ALPA/USAPA Thread for the Week 5/22 to 5/29

[sharktooth]

Like it or not the east needed the west and the west need the east.

Half right. The west needed the east. The other half, not so much.

 

[CactusFlyr]

USAPA doesn't threaten your careers at all. Tell it like it is. USAPA threatens your lottery winnings and nothing more.

It has already slowed my career progression. Just look at the numbers for newhires / recalls and upgrades. Lets see you twist that around into - it was ALL ours to begin with, it wasn't.

 

[Piedmont1984]

This argument is getting old. You showed us by voting in the angry fo club with the majority and now you want our input? Get out of the house the fumes are getting to you!!

The angry fo schills have told us over and over we have a lottery ticket that's not cashable. Have you ever thought that a so called union that excludes and places a portion of its members in a disadvantaged position not a union at all? Aren't unions about protecting the little guy?

After all didn't a portion of your group get a windfall by being recalled? Didn't a portion of your group get to upgrade instead of being furloughed? Didn't we all get to stay employed?

Like it or not the east needed the west and the west need the east.

The question that keeps being asked here and never answered is a simple one- Given the east pilot groups' past actions how can anyone trust their future actions?

It is your group that has taken anger to a whole new level. A petulant group of adolescents, sulking in their corner.

FYI, unions are about the will of the majority, provided that no minority is treated unfairly, which will be the case here. Many of us are tired of explaining over and over that DOH with proper conditions, restrictions and fences does not disadvantage, exclude, discriminate or dismiss the reasonable interests of the west. Of course, since you choose not to participate, it looks as though we in the east will decide what those interests are. Reminds me of the saying "when we want your opinion, we'll give it to you", except in this case you are doing it to yourselves.

And you can always trust USAPA's future actions. They have done exactly what they set out to do from day one over a year ago. No surprises, no tricks, no dirty pool - provided you took heed of their warnings, which you in the west chose to dismiss.

 

[fr8tmastr]

It has already slowed my career progression. Just look at the numbers for newhires / recalls and upgrades. Lets see you twist that around into - it was ALL ours to begin with, it wasn't.

I stand corrected,
No matter the economic situation with the Country or the health of our or any airline, your career progression should not be harmed. So with that being the case, all the East pilots and any potential merger pilots should just step aside in order to preserve your career progression. Because after all at one point in your career things looked good for you, and you, should never see a change.
So I do stand corrected, I thought you guys were not being reasonable.

 

[luvn737s]

Half right. The west needed the east. The other half, not so much.

A blast from the past

US Airways is now in the final stage of completing its plan of reorganization (POR) and during the past week the company made four important announcements. In two bankruptcy court filings, the airline reported its January financial performance and the judge overseeing the case approved the carrier’s unique financing agreement with Eastshore Aviation, LCC. In addition, to cut costs the company elected to most likely remove 11 high-cost B737 aircraft from its fleet, and will eliminate 14 unprofitable routes and service to two Latin American destinations, Panama City and San Salvador.

The motivation behind these decisions is the continued industry wide deterioration of fundamentals. In particular continued low-fare pressure, outrageously high fuel prices, and expensive upcoming aircraft maintenance.

In its monthly filing with the bankruptcy court, US Airways announced that it lost $157 million in January. Much of this loss was for significant S.1110 aircraft cure payments on aircraft that will have their financing agreements affirmed, although for competitive and negotiation purposes between the Seabury Group and the carrier’s creditors, the airline did not disclose what aircraft had their leases affirmed and payments made.

The airline also said its cash balance dropped $195 million in January, leaving it with $543 million in unrestricted cash, which is enough to fulfill the terms of its federally backed loan. The carrier was required to have $498 million as of January 28 and $417 million as of February 4 with its annual low cash period expected to occur in March.

US Airways’ revenue for the month continued to decline and from this observer’s perch, a large portion of the reduction occurred because of liquidation concerns caused by union resistance to participate in the new business plan, AFA and CWA press releases calling for a “strike or chaos†job actions, and the Christmas holiday “operational meltdownâ€. With passenger fear the company would not be able to obtain ATSB approval for continued use of guaranteed funds passengers “booked away†from the airline causing a significant reduction in revenue.

Meanwhile, the DOT Inspector General (IG) issued a report that criticized US Airways for not properly manning its Philadelphia hub, which contributed to the problem.

See Story

Management had plans to offset the short staffing, but they “turned out to be insufficent,†said Inspector General Kenneth Mead. Its problems reflect “an airline trying to emerge from bankruptcy and compete with low-cost carriers by maintaining staff levels with little margin for error,†he said.

See Story

In response the airline issued a press release and said, “The operational events over the Christmas holidays were unfortunate for our company, our employees, and most notably for the passengers that were affected. We have worked very hard since that time to improve our staffing situation and implement other changes that will enhance our operations, including a major February schedule change that is having a clear and beneficial impact. The Inspector General's staff had a challenging task in trying to chronicle a very complicated set of circumstances, and we trust that DOT officials recognize both our regret over the situation as well as the many initiatives we have taken to improve service to our customers.â€

See Story

Interestingly, the US Airways “executive suite†believes that if the Philadelphia “operational meltdown†would not have occurred, the IAM would not have ratified the company’s last contract proposal. If true, this would have lead to court imposed contract changes, which could have created an employee backlash against management. Management believes the “operational meltdown†changed employee sentiment in that union rank-and-file members recognized after the Christmas problems the airline could truly fail and thus, approved the company’s last contract proposal.

To improve staffing levels, US Airways is conducting job fairs to hire new Customer Service Agent (CSA), Fleet Service Agent (FSA), and Customer Assistance Representatives (CAR) in Philadelphia, Charlotte, and Washington. Employees are being offered an airline position with a starting at $9.59 per hour for a CSA/FSA and $7.52 per hour for a CAR. New employees will also receive medical benefits, a 401(k) etirement plan, unlimited free travel on US Airways, a discounted travel on virtually every airline in the world.

US Airways has completed its Washington hiring and has employees in a “pool†for later openings, but still is recruiting personnel to work in Philadelphia and Charlotte. To help obtain quality personnel on March 2 the airline announced an employee referral program where an active employee can earn $100 for each new hire that is selected for employment, passes the security and background investigation, and is within 30 days of completing their probationary period.

Meanwhile, with the labor issues resolved and the “Clear Skies Ahead†advertising campaign now in place, revenue is improving and management expects much improved results for February and March.

Compounding US Airways cash problem is the recent surge in energy prices. This week crude oil prices continued their climb with NYMEX Futures soaring to a 4-month high at about $53 per barrel. US Airways’ new business plan is based on spot jet fuel prices corresponding to a crude oil price of $40 per barrel. Each $1 increase in crude oil increases the company’s monthly fuel expense by $2 million per month. Thus, with oil at $13 per barrel over budget that equals about $26 million more per month or $312 more pear year in fuel expense, which was not in the last transformation plan revision.

To help offset the increased cost of fuel, this week’s airfare increase initiative started by Northwest Airlines appears to be sticking with every legacy carrier matching the Minneapolis-based carrier, along with AirTran Airways. So far low cost airlines Southwest and jetBlue have not increased their fares, but this is a positive development to help offset extremely high fuel prices.

See Story

William Lauer, chairman of Allegheny Capital Management told the Pittsburgh Tribune-Review that last week’s fare increase or ticket surcharge should bring US Airways' aviation fuel expenses down to levels equivalent to a more-normal $37 a barrel, which is a level that is sustainable in the company’s new business plan.

See Story

Lauer believes the increase in monthly revenue would be about $32 million or equal to a $16 decrease in the price of oil per barrel and the corresponding reduction in spot jet fuel prices. US Airways' new business plan accounts for jet fuel prices equal to oil trading at approximately $40 per barrel. If Lauer's increased revenue estimate is accurate, then the fare increase and the oil price at about $13.50 over budget would provide US Airways with about $5 million per month or $60 million per year in extra liquidity -- at today's ticket prices.

