Us Airways Said To Be Pursuing Big Asset Sales

[AOG-N-IT]

you've hit it dead on, funguy2, on all five points. Although US' assets are diminishing in value, they do have value to other legacy airlines who will be able to figure out a way to acquire those assets. DL and NW both have way more cash on hand than they need now, although DL would probably be cautious about spending money while they are still losing it. On the other hand, a US failure will go along way towards helping DL recover. I see AA as probably the most likely acquirer of US assets from a strategic standpoint but I'm not sure they are capable of doing it. If any legacy airlines buy US' assets, it will undoubtedly cause the alliances that have been forged to be rethought.

Thank You both for your observations.

I see that both of them lend to my arguement of "Streamlining" U in reagrds to cuting the PIT Hub to just another U city served.

PHL becasue of it's location and access to large numbers of bodies has to be defended at all costs...and with money saved in other areas , this becomes possible.

CLT because of it's vastly lowered operating costs and facilities in place needs to remain a viable Omni-Directional HUB , Maintenance Base, Training Center and Logistical support center.

PIT becasue of the high costs of boarding a passenger and doing business in regards to adverse weather days at least 4 months out of 12 , needs to be reigned in immediatly. The wide dispersal of our leased properties off the airport facility alone also raises cost concerns that make little to no sense at all.

Then we add in the fact and stupidity of trying to operate two major hubs within 40 minutes flying time of one another....CLT only being 85 minutes away from PIT only compounds how illogical PIT becomes.

The time to consolidate this operation is long over-due....and it's running out faster than the tide.

The WO's need to either be consolidated into one business or sold to a binding contracted airline like MESA....the expanse of running 3 WO's is simply pointless from a business standpoint.

Last we have the expense of a HQ's in Metropolitan D.C. This is purely a luxury base Vs. an intelligent choice. The days of running to Alexandria to grease the judge are over....and the leadership should be closer to our power bases , not that of our government that has already given all it will give.

Everybody wants and chants the mantra of "Economies of Scale".....well my friends , as painfull as it might be , I have just outlined an econmy of scale...and beyond that it purely becomes a focus on revenue making.

 

[AgMedallion]

don't underestimate the value of US' network either. While the right aircraft might not be flying the right routes, US has some incredibly valuable assets. If there are asset sales, however, there may well be employees and aircraft involved so don't automatically assume that you are all going to be unemployed.

The only assets U has that aren't easily attainable by any airline, are landing slots at LGA and DCA. Also gates at those and maybe a handful of other airports. The very last item of interest to another airline buying assets are, unfortunately, the U employees who work with those assets. Other airlines have their own employees on furlough. They would first recall and/or offer transfers to them, not hire high priced employees from U. Or they would hire brand new employees off the street at bottom-of-the-pay-scale rates.

 

[ClueByFour]

AA's is hardly a shuttle, after all its mostly operated by American Eagle.

It runs frequently, they give you beverages and a newspaper. When US moved away from the shuttle Airbus config, they lost all differentiation in this regard. To me, a US 737 in the back is not appreciably better than the ERJ.

 

[Falco]

The very last item of interest to another airline buying assets are, unfortunately, the U employees who work with those assets. Other airlines have their own employees on furlough. They would first recall and/or offer transfers to them, not hire high priced employees from U. Or they would hire brand new employees off the street at bottom-of-the-pay-scale rates.

Bingo! If any assets are sold, it will be without employees. That's how Bronner can get full value for those assets.

 

[Piedmont4US]

Exactly, thats the last thing any buying airline wants, the U employees.. which are stilll among the most highest paid in the biz.

 

[sentrido]

US Airways, the No. 7 U.S. airline, is looking to sell assets, possibly including its hub in Philadelphia, a source close to the situation told the Charlotte Observer on Thursday.


Story

 

[7.5victim]

DL and NW both have way more cash on hand than they need now, although DL would probably be cautious about spending money while they are still losing it.

DL and NW might have a lot of cash on hand, but I certainly wouldn't call it "more than they need".... Both carriers also have a lot of debt coming due next year, which threatens to eat up a lot of that cash. That's why both sides are looking for concessions from employees. But the employee groups at both DL And NW would rather wait until that cash is gone before making any concessions. Go figure.

Asset purchase might be considered, but neither carrier will be interested in bringing US employees on board while they have their own employees on furlough. Again, the employee groups at any carrier would scream in protest. that's partly why I think much of US assets have little value to anyone. Most industry analysts still feel theres too much capacity out there flying around. It would make more sense for the legacy carriers to allow US to liquidate, and then bring their parked assets out of the desert, and own employees off furlough.

 

[Busdrvr]

The very last item of interest to another airline buying assets are, unfortunately, the U employees who work with those assets. Other airlines have their own employees on furlough. They would first recall and/or offer transfers to them, not hire high priced employees from U. Or they would hire brand new employees off the street at bottom-of-the-pay-scale rates.

Bingo! If any assets are sold, it will be without employees. That's how Bronner can get full value for those assets.

STOP IT!!!!

1. The U employees are NOT overpaid by ANY measure. They are UNDERUTILIZED, and that's the fault of DAVE.

2. Big DAVE is an EQUITY investor. If U were to "liquidate" in chapt 11/7 he wouldn't get a THING. I'm sure the ATSB and GE have some pretty specific clauses in the loan deal that prevents wholesale asset sales. Don't you U guys have some pretty specific clauses in your contracts regarding "asset sales".

3. This "rumor" floated by little Dave is OBVIOUSLY having it's desired affect.

 

[PoorPropDriver]

Selling any part of the Express Division may bring cash quickly but is the only profitable portion of the airline at this time.

