Who Gets Additional MDA E170s if USAirways fails?

[Heavy Set]

Worst case scenario in this case... Nobody wants to see USAirways fail but things are getting a bit dicey... Financing for the new RJs and E170s has been withdrawn pending exit from bankruptcy. So, who, in the worst case scenario, could pick up the ordered E170s for cheap in the event that USAirways doesn't make it? With no additional financing now, there will be excess E170s originally bound for MDA available on the market soon.

COEX? Eagle? More for CHQ? I would bet that COEX could pick them up given their previous Embraer experience and their extensive route network over which the E170 would do very well (longer flights)... With most of the kinks worked out of the E170 by now, don't you think someone would want to pick some up on the cheap? If MDA has now accepted as many E170s as could be funded under their previous financing, then someone else will need to pick up the production slack - right?

This is a worst-case scenario for USAirways, but anyone else out there have any thoughts about what could happen with the excess E170s?

 

[KingAirer]

There going to someone to do the flying on behalf of USAir. Its just a matter of which USAir Express carrier.

 

[BRA]

I don't think that most of the kinks are worked out yet. It seems like the plane is always at the gate or returning to the gate often. Working for colgan....i see the plane a lot. The bugs will go away someday though.

 

[328dude]

That's what some of the MDA guys call it. The EMB-180. Pushes off the gate and does a 180 back to it.

 

[lowecur]

Worst case scenario in this case... Nobody wants to see USAirways fail but things are getting a bit dicey... Financing for the new RJs and E170s has been withdrawn pending exit from bankruptcy. The Washington Post story is a bit ambiguous at best, and doesn't specifically say that financing is lost until they emerge from Bankruptcy as you state. The paper states that Embraer and Bombardier withdrew the financing. Since Embraer did not finance any of their a/c it makes you wonder what they are talking about. GECAS has the first 35 deliveries under lease to US Airways, and the Brazilian BUNDES Bank financed the next 50. I believe Bombardier has a similar arrangement, although I don't know who is financing the 50 CRJ7's. So, who, in the worst case scenario, could pick up the ordered E170s for cheap in the event that USAirways doesn't make it? With no additional financing now, there will be excess E170s originally bound for MDA available on the market soon. Hardly. All it means is the production facility will slow down. ERJ said they would not lay anyone off, but there will be no overtime. They are producing around 5 or 6 per month, and the remaining a/c in the pipeline will be used to fill the 50 170's that GECAS ordered plus the 23 170's ordered by Republic.

This is a worst-case scenario for USAirways, but anyone else out there have any thoughts about what could happen with the excess E170s? I look for deliveries to begin again once 1113 is invoked, and the contract issues do not cause any serious job actions. If all this plays out, GECAS will resume deliveries on the 13 a/c they still owe UAIR under lease. The BUNDES deal will follow.

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[Heavy Set]

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Ok. But my question was who could actually assume the order should the worst case scenario happen... You can bet that Embraer has a contingency plan in case USAirways can't recover... Who else would be likely to take up the order?

 

[PHXFLYR]

Who'll get get the MDA E170's you ask?? MESA,who else? Rest assured JLO is salinvating like Pavlov's dog right now just thinking about getting his grimy mitts on them!


PHXFLYR

 

[lowecur]

Ok. But my question was who could actually assume the order should the worst case scenario happen... You can bet that Embraer has a contingency plan in case USAirways can't recover... Who else would be likely to take up the order?

You have to understand that these a/c have not been produced yet. This means that Embraer is not stuck with 63 a/c sitting on the tarmac. GECAS ordered 50 170's back in 2001, of which 35 are being leased to UAIR as they are produced. 22 a/c have been delivered to date, and it is my guess UAIR has every intention of continuing to pay for those leases. I don't know what the delivery schedule is for GECAS on the remaining a/c they purchased, but you can bet that these orders will continued to be filled as contracted. GECAS has leased 45 of the 50 they have ordered and they only have 5 outstanding that have not been contracted for. The mfg pipeline will continue in place, but probably only producing 3 per month for the near future to fill the backorders. Here's the order sheet from Embraer:


Orders

FINNAIR Finland 12
CIRRUS Germany 1
AIR CARAIBES Guadeloupe 2
ALITALIA Italy 6 (15 add'l a/c ordered for 2007/08 with option for 190)
LOT POLISH Poland 6
CROSSAIR (SWISS)Switzerland 15
GECAS USA 5
REPUBLIC (Chautauqua) USA 23 firm, and 27 options
US AIRWAYS USA 85

Total: 170

Now to get around to your question of who would want them. If UAIR goes 7, then a whole new grouping of possibilities open up. The immediate answers would lie with Republic and possibly Mesa. Both of these carriers rely heavily on UAIR business, and would have a choice to make. My guess is they both will strongly consider a FLYi type of situation, in addition to their present block hour leasing business. This will fly directly in the face of ALPA(as is now happening with AMR), but I think many of the legacy's will turn the other cheek. Republic has the option to change existing 170 orders to 190's if they so choose.

The next consideration would go to AMR and DAL. Both of these carriers have scope work to do before they can even think about the 190 or 170. I don't know the situation at EXP, but my guess is their flying the 170 or 190 could be a problem for CAL pilots. The DAL situation is still to be played out at SLC. SKYW is welcoming ASA in there, but I have a hard time believing that if DAL goes 11 that they will keep SKYW. If they jettison SKYW, then look for them to pull a FLYi and order Ejets.

 

[80drvr]

The next consideration would go to AMR and DAL. Both of these carriers have scope work to do before they can even think about the 190 or 170. I don't know the situation at EXP, but my guess is their flying the 170 or 190 could be a problem for CAL pilots. The DAL situation is still to be played out at SLC. SKYW is welcoming ASA in there, but I have a hard time believing that if DAL goes 11 that they will keep SKYW. If they jettison SKYW, then look for them to pull a FLYi and order Ejets.

