Media Reports For 3/31/05

[BoeingBoy]

The Washington Post:

US Airways' Plan to Exit Bankruptcy Hits Snags

PIT Trib-Review on today's BK hearing on the Republic deal:

Airline fate may hinge on hearing

PIT Post-Gazette on possible snag in AirWis deal:

US Airways deal with commuter carrier could be grounded

PIT Post-Gazette on WN's ramp-up to PIT service:

Southwest Airlines ramping up for Pittsburgh debut

Jim

 

[longing4piedmont]

The Washington Post:

US Airways' Plan to Exit Bankruptcy Hits Snags


Jim

[post="259572"][/post]​

Don't worry Mr Chiames, yours is in the mail.

"Chiames said yesterday the airline has not received any tubes of lipstick and he understands that the airline may not be moving as fast in addressing some concerns as customers and employees would like."

 

[ClueByFour]

Southwest Airlines ramping up for Pittsburgh debut

[post="259572"][/post]​

So far, Southwest is "very pleased" with advanced bookings for flights out of Pittsburgh, Rogge said. She said flights to Las Vegas and Orlando had "booked up very nicely."

Philadelphia and Chicago were a "little slower," but Rogge said that was normal for business and shorter-haul markets. "Right now, we've just seen a surge, which is wonderful. And we expect that to continue as we get closer to" May 4, she said.

Rogge said the advanced bookings in Pittsburgh had been comparable to what they were in Philadelphia before the launch there. Philadelphia has proven to be one of the airline's most successful start-ups, going from 14 flights to more than 40 in less than a year.

Can't resist: tic-toc-tic-toc until "those guys" start "unprofitable Pittsburgh flying."

Still can't resist: Who was first to report on this website that LUV was going to do this?

Now, for something that despite local board attempts at spin control and analysis, might actually shock the general public: Chris Chiames telling the truth (from the Washington Post article Jim linked above):

"The changes are designed to keep the company in business, keep serving our customers and keep jobs for employees. We may not be able to do everything on someone else's timeline because of cash, but the ultimate goal is to preserve the company."

Now, if you think a statement like that is going to be followed by either a leveraged buyout of United by Bronner and/or people beating down the door with cash (not like the "give away the farm/loanshark" deals from GE and Air Whiskey and Republic), I've got a toolbox to sell you in Moon Township (mint condition: really!).

Burning the furniture. Somebody needs to tell Chiames that if you piss off your most diehard customer base, there will be no company to preserve.

Reality at 11 (and some coffee for Jim for staying up and grabbing all these articles promptly upon their publication).

 

[FWAAA]

Cash burn for the first 59 days of this year amounted to $332 million. Odds are fairly high that in March, US burned thru more than the $100 million Air Whiskey loan funds ($75 mil on Mar 1 and $25 mil more today). Game over.

 

[BoeingBoy]

FWAAA,

It'll all depend on revenue and fuel cost. The Feb 28 unrestricted cash was about $85 million over the Mar 04 requirement of $325 million. Add in the $100 million you mentioned from the AirWis deal, and that's $185 million to work with since the April 1 requirement is, ironically, also $325 million.

Considering that March had Spring Break and Easter, revenue will presumably be up at least as much as Feb was over Jan - nearly $28 million for the month but more importantly $2.6 million per day. Offsetting that was the fact that operating expenses were also up in Feb over Jan by about $1.4 million a day with "other rent & landing fees" & "selling expenses" being almost $1 million/day of that.

Jim

 

[USA320Pilot]

Also noteworthy, a major portion of US Airways' annual aircraft rental costs were required to be made in January and February and this dramatically moderates in March and thereafter. Unfortunately, I cannot be more specific. Moreover, the full effects of the 3 recent fare increases will not be fully known for about two weeks (but are positive) and May & June bookings/revenue are ahead of projections.

