Chapter 11 Soon?

[usair_begins_with_u]

eastern airlines <clap, clap, clap clap clap>
eastern airlines <clap, clap, clap clap clap>
eastern airlines <clap, clap, clap clap clap>
eastern airlines <clap, clap, clap clap clap>

 

[jimntx]

The ATSB itself is a much more thorny issue, as they are ONLY concerned with the ability of the company to repay the loans. In the case of a chapter 11 or 7 the chance of the ATSB being able to profit at all from this investment is nil.

[post="166886"][/post]​

Are you sure about this? Does anyone know for sure what the primacy of ATSB claims would be in BK court? If you go into BK owing the IRS money, under Federal law, the IRS can see to it that they get paid before anyone else. It seems to me that the ATSB technically has no claim because they have no dog in the hunt until US Airways actually defaults on the loans which they have guaranteed. However, that's why lawyers exist. It's called interpretation of the law. 😉

 

[cavalier]

Why don't all of you U.S. Air EE's just admit that there is no future at US.

You will be much better off a year from now because US Airways will NOT be in existence!!

[post="166903"][/post]​

Bankruptcy is a fancy title making it legal for a business to stiff everyone it owes including, most of all, its employees. In a situation like U going into BK once and getting nothing really accomplished and yet awarding millions to a few select executives, only to be looking to do it again is not only wrong but should not be legal! This company should simply cease to exist if it can’t make it without stealing other people’s money, other people’s money meaning all the other businesses they screwed and employees wages and pensions. Bankruptcy is a lever for corporate America to walk away from all accountability when they really should be held to the fire. Giving millions away to executives of a failing company and demanding more from employees, vendors and all other businesses they need to stay in business is wrong, VERY wrong. All things in life eventually come to a balance and that balance will mean U is off the scale and no longer an ongoing concern because it doesn’t deserve to exist considering the costs of that existence.

 

[oldiebutgoody]

Are you sure about this? Does anyone know for sure what the primacy of ATSB claims would be in BK court? If you go into BK owing the IRS money, under Federal law, the IRS can see to it that they get paid before anyone else. It seems to me that the ATSB technically has no claim because they have no dog in the hunt until US Airways actually defaults on the loans which they have guaranteed. However, that's why lawyers exist. It's called interpretation of the law. 😉

[post="166905"][/post]​

That may be true, but you can bet that there are covenants written into these loans which REQUIRE the backing of the ATSB, thus, if they choose NOT to guarantee the loans, they are called by the financiers. The reality is, the ATSB controls whether UAIR survives or not. Doesn't matter what the hypotheticals are. I would expect that LONG before this happens, and probably with A LOT of political backing (this being an election year and all), UAIR management will come up with some reason to expedite repayment, then file for chapter 11 if they can find a suitor, or chapter 7 if not. The real issue is whether concessions would have any impact on this at all, and my guess is it won't have much! The real culprit here is the RSA, a company that knows almost NOTHING about airlines, that retained the services of an incompetent "numbers guy" (Siegel) rather than pursue someone that knows what makes airlines work. Yup, Siegel sure sold Bronner a bill o' goods! If Bronner were really smart, he'd offer the major financiers more of a say in the BOD, then they might feel a little better about propping this place up. If the unions were smart, they would put their feet down NOW, and make the company stop squeezing the goose that lays the golden egg (the employees), and make them work within their means to make UAIR profitable.

 

[nycbusdriver]

If USAirways files bankruptcy in mid-September, it is the end of the company, plain and simple.

None of the unions are willing to accept a cram-down contract from the company aided by a ruling from a bankruptcy judge. Under these circumstances, each group is free to self-help, and several will likely do just that. The IAM will lead the charge, I suspect, if this eventuality comes to fruition. The CWA will likely follow suit, and maybe the AFA, too.

The pilots are furthest along in talks with the company, but it is impossible for the pilots to have an agreement in place by mid-September. So dreams of an 1113 letter for the pilots are just that. Dreams. The timing precludes having a TA to examine, roads shows and open balloting of the entire membership before the mid-September "deadline," or even by September 30th.

If it's time to get off this f*&^%$# roller coaster, then let it come.

 

[Hula Girl]

I just sold my 20 shares of uair stock. I am sending the $53.00 to a Pillowtex factory family who is about to lose their home. Neither the husband or wife can find a job since the company went out of business. I hope others in the area help them out some so they can find a way to keep their house.

 

[funguy2]

Just a few comments:

1. Chapter 11 Bankruptcy is called reorganization. But it is only a reorganization of debt. Essentially, what happens, is all the old equity (i.e. stock) is eliminated, and the new equity is created out of old debt, in the hopes that the new equity eventually covers the debt owed.

Chapter 11 Reorganization does not require a new business plan, even though it is almost always needed to become successful. US Airways left Ch.11. the first time with no new business plan, but with reoganized debt, and failed. This can happen again.

2. Just because UAIR may be talking to GECAS about a possible BK scenario doesn't mean they agree on things... It could be that U has told GECAS (like the rest of us) that a BK filing is possible, and it could be that GECAS has indicated to management that they will pull the RJ financing, and management has to do what they have to do anyway. I am certain that when UAIR declares bankruptcy, its credit rating drops to the floor, triggering the right for GECAS to pull financing.

3. So what if the ATSB date is Sept. 30. Whether UAIR is in BK or not, on Sept 30. the ATSB may have the right to call the loan. If it does, UAIR is done.

