USAirways - How much time? Estimates?

[Heavy Set]

Siegel's departure does NOT mean that USAirways' death is a certainty. USAirways could use some new management and some new strategies. Who knows?

However, given the lack of good cash flow (difficult to fulfill loan covenants), the lack of a coordinated strategy (at least in the short term), rising fuel costs, the infiltration of Southwest into the PHL hub, the saturation of LCCs on the East Coast including JetBlue, AirTran, Song and upcoming Independence Air and Virgin America (and ATA if it starts 717 service out of PIT or CLT), how much time does USAirways have left REALISTICALLY?

Can it survive the summer with increased competition on the East Coast and rising fuel costs? Any opinions or estimates? Can a new management team turn it around without focusing on further cost cuts? My estimate - 3 months as a new management team fails to come up with a good strategy (besides cutting costs to the bone)...

Good luck to all involved!

 

[SWA/FO]

25 days

 

[Swaayze]

If they ever had a chance it is 100% better now. Siegel clearly had no plan other than labor cost cuts. I suspect Dr. Bronner stuck with DS as long as he could, hoping for another round of concessions. Dave was very good at that, but recent events have shown that the current management had so strained labor relations that progress was next to impossible.

Mr. Lakefield is Dr. Bronner's right hand man and if ever there's a chance for additonal investment and a chance to succeed I think this is it. But you're absolutely right, they need to enact a plan immediately and move forward with mending labor relations to squeeze out that last little bit that's left to give. Otherwise he will oversee the return of RSA's investment through liquidation this winter.


Fingers crossed but not holding my breath,
Swaayze

 

[Splert]

if ever there's a chance for additonal investment and a chance to succeed I think this is it

How many shares did you buy today?

 

[Slug]

Siegel clearly had no plan other than labor cost cuts.

If you think it is just Siegel who is making the decisions about this I believe you might be mistaken. The whole upper management is in it together. Although, I work for SWA now I was at UAL for almost 2 years. It was the same situation there. Even though Goodwin left, management still sucked/sucks.

Good luck to all ya'll (Southern plural) USAir folk. Unfortunately, the hole management has dug is deep and I don't think there is enough time to climb out.


Slug


3 Months

 

[Flash 7]

The sooner the better.

All their concessions will just hurt everyone else. I don't mean any ill well against anyone but it will benefit the industry as a whole. who says life is fair.

 

[juan2go]

Ouch!

 

[Boeingman]

It will probably depend on the second quarter financials. If they are bleak, Bronner will protect what is left of his investment and take it into Chapter 7....with no warning.

They have already shopped their assets and no one is biting. I doubt any outside investor will pump hard cash to keep it going. Especially during the traditionally slow 3rd quarter.

One has to ask. What effect will this have with the ATSB for UAL if U tanks? I think the game will be over in less than 90 days for USAir.

 

[SDF2BUF2MCO]

Wonder if that is why Delta chose to offer more flights to/from PHL or was it to do battle with SWA (even though they don't fly into Hotlanta)?
Maybe they we're going to go into PHL no matter what. Time will tell..........

 

[Eagleflip]

I won't offer an opinion of when US Air might fold, but offer instead a question.

Should US Air go Chap 7, what would it take for the regional feeders, the Chataqua's and Colgans, to reemerge with their own operating certificates?

Or, are they wholly owned? Is there any chance for something--anything--to emerge reasonably intact from the debris?

Best of luck to all involved.

 

[MJG]

Yea, the whole Philly thing. Airlines can get pretty nasty when they smell blood.

I don't know enough about their situation to say how long USAir will last. This is an election year afterall. The last thing Bush needs is tens of thousands of USAir employees in PIT, CLT and PHL out of a job before November.

 

[nimtz]

I won't offer an opinion of when US Air might fold, but offer instead a question.

Should US Air go Chap 7, what would it take for the regional feeders, the Chataqua's and Colgans, to reemerge with their own operating certificates?

Or, are they wholly owned? Is there any chance for something--anything--to emerge reasonably intact from the debris?

Best of luck to all involved.

Bingo! All you guys who think US Air dying will take care of a capcity problem and prevent harmful concessions need to wake-up. US Air II will probably come around within six month after the original dies with low fare, no frills and a non-union workforce that pays RJ wages for A320's. The last thing we need is any more pricing pressure with how bad oil still stands. I will also bet that everyone's favorite snake Johnny Orenstien at Mesa has plans to fly bigger equipment at employee costs that would make Jet Blue raise their eyes. There's alot more to shake out from this then simply US Air folding and everyone benefiting from picking up its best stuff.

 

[Swaayze]

"How many shares did you buy today?"

Ha. You must be joking. Doubling a very small chance of success still leaves them with a small chance of success. Be careful not to misinterpret comments.

Not to mention I'm unemployed and on furlough from 2 different carriers, so the spare change is going away quickly. But now that you mention it, hmmm....maybe some call options. That'd refill the savings account quickly with only a small investment. Yeah that's the ticket. Thanks!

 

[SDF2BUF2MCO]

Bingo! All you guys who think US Air dying will take care of a capcity problem and prevent harmful concessions need to wake-up. US Air II will probably come around within six month after the original dies with low fare, no frills and a non-union workforce that pays RJ wages for A320's. The last thing we need is any more pricing pressure with how bad oil still stands. I will also bet that everyone's favorite snake Johnny Orenstien at Mesa has plans to fly bigger equipment at employee costs that would make Jet Blue raise their eyes. There's alot more to shake out from this then simply US Air folding and everyone benefiting from picking up its best stuff.

And if that doesn't work, then cabotage is next (joking somewhat). Right now I see the glass 1/2 empty sorry.