For US Airways to file its POR and have it endorsed by the creditors committee and the bankruptcy court, the airline must project a profit and to do so, it must further increase revenues and/or cut more costs to account for its increased fuel expense.

If Lauer’s estimate is accurate, then US Airways can project higher revenue and the arithmetic of its business plan should work because it is based on oil prices of about $40 per barrel. With that said, the company plans to increase its popular GoFares program from its current 25% of sales to a much higher figure. Therefore, it’s unclear at this time how the new fare structure will effect the new business plan, POR, and unrestricted cash level, which is an important factor in US Airways emerging from bankruptcy on June 30..

Cash conservation was a key subject in a recent internal memo to US Airways' planning and marketing executives from Bruce Ashby, executive vice president of marketingand planning.

"In my opinion it is our constant duty to take our best shots, see how they work, refine our plans accordingly and, most importantly, to preserve our cash and keep moving forward," said Ashby's memo, which was reviewed by the Tribune-Review.

See Story

Two steps taken to further cut its costs was the removal beginning in May of B737 aircraft and eliminating 14 routes, including some of the new Fort Lauderdale service. The B737 aircraft burn the greatest amount of fuel for the amount of revenue they generate and are in need of a lot of maintenance. The aircraft in question need millions of dollars in long-term repairs, upgrades, refurbishment, heavy checks and can still be returned without financial remedies to their owners. While the company is in bankruptcy it still has flexibility as to how it structures aircraft operations, to further reduce unit costs, in a brutally competitive environment.

Interestingly, these announcement were made the same day that Northwest announced their fare increase and the new increase in revenue was not available when management made the decision to remove these aircraft and pull down 14 mainline flights. In addition, the company still has the bankruptcy court tool to remove aircraft as a means for aircraft financiers to lower lease terms. It’s unclear if the company will retain the additional B737s that are scheduled for return to their owners beginning in May, but the company could elect to keep some of these aircraft if the financiers amend their contract providing the carrier with cost relief, in light of the increased revenue.

US Airways will also eliminate unprofitable lines of flying and the most noticeable reduction is the pull down of some Fort Lauderdale service in another move to preserve its cash.

According to the Pittsburgh Post-Gazette, eleven days after unveiling service between Fort Lauderdale, Fla., and the Caribbean and Latin America, US Airways decided to end several of the new flights because they were losing money, Ashby said.

"We chose to say enough is enough," Ashby wrote in an internal e-mail, distributed to some employees this week and obtained yesterday by the Post-Gazette. "We are just not in a forgiving business right now, and we don't have any extra cash lying around."

US Airways announced Friday that it would end service in May to Panama City, Panama, and San Salvador, El Salvador, and would stop direct connections to San Juan, Puerto Rico, and Newark, N.J. The quick retreat raised new questions about the airline's Florida strategy and a transformation plan designed to lift it out of bankruptcy.

"I've had a number of people ask me, 'How could we do that?' " Ashby said, in the e-mail. "Frankly," he said, "it's not a bad question."

The first-ever flights from Fort Lauderdale to Panama City and San Salvador were not booking "up to reasonable levels, despite significant advertising, marketing and sales support," Ashby wrote in the e-mail. That left the money-losing airline with two choices, he said: Either absorb more losses in San Salvador and Panama City while hoping the situation got better or conclude that "enough is enough."

See Story

The initial Fort Lauderdale “focus city†plan included 44 daily departures to 20 destinations, including 11 East Coast cities, 8 Latin American and Caribbean countries and Puerto Rico. In May it will have 34 daily departures to 15 destinations, two of which will be Saturday-only. "This was a difficult decision to make, but [it] preserves the larger project," of the Fort Lauderdale expansion, US Airways spokeswoman Amy Kudwa told the Orlando Sentinel.

