robbedagain
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- Oct 13, 2003
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heard some rumors this past weekend that usair was or is being investigated that they may have borrowed the govt loan and still cant make money. is this true or what?
Are The Feds Looking Into Usair?
- Thread starter robbedagain
- Start date
Regardless of whether this is true, I'm still perplexed as to why people expected US to post a profit in '03 or '04. The business plan never called for a profit until '05. If groups are now wondering where the profit is, I fault Siegel for not communicating expectations properly. Managing Wall Street's expectations is one of the primary roles of a CEO.
Now, that being said, I think everyone is starting to realize that what was done in Chapter 11 was not enough. I think Siegel probably knows what needs to be done, but whether he executes and regains the support of basically everyone, employees to investors to analysts to etc., is another matter. I think everyone is very interested in seeing what this new transformation plan entails. US has also become a chronic restructurer, which does nothing to help bolster confidence.
I'm perplexed why US can't make money. I'd personally love to see the internal numbers. There is no reason, in my mind, US can't have a strong presence in BOS, LGA, PHL, DCA and FL with a strong omnidirectional hub in CLT and decent international routes to Europe, the Caribbean and Latin America. (Of course, I still believe a US-UA merger looks even better, outside of the obvious problems with labor integration, but whether that comes to pass is a huge open question.)
Now, that being said, I think everyone is starting to realize that what was done in Chapter 11 was not enough. I think Siegel probably knows what needs to be done, but whether he executes and regains the support of basically everyone, employees to investors to analysts to etc., is another matter. I think everyone is very interested in seeing what this new transformation plan entails. US has also become a chronic restructurer, which does nothing to help bolster confidence.
I'm perplexed why US can't make money. I'd personally love to see the internal numbers. There is no reason, in my mind, US can't have a strong presence in BOS, LGA, PHL, DCA and FL with a strong omnidirectional hub in CLT and decent international routes to Europe, the Caribbean and Latin America. (Of course, I still believe a US-UA merger looks even better, outside of the obvious problems with labor integration, but whether that comes to pass is a huge open question.)
USA320Pilot
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- May 18, 2003
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USFlyer:
USFlyer said: "Regardless of whether this is true, I'm still perplexed as to why people expected US to post a profit in '03 or '04. The business plan never called for a profit until '05."
Chip comments: The loan guarantee application, which was approved by the ATSB, did not project a full year profit until 2005. The company's concern going forward is that yield is deteriorating faster than anticipated (due to the tremendous LCC growth) and to what was agreed to by the Board and Fitch Rating, the ATSB's independent application auditor.
According to ALPA E&FA, America West is in violation of their loan guarantee unrestricted cash on hand requirements; therefore, it appears the ATSB is being somewhat lenient. However, there is analyst and industry observer concern that the faster than anticipated yield deterioration has the ATSB on edge and this will have a negative impact on United's efforts to obtain guaranteed funds that could be provided by J.P. Morgan and Citigroup.
Respectfully,
Chip.
USFlyer said: "Regardless of whether this is true, I'm still perplexed as to why people expected US to post a profit in '03 or '04. The business plan never called for a profit until '05."
Chip comments: The loan guarantee application, which was approved by the ATSB, did not project a full year profit until 2005. The company's concern going forward is that yield is deteriorating faster than anticipated (due to the tremendous LCC growth) and to what was agreed to by the Board and Fitch Rating, the ATSB's independent application auditor.
According to ALPA E&FA, America West is in violation of their loan guarantee unrestricted cash on hand requirements; therefore, it appears the ATSB is being somewhat lenient. However, there is analyst and industry observer concern that the faster than anticipated yield deterioration has the ATSB on edge and this will have a negative impact on United's efforts to obtain guaranteed funds that could be provided by J.P. Morgan and Citigroup.
Respectfully,
Chip.
- Banned
- #4
Chip, your facts are untrue again, AWA only has to have $100 million and according to their last sec filing they have As of September 30, 2003, Holdings’ unrestricted and restricted cash, cash equivalents, short-term investments and investments in debt securities totaled $584.5 million. This included the proceeds from a private placement of approximately $86.8 million of Senior Exchangeable Notes in the third quarter of 2003. As part of this transaction, AWA placed $42.9 million of the net proceeds in a cash collateral account to secure principal and interest payments on certain of its indebtedness through September 30, 2004. See Note 5, “Issuance of Senior Exchangeable Notes†in Notes to Condensed Consolidated Financial Statements.
Government Guaranteed Loan
In January 2002, AWA closed a $429 million loan supported by a $380 million guarantee provided by the Air Transportation Stabilization Board (the “ATSBâ€). Certain third-party counter-guarantors have fully and unconditionally guaranteed the payment of an aggregate of $45 million of the outstanding principal amount under the government guaranteed loan plus accrued and unpaid interest thereon. In addition, Holdings has fully and unconditionally guaranteed the payment of all principal, premium, interest and other obligations outstanding under the government guaranteed loan and has pledged the stock of AWA to secure its obligations under such guarantee. Principal amounts under this loan become due in ten installments of $42.9 million on each March 31 and September 30, commencing on March 31, 2004 and ending on September 30, 2008. Principal amounts outstanding under the government guaranteed loan bear interest at a rate per annum equal to LIBOR plus 40 basis points.
Subject to certain exceptions, we are required to prepay the government guaranteed loan with:
• the net proceeds of all issuances of debt or equity by either Holdings or AWA after January 2002;
• proceeds from asset sales in excess of $20 million in any fiscal year to the extent such proceeds are not applied to redeem AWA’s 103/4% senior notes due 2005; and
insurance proceeds in excess of $2 million to the extent such proceeds are not used to restore or replace the assets from which such proceeds are derived.
In addition, we are required to prepay the government guaranteed loan upon a change in control. We may, at our option, prepay the government guaranteed loan without premium or penalty, subject to reimbursement of the lenders’ breakage costs in the case of prepayment of LIBOR loans.
The government guaranteed loan requires that AWA maintain a minimum cash balance of $100 million. In addition, the government loan contains customary affirmative covenants and the following negative covenants: restrictions on liens, investments, restricted payments, fundamental changes, asset sales and acquisitions, the creation of new subsidiaries, sale and leasebacks, transactions with affiliates, the conduct of business, mergers or consolidations, issuances and dispositions of capital stock of subsidiaries, and amendments to other indebtedness. The government guaranteed loan contains customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
Term Loan
In connection with the closing of the government guaranteed loan and the related transactions, AWA converted its existing revolving credit facility into a term loan with the Mizuho Corporate Bank, Ltd., as successor by merger to the Industrial Bank of Japan, Limited, and certain other lenders. As of September 30, 2003, $73.2 million remains outstanding under the term loan. Principal amounts under the term loan become due in two installments of $30 million on December 31, 2005 and December 31, 2006 with the remaining amounts becoming due and payable in full on December 31, 2007. Principal amounts outstanding under the term loan bear interest at a rate per annum equal to, at our option, either the Base Rate or the Eurodollar Rate (which is based on LIBOR), in each case plus an applicable margin. The applicable margin adjusts based on the length of time the term loan has been outstanding. The term “Base Rate†has a meaning customary and appropriate for financings of this type. In addition, principal amounts outstanding under the term loan bear interest in kind at a rate of 2% through December 31, 2004.