 

[~~~^~~~]

Bingo! US Air II will probably come around within six month after the original dies with low fare, no frills and a non-union workforce that pays RJ wages for A320's.

Didn't ALPA already negotiate sub RJ pay rates for 737-200 sized E170 / 190's at Mid Atlantic?

 

[RichardFitzwell]

Part of the Plan

Dave Siegel leaving was all part of the plan from the beginning. Get in, get employee concessions and get out as the bad guy. Dr. Bronner knew that U would either succeed by now or fail. I think he sees it failing.

Why else would Siegel’s contract allow him to get $4.5M BEFORE April 30, 2004? If his job were to actually run a successful airline, his contract would have him getting $4.5M AFTER April 30, 2004.

Mr. Lakefield’s job is to take the airline apart. How long will that take? Who knows?

 

[dlredline]

It will probably depend on the second quarter financials. If they are bleak, Bronner will protect what is left of his investment and take it into Chapter 7....with no warning.

They have already shopped their assets and no one is biting. I doubt any outside investor will pump hard cash to keep it going. Especially during the traditionally slow 3rd quarter.

One has to ask. What effect will this have with the ATSB for UAL if U tanks? I think the game will be over in less than 90 days for USAir.

Hate to say it, but I see this, too, as the likely scenario. Initial bookings for U are low, and probably will go lower with the unexpectancy of the situation. The U BOD couldn't come up with a viable business plan in 2 years under the boy-wonder's helm. By my count, they are a little over 9 weeks from meeting certain ATSB covenants by June 30th. Anything negotiated with the unions (ALPA, IAM - don't forget them, AFA) will require membership ratification, a lengthy process as well.

Unless the price of oil drops, U's bookings increase, and SWA falls on it's face in PHL (all not likely), anything between now and June 30th won't effect their eventual demise. Bronner and the RSA will want to recoup their initial $325 million investment with what little assets are left to sell before the bottom falls out. Like Boeingman said, it could very well happen in 90 days, and with little or no warning.

Sad? You bet. But trust me, there IS life beyond USAirways.

Red

 

[KeroseneSnorter]

I won't offer an opinion of when US Air might fold, but offer instead a question.

Should US Air go Chap 7, what would it take for the regional feeders, the Chataqua's and Colgans, to reemerge with their own operating certificates?

Or, are they wholly owned? Is there any chance for something--anything--to emerge reasonably intact from the debris?

Best of luck to all involved.

ALG, PDT, PSA, are wholly owned, MAA is USAir mainline (Operating Cert.)

Chataqua and Colgan, Mesa, and all the others are contract carriers so they are not tied to U except for the booking services etc. They have their own certificates that are not tied to U.


Everybody on the ALPA board is cheering that Seigal left.

I don't think Lakefield has any airline background, if somebody knows anything please post it.

I am afraid that this change is simply to appoint a Chapter 7 CEO. Lakefields background will be interesting to see.

To answer the question though, if U goes so do all the WO's. The only saving grace for PSA etc will be if they can manage to sell them intact to someone, which I doubt. I would guess that all the new RJ's would be sold and the employees would be left behind. Easier to start fresh with no contracts than to deal with what is in place.

Historically, not much of a chapter 7 airline survives. In Pan Ams case, a few 727 drivers continued on with the new owner, Nothing of the contracts or senority list survives though. In Pan Ams case senority had no bearing, just what airplane the pilot was currently flying. I can't remember anything of Eastern or Braniff surviving, regional or mainline.

I figure the next 60 to 90 days will be it if CH7 is the plan. If it does happen it will be without warning, one day they will simply cease operations.

 

[Boeingman]

ALG, PDT, PSA, are wholly owned, MAA is USAir mainline (Operating Cert.)




I don't think Lakefield has any airline background, if somebody knows anything please post it.

I am afraid that this change is simply to appoint a Chapter 7 CEO. Lakefields background will be interesting to see.


Historically, not much of a chapter 7 airline survives. In Pan Ams case, a few 727 drivers continued on with the new owner, Nothing of the contracts or senority list survives though. In Pan Ams case senority had no bearing, just what airplane the pilot was currently flying. I can't remember anything of Eastern or Braniff surviving, regional or mainline.

I figure the next 60 to 90 days will be it if CH7 is the plan. If it does happen it will be without warning, one day they will simply cease operations.

If I remember correctly (this is getting more difficult as time goes by) in Pan Am's case, UAL and DAL took people out of seniority on aircraft and routes that they wanted which PAA's pilots were qualified on. UAL for the Pacific and DAL bought some European routes they were flying with Airbuses. In fact, there was a great controversy later that some PAA training pilots pencil whipped type ratings so they could go to DAL. I think a couple went to the federal lockup for falseifying federal documents.

You're correct on another front about Lakefield. He is nothing more than a throwaway CEO. His position with the Alabama pension fund is secure and at his age their will be no worries career wise on his part to be at the helm when the airline collapses. He'll just go back to the Alabama pension fund.

I just read an article that U is about to post a $197 million dollar loss for the 1st Q results. Which would mean their losses are at $2.2 million per day. Last I looked when they renegotiated the loan they only had $200 million in unrestricted cash which is about 90 days from mid April. When you figure in costs to actually shutdown the airline it could probably happen as early as June.

One thing that keeps nagging at me is the April 30 deadline for Dave's ridiculous parachute. There must be some corporate and financial significance with that date. It is also interesting that my rough calculations when they run out of cash is exactly when SWA starts service to PHL. I don't think that is any coincidence either.

 

[blahshmah]

What does this mean for the Retirment Systems of Alabama if they do go Ch. 7?

I hope a quick demise is avoided but politics (election year as someone mentioned) may be the only hope at this point.