Airline Executives Meet
- Thread starter USA320Pilot
- Start date
PineyBob Posted on Mar 19 2004, 11:15 I am convinced that NO ONE has "inside information". Those of us who have contact with certain levels of management are told what they think we want to hear or worse manipulated into a thought process that serves the goals of the particular manager in question
some one being used for someone elses spin machine?
some one being used for someone elses spin machine?
oldiebutgoody
Veteran
- Aug 23, 2002
- 2,627
- 945
With all the talk by CEOs about some kind of consolidation, nothing would really surprise me. The big concern is whether the feds would allow it now, or if they prefer to just ditch the legacy carriers altogether. Whatever their looking at needs to be done before November or it could be really bad for jobs. The only thing that will save this industry now, in my opinion of course, is for the economy to recover and folks to begin flying more.
Yes... UAL, UAIR, and Air Canada, the "Bankruptcy Star Alliance" probably got together to talk about how to get US Airways started in the code-share... Big Deal. And USA320Pilot gets to miscontrue it anyway he wants.
Ok, so US Airways has $925mil in the bank... Lets say they are able to sell off the Shuttle for $150mil and PSA for $150mil... That means they have $1225mil in the bank. Ok, next pay off the $726mil ATSB loan. Now the cash balance is $949. The company continues to lose $1/mil per day, and they go bankrupt at $500mil (just like the last time). That gives the company about a year and a half before the next bankruptcy filing.
Now, who here thinks a company that is a year and a half from bankruptcy, again, has the cash, talent, time, energy, financing, etc to pull off any kind of transaction where they are the acquirer. Not me.
Ok, so US Airways has $925mil in the bank... Lets say they are able to sell off the Shuttle for $150mil and PSA for $150mil... That means they have $1225mil in the bank. Ok, next pay off the $726mil ATSB loan. Now the cash balance is $949. The company continues to lose $1/mil per day, and they go bankrupt at $500mil (just like the last time). That gives the company about a year and a half before the next bankruptcy filing.
Now, who here thinks a company that is a year and a half from bankruptcy, again, has the cash, talent, time, energy, financing, etc to pull off any kind of transaction where they are the acquirer. Not me.
savyinvestor
Senior
- Jan 15, 2003
- 494
- 0
Exactly! I'm sure all the pilots already know what % goes with the equipment. Since this is most likely true .... if it smells like a windup, looks like a windup, reads like a windup, could it be a windup? Don't know, but why post it if most appear to know the answer? MOST respectfully, Savyiflyjetz said:Sooooo, this would be labeled as a _CT? ICT? Nope; used already. UCT? Nope; used already.
How about a TCT; Triage Corporate Transaction. Yeah, that's it. Does that work for you, Chip?
BTW, thanks for letting me know that when UAL gets fragmented, I won't be going with the assets. I appreciate you letting me know that in advance of UAL's demise so that I can look for alternative employment. I've been working on my 'would you like fries with that?' I've also been working on 'then how about an apple pie' when they say no. I think the extra effort makes me a shoe-in for the vacancy in an exciting and expanding career field. http://load.pquinn.com/binaries/fries/
It's a good thing that this wouldn't be labeled as a windup topic.
OP
USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
- Thread Starter
- Thread starter
- #23
At this point the network carrier industry as we have known it is in decay. Yesterday US Airways reported on theHub.com that UBS analyst Sam Buttrick predict larger-than-anticipated losses for U.S. airlines this year, which could amount to $2.3 billion. The loss prediction is more than four times greater than the analyst’s previous forecast of a $500 million loss for the year. Contributing to the industry hurdles, U.S. carriers are facing weak revenues and fuel costs that are at their highest in more than a decade.
In addition to these cyclical issues the permanent fundamental shift that has badly hurt pricing power is LCC deployment and internet booking. I agree with PITBull that one of management’s objectives has been to dramatically reduce labor costs and now the second part of the plan seems to be M&A activity. Gerald Grinstein is now beating the M&A drum in ALPA meetings and there seems to be a consensus management and financial community view that M&A activity is the preferred path for a mature industry to grow profits by creating economies of scale to drive down unit costs.
It’s uncertain at this time how this will proceed and a key is United’s inability to come out of bankruptcy.
In fact, yesterday’s Rueter’s report hinted the company has no “Plan B†if the government turns down the loan guarantee application again.
See Story
The big issues are:
Pension: The IRS turned down a similar waiver to US Airways and Congress will not discuss a legislative solution until April 16 at the earliest. Furthermore, the DRC solution being discussed will give short-term relief, but not meet the loan guarantee 7% profit margin in 7 years. Thus, how will negotiations go between the company and labor if management is forced to terminate the pension and then what can they replace it with to meet the ATSB profit guidelines?
