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Court Approves US' Restructuring.  
User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Posted (11 years 6 months 1 week 3 days 16 hours ago) and read 2277 times:

http://www.usairways.com/about/press/nw_03_0318a.htm

Looks like they're gonna make it kids.

N

15 replies: All unread, jump to last
 
User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 1, posted (11 years 6 months 1 week 3 days 15 hours ago) and read 2274 times:

This is fantastic for them, as I haven't followed this too much in detail, could someone actually summarise what has happened for them, what cuts, pay and schedule and a general overview of what they have done. I remember reading that they had a horrific loss for January, and that they actually need to re-emerge through Chapt 11 to receive 1 billion in loans.

When they emerge on the 31st, are they now cash positive ? or are they still making huge losses and just going to eat their way through the billion dollar loan ?


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 33
Reply 2, posted (11 years 6 months 1 week 3 days 15 hours ago) and read 2248 times:

Siegel breezes by one nasty problem. "Resolving all issues" with ALPA over the pilot pension will not be easy. ALPA has promised to fight to the death over that one, and they're probably not just engaging in standard bargaining-table chest puffing. Others can explain the current financing issues better than I--haven't had time to follow closely the past month--but the pilot pension, according to the Washington Post, could sink the whole thing.

Siegel's certainly handled it right--get all the other ducks in a row, which has apparently been legally possible, as to exert maximum pressure on the pilots. Whether they give or not, on what schedule, will probably determine the outcome.

And there's still the war to get through. That's going to take a chunk out of March earnings.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineHaveric From United States of America, joined Jan 2001, 1247 posts, RR: 4
Reply 3, posted (11 years 6 months 1 week 3 days 11 hours ago) and read 2227 times:

Jim -- just how far off are you in predicting the demise of US? Didn't you originally say it would happen about two years ago? Now that they might finally make it, you're still doom and gloom!!!

Boy, they're sorry they ever lost your luggage!


User currently offlineN628AU From United States of America, joined Oct 2000, 343 posts, RR: 0
Reply 4, posted (11 years 6 months 1 week 3 days 4 hours ago) and read 2200 times:

DCA-ROCguy proves his dislike for US once again.

ALPA's own actuaries admitted over the weekend that the financial numbers put forth by management as a need to terminate the current Defined Benefit Retirement Plan are indeed correct. ALPA has had a negotiating team meeting with the company for sometime, so your interpretation that ALPA is going to "fight to the death over that one" is incorrect.

A follow-on plan will be worked out shortly, and US will indeed emerge from Chapter 11 by the end of the month. They will access an additional $240 million from RSA as capital financing, plus the $1 billion loan that is insured by the ATSB. GE Capital, which will own 5% of the company, will provide regional jet financing, and EMB170 and 175 aircraft will be on the property by the end of the year operated by Mid-Atlantic Airways as a division of mainline. They will be configured in a two class cabin, giving US Airways a distinct competitive advantage over the regional jet fleets flown by DL, AA, and CO.

I only have one question for you, DCA-ROCguy, do you still think this company will be gone by the end of 2003 as you have repeatedly said in the past?


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 33
Reply 5, posted (11 years 6 months 1 week 2 days 23 hours ago) and read 2159 times:

I only have one question for you, DCA-ROCguy, do you still think this company will be gone by the end of 2003 as you have repeatedly said in the past?

I still think the possibility of failure is above 50 percent, but as I've been saying for awhile now Siegel has pulled off things a lot of us didn't think possible. If US does survive, their days of gouging the Northeast mercilessly without accountability are long gone. US Airways deserves all of the financial pain they have suffered and more. They ought to emerge from bankruptcy chastened and with a new attitude towards those communities they raked so shamelessly.

As for my luggage, neither US nor any other carrier has ever lost it. But USAir(ways) did lighten my wallet a lot during the 1990's. They lightened a lot of wallets in Upstate New York, which is why we're flocking to Southwest, JetBlue, and AirTran.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineDeltAirlines From United States of America, joined May 1999, 8902 posts, RR: 12
Reply 6, posted (11 years 6 months 1 week 2 days 23 hours ago) and read 2151 times:

You definetely can't forget the war with Iraq though, with the clock down to less than three hours currently. Even a short-term war will kill airlines' bottom lines, and I would not be surprised to see one carrier to go into Chapter 7 within the next fortnight (most likely UAL).

However, things are looking on the brightside for U if they can get through March. They will have the Star Alliance waiting for them, a leaner structure, and competent management.

Jeff


User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7591 posts, RR: 27
Reply 7, posted (11 years 6 months 1 week 2 days 23 hours ago) and read 2140 times:

DCA-ROCguy.....

Let me start out by saying, I appriciate your educated and well thought out opinions. However I do feel that you are being a little harsh on US and the Northeast. Simply put, they did no different than any other carrier of the time. Name an airline (one of the traditional hub & spoke) that didn't stick it to most people in somewhat second-tier markets. In the post-regulation era they were allowed to charge what they wanted and obviously during the boom years they were able to capitalize on this. You cannot fault them for being a business and maximizing their revenue and charging what the market could bear.