Senior management believes that over time Fort Lauderdale can grow its operation with new domestic, Latin American, South American, and Caribbean service, but the company believes the company must reduce its losses in every market possible and conserve cash to comply with the ATSB loan guarantee terms and obtain more exit financing in light of skyrocketing energy prices.

Last Monday the bankruptcy court approved US Airways’ $125 million Debtor-In-Possession ("DIP") financing arrangement with Eastshore Aviation, LCC, and the accompanying RJ service agreement with Air Wisconsin. This agreement came at a time when US Airways’ cash was falling to its seasonal low point and is an extremely positive development for the Arlington-based airline.

The agreement sends another signal to the marketplace that US Airways fortunes have turned, the company is here to stay, and it has “Clear Skies Aheadâ€.

The complex agreement has multiple parts and was negotiated by chief financial officer (CFO) Ron Stanley, who many observers believe is a significant management upgrade over former CFO’s Neil Cohen and Dave Davis.

Key components of the deal include:

$125 million in DIP financing, with $75 million immediately available and two subsequent $25 million increments that can be drawn at a later date, if necessary.

Upon emergence from bankruptcy the $125 million would then convert to equity in the reorganized US Airways.

The $125 million is 50% of the $250 million "target" for new equity management has been seeking and according to Ashby, this agreement helps keep us on track for a rapid and successful emergence from Chapter 11.

The decision gives the company much-needed liquidity as it heads into March, the month when it expects to have the lowest cash reserves of the year, US Airways attorney Brian Leitch told the court.

The second part of the agreement is a standard affiliate carrier RJ service agreement where Air Wisconsin would provide US Airways with competitively priced RJ feed. What is unique about the particular agreement “is that the number of aircraft Air Wisconsin would fly as US Airways Express has not yet been finalized, because it depends at least in part on the outcome of ongoing negotiations between Air Wisconsin and United Airlines. Air Wisconsin currently flies 70 50-seat CRJ-200 RJs for United Express, which is the exact number that the company can put into service with US Airways. “Nothing in our agreement conflicts with what United and Air Wisconsin agree between themselves, but to the extent some of the aircraft currently flown for United are freed up as part of their discussions, they could be placed into service as US Airways Express,†Ashby said.

The AP reported Kelly Lanpheer, an Air Wisconsin spokeswoman, said the deal with US Airways is more than a backup option. "Air Wisconsin sees the progress US Airways has made in its restructuring, and we're looking forward to the opportunity to build a new partnership with US Airways and continue one with United," she said.

Exact details of the agreement were redacted from the public record because of the competitive issues surrounding the placement of regional jets within the marketplace.

Bruce Lakefield said the financing was "a key first step in the process" of the company's emergence from Chapter 11 bankruptcy protection. Leitch said the investment from Air Wisconsin would be a "catalyst" to the company in terms of securing the rest of the money it needs.

Interestingly, there are Wall Street reports US Airways is using the Eastshore deal as leverage to extract further concessions from its current RJ operators, Mesa, Chautauqua, and Trans States Airlines. Sources indicated that US Airways is seeking an equity investment from its partners and lower air service fees in exchange for the right to continue to operate under the US Airways Express network. Moreover, US Airways has not yet affirmed any affiliate carrier RJ air service agreement and if any of the current affiliate carrier’s do not agree to participate in the new business plan, US Airways could reject the current deal and replace the flying with Air Wisconsin jets.

The AP reported "While we're in bankruptcy we still have some flexibility as to how we structure our regional jet operations," said US Airways senior vice president of corporate affairs Chris Chiames. Chiames’ comment is likely a third-party comment to US Airways’ current affiliate RJ operators that basically told them they needed to participate in the new business plan or they could be replaced.

Last Sunday the Pittsburgh Post-Gazette noted Some observers believe that US Airways, in its search for more investors, will look to its other affiliate carriers -- some of which are independent and some of which it owns -- that carry US Airways passengers to smaller cities and receive fees in return. Lauer, the local airline analyst, believes that US Airways could sell the carriers it owns -- PSA Airlines or Piedmont Airlines -- to raise cash. Or, it could ask other regional carriers with feeder contracts, such as Mesa or Chautauqua, to invest in US Airways as Air Wisconsin did and receive guaranteed service in return. "In the quest for exit financing," Lauer said, US Airways "has zoned in on this whole area of the regional contracts." Chief executives at Phoenix-based Mesa and Indianapolis-based Chautauqua could not be reached for comment.

