Us Airways Reaches $125 Mln Deal For Restructuring

[USA320Pilot]

PineyBob:

I am not normally a fan of sarcasm, but your last post in this topic was excellent.

Regards,

USA320Pilot

 

[passed_over]

The best part is that JO and Mesa couild be on the way out

 

[us0004us]

did air wisconsin just pick the survivor of a usairways/united merger?

why not invest in ual? hmmm.

 

[sfb]

smart deal on Air Wiskies part. A well run regional airline gets the opportunity to potentially move some of their RJs from disgruntled UA to US who desperately needs RJs.

That's more or less what I thought when I saw this deal, except that it's AWAC making sure that it's going to have a customer for its RJ flying if it loses the UAL flying. And since US is in bankruptcy, they can get the company to cancel contracts with other regional operators and be right there to fill in as a replacement. It's even possible that, through their ownership stake in the company, AWAC would basically be able to guarantee itself a profit stream from US Airways.

Casting a somewhat cynical eyes on things, I'd argue that AWAC has gotten indications that it will lose out on the rebid of the United Express flying, and this is their strategy for keeping the company viable; after all, there's really no one else in the industry who could be a potential partner. CO is locked in with XJT; AA is limited by its contracts to use Eagle; DL owns ASA and Comair and has plenty of feed from SkyWest and Chautauqua; NW is more interested in growing Pinnacle than turning over flying to a partner; HP isn't big enough. Without the UAX flying, AWAC is probably even worse off than Independence.

And while this is good news for US Airways in its attempts to reorganize, arguing that an equity investment from a privately held regional carrier was part of the Plan of Transformation is a bit laughable.

 

[USA320Pilot]

The potential for Air Wisconsin to fly for US Airways Express gives US Airways a significant amount of leverage to lower affiliate carrier costs. US Airways has not yet affirmed any affiliate carrier contract and if necessary, can reject the contract in its bankruptcy case and replace the lost flying with Air Wisconsin service.

This could be another part of the plan to lower unit costs to a level below both Southwest Airlines and AirTran Airways.

Regards,

USA320Pilot

 

[USA320Pilot]

Just one more point...out of the two legacy carrier's operating in bankruptcy, which airline is scheduled to complete its case first?

Moreover, has a bankrupt airline ever bought a solvent airline, presuming US Airways exits bankruptcy on June 30?

Regards,

USA320Pilot

 

[sfb]

why not invest in ual?

Too expensive. What kind of control would they get in a reorganized UAL for $150 million? With all its blemishes, United still has a far more valuable franchise.

The potential for Air Wisconsin to fly for US Airways Express gives US Airways a significant amount of leverage to lower affiliate carrier costs. US Airways has not yet affirmed any affiliate carrier contract and if necessary, can reject the contract in its bankruptcy case and replace the lost flying with Air Wisconsin service.

Why do you think this will "lower affiliate carrier costs?" After all, AWAC's motive could very well be to lock in profitable fee-for-departure contracts with a mainline carrier which it partially controls. United's not trying to rebid Mesa, Chautauqua, or SkyWest flying, and if AWAC's plan were to reduce its rates to fly for US, wouldn't it be a heck of a lot simpler (not to mention not needing to invest $150 million) to just do it for United?

This could be another part of the plan to lower unit costs to a level below both Southwest Airlines and AirTran Airways.

You mean in the same way Independence Air has lower unit costs than Southwest or AirTran? You cannot achieve lower ASM costs using CRJ's and BAe 146's.

 

[USA320Pilot]

SFB:

I never said you could "achieve lower ASM costs using CRJ's and BAe 146's." US Airways could lower its unit costs by paying less for affiliate carrier feed, which would lower US Airways' unit costs.

US Airways has been negotiating with its affiliate carriers to pay less for the Express feed. If US Airways pays less, it lowers its costs. If the an affiliate carrier refused to lower their fees, then US Airways could reject the contract in bankruptcy court and replace the service with Air Wisconson flights.

Regards,

USA320Pilot

 

[Cosmo]

Just one more point...out of the two legacy carrier's operating in bankruptcy, which airline is scheduled to complete its case first?

That's an easy one -- US Airways in March 2003. But wait a minute ... that can't be right. It's already February 2005. :blink:

Oh, I get it. You really meant to say "... which airline is scheduled to complete its second case first?"

 

[Non Rev]

The best part is that JO and Mesa couild be on the way out

[post="248936"][/post]​

Ditto!!!!!!!!!

 

[RowUnderDCA]

Well... I'm not sure if US Airways "desperately needs RJs"... I think Air Wis desperately needs this deal in case they end up with no Major partners

[post="248894"][/post]​

that sounds right to me "any port in the upcoming regional jet market storm'

 

[RowUnderDCA]

no speculation yet on the relative seniority of AWAC pilots compared to U pilots? What about AirWisc's other employees? How many, how are they distributed? Yet more diverse equipment. I understand that no one has announced a merger between any two or among any group of air carriers. Does Air Wisc have any sibling carriers?

 

[RowUnderDCA]

ok, last post before trying to get back to sleep

Could it be ironic that the U of 2005 might have its fate determined by a corporate strategy chess move that might really have nothing to do with running and efficient airline system? kind of like when U bought PI.

U buys PI to ensure a place in a market place that was becoming increasingly unwelcoming to it (option A: Icahn, option B: PI choking U off)... then Air Wisc does does the same thing by 'buying' U.

U and Air Wisc might not create economics that make sense but it helps get AirWisc to whatever happens after whatever happens next in the industry.

Maybe in the meantime, they'll figure out how to make it work and/or get lucky.

 

[Heinrich]

The investment still could be someone else. Remember in the first bankruptcy there was this announcement about TPG, who ended up having nothing to do with USAir.

125 million sounds like small tiny potatoes though. Is that REALLY all that's needed??

 

[delldude]

The investment still could be someone else. Remember in the first bankruptcy there was this announcement about TPG, who ended up having nothing to do with USAir.

125 million sounds like small tiny potatoes though. Is that REALLY all that's needed??

[post="248995"][/post]​

read an article where 250 mill was what they wanted but author thought 500 would be more like it to offset projected losses in 06 and low 4% growth in 07....
author even indicated with these projections it may be hard to attract any serious investments down the road...time will tell.