I would imagine to an extent that Southwest, AirTran, and JetBlue are deep down not concerned about "gouging" their customers. However, they have found a business model that doesn't need such high prices to support their cost structure. Those airlines are businesses too, and realistically, they too could set fares even lower than what they are charging but they need to provide a suitable profit margin (if that could be possible currently).

Now, you are trying to tell us that when US emerges from Ch 11 with a suitable cost structure, they won't be competitive with the LCC's? I highly doubt most people will hold such a grudge, other than possibly you, toward them. If their fares are competitive with the WN's, AirTran's, and JetBlue's, of the world, with the power of the internet there is no reason why people won't choose US. LCC's are great, only if they can get you were you need to be, which only works on the most high density/frequency routes.

Keep in mind there is more to the aviation world that upstate New York and the Northeast.


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 33
Reply 8, posted (11 years 6 months 1 week 2 days 2 hours ago) and read 2068 times:

In the post-regulation era they were allowed to charge what they wanted and obviously during the boom years they were able to capitalize on this. You cannot fault them for being a business and maximizing their revenue and charging what the market could bear.

Thanks for your kind intro, I appreciate it very much. However, US Airways and all other airlines that gouge vulnerable communities should *very much* be faulted. Airlines are a business, but they are also a public good and vital economic link to cities. If you reject this premise, we'll just need to agree to disagree. Airlines have no justification to gouge, and if the law allowed the Justice Department should hang them from their ankles when they do so.

I have it in from US Airways because they were the dominant airline screwing my own home region in the roaring '90s. Certainly folks in Wisconsin, Minnesota, and Michigan have lots of reason to have it in for Northwest.

I would imagine to an extent that Southwest, AirTran, and JetBlue are deep down not concerned about "gouging" their customers. However, they have found a business model that doesn't need such high prices to support their cost structure. Those airlines are businesses too, and realistically, they too could set fares even lower than what they are charging but they need to provide a suitable profit margin (if that could be possible currently).

Actually, they probably couldn't set fares lower. Southwest has said several times in recent months that their yields are still weak. A low-fare airline should make a decent profit for its shareholders too. But they have low cost structures and don't have a motive to gouge consumers and commuities to do it. They have good productivity and wage structures and lack a generation of management-union bloodshed baggage. They are eating the lunch of the Cartel-network carriers, who eminently deserve it.

Now, you are trying to tell us that when US emerges from Ch 11 with a suitable cost structure, they won't be competitive with the LCC's? I highly doubt most people will hold such a grudge, other than possibly you, toward them. If their fares are competitive with the WN's, AirTran's, and JetBlue's, of the world, with the power of the internet there is no reason why people won't choose US. LCC's are great, only if they can get you were you need to be, which only works on the most high density/frequency routes.

We'll see. It seems to me unlikely that any network carrer is going to get its costs below 9 cents per seat-mile, maybe 9.3 or 9.5, which is still going to be a good bit higher than the low-fares. They'll be able to come closer, for sure, but the low-fares will still be at a distinct advantage. The network carriers should be able to become more financially stable, though. And the communities they serve should recognize some of the benefit with lower fares. That remains to be seen, and I'm not optimistic. US Airways and the other network carriers have consistently screwed vulnerable markets wherever possible.

Keep in mind there is more to the aviation world that upstate New York and the Northeast.

As I said, I"m well aware this goes on elsewhere. However, like everyone here, I'm most familiar with my home market and can write most authoritatively about it. And as Dorothy says, there's no place like home. I make no apologies for pugnaciously defending Upstate NY, a region long abused by the Cartel-network carriers.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 33
Reply 9, posted (11 years 6 months 1 week 1 day 22 hours ago) and read 2051 times:

The network carriers should be able to become more financially stable, though. And the communities they serve should recognize some of the benefit with lower fares. That remains to be seen, and I'm not optimistic. US Airways and the other network carriers have consistently screwed vulnerable markets wherever possible.

To clarify: They'll do this where they can still get away with it, especially in smaller markets. As I said above, the days where US Airways could charge whatever it wanted are gone on a large number of its routes. Good riddance. Rochester, for instance, now has low-fare competition on twelve or thirteen of its largest twenty markets.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineIslandHopper From United States of America, joined Feb 2003, 327 posts, RR: 2
Reply 10, posted (11 years 6 months 1 week 1 day 21 hours ago) and read 2029 times:

>Keep in mind there is more to the aviation world that upstate New York and the Northeast.

Yeah, like Charlotte, NC. They've had a virtual monopoly there forever, and have successfully blocked any LCC from servicing CLT. USAir has lightened my wallet many times too...just try to get a decent fare into Charlotte! Glad my folks moved to ATL and that JetBlue flies there now.

