US Air, what do you think will happen?

canadflyau

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I am curious to hear some speculation about what will happen to US Airways Group (mainline, ALG, PDT, PSA) They filed for ATSB, $900million of a $1billion gov backed loan gaurantee, and Seigal has already stated if rejected its off to Bankruptcy court. So how will this play out?

A situation that I heard recently was that United and US Air are positioning for a gov supported merger of sorts. I have been trying to find out more, but the United ATSB loan application stated something about unlimited blanket codeshare with US Air in order to get the East coast feed needed for their survival and to drum up the needed employee concessions (employees feel they have to have more presence in the East to survive, without it no concessioins.) So as I understand it they are planting the seed in their application to the ATSB that if the two companies were allowed to exist as one they could survive. How opportune if US Air finds itself filing bankruptcy the same time the Gov is considering how to help keep United viable. Isn't this similar to what went down with TWA? (of course in a totally different climate) b/c AMR couldn't buy TWA when they weren't bankrupt, but when TWA did the gov has no problem with it.. I am just trying to see A) could this be true? B) has the gov set a precendent in the past with what they will or will not allow to happen after an airline files for bankruptcy?
 
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publisher

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Opinion

The various ways that this could play out would take all day but here are some thoughts.

It is more likely that USAirways will get money rather than United. They are in much worse shape financially and have employee groups more likely to meet the requirements of the board for cost concessions.

They can do the code share deal with United and that may help. Their marketshare along with Uniteds is not headed in a positive direction.

Little question that they will go Chapter 11 if government does not come through.

The TWA example is not a close parallel to what the situation is now. TWA was not making it during the best of times for airlines, had terrible long term financial history, and really only one stronghold,.
 

vja217

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Remember also that United's balance sheet is much cleaner than Usair's. UAL has 2-3 billion in cash just sitting around, so even if they are losing upwards of 10 million a day, they'll still be around a pretty long time. Usair, on the other hand, only has about enough cash to last them through Labor Day.

I remember watching a congressional inquiry on the Usair/United merger way back then, and one of the questions that was asked to Wolf and Creighton was "if this merger does not go through, will Usair be able to stay in business?". Of course back then they were able to say "of course" and laugh about it... funny how things change.

Another thing to remember -- that 900 million ATSB loan isn't going to be the panacea that everyone thinks it is -- it only means that Usair will stay afloat for another 6 months or so. They still have to reorganize themselves to make their business model profitible, and to be able to service all this debt (including the ATSB load) that they have acquired.

Bankrupcy is not necessarily a bad thing for Usair, infact from their company's point of view, it would solve a lot of problems. It's no secret, Usair has way too much debt, and a bankrupcy will allow them to shed some of those liabilities. Anyhow, I wouldn't buy any U stock right now!

Max
 

canadflyau

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"Another thing to remember -- that 900 million ATSB loan isn't going to be the panacea that everyone thinks it is -- it only means that Usair will stay afloat for another 6 months or so. They still have to reorganize themselves to make their business model profitible, and to be able to service all this debt (including the ATSB load) that they have acquired."-Max

I think in a roud about way you agree with the rumor. You couldn't be more right, the US Gov won't give the loan without some plan. Right now the plan was for some several hundred million a year in employee concesses. I think in the end Seigal will fall short. Thus US Air is in bankruptcy court. Because they are a vital transportation they probably won't skip a beat while it is sorted out by the government. The court will see United as a means for US Air's survival, and who knows what kind of sweet deal will get cooked up.

"The TWA example is not a close parallel to what the situation is now. TWA was not making it during the best of times for airlines, had terrible long term financial history, and really only one stronghold,."-Publisher
Ok I think they are very similar.Pre 9/11, USA was not making it during the best of times for airlines, had terrible long term financial history, and really only one stronghold, the Northeast.

Mabybe they have a very similar past, and maybe a very similar future, substitute United for the role AMR played at TWA.
 
3

350DRIVER

Should be a very interesting "intense" next several months for Airways and as to what will happen "if" the Gov't does not come through is anyone's guess-

Even "IF" they do get the money it will only last so long and then I believe they will be in the same boat as they are now. Sad because I have always been treated extremely well when on them and have nothing but good things to say about Airways-

As for TWA- that was a Compton screw-up... sad all the history (75+ years) went right down the tubes-(he should have studied the MD a tad more and stayed out of the front office- (too late now).....

C H E E R S

3 5 0
 

Bluestreak

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Ch. 11 next ?

MEC CODE-A-PHONE UPDATE #2
June 30, 2002
This is Roy Freundlich with a US Airways MEC update, number two, for Sunday evening, June 30, with two new items:
Item 1. The Negotiating Committee met with management all weekend and was prepared to resolve outstanding issues.
Yesterday, the Negotiating Committee believed it had reached an important tentative agreement with management on small jet code-sharing authority, which gave the Company industry-leading flexibility on operating small jets at US Airways Express carriers.
Today, management provided an unprofessional response to ALPA's proposals by informing the Negotiating Committee that management's current positions are stated in their June 28th proposal to ALPA, which is the proposal that preceded the June 29 tentative agreement on small jet code-sharing authority. Management took a position of refusing to respond to ALPA's current proposals and reneging on yesterday's tentative agreement on small jets.
The Negotiating Committee could not continue discussions with management under these conditions and walked out of negotiations this evening. ALPA is prepared to resume discussions with management that are intended to be conducted in good faith, and that can resolve issues in a professional manner.
No further negotiating sessions have been scheduled.
An updated MEC Fact Sheet on current positions is being prepared and will be posted on the MEC website shortly.
Item 2. The MEC will reconvene its special meeting tomorrow, Monday, July 1 at the ALPA office in Herdon, VA. The meeting is scheduled to begin at 2:00 p.m. and adjourn at the completion of business. All US Airways pilots are encouraged to attend. The telephone number for transportation information is 703-689-2270. Please be advised that portions of the meeting will be in closed session.
Please remember we have 1,070 pilots on furlough.
Thank you for listening.
 

canadflyau

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Bluestreak- I read that article just moments ago... Can you say the ticked off response is the feeling that they are headed for Ch11 and Siegal isn't happy? So he feels negotiations and TA's are a moot point...

