I doubt a "prepackaged" bankruptcy could be managed. There aren't nearly enough assets to satisfy creditor claims. The balance sheet has about $3 billion of intangible (might as well say worthless) assets and a billion more of overvalued equipment, but the $8 billion of on-books liabilities are all real.
Corporate Options
- Thread starter USA320Pilot
- Start date
Since this is a capitalist system, there will be a winner.
Since our market place is driven by supply and demand, those companies who can't afford to procure supply must, by market rules, fail. The suppliers, in this case labor, have a minimum price for their commodity in order for them to remain suppliers. If a company is unwilling to pay the price for labor, labor must be willing to withdrawal their supply (and we are) or market forces will force that supply to be provided for free. No supplier can survive by offering their product for less than their cost (a lesson US Airways refuses to learn), and we won't.
If US Airways is unwilling to pay the market prices for electricity, fuel, or labor, then it is fitting and proper for them to fail.
Skilled, degreed, and licensed labor is still a marketable commodity, and no amount of threatening, cajoling, and propagandizing will delude labor into thinking it's not.
I'm sure the company will blame everybody and anybody for their financial incompetence. But, no one will pay much attention to them, because they will have proven themselves to be failures.
Winglet, the body's not even cold yet and you wonder why the whole system hasn't been rebuilt from the ground up in two days? Come on, that's not realistic even for a company with the size and complexity of B6, let alone one the size and complexity of US.
Why not stop funneling mainline profits off to pay for another airline (MDA)? That sounds like a better option to me!
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
mweiss,
" Winglet, the body's not even cold yet and you wonder why the whole system hasn't been rebuilt from the ground up in two days?"
I think Winglet meant the 1 year since emerging from bankruptcy, not the short time that Lakefield has been CEO.
Jim
" Winglet, the body's not even cold yet and you wonder why the whole system hasn't been rebuilt from the ground up in two days?"
I think Winglet meant the 1 year since emerging from bankruptcy, not the short time that Lakefield has been CEO.
Jim
USA320Pilot said:
There are a few key points here which ought to be expounded upon. While management (probably not Bronner directly) could indeed unilaterally reject the union contracts in bankruptcy and replace them with new ones, the unions would also be entitled to engage in self-help at this point -- and without the pilots or the mechanics, the airline simply could not operate. While I believe the pilots would cave, the Airbus outsourcing issue probably guarantees that the mechanics would walk.
In my humble opinion, disclosure of the "Going Forward" Plan can't come soon enough to get the unions back to the table. In fact, it's also my opinion that lack of disclosure of the plan is the prime reason why most of the labor groups are unwilling to come to the table with management. I can understand why labor groups would want management to explain how it's going to revamp the business beyond simply cutting pay yet again.
Does it look someting like this?
Most of you probably know where I borrowed that from...
As far as I can tell from the opinions expressed around here, "Treat each other with dignity and respect" seems to not be a huge priority for management in the nearly 13 months since exiting bankruptcy.
So is this a "new" going forward plan, or it it similar to the other going forward plan, you know, the one that was hinted at but never materialized? Secondly, why has the two cent CASM improvement program not been initiated?
So many question abound, so few answers to be had!
So many question abound, so few answers to be had!
You just can't go into bankruptcy and abrogate a contract, that was changed after Lorenzo killed the workers at CO.
Levine started her presentation with an overview of bankruptcy. The main goal of bankruptcy is to relieve a debtor of debts, thereby providing an opportunity for a fresh start. Bankruptcy also benefits creditors by providing a forum for an orderly liquidation of a debtor’s estate or a judicially scrutinized plan for full or partial repayment of creditor, and protecting unsecured creditors from preferential or fraudulent transfers of the debtor’s property and requiring adequate protection of secured creditor’s collateral.
There are two types of filling, Chapter 7, Liquidation and Chapter 11, Reorganization.
Levine continued, explaining the two types, but described Chapter 11 filings in depth. She explained the process and enlightened the attendees on all aspects of a chapter 11 filing. One thing that has stuck out in the US Airways members was a term called Fraudulent Conveyance.
