US Airways Files for Bankruptcy Protection

[skykid]

"And soon, you will see US Air 737's and 319/320's being operated with pilots being paid a little less than that of Southwest. Just my guess."

Well, sign me up!


My point is that US Air took a bunch of taxpayers' money and now is saying "yeah sorry, we won't be able to pay you back.

I understand the point you are making but it is not taxpayers money, and the govt can and will take action to enforce the provisions of the guarantee if need be.

 

[sonofaeagle]

Ticket Prices

How do the airlines determine ticket prices? It seems to me prices are pretty darn low. I imagine that accounts for the lower revenue. Right?

Is the plan to hook people back into flying, and then slowly raise prices back up again?

 

[sf3boy]

The airline still owes Uncle Sam $718 million, and it will ultimately be up to a bankruptcy court to determine the government's place in line among creditors. But Lakefield said the Air Transportation Stabilization Board is a secured creditor, and would be first among those seeking repayment.

This was in an AP article by Matthew Barakat on Sunday. Sounds like taxpayers to me, but then again I'm just a dumb regional FO. I wonder which aircraft and or other assets the government will call in to have sold to be made whole?

 

[Mach 80]

sf3boy,

>>>>And soon, you will see US Air 737's and 319/320's being operated with pilots being paid a little less than that of Southwest. Just my guess. Doesn't take a rocket scientist to see where Northwest, Delta, American, etc... are going to go with this. <<<

You and many others make a very wrong assumption about SWA pay. SWA is now the 2nd highest narrow body pay in the industry and who knows, it may be # 1 after Delta takes a possible concession. A 12 year SWA CAptain will be making $181/hr....more than an American 757 Captain. You might start using AA or UAL as the low end bench mark from now on, not SWA. Some of the SWA pilots are concerned that the UAL, and AA rates are eventually going to drag their's down. As someone said after you made your ignorant comment .."Sign me up".
http://www.airlinepilotpay.com/

Writers always talk about SWA's lower labor rates. Well, it's not actually labor rates -- it's various efficiencies in their business model that allow their OVERALL labor costs to be lower than others, not necessarily their rates.

 

[Vortilon]

SF3BOY,

I think what he is saying is that the ATSB Loan Guarantees were just that...guarantees. The airline's financing still came from other sources, just that the government "co-signs" the loan. If it comes down to it, assets would be liquidated to pay the default value to the government. The cost to tax payers (and risk for that matter) should be zero.

Which is why I've always been amazed at the rediculous decision not to give the guarantees to UAL.

Good luck everyone.

 

[lowecur]

The airline still owes Uncle Sam $718 million, and it will ultimately be up to a bankruptcy court to determine the government's place in line among creditors. But Lakefield said the Air Transportation Stabilization Board is a secured creditor, and would be first among those seeking repayment.

This was in an AP article by Matthew Barakat on Sunday. Sounds like taxpayers to me, but then again I'm just a dumb regional FO. I wonder which aircraft and or other assets the government will call in to have sold to be made whole?

As of 6/30/04, UAIR had $975M in unrestricted cash. The $110M owed the pension plans shortly will be reduced by deferral. The sale of the Shuttle can reduce the loan guaranty by $125M, thus freeing up close to $300M to operate the airline in the short term.

If the BK judge gives quick relief on the union contracts, you will see DIP financer's step to the plate. These bankers will also offer exit financing in exchange for stock ownership. It's a tight rope, but the loss of air service to many small communities that would not be picked up by other carriers is at stake. I see the Feds working with UAIR to maintain viability as long as necessary.

 

[Lear70]

How do the airlines determine ticket prices? It seems to me prices are pretty darn low. I imagine that accounts for the lower revenue. Right?

Is the plan to hook people back into flying, and then slowly raise prices back up again?

That, my friend, is the Six TRILLION Dollar question. Since deregulation the airline industry as a whole (not including SWA or some other LCC's) has posted a net loss, NOT a profit. That means, in a nutshell, that deregulation FAILED. Oh it gave flyers lower prices alright, and it stimulated competition; unfortunately, it stimulated it DOWNWARD as we've watched the quality of service decline steadily to match the declination of fares and thereby, revenue.