The plot thickens
 

Tim47SIP

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I guess that sometimes ALPA has to lose the hard way. Hopefully it is not to late as the loan deadline is over. I read an article a week ago that stated that several members of Congress assured the US Air management team that the loan would be approved. Guess we will find out sooner or later.
 

reepicheep

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Us Airways did indeed meet the deadline for the loan app. Note there is nothing preventing airlines in CH. 11 from participating in the program.

The vibes lately are real bad; mgmnt. is playing games with us as evidenced by the above post. Confirmed reports indicate maintenance is readying a significant number of 737's for return to the lessors.

Managment's stated Ch. 11 plan is to downsize by another 50%. They refuse to entertain any request to discuss furlough protections.

The consensus is that something's about to happen.
 

ryane946

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US Air

I have seen all the scenarios but I think that most of them are very unlikely. I think that the United/US Air Codeshare is the solution which will happen.

US Air is loosing money fast, second only to America West. Even before September 11, US Air was not doing that well. They need more people taking their flights.

United Airlines has more presence out west and not so much in the East. Their Washington Dulles HUB is more for Europe and the west coast. Flights to places like Orlando, Atlanta, New York, and other large destinations are done on regional jets. Point being is United needs more presence out East. As far as I am concerned, United has the best airline alliance in the world. They are allied with Air Canada, Mexicana, Lufthansa, Al Nippon, Air New Zealand, Aloha Airlines, and other great airlines. However United has no alliances with airlines in the Continental United States. Most airlines have a few codeshares with airlines inside the US. United has none.

So US Air needs more people to take their flights. United needs more presence in the East. If United and US Air have a codeshare, it is a win/win situation.


I think that US Air has one big problem that needs to be fixed. They have 3 HUBS, 1 in PHL, 1 in PIT, and 1 in CLT. These 3 airports are within 200 miles of each other. I think they need to consolidate one of their HUB's. Move those aircraft to an existing HUB or move them to large airports. For isntance, Comair is about to pull numerous CRJ's out of Orlando. No major airline has a hub in MCo, how about moving a HUB there. Another big non-hub airport is Boston. They should take advantage of these openings. That was just a suggestion.

United/US Air Codeshare is the best way to go.
 

chperplt

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So US Air needs more people to take their flights.
Maineline US Airways flights are full. I've tried to nonrev many places within the system over the past 4 or 5 months and most flights are oversold.

As far as Express goes, my dinky little 19 seater is carrying at least 17 people on just about every non eas leg throughout our entire route system.

Putting people on the airplanes does not seem to be the problem.

Finishing the fleet consolidation and reducing the overall cost per seat mile is a big part of the answer. Code sharing will be good for business, but won't reduce costs.
 

reepicheep

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A code share with UAL is not the answer - Salomon Bros. estimates only $100 million/year gain for US Airways.

Anyways, it sounds like UAL employee issues would kill the deal before it got off the ground.
 

canadflyau

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$100million/year gain sounds like a great start!

Hopefully they will build from there, reduce costs (that means streamlining management and fleet types, not front line labor!) and continue working on the revenue problem (ADDRESS THE STINKING FARE SYSTEM, IT IS WAY OVERDO TO BE REVAMPED.)

United and US Air, sounds like a winning combination to me.
 

canadflyau

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US Airways Management & ALPA Agreed RJ

US Airways Management & ALPA Agreed RJ Position inked in the latest TA.

Anyone else read it!!? Looks like not only does it specifically mention United, it has Embraer all over it.. Sounds like Siegal has already picked out the specific aircraft (EMB-170 & EMB-190) and who he plans to team up with!
 

Checks

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What does that mean for PSA?

I suppose I failed Business 101 but I dont understand how a company that is close to Chapter 11 can afford to buy these regional jets. Usually when a company files for BK they have to sell assets not buy them.
I do understand how they could get CHQ or Mesa to fly RJ's with Us Airways written on the side but could someone explain how PSA would get to fly RJ's?
 
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Wings Level

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Well I believe actions speak loader than words. Although USAir
is technically close to a Chap 11 position, management is probably confident that they have a solution to avoid it. Otherwise they would not spend all their time and focus putting the plan together to get the RJs.

They are just using the bankruptcy threat to keep pilots in fear of losing there jobs and as a means of implimenting salary concessions. My bet is that we will likely see an announcement soon that they got the $1 bil loan and they are moving forward to buy the jets.

Then we can watch everyone have a major dispute about who is going to fly the new airplanes...
 

dogg

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I would say for all of those pilots who work for airlines that are making a little money and that have a valid plan, they need to hope for approval of the government loan. Competing with an airline sliding down the drain in chapter 11 will only hurt the remaining carriers.
 

LR25

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Last I heard the negotiations broke down again for jets, anybody have any news on that? I think they (mainline) are asking for to much.

There hasnt been an update since last Thursday.
 
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