December 29 Airline News

C

chipmunn

Guest
[P style=TEXT-ALIGN: justify][SPAN class=storyhed][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt][STRONG][FONT size=3]RDU options may shrink[?xml:namespace prefix = o ns = urn:schemas-microsoft-com:eek:ffice:eek:ffice /][o:p][/o:p][/FONT][/STRONG][/SPAN][/SPAN][BR][FONT size=3][SPAN class=storyhed][SPAN style=FONT-WEIGHT: normal; FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt][BR]RALEIGH-DURHAM (NewsObserver.com) - [/SPAN][/SPAN][SPAN class=storybody][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt]US Airways grounded 100 jets and persuaded its employees to return $1.04 billion in wages and benefits after filing for bankruptcy in August. It says it still needs $900 million in federal loan guarantees and a $240 million investment from the Retirement Systems of Alabama to stay in the air.[o:p][/o:p][/SPAN][/SPAN][/FONT][BR][FONT size=3][SPAN class=storybody][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt][BR]Complete Story:[BR][A href=http://newsobserver.com/business/story/2048500p-1973614c.html][FONT color=#0000ff]http://newsobserver.com/business/story/2048500p-1973614c.html[/FONT][/A][/SPAN][/SPAN][SPAN class=t21][SPAN style=FONT-WEIGHT: normal; FONT-FAMILY: 'Times New Roman'][o:p][/o:p][/SPAN][/SPAN][/FONT][BR][FONT size=3][SPAN class=t21][SPAN style=FONT-FAMILY: 'Times New Roman'][STRONG][BR]Union Leaders Urge United Airlines' Pilots, Flight Attendants to Accept Pay Cuts[/STRONG][/SPAN][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'] [o:p][/o:p][/SPAN][/FONT][BR][SPAN style=mso-bidi-font-size: 9.5pt][FONT face=Times New Roman][FONT size=3][BR]CHICAGO (AP) -- Union leaders on Saturday urged United Airlines pilots and flight attendants to accept the bankrupt airline's proposal to keep their contracts in exchange for voluntary pay cuts. [o:p][/o:p][/FONT][/FONT][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 9.5pt][FONT size=3]Under the company's proposal, made Friday in U.S. Bankruptcy Court, the unions would keep their contracts at least through spring if they agree to wage reductions and if the court agrees to force concessions from non-cooperating unions.[o:p][/o:p][/FONT][/SPAN][BR][FONT face=Times New Roman size=3][BR]Complete Story:[BR][/FONT][A href=http://biz.yahoo.com/ap/021229/united_airlines_1.html][FONT face=Times New Roman color=#0000ff size=3]http://biz.yahoo.com/ap/021229/united_airlines_1.html[/FONT][/A][BR][SPAN class=mainheadline1][SPAN style=mso-ansi-font-size: 12.0pt; mso-ascii-font-family: 'Times New Roman'; mso-hansi-font-family: 'Times New Roman'; mso-bidi-font-family: 'Times New Roman'][STRONG][FONT color=#000000][FONT face=Times New Roman][FONT size=3][BR]Union Voices Opposition to UAL's Latest Move[/FONT][/FONT][/FONT][/STRONG][/SPAN][/SPAN] [BR][SPAN class=default1][SPAN style=mso-ansi-font-size: 12.0pt; mso-ascii-font-family: 'Times New Roman'; mso-hansi-font-family: 'Times New Roman'; mso-bidi-font-family: 'Times New Roman'][FONT face=Times New Roman][FONT size=3][BR]NEW YORK (TheStreet.com) - The union representing United Airlines' baggage handlers, ground workers and mechanics said it will oppose UAL's latest bankruptcy court filing, which seeks interim wage cuts and other concessions, setting up a potential showdown that could leave the unions without contracts. [BR][/FONT][/FONT][/SPAN][/SPAN][SPAN style=COLOR: black; FONT-FAMILY: 'Times New Roman'][FONT size=3][BR]In its filing Friday, United asked the court to conditionally void collective bargaining agreements with its unions to reduce labor costs and satisfy United's lenders. United explained in its filing that it would drop its motion to void the contracts if the other unions -- including those of pilots and flight attendants -- ratify the interim agreement by Jan. 8, and the court imposes a 13% pay cut on the machinists' union. United said in the filing that the interim agreement would provide an additional $42 million in cuts beyond those sought in its motion, giving United additional headroom with which to operate through May 1, 2003. [o:p][/o:p][/FONT][/SPAN][BR][BR][SPAN style=COLOR: black; FONT-FAMILY: 'Times New Roman'][FONT size=3]Complete Story:[BR][/FONT][A href=http://www.thestreet.com/_yahoo/markets/marketfeatures/10060386.html][FONT color=#0000ff size=3]http://www.thestreet.com/_yahoo/markets/marketfeatures/10060386.html[/FONT][/A][o:p][/o:p][/SPAN][BR][FONT size=3][SPAN class=t1][SPAN style=FONT-WEIGHT: normal; FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt][BR][/SPAN][/SPAN][STRONG][SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt]Statement by UAL-MEC Chairman Captain Paul Whiteford on ALPA Interim Wage Agreement with United to Meet DIP Financing Requirements, expects [/SPAN][FONT face=Times New Roman]challenging and difficult period of further negotiation[/FONT][/SPAN][SPAN class=t1][SPAN style=FONT-WEIGHT: normal; FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt][o:p][/o:p][/SPAN][/SPAN][/STRONG][/FONT][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 9.5pt][FONT size=3]ROSEMONT (Business Wire) - Captain Paul Whiteford, chairman of the United pilots unit of the Air Line Pilots Association (ALPA) representing United Airlines' 9,000 pilots, today said that ALPA's Master Executive Council (MEC) had unanimously approved an interim agreement with United designed to help the Company meet its short term DIP financing requirements.