Fraudulent Conveyance: A transfer of the debtor’s property is fraudulent if, made with the actual intent to hinder, delay, or defraud a creditor. (Note that sometimes the debtor’s actual intent maybe inferred circumstantially by certain “badges of fraud.†Alternatively, a debtor receives less than the reasonably equivalent value and was insolvent at the time of the transfer or became insolvent because of it or had “unreasonably small capital†remaining after the transfer for its business operations or intends to incur debts that it will be unable to repay as they mature. Many of the US Airways members asked hard-hitting questions about this as US Airways sold off airplanes and parts for less then fair market value not too long ago.
Our United attendees asked assertive questions in regards to the ESOP stock, numerous assets that United owns, and the ramifications on how they would be affected if United decided to file.
Levine also went over all the procedures and steps in the bankruptcy codes. One item she covered in depth is the 1113 letter, which refers to the section of code that ensures that a company negotiates with the union before they seek abrogation of the labor agreement. When a company seeks protection, the agreement remains in effect. When a union negotiates an 1113 letter it secures an agreement with the company showing that the company will not seek further cuts from labor. To this date, no company that has had an 1113 letter negotiated has ever asked the court to abrogate it.
Companies that request abrogation of the labor agreement but it must meet the following nine (9) distinct requirements:
1. The debtor in possession must have made a proposal to the union.
2. The proposal must be based upon the most complete and reliable information available at the time of the proposal.
3. The modification must be necessary to permit reorganization.
4. The modification must provide that all affected parties be treated fairly and equitably.
5. The debtor must provide the union with such relevant information as is necessary to evaluate the proposal.
6. The debtor must have met with the collective bargaining representative at the reasonable times subsequent to making the proposal.
7. The debtor must have negotiated with the union concerning the proposal in good faith.
8. The union must have refused to accept the proposal with good cause.
9. The balance of the equities must clearly favor rejection of the agreement.
Levine also noted that bankruptcy is not the preferred course for your contract.
Levine started her presentation with an overview of bankruptcy. The main goal of bankruptcy is to relieve a debtor of debts, thereby providing an opportunity for a fresh start. Bankruptcy also benefits creditors by providing a forum for an orderly liquidation of a debtor’s estate or a judicially scrutinized plan for full or partial repayment of creditor, and protecting unsecured creditors from preferential or fraudulent transfers of the debtor’s property and requiring adequate protection of secured creditor’s collateral.
There are two types of filling, Chapter 7, Liquidation and Chapter 11, Reorganization.
Levine continued, explaining the two types, but described Chapter 11 filings in depth. She explained the process and enlightened the attendees on all aspects of a chapter 11 filing. One thing that has stuck out in the US Airways members was a term called Fraudulent Conveyance.
Fraudulent Conveyance: A transfer of the debtor’s property is fraudulent if, made with the actual intent to hinder, delay, or defraud a creditor. (Note that sometimes the debtor’s actual intent maybe inferred circumstantially by certain “badges of fraud.†Alternatively, a debtor receives less than the reasonably equivalent value and was insolvent at the time of the transfer or became insolvent because of it or had “unreasonably small capital†remaining after the transfer for its business operations or intends to incur debts that it will be unable to repay as they mature. Many of the US Airways members asked hard-hitting questions about this as US Airways sold off airplanes and parts for less then fair market value not too long ago.
Our United attendees asked assertive questions in regards to the ESOP stock, numerous assets that United owns, and the ramifications on how they would be affected if United decided to file.
Levine also went over all the procedures and steps in the bankruptcy codes. One item she covered in depth is the 1113 letter, which refers to the section of code that ensures that a company negotiates with the union before they seek abrogation of the labor agreement. When a company seeks protection, the agreement remains in effect. When a union negotiates an 1113 letter it secures an agreement with the company showing that the company will not seek further cuts from labor. To this date, no company that has had an 1113 letter negotiated has ever asked the court to abrogate it.