Actually, I'm glad they're emerging. I have a lot of FF miles from the above mentioned wallet-emptying.  Smile


User currently offlineJmc1975 From Israel, joined Sep 2000, 3280 posts, RR: 15
Reply 11, posted (11 years 6 months 1 week 1 day 13 hours ago) and read 1996 times:

It looks like there might be a snag with the pilot pensions. Let's hope they don't throw the baby out with the bathwater!


.......
User currently offlineLymanm From Canada, joined Jan 2001, 1138 posts, RR: 1
Reply 12, posted (11 years 6 months 1 week 1 day 11 hours ago) and read 1975 times:

For those who anticipate they will emerge from Ch11, now would be a great time to purchase cheap US stock. At $0.11 per share, the announcement of emerging from bankruptcy could potentially double that (or more)! After all, at $0.11 per share, there is little room to go but up!


buhh bye
User currently offlineN628AU From United States of America, joined Oct 2000, 343 posts, RR: 0
Reply 13, posted (11 years 6 months 1 week 1 day 4 hours ago) and read 1931 times:

First of all, DO NOT UNDER ANY CIRCUMSTANCES PURCHASE EXISTING US STOCK. These shares will be terminated upon emergence and replaced with newly issued shares. Existing stock holders will be considered unsecured creditors and receive nothing.

As far as running all LCC's out of CLT, how do you explain ATA's presence?


User currently offlineScottb From United States of America, joined Jul 2000, 6766 posts, RR: 32
Reply 14, posted (11 years 6 months 1 week 1 day 4 hours ago) and read 1924 times:

Lymanm-

I'd strongly advise you to NOT purchase "cheap" US Airways stock; the bankruptcy restructuring plan includes the cancellation of ALL pre-bankruptcy US Airways shares. This means that all those $0.11 shares will be worth $0.00 whether US Airways successfully emerges or liquidates.

PSU.DTW.SCE-

You're right, most of the traditional network carriers DID stick it to the passengers in uncompetitive markets (I don't say "second-tier" because they've gouged hub market passengers while keeping fares more reasonable to places like BHM or ELP, for example). And Jim has been critical of that practice as well (the amusing Cosa Nostra references come to mind). But I think it's perfectly understandable that he'd enjoy seeing US Airways get its come-uppance; after all, the airline expected him and other people in upstate NY to suck it up for well over a decade. And as the saying goes, payback is a b____. I think it's even more infuriating for folks in upstate NY that USAir's purchase of Piedmont was aimed more at eliminating competition in the Northeast (remember PI's hub at SYR) than at providing enhanced service. And US Airways continued to finance a broken business model on the backs of travelers in the East. They were unable/unwilling to fix their cost structure, which meant withdrawal from markets where they simply could not compete and higher fares in the markets they still controlled.

It's not that the LCC's business model doesn't need high prices; it's that their business model is built around charging low to moderate prices. They actually sell (as a percentage) a lot more "full-fare" tickets than the network carriers, simply because the price of that "full-fare" ticket is so reasonable. If I want to fly from Dallas to Houston today, WN wants $91 for the airfare. If I want to fly from Boston to Philadelphia today, US wants $385 for the airfare. Even on a route where WN faces little or no competition (like FLL-JAX), they keep fares reasonable.

US Airways might be better able to compete if they manage to emerge from bankruptcy with a significantly lowered cost structure. But they're still going to be stuck with an inefficient route network and ASM costs above the LCC's, even if CASM drops to 9-9.5 cents.


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 33
Reply 15, posted (11 years 6 months 1 week 1 day 2 hours ago) and read 1905 times:

I think it's even more infuriating for folks in upstate NY that USAir's purchase of Piedmont was aimed more at eliminating competition in the Northeast (remember PI's hub at SYR) than at providing enhanced service. And US Airways continued to finance a broken business model on the backs of travelers in the East. They were unable/unwilling to fix their cost structure, which meant withdrawal from markets where they simply could not compete and higher fares in the markets they still controlled.

Preach it, brother. The 1987 US-PI merger was entirely about eliminating competition and hiking fares, which became even easier because People Express mismanaged itself to death at about the same time. Rochester had jet service out the yazoo before that merger--ten F-28s/ DC-9's/ 722's per day to LGA was common. Not to mention People's 5 732/722's per day to LGA, and whatever US, PI and Pan Am Express had to JFK. And the Syracuse hub was a great service to cities in the Northeast. Compact and easy to use. Under the economics of today, who knows if the SYR hub would work, but at that time it was elminated solely to funnel pax to PIT and PHL.

USAir CEO's Colodny and Schofield are, to make a harsh analogy, economic war criminals. They kept the post-merger fleet unrationalized; remained intimidated by unions; and gouged the Northeast to pay for it all. You bet we have it in for US Airways.

And today the Washington Post tells us that the pilot union talks are at an impasse. The unions and management *hardly* agree on numbers, contrary to what N628AU says. Management says the unions' counterproposal is 50 percent above allowable cost; Freundlich of the pilots' union says it's only 10-15 percent above cost allowable for emergence from bankruptcy. This opera is far from over.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
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