Once Soaring Into A Recovery

[USA320Pilot]

Once soaring into a recovery, US Airways is now losing altitude – fast

Airline looked like a potential buyer of other airlines' distressed assets

NEW YROK (Forbes.com) - How did the skies darken so suddenly for US Airways Less than a year ago the nation's seventh-largest carrier shook off bankruptcy after only eight months in the dock.

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Respectfully,

USA320Pilot

 

[Dizel8]

Not to worry, you will soon aquire UAL!

 

[pitguy]

Don't worry there will be jobs for Mechanics at the commuters paying $10k less per year than they make now (That is why it is not worth the Mechanics taking any less here for a hostile company, because any less and they are at commuter wages). Only problem may be your salary though. I think they start their commuter pilots out at $20k or so. Best of luck.


DELETED BY MODERATOR

 

[USA320Pilot]

Dizel8:

The revised ATSB agreement provides US Airways with flexibility and could improve its finances. The company has lowered its debt, obtained EBITDAR relief, and can sell non-core assets to improve liquidity. In addition, the new accord will permit the company to remove some M&A obstacles while it continues to restructure.

In my opinion, US Airways chief executive officer Dave Siegel’s comment last week in the WSJ is accurate and will likely occur because it’s the only true way to remove cost from a mature industry by creating economies of scale. According to Susan Carey Siegel won't comment on whether US Airways has been approached by a potential buyer. He says his focus is on fixing the company on a stand-alone basis, "so we're a more attractive partner" when the "necessary, logical and inevitable" consolidation occurs.

Dizel8, did you miss Siegel's comments last week?

Regards,

USA320Pilot

 

[mweiss]

USA320Pilot,

Slots and gates at two, maybe three airports. That's all you've got that's worth anything to a buyer. We already covered this. You can call the sales of those assets a merger if it makes you feel better.

 

[Dizel8]

Had U not "repaid" the ATSB, there was a very real possibility, that the covenants of the loan would not be met. It certainly was not because U all of a sudden was flush with cash.

As a matter of fact, the "ongoing concern about the viability of U" has not abated the slightest, particularily now, that U is in a position to sell assets. What will be every interesting, is to see what those assets will be valued at by other airlines, the Shuttle was estimated to be valued at a lots less, than U had anticipated. Of course, most analyst are starting to think, that any core asset sale, will merely speed up the inevitable.

 

[pitguy]

Isn't the darling America West in violation of their ASTB agreement. I know they were at least for awhile and the Feds did not shut them down.

 

[funguy2]

Isn't the darling America West in violation of their ASTB agreement. I know they were at least for awhile and the Feds did not shut them down.

pitguy:

USA320Pilot erroneously, I believe, reported that America West violated its ATSB loan covenants. I could not find any such information. I researched this at the time USA320Pilot made his claim. IIRC, they had a $100mil unrestricted cash covenant and a 15% cap on salary increase. I am not really sure how the 15% cap works, but I recall it was a big issue in their recent ALPA negotiations.

In regards to their cash balance, here is a quote from their Year End 2003 Results:

* The Company reported record total cash and investments of
$629.5 million, of which $516.7 million was unrestricted, at the end of
the 2003. This is the highest cash balance in the Company's history.

IIRC, their loan was about $400mil and the payments start this year.

My information was publicly available ATSB info (I did not save the link), and their press releases on their website.

 

[767jetz]

He says his focus is on fixing the company on a stand-alone basis, "so we're a more attractive partner" when the "necessary, logical and inevitable" consolidation occurs.

Is there still any question in your mind as to who the "surviving entity" would be?

 

[ojxux]

not looking good.

 

[BoeingBoy]

Editorials
Let Failing Airlines Fail
Aviation Week & Space Technology
03/08/2004, page 70

United Airlines is back on a glidepath to oblivion (see p. 35). To emerge from Chapter 11 bankruptcy protection, it must secure approval of federal guarantees for $1.6 billion of the $2 billion in borrowing that the carrier has lined up. There are no assurances such approval will be forthcoming, of course, so the next few months will tell the tale. It all depends on how the Air Transportation Stabilization Board assesses the airline's reorganization plan; the board rejected the first one.

One can only hope that United's travails--as well as those of US Airways--will spark enlightened self-interest on the part of the other four operators who are among the six largest U.S. legacy airlines. Even before Sept. 11, 2001, all of them seem to have forgotten they were service companies--and as such obliged to strive for customer satisfaction, fair pricing and responsible capital spending. It's almost as though management thought a steady stream of slick ad slogans and alluring scenes of desirable travel destinations would serve as acceptable substitutes. The flying public, particularly business travelers, not only were taken for granted but exploited to the hilt. Even today, there is evidence that the same self-defeating attitude persists.

Fast forward to March 2004. The reality is that the future of all six major U.S. network carriers is questionable, and there's at least a 50-50 chance US Airways or United--or both-- won't survive to see the next cyclical downturn. Tragic as that would be for thousands of employees, the demise of one of the Big Six would be in the long-term interests of the U.S. airline industry. There are too many legacy hub-and-spoke carriers for the level of revenues they are generating, and the sooner the industry is allowed to consolidate the sooner the U.S. industry can get on solid footing once and for all.

Let there be no misunderstanding: the management of these airlines have no one but themselves to blame for their current predicament--their business model was broken long before terrorism changed the face of commercial air transportation. But the government must also shoulder much of the responsibility. In fact, Congress is guilty of perpetuating many of the industry's ills by continuing to provide a financial safety net. Such myopic, misguided policy-making is doing nothing to encourage mainline carriers to institute fundamental change in how they conduct their business.

While United has made considerable progress in reducing costs, basically it will be a slimmer version of its former self, as US Airways was when it exited last April--and now it's on the brink again.

Let failing airlines fail. It is the only way the industry will take the steps that are required to return to full health.

 

[ua767fo]

Not to worry, you will soon aquire UAL!

And the future of Pittsburgh will be secure!

 

[Fly]

ummmmmm, BoeingBoy. That was an editorial....everyone has an opinion.

 

[BoeingBoy]

Fly,

You are correct - it is an editorial as indicated in the 1st line. Just thought I'd throw it in for discussion.

Jim

 

[USA320Pilot]

Pitguy:

Pitguy said: "Isn't the darling America West in violation of their ASTB agreement. I know they were at least for awhile and the Feds did not shut them down."

USA320Pilot asnwers: America West violated the ATSB EBITDAR requirement, but the board took no action. ALPA E&FA was directly involved in negotiation because the America West pilots were involved in new contract talks, which resulted in a new CBA.

The news was not made public, similar to the new US Airways agreement, so the board could help the airline. Thus, there is reason to believe there is some leeway with the ATSB.

Regards,

USA320Pilot