The big issue: How do we raise fares? The big answer: We don't. The more we raise them, the more people flock to LCC's. Why? Because the disparity of service that USED to exist is nearly nonexistent except to first class passengers and the airline can't run on that revenue alone. The Legacy carriers are therefore good for only one thing these days: International Routes, and who knows what's going to happen with Branson's new venture - maybe he'll start the International LCC wave of the future.

Bottom line, the downward spiral of the airline industry has NOT reached the bottom yet, we're still far from it. How's that for a depressing start to your career? Welcome to aviation - good thing I'm in it because I love to fly, otherwise I'd have to call "Truckmasters".

Incidentally, the bottom of this spiral ends where ALL the Legacy carriers have bankrupted their way into weaseling out of their pensions, reducing salaries of ALL labor by 50-70%, getting new cheap terms on the assets, then bankrupt anyway because the hub-and-spoke model doesn't support a LCC environment they're trying to create. At some point, the government is going to have to step back in again, I don't see much of a way around it if things continue at their present pace...

Speaking of the government, the idea that the taxpayers aren't paying for failed carriers with ATSB loans is rediculous. Where do you think that money came from? Answer: the Federal Budget which had the ATSB ammendment added to it after 9/11. The deficit we create will EVENTUALLY have to be restored which either means less governmental spending (not likely) or increased taxes. How long do you think we as a country can keep digging a hole for ourselves in terms of the Federal Deficit?

Bronner with the PBGC is another story. If U liquidates completely, I'm sure the Federal Government and the PBGC will get the lion's share of their money back - funny how the Government protects itself first, other businesses second, taxpayers last.

 

[PSL]

I'm curious ...

Since the judge for the Bankruptcy Court will essentially be making the management decisions for US Airways, what restrictions will placed upon the unionized employees?

1) Will they, like in Section 6 negotiations, be ordered to maintain the 'status quo' by showing up for work even though their compensation package will most likely be ransacked ? If so, does this sound like indentured servitude to anyone?

2) Will they be permitted to withhold their services (strike) due to their contract being abrogated ?

 

[skykid]

Speaking of the government, the idea that the taxpayers aren't paying for failed carriers with ATSB loans is rediculous. Where do you think that money came from? Answer: the Federal Budget which had the ATSB ammendment added to it after 9/11.

Not correct. All airlines got a couple of payments after 9/11 that added up to billions in taxpayer money. But, the loan guarantees did not come from the federal budget. There was a limit on guarantees in the legislation you speak of (I think 10 billion), but that is money from private creditors only guaranteed by the govt. Do you really think our Congress has any money set aside for covering potential defaults? If you want to argue that the ATSB may not get all the money they gauranteed if it comes to liquidation, that is a valid arguement. However, I'm sure there are very few people who know where the ATSB would be in line, and what the big picture is on recovery, so it would be pure speculation to say the taxpayers will be holding the bag.

 

[AA717driver]

The company can use Sec. 1113 of the bankruptcy code to amend the contracts. I believe the employees still have the right to self-help at that point.

I'd look for the FA's or IAM to pull the trigger on that one. The IAM will take it in the shorts in the 1113. Outsourced ramp and mx will head straight to Alabama.TC

 

[halfmoon]

Already trying to drop lease payments on 23 a/c.As soon as the ATSB asks for their loan payments UAIR will liquidate. Expected after the elections.
This is getting really bad!!

 

[skeezer]

Already trying to drop lease payments on 23 a/c.

None of those aircraft are currently flying. They include 1 737, 12 Do-328's and 10 Dash-8's. Simply shedding some excess debt. Not a big deal.

Skeezer

 

[Lear70]

The ATSB CAN'T demand their loan payment while U is in Ch. 11, that's the whole point... Staves off the wolves for several more months while they try to put something that will work together after completely decimating the working contracts and I think T.C. is right - the IAM will probably pull the trigger on self-help and that may be the final curtain if they do... can't blame them if they're going to lose half their employees to outsourcing anyway. This whole thing sucks a*s.