Companies that request abrogation of the labor agreement but it must meet the following nine (9) distinct requirements:
1. The debtor in possession must have made a proposal to the union.
2. The proposal must be based upon the most complete and reliable information available at the time of the proposal.
3. The modification must be necessary to permit reorganization.
4. The modification must provide that all affected parties be treated fairly and equitably.
5. The debtor must provide the union with such relevant information as is necessary to evaluate the proposal.
6. The debtor must have met with the collective bargaining representative at the reasonable times subsequent to making the proposal.
7. The debtor must have negotiated with the union concerning the proposal in good faith.
8. The union must have refused to accept the proposal with good cause.
9. The balance of the equities must clearly favor rejection of the agreement.
Levine also noted that bankruptcy is not the preferred course for your contract.
While I agree, ATSB and RSA would likely make a Ch. 11 bankruptcy non-option, your notion that the Federal Government owns 10% of US Airways is false.USA320Pilot said:
From US Airways 2002 Annual Report:
Allow me to translate: Warrants are the right to acquire stock. Holding warrants does not equate ownership. If/When the Warrants are exercised, then US Airways would have to issue (or acquire from current stockholders) enough stock to give 10% ownership of the company to the holder of the warrants. Therefore, the holder of the warrants does not own any stock, thus it does not own any part of the company until that warrant is exercised.
If the warrants are never exercised, then they are not worth the cost of the paper they are written on.
Next, the federal government, through the example set by its "bailout" of Chrysler, will sell the warrants rather than exercise them. They did this with Chrysler. It is expected that they will do this with AWA and US Airways. The reason for this is that the feds do not want to apear partial to the airlines it has "bailed out". Thus the warrants are a way to reward the government for its risk without any actual ownership of the company.
If the federal government owned 10% of US Airways (and 33% of America West per that agreement), don't you think some bureaucrat from the ATSB would be sitting on the BOD's of these companies?
So I hope I have fully explained that the federal government does not own 10% of US Airways, and is unlikely to do so. However, the federal governement should be rewarded hansomely if the risk they have taken with this loan works out (as should any investor who deals with risky investments, high risk = high reward with a positive outcome).
----
On a different note, I also thought that Chapter 11 now has a three strike provision. Thus, if US Airways files again, they would essentially be on "strike two". And there is no guarantee that a judge would allow the "strike two" bankruptcy to proceed, a judge could force a conversion from Chapter 11 Reorig to Chapter 7 Liquidation, like what happened to Midway and National.
repeet:
I agree with your post... But I think idea of GadgetFreak was trying to convey is that Management and Labor either win together or lose together. Certainly, if they lose together, other airlines will likely emerge winners and losers...
Winners: Air Tran, Southwest, Delta, JetBlue
Losers: Mesa, Chautauqua, Star Alliance partners
I agree with your post... But I think idea of GadgetFreak was trying to convey is that Management and Labor either win together or lose together. Certainly, if they lose together, other airlines will likely emerge winners and losers...
Winners: Air Tran, Southwest, Delta, JetBlue
Losers: Mesa, Chautauqua, Star Alliance partners
Phoenix
Veteran
Caret Baggers and Robber Barrons are unfamiliar with the word you keep bringing up.funguy2 said:
"What is this word 'together'? We are not familiar with that concept."
Am I being simple-minded, but couldn't RSA decide to pay-off the ATSB backed loans and therefore trigger a bankruptcy AFTER the ATSB is out of the picture? Would that be too slick? It seems to me that that's what Bronner has been saying: "We will NOT default on the ATSB loans."
Didn't he really want to take U private?
Honestly, I haven't been paying that much attention lately, so forgive me, if this is simple.
Didn't he really want to take U private?
Honestly, I haven't been paying that much attention lately, so forgive me, if this is simple.
ClueByFour
Veteran
Maybe, but then he's in hock for $250 million plus what, $700 million of ATSB loan?RowUnderDCA said:
If U liquidated today, I don't know that he'd get $950 million for the whole nine yards.
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