United crying unfair?

[Mongolikecandy]

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.



Just wanted to get other's feedback on this. Seems as though if things aren't going United's way, it's okay to complain and cry foul but when they are putting the screws to others, it's OK for them because they are in bankruptcy.

 

[Crossky]

UAL Wants Answers On Air Wisconsin-US Airways Deal

Dow Jones & Company, Inc. -- March 9, 2005

By Christopher Scinta, Of DOW JONES NEWSWIRES

. . . .

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.





Just wanted to get other's feedback on this. Seems as though if things aren't going United's way, it's okay to complain and cry foul but when they are putting the screws to others, it's OK for them because they are in bankruptcy.

Our management made that deal with UAL and big blue deserves to sleep in the bed they made with our ATW guys. If they reject us we should get to keep all the extra payments per the agreement. UAL's trying to cut their losses in case they do reject AWAC. The overpayment and payback scheme was and is financial incentive for UAL to give AWAC a secure contract.

I think UAL is trying to see what rates AWAC has offered their services to US at, to see if they can negotiate any lower with us. I strongly believe (and it's the common thinking here) that the $125 MIL DIP loan to US does not include any of the added payments to UAL. That is UAL's money to claim with a new secure agreement with AWAC (1/2 with new agreement, 1/2 at BK exit). The bankruptcy court wouldn't approve it otherwise because if UAL renewed with us then it would put our loan to US in jepoardy (spelling?)

This might delay the decision another two months.

Suprised no one has responded to this yet. Everyone's theorizing about SKW and ComAir / ASA. My guess - yes, with St. George offering all DOH seniority, no union, and SKW pay and bennies.

 

[NuGuy]

Agreed...sounds like UAL got POed that Air Willie found themselves a new lover.

Guess UAL will be asking Great Lakes back to the party here pretty soon.

Nu

 

[mckpickle]

United has bigger problems when CAL and Northwest buy them out!

 

[FlyComAirJets]

I am shocked, SHOCKED, that there is gambling going on here!

After what UAL did to Air Wisconsin in the early 90's it sure takes a lot of nerve. Revenge is a dish best served cold.

 

[chperplt]

Revenge is a dish best served cold.

I like mine heated with a little tobasco.

 

[Beechnut]

Yeah, I'm a happy AWAC guy these days. Glad to see UAL uncomfortable with a vendor that just grew big brass ones.

S.

 

[airwillydrvr]

Hey beechnut go fly. Get out of the RR room.

 

[Mongolikecandy]

Yeah, I'm a happy AWAC guy these days. Glad to see UAL uncomfortable with a vendor that just grew big brass ones.

S.

I don't know how big they really are but the fact that this is making United twitch a bit makes the waiting game that much more enjoyable.

 

[J32driver]

Mongo.... love the avitar!!!

 

[Propblast]

Glad to see AWAC playing hardball with UAL. It's always the same response from UAL management "How dare you attempt to ensure your survival!?! You are suppposed to let us slowly bleed you off like we have with our comapny!!!"-PB

 

[DiverDriver]

I have to admit that the feeling may not last if the BK judge makes AWAC show the whole contract but right now the feeling is good. At least they are doing something and I hope they protest the motion to the end. Enough is enough. Sign the dang contract and lets get back to the business of moving people from point A to point B safely, comfortably and on schedule. That's where we are going to make our money.

 

[WhiteCloud]

Agreed...sounds like UAL got POed that Air Willie found themselves a new lover.

In breaking news......UAL has hired Glenn Close (Fatal Attraction) to be their spokes person in future negotiations.

 

[Dizel8]

Well, United went shopping for new feed, AW says okay, we'll go shopping for another "mother ship". UA gets mad and now says AW is unfair, but still will not come to agreement with AW on pay.

UAL management,the Creditor commitee and the court, what a bunch of BS they spew. Let us not forget, that they sued their smaller vendors
for a return of money paid.

To many god people at United to wish ill, but for their management practices, not much good can be said.

 

[WhiteCloud]

I have to admit that the feeling may not last if the BK judge makes AWAC show the whole contract but right now the feeling is good. At least they are doing something and I hope they protest the motion to the end. Enough is enough. Sign the dang contract and lets get back to the business of moving people from point A to point B safely, comfortably and on schedule. That's where we are going to make our money.

Does the BK judge have the authority to make AWAC divulge their business relationships. It's not AWAC that's in bankruptcy. Of course it could take many months and several appeals before this could be made to happen.

