If United files chapter 11...

[beats working]

What do you think will be the impact on the United Express carriers? For ACA, AirWis, and SkyWest I see good and bad possibilities.

Good: Relaxing or elimination of scope clause which will may mean more jets. Increased transfer of flying from mainline to cheaper RJs (at least for marginal routes). These would both mean more growth for the regionals.

Bad: All United ops (mainline and regionals) are hurt from negative public perception and competitors go in for the kill. In this cased the flying would go to American, Delta, and CAL instead of ACA, SkyWest, and AWAC.


Any thoughts???

 

[Rvrrat]

Little downside for the express carriers

SKYW is solid in its own right through route structure & market frequency. All of them could stand on their own.

Chapter 11 stigma is relatively short term in the memory of the public at large.

 

[Beechnut]

According to the Johnny O. over at Mesa: AirWis or SkyWest will lose their United contract because we're just to darn expensive. Mesa will swoop in and take over the Denver mountain cities with their Dash 8's. AirWis may even fold because we're a poorly run company and we lose money everytime an AirTran JetConnect airplane moves.

Of course, That's Mesa's take on it. So glad Johnny O. knows how to run AirWis better than our three guys.

S.

 

[Andy Neill]

Remember that even if United folds (a very unlikely scenario) there will be an awful lot of jets available for the Delta Connection sides of the SkyWest and ACA houses.

 

[Rottweiller]

Remember that even if United folds (a very unlikely scenario) there will be an awful lot of jets available for the Delta Connection sides of the SkyWest and ACA houses.

Maybe on Skywest's side but not for ACA. UAL pay the financing on the ACA RJ's so they would become UAL assets to be divided / sold etc if it went to chap 11. AirWis has only 7 registered to UAL all the rest (and future) are AirWis, bought and paid for by Airwis.

Agreed though, UAL going under? Not likely but hey the mechanics seem to want it that way!!

 

[throttlejockey]

A UAL bankcruptcy will allow UAL to renegotiate all of its current contracts - i.e. labor, aircraft leases, and vendor contracts. That includes the contracts with various regional carriers.

I have no doubt that UAL will ask the regional carriers for concessions. This will be very hard on the regional carriers since all of them operate on a "fee for departure" basis, which is essentially a "cost plus" deal.

If a UAL bankcruptcy was to dramatically change the face of the industry (as the USA Today Article said), UAL would ask its regionals to operate its jets on a "pro-rata" basis, forcing the regionals to take more of the risk in operating the equipment. If that happened, we would see a dramatic change in the places and the ways in which the RJ's would fly.

In the short term, I expect that there will be little change in the explosive growth of the current regionals at UAL post bankcruptcy filing.

However, in the long term (2 + Years) after the banckruptcy, I expect one or two of the regional carriers currently serving UAL, to have serious financial trouble, maybe one of them will be dimished and/or gone, and certainly UAL will have a new regional feed carrier or carriers operating for them in addition to what they have now.

my $.02

 

[Beechnut]

Gotta love the Financial guru/Pilot posts.

S.

 

[20sx]

I believe ACA does ALL its own financing for its jets.

 

[BlueRidger]

Rotweiler,
What hole did you pull that info out of about UAL owning ACA's planes. ACA leases the planes from a variety of lessors which provide the finanacing. Each and every plane is required to carry a placard of who the official owner is. Most of our planes say First Security Bank of Utah (yes ACA) not UAL. What you wrote is pure wishful thinking that ACA would go away and Air Wis can have all that flying.
Like SkyWest, ACA has a solid grasp of its primary market, ACA owns its own gates in IAD and most of its outstations. If UAL got rid of ACA's contract the company could stand on its own by developing the IAD market like they originally planned. Instead of taking over more Air Wis routes and stations out of ORD.

 

[BlueRidger]

Rottweiller wrote"Maybe on Skywest's side but not for ACA. UAL pay the financing on the ACA RJ's so they would become UAL assets to be divided / sold etc if it went to chap 11. "

Where did you get this from. ACA planes are leased from various sources. There are placards on each plane identifying the owner and lessor of these planes. I have not seen any that say "UAL" Most say "First Security Bank of Utah".
Second, even if a company like UAL were the lessor do you really think that the bankruptcy court would give up a constant and secured revenue stream. Further, what you are talking about is a Chapter 7 liquidation not Chapter 11 Bankruptcy. Engage your brain before operating the keyboard with malicious rumors.

 

[BlueRidger]

Sorry about the double post the computer told me the first one did not go through.

 

[RJPilott]

BLRer... you can delete a post if you like. Go to the edit button and there should be a delete function. Personally, I like the second one better

 

[Pilot877]

Keep Both!!

 

[Rvrrat]

The sky is falling! The sky is falling.

Gotta love the Financial guru/Pilot posts.

