Fragmentation Or Liquidation?

[Hope777]

Due to the way my post formated, I have replaced it with the link to the USAirways 2003 Annual Report. The Flight Equipment can be found on page 10 of the report. Also below is a quick view of Equipment owned per the report.

http://www.usairways.com/about/investor_re...03%20Report.pdf

 

[Hope777]

Sorry could not get the over post to format but from the 2003 Annual Report,

We own..
9- A330
4- B767-200ER's
20- A321
3- B737-400
11- A320
7- B737-300
15- A319
2- CRJ 200's
33- Dash 8 100/200

 

[RowUnderDCA]

Well, it's hard to read, but I take this to mean that the A330s are owned and collateralized. And 4 of the 76s are owned, 6 leased. All the 75s are leased, as per my reading.

 

[Rob]

... I do know from the LGA station manager that both Virgin America and JetBlue are trying to obtain US Airways LGA terminal ...

[post="172360"][/post]​

Does US have the right to sublet all or part of the LGA terminal? Or does it have to go back to Continental if US abandons its tenancy?

 

[Cfm56]

Airline's executives take flights of fancy

By Eric Heyl
TRIBUNE-REVIEW
Wednesday, August 25, 2004


It's a good thing David Bronner and Bruce Lakefield are navigating an airline and not an airplane. Were US Airways' two top executives copiloting a Pittsburgh-to-Philadelphia flight, the plane might well touch down in Paraguay.
US Airways inexplicably announced Monday it wants to become a gateway to the Caribbean and Latin America by significantly bolstering its operations in Fort Lauderdale, Fla.

Provided, of course, the perpetually flailing carrier doesn't cease to exist.

The possibility the airline soon might be liquidated was raised last week by Bronner, the airline's chairman. So talk of any expansion left some observers, including the unions from which US Airways again is attempting to extract hundreds of millions of dollars in concessions, scratching their heads.

Makes you think Lakefield, the airline's chief executive, might need some help in clarifying the airline's position during his next weekly recorded message to employees.

Here's how that message might sound:

"Hi folks, Bruce Lakefield here. I know many of you probably are wondering whether we're going to expand or cease operations. While we're not entirely sure ourselves, David Bronner and I are going to try to shed some light here."

"Thanks, Bruce. Hi everyone. Hope the skies are blue wherever you're flying."

"Given our precarious condition, I know many of you are puzzled over our intended expansion. However, David and I firmly believe there is vast, untapped potential in the sunny Caribbean and Latin America via Fort Lauderdale."

"We sure do, Bruce, even though American Airlines has a hub just 25 miles away in Miami and is a larger, more financially stable carrier than we are. We think US Airways will be highly competitive with American once we introduce our discount 'Limbo Lower Now' fares."

"Now, David, could you elaborate on those unfortunate comments attributed to you about our likely liquidation if we're again forced into bankruptcy?"

"Bruce, those remarks were taken somewhat out of context. You have my gratitude for instantly and publicly contradicting them -- even if it did make it appear as though we have conflicting opinions on the company's future."

"You're more than welcome, David. What exactly did you mean to say?"

"Bruce, let me emphasize there would be no immediate selloff of our assets. We wouldn't dream of liquidating until we found a buyer for all the stuff."

"And that could take some time, right, David? I mean, if we go out of business, American probably wouldn't need the planes we could sell it to help ward off the stiff competition we planned to provide it in Florida until we went under."

"Precisely, Bruce. So you see, our expansion plans are as logical as any other idea this airline's management has advanced over the past several years."

"Sorry, folks, we're out of time. Until next week, please think about agreeing to those extensive wage and benefit concessions, and try to keep livin' la vida loca."

 

[savyinvestor]

mwereplanes, You responded before I saw the question. My thoughts exactly as anyone who has followed his posts for any length of time would know. Best of luck to you. Savy

 

[funguy2]

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.

MrAeroMan... That's a fair put... but, we have to remember that the loan, if called will likely be due immediately... However, the BK judge probably gets to delay payment until he sees fit (of course, I presume if it gets delayed, the banks probably become entitled to interest and penalty fees).

Meanwhile, the cash from any sales of newly "unemcumbered assets" would not come in the door until later, after they are sold. So its probably unclear at best to say what happens to the cash position once Ch 11 or Ch 7 is filed.

 

[MrAeroMan]

I agree. While those monies may not come in until later there could be a package deal presented with the filing outlining the sale of the newly unemcumbered assets and that may help speed along the final outcome. Either way these guys are going to get as much money back out as they can and they'll sell the chair you're sitting on to do it. Once all is said and done there is no way there will be enough money to pay everyone what they are owed.

 

[funguy2]

MrAeroMan:

I think you are correct. Of course, the way things are liquidated, unencumbered, and paid-off will depend on what kind of BK we have:

Ch 11: Reorganization... Try again
Ch 7: Liquidation... go straight to the shutdown and bankruptcy sale
Ch 11 converted to Ch 7: Start as a reorg, but when nobody provides financing or things further deteriorate, convert to Ch 7 and begin the sale...

Depending on the goals of BK, that will alter the ultimate cash flow. If we go straight to Ch 7, the sale will begin and ATSB-backed loans will likely be paid off first, and then other creditors as the priority dictates, as the encumbered assets are sold...

If we go to Ch 11, we may see some further rework of the ATSB-back loans (and other debts) and other agreements with the notion of preserving cash, because airlines need lots of cash to operate, as I have illustrated in other threads with the bucket of water analogy.

 

[MrAeroMan]

I think you're correct but this time around it's going to happen very quickly. If it begins as a ch.11 it won't take long before it heads right into ch.7 as Dr. Dave knows the longer he's in the more money he loses. I've got a feeling he won't be done in the airline business and he's arranging his cards so he'll end up with an airline but much smaller and with no unions when his hand is revealed. I'd venture to speculate PHL will end up as MDA and the shuttle will be sold off to AMR. What'll be left, and rather ironic if you think about it, is what PI use to look like back in the 1980's. It'll have a different name and the payscales will be much less than PI paid back in the 1980's. How scary is that??

 

[emb170check]

MDA is a division of U. They don't have their own certificate. Difficult to remain after U goes away.

 

[BoeingBoy]

emb170check,

The certificate would/could survive (reference Midway liquidation where Mesa ended up with the Midway certificate).

Jim

 

[robbedagain]

how likely is it for mesa to pick up the mda certificate and fly the mda emb-170s? or even a wholly owned express carrier or can it be done?

 

[Hope777]

Look at Express Carrier Chautauqua to do that not Mesa.
They also are Authorized to fly the EMB170.

 

[BoeingBoy]

robbed,

As emb170check said, MDA does not have it's own certificate to sell (along with the planes). So anyone buying MDA (meaning the planes) would have to have or get their own certificate. Obviously, Mesa or any other operating carrier has a certificate, so they would just have to add the Emb-170 to their certificate. That's not an overnight process, but it's not uncommon either. U added the 170 to our certificate, PSA added the CRJ to theirs.

Of course, the other option discussed above is to buy the U certificate in a liquidation along with the airplanes. It has the Emb-170 already, plus the other mainline airplanes - presumably including the DC-9, F-100, etc.

Jim