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more bad news..
http://www.post-gazette.com/pg/04231/363350.stm
Bronner: No rescuers for US Airways
Chairman says a return to bankruptcy soon would mean oblivion for the troubled airline
Wednesday, August 18, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
If US Airways files for bankruptcy in less than a month, airline chairman David Bronner predicts that no one, including himself, will be willing to rescue the nation's seventh-largest carrier from oblivion.
http://www.post-gazette.com/pg/imag...s/blurbrule.gif
Related article:
http://www.post-gazette.com/pg/imag...simages/dot.gif Keeping air service to London could be complicated
http://www.post-gazette.com/pg/imag...s/blurbrule.gif
In the last 30 days, Bronner said only one investor has contacted him about a bankrupt US Airways -- and that was a foreign player interested only in the leftover piece of an airline that employs 28,000 people, including about 8,000 in the Pittsburgh area. "They don't want the whole thing," he said.
Bronner, who runs the Retirement Systems of Alabama, the pension fund that owns a controlling stake in the ailing airline, claims that US Airways' predicament is more dire than it was in 2003, when the company reemerged from bankruptcy with his help. The outspoken pension fund manager fought off a rival bidder to provide $240 million in equity in the airline -- a stake now worth less than $100 million.
This time around, Bronner does not expect anyone to compete for the right to keep US Airways intact and compete in an industry roiled by high fuel prices and aggressive low-cost carriers such as JetBlue Airways and Southwest Airlines. Such reluctance extends even to Bronner, who knows that a second bankruptcy will wipe out most of his investment.
Bronner said he can't imagine pumping more money into the airline and starting a new set of negotiations with creditors and labor groups -- the same labor groups that have yet to give the airline an additional $800 million in concessions the airline claims it needs to survive. "It is just not worth it," he said in a telephone interview yesterday.
US Airways faces a number of critical hurdles next month that could plunge the carrier back into bankruptcy, the first being a $110 million pension payment due its flight attendants and machinists on Sept. 15 -- a payment that could deplete its cash and force a default on more than $700 million in federally-backed loans.
US Airways is asking the Internal Revenue Service for permission to reduce the Sept. 15 payment by almost $28.6 million, which would leave it with a reduced obligation of $81.4 million. But Bronner said yesterday that the reduced obligation, if the IRS signs off, may not be small enough for the airline to still avoid defaulting on the loan.
Bronner also dismissed suggestions that the airline's September deadline for new union agreements could be extended, saying that a "couple" options have been discussed but they are "so far-fetched no one pays any attention to them." One, he said, is to make all required pension payments due that month and "hope for a couple more weeks," but "that doesn't get you out of your problems."
He does not think the airline can renegotiate the federal loan covenants requiring US Airways to make progress on cutting costs by Sept. 30, saying that would "set off 40 different other whistles" among its creditors. "I don't think we have any options if we don't have any labor agreements" by mid-September, he said.
Faced with no cooperation from labor, Bronner would file Chapter 11 bankruptcy rather than sell the company's assets, hoping to "protect as many people" as he can until all options are exhausted. The chances of getting agreements with the labor groups and thus avoid another bankruptcy filing stand at "50-50," he said.
US Airways since last spring has been trying to coax another $800 million in annual concessions from its pilots, flight attendants, machinists and passenger service workers -- all of who sacrificed more than $1 billion during the airline's last bankruptcy.
Negotiations have been slow, and in the case of the machinists, nonexistent. The only group close to an agreement is the pilots union, holed up this week with management negotiators in Arlington, Va., where the airline is based.
Bronner, amazed at the slow pace, has been trying "to rationalize in my own head" the lack of new agreements so close to the mid-September deadline. Perhaps employees "have heard the sky is falling for so long" that they "simply don't believe it."