Don't forget that Chapter 11 is NOT Chapter 13.
Chapter 11 is a simple business tool to use when the calculators either break or are unable to display the required amount of digits behind a minus sign.

 

[Rottweiller]

Rotweiler,
What hole did you pull that info out of about UAL owning ACA's planes. ACA leases the planes from a variety of lessors which provide the finanacing. Each and every plane is required to carry a placard of who the official owner is. Most of our planes say First Security Bank of Utah (yes ACA) not UAL.

You are right in that ACA goes and finds the lessors and this would be shown on the ownership. However it is United that pay the loan on the vast majority these aircraft.

This is not pulled out of a hole in the wall but from a VERY reliable source in United HO.

I have no ill feelings for ACA, have many friends flying there. Just pointing out a fact.

 

[cl65@350]

I just don't UNDERSTAND GUYS!

well..the original poster said the GOOD, and the BAD that can come from UAL going chapter 11....

Unless all of us REGIONAL pilots want our career expectations flushed down the toilet.........................THEN there is NOTHING GOOD about UAL going chapter 11. No, i don't want to hear posts from 3000 hour crj fo's...it is the CAPT's on the crj with more than a few 1000 hours of PIC that I am talking to...

If UAL goes chapter 11, there will be ramifications industry-wide...thus DELAYING FOLKS our chance of a "real" job! Not to say we don't have good jobs...but do we really want to spend the rest of our lives in the minor leagues? I DON"T...therefore, I do not see ANYTHING good coming from a ual chapter 11 except for junior crj fo's trying to build time...my only question to those folks are....building time for WHAT? You'll have 12K hours of PIC before the big boys hire again if ual goes chapter 11!

 

[sleepy]

Remember that even if United folds (a very unlikely scenario) there will be an awful lot of jets available for the Delta Connection sides of the SkyWest and ACA houses.

We are already at our scope limits. Adding anymore contract carrier airline capacity would mean shrinking ASA or Comair. Unless that was done to attack the ASA union (we are in contract talks) it is unlikely to happen. ASA and Comair both provide more revenue to DAL than any of the contract carriers.

Why would DAL pay more for ACA or Skywest than United? If United gets to renegotiate their contract with these contract carriers under CH 11, then why wouldn't DAL seek to renegotiate their contracts as well?

I don't see how a United CH 11 would have any up-side for these contract carriers.

 

[A4Forever]

GENTLEMEN: Don't be too hasty in thinking that UAL will abrogate all the contracts if they declare C11. It is my understanding that all agreements must remain in place until such time that UAL convinces the bankruptcy judge that they have tried unsuccessfully to reach agreement with the unions to restructure the current contracts.. Only then could the judge allow the agreements to be modified. If that were to happen, it would be "down the road" so to speak. Word on the street is that there will be an additional 550 UAL pilots joining the ranks of the furloughed come Jan 1, 2003 and that a recovery plan is being undertaken with or without bankruptcy.

 

[Booker]

GENTLEMEN: Don't be too hasty in thinking that UAL will abrogate all the contracts if they declare C11. It is my understanding that all agreements must remain in place until such time that UAL convinces the bankruptcy judge that they have tried unsuccessfully to reach agreement with the unions to restructure the current contracts.

To add, it's also my understanding that the unions that have signed TAs thus far (at least ALPA and AFA) also have 1113 letters.

 

[Publishers]

Variations

Under Chapter 11, there are a midrad of things that could happen. Not the least of which is the damage done to current shareholders including the employees who own a substantial portion of the airline.

Secondly, it does not mean that they can just forget their lessors and throw the contracts in the trash. You must remember that there are both operating leases and finance leases.

Likewise, the position of various lenders changes, their may be several types of deals with their regionals.

While Chapter 11 deals with that which has gone on before, it does not mean these same people have to do business with you now. Nor do they have to accept terms now they do not want.

The only positive in this is that the industry is such that the options people have to move aircraft etc are limited

 

[BlueRidger]

"While Chapter 11 deals with that which has gone on before, it does not mean these same people have to do business with you now. Nor do they have to accept terms now they do not want. "

This is almost true. The company in Ch11 can only break the entire contract, not just specific terms within that contract. Also the bankruptcy court judge must approve the breaking of the contract.

"The only positive in this is that the industry is such that the options people have to move aircraft etc are limited"

This is true but I just had a scary thought. If Mesa rejects J4J that means that every airlines with the exception of the WO's and Midway have rejected it and J4J will be a failure. It would then be time for US Airways mgmt to get rid of the whole J4J policy becuse they need RJs ASAP. Then if the UAX carrieres were axed there would be a place for all those RJ's to go. Although, on second thought, UAL will keep the RJ's and just code share those routes.

 

[popilot]

agreed though,UAL going under? Not likely but hey the mechanics seem to want it that way!!

i'd say to look more at the "industry leading" alpa contract. Thanks Duane!!