EETC’s: Last week Susan Carey said, “United creditors are upset about a plan to restructure the financing of 175 jets. United has been using Chapter 11 to redo its aircraft financings and lease terms, marking down the rates to depressed levels and rejecting planes it no longer wants. It hopes the process will yield savings of about $900 million a year. But a big part of that restructuring involves a group of aircraft investors represented by Chicago law firm Chapman & Cutler, and creditors believe this group is wielding excessive influence. Creditors contend that UAL is agreeing to less-than-ideal terms. They also dislike UAL's plan to give the Chapman group equity in the reorganized airline, reducing the amount available to other creditors, according to people close to the matter.â€
UCT Airport Municipal Bonds: According to S&P, United has not made municipal bond payments since last April and now the airport authorities for SFO, LAX, ORD, DEN, and the Port Authority of NY and NJ have filed suit over this issue. How will this be litigated and what will be the response.
Dulles: Although the company has reached an agreement with Chautauqua, Republic, and Shuttle America, the company has not articulated where the aircraft will come from. Moreover, US Airways senior management gave the US Airways ALPA MEC final RJ scope relief language last night. The MEC will convene a special MEC meeting on Tuesday to discuss this development, which will havea major effect on US Airways and possibly Untied Express in the future. We will know more on this development next week.
Separately, Atlantic Coast asked the bankruptcy court again to let it out of its United Express agreement in 90 days.
DIP Financing: According to Carey, “people familiar with the company's finances said United is concerned that it might not meet its May hurdle, which will require positive earnings, as measured before interest, taxes, depreciation, amortization and aircraft rents (EBITDAR), for the past 12 months. In May of last year, UAL received $300 million in a one-time government grant related to the war in Iraq, which will skew the measurement this year."
Moreover. I understand the DIP financing runs out in May and the banks could either call in their loans or renegotiate the terms.
Industry Fundamentals: The industry's slight recovery has lost steam amid new more problems regarding terrorism, high fuel prices and excess capacity. How will this effect EBITDAR requirements?
Loan Guarantee: The AP reported yesterday Goldman Sachs analyst Glenn Engel, who has a "sell" rating on UAL shares because the shares probably will be worthless after the reorganization, said the carrier is having a hard time selling its business plan to the loan guarantee board in the face of rising fuel costs. "The assumptions that the loan board are willing to see as reasonable have changed," Engel said, adding that the airline can't come out of bankruptcy without the loan guarantee.
See Story
From this observer’s perch, United may not come out of bankruptcy itself, the company may need an equity investor (like Air Canada and US Airways) and the airline may have to seek other alternatives. The Chicago-based carrier’s union contracts give the company or an equity investor significant flexibility to split up the airline to multiple parties, if necessary.
Will it occur? I do not know, but RSA’s chief executive and US Airways chairman David Brooner continues to publicly and privately indicate he is willing to participate in the pending industry consolidation if the Arlington-based airline has a competitive cost structure.
There is no question there is a lot going on here and US Airways and United executives met in Chicago late last week and it’s uncertain how the companies will proceed. However, I agree with PITBull. I believe the company is going to further lower labor costs and then be involved in M&A activity. After all, two weeks ago in prepared comments and then in an WSJ interview US Airways chief executive officer Dave Siegel said his focus is on fixing the company on a stand-alone basis, "so we're a more attractive partner" when the "necessary, logical and inevitable" consolidation occurs.
Regards,
USA320Pilot
In addition to these cyclical issues the permanent fundamental shift that has badly hurt pricing power is LCC deployment and internet booking. I agree with PITBull that one of management’s objectives has been to dramatically reduce labor costs and now the second part of the plan seems to be M&A activity. Gerald Grinstein is now beating the M&A drum in ALPA meetings and there seems to be a consensus management and financial community view that M&A activity is the preferred path for a mature industry to grow profits by creating economies of scale to drive down unit costs.
It’s uncertain at this time how this will proceed and a key is United’s inability to come out of bankruptcy.
In fact, yesterday’s Rueter’s report hinted the company has no “Plan B†if the government turns down the loan guarantee application again.
See Story
The big issues are:
Pension: The IRS turned down a similar waiver to US Airways and Congress will not discuss a legislative solution until April 16 at the earliest. Furthermore, the DRC solution being discussed will give short-term relief, but not meet the loan guarantee 7% profit margin in 7 years. Thus, how will negotiations go between the company and labor if management is forced to terminate the pension and then what can they replace it with to meet the ATSB profit guidelines?