But Bronner -- and US Airways -- is running out of patience. "Either you do it or you don't, but you sure don't wait until the last minute. ... If you do it at the last minute, all that does is hurt the company every day it drags on. Each day it drags along and pokes along, each day it becomes more difficult."
http://www.post-gazette.com/pg/04231/363350.stm
Bronner: No rescuers for US Airways
Chairman says a return to bankruptcy soon would mean oblivion for the troubled airline
Wednesday, August 18, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
If US Airways files for bankruptcy in less than a month, airline chairman David Bronner predicts that no one, including himself, will be willing to rescue the nation's seventh-largest carrier from oblivion.
http://www.post-gazette.com/pg/imag...s/blurbrule.gif
Related article:
http://www.post-gazette.com/pg/imag...simages/dot.gif Keeping air service to London could be complicated
http://www.post-gazette.com/pg/imag...s/blurbrule.gif
In the last 30 days, Bronner said only one investor has contacted him about a bankrupt US Airways -- and that was a foreign player interested only in the leftover piece of an airline that employs 28,000 people, including about 8,000 in the Pittsburgh area. "They don't want the whole thing," he said.
Bronner, who runs the Retirement Systems of Alabama, the pension fund that owns a controlling stake in the ailing airline, claims that US Airways' predicament is more dire than it was in 2003, when the company reemerged from bankruptcy with his help. The outspoken pension fund manager fought off a rival bidder to provide $240 million in equity in the airline -- a stake now worth less than $100 million.
This time around, Bronner does not expect anyone to compete for the right to keep US Airways intact and compete in an industry roiled by high fuel prices and aggressive low-cost carriers such as JetBlue Airways and Southwest Airlines. Such reluctance extends even to Bronner, who knows that a second bankruptcy will wipe out most of his investment.
Bronner said he can't imagine pumping more money into the airline and starting a new set of negotiations with creditors and labor groups -- the same labor groups that have yet to give the airline an additional $800 million in concessions the airline claims it needs to survive. "It is just not worth it," he said in a telephone interview yesterday.
US Airways faces a number of critical hurdles next month that could plunge the carrier back into bankruptcy, the first being a $110 million pension payment due its flight attendants and machinists on Sept. 15 -- a payment that could deplete its cash and force a default on more than $700 million in federally-backed loans.
US Airways is asking the Internal Revenue Service for permission to reduce the Sept. 15 payment by almost $28.6 million, which would leave it with a reduced obligation of $81.4 million. But Bronner said yesterday that the reduced obligation, if the IRS signs off, may not be small enough for the airline to still avoid defaulting on the loan.
Bronner also dismissed suggestions that the airline's September deadline for new union agreements could be extended, saying that a "couple" options have been discussed but they are "so far-fetched no one pays any attention to them." One, he said, is to make all required pension payments due that month and "hope for a couple more weeks," but "that doesn't get you out of your problems."
He does not think the airline can renegotiate the federal loan covenants requiring US Airways to make progress on cutting costs by Sept. 30, saying that would "set off 40 different other whistles" among its creditors. "I don't think we have any options if we don't have any labor agreements" by mid-September, he said.
Faced with no cooperation from labor, Bronner would file Chapter 11 bankruptcy rather than sell the company's assets, hoping to "protect as many people" as he can until all options are exhausted. The chances of getting agreements with the labor groups and thus avoid another bankruptcy filing stand at "50-50," he said.
US Airways since last spring has been trying to coax another $800 million in annual concessions from its pilots, flight attendants, machinists and passenger service workers -- all of who sacrificed more than $1 billion during the airline's last bankruptcy.
Negotiations have been slow, and in the case of the machinists, nonexistent. The only group close to an agreement is the pilots union, holed up this week with management negotiators in Arlington, Va., where the airline is based.
Bronner, amazed at the slow pace, has been trying "to rationalize in my own head" the lack of new agreements so close to the mid-September deadline. Perhaps employees "have heard the sky is falling for so long" that they "simply don't believe it."
But Bronner -- and US Airways -- is running out of patience. "Either you do it or you don't, but you sure don't wait until the last minute. ... If you do it at the last minute, all that does is hurt the company every day it drags on. Each day it drags along and pokes along, each day it becomes more difficult."