 

[USFlyer]

At least this time around this topic will play itself out quickly. US wants offers by mid-January (i.e., next week) with the sale to be complete in February. It doesn't give anyone a lot of time to play this posturing game.

 

[AOG-N-IT]

Selling any part of the Express Division may bring cash quickly but is the only profitable portion of the airline at this time.

PPD,

Note that I stressed a cost saving consolidation of the WO's first and foremost.....a sale would be the last thing that needs to be done , if in fact it's even an option? I hope it does not come to that in any respect.

 

[sfb]

To add to funguy2's points:

US Airways does have some assets listed in the news reports which could be sold and which are no longer critical to the airline's operation. Case in point: US Airways' BOS gates. Does the company truly need 18 gates at BOS for 31 daily Shuttle flights, 29 daily mainline flights, and 38 daily Express flights? I'd argue that US could easily give up nearly half of its gates at BOS in exchange for sufficient financial consideration and still be able to run its operation effectively. Heck, the company ran a lot more flights out of BOS in the past with fewer gates! Similarly, I believe that US Airways could sell a number of its 21 LGA gates to another airline, given that US only operates about 50 daily large jet departures from LGA now.

I see little value to US Airways in any rumored sale of the PIT hub, in large part because the company has nothing to sell at PIT anymore. The leases for 40 of the 50 gates on the A and B Concourses were rejected, so in theory the airline no longer controls enough gates to keep out any other carrier interested in hubbing at PIT. Moreover, the company did not commit to long-term leases on other facilities at PIT, so again the company has little control over the future of those assets. There is little to keep any other airline with access to enough aircraft from signing leases with the airport authority on some of US's gates which are leased month-to-month and starting its own hub.

There is more value in US Airways' gates and facilities at CLT and PHL given that there are relatively few empty gates at both airports. However, as most everyone else has accurately recognized, both hubs are integral to the company's operations. PHL is the company's largest revenue driver and the linchpin of its transatlantic operation; it generates more O&D traffic than PIT and CLT combined, even with almost zero O&D to NYC and WAS. CLT offers the company low facilities costs AND access to a large number of markets in the Southeast which are simply not feasibly served from PHL or PIT. Without CLT, US Airways is irrelevant to anyone not traveling to or from PA/MD/DC/NY/NJ/New England. To add to this, I'm unable to see what US would do with 279 mainline aircraft and only two hubs, since the airline would still be stuck with this contractual obligation.

The sale of the wholly-owned Express carriers seems like a plausible scenario, though I imagine that they would hold much more value combined into a single entity operating primarily regional jets. Both NW and CO have picked up hundreds of millions of dollars in badly-needed value/liquidity in the ongoing spinoffs of their regional arms. There are two big problems here, though: first, a regional flying mostly props holds little value in this market, and second, any revenue/contractual flying guarantees from US Airways must be discounted by the potential for UAIR to liquidate or break those contracts in another bankruptcy filing. I'd add that US Express's fleet is a relatively poor fit for most of the regionals, aside from perhaps Mesa. And while Mesa was indeed looking to take over ACA, they were going to do it with stock *and* were doing it in large part to get access to ACA's substantial cash reserves. A bunch of Mesa stock won't help UAIR.

A sale of the Shuttle really presents a conundrum. Without it, US becomes less attractive in the BOS, LGA, and DCA markets. It probably doesn't make money anymore in large part due to increased security hassles and competition from Acela, and the Delta Shuttle has a somewhat higher market share. I have my doubts as to how much the Shuttle is worth as a business; however it is obvious that the Shuttle's LGA and DCA gates and slots do hold significant value. It is questionable, though, if UAIR can sell those slots if they've been pledged as collateral for the ATSB-backed loans.

This seems to me to be either a trial balloon to see what sort of offers the company can get for these assets (as compared to what the company projects it can earn from them) or a direct message to the employees and their union leadership that the company will be sold off piece-by-piece until there's nothing left, unless management gets what it wants.

Honestly, I don't know what I'd do in this situation if I were a US Airways employee. It does seem clear that management has continued to drop the ball and that employees continue to pay the price. Though management would never agree, in your shoes, I'd only agree to pay cuts in exchange for comparable, verifiable cuts in TOTAL compensation (this includes benefits, bonuses, options, perks, etc.) for all officers of the company. Any increases in total compensation for corporate officers would be matched, by contract, by equivalent increases for labor groups.

I do agree with the observation of another poster that WN's entry into PHL seems like a desire to be a known presence in the market (and in the best position to expand) in case US Airways does go away. PHL is one of the big prizes (along with LGA and DCA slots/gates) if UAIR liquidates.

 

[767jetz]

5) I find it very interesting that Chip's secret sources didn't tell us this first... Seems to me like everything that Chip tells us doesn't happen, and the things that do happen, such as this leak to the media, Chip does not know about.

Very good point. I too was wondering why, with all of Chip's informed and secret sources, was he not the first to point out that US is seeking a buyer for significant assets.

My thoughts are with all of the fine US employees. Yes Chip, even you. I hope this turns out to be a bluff.

 

[700UW]

You people are so gulliable, why am I not surprised you don't let facts get in your way.

The slots at LGA and DCA are collateral for the loan, you can't sell collateral unless you pay off the loan.

Secondly, US Airways does not OWN hubs, gates, aiports or facilities, they lease it, guess the city of clt, pit or phl would not be happy if US tries to sell things they don't own.

Don't let facts get in the way of your thinking, cause you might actually use logic to see all thru the bull crap the company is spreading to scare you into BOHICA once again.

Sit back and think, why would you sit down with someone who has lied to the employees since he got here and why would you give back your hard earned money and jobs to someone who has squandered $1.1 billion from employees and $1 billion from vendors?

 

[28yearsnojob]

your are right 700uw