EETC’s: Last week Susan Carey said, “United creditors are upset about a plan to restructure the financing of 175 jets. United has been using Chapter 11 to redo its aircraft financings and lease terms, marking down the rates to depressed levels and rejecting planes it no longer wants. It hopes the process will yield savings of about $900 million a year. But a big part of that restructuring involves a group of aircraft investors represented by Chicago law firm Chapman & Cutler, and creditors believe this group is wielding excessive influence. Creditors contend that UAL is agreeing to less-than-ideal terms. They also dislike UAL's plan to give the Chapman group equity in the reorganized airline, reducing the amount available to other creditors, according to people close to the matter.â€
UCT Airport Municipal Bonds: According to S&P, United has not made municipal bond payments since last April and now the airport authorities for SFO, LAX, ORD, DEN, and the Port Authority of NY and NJ have filed suit over this issue. How will this be litigated and what will be the response.
Dulles: Although the company has reached an agreement with Chautauqua, Republic, and Shuttle America, the company has not articulated where the aircraft will come from. Moreover, US Airways senior management gave the US Airways ALPA MEC final RJ scope relief language last night. The MEC will convene a special MEC meeting on Tuesday to discuss this development, which will havea major effect on US Airways and possibly Untied Express in the future. We will know more on this development next week.
Separately, Atlantic Coast asked the bankruptcy court again to let it out of its United Express agreement in 90 days.
DIP Financing: According to Carey, “people familiar with the company's finances said United is concerned that it might not meet its May hurdle, which will require positive earnings, as measured before interest, taxes, depreciation, amortization and aircraft rents (EBITDAR), for the past 12 months. In May of last year, UAL received $300 million in a one-time government grant related to the war in Iraq, which will skew the measurement this year."
Moreover. I understand the DIP financing runs out in May and the banks could either call in their loans or renegotiate the terms.
Industry Fundamentals: The industry's slight recovery has lost steam amid new more problems regarding terrorism, high fuel prices and excess capacity. How will this effect EBITDAR requirements?
Loan Guarantee: The AP reported yesterday Goldman Sachs analyst Glenn Engel, who has a "sell" rating on UAL shares because the shares probably will be worthless after the reorganization, said the carrier is having a hard time selling its business plan to the loan guarantee board in the face of rising fuel costs. "The assumptions that the loan board are willing to see as reasonable have changed," Engel said, adding that the airline can't come out of bankruptcy without the loan guarantee.
See Story
From this observer’s perch, United may not come out of bankruptcy itself, the company may need an equity investor (like Air Canada and US Airways) and the airline may have to seek other alternatives. The Chicago-based carrier’s union contracts give the company or an equity investor significant flexibility to split up the airline to multiple parties, if necessary.
Will it occur? I do not know, but RSA’s chief executive and US Airways chairman David Brooner continues to publicly and privately indicate he is willing to participate in the pending industry consolidation if the Arlington-based airline has a competitive cost structure.
There is no question there is a lot going on here and US Airways and United executives met in Chicago late last week and it’s uncertain how the companies will proceed. However, I agree with PITBull. I believe the company is going to further lower labor costs and then be involved in M&A activity. After all, two weeks ago in prepared comments and then in an WSJ interview US Airways chief executive officer Dave Siegel said his focus is on fixing the company on a stand-alone basis, "so we're a more attractive partner" when the "necessary, logical and inevitable" consolidation occurs.
Regards,
USA320Pilot
OP
USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
- Thread Starter
- Thread starter
- #24
Funnyguy:
Funnyguy said: "Ok, so US Airways has $925mil in the bank... Lets say they are able to sell off the Shuttle for $150mil and PSA for $150mil... That means they have $1225mil in the bank. Ok, next pay off the $726mil ATSB loan. Now the cash balance is $949. The company continues to lose $1/mil per day, and they go bankrupt at $500mil (just like the last time). That gives the company about a year and a half before the next bankruptcy filing. Now, who here thinks a company that is a year and a half from bankruptcy, again, has the cash, talent, time, energy, financing, etc to pull off any kind of transaction where they are the acquirer. Not me."
USAS320Pilot: Funnyguy, you forgot to mention the 25% reduction in CASM cut the company anticipates in the "Going Forwar Plan", which we will hear more about on Wednesday in a company wide Webcast.
Regards,
USA320Pilot
Funnyguy said: "Ok, so US Airways has $925mil in the bank... Lets say they are able to sell off the Shuttle for $150mil and PSA for $150mil... That means they have $1225mil in the bank. Ok, next pay off the $726mil ATSB loan. Now the cash balance is $949. The company continues to lose $1/mil per day, and they go bankrupt at $500mil (just like the last time). That gives the company about a year and a half before the next bankruptcy filing. Now, who here thinks a company that is a year and a half from bankruptcy, again, has the cash, talent, time, energy, financing, etc to pull off any kind of transaction where they are the acquirer. Not me."