There was a limit on guarantees in the legislation you speak of (I think 10 billion), but that is money from private creditors only guaranteed by the govt. Do you really think our Congress has any money set aside for covering potential defaults?

My point EXACTLY The Federal Government has GUARANTEED those ATSB loans. So when they are defaulted on by carriers that don't survive, THE GOVERNMENT HAS TO PAY UP. You said it yourself, Congress certainly doesn't have money set aside for that, they'll have to cough it up from somewhere, and I don't think you'll find a taxpayer anywhere who doesn't believe we'll bear the brunt of it eventually, similar to all the crack whores we have on welfare. I swear to God you should have to have a permit to have more than one child. Sorry, different rant...

 

[chperplt]

Staves off the wolves for several more months while they try to put something that will work together

Not completely accurate. The Ch 11 filing gives US Air (or any airline) 60 days to settle with the aircraft lease companies. If, after 60 days, the airline and lease companies do not come to an agreement, the leasing companies can repossess the airplanes.

 

[becket]

I think Alaska pays 197.00 an hour for capts. Alaska is the 2nd highest paid narrowbodies, at least as far as straight hourly pay in concerned.

 

[sf3boy]

Mach 80,
I never said "sign me up." That was someone else.

But you were correct in my failing to account for the concessions given at those other carriers to bring SWA pay up to the other majors as far as 100-150 seat aircraft. I am still stuck in the mode that all DL, AA, UA, US, NW pilots are disgusted with WN pilots for watering down their profession.

On another note:

Judge Gives US Airways Temporary Permission to Use a Government Loan to Fund Daily Operations


ALEXANDRIA, Va. (AP) -- A bankruptcy judge gave US Airways Group Inc. permission Monday to tap a government loan to fund daily operations -- a move expected to allow the airline to continue its normal flight schedule while it searches for additional financing.


Lakefield said he still believes employees will voluntarily negotiate new labor agreements. If not, the airline can ask the court to cancel the existing labor contracts. Lakefield would not speculate on how long the company would continue to seek consensual agreements.

Meanwhile, the airline asked the court for permission to avoid payment on several of its retirement plans. That includes a $110 million pension payment to the plans for its machinists and flight attendants that would have been due Wednesday, and about $19 million in contributions to the pilots' 401(k)-style retirement plan.

The company's plan to skip those payments raised concerns from the Air Line Pilots Association and the federal Pension Benefit Guaranty Corp., which wants to ensure the pension plans' solvency.

"We strongly recommend that they reconsider their plan" to avoid retirement contributions, said Richard Seltzer, lawyer for the pilots' union. "It's unfortunate and it's counterproductive" as the airline continues contentious negotiations with the pilots' union.

PBGC lawyer Susan Birenbaum said the pension contributions "are mandated by federal law" and stressed "the importance of continuing to fund the plan while in bankruptcy." Mitchell scheduled a hearing on the issue for Oct. 7.

 

[thruthemurk]

sf3boy,
Some of the SWA pilots are concerned that the UAL, and AA rates are eventually going to drag their's down. As someone said after you made your ignorant comment .."Sign me up".
http://www.airlinepilotpay.com/

Writers always talk about SWA's lower labor rates. Well, it's not actually labor rates -- it's various efficiencies in their business model that allow their OVERALL labor costs to be lower than others, not necessarily their rates.

Have you been watching the industry for more than a few weeks? For 27 of the 30 odd years that southwest has been in business their pilot rates were below the competitions. Now that most carriers rates have fallen below theirs, it is a little disengenous to latch on to SW pay as some kind of new benchmark.

I am not blaming any individual SW or LCC pilot, It was an unavoidable side effect of deregulation that the rates would come down, but there is not a lot of doubt where the race to the bottom began.

