USAirways to sell assets

[storminpilot]

http://biz.yahoo.com/rf/040108/aero_usairways_1.html

Reuters
US Airways seeking big asset sales - NYT
Thursday January 8, 2:30 am ET


NEW YORK, Jan 8 (Reuters) - US Airways (NasdaqNM:UAIR - News) is seeking to sell several assets, including its East Coast shuttle and possibly one of its three hubs, the New York Times said on Thursday, citing people who had been briefed on the airline's plans.
The paper said the airline, which emerged from bankruptcy last March, is considering selling assets because it failed to get its unions to support revisions in its business plan, which would replace the restructuring plan it completed last April.

The airline has retained Morgan Stanley to gauge interest and find potential buyers, according to the Times.

The paper said that among the assets possibly to be put on the block are its shuttle serving Boston, Washington and New York, which operates out of La Guardia Airport; additional gates at La Guardia and Logan Airport in Boston; its regional operation, US Airways Express; and a hub, either Pittsburgh, Philadelphia or Charlotte.

The company could not immediately be reached for comment.

 

[CitationLover]

i know most would think it is pit to go, but why not phl? if this was all triggered by swa, wouldn't that be the logical place?

 

[storminpilot]

New York Times

http://www.nytimes.com/2004/01/08/business/08air.html?hp

US Airways Said to Be Pursuing Big Asset Sales

By MICHELINE MAYNARD and ANDREW ROSS SORKIN
Published: January 8, 2004

Less than a year after it emerged from bankruptcy protection, and facing stiff competition from low-fare competitors, US Airways is seeking buyers for a number of its assets, including its East Coast shuttle and possibly one of its three hubs, people who have been briefed on the airline's plans said last night.

The move comes as US Airways has failed to obtain the support of its unions for revisions in its business plan, which would supplant the restructuring plan it completed last April.

As a result, the airline is considering selling assets, those briefed on the plans said. Among them are its shuttle serving Boston, Washington and New York, which operates out of La Guardia Airport; additional gates at La Guardia and Logan Airport in Boston; its regional operation, US Airways Express; and a hub, either Pittsburgh, Philadelphia or Charlotte. A spokesman for US Airways declined to comment.

The airline has retained Morgan Stanley to gauge interest and find potential suitors. A spokesman for Morgan Stanley declined to comment last night.

The airline, the country's seventh largest, filed for bankruptcy protection in August 2002, citing a slump in travel after the September 2001 terrorist attacks.

As part of its restructuring, US Airways' unions agreed to two sets of concessions, which the airline used to obtain $500 million in financing from the Retirement Systems of Alabama, whose chief executive, David G. Bronner, is now the airline's chairman.

But last month, the chief executive of US Airways, David Siegel, said the airline would be forced to revise the business plan on which it based its emergence from bankruptcy last spring. Specifically, he cited a decision by Southwest Airlines to begin operations in May from Philadelphia, one of US Airways' hubs.

Mr. Siegel warned that Southwest's arrival would most likely prompt fares to drop 30 percent and said the airline had to cut its costs in advance so that it could lower its own ticket prices. In addition, US Airways must make debt payments in June to meet covenants of $900 million in federal loan guarantees, which it received when it emerged from bankruptcy.

US Airways lost $90 million in the third quarter, when other carriers posted small profits, buoyed by healthy summer traffic and refunds of federal security fees. The airline has about $1 billion in cash, less than half that of its bigger rivals.

The airline has said every aspect of its operations is under review, from labor costs to schedules to routes, as part of its cost-cutting. But selling assets would be a faster and presumably simpler way for the airline to raise money, depending on the bids it received.

Mr. Siegel's candor about the airline's problems has led to widespread speculation within the airline industry that US Airways might have to seek bankruptcy protection once again. US Airways executives have flatly denied they have any plans for a second bankruptcy filing.

But the chief executive of one airline, who spoke in the condition of anonymity, said last week that Mr. Siegel faced a difficult situation, not only because of Southwest's arrival in Philadelphia, but because low-fare competition is heating up all around US Airways.

Referring to Southwest's plans to begin service at Philadelphia, the executive said, "They're thinking, 'If US Airways goes out of business, we want to be there.' "

Mr. Siegel had met late last year with officials of the company's unions, in a bid to win their support for further cuts. He had characterized the meetings as positive. But last month, leaders of US Airways' pilots union called for Mr. Siegel to step down, contending he had lost the faith of airline employees. Meanwhile officials of its mechanics union refused to grant further cuts, saying, "the concessions stand is closed."

The airline decided to go ahead with drafting its cost-cutting plan and said it would outline it this quarter. But on Tuesday, it postponed a series of meetings with employees that it had planned over the next few weeks.

In a recorded phone message, Mr. Siegel said leaders of the company's unions said they had "no interest in hearing the revised business plan or even having discussions with management on work rule and productivity changes."

 

[storminpilot]

I guess this proves the point why ACA fought so hard against Mesa. Mesa is going to have trouble if USAirways downsizes, unless the Midway certificate is going to be used by Mesa to start its own version of Independence Air.

