Gecas Haults Financing For Regional Jets

[usair_begins_with_u]

IF Uair can't use the ATSB cash, then what good does it do sitting in Uair's bank account?

 

[BoeingBoy]

ubwu,

The only way I can wrap my feeble brain around the idea is by thinking of the loan as providing U with some breathing room. Getting that loan (and the $240 million from RSA) let us seek other financing and gave U some time to get turned around (TP1, or the 1st POR). Siegel used the financing for lots of RJ's and didn't do squat to change the structure of the airline, hence here we are again.

The loan was never intended to provide cash for operations indefinitely into the future. It was a one-time infusion to "prime the pump", so to speak. And it came with strings (the covenants) that started kicking in 9 months after we emerged from the 1st BK - strings that were to insure that U could pay the money back. So far we've broken every "string" and had to renegotiate.

Jim

 

[hadEnuff]

Anything to do with RJ's by Enbraer and GE Capital has been put on hold until they see that labor cost across the board have been lowered. They advized the company of this long ago when they said they would provide and finance until Sept 30 and at that time the company must have lowered labor cost for the plan to go forward. That is why you will see Management impose lower wages, on a temporary basis, sometime within the next week. Those wages must be in place by Sept 30 for the ATSB review and the review by GE and Enbraer. We get lower wages, makes no difference how much concessions we have given or how badly they have mismanaged.

 

[funguy2]

BoeingBoy:

Thanks for getting my back... As you can tell, I'm a bit rusty... With all the press on jetBlue, and their E190s, they seem closer to service than over a year away...

usair_begins_with_u:

I've used an example comparing unrestricted cash to water in a bucket... The long and short of it is this... If UAIRQ paid off the ATSB tomorrow, the $1.3bil you speak of would become $583mil. Of that $583mil, much of it is "restricted" by American Express and others, which would leave UAIR with very little "unrestricted cash" in the bank... Probably somewhere north of BoeingBoy's $25mil, but certainly not enough to continue running the operation...

As a note, for BK 1, UAIRQ had between $500-$600mil unrestricted cash... For BK 2, they had $750mil unrestricted cash (per BoeingBoy), but they have a loan covenent requiring $726mil unrestricted cash on hand...

Am I mistaken, or do I recall that per the Amex agreement, UAIRQ needed to have something like $825mil unrestricted cash on hand? I seem to recall discussing this... If so, this would mean that UAIRQ is in violation of its credit card processing agreement (the agreement which forced the rush to end BK1). Is this correct?

 

[BoeingBoy]

funguy,

According to Embraer's website, JetBlue deliveries are to start in the 3rd quarter 2005 and since they're the launch customer for this version they should get the first deliveries.

The $750 million unrestricted cash figure is in the BK motion for approval of the deal with the ATSB to lower the cash on hand requirements for the next month - I think it docket #6.

I've wondered about the AmEx agreement also but haven't seen anything on it yet. Presumably, the reason the unrestricted cash dropped so much from June 30 is that U had to put the $50 million or so additional in trust when the level dropped below the $850 million or so (one of those numbers has a "5" on the end and I can never remember which one).

Jim

 

[usair_begins_with_u]

Next question, if Uair doesnt own any of its assets, including [you say] the cash in its checking account, how in the world could it ever generate enough cash pull itself out of BK when it cant generate pos cash? Not to mention pay off it's 8.5 Billion in short term long term debt, as well as take care of the other 5 billion in off balance sheet financing?

Last one out remember to turn the lights out.

 

[BoeingBoy]

ubwu,

While technically we do own some assets and the cash in the bank, for all intents and purposes you are right. And your question is the $64 million dollar one. U will have to come up with a plan (POR2) that convinces the creditors and judge that we can generate the cash flow to service all that debt. It's probably safe to say the POR will get a little more scrutiny than last time - if we last long enough to present a POR.

Jim

 

[usfliboi]

PITBULL, What Im saying is, USAIR paid way way above what other airlines paid. Not just in per hour basis, but things like benefits, cleaners etc. When I started with Piedmont, and Uncle ED raised us all up to US "pay standards" We were all in shock of the difference. Thats where it all began. Slow in taking cuts was a reference to having already being paid well above other legacy carriers. We had alot further to go to cut than some. I dont mean our unions were slow to respond, but there was some feet draggin on both sides

 

[700UW]

US was not the highest paid, funny if we were then why did we all get raises with Parity +1?

You should realize AA, DL, UA, and WN all pay more then US and have for a while.

Go check the rates before you post.

 

[nycbusdriver]

PITBULL, What Im saying is, USAIR paid way way above what other airlines paid. Not just in per hour basis, but things like benefits, cleaners etc. When I started with Piedmont, and Uncle ED raised us all up to US "pay standards" We were all in shock of the difference. Thats where it all began. Slow in taking cuts was a reference to having already being paid well above other legacy carriers. We had alot further to go to cut than some. I dont mean our unions were slow to respond, but there was some feet draggin on both sides

[post="181332"][/post]​

Besides bringing the Piedmont employees up to USAir pay scales, there were other huge employee costs associated with the "cool northern efficiency" of Ed Colodny's legacy:

* Most of the Piedmont agents were part-time workers. Piedmont found it very advantageous to have about 70% of these workers as part-timers. They got no benefits except free travel. Yet the thought of just getting their foot in the door at this remarkable carrier had folks lined up around the block to take these part-time positions. USair's philosphy was to have mostly full-time workers and just a "fill in" amount of part-timers. So, when the merger took effect, thousand of Piedmont part-timers became USAir full-timers overnight. The hourly rate went up, and now they had a full benefits package. It was no small amount of money, and it was a huge overhead increase that would never, ever go away.

* We all know that at Piedmont the licensed mechanics got paid to exercise that license, and only that. The ramp agents pushed the airplanes away from the gates when they were through loading the cargo bins. An elegant model, since we never had to go in search of someone to push the airplane, and we didn't have to pay an extra employee to be there to do that. I'm told (rumor) that USAir had to hire over 1000 more licensed A&P mechanics in order to get the staffing up to speed for the merger to comply with the "reception & dispatch" section of the IAM contract at USAir. ANother expensive, permanent addtion to the overhead.

* At Piedmont, the F/A's were paid less. But there was no shortage of takers for the job. They hired about 1 out of 50 applicants. Not only was there a fair hourly pay differential, but the Piedmont F/A's were on different duty rigs than the pilots. IOW, the airline got more work out of them and so had to hire fewer to cover the schedule. That efficiency disappeared with the merger. (Admittedly, there are some significant upsides to having the F/A's and pilots on the same schedule.)

* Oddly, at Piedmont the pilots were almost exactly on par with their USAir counterparts. The duty rigs were identical. The hourly rates were within a dollar or two of each other. I saw no noticeable change in my paycheck when the merger occurred. We were, however, astounded at the flexibilty the USAir pilots had with their schedules. Management now interprets this as inefficiency. Sadly, it is.

* Piedmont owned their HQ building in Winston-Salem. It was the front end of the maintenance hangar. I'm certain that since the airline was the pride and joy of the city (and the state) that they had favorable lease rates, or they may have actually owned the property outright. USAir, of course, has high-priced leases on expensive, showpiece office space in Arlington, VA. 'nuff ssaid.

* Utility. Here's the one the southern-division employees love to hate. At Piedmont, it was all done by contractors. It was then, and still is cheaper. Sorry to all the utility folks here, but it's true. It's almost always cheaper (at least in terms of dollars) to contract whenever you can. It's not always wise, but it is amost always cheaper. On overnights, rampers or customer service agents did the overnight cleaning. They had a shift just for that. A huge savings in itself since there was no need to add personnel to the payroll and pay those extra people's benefits.

There you have it. USairwyas is now being beat up by airlines that are operating efficiently and much, much closer to the old Piedmont model. The circle of life!


(I can't speak as to how PSA did things. But the fact that Herb Kelleher modeled SWA after PSA speaks volumes. And we are where we are. )

 

[Bradly71]

If unions are irrelevant a company would be free to do as they say and pillage the employees.

Once again you speak of things you do not know about. The company will have to deal with the unions and their attorneys. And be forced to negotiate in "good faith".

[post="180889"][/post]​

..wow... it sounds as though you just assume all companies are evil and the little people need the big bad unions to protect them. I worked for US and was a union member. Now I work for a company a little larger than US, no union, and make 25% more money and have better benefits... Unions aren't the answer for everything and until you realize that I feel sorry for you

 

[700UW]

Let your company go into bankruptcy and lets see what happens, I was talking about bankrutpcy and I bet your company pays the same as a company that is unionized in your industry.

Like it or not union influence the labor market to keep companies honest for the most part.

And I feel sorry for you with your anti-worker philosophy.

 

[nycbusdriver]

I would much rather work for a non-union company with ethical leadership. Unfortunately, there's no way to guarantee that any company will keep any ethical leaders that they have. The money-grubbers always seem to get their paws on a good thing and end up spoiling it for their own greedy interests.

WalMart is a good example. When Mr. Sam died, I figured it would grow greedy and selfish. It did. His heirs did not have his integrity. He brought his company to critical mass and now it's an untamed monster without his guidance.

 

[Bradly71]

Let your company go into bankruptcy and lets see what happens, I was talking about bankrutpcy and I bet your company pays the same as a company that is unionized in your industry.

Like it or not union influence the labor market to keep companies honest for the most part.

And I feel sorry for you with your anti-worker philosophy.

[post="181349"][/post]​

Keep it up.. please! You cease to amuse me, I like a good laugh. We'll see how union friendly you are when you have no job. Unions don't keep companies honest, people do. Unions take your money and my money, tell you they are going to do one thing but do another. I've worked for a company through a bankruptcy, prior to the airline. Promises and sacrafices were made, it was rough for a year or so, but things turned around and it actually got better. So slam someone who has a different view from you some more, it's good reading!

People such as yourself though make me have no sympathy what-so-ever for US Airways and the employees... same reason my company will not fly them.

 

[700UW]

If people keep companies honest then pelase explain the following:

Enron, WorldCom, Adelphia and Mr Milken.

And I guess you have forgetten the employees of this company have given back 20,000 jobs and over $2.4 Billion in wages and benefits since 2002.

Even gave concessions in 1992.

Selective Memory?