The prepayment requirements and covenants of the term loan are substantially similar to those of the government guaranteed loan. We may, at our option, prepay the term loan without premium or penalty, subject to reimbursement of the lenders’ breakage costs in the case of prepayment of loans bearing the Eurodollar Rate. The term loan is secured by a first priority perfected security interest in certain of our aircraft, spare engines, rotable aircraft parts inventory and a maintenance facility. The term loan contains customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
Government Guaranteed Loan
In January 2002, AWA closed a $429 million loan supported by a $380 million guarantee provided by the Air Transportation Stabilization Board (the “ATSBâ€). Certain third-party counter-guarantors have fully and unconditionally guaranteed the payment of an aggregate of $45 million of the outstanding principal amount under the government guaranteed loan plus accrued and unpaid interest thereon. In addition, Holdings has fully and unconditionally guaranteed the payment of all principal, premium, interest and other obligations outstanding under the government guaranteed loan and has pledged the stock of AWA to secure its obligations under such guarantee. Principal amounts under this loan become due in ten installments of $42.9 million on each March 31 and September 30, commencing on March 31, 2004 and ending on September 30, 2008. Principal amounts outstanding under the government guaranteed loan bear interest at a rate per annum equal to LIBOR plus 40 basis points.
Subject to certain exceptions, we are required to prepay the government guaranteed loan with:
• the net proceeds of all issuances of debt or equity by either Holdings or AWA after January 2002;
• proceeds from asset sales in excess of $20 million in any fiscal year to the extent such proceeds are not applied to redeem AWA’s 103/4% senior notes due 2005; and
insurance proceeds in excess of $2 million to the extent such proceeds are not used to restore or replace the assets from which such proceeds are derived.
In addition, we are required to prepay the government guaranteed loan upon a change in control. We may, at our option, prepay the government guaranteed loan without premium or penalty, subject to reimbursement of the lenders’ breakage costs in the case of prepayment of LIBOR loans.
The government guaranteed loan requires that AWA maintain a minimum cash balance of $100 million. In addition, the government loan contains customary affirmative covenants and the following negative covenants: restrictions on liens, investments, restricted payments, fundamental changes, asset sales and acquisitions, the creation of new subsidiaries, sale and leasebacks, transactions with affiliates, the conduct of business, mergers or consolidations, issuances and dispositions of capital stock of subsidiaries, and amendments to other indebtedness. The government guaranteed loan contains customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
Term Loan
In connection with the closing of the government guaranteed loan and the related transactions, AWA converted its existing revolving credit facility into a term loan with the Mizuho Corporate Bank, Ltd., as successor by merger to the Industrial Bank of Japan, Limited, and certain other lenders. As of September 30, 2003, $73.2 million remains outstanding under the term loan. Principal amounts under the term loan become due in two installments of $30 million on December 31, 2005 and December 31, 2006 with the remaining amounts becoming due and payable in full on December 31, 2007. Principal amounts outstanding under the term loan bear interest at a rate per annum equal to, at our option, either the Base Rate or the Eurodollar Rate (which is based on LIBOR), in each case plus an applicable margin. The applicable margin adjusts based on the length of time the term loan has been outstanding. The term “Base Rate†has a meaning customary and appropriate for financings of this type. In addition, principal amounts outstanding under the term loan bear interest in kind at a rate of 2% through December 31, 2004.
The prepayment requirements and covenants of the term loan are substantially similar to those of the government guaranteed loan. We may, at our option, prepay the term loan without premium or penalty, subject to reimbursement of the lenders’ breakage costs in the case of prepayment of loans bearing the Eurodollar Rate. The term loan is secured by a first priority perfected security interest in certain of our aircraft, spare engines, rotable aircraft parts inventory and a maintenance facility. The term loan contains customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
oldiebutgoody
Veteran
- Aug 23, 2002
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UAIR is being run by a BOD chairman with NO airline experience, who thinks that investing in airlines is good for his account holders. What does that tell ya?D M G said:
Why would anyone expect UAir to make a profit in 2005 or any other year for that matter?
These projections they made for the sake of obtaining the ATSB Loans , should be just as flawed as the projections that are now leading for the calling for added concessions , furloughs and closings ( GSE of late)... Face it...they are either the biggest liars on earth or they couldn't predict the sunrise in the morning.
I swear , I do believe you people only read small parts of stuff that is posted....and yet are so eager to swallow the party doctrine when dispensed to you....especially when served with Chip's and Kool Aid.