 

[chperplt]

At some point in the near future, the BK judge is going to have to let that company repo the airplanes from UAL. Once that happens, 1/3 of their fleet go bye-bye and they have bigger issues to worry about that AWAC.

 

[DiverDriver]

Does the BK judge have the authority to make AWAC divulge their business relationships. It's not AWAC that's in bankruptcy. Of course it could take many months and several appeals before this could be made to happen.

Don't know. Seems that some people think that he does and are at least trying that avenue. I hope it doesn't work but then again I don't know the law and what's allowed. So, that's why I said I'll enjoy the feeling of "fighting back" until such time that we do have to show the contract. Maybe we can stretch UAL management out a few months on this issue and see how they like being strung along.

 

[fam62c]

UAL BK Judge

As far as I can tell the judge in the UAL BK case seems to have the authority to do whatever he wants with no limitations; he makes the laws as far as they pertain to the relationship between UAL and other parties. This guy wouldn't even let aircraft lease holders repossess THEIR OWN airplanes. I'm sure that he will order whatever the UAL management wants him to. The question is, what happens if AirWis refuses to respect the ruling? As somebody pointed out earlier; AirWis is not in BK and it seems that relationship between USAir and AW isn't really any of UAL's business. Until something happens that violates the agreement between UAL and AirWis where is the problem? Can this judge order any company that does business with UAL to turn over their confidential business information just because UAL would like to see it? UAL is just upset because their attempt to use extortion against AW may have not have gone as well as they had planned. UAL wants to use the judge to force everybody to tip their hands so that nobody has any leverage except UAL. It just goes to show that if you push people hard enough they will start pushing back sooner or later.

 

[DiverDriver]

Since this rebid has started the word has been that United wanted a new "mix" of airplanes for AWAC. We kinda assumed that menat CRJ 700 and 900/950s. It went back and forth and about 6 (aprox.) "rebids" of the original "rebid" on Dec. 10th. Well, then we heard that CJT was fed up and just put in a final bid for ALL 50 seat flying and that was that. Along with the USAir loan we figured we'd hear something from UAL and a deal would be done and we'd go back to focusing on the customer. Seems we finally hit a nerve over there. Good. Even if the judge rules AWAC has to show it's hand I hope they appeal it and drag it out. Fight fire with fire.

edit: I can't spell "forth"....sheeesh.. <slaps forehead>

 

[DashCojones]

Get some, AWAC!!

 

[Furloughed80]

In addition to all this, what about the motion the creditors filed to prevent AWAC from keeping no more than $90 million of the added payments that are being used as a type of insurance in case United rejects AWAC's contract. This agreement was made while United was in bankruptcy. Because of that, wouldn't the Bankruptcy Judge have to honor it?

 

[Illinois]

UAL has gone from using bankruptcy to writing bankruptcy law. Their smart enough to hire lawyers capable of this, but forget that necessity is the mother of invention. Those men and women in ATW sure got creative.

Wisconsin cheese only for me!

 

[KingAirKiddo]

UAL has gone from using bankruptcy to writing bankruptcy law. Their smart enough to hire lawyers capable of this, but forget that necessity is the mother of invention. Those men and women in ATW sure got creative.

Wisconsin cheese only for me!

Agreed. UAL management opened this can of worms when they submitted all the UAX carriers to the Bain fiasco after the filing. They're now reaping the "benefits" of that cluster----.

Good luck AWAC.

KAK
Battered, bruised, and bitter former Blue Ridger

 

[saabdude]

Very good points on earlier posts. The BK Judge can do what ever he wants. It's going to be a tough decision: United saying that they want to see Air Willy's agreement with US-Airways to see if it violates any of the agreements VS, the fact that Air Willy says it is a competitor airline and that it should remain confidential. Very arguemental points.

United wants to see the contract with US Airways and Air Willy mainly to find out the rate that they are willing to fly for as well as the flying that Air Willy will replace out of US Airways (Ex: Mesa) so they, United, can go to the regional to see if they are willing to reduce costs even more to hold on to their own flight staff.

There are some cut-throat evil people working with United for their own benefit. They are the type to sell out their mothers for an extra dime.

I'm proud to be part of Air Willy, and hope our management team can keep their middle finger up to United till this is solved. Air Wisconsin was just protecting themselves with a insurance policy with US Airways. Hopefully, Air Wisconsin is able to show the agreement without any dollars and cents involved and resume flying with United and have some growth with US Airways.