ouboy79
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US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 1:29 am

From US Aviation and another news source:

Spokesman David Castelveter said the carrier, which has cut its jet fleet by one-third, expects within 30 days to order 50 fifty-seat and 50 seventy-seat regional jets from Canada's Bombardier Inc.or Brazil's Empresa Brasileira de Aeronautica SA with options to buy another 100 of each. Deliveries should begin in the fall, US Airways said.


More than likely these will be going to Embraer through GECAS and the 50 70-seat Embraer 170/175s already on order. The first 3 are rumored to be delivered in September.

This would be 50 Firm and 100 Options on EMB-145/CRJ-200, and 50 firm and 100 options on the Embraer 170/175/CRJ-700. Not bad...100 firm, 200 options...there is your 300 hundred. Siegel stated on CNBC Monday evening at 4:55PM that US Airways will take delivery of 300 RJs over the next 3 to 4 years.

Someone is finally ready to play. Thank god.
 
FlyPNS1
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 2:03 am

Unfortunately, those RJ's are primarily going to be used to replace mainline flights and upgrade props. Only a tiny amount will go toward actually growing the airline. Even with these RJ deliveries, US is pulling out of RJ markets like BTR,MSN and AZO.

Siegel has already mentioned using force-majeure to shrink the mainline below the current level of 279.
 
DCA-ROCguy
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 4:15 am

Unfortunately, those RJ's are primarily going to be used to replace mainline flights and upgrade props. Only a tiny amount will go toward actually growing the airline. Even with these RJ deliveries, US is pulling out of RJ markets like BTR,MSN and AZO. Siegel has already mentioned using force-majeure to shrink the mainline below the current level of 279.

This analysis seems about right to me. If US does want to do something except blow through Bronner's money until they're on the edge again, they need to get rid of a lot of 125-150 seat mainline a/c and replace them with 70-100 seat a/c. Of course this order only deals with 50 and 70 seaters, but that's still closer to the original (profitable) USAir and Piedmont fleets of the early to mid '80s than are all these big 733's and 734's. And with LCC's in the picture, 125-150 seaters become even less viable for many of US's routes.

What's the status of the Embraer 195? That would probably be a good option for US.

The CASM is still kind of high relative to US's LCC competition, BTW. Reuters reports that it's 10.5 now and goes to 9.9 in 2004. Much better, but still not low enough for the long term. US says they don't expect a profit til 2005, so it's still not easy going. US probably needs to get to 9-9.5 in order to be viable alongside nice big LCC operations in the East.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
artsyman
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 4:40 am

How does this bankrupt company have the credit available to go and buy 100 + aircraft that cost millions each.

Their credit must be in the toilet.

Jeremy
 
ouboy79
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 6:19 am

I'll have to look at the latest number on the prop fleet...I think it is around 120-180 in the WO fleet. There will be some growth since aircraft will now be able to be redeployed on longer flights instead of shorter hops. Growth won't be huge...but things will finally be right sized.

Jim I agree o n the CASM needing to come down more. We'll get there slowly but surely...once we get these 32Xs and 737s off there short hops, that will improve. US Airways is actually expecting to make money next year, if this war doesn't take too long.

Jeremy - the beauty of chapter 11 reorganization, is that you are reorganize all your finances and come out stronger. US Airways is no longer operating in bankruptcy...so therefore, they aren't bankrupt.
 
artsyman
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 6:21 am

Jeremy - the beauty of chapter 11 reorganization, is that you are reorganize all your finances and come out stronger. US Airways is no longer operating in bankruptcy...so therefore, they aren't bankrupt.
**********************

I know that, but when you go into Chapt 11 and reorganise, you #$#% over more or less every lender, and these lenders are needed to borrow money for planes. US airways credit rating will be as low as credit ratings can possibly be at the moment
 
UN_B732
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 6:30 am

Aren't RJs purchased by Mesa or Chatuqua and operated by them for USAir?
-Transaero Boeing 737-200
What now?
 
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RayChuang
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 6:36 am

What's the status of the Embraer 195? That would probably be a good option for US.

I think the Embraer 190/195 series will be more designed as a replacement for small mainline jets. For example, NW's huge fleet of DC-9's will have to be replaced sooner or later, mostly due to stricter ICAO jet engine noise and exhaust emission rules coming into effect in 2006. The problems for NW are that pilot scope clauses will limit how much Mesaba Airlines (Northwest AirLink) can grow, the A319 is too big a plane for many of NW's smaller routes, and the A318 is too heavy a plane for its passenger load. I actually foresee NW looking at an 80-100 plane order for a true DC-9 replacement, and it will likely come down to between the 717-200 (if Boeing still has the production line available) and the Embraer 195.
 