Again...they made projections based on the best case scenario only. They did not calculate a slow / no return of full fare business travel....or the invaision of the LCC's that has been looming for better than 15 years.....longer in the case of SWA alone.
U's failure to address core problems will only end in three possible ways.
(1) The few remaining employees' will work for nothing at a still flawed carrier
(2) The few remaining employee's will work for nothing at a still flawed carrier , while awaiting Chapter 7
(3) A change of corporate and executive culture takes place....and a real leadership group emerges from a far off galaxy....and U actually examines it's problems beyond pinning it on labor...and does something proactive to change things.
Do not wait on a Chip prediction for a west coast hub....UA is going to make it , with us or without us? ....and it's been made painfully clear that the US in any compass direction is already over capacity on HUBS period.
The time to streamline ourselves to two mainline hubs...and pick up the point to point flying is long over due. The clock is ticking for the remaining 28,000 here...and the goal is looking more like 18,000 heading to ZERO if the present course and braintrust remains in place ?
These projections they made for the sake of obtaining the ATSB Loans , should be just as flawed as the projections that are now leading for the calling for added concessions , furloughs and closings ( GSE of late)... Face it...they are either the biggest liars on earth or they couldn't predict the sunrise in the morning.
I swear , I do believe you people only read small parts of stuff that is posted....and yet are so eager to swallow the party doctrine when dispensed to you....especially when served with Chip's and Kool Aid.
Again...they made projections based on the best case scenario only. They did not calculate a slow / no return of full fare business travel....or the invaision of the LCC's that has been looming for better than 15 years.....longer in the case of SWA alone.
U's failure to address core problems will only end in three possible ways.
(1) The few remaining employees' will work for nothing at a still flawed carrier
(2) The few remaining employee's will work for nothing at a still flawed carrier , while awaiting Chapter 7
(3) A change of corporate and executive culture takes place....and a real leadership group emerges from a far off galaxy....and U actually examines it's problems beyond pinning it on labor...and does something proactive to change things.
Do not wait on a Chip prediction for a west coast hub....UA is going to make it , with us or without us? ....and it's been made painfully clear that the US in any compass direction is already over capacity on HUBS period.
The time to streamline ourselves to two mainline hubs...and pick up the point to point flying is long over due. The clock is ticking for the remaining 28,000 here...and the goal is looking more like 18,000 heading to ZERO if the present course and braintrust remains in place ?
This isn't quite accurate. Bronner took a bath when U rejected certain aircraft leases, mainly for the F100s. Investing in U was a last ditch effort to recoup at least some of the money lost due to the lease cancellations. Believe me, Bronner never would have invested in UAIR if it were not for the bath he took elsewhere. And, the amount he invested really is a small amount compared to the overall value of the funds he manages.oldiebutgoody said:
BUSH LEAGUE!!! Regardless of what I may or may not think of U's long term prospects, the notion of trying to "recoup losses" by putting good money after bad is downright freightening if a supposedly "genious" investor actually did that. I't like staying at he black jack table with the note for your house trying to win back the last grand you lost. :down: :unsure:USFlyer said:
Light Years
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- Aug 27, 2002
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I too have been wondering how different the business plan and current state of the airline would be under Texas Pacific Group. They certainly have a high success rate with airlines (Continental and America West if I recall correctly). And the Retirement System of Alabama? Well...
oldiebutgoody
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- Aug 23, 2002
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Bronner is a FUND MANAGER, not an AIRLINE MANAGER. Tell me again how his experience has ANYTHING AT ALL to do with running an airline? Inflated airplane leases, among other things, is why this industry is in the position it's in. Those planes have paid for themselves many times over. He just couldn't let go of the "goose that lays the golden egg". Now, it appears, UAIR is going to get saddled with UAL's RSA owned airplanes, even though they appear to be a bad mix. Yea, he looks like he knows how to run an airline! :blink:USFlyer said:
