Timothy R. Phelan...known as SH&E...potential likelihood of the America West bankruptcy...summarize Mr. Parker's projections, and our conclusion that we think he was very correctwe had to merge or liquidate, we had to merge with US Airways liquidate.
15 Mr. Phelan.
16 Have you seen an airline that was the size
17 and had the assets of US Airways in 2005 that has
18 been compelled to liquidate.
19 A I don't think there has ever been a case
20 of complete liquidation of airline as large as US
21 Airways.
You have America west
21 in the middle now, with rising costs in the
22 beginning of 2005. And you have low cost carriers
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1 will continue their low cost positioning versus
2 America West and the network carriers.
3 Q So this chart we are looking at now and
4 the related analysis that is in the full report
5 confirms Doug Parker's comments about the
6 competition dropping their costs?
7 A Their strategic model was broken, their
8 low cost strategic model was broken.
9 Q Thank you, Mr. Phelan.
10 The next exhibit, slide 12, switches to a
11 slightly different subject doesn't it?
12 A Well, it does, indeed.
13 Q Would you explain that, please?
14 A Mr. Parker said that you know, but for the
15 merger, if you will, but for the merger they would
16 have, and given the fact that they had four reasons,
17 they didn't have a strong enough market position
18 from a financial standpoint or from an income
19 standpoint to raise additional capital, equity, on
20 the equity side.
21 They had, as I recall, they only owned two
22 aircraft, two out of 140, so they had no collateral.
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1 They had no assets to pledge as collateral for
2 additional debt. Most of their loans were
3 unsecured, I should say, but at any rate he said you
4 know, but for -- given our competitive situation,
5 given our inability to raise additional capital, and
6 given our cash situation, we had to merge or
7 liquidate, we had to merge with US Airways or
8 liquidate.
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America west owned 2 of 140 aircraft. east pilots pissed their pants and disregarded the facts, opening the door to LOA 93
Chip Munn and Traitor led the March of bed wetters.