During March it does appear that industry profitability was fairly strong on a non-fuel basis because the revenue environment strengthened. Normally that would be considered good news in itself, but the reality is high fuel costs are offsetting a lot of the revenue impact.

The combination of Easter shift from the second to first quarter, strong passenger demand, and most importantly moderate industry capacity growth drove very strong industry-wide March revenue gains. Preliminary analyst estimates for industry data is +2-3% domestic and +3-5% system revenue increases year-over-year with the strength a function of supply and demand.

It appears the 3 fare hikes are now offsetting about $5 per barrel of crude oil price gains and the strength is a function of supply and demand.

Regards,

USA320Pilot

 

[BoeingBoy]

I know in the other thread you said:

"During January and February, US Airways had large aircraft rental payments of $36.1 million that were anticipated and have been included in its business plan."

That surprised me since the financial reports stated "Aircraft Rent" as $39.3 million for Jan and $36.1 million for Feb. For comparison, the months of Oct, Nov, and Dec ran about $38 million each so there wasn't much change from month to month since we entered BK.

Respectfully

Jim

 

[FWAAA]

I know in the other thread you said:

"During January and February, US Airways had large aircraft rental payments of $36.1 million that were anticipated and have been included in its business plan."

That surprised me since the financial reports stated "Aircraft Rent" as $39.3 million for Jan and $36.1 million for Feb. For comparison, the months of Oct, Nov, and Dec ran about $38 million each so there wasn't much change from month to month since we entered BK.

Respectfully

Jim

[post="259590"][/post]​

True, but the cash flow statements for November and December show a debt repayment/capital lease holiday for those two months that ended in January. For the first two months of 2005, US repaid about $59 million - I assume these were payments to cure defaults, but I may be mistaken.

The income statement indeed shows a steady monthly $36 to $39 million in aircraft rent, but I'm assuming that not all of that was paid in Nov. and Dec. and had to be made up in Jan. and Feb.

 

[USA320Pilot]

BoeingBoy:

To be a little more specific I should have said, "US Airways had large aircraft rental payments in January and February. For example, in February they totaled $36.1 million."

The point is that the payments are going to moderate for the majority of the mainline fleet plan, per the last presentation I witnessed, however, I cannot be more specific.

The presentation excluded the additional aircraft rental payment reductions that will occur due to the GE agreement and rejection of the B737 EETCs/leases. The company has announced that one A319 will be removed from service each month from March through August (six total), three more A319s will leave in September, and eleven B737s will be returned to the lessors in May.

If my memory serves me correctly, at the end of February the mainline operated 280 aircraft and at the end of September that number will be reduced to 260, which is scheduled to be the year end fleet count.

Moreover, the Republic deal includes the sale/lease transfer of the MDA EMB-170s that will also lower aircraft rental expense by 25 more aircraft.

Another company option being examined is to sell/transfer PSA's thirty five CRJ-200s/fourteen CRJ-701s and Piedmont's Dash 8's, which would further lower US Airways Group's aircraft rental expense.

Separately, it's interesting to note that much of US Airways' Pittsburgh hub, labor, facility, aircraft, MDA, and "wholly owned" restructuring(s) is very similar to what would have occurred if the last United Airlines - US Airways merger had been completed.

Regards,

USA320Pilot

 

[BoeingBoy]

Thanks for the clarification on the Jan/Feb A/C rent.

I realize that turning in A/C will lower the "Aircraft Rent" line item, but not fast or far - at least as far as we know at this point. As you said, the 11 Boeings will mean less than $1 million per month and the Airbus's leave relatively slowly - by the end of the year you're talking less than $2 million a month less in "rent" on them. Call it about $3.5 - $4 million a month total.

Moreover, the Republic deal includes the sale/lease transfer of the MDA EMB-170s that will also lower aircraft rental expense by 25 more aircraft.

Another company option being examined is to sell/transfer PSA's thirty five CRJ-200s/fourteen CRJ-701s and Piedmont's Dash 8's, which would further lower US Airways Group's aircraft rental expense.

