I just returned from 27 hour four day trip and last night, for the first in about two years, I did not turn on my computer and went out with our crew for a holiday dinner. In addition, later today and Saturday I'm flying a two day trip, which will further limit my on-line time.
During the past 72 hours much has occurred at US Airways, it will take a little time to digest, however, I believe Dave Siegel is very bright and two steps ahead of labor.
In my opinion, management has an agenda and an ulterior motive. Siegelâ€™s proposed cuts, announced immediately after TPA hangar and MCO reservation facility closures, which hurt the IAM and CWA, are too drastic and will likely not be approved by probably every union. Then on the surface it would appear the company is on a one-way path to a fragmentation/liquidation, but this doesnâ€™t make sense considering the company's restructuring success.
The company has tirelessly worked to obtain with $1.3 billion in cuts, $425 to $475 million in lessors cuts, worked with GECAS agreeing to further restructure debt in 1 to 3 weeks, RJ deals for 88 affiliate carrier RJs at Midway and Mesa, reportedly has a deal with Canadair and Embraer for 200 RJ deliveries and 300 options, MDA, the domestic alliance, the accelerated plan to join the Star alliance, and the loan guarantee.
With all this progress does it make sense Siegel wants or will liquidate the airline?
According to the CWA Siegel told the labor leaders the company wants a labor decision by Monday, December 2 and the board will address US Airways' future on Tuesday, December 3.
In my opinion, some or all of the unions will object to managementâ€™s proposal. Then at Tuesdayâ€™s board meeting, the board may notify the PBGC that it is providing a 60-day notice to terminate the defined benefit pension plan for ALPA, AFA, IAM, and the TWU. This move would undoubtedly qualify US Airways for the loan guarantee, the company would save over $500 million per year or $3.1 billion in pension contributions from 2003 through 2009, and provide over $1.8 billion in annual cuts during the loan guarantee period. Furthermore, letâ€™s not forget the company filed a motion with the bankruptcy court last Friday asking for a one-month extension to file its final POR and confirmation statement. 60 days from the December 3 is January 31. Coincidental or part of the plan?
Meanwhile, â€œlabor friendlyâ€ Dave then would keep good on his promise to not seek further cuts through the bankruptcy court because the pension termination would be handled by the PBGC. Furthermore, with the S.1113 letter and the protocol required to undue labor contracts in bankruptcy court, it would not be easy for Siegel to go down this path and I understand there are 7 or 8 steps that must be met.
At this point, the unions will have three options: negotiate between December 3 and December 9 for productivity changes, have your pension termianted, or a hybrid where there are a combination of pension/productivity cuts.
Regardless, the cuts will come one way or another. Either management obtains productivity cuts or will legally terminate the pensions with the PBGC. These cuts are required to obtain the loan guarantee, final credit facility payment, and equity investment, required to emerge from bankruptcy and there is nothing the unions can do to stop these actions.