 

[lowecur]

Tough move by Siegel

I'm sure his main objective is to bring the unions to the table.

There are not alot of airlines that could afford the purchase of large assets at this time. I have my doubts WN and B6 would get into a bidding war, and many of the legacys have no ability to borrow that kind of money. I think most would just let them fall into Chapt 7, and then everyone could get an equitable part of their system at a much smaller cost. One interesting scenerio is Branson, who is out shopping around for a headquarters. He certainly has the money.

 

[MedFlyer]

http://www.post-gazette.com/pg/04008/259030.stm

Have to say that I agree with Pollock that for the moment US is using asset sales as a threat.

Unfortunately for US pilots and all other employees, it seems like **CENSORED****CENSORED****CENSORED****CENSORED**ed if you give concessions and **CENSORED****CENSORED****CENSORED****CENSORED**ed if you don't give concessions.

I'm not really sure who is in the position to really buy the assets. PIT is probably worthless except for maybe a few gates. CLT and PHL have some value. The Shuttle would be valuable, but for who? One of the LCC's might be the best candidates as they have the cost structures to really make the Shuttle a moneymaker.

 

[vc10]

Threat it is, but what matters is it a credible threat?

Perhaps. If US Airways isn't making money then it will have to monetize assets.

However, there's very little valuable in the cupboard to sell. The Shuttle is really it---perhaps LGA/DCA slots/gates in general. Even selling off PSA wouldn't bring in very much, because PSA isn't worth diddly if US Airways isn't a going concern.

 

[Catbird]

Shoot this bloated, festering snake quick. Would have been DOA sooner if 9/11 had not facilitated a Government handout. Never meet a group of people who deserve it more with a very few exceptions. "Northern Hospitality and Ironhead mentality".

 

[XUSAir]

This ship has already hit the iceberg. The captain is asking the unions to keep bailing, while he yells commands from his lifeboat. Mismanagement sealed USAirs fate, not labor costs. A SWA captain s rate is $162, USAir $145. Wolf was preoccupied with a doomed sale as LCC's eroded RSMs and market share. USAir pilots are now near the bottom in pay and work rules. This management will continue to bleed employees for thier shortcomings. I hope my union stands firm. Every concession has been wasted thus far. They have the contracts they need to compete. Unfortunately, USAirs fate lies with this managements ability to chart a profitable course. If they can't, concessions will only prolong the inevitable.

 

[flint4xx]

http://www.unisys.com/eprise/main/admin/micro/doc/Dec_03_Scorecard.pdf

 

[storminpilot]

http://biz.yahoo.com/djus/040109/0111000049_1.html

Dow Jones Business News
US Airways Considering Asset Sales to Aid Recovery
Friday January 9, 1:11 am ET


Nine months after it stepped out of bankruptcy-court protection, still- troubled US Airways Group Inc. (NasdaqNM:UAIR - News) hired Morgan Stanley (NYSE:MWD - News) to develop alternatives, including the sale of some assets, to get the company back into the black and help it compete with low-cost rivals, David Bronner (News) , nonexecutive chairman of the airline, told Friday's Wall Street Journal.

Mr. Bronner, chief executive officer of a pension fund that is US Airways' largest investor, said Morgan Stanley was engaged recently to prepare scenarios for the airline's board when it meets next month. Directors are worried about financial covenants that will kick in this spring and summer on a $1 billion loan backed in large part by the federal government, he said.

The nation's seventh-largest airline, swamped by low-cost competitors on its East Coast turf, is evaluating whether to sell a variety of holdings, including gates, routes, planes, aircraft delivery positions, some regional jet operations, its Boston-New York-Washington shuttle service, and possibly assets at one or more of its three hubs, located in Philadelphia, Pittsburgh and Charlotte, N.C., said people familiar with the matter.

Morgan Stanley declined to comment. The possibility of asset sales was reported Thursday by the New York Times.

A number of airlines have been approached by the investment bank in recent days, said people with knowledge of the matter.

Wall Street Journal Staff Reporters Susan Carey and Scott McCartney contributed to this report.

 

[storminpilot]

http://wcco.com/finance/finance_story_010175407.html

US Airways May Not Have To Sell Assets

New Round Of Labor Talks Possible

Jan 10, 2004 4:52 pm US/Central
CHARLOTTE, N.C. (AP) US Airways won't have to sell any assets if it can get its costs down, its nonexecutive chairman says. Union leaders say they are willing to talk about making concessions.

Recent published reports said the nation's No. 7 airline is considering selling its East Coast shuttle and perhaps one of its three hubs, including the one in Charlotte. The Arlington-based carrier emerged from seven months of bankruptcy protection early last year.

"If changes can help get our costs down, then obviously that's where you want to be," said David Bronner, chief executive of Retirement Systems of Alabama, the airline's principal owner. "If you can get into a profitable situation, then the whole game changes."

The company's unions have resisted US Airways' efforts to further cut costs. Bronner's comments could clear the way for a new round of labor talks.

