A Scenario...is It Possible

M

madders

Senior
Nov 23, 2003
281
0
If U goes into CH 7 ,..valuable assets are sold ...could RSA aka Bonner buy those assets and spin off a new airline after all, all he needs to get is a certificate ....get authorisation to fly USairways routes.
He could hire Usairways employees back and black-list the "trouble makers" pay them what they want to pay them I am pretty sure PHL and CLT would welcome a "new airline" to fill the void...

If this scenario is possible since Bonner wants a airline .... he could have it running in 6 months or so after all none of the majors in a position to fill a void left by usairways if they should depart.....

About the ATSB i doubt they would call in the loan because for 700 mil owed they would cause the company to liquidate and over 30000 employees would go collect unemployment not to mention the pension problem so between pension and unemployment I am betting it would be more than 700mil for Uncle Sam so it would be too expensive for Uncle Sam to call the loan..right......
 
Dr. Bronner (not Bonner) may be equipped with an excess of ego and he might even be crazy, but he is not stupid. If UAIR goes Ch. 7, I think he will take his losses like a man and walk away from the airline business. After all, he will still be in charge of the RSA which will lose less than 1% of its asset value if UAIR fails. (I wish my portfolio had only lost 1% over the past 2 years. :( )

As far as the PBGC having to take over the pensions and the issue of unemployment insurance (UI) affecting the ATSB decision one way or another...won't happen. First off, you are assuming that government agencies--like the different departments of a private company--coordinate their efforts for the financial betterment of the whole. I can promise you, that does NOT happen. In fact, they tend to go out of their way to prove that they are acting independently.

Besides, the unemployment issue will not cost the government a single additional dime. The money to pay your UI benefits is already in the hands of your state government. UI benefits are funded through a payroll tax on employers paid quarterly. The only possible funds not paid in would be those for the current quarter.

The only time UI benefits cost the Federal government additional money is during those periods that Congress grants an additional 13 weeks of UI to those who have exhausted their normal 26 weeks and are still unemployed. No such extension has been in effect since 31DEC03.
 
He could hire Usairways employees back and black-list the "trouble makers" pay them what they want to pay them I am pretty sure PHL and CLT would welcome a "new airline" to fill the void...
Click to expand...
What if some of the most disgruntled employees are the ones most worthy of a job. I have witnessed that some of the most unhappy with the current situation are the ones who have given years of hard work and good service to the customers only to be blamed for faulty management decisions. I have also witnessed others, who in the past though rarely productive, decide that this might be the time to show a little effort.
 
RSA could, hypothetically purchase some collection of assets from the bankruptcy estate in a liquidation auction; however, that process might well open up the disposition of the estate to other bidders who might end up providing a better return for creditors. And, as Jim said, I'm not so sure that Bronner's all that keen on running an airline. I think he saw a way he could make a good return in a short time if the company succeeded, but it unfortunately did not. He was able to hedge his bets by picking up pretty substantial fees for providing the DIP financing, by earning interest on the ATSB-guaranteed loans, by having the airline keep its leases on RSA-financed aircraft, by having the company promote RSA-owned resorts in Alabama, etc.

Given that the company appears likely to reject all of its defined benefit plans as part of this reorganization anyway, I doubt that would have much bearing on the government's decision. As Jim points out, the unemployment comes from an insurance fund that every employer pays into. And if the shutdown happens in October, it won't show up in the national stats until November. One could argue that a UAIR liquidation would provide opportunities for other airlines to bring their furloughed employees back, too, or for some of the LCC's to hire new employees.

PHL is already welcoming a "new airline" to fill the void; it's just that the airline's name happens to be Southwest. Within a year or two, every O&D market with meaningful demand would see replacement service.
 
We just hired a new guy here at F9, welcome aboard DON! You'll like it here, it's a totally different enviroment. And, don't mind TED or UniTED we'll be here in Denver for a VERY LONG TIME. Hope you enjoy your stay here in Colorful Colorado and again welome to A WHOLE DIFFERENT ANIMAL.
 
madders said:
after all none of the majors in a position to fill a void left by usairways if they should depart.....
[post="181491"][/post]​
Click to expand...