Leitch noted the loan was well-priced and doesn't have commitment fees or prepayment penalties. If US Airways doesn't pay off the loan, it will convert to equity in the reorganized airline when it emerges from bankruptcy. The cash will also help the company stay above minimum cash requirements on larger loan facility with lenders headed by the federal Air Transportation Stabilization Board (ATSB). The company's creditors committee, GE Capital and the ATSB all said the deal should be approved.

Furthermore, according to loan documents filed with the bankruptcy court, Air Wisconsin would have a stake ranging from at least 19.2% to as much as 26.3% in the reorganized US Airways, with minimum equity of $225 million.

Separately, Dow Jones Newswires reported One positive aspect of the deal for US Airways is that the company can continue shopping around for other financing and regional jet service deals, Leitch said. In exchange for the financing, Air Wisconsin now has a put option, allowing it to place up to 70 jets in US Airways' fleet. Air Wisconsin currently uses its Bombardier CRJ-200 regional jets to fly routes for United. However, since United is in Chapter 11, it can cancel unwanted contracts, and it is unclear if United will keep its Air Wisconsin contract. If that contract is canceled Air Wisconsin would need to find another partner in a difficult market for regional airlines. "Air Wisconsin's looking for a hedge. We can provide that hedge," Leitch said.

Also noteworthy, Air Wisconsin would fly in the US Airways system "at prices equal to or lower than those paid to other regional jet affiliates" and may add ninety-seat jets to the US Airways network. These aircraft could be EMB-190 or CRJ-900 aircraft per LOA 93, but this would have to be flown under the J4J protocol.

In summary, this is another good deal for US Airways.

As the company continues to shop for exit financing, another option to boost liquidity would be for the company to sell its wholly owned companies Piedmont, PSA, and MDA and then have a MOU for the acquiring company to enter into an affiliate carrier air service agreement. In my opinion, if this occurs, US Airways would first sell Piedmont and PSA and if necessary MDA. It’s unclear what the market value of the companies would be, however, during the last United – US Airways merger United agreed to sell the 3 turboprop operators, PSA, Piedmont, and Allegheny Airlines to Atlantic Coast for $200 million.

Finally, US Airways has made two key announcements on the last two Friday’s and key announcements will likely happen in the not-so-distant future with the company scheduled to file its POR on March 15, just eleven days away.

Regards,

USA320Pilot

 

[Tiger 1050]

You don't understand the definition of windfall, or ALPA merger policy for that matter.

Per ALPA Merger Policy:

a. Preserve jobs.
b. Avoid windfalls to either group at the expense of the other.
c. Maintain or improve pre-merger pay and standard of living.
d. Maintain or improve pre-merger pilot status.
e. Minimize detrimental changes to career expectations.

Your first example for "windfall" would fall under "Maintain or improve pre-merger pay and standard of living. Your second example would fall under "Maintain or improve pre-merger pilot status." Neither would qualify for a "windfall." On the contrary, your examples would concur with with ALPA merger policy.

Hope this helps.

Oooppps! I failed to read where it specifically states that the arbiter must comply with these terms... Maybe you and MyView can find that...

 

[Piedmont1984]

A blast from the past

USA320Pilot has always done an excellent job of reporting the news. It is in the area of prognostications that his batting average is often no better than the rest of us.

Rereading his 2005 summary certainly throws cold water on the west's mantra of "you were hours from liquidation".

Boy would I love to see $40 a barrel oil again.

 

[Flyz4food]

Oooppps! I failed to read where it specifically states that the arbiter must comply with these terms... Maybe you and MyView can find that...

