Beechnut
Ndugu's Foster Dad
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- Nov 27, 2001
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UAL Wants Answers On Air Wisconsin-US Airways Deal
Dow Jones & Company, Inc. -- March 9, 2005
By Christopher Scinta, Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--UAL Corp. (UALAQ) wants to know just what the
status of its relationship with Air Wisconsin Airlines and US Airways
Group (UAIRQ) is, now that those two carriers have a relationship of
their own.
The parent of United Airlines, which is in bankruptcy protection, wants
a closer look at partner Air Wisconsin Airlines' new regional jet
service contract with US Airways - which is also in Chapter 11. United
says it needs to know if the new pact violates any of the numerous
agreements it has with Air Wisconsin and US Airways.
However, Air Wisconsin has refused to provide a detailed version of the
recently-approved pact, which allows but doesn't require Air Wisconsin
to fly up to 70 regional jets for US Airways, United said in court
papers made public Monday. Entire sections have been redacted from the
version of the contract United has seen. Now United is asking the court
overseeing its bankruptcy case to force Air Wisconsin - which flies
feeder routes for United - to produce a more detailed version of the
deal.
An Air Wisconsin spokeswoman said she couldn't comment on a matter that
is subject to litigation.
"United desires to verify to its own satisfaction that the terms of the
(jet service agreement) do not violate the letter or spirit of any" of
the 20 agreements United has with Air Wisconsin, or the code share and
Star Alliance agreements it has with US Airways, court papers said.
United spokeswoman Jean Medina said, "we believe we are entitled to
review the full terms of the US Air-Air Wisconsin jet services
agreement."
But US Airways isn't in a hurry to give United more details.
"Both US Airways and Air Wisconsin consider the information in the
agreement to be extremely confidential for competitive reasons," US
Airways spokesman David Castelveter told Dow Jones Newswires Wednesday.
It's a touchy situation, since United is considering a break up with Air
Wisconsin.
United is trying to further cut costs during it restructuring, and is
currently reviewing competing bids for the United Express routes Air
Wisconsin flies. Under the Bankruptcy Code, a debtor company can reject
unwanted contracts, giving United the right to end its service agreement
with Air Wisconsin.
One of the reasons Air Wisconsin agreed to the US Airways loan was to
lock in a service agreement so it would have a partner if United goes
with another provider, US Airways officials have said.
The U.S. Bankruptcy Court in Alexandria, Va., which is overseeing US
Airways' bankruptcy case, approved on Feb. 28 the Air Wisconsin jet
service agreement and an associated $125 million loan.
United's motion said it will keep any information it gains from
reviewing the full contract confidential, but it needs more than the
assurance of a US Airways press release that the contract won't affect
its deal with Air Wisconsin.
A hearing on the United's disclosure request is scheduled for March 18,
with objections due Friday. If no objection is filed, United said its
motion would be automatically approved under local rules in the U.S.
Bankruptcy Court in Chicago.
Meanwhile, UAL's official committee of unsecured creditors has an issue
with Air Wisconsin as well.
The panel asked the Chicago bankruptcy court to rule that if United does
eventually reject its contract with Air Wisconsin, the Appleton,
Wis.-based company can't keep more than $90 million in added payments
made under the deal.
In 2003, United amended its United Express agreement with Air Wisconsin
to cut costs. Under the amended contract, United agreed to make
additional payments of 10% of the new rates, and Air Wisconsin would
hold that money, getting to keep if United didn't assume the contract.
United's Medina said the amended Air Wisconsin deal was a big
improvement when it was put in place 18 months ago, and the added
payments were "appropriate given the uncertainties associated with our
bankruptcy case at the time."
However, the creditors committee argued when United agreed to the added
payments, it thought it would emerge from Chapter 11 within a few
months. Exit financing didn't materialize and United got stuck in
Chapter 11, making about $ 90 million in added payments to Air Wisconsin
since then.
That figure is more than the bargained-for savings through the contract
amendment, and it appears the $125 million loan to US Airways was
largely funded by the extra payments from United, the creditors
committee said.
"The unexpected delay in confirming these cases... has resulted in the
accumulation of a potentially substantial windfall for Air Wisconsin and
a significant impediment to (United) seeking an alternative to the
amended agreement," the creditors committee motion said.
The company hasn't made any decision on whether it would seek to rescind
the additional payments, Medina said.
__________________________________________________________________
Looks like UAL can talk the talk but can't walk the walk. Let 'em rot! ...AND explain losing the $90,000,000.00!!!! ha ha ha
S.