I forgot to add in my earlier post...
Evidently you are not aware that AA has over 5000 flight attendants and about 2,000 pilots on furlough which is almost as many f/as and pilots as US Airways has working right now, I think.

In addition, they have a number of planes parked in the desert. If those a/c were not enough, there are plenty available 2nd hand. Oh, they also have $4 billion in cash on hand as of 30JUN.

I'm not wishing ill for UAIR. I'm just pointing out that the statement that no one could fill the void is not correct. After all, if UAIR goes under, not all of their current routes will be covered by other airlines--just the ones that make sense for a particular airline's route system.

For instance, AA might add a PHL-FLL or PHL-MIA route, but probably would have no interest in flying PHL-PIT or PHL-CLT. I doubt ANY of UAIR's CLT to the Caribbean routes would be replaced. The reason they exist is because UAIR created a hub in CLT and shuttled their Caribbean traffic through there. There is no natural market for flights to the Caribbean out of CLT--well, certainly not to the extent that exist now.
 
jimntx said:
Oh, they also have $4 billion in cash on hand as of 30JUN.

[post="181570"][/post]​
Click to expand...

Their 10-k for December 2003 shows 2.6 bil in Cash and investments. At the rate they were losing money I hardly think they were able to put another 1.4 bil in the bank and we all know how investments have done this year. AA has their own problems to solve and they don't need to take on any more.
 
AMR has been increasing unrestricted cash every quarter. Remember, loses don't necessarily mean negative cash flow.

Jim
 
I think it is very possible that US could "shop" its assets in a liquidation to an investor that is willing to invest in a reorganized US2. I don't agree that Bronner will simply give it up and walk away. I do believe it is possible that US could try to sell its assets to Virgin America w/ Bronner acting as the American investor that Virgin must have to set up shop due to US ownership laws. We haven't heard much from Virgin for several months and I don't think that is an accident. Some of US' assets may be sold on the open market but there is no airline in the US that could buy most of US' currents and put them to use; Virgin could, however. Yes, all bids would have to be entertained but I don't think Branson would think twice about getting into a bidding war w/ any US airline.
 
Borescope said:
Their 10-k for December 2003 shows 2.6 bil in Cash and investments. At the rate they were losing money I hardly think they were able to put another 1.4 bil in the bank and we all know how investments have done this year. AA has their own problems to solve and they don't need to take on any more.
[post="181574"][/post]​
Click to expand...

From the AMR 2nd Quarter results (30 June), "It's also important to note that we ended the quarter with total cash and short-term investments of $3.9 billion".
 
The debt holders get first shot at any assets. I don't think there will be much left for Bronner unless he is willing to put up more capital.


Jay
 
Madders,

About the ATSB I doubt they would call in the loan because for 700 mil owed they would cause the company to liquidate and over 30000 employees would go collect unemployment not to mention the pension problem so between pension and unemployment I am betting it would be more than 700mil for Uncle Sam so it would be too expensive for Uncle Sam to call the loan, right...

They will call in the loan you can bet on that. Why would the US Treasury Department care about 28,000 jobs? They Don't!!!! Their job was to stabilize the aviation industry and give loans to those who qualified. I think they knew it might be a crapshoot with USAIR, but they had nothing to loose with what little assets you had. They knew if you defaulted at least they could keep the taxpayers from footing your companies failure.

Think of it like this! If you were to go and file for BK, and you had out standing taxes or a student loan due. You think that Uncle Sam would just let you skip it in BK court. You better think again on that one. They’d be at the head of the line with their hand out! Remember when the government owes you ta/ta/ta but when you owe them its collection time one-way or the other. USAIR had their chance they blew it! It's no fault of the employees; they have sacrificed enough at US and all the airlines BIG and SMALL.
 
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