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