SegmentKing
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 7:15 am

The ERJ 170s will be flown as mainline, from what I've heard... but folks at the manufacturer have said that the GECAS planes will have the US livery on them (makes sense, considering GECAS is part of the bailout).

The ERJ 190/195 will not be available until late 2004.

-nate
~ ~ ~ ~ pRoFeSsIoNaL hUrRiCaNe DoDgEr ~ ~ ~ ~
 
N628AU
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 9:46 am

Any Embraer 170/175 aircraft will be operated in mainline colors by Mid Atlantic Airways (MDA) as a division of mainline.

The addition of regional jets will lead to some growth, while very small initially, it is a longer term overall project.

First of all, replacing the props on a one for one basis will allow more trips to be flown by each aircraft daily as the RJ is, of course, a faster aircraft. This will allow the larger aircraft to get off some shorter hops such as CLT-GSO, and fly longer legs, including more west of the Mississippi and more Carribean flying. The longer legs flown by the 120 seat class aircraft will further go towards lowering the company's CASM. Also, assuming UA survives, more passengers will be flying with feed going to and from UA hubs, bolstering flights in US territories with UA passengers, and also requiring more service to UA hubs.

Finally, as for the credit rating, US is kind of in the catbird seat. First off, they are backed by RSA, which in itself is worth $28 billion, so they are really pretty strong financially. Bronner at RSA has said he will make sure US survives the war. As for manufacturers and lessors, everyone is hammering them right now. UA and AC are also bankrupt, AA has just announced deferring lease and debt payments (gee, did UA and US not do that before filing as well?), and orders have been canceled en masse in the last 18 months. They have to get orders from somewhere, and right now, US is probably the only one looking to buy.
 
MxCtrlr
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 10:07 am

Another point to remember with regards to bankruptcy, now that they are out of bankruptcy, they have restructured their debt to a more manageable level and cannot file bankruptcy (Chapter 11) again for 7 years. That makes them a very good credit risk! Strange but true.

MxCtrlr  Smile/happy/getting dizzy
Freight Dogs Anonymous - O.O.T.S.K.  Smokin cool
DAMN! This SUCKS! I just had to go to the next higher age bracket in my profile! :-(
 
artsyman
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RE: US Airways Expects RJ Order In 30 Days

Wed Apr 02, 2003 10:13 am

That makes them a very good credit risk! Strange but true
***********************************

Huh, it means that if there is any significant downturn at all, they immediately liquidate, avoiding chapt 11.
 
srbmod
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 5:10 am

I look to see US Airways ordering Embraer a/c over Bombardier. The 170/175/190/195 family is aimed squarely at mainline operations, not feeder operations. Bombardier does offer a/c in the same capacity as the new Embraer family, but has a more cramped cabin than the Embraer 170/175/190/195. The Embraer 170/175/190/195 family offers a wider cabin, and better seat pitch than the CRJ-700/900 a/c. Embraer is looking for an order from a U.S. airline, and will probably try to sweeten the pot as best they can. The order will definitely be split between the EMB-135/145s and the Embraer 175/195, with the smaller a/c being deployed to US Airways Express carriers, and 175/195 being used in mainline service. I think that once US Airways makes this order, some other U.S. carriers may seriously look at the Embraer 170/175/190/195 for their fleets. Airbus and Boeing will never seriously enter the sub-100 seat market, and this bodes well for Embraer, because Bombardier's largest a/c on the market is a 90-seater, and their 100+ seat a/c family concept, the BRJ-X, has been sitting on the shelf for nearly three years, with no indication of it ever becoming more than a paper a/c.
 
ouboy79
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 5:24 am

Jeremy...you are missing the point. What happens when you file bankruptcy? The credit card companies send you TONS of pre-approved cards. You can't file bankruptcy again for a few years to eliminate your debt...so they are guaranteed at least some cash.

The RJ deal is special considering GECAS was also a DIP financier (late entrant) and now owns 5% of the reorganized US Airways.
 
artsyman
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 5:53 am

Jeremy...you are missing the point. What happens when you file bankruptcy? The credit card companies send you TONS of pre-approved cards. You can't file bankruptcy again for a few years to eliminate your debt...so they are guaranteed at least some cash.
****************************

I have been a limited company for 8 years, I have never seen it happen your way ever. But will assume that you have. Once you have filed bankruptcy, your credit is mud

Jeremy
 
ouboy79
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 8:00 am

Personally I never filed bankruptcy, nor has my company. However, I have several contacts that have and what I explained is exactly what happened. Once your file bankruptcy...you have no credit. Nothing bad...nothing good; you are free to start building it up again. However, you can't file for bankruptcy for another 7 years and therefore you are not a credit risk for any company. You HAVE to pay them eventually...or they'll start taking everything you own to make up for it.
 