I have stated this many times before...

UAIR had $500-600mil unrestricted cash when it went to BK 1.

Today it has $925mil unrestricted cash.
Subtract $725mil ATSB loan, and the company is left with $200mil unrestricted cash... About 33% of the amount UAIR had the first time.

And this assumes no cash burn in 3Q, which is highly unlikely.

Furthermore, I believe that $200mil unrestricted cash (or less) will not allow UAIR to continue uninterupted operations.

Meanwhile, the quarter is already half over, and not a single union has a signed contract.

I believe the following:

1. UAIR will be BK soon (remember my prediction in March that something would occur by October...).
2. UAIR management will blame the unions
3. UAIR will continue operating at a loss until they have no cash left.
4. With no cash, I believe UAIR will attempt to get financing for operations.
5. UAIR will approach TPG about financing, everyone will get excited
6. The financing will not come through, and airline operations will be suspended.
7. UAIR Ch.11 will be converted to Ch.7 Liquidation.

 

[ClueByFour]

How do you have a pre-packaged involuntary bankruptcy?

[post="166846"][/post]​

You don't.

The ATSB is not going to risk a default twice, nor will that very political organization allow US to put the screws to labor before the election cycle.

If the ATSB forces a filing, it will be to liquidate (they would be first in line to be paid, plus would end up with all of U's DCA and LGA slots and DCA gates IIRC).

 

[700UW]

Bankruptcy requires a new business plan it is called a Plan of Reorganization that the Creditor's Committee must approve, then it goes to the judge for approval.

 

[jimntx]

You don't.

The ATSB is not going to risk a default twice, nor will that very political organization allow US to put the screws to labor before the election cycle.

If the ATSB forces a filing, it will be to liquidate (they would be first in line to be paid, plus would end up with all of U's DCA and LGA slots and DCA gates IIRC).

[post="166956"][/post]​

This is just the type of language that is confusing everyone--i.e., "[the ATSB] would be first in line to be paid."

The ATSB has no money invested in US Airways or money owed to it by US Airways. The ATSB guaranteed loans made by others. Only if those lenders do not get paid would the ATSB have to put out a dime. That would be sometime after US Airways goes under which hasn't happened yet. And, another Ch. 11 does not automatically mean the end of US Airways either. Possible, yes, definite, no.

Now, if ATSB cancels the loan guarantee due to US Airways not maintaining the loan covenants, that is another thing entirely, but the ATSB does not have to force a BK filing in order to cancel the guarantee.

 

[funguy2]

Bankruptcy requires a new business plan it is called a Plan of Reorganization that the Creditor's Committee must approve, then it goes to the judge for approval.

[post="166958"][/post]​

And it seems to be very lenient, and apparently, operating as is for a couple of years with no changes is an acceptable POR. I.e. no real reform required, otherwise UAIR would not be facing BK 2 so quickly.

 

[700UW]

US changed the way they do business dramatically, go back and read the POR on file.

 

[funguy2]

This is just the type of language that is confusing everyone--i.e., "[the ATSB] would be first in line to be paid."

The ATSB has no money invested in US Airways or money owed to it by US Airways. The ATSB guaranteed loans made by others. Only if those lenders do not get paid would the ATSB have to put out a dime. That would be sometime after US Airways goes under which hasn't happened yet. And, another Ch. 11 does not automatically mean the end of US Airways either. Possible, yes, definite, no.

Now, if ATSB cancels the loan guarantee due to US Airways not maintaining the loan covenants, that is another thing entirely, but the ATSB does not have to force a BK filing in order to cancel the guarantee.

[post="166968"][/post]​

If UAIR can meet the terms of the ATSB guarantee, then there is no reason to declare BK (in the short-term).

While the ATSB has no cash directly invested in UAIR, it is responsible for UAIR's ability to repay. The scenario presented has UAIR "pre-emptively" going BK to probably muddy the issue when Sept. 30th comes around and UAIR does not meet the covenents, thus allowing ATSB to cancel the guarantee and the banks to call the loan.

The ATSB essentially co-signed the UAIR loan. Thus, when UAIR defaults, the ATSB is liable. I suspect that the ATSB will not allow itself to become liable. They have built several clauses (i.e. the pre-payment clause which has occured once already) into the contract to ensure this. If UAIR goes BK, I believe it will force repayment of the guaranteed loan, either on BK entry or on Sept 30th (which may trigger the BK).

We'll have to see how it works out.

 

[funguy2]

US changed the way they do business dramatically, go back and read the POR on file.

[post="166973"][/post]​

I have seen very few implemented changes, other than raking employees over the coals.

Very few unprofitable operations have been dropped. There has been no fleet or business model simplification. Some minor items have been put into place almost two years prior to entry to BK.

Apparently, the POR does not need to include contingencies for continuing economic malaise or a spike in your #1 cost (fuel).

Most importantly, there is no accountability on the court's part to ensure that the POR is adhered to, once exit from court protection has occured.

 

[robbedagain]

if usair does go into ch11, wouldnt the costs of the ch11 court and legal fees occur at the filling time? and couldnt anyone demand some sort of repayment back from some of the (or all of the)clowns that walked away from the airline with their "golden parachutes" packages and the million dollars that went with it?
Also i doubt that an s.1113 would help the pilots, just look at their pension plan--does that even ring a bell to a certain capt on this board????