Fragmentation Or Liquidation?

[FA Mikey]

Have we not established that US leases the LGA terminal from CO? If so, US or Bronner will have no choice but to relinquish it to CO who has stated before that they would like to expand their LGA oepration. Of course slots would help but a terminal is a good start - and a good way to keep another party from setting up shop right next to EWR.

The value for any asset sale is how quickly US can transfer assets to another carrier and get it up and running. The competitive environment is so tough that US will have a very small window before even the assets lose their value. Anyone want to guess how quickly an asset acquirer could set up shop and which ones they would focus on?

[post="172486"][/post]​

Depends on the carrier. EAL had about 24 hours to get going on Braniffs S America operation. AA took over and started it up in pieces from EAL. Guess it a matter of having the A/C and crews available.

Figure you need a months lead time. Other wise you will be using up your reserve pool of flight crews. Then figure how well staffed, if at all in a station to get the operation going.

A flight or two here or there no problem. But to start up say 15 at LGA, thats another story.

AA would look for facilities in LGA, BOS and DCA. Beyond that I dont see anything AA would want. I suspect NWA, Delta and Continental are more interested in assets.

 

[BoeingBoy]

MrAero,

FWIW, the $700-$725 million loan balance includes the balance owed to RSA & BoA, since that is the balance of the entire $1 billion original loan, not just the ATSB-guaranteed $900 million.

The rest I agree with - well, employees will be ahead of stockholders, I think.

Assuming that we do in fact have $900 million in "cash" and that a filing occurs prior to making any pension payments (thus not depleting some $65 - $115 million), and that liquidation happens quickly (thus not spending 10's of millions on BK costs), then something less than $200 million is left in "cash" - let's call it $175 million.

Pretty much everything else is tied up as collateral - well, there may be a few #2 pencils floating around that aren't.

Jim

 

[funguy2]

$900Mil in (Unrestricted) Cash is a big assumption... And I have no idea if its true or not... I assume the "restricted amounts" go to pay off the obligations that have "restricted" it in the first place... Some of that may be ATSB-backed loan payments (typically restricted prior to payment, I don't know why, just noticed that America West and US Airways have said ATSB loan payments were part of their restricted cash)... So the whole $726Mil does not necessarily come from unrestricted cash.

At the end of 2Q, there was $975Mil unrestricted... 3Q is a cash burner... (Less ticket sales but the bills still get paid...) My guess is that when BK is filed, it will be a lot closer to $750Mil than $900Mil... But that is just my guess... we'll have to see when the time comes.

 

[jimntx]

It has been explained to me that is only during Chapter 11. Once Ch. 7 is filed the employees become just another creditor owed money by the debtor. They have to stand in line to be paid just like those that are owed millions.

[post="172490"][/post]​

Furthermore, IIRC, in Ch. 7, employees are unsecured creditors--those poor saps who get paid only if there is anything left over after the secured creditors get paid.

 

[USA320Pilot]

When US Airways enters bankruptcy the key to emerge from Chapter 11, if possible, will be cash flow according to Bruce Lakefield. During the recent MEC meeting Lakefield said the company would likely return the A330s to their owners and reject the EETCs.

Lakefield said the decision time for this action would be in November because the company does not want to pay for the expensive heavy maintenance.

In addition, if the company enters bankruptcy, management will lose total control of the airline and third parties (creditors and the bankruptcy court) will be part of the decision making process.

From a labor perspective, it's nonsense to think a union will be better off in the upcoming proceeding.

It appears the party is just about over...

Regards,

USA320Pilot

 

[A320 Driver]

It appears the party is just about over...

I've heard that so much since 92 that I almost wish it would so I wouldn't have to be subjected to it anymore. Whimpering and whining won't fix this problem. How about a little integrity on the company's side in these negotiations. If that last rag they laid on the negotiating committee was capped at 295 mil, I'll eat my captain hat.

A320 Driver

 

[MrAeroMan]

MrAero,

FWIW, the $700-$725 million loan balance includes the balance owed to RSA & BoA, since that is the balance of the entire $1 billion original loan, not just the ATSB-guaranteed $900 million.

The rest I agree with - well, employees will be ahead of stockholders, I think.

Assuming that we do in fact have $900 million in "cash" and that a filing occurs prior to making any pension payments (thus not depleting some $65 - $115 million), and that liquidation happens quickly (thus not spending 10's of millions on BK costs), then something less than $200 million is left in "cash" - let's call it $175 million.

Pretty much everything else is tied up as collateral - well, there may be a few #2 pencils floating around that aren't.