 

[Full of LUV]

Total Labor Costs?

sf3boy,

>>>>And soon, you will see US Air 737's and 319/320's being operated with pilots being paid a little less than that of Southwest. Just my guess. Doesn't take a rocket scientist to see where Northwest, Delta, American, etc... are going to go with this. <<<

You and many others make a very wrong assumption about SWA pay. SWA is now the 2nd highest narrow body pay in the industry and who knows, it may be # 1 after Delta takes a possible concession. A 12 year SWA CAptain will be making $181/hr....more than an American 757 Captain. You might start using AA or UAL as the low end bench mark from now on, not SWA. Some of the SWA pilots are concerned that the UAL, and AA rates are eventually going to drag their's down. As someone said after you made your ignorant comment .."Sign me up".
http://www.airlinepilotpay.com/

Writers always talk about SWA's lower labor rates. Well, it's not actually labor rates -- it's various efficiencies in their business model that allow their OVERALL labor costs to be lower than others, not necessarily their rates.

When you say, "efficiencies" you mean things like pensions and health insurance for retirees? Oh yeah, that's right, let's fix the no retiree medical insurance by raising the mandatory retirement age thereby allowing pilots to work until they qualify for medicare.
Thanks SWAPA, way to hold the bar.
My how this profession has changed in 5 years time.

 

[michael707767]

Have you been watching the industry for more than a few weeks? For 27 of the 30 odd years that southwest has been in business their pilot rates were below the competitions. Now that most carriers rates have fallen below theirs, it is a little disengenous to latch on to SW pay as some kind of new benchmark.

I realize that even now with their pilot pay rates suddenly among the top Southwest is making money. But I have to ask myself how long it will be before even Southwest management takes a look around the industry and wonders how much more they would be making if they could align their pilot pay with the industry average.

 

[canyonblue]

Thanks SWAPA, way to hold the bar.

I didn't realize I was holding the bar for you. I have been at SWA for almost 3 years and have felt that I have been adequately compensated, I could always take more but my pay is fair, after all the SWA business model affords no First Class and no International flying to make up for revenue shortfalls in the domestic market. If my SWA pilots before me worked for what you may call a paltry sum then you should take it up with them. Ask them why they made near bottom wages for many years and you might be surprised at the blame being placed at AA, DAL, UAL. These carriers have tried to put SWA, and those pilots before me out of a job since day one. So when you ask "What has a SWA pilot done for me lately?" Don't be surprised if they just don't give a d@mn about you or your bar.

 

[atafan]

Right on canyonblue!

Since when did any of the legacy carriers give even a second thought about any of the LCCs other than wanting them to go away.

Heck, most don't even know who ATA is!

 

[Publishers]

U

Industry average does not mean much if you cannot get passengers to pay to be on your aircraft at a rate that can compensate the crew. U cut the costs but failed on that second part of the equation, butts in the seats at a decent yield.


What gets me is that seems to be this thing like it is a right to make a great living flying aircraft and guaranteeing pilot pay will remain at some level.

Southwest has been able to strike a reasonable compromise until now on compensation somewhat offset by productivity and a model that puts butts in the seats. If the legacy carriers cannot immulate that approach, they will cease to be legacy except in their own minds.

 

[Full of LUV]

To heck with the bar!

I didn't realize I was holding the bar for you. I have been at SWA for almost 3 years and have felt that I have been adequately compensated, I could always take more but my pay is fair, after all the SWA business model affords no First Class and no International flying to make up for revenue shortfalls in the domestic market. If my SWA pilots before me worked for what you may call a paltry sum then you should take it up with them. Ask them why they made near bottom wages for many years and you might be surprised at the blame being placed at AA, DAL, UAL. These carriers have tried to put SWA, and those pilots before me out of a job since day one. So when you ask "What has a SWA pilot done for me lately?" Don't be surprised if they just don't give a d@mn about you or your bar.

Canyonblue and other LCC's,
Todays LCC's will be tomorrow's legacys. I would like you to print out your post frame it and look at it when you have 15 years in with SWA and start to lament about an airline that has begun to replace you. My point wasn't that you don't feel adequately compensated, obviously all employed pilots feel compensated for their current position or they would quit. Mesa feels compensated, U air pilots feel compensated etc. It's the fact that there will always be someone willing to work for less. Heck, some people even fly for free. My wife works for a company that doesn't match a cent of her 401K, why should SWA match? She doesn't get any travel benes, why should SWA. These are all costs that could reasonably be trimmed from the industry in the next decade of "bar" readjustment. Just wait until the SWA contract is due again whenever and see how generous the company will be. Its all a giant market, for both the product and labor. It really isn't the pilot profession, it is the pilot market. Now I gotta go, it's time to make the donuts.

