AirT85
Topic Author
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USAirways Update

Tue Jul 09, 2002 11:35 am

Not sure how much of this has made its way one here.
From FOX13 news at 10
No more wondering if. USAirways has announced it will file for bankruptcy protection if it cannot get 1 billion from the government in aid. It has stated it has reached a tentative agreement with pilots for a similair amount in paycuts. I guess this is all in the government's hands.
How do you think this will turn out? I dont think the government has lots of room to wiggle here. Either way, bail them out or not, they will get ridiculed. USAirways is just too big to let die, but they are bleeding like crazy!
Tony
Why would God make us all so different, if He wanted us to be the same?
 
sllevin
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RE: USAirways Update

Tue Jul 09, 2002 11:42 am

Tony,

While I think it was very important that, in the direct moments following 9/11, that the US government stood for and supported all the major airlines, I'm not sure that now, as the true crisis has passed, if there shouldn't be some consolidation.

While large, one time losses can be attributed to 9/11, and that, as a country, we should help against, we should not lose sight of the fact that US Airways issues are more endemic. Right now, traffic is merely in a downturn, a slow time, and US Airways' weakness is showing.

In short, unless US Airways has a business plan showing how it can survive, I don't think the government should spend taxpayer money on it. To paraphrase the Bible, it is not a blessing to give money, it is a blessing to loan money so someone can be successful.

Steve
 
762er
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RE: USAirways Update

Tue Jul 09, 2002 11:47 am

This really isn't news. It has been expected and forecasted by many for several months now. If they do not get the federal loans, bankruptcy is the only option. It is all in the hands of the government.
 
sccutler
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RE: USAirways Update

Tue Jul 09, 2002 11:49 am

Chapter 11 is not the death knell for the airline, and an appropriate pre-packaged 11 might be just what US needs.

Let's wait to see what the unions do; and it's all for nought if the IAM do as they typically do and drag the whole ship down.

I'm pulling for US, have always had a soft spot for 'em. But they'll need major-league concessions from labor, a major capital injection and a rock-solid traffic-feeding alliance, to survive.
...three miles from BRONS, clear for the ILS one five approach...
 
AirT85
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RE: USAirways Update

Tue Jul 09, 2002 11:53 am

I know all about the funding.
If the government can stand here and shell out cash to Amtrak who sees less people than USAirways, i dont see how they can say they can't give the help to USAirways. Besides that point, i think bankruptcy could go one of two ways.
1) they turn out like Continental. Who knows, it could happen with the right people and the right plan.
2)The filing pushes the likes of Southwest and AirTran all over their markets that once were quite protected, like the hubs, and Florida. A bankruptcy often shakes consumer confidence and some less informed travellers could view it as a sign to switch airlines.
I do hope they make it but the odds have been against them for way too long.
Why would God make us all so different, if He wanted us to be the same?
 
flashmeister
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RE: USAirways Update

Tue Jul 09, 2002 11:57 am

If the government can stand here and shell out cash to Amtrak who sees less people than USAirways, i dont see how they can say they can't give the help to USAirways.

Amtrak and USAirways are both important carriers, but in different ways. Amtrak -- especially along the Northeast Corridor -- is a vital link for not-small towns to larger cities. As soon as USAirways starts flying Trenton-LaGuardia and New Brunswick-Philadelphia, then I'll buy that they're in the same class.

Also, Amtrak controls the trackage along the NEC, meaning that if Amtrak ceased operations, NJ Transit trains from Philly/30th St to NYC/Penn Stn would cease, along with lots of SEPTA and Metro-North routes. Now, Amtrak affects more people.
 
AirT85
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RE: USAirways Update

Tue Jul 09, 2002 12:00 pm

USairways and its express carriers also operate as the only carrier in the cities they serve, many without amtrak service. smalltowns throughout the northeast and pennsylvania. Im not saying let either die, but you cant fund one and not the other. they may not be the same but they are relied on in ways that deem them both necessities.
Tony
Why would God make us all so different, if He wanted us to be the same?
 
flashmeister
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RE: USAirways Update

Tue Jul 09, 2002 12:07 pm

you cant fund one and not the other

I'm afraid that you can.

Amtrak, as flawed as it is, has been deemed a vital intercity link and just about everyone is going to fight to keep it running until a viable reform package can be agreed upon.

Almost everyone agrees that Amtrak's long distance services or even their mid-length services (DC-Chicago, Philly-Pitt, etc.) are in danger and probably will be radically reformed if not dropped. But, especially in the Northeast Corridor and post-9/11, Amtrak and its Acela service has proven to be a viable travel route, and has grown to be an important one. Add the secondary carriers that depend on Amtrak and you have a large population of travelers going from major metro areas that could cripple travel in the corridors and on intra-city transit routes. That's a little more important, frankly, than puddlejumper service to small eastern towns.

