When Will Usairways File Chapter 7 ?

[WorldTraveler]

Gadget,
Unsecured creditors are unlikely to receive anything regardless of the outcome. If US exits BK, unsecureds are usually wiped out. From an unsecured creditor perspective, keeping US alive only delays their losses but doesn’t eliminate it.

Loss of the RJ financing is very significant. US will have to come up with a new business plan based on not having those aircraft and that cannot be produced overnight.

The secured creditors will not allow US to run their balances down to zero and they are closely watching the bookings (they can receive information on US bookings from computer reservation systems and are not dependent on US to provide them). If it appears that US bookings for the holidays are not going to materialize, it is very possible they may pull the plug within 4-6 weeks (shortly after the election but the timing is really just a coincidence).

There is a precedent for airlines failing just before or after holidays. If US makes it through Thanksgiving, there is another 3 week period of slow revenue growth before Christmas and then another 5 weeks or so before spring break travel and the Ft. Lauderdale expansion starts. Since the credit card companies are holding much of the revenue until passengers fly, there is not the incentive to accumulate the revenue from bookings but shut down the airline right before the passengers fly in order to increase the size of the bank accounts for the creditors. From the creditors perspective, they might as well pull the plug early or wait until a holiday has just passed.

 

[cavalier]

There is a precedent for airlines failing just before or after holidays.

From the creditors perspective, they might as well pull the plug early or wait until a holiday has just passed.

[post="182324"][/post]​

Not to paint a bleak picture, but: Last Wednesday I was at a travel agency because they have services I use besides the travel service. I asked them what they are doing about the U situation being U "was" their biggest customer. I was told that unless a pax is booking very near term they book “awayâ€￾ from U afraid of getting their customers into possible trouble or undo stress worrying about the return flight with the hassle of getting on another carrier. I was also told this was what all agencies are doing as far as U goes. U is doing nothing but hurting themselves by saying or doing “nothingâ€￾ to rectify this problem. This is another sign of the obvious, this management team is clueless thinking that labor only will save the day.

Good Luck U employees, it might be a hell of a holiday season this year.

 

[jimntx]

Gadget,
Unsecured creditors are unlikely to receive anything regardless of the outcome. If US exits BK, unsecureds are usually wiped out. From an unsecured creditor perspective, keeping US alive only delays their losses but doesn’t eliminate it.

Then why would Embraer, Bombadier, and GE allow it go on another day, much less 4-6 more months? According to AWST article, EMB and BMB together are owed $2.4 billion unsecured--over a billion EMB. The article listed almost $3 billion in unsecured debt, and that was just the major creditors. No mention of little guys like caterers or other suppliers of goods and services.

...and the Ft. Lauderdale expansion starts.

[post="182324"][/post]​

According to Brancantelli in USA Today, UAIR has already shelved the FLL expansion because it is not even mentioned in the court filings as part of the reorg plan!

 

[Winglet]

The question is, will they Chapter 7 the place before the cash is burned down and no creditors get anything and the employees' wind up working the last two weeks for free. My guess is the company leadership doesn't have the integrity to make an orderly shutdown and make sure that the workers' last paycheck is good.

As a passenger, I wouldn't buy a ticket unless it was for same day travel. Buying now for holiday travel?? Not a chance.

 

[airlineorphan]

What do folks make of the financing for the Embraers being cancelled? How does this fit into theories that the creditors want to avoid a Chapter 7? Seems to me like rats deserting the ship...

-Airlineorphan

 

[JonC]

Yo cav...you nattering nabob of negativism,....U COULD WELL SURVIVE. What good does your unending carping do for anyone?

[post="182300"][/post]​

US Airways "might" survive, just like PanAm survived. A tiny, little charter/occasional schedule service carrier with a couple of airplanes. I think barring a miracle, the carrier of choice is going to the land of former great airlines. Although, honestly speaking, US Airways at its best was never PanAm or TWA at their prime. It never was more than a glorified regional who occasionally got too big for its own pants.

Jon C

 

[700UW]

Pan Am did not survive, they were out of business and a New Hampshire based company bought the name in bankruptcy, no assets, nothing, just the name.

 

[GadgetFreak]

What do folks make of the financing for the Embraers being cancelled? How does this fit into theories that the creditors want to avoid a Chapter 7? Seems to me like rats deserting the ship...

-Airlineorphan

[post="182341"][/post]​

Well there is some discussion or disagreement between what I read in the paper was said by an unsecured creditor (a major one) and the information above that the unsecured lose either way. But apart from that, even if the information I heard was correct and they dont want a Ch7, that doesnt mean they are crazy enough to put more money at risk.

 

[gso-crew]

Does anyone want to predict when USAIRWAYS will file for Chapter 7 Bankruptcy?

[post="182238"][/post]​

Better chance of you moving to Mobile AL. to keep your job than company going Chapter 7.