AMR has stated they are not interested in the E-170/190. Their interest is further fleet simplification.

 

[lowecur]

AMR has stated they are not interested in the E-170/190. Their interest is further fleet simplification.

Then I guess they'll order the 736 .

 

[CF34-3B1]

The next consideration would go to AMR and DAL. Both of these carriers have scope work to do before they can even think about the 190 or 170. /QUOTE]

Why? I'm sure they could find around 1060 guys who'd fly the E190 for DAL.

 

[80drvr]

Then I guess they'll order the 736 .

They say they're not interested in that either.

 

[FlyComAirJets]

Ok. But my question was who could actually assume the order should the worst case scenario happen... You can bet that Embraer has a contingency plan in case USAirways can't recover... Who else would be likely to take up the order?

The highest bidder, of course. My crystal ball is a little fuzzy, but I would venture to guess that JetBlue, American, and Delta would be interested.

 

[FlyingDawg]

New codeshare for Chautauqua/Republic. The rumor within the company is a new codeshare in 2005. Who, is anyone guess. The rumors tend to favor America West and Continental. RP has confirmed 170 orders with no codeshares associated with them. More than likely they will pick up some of these additional aircraft. CEO recently stated that the 50 seaters are a thing of the past and the 70 seats are the future of the company.

 

[180ToTheMarker]

Hey Lowecur, what does .... mean?

 

[lowecur]

Hey Lowecur, what does .... mean? When I do my signature reply within a reply, the system requires that you have at least 5 characters outside the quote....thus.....

.....

 

[Truckdriver]

They will go to CHQ then XJT will buy CHQ.

CHQ is going to fly them out of LAX for CAL which will not violate the scope clause at CAL nor the capacity purchase agreement that XJT has with CAL. This allows XJT to very quickly reduce the risk involved of having one customer which is CAL. If XJT buys CHQ they will then have CAL, DAL, AMR, UAL, and UAIR as customers. In addition to that, CHQ will no longer be able to underbid XJT for other flying opportunites like they did with DAL. XJT wants to buy them and operate them as a seperate company withing XJT Holdings. Nothing has been announced yet because the pilots can throw a wrench into the whole deal by getting scope in the new contract. This would require all flying done in the holdings company to be provided by pilots on the XJT seniority list. If the pilots get the scope the whole deal doesn't work as well as XJT wants it to. If you talk to the XJT pilots, it is obvious that scope is the sticking point in current negotiations and I believe this is why the company doesn't want to budge.

 

[FlyChicaga]

I think a lot of people misunderstand the scope issue at XJT. The negotiating committee is trying to get language which would state that should XJT acquire another company, then that purchased company would operate under the XJT contract, unless the other company has a better contract.

 

[Truckdriver]

There are two scope issues that affect XJT. First, the CAL scope clause limits XJT to flying only 50 seat jets. It is not based on ASM's or any of that stuff. They can fly 2000 ERJ's as long as they don't have over 50 seats. The limit however does not apply to a code-share partner therefore a carrier could fly out of LAX on a code-share deal and fly larger airplanes. XJT could do it, CHQ could do it, anyone could do it. XJT has nothing to do with this scope issue, it is a CAL pilot issue.


Second, is the scope withing XJT Holdings. The XJT CEO has clearly stated that they wish to buy and operate another carrier within the holdings company. They have no wishes to merge the company with XJT Airlines. They do not want to merge them because "the block hours costs are already agreed upon in contracts with other major carriers and merging the acquired carrier with XJT Airlines would increase the block hour cost and possibly void the contract with the major carrier that the acquried airline is flying for." He did promise however, that there would be no transfer of flying between the two carriers and that they did not wish to create a whip-saw scenario. He said, "If we can buy and airline that is underbidding us now, then that is one less airline that can underbid us in the future."

There are 2500 pilots at XJT that know this is a crock and as soon as they get a new contract and XJT Holding buys another airline, that all new flying will go to the lowest cost carrier. Without rock solid scope protection, the XJT pilots will NEVER sign a TA.

 

[BigDave]

Truckdriver is correct except from the way I understand the code share aggreement issue with CAL and flying larger then 50 seats out of lets say LA, XJT or CHQ could do it under a code share with CAL but they will need their own reservation systems, own advertisment, etc for that service. I doubt it would happen but who the heck knows.

 

[Sam Fisher]

They will go to CHQ then XJT will buy CHQ.

CHQ is going to fly them out of LAX for CAL which will not violate the scope clause at CAL nor the capacity purchase agreement that XJT has with CAL. This allows XJT to very quickly reduce the risk involved of having one customer which is CAL. If XJT buys CHQ they will then have CAL, DAL, AMR, UAL, and UAIR as customers. In addition to that, CHQ will no longer be able to underbid XJT for other flying opportunites like they did with DAL. XJT wants to buy them and operate them as a seperate company withing XJT Holdings. Nothing has been announced yet because the pilots can throw a wrench into the whole deal by getting scope in the new contract. This would require all flying done in the holdings company to be provided by pilots on the XJT seniority list. If the pilots get the scope the whole deal doesn't work as well as XJT wants it to. If you talk to the XJT pilots, it is obvious that scope is the sticking point in current negotiations and I believe this is why the company doesn't want to budge.

Do you fly for XJT or CHQ? Is this just conjecture on your part or is it based on some sort of factual information?

Sam

 

[AirBill]

Do you fly for XJT or CHQ? Is this just conjecture on your part or is it based on some sort of factual information?

Sam

Wishful thinking, sounds like to me.