Airline Industry Focuses On Us Airways

[funguy2]

Well, here is an article which suggests Mesa is not ready to commit financing to a merged HP-US:

Mesa Air exec still weighing merger plans - Arizona Republic

A couple of quotes:

"I have to be convinced more than anything else that it's a workable deal," Ornstein said.

The worst-case scenario would be for Mesa to invest in the deal, keeping its planes where they are, only to have the merged operation quickly run into trouble, he said.

"Six months later, we're right back in the thick of it, less a couple hundred million dollars," he said. "That would be the last thing we'd want to have happen."

Ornstein said the company is evaluating whether an America West-US Airways deal can be successful long term and hasn't reached a conclusion.

"We'd like to work something out with US Airways and America West that makes sense, but we're not going to do something that we don't think is in our shareholders' long-term interests," Ornstein said.

Sounds like Mesa's involvement is 50/50 at best, from this article.

 

[FWAAA]

Mesa's cash balance is impressive for an airline its size - $256 million on 3/31 - but that's not a huge sum to an airline as big as U, which could blow thru it (along with its other recent financing) in a few short months if fuel stays expensive.

 

[ClueByFour]

Meanwhile, people with knowledge of the situation indicated that RSA has shopped a number of prestigious law firms in recent days for a written opinion that such additional investment would not contravene these fiduciary restrictions provided that US Airways’ situation is materially different, another words, that their risk profile of the investment is reduced. There have been indications
that RSA has such an opinion in hand, contingent on the America West deal being successfully negotiated.

[post="264800"][/post]​

Whichever law firm came up with that piece of crack-smoking literature should be prepared to have their pants sued off in a class-action move by the retirees in the state of Alabama.

Bronner has tossed what, $300 million away on US (thus far). If he dumps any more in (and there is absolutely no concrete evidence to suggest that there is less risk now than 2.5 years ago), he's making an extremely ill-guided move with other people's retirement funds.

 

[FWAAA]

Whichever law firm came up with that piece of crack-smoking literature should be prepared to have their pants sued off in a class-action move by the retirees in the state of Alabama.

Bronner has tossed what, $300 million away on US (thus far). If he dumps any more in (and there is absolutely no concrete evidence to suggest that there is less risk now than 2.5 years ago), he's making an extremely ill-guided move with other people's retirement funds.

[post="265050"][/post]​

Agree completely.

If it is even true that RSA is contemplating throwing good money after bad, this quote is particularly telling:

. . . shopped a number of prestigious law firmsin recent days for a written opinion that such additional investment would not contravene these fiduciary restrictions . . .

Uhh, if you have to ask a number of prestigious firms before one of them will opine to such lunacy, you'd better see if that firm will post a bond. Don't want to find yourself unable to collect from some judgment-proof lawyers. 😀

 

[USA320Pilot]

Last year RSA increased the funds market value by about $1 billion, if my memory serves me correctly. I doubt RSA's leadership has much to worry about.

Meanwhile, it is my understanding Bruce Lakefield is in New York City today discussing the company's POR and corporate transaction issues with key creditor's and IB's.

Regards,

USA320Pilot

 

[FWAAA]

Last year RSA increased the funds market value by about $1 billion, if my memory serves me correctly. I doubt RSA's leadership has much to worry about.

[post="265066"][/post]​

That's not the point, pilot. Anyway, for the 2004 fiscal year, here's the results:

The net increase in fair value of investments for fiscal year 2004 was $1.5 billion compared to a net increase in fair value of investments in fiscal year 2003 of $2.1 billion, which accounted for most of the negative variance in investment income.

http://www.rsa.state.al.us/Publications%20...Section2004.pdf

The point is that mismanagement of a pension fund is serious business, and if Bronner really is dumb enough to lend any more money to U, he deserves to be surcharged personally. But your posts say he has found some even dumber lawyers he hopes will insure his non-prudent decision (if he really is considering throwing good money after bad).

 

[SpinDoc]

The point is that mismanagement of a pension fund is serious business, and if Bronner really is dumb enough to lend any more money to U, he deserves to be surcharged personally.

SpinDoc replies:

Just remember, Doc Boners first interest in helping
US emerge from BK1 was covering his positions on
EETC leases on aircraft. He was gambling that his
investment would keep the cash flowing in for US
aircraft long enough to make a profit.

Moving forward to BK2, GE Capital is sort of doing
the same thing. While they haven't given US
equity investment money, they have rearranged
leases on several occasions to keep the cash
coming in.

Has anyone seen a cost/benefit analysis on the
RSA investment? While they may have lost their
initial investment in US, they could have made it
back, plus some with continuing lease payments
on aircraft. So, maybe the public is only seeing the
loss, and not the other side of the deal. Also, has
the marketing/promotion of AL State Tourism
helped to lessen the initial loss? Doc Boner is
a smart man and I can't see him forgetting to
cover all of the bases here.

Point is, if the overall benefit to RSA was larger
than the loss of the investment, then he was
smart and will probably throw more money at
US to emerge and merge with AWA. If he does
not, then TPG or another investor will probably
buy out RSA for a small profit.

 

[ClueByFour]

Last year RSA increased the funds market value by about $1 billion, if my memory serves me correctly. I doubt RSA's leadership has much to worry about.

[post="265066"][/post]​

Then why (according to you) were they chasing a "prudent man" letter from a "prestigious law firm?" Moreover, why do they have to shop around to find somebody dumb enough to pen one?

If he's not worried, why is he looking for CYA coverage?

Funny part of this is the only way that Bronner gets to continue playing airline with HP is if he dumps in enough more money to buy off Bonderman. If that's the case, Bonderman will be quite literally laughing all the way to the bank. At Bronner's expense. For the second time. And then, in the ultimate belly-buster, he buys the entire thing back in the inaugural bankruptcy for US West Airways for the original sum of $200 million that he stopped on in the first bidding war.

Alabubba playing airline at 11.

 

[USA320Pilot]

Clue:

Clue asked: "If he's not worried, why is he looking for CYA coverage?"

USA320Pilot answers: I thought you would understand this, then again I'm not surpirsed you do not. Because he is required to. US Airways is talking to a number of potential investors and it will be interesting to see who are the final players.

Best regards,

USA320Pilot

 

[robbedagain]

Clue:

Clue asked: "If he's not worried, why is he looking for CYA coverage?"

USA320Pilot answers: I thought you would understand this, then again I'm not surpirsed you do not. Because he is required to. US Airways is talking to a number of potential investors and it will be interesting to see who are the final players.

Best regards,

USA320Pilot

[post="265222"][/post]​

what do you make of the air canada coming as a potential player of sorts? and how would it affect the outcome of a potential merger?

 

[whatkindoffreshhell]

Certainly the disappearance of US & UA will cause Southwest airlines to immediately raise their fares and price-gouge the consumer.

Riiiiiiiiiiiiiight.....