Bronner said he needs to know what cost-cutting measures are available, from both the union and the airline, before a February board meeting. There, he intends to lay out options ranging from cost reduction to asset sales.

Unions pledged $1 billion in concessions before and during US Airways' stay in bankruptcy court. Union leaders insist they have no interest in making more concessions, but some would talk about scheduling changes or union-proposed cost-saving measures.

The Air Line Pilots Association said it doesn't believe Chief Executive David Siegel has an actual plan, but spokesman Jack Stephan added: "If they have a plan to operate more efficiently, we're all for it. We're all about making this thing run more efficiently."

Among the assets reportedly under consideration are the shuttles linking airports in Boston, Washington and New York. Also mentioned were gates at New York's LaGuardia Airport and Boston's Logan Airport, and the regional US Airways Express operation. A hub in Pittsburgh, Philadelphia or Charlotte also was a possibility.

The airline has retained Morgan Stanley to seek potential buyers. The investment firm declined comment.

US Airways faces mounting low-fare competition and must meet covenants associated with a $900 million government loan. Competition could get tighter in May when Southwest Airlines begins service to Philadelphia.

Bronner said he wants to prepare for that event.

"I'm not going to sit here and bleed to death," he said. "I'm not going into the spring knowing I have a war on my hands, and already dripping blood. With Southwest or Jet Blue or any other low-cost carrier, you want to be able to have money in the bank and hold your position."

The International Association of Machinists won't talk with the airline about concessions, but will discuss employee suggestions for cost-cutting, said Robert Roach, the union's general vice president.

 

[captjim]

I honestly think that Airways is doomed. They have been so mismanaged in the past its nearly impossable to save that company. I don't blame Seigal at all, I don't think any managment team can save them.

How many types of aircraft do they have? How much redundency is there in their fleet?

They are bigtime behind in the small jet arena also.

They are being attacked on both flanks by LCC's.

The future looks very bleak indeed for those guys for Airways.

 

[blzr]

THANK YOU STEVEN WOLF May you be burried in a paupers grave.

 

[BollaBolla]

there is a news bulletin on this on thehub...

thehub.usairways.com is the website. Everyone has access to it with their employee number. But for those of you who dont... Here is Dave Siegel's response...

To All Employees ... Please Post ... Special Bulletin

Dear US Airways Colleagues:

The news media coverage over the past several days about our company has many people concerned and upset. Nevertheless, our focus must remain on our customers, who are the cornerstone for everything we do.

In my telephone message to employees earlier this week, I said that we were postponing employee meetings about a revised business plan and that the management team would have to consider other alternatives, given our financial obligations, including the federal loan guaranteed by the ATSB.

The subsequent media coverage has tried to connect dots, leading to rumors, speculation and assumptions. And let's not kid ourselves ?Eit is sometimes in the interest of our competitors to seize upon opportunities to whisper things that further those rumors.

So far in our restructuring effort, we have pushed back from the gate, but we still have to guide this company to the end of the runway and up in the air. The Board of Directors has a fiduciary responsibility to repay the federal loan, protect the interests of our shareholders, and to make this a successful and profitable airline. We must make decisions with those things in mind, and to evaluate how those decisions impact our financial commitments, our operations, and our ability to serve our customers ?Eso that all of those factors come together profitably and you have a company to work for. That is exactly what we are trying to do.

It is not unusual for a company to engage an investment bank. And it is not unusual for a company to explore strategic alternatives, especially when it has specific financial commitments and obligations it must meet. We are facing a new competitive challenge with Southwest coming to Philadelphia and the rapid growth of other low-cost competition in other parts of our network. Furthermore, Standard and Poor's today downgraded our credit rating and we cannot let that impact our ability to maintain the financing of the regional jets that are coming into our system.

If there are some ways to improve our balance sheet, we must consider those options. If there are some strategic partnerships that would enhance our financial standing, we must consider those as well. At the end of 2003, we had an unrestricted cash balance of approximately $1.29 billion. We cannot fritter that away, and we cannot fool ourselves into thinking we can simply spend that money, hope the world gets better, and not take necessary steps to remain competitive. But we do have the ability to proactively deal with the financial issues we face from a position of strength.

All of us should continue to focus on serving our customers. Any initiatives we might undertake must have them in mind by helping us improve our competitive position to provide them with the affordable, efficient service that they deserve. Our important corporate accounts and travel partners want assurance that we are dedicated to success. The ultimate goal is to successfully compete in the marketplace and grow the airline. I still remain hopeful that we can engage our labor leaders in constructive dialogue on the business changes necessary to better serve our customers. Remember that our alternatives involve managing our financial commitments so that we can continue to implement our restructuring plan.

Sincerely,
Dave Siegel
President & CEO

Also, apparently ALPA called for seigels resignation last month... Bronner has something to say about that on the hub. I suggest anyone who works for airways check it out.

 

[Draginass]

constructive dialogue on the business changes necessary

What Mr. Siegle is saying in this mealy mouthed cowardly manner, is that the employees need to again make concessions.