Asset Sales May Not Help U.s. Air -analysts

[jB-Rocks]

See Story

 

[Borescope]

Merge with Virgin and give them a run

 

[gso-crew]

"But liquidation could also mean that the shuttle is sold to somebody, some slots are sold to somebody else, and the core of the low-cost airline merges with Independence Air (FLYI.OQ) or forms the core of Virgin (VA.UL), for example," Bromley said.

 

[wings396]

The Shuttle is not worth what it once was. Too many Airlines with way to much frequency in those markets.

 

[AtlanticBeach]

The sale of any revenue generating component, would IMHO, be the red flag that would cause the FFs to jump ship. Doesn't matter if it is the Shuttle, Europe or Carribean.

 

[mrfish3726]

Don't have much to sell do they? Isn't everything pretty much leveraged from the 1st BK and to the ATSB?

 

[Borescope]

Besides, everyone flies to the same places in Europe and most of the Carribean. No one would want any of those routes. The shuttle is saturated with a number of airline also. What there to sell, if you could sell it, since it's all pledged to the existing loans? They're going to come after the employees which really sucks. :down:

 

[Winglet]

If you're a U FF and aren't burning your miles as fast as possible, you don't understand the situation.

 

[jimntx]

The sale of any revenue generating component, would IMHO, be the red flag that would cause the FFs to jump ship. Doesn't matter if it is the Shuttle, Europe or Carribean.

[post="180107"][/post]​

Not being unpleasant, just trying to understand. What saleable assets are there?

How could the Shuttle be sold? The valuable thing about the Shuttle is the landing slots at LGA and DCA which are pledged to the ATSB loans? I don't think anybody cares about the service itself.

With the exception of the London airports, Europe is pretty much open to any airline that wants to start service there. With EWR and JFK so nearby (relatively speaking), why would anyone "buy" a PHL to Europe route?

Caribbean? Like Europe, it's open to whoever wants to start service.

A/C? Because of the 15% rule, I don't think that anyone is going to shop for UAIR a/c unless there is a Ch. 7 yard sale. And, if the company comes to the senior UAIR pilots and says "We can save your jobs and pensions if you rescind the 15% rule and allow us to sell a/c without the buyer having to take pilots and flight attendants with them", how long do you think ALPA solidarity will hold?

 

[usfliboi]

Theres not gonna be any liquidation. Think about it. If they were gonna do it it would already been done. I believe they will do what has to be done to become an Lcc

 

[jimntx]

Liquidation is not always a choice made by the bk company. It can be imposed by the creditors who have decided to cut their losses and get what they can from an asset sale.

With no DIP financing, UAIR can not stay in BK indefinitely like UAL is attempting to do. How far into the "covenanted" cash on hand do you think the ATSB will let UAIR go before they pull the plug?

And, if not the ATSB, then the non-ATSB-backed creditors are going to get antsy as they see the cash that could pay them disappear. The burn rate for cash is going to get astronomical as suppliers start demanding cash on delivery.

 

[usair_begins_with_u]

How far into the "covenanted" cash on hand do you think the ATSB will let UAIR go before they pull the plug?

November 3rd 😉

 

[jimntx]

Surely you are not implying that politics would have anything to do with it! I'm shocked! Shocked, I tell you!

 

[sfb]

The Shuttle is not worth what it once was. Too many Airlines with way to much frequency in those markets.

It's not even so much the competition from other airlines on the traditional Shuttle routes. Acela has stolen a bunch of traffic from the Shuttles simply because the plane doesn't save much time versus the train anymore, once you add in the time needed to get to/from the airport and clear security. And the train offers power outlets for laptop users and the ability to use your cell phone, while being considerably less expensive.

I'd add that Delta has taken the lead in market share in both NYC-BOS and NYC-WAS (this includes both Shuttles from LGA, AA Eagle from LGA, and CO from EWR) with about 45% share in each market. So the position of the US Shuttle as being the weaker operation in market share does little to enhance its value as a business (not that it is even a separate business anymore).

What value the Shuttle might offer lies mainly in its LGA & DCA slots along with terminal facilities at DCA, LGA, and BOS. Actually, I'd argue that the BOS terminal leases aren't worth anywhere near what they were four years ago, given that the opening of Delta's Terminal A is going to free up about a dozen gates in Terminal C. Any airline willing to wait about six months will probably be able to pick up a few gates once Delta moves. The value of the LGA sublease is in question as well if CO (from whom US subleases the terminal) has the right of first refusal or can block US from subleasing to another party. The LGA slots are useless unless you have somewhere to park the planes; jetBlue had to delay LGA service for months until it could find a gate to use. DCA, of course, is the real gem, but it remains to be seen how much Independence Air is going to trash DCA yields with its IAD operation. The A319's and A320's only fit in at NWA among the majors due to the CFM engines, and few U.S. airlines will be interested in 737-300's that average about 17.5 years in age.

As others have said, there's almost no value in selling the Europe/Caribbean routes, due to lack of any sort of exclusive route authority AND the lack of viability of the routes without the hubs to back them up. You can't fill most of the CLT-Caribbean flights without the domestic feed of the hub.

At this point, none of the network majors has the cash to spend on a large purchase of UAIR assets. I suspect that most of them are waiting, like vultures, for a potential fire sale. And since the LCC's are the only carriers with the cash to fund asset purchases, that makes asset sales even more unattractive, since US would only be exposed that much more to low-cost competition.