US Air?

[350DRIVER]

....yeah, that'll work. Sell off the only thing making them money right now.

On that note, isn't Piedmont the only wholly owned making any money or so I have been told?. All planes are paid for as well.

3 5 0

 

[Smoking Man]

350driver

The PSA and MidAtlantic are also making money, the financing for the RJ's is not provided by U, it is provided by GE and can only be used for RJ's. In addition very few of the Dash 8's are owned they are on lease.

 

[SkyBoy1981]

I also find it rather unbelievable that US Airways would be completely liquitated so spontaneously simply for not making a loan payment. If, for whatever reason, the Stabilization Board were to consider the liquidation of US Airways it would most likely become a political battle. The collapse of US Airways 2 months before elections would be a killer for Bush and the Republicans, so you can bet that they would be fighting every way possible to keep them alive until after the election is over at least. I am by far no political analyist, but thats just my thoughts. I also agree with 350Driver that the loan will probably be readjusted, at some point part of the US Airways assets will be sold and they will end up reemerging as a smaller carrier. If so, this is a process that will happen over the next several months, not weeks.

 

[tittyjet]

The collapse of US Airways 2 months before elections would be a killer for Bush and the Republicans, so you can bet that they would be fighting every way possible to keep them alive until after the election is over at least.

Outstanding observation.

 

[350DRIVER]

The collapse of US Airways 2 months before elections would be a killer for Bush and the Republicans, so you can bet that they would be fighting every way possible to keep them alive until after the election is over at least.

Very good point... I agree 100% on this. Bush already has an uphill battle as it is now let alone the ramifications that will then come into play should Airways go bye-bye- prior to the election. I just can't see this happening, you would have to assume that some way shape or form something can be done here.


3 5 0

 

[NCFlyer]

Let me add this to the discussion:

USAirways has a pension obligation due the middle of next month in the $190 - $200 million range. In my opinion, they have no intention of making that cash payment. So that leaves them with 2 options:

1. Have that obligation negotiated away through standard (can you say hurried) negotiations, or

2. Enter bankruptcy and have it eliminated by the courts.

Also, I don't know what the revenue to debt ratio is at this point, but if memory serves me correct (and it might not be) USAirways used a $250 million prepayment earlier this year to keep the ratio within the range required by the ATSB loan.

 

[B190Captain]

The PSA and MidAtlantic are also making money, the financing for the RJ's is not provided by U, it is provided by GE and can only be used for RJ's. In addition very few of the Dash 8's are owned they are on lease.

Does that mean that if USAir tanks, PSA will keep getting the RJ deliveries?

 

[Jungle_Jet]

All of you guys speculating that the WO's can be sold to raise cash miss an important economic concept (which is not unusual for pilots, we are perhaps the least economically astute work group around).

With their only client (US) tanking, what value would these companies have to any outside buyers? They have no assets (aircraft mortgaged to the hilt or leased). You can't buy them with the expectation of their current cash flow continuing, as it won't after US goes under. Also the current market value of RJ's is pretty much nil, suffice it to say that the props are even lower.

In the end, the alleged business model for US will be their downfall. The fact that they have built up nearly their entire route structure on short haul flying in the NE will be what determines their fate. That flying is way too expensive (not that the unions are helping in that cause) and post 9/11 people aren't intersted in dealing with the BS involved with flying for a 90 minute flight, priced at $.20 a mile. They save more time (and money) taking Amtrak, driving or flying charter (which is much more cost effective than flying DL, US, NW or CO).

If anyone at US had ever had the foresight to maintain a west coast route structure, holding on to BWI or strengthening their int'l routes without caving in to the unions at every turn, then I think US could weather this like CO or NWA will. But forsight seems to go against US's biz plan.

 

[SRJ]

Didn't USAir finish second in profits in the entire industry after the second quarter? I know they are in a huge rut but they have shown some progress towards the positive side and I think that the creditors may feel a little better about their investment in this "sinking ship".

 

[SkyBoy1981]

With their only client (US) tanking, what value would these companies have to any outside buyers?

I think you have a very legitimate point here. Using turboprops to fly short hauls around the Northeast has played an important role in the US Airways system, but the demand for it is diminishing. It would probably be very difficult for US Airways to sell operators like PSA, Piedmont, or Allegheny even if they wanted to. I personally don't think that they would WANT to at this point, considering the lower cost of operation with these carriers versus the mainline is probably helping to keep them alive. I still think US can make it, but its going to require downsizing in some areas and possibly restructuring itself in order to change its targeted market.

 

[CRJDog]

I think you have a very legitimate point here. Using turboprops to fly short hauls around the Northeast has played an important role in the US Airways system, but the demand for it is diminishing. It would probably be very difficult for US Airways to sell operators like PSA, Piedmont, or Allegheny even if they wanted to. I personally don't think that they would WANT to at this point, since the low cost of operation with these carriers versus the mainline is probably helping to keep them alive. I still think US can make it, but its going to require some downsizing and possibly restructuring to change their targeted market.

PSA will be all jet by Sep 7. It would not be hard to sell PSA since they an asset not a liability.

 

[SkyBoy1981]

PSA will be all jet by Sep 7. It would not be hard to sell PSA since they an asset not a liability.

Again it will go back to who would want to buy the entire PSA operation. What value would it really have to anyone? As stated previously, RJ's don't have the highest market value right now either. I personally think they are being over-produced, but thats another story for another thread. Again, if downsizing is going to be done and assets are going to be sold, it will most likely be those assets which can be sold easily and have the least value to the everyday operation of US Airways. I don't think PSA is one of them. These are just my thoughts and opinions. Anyone with more inside information or economic experience feel free to correct me.

 

[Jungle_Jet]

SkyBoy, you are correct. An item is only worth what someone is willing to pay for it (Econ 101 again) and I don't see any buyers out there for much of anything. Certainly not RJ's, which have an extremely low return on investment and of which there will be a pretty high number getting a tan soon.

Again, why would anyone else want PSA, and who could pay for it? SWA doesn't use regional affiliates, and they're the only ones with any money (and they're too cheap to buy anything anyway). Besides, I don't think anyone else would want those routes.

The only things US has that have any value would be the shuttle, BOS terminal/gates/operation, LGA and DCA slots and some int'l route authorities. An asset sale wouldn't net them much, and may trigger some loan covenants anyway.

As much as I hate to say it (and I really do) US is done and many of our bretheren will be unemployed very shortly. It saddens me, but a price must be paid for extremely poor business decisions and poor career planning.

 

[lowecur]

UAIR reprieve

Looks like they may have enough to meet the covenants if the FA's and IAM's approve the $68M deferral to the defined benefit plans. It will be close based on what kind of numbers show up on Sept 30th.

The procedes from a possible Shuttle/slots/gates sale have already been promised to GECAS to keep the 170's and CRJ's coming. The cash part of the deal is limited to $125M, with a note for the remaining money. The total value of this deal is estimated to be around $400M, which would value the note at $275. This will only be used as a last resort if they decide to go 11.

US Airways Seeks Pension Payments Delay
Monday August 16, 5:32 pm ET
By Matthew Barakat, AP Business Writer US Airways Seeks to Delay Pension Payments to Conserve Cash, Avoid Second Bankruptcy Trip


ARLINGTON, Va. (AP) -- US Airways Group Inc., which is desperately seeking new labor deals with its employees to avoid a second trip into bankruptcy, said Monday it is seeking to conserve cash by delaying required payments to its machinists' and flight attendants' pension plans.

The airline said it would ask the Internal Revenue Service for permission to defer about $68 million in funds for those plans, making those payments over the next five years, rather than the next 18 months.

The airline said the move, if approved, would not affect the monthly payments due to pensioners.

In a memo to employees, the airline said only the machinists and flight attendants are being targeted because they are the only two unions that still have a defined-benefit pension plan. Other unions, including the pilots, have a defined contribution, 401(k)-style plan.

Joe Tiberi, a spokesman for the International Association of Machinists, said union lawyers are still reviewing the airline's proposal, but that it does not appear to violate the company's collective bargaining agreement and will not affect union members' benefits.

"I don't see any cause for great alarm," Tiberi said.

 

[OhDannyBoy]

I just have to ask...why are companies like Piedmont and PSA continuing to interview and hire new pilots?

 

[blzr]

Piedmont has a horrendous attrition rate, and PSA has low pay. Hard to find pilots willing to work for either regional right now.

 

[StarChecker]

As much as I hate to say it (and I really do) US is done and many of our bretheren will be unemployed very shortly. It saddens me, but a price must be paid for extremely poor business decisions and poor career planning.

After flying with quite a few J4J guys....I have to disagree with blaming their "career planning". When these guys were hired at Airways(in 1988 for some)....it was THE place to be. They were hiring like crazy, they had 400 Airbuses on order...anyone would have made the same choice. I don't see how blaming them for not seeing 15 years into the future is appropriate.

It's been a real eye-opener flying with these guys. A good dose of reality.

 

[Nova]

SkyBoy, you are correct. An item is only worth what someone is willing to pay for it (Econ 101 again) and I don't see any buyers out there for much of anything. Certainly not RJ's, which have an extremely low return on investment and of which there will be a pretty high number getting a tan soon.

Again, why would anyone else want PSA, and who could pay for it? SWA doesn't use regional affiliates, and they're the only ones with any money (and they're too cheap to buy anything anyway). Besides, I don't think anyone else would want those routes.

If an airline like PSA was liquidated I doubt they would try to sell it as a whole but piece it out. I agree that RJ's have a limited audience here in the US but they could easily find a seller abroad. Plus if nothing else, parking them in the desert is a possibility as they don't cost money when they don't fly. US is looking to save money, not necessarily raise money. They wouldn't have to sell their gates or infrastructure, just top paying rent on them and let each go abandoned.

 

[Jungle_Jet]

After flying with quite a few J4J guys....I have to disagree with blaming their "career planning". When these guys were hired at Airways(in 1988 for some)....it was THE place to be. They were hiring like crazy, they had 400 Airbuses on order...anyone would have made the same choice. I don't see how blaming them for not seeing 15 years into the future is appropriate.

It's been a real eye-opener flying with these guys. A good dose of reality.

I disagree, and seeing that I was flying back then while you were likely watching Saturday morning cartoons, I'll go with my observations.

It wasn't hard for anyone who could actually read an annual report, or understood anything about starting or operating a business to see that US was going to be struggling eventually. Assuming a large debt load combined with a limited route structure made it fairly obvious to anyone willing to see outside the box that something was going to happen.

Am I going to claim that I saw this happen 15 years ago, of course not. But even then US was concentrating on the NE corridor, which I felt would only support so much. There was nothing diffeentiating them from any other comapny, and that's dangerous in business.

Don't be fooled. All of you guys who think that ordering loads of new Airbii and hiring like crazy thus making a company the "it" place, have only yourself to blame. Does this mean that ATA was the hot place to be four years ago? What would you say about those guys now?

Besides, how many of those guys that you flew with were honest enough to look in the mirror. If they're like most of us flyers, then they likely feel they did no wrong, it's all management's fault.

 

[OhDannyBoy]

Will PSA/Piedmont New Hires ever make it to training?