UAIR to ask judge for 23% today

[dlredline]

Thanks for taking the time to elaborate on this futher. Couple of questions: The (e) part of this section you mentioned as "temporary". What is the timeline of that? And at this expiration does the union automatically get released to self help?

Also, I read that U was going to reduce below 279 aircraft. Wasn't the last concession package agreed to by ALPA predicated on that number being maintained? It would seem that should be brought up before the bk judge now since U wants to change their end of the deal, again. I think ( and you seem to indicate) ALPA at U has been far to "amicable" time and again. It would appear as I suspected that eventually this is going to bite them in the arse in the future.

Boeingman,

The 1113(e) filing with the BK court is defined as "interim" emergency relief, and almost always granted by the court. The applicant (in this case, USAirways) must define the time frame, and for this filing they said "interim" means until March 31, 2005. Interestingly, had USAirways and ALPA come up with a TA prior to entering BK, that TA would've only been good for 60 days, whereupon USAirways could return to the court and file this same 1113(e). So most all of the posturing to get an agreement prior to entering bankruptcy would likely have been for naught 60 days later.

As far as the 279 aircraft, you're exactly correct, that was in the last company proposal prior to the bankruptcy filing. However, in their 1113(e) filing Friday, USAirways has asked for:

(1) A 23% across the board pay cut (all unions, except the dispatchers, who agreed to TA last week, and excluding MDA).
(2) Replace current DC Plan contributions with a ten percent (10%) employer contribution.
(3) Pay cap increase to 95 hours/month (to offset the fleet reduction).
(4) Elimination of the 279 minimum aircraft and minimum block hour provisions of the contract.

Notice that nothing in this filing addresses the "furlough out of seniority" issue that the company has proposed to ALPA. The union would have to agree to a TA that includes this. Negotiations between the two parties can continue prior to the judge's ruling on the 1113(e) motion, but currently nothing is scheduled. My guess is that if the two parties don't come up with a TA in the next week that addresses "furlough out of seniority", USAirways will run it's cost analysis on the training costs associated with the parking of the 767s and 757s, and file another 1113(e) addressing this issue in a few weeks.

For those wondering about the difference between 1113 and 1113(e) filings, you now know the (e) is "interim". If USAirways files for a straight 1113 with the court, this is coined the "all or nothing" filing. The judge will look and the company's contract terms, then the union's, and decide which one he'll impose. The statutes do not provide him the opportunity to pick and choose pieces of each proposal, only one or the other.

Many have talked about "self help" after an 1113 filing, which is not available to the union after an 1113(e). Actually, self help (the ability to call a strike) while in bankruptcy is untested to date while in Chapter 11. Of course, if they emerge from Chapter 11, the RLA takes full force. Uncharted waters, as they say (whoever "they" are).

Sorry this got a little long winded, but I hope it helps.

Red

 

[SMMustang]

sf3boy - you are correct in your conclusion. It is all about supply and demand and the fact remains that there are far too many entry-level pilots out there willing to to work for "slave wages". The airline pilot profession is basically dead. I for one, have had enough and am moving on for good. I guess it is time I used my college degree. Best of luck to those that remain in this horrible industry.

Join the AFReserves as an IMA if you can. I've been doing it with my wife since I was furloughed in 02. The program offers the best diversity for anyone in the military.

 

[hopeful]

I've been doing it with my wife since I was furloughed in 02.


Who was doing it to your wife before that?

Sorry, I couldn't resist.

 

[michael707767]

Boeingman,

Many have talked about "self help" after an 1113 filing, which is not available to the union after an 1113(e). Actually, self help (the ability to call a strike) while in bankruptcy is untested to date while in Chapter 11. Of course, if they emerge from Chapter 11, the RLA takes full force. Uncharted waters, as they say (whoever "they" are).

Sorry this got a little long winded, but I hope it helps.

Red

On the other hand, they can't force you to work. I would strike, legally or not, over furlough out of seniority.

 

[Publishers]

Rhetoric

While the rhetoric is fine, any significant action by the employees would mean the death of USAirways --end of story. Who shot who does not matter much in the end.

Ask Eastern, National, Pan American, Braniff or any other group like them.

 

[Boeingman]

While the rhetoric is fine, any significant action by the employees would mean the death of USAirways --end of story. Who shot who does not matter much in the end.

Ask Eastern, National, Pan American, Braniff or any other group like them.

While you're at it, ask them if they felt that the repeated paycuts and concessions helped to save their airlines.

 

[SWA/FO]

Everybody talks about the "industry" when all these folks are thinking about is themselves... and rightfully so. When the pilots of SWA were given a raise by management, I wasn't thinking - boy, this is great for our industry. This will help out my fellow aviators at the various carriers etc.. I was thinking, what can I buy with my money?

