dlredline
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It's almost over at USAIR.
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BeCareful!
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U Management "blinked" back in 2000. So what? It seems to me that the only thing on the plate back then as far as Management was concerned was getting the merger done with UAL. Even though the deal was announced after the situation with the F/As, the plan itself was in motion long before that. If you had a bunch of bozos ready to offer $63 a share back then, would you have been thinking of anything else or rocking the boat? Taking on the F/As, beyond doing nothing more than looking tough, was not on U management's agenda anyway.BeCareful! said:
The bottom line seems to be that for the majority of the U F/As, there is not going to be enough of a premium left in the job to justify doing it. May as well have a job a short drive away that allows you to sleep in your own bed at night. If the majority feel this way and understand that a strike guarantees the end of it, then you can't blame them at all for deciding to walk away.
BeCareful!
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One Reason Airlines
Keep Flying Despite
Huge Losses: GE
No. 1 Aircraft Lessor Aims
To Avoid Grounding Planes;
One Side Effect: Low Fares
December 14, 2004; Page D8
It's a financial miracle that U.S. airlines have kept flying despite $25 billion in losses over the past four years.
Gee? No, GE.
General Electric Co. has been a major behind-the-scenes player in keeping troubled airlines in the air. It isn't alone, but it has made some of the most significant moves, such as a recent deal with US Airways Group Inc. that gives the airline more hope for survival.
For travelers, such help amounts to a subsidy of low fares. Instead of airlines going out of business, the financial assistance has kept a lot of seats in the air, and airlines have slashed prices to historically low levels to fill them.
Plenty of deep-pocketed entities have helped airlines through the recent crisis. From the government to several aircraft-leasing companies to American Express Co., which sells tickets and has a business in frequent-flier miles, many parties have been willing to renegotiate debt and give carriers more cash on top of bad loans. The state of Indiana even loaned hometown carrier ATA Airlines $15.5 million to keep it flying, preserving -- at least temporarily -- both local jobs and air service. On top of that, airline employees have made deep sacrifices to keep carriers flying.
But no single entity has done more than GE to keep the sickest airlines flying world-wide. GE says it has invested more than $7 billion in airlines around the world since the 2001 terrorist attacks. GE helped prop up America West Airlines and helped finance Air Canada's reorganization. GE is the biggest creditor at bankrupt UAL Corp., the parent of United Airlines, with $1.6 billion at stake. Ditto for US Airways, where GE has nearly $3 billion at stake, according to financial filings.
This fall, GE struck a deal to loan Delta Air Lines $630 million and help it avoid a bankruptcy filing. And just recently, GE agreed to free up an additional $140 million that US Airways owed it, taking a convertible loan instead of cash. That deal still is subject to bankruptcy-court approval and other conditions.
For GE, the world's largest aircraft-leasing firm, pumping money into airlines is in part a way to avoid potentially huge losses from an airline collapse. GE, which has 1,239 airplanes and $29 billion of airplane loans and leases, has an interest in keeping its leased planes in circulation.
GE says it only does deals where it thinks it can profit -- and is plenty willing to take back airplanes from failing carriers and rent them someplace else. When it helps prop up airlines, it's "because we think we make a lot of money on it," says Henry Hubschman, president and chief executive of GE Capital Aviation Services and the transportation-financing unit of GE Commercial Finance. "The time you do best is when they are most in need of money," he says.
While airlines are losing billions, the commercial-aircraft unit, known as Gecas, still is making millions. The unit earned at least $450 million in both 2002 and 2003, even after write-downs of more than $200 million a year. GE expects similar results this year.
Mr. Hubschman says GE is standing firm at some U.S. carriers he won't name -- and says GE likely will pull planes out of failing airlines soon. Already, GE has a still-unannounced deal to take 18 airplanes out of the U.S. and lease them abroad. GE also has taken back planes from many foreign airlines, such as Brazil's Varig and Italy's Volare.
But if the airline can show a good business plan, GE is willing to help the carrier through tough times. It weighs that along with the likelihood it can find a new home for its airplanes and what it would cost to move planes.