 

[gogogadget]

Dont think it will happen in the immediate future. Reasons, You have a very anti-labor administration in office and it is election time. Would be very bad for a company as large a Usairways to go away, especially one with this much media coverage. Do you actually think the ATSB give was a gift? How about leverage! Sounds more like old Lakefield said we are history unless you let us play with that money. Being the politicians that they are it is much better for to have U's management keep socking it to the employee labor groups, internally keeping the anti-labor agenda in motion, while making it look as though there really is sympathy by letting U use the taxpayer's money!

My guess is after the election! W wins by an 8% margin and then says screw it with arrogance and walks away with more pension hits and people on the unemployment line. If Kerry wins it will be more of the same I told you so and love peace war retoric. Standard issue either way but all after the election!

 

[NCFL]

Does anyone want to predict when USAIRWAYS will file for Chapter 7 Bankruptcy?

Or if not, why do you think this airline will survive....
Serious Issues include:


4. unwillingness of airline to bargain with unions in good faith...(Cancelling meetings)


Did I miss anything?...

[post="182238"][/post]​

Yes, you forgot some things:

11. The unwillingness of some employees to accept economic reality. Work rules are inefficient. People aren't entitled to jobs, they earn them. Some employees get paid too much (union and non-union alike). Bogus unscheduled absence and FMLA abuse are crippling us. One has a job to work, not for the luxury of staying home. The customer is not the enemy.

12. Union gall presenting foolish ideas like "building an on-site gymnasium to cut down on OJI expenses" as a realistic cost-saving measure. And, no, I'm not making that up.

Let the bully pulpit commence...

 

[FWAAA]

Bombardier and Embraer are the largest unsecured creditors, but only if one counts the future commitments to buy aircraft as unsecured debt. Aircraft already delivered are secured debt.

Same with GE's debt - the numbers represent commitments to buy engines for the RJs, service engines for the RJs and some possible shortfalls in the collateral already delivered (the RJs for which GE is the finance company).

U will cancel the purchase orders for the RJs and the engines, leaving the above mentioned companies little say as to U's future.

To repeat, the debts listed to Bombardier, Embraer, and the various GE entities do not represent money owed by U for things/services that U has already received. They represent contract commitments which will soon disappear. It is common in bankruptcy cases for the debtor to list all debts (even executory contracts like those listed above) as unsecured debts. Safer to list them than to omit them.

A footnote in the debtor's schedule of unsecured creditors reads:

(2) The amounts owing to various General Electric entities from US Airways entities are cross-collateralized and may be undersecured.

Like I said - better safe than sorry.

The largest real unsecured debt is owed to EDS, and it is just $16.5 million.

Given U's precarious financial situation over the past couple of years, no smart company would allow U to get in too deep. Apparently, however, EDS was the biggest loser; even so, only to the tune of $17 million.

http://www.donlinrecano.net/dr201/mwc/04-1...000002-0000.pdf

http://yahoo.reuters.com/financeQuoteCompa...12398746_newsml

 

[Reservation Agent]

I think unless a trustee with a savy airline business mind is found to run the company is gonna run out of cash before it makes a profit it can survive on....

I am beginning to think CCY is clueless as to why we are here now...so to get out of it is not very likely with the same group running things...And I believe the reason is not the salary or benefits left now... with the smaller staffings left in the operations/Customer service/Sales part of the company....

If you want to be like Southwest...gotta fly the big jets...atleast B737's to larger population areas...simplify fares...cut out all the built in beaucracy in the system in administrative duplication, streamline management to a number justifiable for the number of non mgt employees, cut out advance seat assignments, re-establish West Coast service without relying so much on filling all those United planes, de-emphasize the Star Alliance, which looks to me is only generating dividend miles calls instead of an increase in paid sales calls, etc... and please try to put a "Positive attitude" to the public in management interviews with the media...Who wants to fly on a airline when every time you turn on the tv, the management is saying how bad things are... and we may have to do another bankruptcy, or liquidate, etc...

And if the company wants to re-work a contract, talk to the former CEO's with Golden Parachutes worth millions of dollars....If you wanted to void contracts with lease holders and aircraft mfgrs, why can't you re-negotiate gold parachute contracts, when you are back in a bankruptcy?

 

[jimntx]

U will cancel the purchase orders for the RJs and the engines, leaving the above mentioned companies little say as to U's future.

[post="182518"][/post]​

Uh, according to news reports and press releases from both Embraer and Bombadier, UAIR will not be given a chance to cancel the orders. The manufacturers have done that for UAIR. The Bombadier release even listed to whom they had sold the current batch of UAIR jets.

 

[usair_begins_with_u]

Liquidation plans are already being analyzed by creditors... .. I think the only reason chap 7 will come later rather than sooner is no one wants to write off the bad bedt losses on this years balance sheet, as it will big enough to affect bonuses, ratios etc and not much time to pad the hit... My prediction is liquidation in the 2nd or 3rd week of January... Adios Uair!

Regards:
employee #8131_