These folks at US Airways are trying to make a plan B, so if a 23% reduction will buy some time, a few months, a few house payments then so be it. I don't think anybody thinks their cuts will save the airline. I wish they would just tell management to go f*ck themselves, but that is easy for me to say from where I sit.

Lots of nice people at US Airways and I hope some consider coming over to our team in the future.

 

[Booster]

How low can you go

[font=&quot]US[/font][font=&quot] Airways Gets Oct. 7 Court Hearing On Labor Cost Relief[/font]

[font=&quot]By ELIZABETH SOUDER
[/font][font=&quot]September 27, 2004[/font][font=&quot]2:17 p.m.[/font]

[font=&quot] Of DOW JONES NEWSWIRES[/font]

[font=&quot]NEW YORK[/font][font=&quot] -- US Airways Group Inc.'s (UAIRQ) request for the bankruptcy court to impose new contracts on labor unions will have a hearing on Oct. 7.[/font]

[font=&quot]In a court filing Monday, the bankruptcy court in [/font][font=&quot]Virginia[/font][font=&quot] said it granted the airline a hearing on that day at [/font][font=&quot]1:30 p.m. EDT[/font][font=&quot].[/font]

[font=&quot]The airline filed a motion late Sunday seeking interim relief from the contracts with the pilots, flight attendants, communication workers, machinists and some ground workers.[/font]

[font=&quot]Airline executives have said they may face liquidation without cheaper labor contracts. The relief request seeks $38 million in monthly cost reductions. The airline said late Sunday it will also cut non-labor costs by $5 million a month.[/font]

 

[TWA Dude]

Everybody talks about the "industry" when all these folks are thinking about is themselves... and rightfully so.

I'm not normally a "yes" man but your comment is so accurate I almost cheered. Everytime I read a comment about "bringing down the profession" or "lowering the bar" I just shake my head. Our profession is deteriorating as a result of economic conditions and management's decisions. Concessionary contracts are the symptom not the cause.

I also wish the USAir guys luck. They ain't gone yet.

 

[Publishers]

Boeingman

What I was saying is somewhat like TWA Dude. It doesn't matter if they already did something, it did not work. Their management may suck but it is the management that they have.

When you get into a deep enough hole, management really does little to manage, much more is outsiders forcing particular decisions which management then implements.

Once on a USAir flight, we had a significantly hard landing -- the pilot opened the door and remarked to the flight attendant-- Were there any survivors? It is only the tremendous cash flow at these places that really keeps them open. A regular business in your town would have closed a long time ago.

 

[LearLove]

MEC CODE-A-PHONE UPDATE
​

September 28, 2004
​

This is Jack Stephan with a US Airways MEC update for Tuesday, September 28th, with two new items.

Item 1. Yesterday, the U.S. Bankruptcy Court scheduled a hearing date on the Company’s 1113(e) motion for authority to implement immediate cost reductions for Thursday, October 7th. As there are other motions scheduled to be heard that day, the motion for interim relief may not conclude on October 7th. The date the hearing is most likely to continue is October 12th. ALPA plans to oppose this motion in court if an agreement is not reached before the hearing. Objections are due on October 5th.



Please be aware that no changes to the contract will be made until after a hearing. US Airways management will continue to seek agreements with each union prior to that hearing. If the court grants the 1113(e) motion, during the time that the short-term cost reductions are in effect, US Airways and ALPA can continue their Transformation Plan negotiations on longer-term relief. If the court imposes interim relief, the terms imposed do not dictate the terms of a long-term agreement with the Company.



It is ALPA's goal to have the Negotiating Committee negotiate a comprehensive, consensual agreement that covers short-term and long-term relief without the need for 1113(e) interim relief or long-term 1113 relief. The Negotiating Committee plans to continue meetings with management.



Item 2. The Contract Hotline reports that Crew Scheduling has been telling some first officers that they can fly up to 95 hours per month domestically. Please take note that the contractual limit for domestic flying remains 85 hours, with a 95 hour limit for international flying.



Please remember we have 1,879 pilots on furlough.

Thank you for listening.

 

[dlredline]

. .Please be aware that no changes to the contract will be made until after a hearing. US Airways management will continue to seek agreements with each union prior to that hearing. If the court grants the 1113(e) motion, during the time that the short-term cost reductions are in effect, US Airways and ALPA can continue their Transformation Plan negotiations on longer-term relief. If the court imposes interim relief, the terms imposed do not dictate the terms of a long-term agreement with the Company. . .

Don't count on it. This will be considered the starting point of any future negotiations. Nothing forbids the company from seeking additional 1113(e) relief during the coming weeks and months as revenue forecasts and oil prices dictate a continual shortage of cash. And remember, the ATSB has given USAirways permission to burn through their $750 million loan only down to $500 million before they pull the plug.



Also, the IAM (and AFA to a degree) have said they won't talk again. Any job action (legal or otherwise while in Chapter 11) will close the doors. USAirways' only hope of survival hasn't changed for several years now. They are in dire need of a management team that is willing to run an airline rather than continually batter their employees.

Red

 

[lowecur]

Don't count on it. This will be considered the starting point of any future negotiations. Nothing forbids the company from seeking additional 1113(e) relief during the coming weeks and months as revenue forecasts and oil prices dictate a continual shortage of cash. And remember, the ATSB has given USAirways permission to burn through their $750 million loan only down to $500 million before they pull the plug. I think that's $585M till 10/15. Also, since the ATSB has full collateral, don't be surprised if the whole $585M is put on the table for the DIP if necessary. The Feds have every reason to make this work, as a Chapt 7 will probably mean the Feds would have to p/u the retirement money owed of $2.3B. Actually, UAIR is very close to viability if they roll out a business model that only has 125-150 a/c.

Also, the IAM (and AFA to a degree) have said they won't talk again. Any job action (legal or otherwise while in Chapter 11) will close the doors. Hardly. If a 125-150 a/c LCC is mandated in the next 60 days, the F/A's will be climbing all over each other for work. I believe IAM had their wings clipped by 1113 at UAL, and at worse their numbers will be decreased 50% with the reduced fleet, and any job action will give the judge the reason he needs to outsource maintenance to Alabama on an all Airbus mainline fleet. I think Bronner and Lakefield will petition the court for an immediate sale of the Shuttle, European Landing Slots, and possibly PSA to receive $125M cash from the sale, with the ATSB receiving the remaining proceeds. USAirways' only hope of survival hasn't changed for several years now. They are in dire need of a management team that is willing to run an airline rather than continually batter their employees. Actually, I think the employees like Bruce Lakefield.

Red

.....

 

[lowecur]

$500M Cash in March based on $44 oil

Cash projections given to the judge show available cash using the ATSB money based on certain assumptions. These numbers are based on the current fleet and the existing capacity that will most certainly be reduced by Jan 1, and they don't include the requested 23% reduction of pay rates for a savings of $200M, plus a mgt reduction 20% for an additional $45M. My guess is oil will remain over $50 per barrel, but the changeover to a more economical Airbus mainline fleet will off-set the increase.

PHL has requested that UAIR turn over 2 gates in terminal D to them for lack of use. LUV will probably be the recipiant of this good fortune in what could be the beginning of the reduction of hub traffic through PHL, as UAIR will have to focus on more point to point with a fleet of only 125-150 a/c.

Posted on Wed, Sep. 29, 2004

US Airways bets on oil, passenger predictions

STAN CHOE AND ADAM BELL
Staff Writers

Like any business plan, US Airways' blueprint to survive and change into a low-cost carrier depends on certain gambles.

The airline, for example, is guessing crude oil prices will stay around $44 per barrel through April and that it will lose no more than $100 million from nervous fliers ditching it for competitors.

Those assumptions are guiding US Airways' all-important cash projections as it tries to pull itself out of its second tumble into bankruptcy protection in two years. If those assumptions prove wrong, it could force a "very significant" drop in cash holdings, the company said in a bankruptcy court filing last Friday. That could be a dire turn for the Arlington, Va.-based airline's 28,000 employees, including 5,700 based in its busiest hub of Charlotte.

US Airways' creditors -- led by the federal Air Transportation Stabilization Board -- are keenly watching that cash. They could cut off the airline if its cash holdings dip too low.

The reason US Airways is in bankruptcy protection again, the airline says, is it made wrong assumptions when it first left bankruptcy in March 2003. Mainly, it had assumed fliers would continue to pay high fares.

"US Airways did not accurately anticipate the magnitude of this structural shift," it wrote in its bankruptcy filing Sept. 12. But, the airline added, neither did its lenders or the ATSB, which backed $900 million in loans and is now the airline's most powerful creditor.

Analysts give the airline credit for "fessing up" to past mistakes and believe US Airways' management this time will be extra cautious in making projections, for fear of getting burned again.

"They're facing reality now," said aviation analyst Ray Neidl of Calyon Securities in New York. "They're realizing it's do-or-die at this point."

The airline says it carefully studied the numbers to come up with the best projections possible. It used a combination of economic models and outside consultants to arrive at its $44-per-barrel assumption and others. The airline told the bankruptcy court it devised a reasonable range for its assumptions, with best- and worst-case scenarios.

