Who Will End Up In Control?

[700UW]

My gut feeling and from the speculation I have been hearing is don't be surprised if John Orenstien and his financial partners end up in control of US Airways upon emergence of bankruptcy.

Remember Mesa owned a chunk of US stock before the first filing and he tried insucesfully to be the majority owner of US during the last bankrutpcy. I even hear that there is some behind the scene lobbying to get him back interested.

Like I said none of this is written in stone it is my opinion and some things I have been hearing.

 

[Mike]

Oh please...JO can hardly run the operation he has now.

 

[700UW]

Funny,

He is the largest RJ operator and keeps growing.

 

[longing4piedmont]

Just a WAG. Virgin America and Sir Richard.

 

[cavalier]

Just a WAG. Virgin America and Sir Richard.

[post="179883"][/post]​

Or maybe the creditors, lessors, banks, credit card companies, in other words, vanquished in liquidation. And that has been the one stable thing about U, it was always on a heading to oblivion, straight slow and sure. Funny how the entire world feels U is done, except the employees and the executives who placed U here. If U does somehow survive, and count me an unbeliever for the record that was dead wrong, it will not be including most of the U employees writing on these boards.


La buena suerte Todo y Mejor A Todo. Esto Es Mi Bueno Adiós.

 

[longing4piedmont]

Funny how the entire world feels U is done, except the employees and the executives who placed U here.

[post="179890"][/post]​

Cav

Allow me to modify my answer. I beleive US is going to pull out of this and survive. My answer was based on being wrong about that.

 

[DHC8Driver]

My gut feeling and from the speculation I have been hearing is don't be surprised if John Orenstien and his financial partners end up in control of US Airways upon emergence of bankruptcy

So do you think JO will buy out RSA's equity stake and take over, or do you think it will be a MidWay deal where MidWay was CH 7 nd and then JO took over the operation sans the employee contracts??? Started over from scratch with an existing operation so to speak.
As long as we are speculating...

 

[WorldTraveler]

It is a bit early to write US off although they will not likely be large enough under any scenario to be a long-term standalone player. If they truly become an LCC, they will have to fairly aggressively move into growth mode in order to gain a nationwide presence or will be in good shape to be acquired by another airline – LCC or legacy. Growing into being a nationwide LCC carrier will be a tough order so it is probably more likely to believe that US will merge with another carrier down the road. Compared with what US has been through so far, a merger (more likely of equals rather than the takeover mindset of AA-TW) will be relatively easy to deal with when compared with what US will have to go through in the next couple months to become a viable carrier. If an investor acquires a stake in a restructured airline, it could either be Branson (Virgin America) or Bronner. Bronner will want desperately to save face and try to get the US investment to pay off while Branson needs a US investor to meet US ownership rules. Virgin is going to have a much harder time setting shop given that the LCCs have large deliveries in the next couple years and several legacy carriers will have restructured their operations by that time.

US still has a valuable franchise; in one form or another, US or its successors will continue to serve the key markets in US’ system for a long time to come.

 

[Winglet]

A dumb route structure, incompetent management, irrational fleet, cut throat competition, and what's left of a brutally raped and demoralized work force. Oh, yea, that what I'd want to invest in.

 

[vc10]

A dumb route structure, incompetent management, irrational fleet, cut throat competition, and what's left of a brutally raped and demoralized work force. Oh, yea, that what I'd want to invest in.

[post="179919"][/post]​

No worse than where CO was in 1993/4. Four years later it was riding high. Turnarounds are possible (though certainly not assured) in this business.

If US Airways gets an America West cost structure, investors might actually be interested.

Employees should sign up for the America West cost structure in return for a hefty slice of new equity and/or profit sharing. That way, if it works out, they get a big share of the upside. If it doesn't work out, they're no worse off than today.

 

[TheDog2004]

Continental is a unique exception. It is anything but the rule.

 

[savyinvestor]

So do you think JO will buy out RSA's equity stake and take over, or do you think it will be a MidWay deal where MidWay was CH 7 nd and then JO took over the operation sans the employee contracts??? Started over from scratch with an existing operation so to speak.
As long as we are speculating...

[post="179901"][/post]​

I'm no expert, but starting over from scratch would seem to be the least expensive way to go. Good for him, but not for employees. Savy

 

[vc10]

Not true. America West was a total dog just prior to 9/11. Now it's actually a decent airline.

ValuJet after their crash couldn't give away its product. It limped along for years. Now AirTran is actually doing well (relative to everyone else).

Even Spirit, a real bottom feeder if there ever was one, has become a semi-OK airline---to the point where it attracted a $125 million private equity investment.

For sure you can't count on any particular airline turning itself around. However, you can't dismiss it out of hand either.

Continental is a unique exception. It is anything but the rule.

[post="179935"][/post]​

 

[WorldTraveler]

Part of the reason that the LCCs have grown so much is because the legacy carriers have been unable to defend themselves against LCC expansion for several years but that is changing. For example, AA has been much more aggressive in going after JetBlue. Delta and Independence are playing toe to toe on Indy’s desires of setting up shop to Florida while DL has also been trying to further strengthen its presence at JFK ahead of B6’s EMB deliveries. And of course UA is fighting back at Indy and Frontier. And that is just the actions of the big 3.
As legacies restructure themselves and start fighting back, it will be harder and harder for LCCs to just waltz into markets and make money hand over fist. The easy markets have largely been picked off (although DFW is ripe for an LCC expansion given DL’s exit); LCCs will have to fight in order to make gains.
Even if the current US liquidates, they will not simply walk away from the markets they have built and sell the assets to a third party. There is far more value to US and to investors by turning US into an LCC with employees that want to work at the wages the company is willing to pay and with a fleet that is suited for the mission than if the assets were sold off. The challenge will clearly be to shut down the old US in an orderly fashion and relaunch the new US in relatively little time. You may remember that a reorganized Pan Am was created after DL bought the transatlantic routes and was to focus on the Caribbean and Latin America. Although it only lasted for about 6 weeks, the reorganization plan probably wasn’t aggressive enough in cutting costs. Further, Delta provided the financial backing for the reorganized PA and was unable to continue to invest in PA2 once it became apparent how much money it was losing on the transatlantic routes. I don’t think there will be any problem finding an investor willing to fund the new US if costs are down to low levels. No, that is not an encouraging picture for US employees who want to keep what they now have. If they absolutely want to work in the airline industry, there will probably be an airline with a strong east coast presence that will fly the Airbuses and a bunch of RJs and be about half the size US is right now. That kind of airline would still fill a valuable spot for Virgin America or any other European airline wanting good connections to its transatlantic flights. It would also be a reasonably decent investor for someone wanting to invest solely in the domestic side of the industry, particularly if US2 is sold to another airline in a couple years to complete a nationwide network.

 

[ITRADE]

Well, thats not quite true.

The majors have been able to fight off a lot of the LCCs by clubbing them to death. Remember when Legacy wanted to fly out of DAL, AA immediately added service and beat the hell out of them. When Vanguard tried the same thing, the majors again worked to smash them.

Additionally, many of the LCCs and startup were formed upon the premise that an airline could be created out of a barn, using a single 737-200, and money would be created. Unfortunately, with old equipment, competition, and some dumb management moves, most all start-ups and LCCs died.

JetBlue and AirTran have come in with a gazillion dollars in investor money, brought in new planes, and operate with enough staying power to develop name/brand recognition and to grow. Even if AA could temper or keep JB contained, the airline has about $200MM in cash and can withstand prolonged attacks.