How Much Time Do We Have Left?

[USA320Pilot]

PineyBob:

US Airways does have time to renegotiate terms and Q2 will be better than forecast, Q3 will be o.k., but the problem will occur in Q4 and early 2005 when the company experiences normal seasonal traffic declines.

The new ATSB agreement buys the airline time. In regard to asset sales, senior management has told me that the assets I have listed will likely be sold. In fact, there is reason to believe a deal may already have been agreed upon by the parties and briefed to the ATSB and the only reason for the delay in announcing the agreement is the time required to obtain final ALPA RJ scope relief approval.

Not only does this boost liquidity, it clears M&A scope obstacles, which is an important factor in a future corporate combination that Siegel has repeatedly said is "inevitable".


Regards,

USA320Pilot

 

[USA320Pilot]

Cav:

Cav said: "How much time do we have left is the question. Well if you really really care and are really really concerned, now’s the time to seek counseling."

USA320Pilot asks: Why do you say this?

Regards,

USA320pilot

 

[cavalier]

Cav:

Cav said: "How much time do we have left is the question. Well if you really really care and are really really concerned, now’s the time to seek counseling."

USA320Pilot asks: Why do you say this?

Regards,

USA320pilot

You can fly a BIG plane and land that baby in the fog, rain, sleet and snow; therefore you can figure this one out captain.

 

[700UW]

In regard to asset sales, senior management has told me that the assets I have listed will likely be sold. In fact, there is reason to believe a deal may already have been agreed upon by the parties and briefed to the ATSB and the only reason for the delay in announcing the agreement is the time required to obtain final ALPA RJ scope relief approval.
Regards,
USA320Pilot

Time to call the SEC and report mr cockpit chronicles and the senior management to the government.

Or the NY State Attorney General.

 

[mweiss]

Ya know, for one with so much insider information, he sure has loose lips about it.

 

[flyin2low]

I'll give'm until June 18th at 1700 hrs..........

 

[funguy2]

Here is my post from another topic entitled "Financial Analysis" which got moved to UA's part of USAviaiton.com forums... I outline with specific detail why I beleive a cash crisis will re-occur after Labor Day, unless something else occurs (or perhaps causing something else, like an asset sale, to occur).

US Airways Unrestricted Cash:
$1290mil 3/31/03
$925mil 3/13/04
$365mil lost from 3/31/03 to 3/13/04, or roughly $1.05mil/day. (over 348 days)

$700mil unrestricted cash required by new ATSB loan covanent. That means US Airways has $225mil to burn before reaching this covenant... at $1.05mil/day, thats 214 days from 3/13/04, or roughly 10/13/04.

So, that means, assuming nothing major happens between now and 10/13/04, that will be US Airways' next major cash crunch. The things which could change this:

~ US Airways reduces loss of unrestricted cash
~ Asset sale
~ "Going Concern" clause removed by auditors (unlikely if US Airways continues to lose $1mil/day)

Now, if US Airways had a "plan" to change its cash position, it would certainly need to start implementing it today. Any schedule changes (i.e. rolling hub concept), furloughs, concessions, or fare structure changes would need to be completed very soon to be effective by summer. I see little public information stating that this may happen.

So, again, if nothing changes, I suspect US Airways will begin publicly airing their cash crisis after Labor Day, when bookings fall off a cliff, yet in advance of the "deadline" I noted above.

It will be interesting to see if US Airways opts to sell assets (which has become a lot easier with ATSB approval and some offers in hand) or try to renegotiate the ATSB again. It is obviously in the company's best interests to retain as many assets as possible.

Lastly, just as an informational note, US Airways had $602mil in cash (probably unrestricted, the press release was not specific) at the end of Second Quarter 2002 (3 months prior to bankruptcy). In the SEC filing 8K for the bankruptcy, they noted unrestricted cash "in excess of $500mil". So let's say $500-600mil. So, $700mil is not that far off...

So, in my estimation, US Airways needs a BIG summer or some MAJOR changes, and soon. Otherwise another bankruptcy could be as soon as late 2004. And I don't think more employee concessions will be enough. This summer should be extremely interesting for US Airways.

Note: I used $1.05mil/day as it is more representative of the whole year, to try and reduce seasonality. If you believe USA320Pilots $1.6-$2.0mil/day number then obviously the next cash crunch will be even sooner, like early June.

As for USA320Pilots continuous ramblings, I'll quote one old saying, when it comes to business:

"Those who know, don't talk... Those who don't know, talk (frequently and often)."

Which of these categories does USA320Pilot fall into?

 

[Just Plane Crazy]

Until January 2005.....
It is an election year. I think the Bush administration release some of the government fuel reserves, therefore lowering the price of fuel. Bet it will happen early summer to give a boost to the economy just in time for the fall elections. Bush will not want any company to go Chapter 7 in the next few months. Next January neither he nor Kerry will care if USAirways goes under.

I agree with you partially. This is an election year and a big closing of an airline will not help this administration. Having the doors closed for ever on U will defenately cost the election for Bush. So they will do what ever they have to do to keep U up and running. The questionis at what price. The management might get more of what they want and some people might have to adjust to a new ballgame.

 

[funguy2]

Until January 2005.....
It is an election year. I think the Bush administration release some of the government fuel reserves, therefore lowering the price of fuel. Bet it will happen early summer to give a boost to the economy just in time for the fall elections. Bush will not want any company to go Chapter 7 in the next few months. Next January neither he nor Kerry will care if USAirways goes under.

I agree with you partially. This is an election year and a big closing of an airline will not help this administration. Having the doors closed for ever on U will defenately cost the election for Bush. So they will do what ever they have to do to keep U up and running. The questionis at what price. The management might get more of what they want and some people might have to adjust to a new ballgame.

I kind of agree here too... The Bush Admin has already acted to protect US Airways prior to the election. Given my projection of mid-October cash crunch, US Airways has already been given a green light by ATSB to begin selling assets. I assume this type of transaction will occur before the election, securing US Airways survival until after the election. However, selling of assets will be the beginning of the end.

 

[mweiss]

Having the doors closed for ever on U will defenately cost the election for Bush.

That's a mighty sweeping statement there.

To be sure, PA is one of the dozen or so states in play, and it has a pretty large number of electoral votes (21). But to suggest that US shutting its doors would throw PA, and that the shift of PA to Kerry would throw the election, is a bit of a strong statement.

 

[avek00]

IMHO, the only major airline with a good chance of dying before Election Day is United, which has a brewing operational crisis in ORD that, if fully realized, will kill any chance of the company coming out of bankruptcy. The delays of the past few months due to winds and congestion have been unreal; the increase in flying during the summer sked will only magnify these problems, and throw UA into operational turmoil.

 

[Bear96]

IMHO, the only major airline with a good chance of dying before Election Day is United, which has a brewing operational crisis in ORD that, if fully realized, will kill any chance of the company coming out of bankruptcy. The delays of the past few months due to winds and congestion have been unreal; the increase in flying during the summer sked will only magnify these problems, and throw UA into operational turmoil.

Pathetic.

I can see the headlines now... "HIGH WINDS FOR A FEW DAYS IN MARCH CANCEL A FEW UAX FLIGHTS TO TINY MIDWESTERN DESTINATIONS AND FORCE WORLD'S SECOND LARGEST AIRLINE TO LIQUIDATE... DETAILS AT 11!"

So, Avek, can we put this down as (yet another) prediction of yours about the demise of UA?

Tell ya what. If UA is no longer around on Election Day, Tuesday, November 2, 2004, I will publicly apologize for being a loud-mouthed jerk, admit I have had no idea what I was talking about concerning the airline industry all this time, and never post again on these boards.

If UA *IS* still in business on Election Day, Tuesday, November 2, 2004, you do the same.

Deal?

(P.S.-- Guess AA is on the verge of going out of business in the next few months too since they also have a large hub in ORD, huh?)

Ya know, I used to think you had some valid insights into the airline world and you were being unfairly dumped on by others here and on Flyertalk. But the past few days has certainly cured me of that idea.

 

[avek00]

Pathetic.

I can see the headlines now... "HIGH WINDS FOR A FEW DAYS IN MARCH CANCEL A FEW UAX FLIGHTS TO TINY MIDWESTERN DESTINATIONS AND FORCE WORLD'S SECOND LARGEST AIRLINE TO LIQUIDATE... DETAILS AT 11!"

So, Avek, can we put this down as (yet another) prediction of yours about the demise of UA?

Tell ya what. If UA is no longer around on Election Day, Tuesday, November 2, 2004, I will publicly apologize for being a loud-mouthed jerk, admit I have had no idea what I was talking about concerning the airline industry all this time, and never post again on these boards.

If UA *IS* still in business on Election Day, Tuesday, November 2, 2004, you do the same.

Deal?

(P.S.-- Guess AA is on the verge of going out of business in the next few months too since they also have a large hub in ORD, huh?)

Ya know, I used to think you had some valid insights into the airline world and you were being unfairly dumped on by others here and on Flyertalk. But the past few days has certainly cured me of that idea.

Actually, if you had been following the public comments of your employer lately, you'd know that ORD is having a significant and growing problem in terms of flight delays due to airport/ATC constraints. While the 5% AA/UA schedule reduction might improve things for the next month or so, the schedule additions that usually come with the summer schedule will only add to the problem. Compound the operational problems with record or near-record summertime load factors, and United could easily find itself in a nightmare rivaling the 2000 Summer From Hell. Make no mistake about it - should such a scenario occur, neither the ATSB or any lender with half a brain wil then give United a dime to do so much as a make a phone call, much less emerge from bankruptcy. FWIW, however, United has ample time and resources to make the necessary scheduling/operational adjustments to avoid a possible metldown. Whether or not UAWHQ will succeed is anyone's guess.

BTW - the anecdotal evidence I've heard to date suggests that while AA is suffering @ ORD as well, it is to a significantly lesser extent than UA because of the scheduling modifications previously made to its ORD operation.

 

[BoeingBoy]

Yes, ORD could be a problem this summer, but that is what percentage of UAL's operation? The FAA is worried about the Northeast as well. The growth of the LCC's is predicted to cause problems as well as the influx of more and more RJ's (which take up the same amount of airspace). So if delays are going to sink any airlines, U may be at the front of the line.

Jim

 

[USA320Pilot]

Avek00:

Avek00 said: 'IMHO, the only major airline with a good chance of dying before Election Day is United."

USA320Pilot comments: Avek00, it appears your comment above may be true according to the article below:

See Story

Respectfully,

USA320Pilot