Propping up carriers after Sept. 11, 2001, proved to be a good strategy for lessors, avoiding a crush of grounded airplanes. The market for used planes has improved considerably since then. Now, they can pick and choose who to prop up and, if need be, judiciously redistribute their planes.
At Delta, GE signed a three-year loan that Delta said was "secured by substantially all of Delta's remaining unencumbered assets." One thing GE asked for in return was a provision for Delta to take about 40 small regional jets in the future, if GE wanted. GE happens to have 39 regional jets on lease at US Airways.
At US Airways, GE has hedged its bet. The carrier was in need of cash last month, and GE was willing to help -- but it also wanted to start limiting its exposure by taking some of its airplanes back. US Airways agreed to give up only 25 -- 10 Airbus 319s and 15 Boeing 737-300s. GE says it already has found new homes for all 25. (These planes are unrelated to the other 18 GE planes soon to leave the U.S.) Foreign airlines will take the 319s; the 737s likely will be converted to cargo carriers.
US Airways says the latest GE deal, which includes lots of deadlines and financial hurdles, is a "catalyst" toward completing its restructuring. But it also requires the airline to come up with another $100 million in liquidity by January. "It shows momentum and it's a vote of confidence from our largest creditor," spokesman Chris Chiames said.
Analysts and competing airline executives bemoan the industry's inability to shed unprofitable capacity. If an airline or two went out of business, the finances of the survivors likely would brighten. But it's hard to ever get the airline industry to economic equilibrium, because so many stakeholders are willing to pump in new money and bet better days are ahead.
• Write to Scott McCartney at [email protected]2
URL for this article:
http://online.wsj.com/article/0,,SB110297829238498985,00.html
Keep Flying Despite
Huge Losses: GE
No. 1 Aircraft Lessor Aims
To Avoid Grounding Planes;
One Side Effect: Low Fares
December 14, 2004; Page D8
It's a financial miracle that U.S. airlines have kept flying despite $25 billion in losses over the past four years.
Gee? No, GE.
General Electric Co. has been a major behind-the-scenes player in keeping troubled airlines in the air. It isn't alone, but it has made some of the most significant moves, such as a recent deal with US Airways Group Inc. that gives the airline more hope for survival.
For travelers, such help amounts to a subsidy of low fares. Instead of airlines going out of business, the financial assistance has kept a lot of seats in the air, and airlines have slashed prices to historically low levels to fill them.
Plenty of deep-pocketed entities have helped airlines through the recent crisis. From the government to several aircraft-leasing companies to American Express Co., which sells tickets and has a business in frequent-flier miles, many parties have been willing to renegotiate debt and give carriers more cash on top of bad loans. The state of Indiana even loaned hometown carrier ATA Airlines $15.5 million to keep it flying, preserving -- at least temporarily -- both local jobs and air service. On top of that, airline employees have made deep sacrifices to keep carriers flying.
But no single entity has done more than GE to keep the sickest airlines flying world-wide. GE says it has invested more than $7 billion in airlines around the world since the 2001 terrorist attacks. GE helped prop up America West Airlines and helped finance Air Canada's reorganization. GE is the biggest creditor at bankrupt UAL Corp., the parent of United Airlines, with $1.6 billion at stake. Ditto for US Airways, where GE has nearly $3 billion at stake, according to financial filings.
This fall, GE struck a deal to loan Delta Air Lines $630 million and help it avoid a bankruptcy filing. And just recently, GE agreed to free up an additional $140 million that US Airways owed it, taking a convertible loan instead of cash. That deal still is subject to bankruptcy-court approval and other conditions.
For GE, the world's largest aircraft-leasing firm, pumping money into airlines is in part a way to avoid potentially huge losses from an airline collapse. GE, which has 1,239 airplanes and $29 billion of airplane loans and leases, has an interest in keeping its leased planes in circulation.
GE says it only does deals where it thinks it can profit -- and is plenty willing to take back airplanes from failing carriers and rent them someplace else. When it helps prop up airlines, it's "because we think we make a lot of money on it," says Henry Hubschman, president and chief executive of GE Capital Aviation Services and the transportation-financing unit of GE Commercial Finance. "The time you do best is when they are most in need of money," he says.
While airlines are losing billions, the commercial-aircraft unit, known as Gecas, still is making millions. The unit earned at least $450 million in both 2002 and 2003, even after write-downs of more than $200 million a year. GE expects similar results this year.
Mr. Hubschman says GE is standing firm at some U.S. carriers he won't name -- and says GE likely will pull planes out of failing airlines soon. Already, GE has a still-unannounced deal to take 18 airplanes out of the U.S. and lease them abroad. GE also has taken back planes from many foreign airlines, such as Brazil's Varig and Italy's Volare.
But if the airline can show a good business plan, GE is willing to help the carrier through tough times. It weighs that along with the likelihood it can find a new home for its airplanes and what it would cost to move planes.
Propping up carriers after Sept. 11, 2001, proved to be a good strategy for lessors, avoiding a crush of grounded airplanes. The market for used planes has improved considerably since then. Now, they can pick and choose who to prop up and, if need be, judiciously redistribute their planes.
At Delta, GE signed a three-year loan that Delta said was "secured by substantially all of Delta's remaining unencumbered assets." One thing GE asked for in return was a provision for Delta to take about 40 small regional jets in the future, if GE wanted. GE happens to have 39 regional jets on lease at US Airways.
At US Airways, GE has hedged its bet. The carrier was in need of cash last month, and GE was willing to help -- but it also wanted to start limiting its exposure by taking some of its airplanes back. US Airways agreed to give up only 25 -- 10 Airbus 319s and 15 Boeing 737-300s. GE says it already has found new homes for all 25. (These planes are unrelated to the other 18 GE planes soon to leave the U.S.) Foreign airlines will take the 319s; the 737s likely will be converted to cargo carriers.
US Airways says the latest GE deal, which includes lots of deadlines and financial hurdles, is a "catalyst" toward completing its restructuring. But it also requires the airline to come up with another $100 million in liquidity by January. "It shows momentum and it's a vote of confidence from our largest creditor," spokesman Chris Chiames said.
Analysts and competing airline executives bemoan the industry's inability to shed unprofitable capacity. If an airline or two went out of business, the finances of the survivors likely would brighten. But it's hard to ever get the airline industry to economic equilibrium, because so many stakeholders are willing to pump in new money and bet better days are ahead.
• Write to Scott McCartney at [email protected]2
URL for this article:
http://online.wsj.com/article/0,,SB110297829238498985,00.html
Cappy
Well-known member
- Joined
- Dec 18, 2001
- Posts
- 144
How about the fact that the USAir pilots have for years been at the throughts of management trying to convince them that having NINE, yes NINE, different acft configurations on property was going to kill them in the long run? They had 767, 757, 727,737-100, -200, -300, F-100, DC-9-30, MD-80's! Whew!skykid said:
Consider for a moment the hundreds of millions a year in extra MX/Fuel/Training for pilots and mechanics/spare parts, and on and on...just to keep old acft around?
In addition it is well known that USAir management was perfectly happy not listening to their employees regarding cost savings. Just go back to any archived boards or newsletters.
There is no argument in my mind that USAir management is at fault. Remember, it is the fudisiary responsibility of manegement, NOT EMPLOYEES, to maintain the health of the company. Through healthy labor relations and an atmosphere of inclusion, USAir management COULD have turned this company around before 2001 to be the most profitable carrier in the US.
Later.
flyingitalian
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- Posts
- 143
skykid
On Point
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- Jan 24, 2002
- Posts
- 759
Great point Cappy. I would still contend that even if U mgt figured a way to sell crack on the airplanes for huge profits, they are in a market situation where there is not a lot of hope. They face extreme LCC competition in their limited domestic market and have virtually no presence overseas. I don't think simplifying the fleet would have been enough.
Give some details of how they could have done this. I would just like to know what you mean.