[post="259593"][/post]​

Neither of these save money (although they infuse cash). You're merely reducing "Aircraft Rent" and increasing "Capacity Purchases" (probably more than the reduction in rent). A short term cash infusion for long term higher cost. But of course that's what Lakefield meant when he talked about decisions for short term gain and long term pain.....

Jim

 

[oldiebutgoody]

...But of course that's what Lakefield meant when he talked about decisions for short term gain and long term pain.....

Jim

[post="259626"][/post]​

I thought maybe he meant feeding more of the employees to the wolves to keep his paycheck coming. Even that won't get UAIR through the summer, in my opinion. Why would ANYONE with a choice fly this airline? I can't imagine. UAIR has absolutely NOTHING left to compete with, and everyday they have even less. Give me a real seat on a real airplane anyday over a tiny seat in a tin can that my head touches the ceiling in. Until Bronner and Lakefield are gone this airline has absolutely no hope. Sorta brings thoughts of the Donner party, where the elders ate their young to stay alive. Maybe they should call it the "Bronner party".

 

[Finish or Ignore]

I thought maybe he meant feeding more of the employees to the wolves to keep his paycheck coming. Even that won't get UAIR through the summer, in my opinion. Why would ANYONE with a choice fly this airline? I can't imagine. UAIR has absolutely NOTHING left to compete with, and everyday they have even less. Give me a real seat on a real airplane anyday over a tiny seat in a tin can that my head touches the ceiling in. Until Bronner and Lakefield are gone this airline has absolutely no hope. Sorta brings thoughts of the Donner party, where the elders ate their young to stay alive. Maybe they should call it the "Bronner party".

[post="259632"][/post]​

Oldie,
A Silver preferred explained it to me last week. We are no worse than the other legacy carriers. Maybe better than some. That doesn't make me feel any better. I hate being a part of the sh***y service we provide now. It is out of the employees control.

 

[ClueByFour]

Neither of these save money (although they infuse cash). You're merely reducing "Aircraft Rent" and increasing "Capacity Purchases" (probably more than the reduction in rent). A short term cash infusion for long term higher cost. But of course that's what Lakefield meant when he talked about decisions for short term gain and long term pain.....

[post="259626"][/post]​

Do they infuse cash?

Does U have any significant equity built in any of these aircraft (even the Dash-8s)? If it's just re-assigning/transferring leases, it won't really be a huge cash infusion, and as Jim points out, it'll just increase "capacity purchases."

Moreover, presumably Air Whiskey and Republic are not stupid--I'd assume that Republic's "cost + 5%" model means that U will still be paying to lease, fuel, and operate the aircraft (albeit indirectly) and another 5 points on top of that.

Burning furniture at 11.

Returning the Boeings and Busses also might seem like a good idea now, but it's sacraficing the future: their CASM is well below the RJs that will replace them.

 

[BoeingBoy]

Do they infuse cash?

Does U have any significant equity built in any of these aircraft (even the Dash-8s)? If it's just re-assigning/transferring leases, it won't really be a huge cash infusion, and as Jim points out, it'll just increase "capacity purchases."

[post="259687"][/post]​

I'll admit, I was thinking about the 170's when I wrote about "infusing cash". Assuming that U get's to keep any of it, that's $40-some million. As for the CRJ's and Dash 8's, I'll admit that I have no idea except to say that the latest CRJ-700's delivered this year should have some equity value. The bank is only financing what remained of the purchase price after the deposits/progress payments for all the remaining orders were applied to the price of these aircraft.

Of course, the Republic deal also has another cost increase built in, besides converting aircraft rent to capacity purchases. Those 130-some slots will be leased back - now they're free. I've no idea how much money this represents.

Jim

 

[700UW]

And you have to remember, any asset sales 75% goes to the ATSB loan.