Jim

[post="172496"][/post]​

Thanks Jim. I stand corrected. Now answer me this. If the ATSB loan is satisfied then the collateral that was put up for that loan becomes unencumbered and therefore can be disposed of as the company sees fit. I don't know what GE and Bombadier as well as AMEX required for collateral but I can't imagine it being much else beyond what the ATSB had required as they wouldn't have been able to put assets up for collateral to more than one creditor. If the A330's are wholly owned maybe it was them.
Also, what are they going to do about customs in FLL? From what I understand there is no dedicated ops for customs and given this companies history in its dealings with airport authorities I can't imagine FLL ponying up to cover those construction costs. Maybe they'll get a couple double wides on the cheap from a repo lot and convert them. They can put a nice redwood deck off the back with a picnic table for those waiting for their bags. :blink:

 

[BoeingBoy]

MrAero,

You're right about the collateral for the ATSB loan. Whether it's otherwise encumbered or not I don't know. Somebody can explain the "cross-collateralization" that was the point of our last agreement with the ATSB - I haven't a clue except that it cost us $5 million and the right to keep 25% of asset sales.

I would like to know more about the financing for the RJ's, but haven't seen anything of substance on the particulars. Is the financing turned into a lease arrangement upon a/c delivery or do we "own" the planes using borrowed money (with the planes as collateral)?

So many questions, so little time till the dust settles...

Jim

 

[MrAeroMan]

Jim,

I think the RJ's are structured like a sale/lease back arrangement. I'm not positive but seems to me I heard that UAIR purchased the a/c with borrowed money (naturally) and then turned around, sold the a/c and leased them back. I believe GE is the big player for this one (and I'm sure Bombadier and Embraer are in there somewhere) so they could be on the hook for a lot of little jets flying all over the NE.
There is a lot of "shtuff" flying around as usual in times like this but I've heard the ultimate goal isn't agreements and the Ch.11 filing will be used to abrogate the contracts and ultimately break the back of labor. How they plan on getting out of Ch.11 is what has me puzzled and there are some pieces that aren't lining up quite right just yet. It's just a matter of time and it's going to shake out but I wouldn't be a bit surprised to see the airline Ch. 7nd and a prearranged sale of the assets to another entity with RSA's hand in it somewhere. I wouldn't think Bronner would want to keep his hand in an airline but the guy has a big ego and doesn't like failure. He's also very big on Alabama and making it into a resort so an airline would fit in that scenario like a glove.
Rumor has it the airline will focus on CLT as well as FLL, the Carribean and key NE airports ie DCA, LGA and BOS. I know the company is high on pulling in more O&D from the CLT region as a lot of that traffic is being split between several close airports like RDU, GSP, GSO and CAE.



Hope it doesn't end up like that but at this point who knows.

 

[WorldTraveler]

Aren't there reserves which companies have to put aside for accumulated wages? We just saw this with Midway's shutdown and I remember they were lambasted for hosing the employees. What was the outcome of that?

 

[700UW]

He provided the DIP financing. He is first in line.

[post="172389"][/post]​

DIP Financing was paid back when US emerged from BK.

Bronner is not first in line. The ATSB backed loan is.

 

[Phoenix]

... company will likely liquidate...

[post="172360"][/post]​

Yeah, we know. It is the same dog and pony show. But why change something when it is working?

 

[Phoenix]

USA320 is just pushing his agenda. Savy

[post="172390"][/post]​

What is his agenda? I am having trouble seeing it.

 

[mwereplanes]

Trying to save, at all costs, his job. He's willing to do it for whatever the company wants him to do it for.

Regardless of the continued management incompetence. Regardless of the corporate culture. Regardless of how much the executives drain for their own pockets. Regardless of what it means to the rest of the work force. His agenda is saving his own job.

To do that he consistently attempts to instill fear and uncertainty into folks who read these boards. Hoping they will capitulate to the mismanagement so he may retain his job.

What has just happened with ALPA still has not opened his eyes to the dishonesty and deceit of Jerry Glass and the rest of the team and the land grab they are attempting. ALPA has offered and been rebuffed by an offer at least double what the company asked for in the first place and yet he still is willing to give them that amount to further his agenda: Saving HIS job. Of course he will spin it as "saving the airline". The ONLY people who can save the airline work in CCY. Not in cockpits.

So, Phoenix, that is his agenda. We all understand we need to help remake the airline. But this managment is interested in busting the unions to do so. And he is willing to go along with that to SAVE HIS JOB.

mr

 

[delldude]

When US Airways enters bankruptcy the key to emerge from Chapter 11, if possible, will be cash flow according to Bruce Lakefield. During the recent MEC meeting Lakefield said the company would likely return the A330s to their owners and reject the EETCs.

wait a minute...hold the phone.
you or some else indicated the 330's were the only a/c that we do in fact own.
someone is reporting bad press.what is it then?
do we own them or not?
i believe you 320 pilot said in an earlier post uncle brucey threatened to sell the 330's to avoid doing the heavies. :angry: