The Bankruptcy Road Ahead

[700UW]

US Airways is 0% fuel hedged, they were sold last week back to the bank, therefore US is 100% exposed to price fluctuations.

This information came from US' Finance Dept.

 

[RowUnderDCA]

By my way of thinking that could be good market timing for U to sell hedges when they're high. ????

 

[BoeingBoy]

Row,

You could be right - only time and fuel prices will tell.

I suspect that it was done to raise cash, but that's only my opinion. Add $5 and you can get coffee at Starbucks...

Jim

 

[ClueByFour]

The company is squeezing EDS to try to lower its lease expense and the IT service provider is trying to keep its fees as high as possible.

Each of the parties listed above need one another and all must share in the company and industry restructuring. Thus, I expect successful resolution to each issue above with all parties trying to obtain the best deal possible.

[post="199251"][/post]​

That's right--EDS will be paid promptly every month, or they'll compel assumption or rejection. It's a game of chicken that US cannot win--EDS will be hurt but not fatally so by the loss of the US contract, whereas US will liquidate in a day if they reject the EDS contract.

EDS has the upper hand, has already lowered their rates. It won't happen again.

 

[BoeingBoy]

Clue,

Obviously, you're right. The funny thing is that EDS isn't even asking for the contract to be rejected or assumed at any certain time. All they want is payment in advance as opposed to payment in arrears - in effect, they don't want to be "loaning" the company roughly $28 million in addition to the pre-petition balance (all interest free), a "loan" that could be defaulted on if the company liquidates.

Jim

 

[jimntx]

The thing everyone has to remember about information technology services companies like EDS and Perot Systems is that they are extremely flexible. If they lose a major contract, such as UAIR, they simply layoff a sufficient number of employees to equal the number that were working on that account. So, from an expenses and administrative standpoint, that contract never existed. (It's a little more complicated than that, but not much.)

Everyone who works for them knows how the game is played and what the rules are. When you are working you make VERY good money, but there are no long-term guarantees.

EDS does not need US Airways.

 

[eolesen]

The thing everyone has to remember about information technology services companies like EDS and Perot Systems is that they are extremely flexible. If they lose a major contract, such as UAIR, they simply layoff a sufficient number of employees to equal the number that were working on that account. So, from an expenses and administrative standpoint, that contract never existed. (It's a little more complicated than that, but not much.)

[post="199380"][/post]​

It is a little more complicated... You're right about the people who work for EDS being disposable in their management's eyes. Not billable for a month? Gone. Two weeks severance. See ya.

But there is also a financial hit beyond the employee expenses.

When they got the contract to manage US's systems, EDS had to invest their own money into building out the supporting infrastructure (IP network, two data centers, and all the administrative servers required to manage all that). Those costs are recouped over the life of the contract.

Plus, you have data centers in places like INT which can't possibly be of much use to anyone else as long as hardware owned by US is still taking up space. EDS can't just sell off those assets on eBay, so until US decides to remove them, EDS has to bear the cost of not being able to rent that space to another customer.

All that said, I don't have a lot of sympathy for EDS. They've made my life hell, and take great pleasure in billing people for services barely provided. I do feel sorry for the people who are working the account, because many of them were the comm reps who either used to work for various airlines but were spun off, either directly to EDS or via other companies like Galileo and Sabre who sold their hardware and network lines of business to EDS.

 

[BoeingBoy]

I do feel sorry for the people who are working the account, because many of them were the comm reps who either used to work for various airlines but were spun off, either directly to EDS or via other companies like Galileo and Sabre who sold their hardware and network lines of business to EDS.

[post="199399"][/post]​

That is definitely the way it is, and it's unfortunate. I've worked with the same folks in PIT for 15 years. The same folks who were part of the US IT department went with the job to first Sabre then EDS. If the contract ends, their job will probably end too.

Jim

 

[notlayedoffyet]

When they got the contract to manage US's systems, EDS had to invest their own money into building out the supporting infrastructure (IP network, two data centers, and all the administrative servers required to manage all that). Those costs are recouped over the life of the contract.

Plus, you have data centers in places like INT which can't possibly be of much use to anyone else as long as hardware owned by US is still taking up space. EDS can't just sell off those assets on eBay, so until US decides to remove them, EDS has to bear the cost of not being able to rent that space to another customer.

[post="199399"][/post]​

There is some mis-information here. EDS did not invest their own money into the US Airways network. It's US Airways owned. The data center in INT is long gone, moved to Tulsa in Dec 1998.

 

[eolesen]

There is some mis-information here. EDS did not invest their own money into the US Airways network. It's US Airways owned. The data center in INT is long gone, moved to Tulsa in Dec 1998.

[post="199412"][/post]​

Pacer is gone, but isn't there's still some stuff on OS/390 which supports Revenue Accounting and Recievables/Payables at INT?

US may own the network infrastructure within the airports, but EDS is still responsible for connecting the dots.

 

[USA320Pilot]

Another interesting twist to the EDS situation is the boarding pass readers. All of the podiums, computers, monitors, and scanners were bourght by EDS and leased to US Airways.

EDS has an upfront expense and US Airways pays a monthly fee.

Regards,

USA320Pilot

 

[notlayedoffyet]

Pacer is gone, but isn't there's still some stuff on OS/390 which supports Revenue Accounting and Recievables/Payables at INT?

US may own the network infrastructure within the airports, but EDS is still responsible for connecting the dots.

[post="199415"][/post]​

No, It's all more than 7 stories underground in Tulsa, OK.

 

[700UW]

According to US Airways Finance Dept, they had to pay for the readers and new computers and got permission from the ATSB to continue the process to get them all installed.

 

[Rico]

Everyone who works for them knows how the game is played and what the rules are. When you are working you make VERY good money, but there are no long-term guarantees.

Unlike here, where many assume that they are righteously entitled to maintain what they have gained in the good times, no matter what the condition of the company or entire industry is like in the bad ones...

Interesting comparison.

EDS = the "Real World" and the typical workplace enviorment that many will have to quickly adapt to if US Airways folds....

 

[USA320Pilot]

According to LGA station management the boarding pass readers are leased.

Best regards,

USA320Pilot