 

[canyonblue]

That's the trouble with any "bar" scenario. SWA will pay what it can afford to pay, no more. Gary Kelly has made a point of this and trying to be "industry leading" anything is asinine unless you have the goods to back it up. Once again for the hard of hearing, we have no First Class, no international and no alliance with another airline. Just who should we compare ourselves to? For a domestic only single class, single type airline most SWA pilots feel fairly compensated. For the other "Full Service Legacy Carriers", I don't know are they fairly compensated? Ask one some time. Wasn’t it Delta that had bag stickers that said "United plus a $". Be careful what you wish for, Grinstein might just be printing those up.

And as far as:

"I would like you to print out your post frame it and look at it when you have 15 years in with SWA and start to lament about an airline that has begun to replace you."

I don't need to frame it, I already have it embroidered on a pillow in my rec room. Don't worry, at SWA we all know the history of the battles, and the Airlines that were out to kill us. Those senior guys at SWA aren’t loosing sleep over the troubles of the Legacy’s or the path they are headed. They started it, now they have to live with it.

 

[100LL... Again!]

Industry-leading contract?

Leading in which direction?

 

[vetteracer]

Bob Crandall gave the industry the B scale long before SWA was a thorn in anybody’s side other then Texas International. The list goes on and on for the decline in industry pay. I am just about finished with "Hard Landing" and recommend it to all in this industry.

It seems in form with this forum that a thread about a failing airline turns into finger pointing on our part.

Mark

 

[Lear70]

Everyone needs to read the following

Nuts! (The story about SWA and how other carriers tried to put them out of business is especially interesting).

Flying the Line Vol I and II - the ultimate guide to union negotiations at any carrier where the management/pilot relationship is less than "friendly".

Hard Landing - explains very nicely what deregulation has done to this industry.

If you haven't read those yet, taking notes and filing for future use, then QUIT BASHING OTHER AIRLINES!! Number one, it accomplishes nothing (similar to PFT - you're not going to convince anyone of anything on here 99% of the time, even if your argument is correct), Number two, an uneducated debater is going to lose, Number three, your time could be put to better use AT YOUR OWN CARRIER! Volunteer to a committee or if you want nothing to do with your union, go work at a homeless shelter or something. Make the world a better place through action, not rhetoric.

Or, alternately, you could go into politics if you like to debate all day long - CSPAN has great coverage of it... Maybe you can be the catalyst for pension reform - God knows we need it.

My mommie's calling - I have to do my chores (don't you just love when the caller I.D. comes up "xyz Airline Crew Scheduling"?) Fly safe, and try to remember we got into this because we like flying... pause for a minute in cruise at sundown, take a deep breath, and just ENJOY!

 

[CitationLover]

We are all in trouble if he starts flying 737's and the FO's are only making $25/hour.

time for some credit where it is due. we have already SHOT DOWN jo's "request" for this. mesa pilots are not your enemy.

 

[WyoHerkdriver]

Actually, JO proposed that the pay (for FOs) to fly the 737 would be $20.47/hour. He actually wanted the 737 pay to be the same as the regional jet pay (at least for FOs). I think it is an insult to pay a pilot that little to fly an 84 seat regional jet - not to mention a 737. Things are going to get very ugly if we see Mesa flying the 737 and paying pilots $20 an hour to do so.

 

[Beantown]

Actually, JO proposed that the pay (for FOs) to fly the 737 would be $20.47/hour. He actually wanted the 737 pay to be the same as the regional jet pay (at least for FOs). I think it is an insult to pay a pilot that little to fly an 84 seat regional jet - not to mention a 737. Things are going to get very ugly if we see Mesa flying the 737 and paying pilots $20 an hour to do so.

Wyoherkdriver, Please read the post above. Mesa pilots laughed at JO's 737 offer so you will never see this happen. Relax. -Bean