Sorry to post blindly here, as I have no dog in this fight, but is it even legal to invoke self-help while under Chapter 11 protection?
And if so, correct me if I'm wrong, but the average training time from start to finish for F/As is about 6 weeks?
What leverage against management is that? They can avoid CBA by firing the F/As and hire an all new force at 1/3rd the pay. Bonus for them. That is, unless the picket line is strong enough to stop anybody currently unemployed (or even some currently-employed regional guys that make less than UAIR F/As) from starting training.
I agree with the sentiment, but is the act correct given the overall environment?
FLAME PROOF SUIT ON
And if so, correct me if I'm wrong, but the average training time from start to finish for F/As is about 6 weeks?
What leverage against management is that? They can avoid CBA by firing the F/As and hire an all new force at 1/3rd the pay. Bonus for them. That is, unless the picket line is strong enough to stop anybody currently unemployed (or even some currently-employed regional guys that make less than UAIR F/As) from starting training.
I agree with the sentiment, but is the act correct given the overall environment?
FLAME PROOF SUIT ON
ultrarunner
Well-known member
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- Nov 26, 2001
- Posts
- 4,322
LEROY said:
Well, 'Self Help' applies to those employees covered under a CBA. If the judge absloves the FA's CBA the company nor the FA's are afforded any contractual rights or protections that this process allows.
They simply walk off the job.
Sure, U could hire, but it would be too late by then.
dlredline
Well-known member
- Joined
- Jan 15, 2003
- Posts
- 310
Leroy,LEROY said:
Actually, that is a very good question. No labor group has sought "self-help" protection following a complete bankruptcy-induced abrogation of an entire contract (including the TA/CAL situation) while in Chapter 11. USAirways has filed a restraining order seeking court protection against such an action should Judge Mitchell rule in the company's favor. AFA and IAM argue that abrogation is not a negotiated position as defined by the RLA, and absent a contract there is no 30 day "cooling off" period, and the union membership is free to act on it's own accord. The next 2 weeks will be very interesting.
Red
BeCareful!
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- 809
climbhappy
ex pat
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- 2,159
climbhappy
ex pat
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- Posts
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KeroseneSnorter
Robust Member
- Joined
- Oct 26, 2003
- Posts
- 1,530
I rode U to recurrent this year and I have to agree with the thread title. I haven't been on one it a couple of years and I was amazed at how the aircraft have declined. The interiors were dirty and ragged. Stains on seats, broken trim, thread bare seat covers etc. The one coming back wasn't as bad, but the passengers equate the appearance of the planes as a gauge for how how well the maint. is.
Also I rode as a paying passenger instead of non-reving since I didn't have the time to risk being bumped. Given the number of passengers on board and what I paid for a round trip ticket with 30 days notice, they didn't even cover the fuel cost on the trip out, and probably just broke even on fuel and crew for the trip back, assuming that everyone paid about the same fare.
Also I rode as a paying passenger instead of non-reving since I didn't have the time to risk being bumped. Given the number of passengers on board and what I paid for a round trip ticket with 30 days notice, they didn't even cover the fuel cost on the trip out, and probably just broke even on fuel and crew for the trip back, assuming that everyone paid about the same fare.
michael707767
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ultrarunner
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skykid
On Point
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- Jan 24, 2002
- Posts
- 759
OK Everybody, repeat after me:
"Employee concessions have never saved an airline".
I am curious as to the reasons so many people think it will be different at U or UAL, et. al.?
United will not get exit financing with the defined pensions in their current state. I don't believe employee concessions will save either of these airlines alone either, but I do know United will at least partially liquidate if the pensions don't go away - as will all the airlines with defined pensions, eventually.
"Employee concessions have never saved an airline".
I am curious as to the reasons so many people think it will be different at U or UAL, et. al.?
United will not get exit financing with the defined pensions in their current state. I don't believe employee concessions will save either of these airlines alone either, but I do know United will at least partially liquidate if the pensions don't go away - as will all the airlines with defined pensions, eventually.
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