Dow Jones & Company, Inc. -- March 9, 2005
By Christopher Scinta, Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--UAL Corp. (UALAQ) wants to know just what the
status of its relationship with Air Wisconsin Airlines and US Airways
Group (UAIRQ) is, now that those two carriers have a relationship of
their own.
The parent of United Airlines, which is in bankruptcy protection, wants
a closer look at partner Air Wisconsin Airlines' new regional jet
service contract with US Airways - which is also in Chapter 11. United
says it needs to know if the new pact violates any of the numerous
agreements it has with Air Wisconsin and US Airways.
However, Air Wisconsin has refused to provide a detailed version of the
recently-approved pact, which allows but doesn't require Air Wisconsin
to fly up to 70 regional jets for US Airways, United said in court
papers made public Monday. Entire sections have been redacted from the
version of the contract United has seen. Now United is asking the court
overseeing its bankruptcy case to force Air Wisconsin - which flies
feeder routes for United - to produce a more detailed version of the
deal.
An Air Wisconsin spokeswoman said she couldn't comment on a matter that
is subject to litigation.
"United desires to verify to its own satisfaction that the terms of the
(jet service agreement) do not violate the letter or spirit of any" of
the 20 agreements United has with Air Wisconsin, or the code share and
Star Alliance agreements it has with US Airways, court papers said.
United spokeswoman Jean Medina said, "we believe we are entitled to
review the full terms of the US Air-Air Wisconsin jet services
agreement."
But US Airways isn't in a hurry to give United more details.
"Both US Airways and Air Wisconsin consider the information in the
agreement to be extremely confidential for competitive reasons," US
Airways spokesman David Castelveter told Dow Jones Newswires Wednesday.
It's a touchy situation, since United is considering a break up with Air
Wisconsin.
United is trying to further cut costs during it restructuring, and is
currently reviewing competing bids for the United Express routes Air
Wisconsin flies. Under the Bankruptcy Code, a debtor company can reject
unwanted contracts, giving United the right to end its service agreement
with Air Wisconsin.
One of the reasons Air Wisconsin agreed to the US Airways loan was to
lock in a service agreement so it would have a partner if United goes
with another provider, US Airways officials have said.
The U.S. Bankruptcy Court in Alexandria, Va., which is overseeing US
Airways' bankruptcy case, approved on Feb. 28 the Air Wisconsin jet
service agreement and an associated $125 million loan.
United's motion said it will keep any information it gains from
reviewing the full contract confidential, but it needs more than the
assurance of a US Airways press release that the contract won't affect
its deal with Air Wisconsin.
A hearing on the United's disclosure request is scheduled for March 18,
with objections due Friday. If no objection is filed, United said its
motion would be automatically approved under local rules in the U.S.
Bankruptcy Court in Chicago.
Meanwhile, UAL's official committee of unsecured creditors has an issue
with Air Wisconsin as well.
The panel asked the Chicago bankruptcy court to rule that if United does
eventually reject its contract with Air Wisconsin, the Appleton,
Wis.-based company can't keep more than $90 million in added payments
made under the deal.
In 2003, United amended its United Express agreement with Air Wisconsin
to cut costs. Under the amended contract, United agreed to make
additional payments of 10% of the new rates, and Air Wisconsin would
hold that money, getting to keep if United didn't assume the contract.
United's Medina said the amended Air Wisconsin deal was a big
improvement when it was put in place 18 months ago, and the added
payments were "appropriate given the uncertainties associated with our
bankruptcy case at the time."
However, the creditors committee argued when United agreed to the added
payments, it thought it would emerge from Chapter 11 within a few
months. Exit financing didn't materialize and United got stuck in
Chapter 11, making about $ 90 million in added payments to Air Wisconsin
since then.
That figure is more than the bargained-for savings through the contract
amendment, and it appears the $125 million loan to US Airways was
largely funded by the extra payments from United, the creditors
committee said.
"The unexpected delay in confirming these cases... has resulted in the
accumulation of a potentially substantial windfall for Air Wisconsin and
a significant impediment to (United) seeking an alternative to the
amended agreement," the creditors committee motion said.
The company hasn't made any decision on whether it would seek to rescind
the additional payments, Medina said.
__________________________________________________________________
Looks like UAL can talk the talk but can't walk the walk. Let 'em rot! ...AND explain losing the $90,000,000.00!!!! ha ha ha
S.
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