USAS320Pilot: Funnyguy, you forgot to mention the 25% reduction in CASM cut the company anticipates in the "Going Forwar Plan", which we will hear more about on Wednesday in a company wide Webcast.
Regards,
USA320Pilot
OP
USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
- Thread Starter
- Thread starter
- #27
Magsau:
Magsau said: Does the 25% reduction in CASM factor in the rising fuel cost. If so the going forward plan may go nowhere and the creditors could lower the rating forcing the cancellation of the rj's.
USA320Pilot comments: That's true, but last night at 5:00 PM the company gave the final RJ scope relief written language to the MEC. The MEC stayed in session until 7:00 PM to review the complex document and then recessed. The MEC will go back into session on Tuesday to review the TA language and will either send the NC back to work with the Company or send the document out for membership ratification.
It's my understanding the deal will proceed (it might need some minor modifications) and will protect all or virtually all of the RJs for US Airways Express. Things could change, but the ATSB seems to be on US Airways' side, at this point, by granting approval of the origninal loan application and then the revised terms. I suspect the recent MDA grievance settlement and new RJ Scope agreement will be acceptable as well.
The intent of the agreement is to provide GECAS with diversificaiton, reduce US Airways long-term debt, keep the RJ revenue within US Airways, and to provide the company with additional liquidity for operations and to pay down the loan guarantee, per the recent revised loan guarantee terms.
In regard to S&P, they have been involved in discussions with Neal Cohen and the credit agency maintained its B- rating. This could be lowered, but the RJ Scope relief, new ATSB terms, and "Going Forward Plan" should raise the rating, according to the company.
See Story
Regards,
USA320Pilot
Magsau said: Does the 25% reduction in CASM factor in the rising fuel cost. If so the going forward plan may go nowhere and the creditors could lower the rating forcing the cancellation of the rj's.
USA320Pilot comments: That's true, but last night at 5:00 PM the company gave the final RJ scope relief written language to the MEC. The MEC stayed in session until 7:00 PM to review the complex document and then recessed. The MEC will go back into session on Tuesday to review the TA language and will either send the NC back to work with the Company or send the document out for membership ratification.
It's my understanding the deal will proceed (it might need some minor modifications) and will protect all or virtually all of the RJs for US Airways Express. Things could change, but the ATSB seems to be on US Airways' side, at this point, by granting approval of the origninal loan application and then the revised terms. I suspect the recent MDA grievance settlement and new RJ Scope agreement will be acceptable as well.
The intent of the agreement is to provide GECAS with diversificaiton, reduce US Airways long-term debt, keep the RJ revenue within US Airways, and to provide the company with additional liquidity for operations and to pay down the loan guarantee, per the recent revised loan guarantee terms.
In regard to S&P, they have been involved in discussions with Neal Cohen and the credit agency maintained its B- rating. This could be lowered, but the RJ Scope relief, new ATSB terms, and "Going Forward Plan" should raise the rating, according to the company.
See Story
Regards,
USA320Pilot
This is beyond silly. By analogy, you're suggesting that they've bought a million dollar house on cheap land with the intention of selling it, found no buyers, and rather than maintain the house are burning it down so they can sell it for $100K.E-TRONS said:
The seller still loses in that scenario.
767jetz
Veteran
- Aug 20, 2002
- 3,286
- 2,779
USA320Pilot,USA320Pilot said:
You are the ultimate spin master. For those who didn't actually read the article, let me post the pertinent section:
----------------------------------
"However, Brace did add that United would get out of Chapter 11 "one way or another."
In some ways, United is in a tricky situation with regard to commenting on the loan process underway at the Air Transportation Stabilization Board. Among key requirements, loan guarantees are only available if no private sector financing is reasonably available.
The program is considered a last resort, so the government would not appreciate an applicant seeking help but also saying that backup options — which could include private financing, a major equity investor or deeper cost cuts — might be available."
----------------------------------
Translation for the very dense: UA can not say they have a plan "B" when the ATSB will only approve them if there is no plan "B" available.
USA320pilot, where on earth do you come up with this spin?
As for the rest of your post, thank you for cutting and pasting all the news articles that everyone has read over and over and over again. Unfortunately it is still complete speculation by you and the writers of those articles. With the exception of the ATSB, JP Morgan & CitiGroup, and UA's board of directors, NO ONE (not you, your analysts, US management, the reporters you continue to quote, or you secret sources) has seen the business plan.
TheWatcher
Senior
- Aug 26, 2002
- 342
- 0
Still at it with these clever topics eh? Can anyone point out a better candidate for the nut house? Just yanking your chain a bit. iI dont agree with your comments, but i hope you keep them coming. I do find your ideas and dreams very amusing