I'm not aware of any Northeastern cities (or any cities at all) that USExpress serves that are EAS markets. I don't follow EAS well at all, admittedly, so please point out if I'm wrong.

So, you have one mode of travel -- Amtrak -- (and its ramifications of shutting down) that the government and most parties involved deem critical. You have another -- USAirways -- that, while important, could dissolve, and between replacement service from other carriers and existing Amtrak services, would not have as wide of an impact.
 
AirT85
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RE: USAirways Update

Tue Jul 09, 2002 12:11 pm

I highly doubt any major airline would want the PA markets and other small cities like them. they may not be EAS but they are widely used and express is quite profitable, with USAirways. Without them though it would be disastrous. The regionals wouldnt be able to make it work with anyone who didnt buy the entire PIT or PHL hub operation...
Tony
Why would God make us all so different, if He wanted us to be the same?
 
AirT85
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RE: USAirways Update

Tue Jul 09, 2002 12:14 pm

Im not saying one is more important than the other. Im saying two sets of missions are accomplished by both and they both are important to the peopel involved. USairways also employes more people though. If they did downsize, every county around Pittsburgh would practically go bankrupt with them thats how important they are to the cities they serve.
Tony
Why would God make us all so different, if He wanted us to be the same?
 
flashmeister
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RE: USAirways Update

Tue Jul 09, 2002 12:24 pm

USairways also employes more people though. If they did downsize, every county around Pittsburgh would practically go bankrupt with them thats how important they are to the cities they serve.

I hardly think that this is a reason to keep an unviable business afloat. Enron and Worldcom both employ lots and lots of people and have plenty of cities by the balls, and neither deserved any sort of prop for the good of the people. Look, losing your job sucks, but as a taxpayer, I'm sure as hell not going to be in favor of supporting an airline that simply does not work. It never has and it most likely never will.

Airlines are a business at their root, and they are born, they live, and they die like any other business. They should be treated as such.
 
747firstclass
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RE: USAirways Update

Tue Jul 09, 2002 12:28 pm

I don't think any politician in an election year, even though George W is not running this year, will stand by and watch the govt. Deny the loan to US. Once they deny the loan, no one can say for sure how things will turn out. Jobs could be lost etc. etc. etc. In other words it will prove costly come election time. I do however off a suggestion that has been much overlooked.
If another US carrier bought even parts of US, competition would dwindle in the US. I think now is the time to raise the limits that foreign carriers can own in US carriers from the 25% to 51%. This would bring new money into the US airline industry, preserve jobs and preserve competition. It would not surprise me in the least, if this possibility gets some serious consideration. More will be revealed.....
 
762er
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RE: USAirways Update

Tue Jul 09, 2002 12:58 pm

747firstclass: I totally agree with you in allowing foreign ownership. I remeber British Airways had that sort of a deal with US Airways for a while in the early/mid 90's, and that it worked well in the beginning until politics starting getting involved-then it got really ugly. The only reason I do have some sympathy for the airlines getting government help compared to other companies is because airlines are regulated by the government. Not in the sense of old regulation where routes were determined, but in the sense that the airlines are at the hand of the FAA. For several days all air traffic throughout the country was shut down because the FAA simply mandated it. Other companies (Enron, Worldcom) do not have to deal with such hurdles. Since in the airline industry, government can cause problems, they should be held accountable for helping them when it's their decisions that contribute to the airlines' problems. Now, I'm not suggesting that they give them everything they want, just that they should give them some degree of help. To what degree is for them to determine.
 
flashmeister
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RE: USAirways Update

Tue Jul 09, 2002 1:08 pm

So, 762er, if a governmental regulatory body restricts a business from maximizing their profits by imposing certain regulations, that then entitles them to compensation?

Following that logic, Worldcom would get compensation since they're restricted from providing long-distance services in certain markets, and the FCC regulates what sort of traffic they can carry at certain times.

Also, Wells Fargo should get a handout since the Treasury and the FDIC require them to go through all of these hurdles that cost them money in the interest of satisfying regulators.

While we're at it, Ford and GM should get a gov't check since the government is mandating crash standards and emissions regulations.

I don't think so... no one else would get this, why would airlines?

As for the FAA-mandated shutdown, first of all, that was an exceptional, extraordinary event. Secondly, there is no way that the problems of US today are directly related to the shutdown, especially considering that US' finances were screwed pre-9/11.

This is an example of a carrier that, in its current form, simply should not be in business. They have no viable business model. To support US would be to counteract natural market pressures that reward those who do business smartly and punish those who are foolish in managing their affairs.
 
ILUV767
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RE: USAirways Update

Tue Jul 09, 2002 1:57 pm

US Airways was already hurting way before 9/11. Giving them government loans is just giving them more money to loose, which also since they'd have to pay it back, will hurt them in the long run. US Airways needs to focus on reducing their costs from close to 19 cents per rev seat mile, to around 10 cents which is where the rest of the inudsty is at (not counting low fare carriers, and CO).