In the best case, the airline would have about $500 million at the end of March, not including a 23 percent pay cut from union workers it's requesting. In the worst case, it would have what it considers a dangerously low $256 million, not including pay cuts. The airline estimates the most likely result is $387 million.

Labor unions at the airline say they're still studying US Airways' assumptions.

The assumptions were included in a filing that asked Bankruptcy Judge Stephen Mitchell in Alexandria, Va., to impose temporary 23 percent pay cuts on its labor unions. The cuts would save the airline about $200 million over five months.

Those cuts will let the airline hold onto enough cash to convince creditors to allow it to continue tapping into cash and restructure, US Airways said. The company also continues to try to work out long-term concessions with the unions.

The creditors will likely weigh in on the assumptions in court. That could come in an Oct. 7 hearing on the 23 percent pay cuts, though that session could spill into another hearing Oct. 12.

The creditors will also be in court at an Oct. 14 hearing, when US Airways will ask for permission to continue dipping into its cash.

Some analysts who have reviewed US Airways' filings say management may be a bit optimistic in its assumptions.

The airline listed three major dangers that could push its projections out of whack: soaring oil prices, which mean higher jet-fuel costs; nervous passengers booking away from US Airways; and hurricanes, terrorism or other world events.

During the last three months, the airline said, oil prices have ranged from $37.50 to $48 per barrel. With its assumption of $44 per barrel through April, each $1 per barrel increase costs the airline an extra $2 million a month.

Crude oil just broke the $50-a-barrel barrier, and energy analysts are unsure where the price goes from here.

It doesn't take much to push oil prices up, they say, such as hurricanes that delay freighter shipping, problems at a giant Russian oil producing company or political turmoil in Iraq that disrupts the supply of oil. Some also worry about unrest in Nigeria, Africa's leading exporter of oil.

That's on top of rising global demand and limited refinery capacity.

Seth Kleinman, an energy market analyst with PFC Energy, a Washington consulting firm, called US Airways' $44 projection "extremely optimistic."

A cold winter, with its ensuing higher oil demand, "makes that number look silly," he said. "We're entering unexplored territory for prices here."

Kleinman expects to see prices around $48 or $49 per barrel.

Doug MacIntyre, senior oil market analyst with the federal Energy Information Administration, called the $44 figure "as reasonable an estimate as anyone can make."

The agency is estimating oil will be $40-$42 per barrel through April, but MacIntyre acknowledged it's possible it could hit $50 or more.

"Everyone has been constantly underestimating the prices, including ourselves," he said.

Analysts also question US Airways' projection of $100 million lost to book-aways. "I think $100 million is probably low," said Robert Mann, an aviation consultant on Long Island.

Mann pointed to the high number of sales coming from US Airways in the past week. Those $349 round-trip tickets from Charlotte to Paris are US Airways' attempts to entice passengers to stay with US Airways rather than book on another carrier.

In calculating projections, Mann said airlines must practice an the art of finding the balance between being too conservative and too optimistic. It's not a science, he said.

"It's a decision tree; you're looking at possible outcomes out of a whole slew of variables."

 

[AA717driver]

YOU CAN'T SHRINK TO PROFITIBILITY!TC

 

[Jeff Helgeson]

The indoctrination

YOU CAN'T SHRINK TO PROFITIBILITY!TC

Have you been having power lunches with Robert Crandall? I bet you are chain smoking, drinking too much coffee and jogging 5 miles a day. What's next, "value pricing"?

PS: I didn't wake up intending to be a smAArt AA$$ today, it just worked out that way!

 

[lowecur]

YOU CAN'T SHRINK TO PROFITIBILITY!TC

Sure you can, if you change from a hub carrier to a direct LCC. Shrinking an existing business model is suicide, but going to an O&D airline with an LCC cost structure will work.

Listen the Feds don't want to get stuck with the $2.3B pension bill. They understand that they cannot continue to prop up UAIR as they exist today with the ATSB cash and the 23% payroll reduction. The airline needs a complete makeover and an ability to avoid harmful job actions. The only way to do this is to shrink the airline 40-50%, and institute an O&D model with LCC cost structure.

The Feds are probably going to get stuck with the pensions at UAL. They simply will not be able to survive with that liability due to the covenants required to get exit financing. DL will face a similar situation when they enter BK shortly. These two airlines just don't have the time, and will be at the mercy of job actions because of their size and their inability to perform a complete makeover like UAIR.

 

[flyingitalian]

Sure you can, if you change from a hub carrier to a direct LCC.

Really that easy? Name one who has.

 

[lowecur]

Really that easy? Name one who has.

No...

 

[Jeff Helgeson]

Shrinking not successful

No airline to my knowledge has been successful using a shrink to profitability.

You can change the business plan, dehub the operation to some degree, etc. Shrinking just doesn't cut it.