AA717driver
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 8:27 am

Yeah, they offer you lots of credit cards--at 21% interest! When TWA went to acquire aircraft after the filing in '96, there was no shortage of opportunities. We helped out McD-D and cleaned up the last of their MD80 line. Boeing leased us 757's and ILFC leased us some 757's and 767-300's. Great, right?

The problem was that the leases were about 30% higher than market. Why? Because we had recently emerged from Ch. 11.

Bronner may well see U through the war. But one thing is certain, he will get his money back--plus interest AND at a better rate than he could get in a CD Big grin.

Why do you think TWA turned to Carl Icahn in '96 after ridding themselves of him 4 years earlier? Did he offer a better rate on loans than Citigroup or Chase? That move killed TWA. Icahn's tickets drove our revenue through the toilet and TWA couldn't survive.


But WDIK? Maybe it will be different now than it was with the THREE bankruptcies I've experienced. And, maybe it will be different than the bankruptcy advisors who represented ALPA and APA said it would be for UA, U and AA. Yeah, you're probably right.TC
FL450, M.85
 
artsyman
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 8:27 am

Once your file bankruptcy...you have no credit. Nothing bad...nothing good; you are free to start building it up again.
****************************

This is simply not even close to the truth, I wish it were, as do most companies as they would all just file at will whenever they were behind. The reason why companies try to avoid it is that it buries your credit for seven years.

 
AA717driver
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RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 4:46 pm

Artsyman: Is there a time limit for corporation's credit to be trashed? I kind of thought it was trashed until you could prove to the financial community that you were solvent.TC
FL450, M.85
 
artsyman
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Joined: Wed Feb 28, 2001 12:35 pm

RE: US Airways Expects RJ Order In 30 Days

Thu Apr 03, 2003 7:17 pm

I am not positive for the US, but if you go personally bankrupt in the UK, your credit is mud for 7 years. During this time, you are not allowed to be a director of a company never mind numerous other setbacks.

Bankruptcy is no cakewalk...
 
N628AU
Posts: 355
Joined: Wed Oct 18, 2000 4:20 am

RE: US Airways Expects RJ Order In 30 Days

Fri Apr 04, 2003 2:10 am

Artysman...

There are two problems with what you are saying. UK and US laws are different, and you are comparing a personal bankruptcy vs a corporate restructuring.
 
artsyman
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Joined: Wed Feb 28, 2001 12:35 pm

RE: US Airways Expects RJ Order In 30 Days

Fri Apr 04, 2003 3:45 am

There are two problems with what you are saying. UK and US laws are different, and you are comparing a personal bankruptcy vs a corporate restructuring.
**********************

I cant believe we are having this discussion. Think about what you are saying, you are suggesting that Bankcruptcy is a walk in the park. If it was this great mecca of all things, then why is there such a stigma over filing it, why is it that everyone tries to avoid it. Other than Chapt 7, it is the biggest failure that you can have as a company.

Think about this... You are a bank, and you lend US air 100 million, US air files chapt 11, defaults on the payments, and in a court restructure process, US airways says sorry to the bank, but we just cant pay you, or, sorry we can only pay 38 cents a week. Do you then offer loads of great new deals to US air after they have screwed you out of 100 million, do you offer them loads of prefered rate loans ? credit cards ?, do you hand a company that has proven to you that they will not pay you when the cards are down, another big chance to do it all over again ?

Whatever loans US gets now, they will be paying way ..way.. way over the odds, unless they have personal gaurantees from Bronner or from other sources.

And rather than take it from me, look up anything you want on Bankruptcy, you will see it is no picnic.
 
ScottB
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RE: US Airways Expects RJ Order In 30 Days

Fri Apr 04, 2003 5:32 am

Actually, if you want further confirmation that filing bankruptcy hasn't magically fixed US Airways' credit rating, look no further than the government loan guarantees the company is using to improve its credit. If bankruptcy were to (hypothetically) make US Airways a good credit risk, they'd have no need to give the U.S. government 10% of their equity in exchange for $900 million in loan guarantees (not to mention that they also pay a fee for the guarantees). Also note that TWA filed for Chapter 11 reorganization in both 1992 and 1995, so there's no restriction on filing for bankruptcy again within the next seven years. In fact, some analysts have speculated that US Airways may be forced to make a return trip to the bankruptcy courts given weak traffic due to the war and a shaky economy.

US Airways gave roughly 5% of its post-reorganization equity to GECAS, which will be providing the financing/leases for the RJ's US Airways intends to add to its fleet. I'm pretty sure that most of the initial "orders" will come from GECAS' inventory.

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