And why wouldn't he follow terms and guidelines agreed to by both parties? Why should he strike out on his own and come up with his own rules. The fact he didn't think your position was correct made his decision invalid?

 

[Piedmont1984]

Oooppps! I failed to read where it specifically states that the arbiter must comply with these terms... Maybe you and MyView can find that...

Yeah, I guess you're right. The arbitrator can do whatever the hell he wants. Which is exactly what he did.

And then - we did exactly what we wanted to do - we told the arbitrator to go to hell, and then we said the same thing to ALPA.

Q.E.D.

 

[Tiger 1050]

And why wouldn't he follow terms and guidelines agreed to by both parties? Why should he strike out on his own and come up with his own rules. The fact he didn't think your position was correct made his decision invalid?

I think you missed my point. The Arbiter is in no way bound by any of the terms in the ALPA merger policy. In fact the arbitration is just one of three main parts in said policy. First is negotiations between the parties to be integrated and Second is mediation to help facilitate some sort of acceptable outcome. Finally we reach the third part where the parties agree to plead their case and let the Arbiter decide... Both pilot groups agreed to this process. Only the pathetic east pilots had a problem once the award was announced. Funny not one word of displeasure surfaced prior...

Either way, it matters not what you or I think. In the end USAPA will fail. Whatever the numbers are you simply cannot disenfranchise 40% of your group and expect success...

 

[Tiger 1050]

Yeah, I guess you're right. The arbitrator can do whatever the hell he wants. Which is exactly what he did.

And then - we did exactly what we wanted to do - we told the arbitrator to go to hell, and then we said the same thing to ALPA.

Q.E.D.

And now you know why our mantra is "Integrity Matters." Apparently you are lacking...

 

[GorgeousGeorge]

And now you know why our mantra is "Integrity Matters." Apparently you are lacking...

That sounds like a personal attack......I guess he could say that really means a lot coming from a thief......

and so on...........and so on................

 

[spike99]

A blast from the past

Its interesting you post a thread from another member to spout your position. Your entire position stands on your assumption AWA was a vibrant airline waiting to move forward and grow. You dismiss the fact DP was preparing to implement project "Zanzibar" if he couldn't find a merger partner to infuse cash. Interesting how AWA was in initial merger talks with US and said they needed a better "Bottom Line" before they could implement the deal. Amazingly US declares second BK, gets LOA 93 in place and furloughs another 600 pilots, and the financiers (provided by Mr. Lakefield) are ready to support the AWA coup. It couldn't be a legacy carrier had the best operating cost in the industry, after being gutted, and couldn't help make money regardlesss of the management. In terms of the Nic award, AWA is hiring pilots as fast as they can find them, (save Dave) while US is furloughing more pilots. What were the numbers before AWA saved the East, 1800 pilots for 180 airplanes, compared to 2800 for 320+ AC for the East. Im sure management, had nothing to do with manipulating those numbers. AWA must have been a model of efficiency with that ratio. Of course it was very helpful in the who brought what jobs argument, again I'm sure there was no collussion in those numbers. Of course, when the airlines didn't integrate as fast as management had hoped, the additional AWA pilots weren't able to fill in the displaced jobs of the East. When the East had to start they're belated recall, they couldn't fill the training slots fast enough to meet the summer schedule. Of course, you see this as an impediment to your career progression, regardless of your initial DOH, or LOS. I guess if you'd had the oportunity to be furloughed, instead of stagnated, you'd have a better understanding.

 

[Piedmont1984]

And now you know why our mantra is "Integrity Matters." Apparently you are lacking...

Sorry, I should have elaborated. We told the arbitrator to go to hell since his award lacked integrity, and we told ALPA to go to hell since they lacked integrity, and then we did the same with ALPA's Tsar, John Prater.

As far as my integrity, it is quite intact. I took care of my brothers and sisters throughout this episode. Since April 17th the size of the family has increased. So tell me "brother", do we move forward together or not?

And with regard to your post#205. You are disenfranchising yourselves - big difference.

 

[Pacemaker]