United, on the other hand has cut costs and has their costs well within the industry average. Sadly, they are burdened by other expences such as higher insurance prices after the 9/11 attacks which is where the loans would help out. The loans would also help United to grow back in key markets where they could then pay back the loans. US Airways on the other hand is loosing more (percentage wise) than United, and would probably use the loans to help pay for their 19 cent costs, as apposed to lowering the costs of the airline. They should have been able to do that long ago.

I L U V 7 6 7

 
AirT85
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RE: USAirways Update

Tue Jul 09, 2002 8:02 pm

USAirways is cutting its costs. Its been moving for an all Airbus fleet which reduces costs in maintenance, training and operations, its been getting wage cuts, and its been looking at smaller capacity airliners. But without the loan guarentees these plans it has worked so hard to come up with and initiate will be worth nothing because they might not make it to see them put into place.
Bankruptcy may be a great option for them, it was for Continental. But I think the government should recognize the fact USAirways is working hard ats saving itself and approve the loan.
Tony
Why would God make us all so different, if He wanted us to be the same?
 
762er
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RE: USAirways Update

Tue Jul 09, 2002 8:37 pm

Flashmeister: Your bring up valid points against my argument. I'm not familiar with federal regulation in other businessness so it is not my place to say when government should and should not help. I just always assumed (and perhaps wrongly assumed) that the FAA and DOT are more active than other government agencies because of the issue of safety. I'm a Keynsian economist as much as it sounds like you are, but I am also a US Airways employee. I am simply looking for hope. I would be arguing the same things you are arguing if I was in your position.
 
brons2
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RE: USAirways Update

Wed Jul 10, 2002 1:01 am

You all have got one thing wrong. These are not government loans that US Airways and other airlines have applied for. They are merely Loan Guarantees. They are to be sourced through private investors. What the government is doing is guaranteeing the loan; they're not making the loan. The government incurs very little risk, if in fact they think the airline has a good plan for a return to profitability. Also, airline enrollment in the loan guarantee program allows the government to take up to a 40% stake in the airline itself, obviously giving incentive to pay back the loan asap.
Firings, if well done, are good for employee morale.
 
deltairlines
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RE: USAirways Update

Wed Jul 10, 2002 1:24 am

The only EAS cities here in the Northeast I can think of would be Augusta, Presque Isle, and Rockland, all in Maine.

You can't really compare Amtrak to US Airways. Each has their own niches. For example, in the midwest, there are several small towns that are no where no the cities that the Cartel's regional partners serve (a good 2-3 hour drive for them) that depend on Amtrak to get around convinently. In the Northeast, Amtrak is responsible for all the railroad operations. Commuters in Boston, New York, Philadelphia, and Washington all depend on Amtrak services to get them into the city. Also, Amtrak has a 50% market share on BOS-NYC-WAS, while Delta and U COMBINED have the other half.

However, there are things U has that Amtrak can't compete with. Want to go MHT-LAX? Here is what would happen:

U: Take PHL, PIT, or CLT flight, connect to LAX flight. Total time: 6-8 hours
Amtrak: Drive to Boston's South Station or Vermont's White River Junction (an hour either direction), and take a few trains (most likely through CHI from BOS, through Springfield, MA and CHI from WRJ) and go to Los Angeles. Total time: 3-4 days. Price: about the same. Which would people pick here? U or Amtrak. I'd certainly take U, as would most people (no train enthusiasts).

As for U to get back to profitability, there are several things that should be done besides getting concessions, which is inevitable for survival. They should really cut some routes, mainline and express, to achieve profitability. Close the PIT hub too. PHL and PIT are too close together, and PHL has a good yield. That would save money.

Jeff
 
AirT85
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RE: USAirways Update

Wed Jul 10, 2002 1:28 am

PIT has the 6th highest airfares in the nation i think USAirways makes a lot of money in Pittsburgh. In PHL they are battling with AirTran and SW right down the road in BWI. No real low-fare competition in Pittsburgh now that AirTran is going to just ATL flights.
Why would God make us all so different, if He wanted us to be the same?
 
727LOVER
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RE: USAirways Update

Wed Jul 10, 2002 1:33 am

"Battling Aitran at PHL?" PUUUUULEEEEZE!!!!!!! Airtran has a handful of flights out of PHL vs over 300 from US & US Ex.
I feel woozy....what did you put in that Pudding Pop?
 
AirT85
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RE: USAirways Update

Wed Jul 10, 2002 1:37 am

To florida which happens to be ahuge market for USAirways and im pretty sure its hurting them to have AirTran doing well there. Southwest down the road doesn't help them either. Anyways, PIT makes USairways quite a but of money.
Tony
Why would God make us all so different, if He wanted us to be the same?

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