leaders who can convince disgruntled employees that it's the best thing for them (whether it is or isn't). An impossible task, IMHO.

Doug Parker is an excellent leader, and would be GECAS choice to lead the new consolidated airlines.

 

[BeCareful!]

It takes more than just billions of sugar-daddy bucks to make a merger work. It takes great leaders who can convince disgruntled employees that it's the best thing for them (whether it is or isn't). An impossible task, IMHO.

Nonsense. All the leadership we need can be simply stated: Bruce Lakefield

 

[General Lee]

Leo Mullin would be available to run your new airline into the ground. And, he could get Fred Greed back from Virgin America for a chunk of stock options.....(He loves the fact that you guys use soooo many RJs....)


Bye Bye--General Lee

 

[lowecur]

DL has many other parties interested in its continued flying. AMEX, GE, every Skyteam member, local governments, 50,000 employees, etc. Most of your predictions have come up short so far Lowecur. I thought you initially said USAir was going to be gone 2 years ago? This business changes by the minute... Now go back to promoting GEICO's newest policy---you have people waiting....



Bye Bye--General Lee

A good analcyst is fluid GL. Don't count on GE to be there for you guys if this deal goes through. 30 leased a/c just ain't gonna cut it. The $500M collateralized senior secured loan was just to prop you guys up long enough for them to make a choice on where their support would finally settle. For GECAS to settle on this deal without any real collateral says much as to what they believe the future of DL will be.

If this deal goes through, DL will be scrambling to find an investor. Could be the State of GA, as they have the biggest vested interest, but I doubt the taxpayers would bite. It is going to be an interesting year for this business.

 

[General Lee]

I am soooo glad you know exactly what will happen and the exact relationship DL and GE have. God bless America.....? Good guesses, though.



Bye Bye--General Lee

 

[TWA Dude]

Doug Parker is an excellent leader, and would be GECAS choice to lead the new consolidated airlines.

Doug has improved this airline considerably but if you asked most employees here you wouldn't hear "excellent leader" said very much. USAir employeess would be the one's needing the most cajoling anyway.

 

[Flying the Line]

General Electric is under attack for unnecessarily propping up financially shaky airlines.

The conglomerate is one of the world's largest makers of aircraft engines and providers of engine-maintenance services. Through its lucrative airline-leasing company, it also owns more than 1,300 airplanes, and has more than $10 billion in orders for new aircraft, The Wall Street Journal points out.
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The paper also notes that GE has business dealings with more than 200 airlines throughout the world and has about $33 billion of loans and leases to the industry.

GE also has played a big role in helping to keep alive financially troubled carriers. Examples: GE provided bankruptcy financing to United Airlines and came up with a $700 million loan to Air Canada when the carrier was in bankruptcy proceedings. GE has also helped out America West Airlines, Delta Air Lines, Independence Air, and US Airways Group Inc., according to the paper.

Critics say these kinds of activities have helped to keep a number of airlines aloft and blocked the natural evolution of the industry’s consolidation. A shakeout, they think, would boost survivors by enabling them to raise fares.

Mike Ristow, a pilot who serves on the board of directors of Northwest Airlines, told the paper, "There are a large number of aircraft that probably shouldn't be in this industry, but GE has allowed them to keep flying. It's capitalism, but is it realistic? This is a threat to our recovery."

Joe Leonard, chief executive at AirTran Holdings Inc.'s AirTran Airways, reportedly said last week in a speech that the industry's problems stem in large part from federal subsidies, overreliance on the U.S. bankruptcy code and "some key lessors and suppliers [who] are cutting deals to help keep their airline clients flying."

"There are too many seats in the market," he told The Journal in an interview. "The question is, whose seats should come out? It should be the weaker carriers. By propping them up, you're hurting the balance sheets of the stronger carriers."

In response, GE told the paper that its actions better serve its shareholders and customers and that it’s simply trying to make money in a volatile industry. "We're not the strategic arbiters of the airline industry," Henry Hubschman, chief executive at GE Capital Aviation Services (GECAS), told the paper. "We're mindful of the fact that, if one part of the world is crying out for aircraft and one part of the world has excess capacity, we look at that and that weighs on us."

Other critics have blamed the mere existence of the Pension Benefit Guarantee Corporation (PBGC) and its mandate to bail out shaky defined-benefit pension plans for enabling ailing airlines to off-load these obligations so that they can stay in business.

Experts also point out that other financial powerhouses have provided some sort of financing to the airline industry, including American Express Co., Ranch Capital LLC, and Airbus.

But Laura Wright, chief financial officer of Southwest Airlines, one of the only airlines to consistently report a profit, told The Journal her company is being harmed by "the capital coming into the market to keep some of the weaker players afloat." As a result, she claims Southwest must "do a lot more discounting.”

 

[bigtexpilot]

Not to be to self-centered. Ok maybe I am. I'm worried about being on the street if this deal goes through. Wouldn't that mean all of the furloughed uair pilots wouild be called back, immediately followed by furlough of lower seniority hp pilots. That is assuming that most of the uair pilots on furlough would go into the seniority list above me.

 

[FDJ2]

A good analcyst is fluid GL. Don't count on GE to be there for you guys if this deal goes through. 30 leased a/c just ain't gonna cut it.

Lowecur, how about those GE engines? Any idea how many GE engines DAL has?

 

[xanderman]

woops!

Not to be to self-centered. Ok maybe I am. I'm worried about being on the street if this deal goes through. Wouldn't that mean all of the furloughed uair pilots wouild be called back, immediately followed by furlough of lower seniority hp pilots. That is assuming that most of the uair pilots on furlough would go into the seniority list above me.

And here we have the can-o-worms on display for your viewing pleasure folks...

 

[JetMonkey]

Not to be to self-centered. Ok maybe I am. I'm worried about being on the street if this deal goes through. Wouldn't that mean all of the furloughed uair pilots wouild be called back, immediately followed by furlough of lower seniority hp pilots. That is assuming that most of the uair pilots on furlough would go into the seniority list above me.

Do you really think that the HP Pilot group would let that happen? You would see an airline in total chaos before that would go through.

 

[Vikedog64]

A good analcyst is fluid GL. Don't count on GE to be there for you guys if this deal goes through. 30 leased a/c just ain't gonna cut it. The $500M collateralized senior secured loan was just to prop you guys up long enough for them to make a choice on where their support would finally settle. For GECAS to settle on this deal without any real collateral says much as to what they believe the future of DL will be.

If this deal goes through, DL will be scrambling to find an investor. Could be the State of GA, as they have the biggest vested interest, but I doubt the taxpayers would bite. It is going to be an interesting year for this business.

I do agree with you on one thing..Financing could get tighter for everyone in the future and I do believe the state of georgia would step in with financing..much like minnesota did with NW some years ago. I think it was a maint. hangar in Duluth.

 

[lowecur]

Lowecur, how about those GE engines? Any idea how many GE engines DAL has?

No, but I do know they have leins against most of the spare parts. The planes have to go somewhere, and I'm sure GE will be there to sell them parts.