[o:p][/o:p][/FONT][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 9.5pt][FONT size=3]Complete Story:[BR][FONT color=#0000ff]h[/FONT][/FONT][A href=http://biz.yahoo.com/bw/021228/282003_1.html][FONT color=#0000ff size=3]ttp://biz.yahoo.com/bw/021228/282003_1.html[/FONT][/A][o:p][/o:p][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'][FONT size=3]United Union Leaders Agree to Interim Cuts[o:p][/o:p][/FONT][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'][FONT size=3]NEW YORK (New York Times) - The pilots' and flight attendants' unions at United Airlines said yesterday that their leaders had agreed to short-term wage cuts, and that those leaders would urge the rank-and-file members to vote for the cuts to avoid having United executives go to bankruptcy court to void union contracts.[o:p][/o:p][/FONT][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'][FONT size=3]Complete Story:[BR][/FONT][A href=http://www.nytimes.com/2002/12/29/business/29UNIT.html?ex=1041829200&en=5cbe076dcc3de3b7&ei=5040&partner=MOREOVER][FONT size=3][FONT color=#0000ff]http://www.nytimes.com/2002/12/29/business/29UNIT.html?[/FONT]e[FONT color=#0000ff]x=1041829200&en=5cbe076dcc3de3b7&ei=5040&partner=MOREOVER[/FONT][/FONT][/A][o:p][/o:p][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 18.0pt][FONT size=3]No. 1 Local Business Story of the year: Ailing US Airways forced to file bankruptcy[o:p][/o:p][/FONT][/SPAN][BR][BR][FONT size=3][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 18.0pt]PITTSBURGH (Post-Gazette) - [/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman']Perhaps the best thing that can be said about bankrupt US Airways is that it is still in business and could be poised to reverse its losses and earn a pre-tax profit within a few years.[o:p][/o:p][/SPAN][/FONT][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'][FONT size=3]Complete Story:[BR][/FONT][A href=http://www.post-gazette.com/businessnews/20021229usair1229fnp3.asp][FONT color=#0000ff size=3]http://www.post-gazette.com/businessnews/20021229usair1229fnp3.asp[/FONT][/A][o:p][/o:p][/SPAN][BR][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3]US Air Predicts 2004 Profit; Will Cut Turboprops By 2008[o:p][/o:p][/FONT][/SPAN][BR][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]WASHINGTON (Aviation Daily) - US Airways, working hard to cut $1.8 billion in annual operating costs, predicted in its recently filed reorganization plan it will post a $122 million profit in 2004 and grow its net income to $269 million by 2009.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]Newly released projections assume the airline will keep 279 aircraft for mainline operations for 2003 through 2009, and introduce 29 regional jets with its Express carriers in 2003. The RJ fleet would stand at 168 by the end of 2009. US Air expects to eliminate the entire Express turboprop fleet by the end of 2008.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]The profit forecast is also based on at least 10 significant assumptions, including retention of all of its wholly-owned subsidiaries, final agreement on pension funding and benefit cuts, more labor work rule changes and final approval of its federal loan guarantee. Even with the remaining hurdles, the airline predicts it could emerge from Chapter 11 reorganization as early as late March.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]The airline projects passenger revenue will rise from $5.7 billion in 2003 to about $7.9 billion in 2009. Roughly $1.2 billion of the increase comes from higher passenger yields and load factors and the airline credits the larger RJ fleet for the remaining $1 billion.[BR][BR]For costs, the airline assumed an average annual cash savings of about $1 billion through calendar year 2008 from changing collective bargaining agreements. Average annual wages are projected to increase in line with each labor agreement, ranging between about 1% and 3% per year.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]The airline expects maintenance costs to soar more than 60% to $639 million by 2009 due to timing of heavy maintenance checks on the Airbus fleet, and the growth of the RJ fleet in the later years of the projection. While there are many variables in play, US Airways predicts a cash and short-term investment balance of $1.9 billion at the end of 2009, up sharply from the $658 million it will have at the start of 2003.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]Standard & Poor's yesterday said the reorganization plan is consistent with management's previously disclosed strategy but still faces several important hurdles Before the company can exit Chapter 11. S&P said it was difficult to assess the airline's financial projections because of the lack of final information on very substantial lease obligations.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]One of the biggest questions for the airline in the new-year is how to resolve a $3.1 billion pension funding liability during the next seven years. The company continues to explore options to lower its pension expense, the airline said.[BR][/FONT][/SPAN][SPAN style=FONT-FAMILY: 'Times New Roman'; mso-bidi-font-size: 10.0pt][FONT size=3][BR]Separately, the airline now plans to have a 15-member board, two more than previously expected. The board will include eight Alabama Pension Fund nominees, four US Airways union representatives, Siegel, and two independent directors nominated by the company in consultation with the unsecured creditors committee.[o:p][/o:p][/FONT][/SPAN][SPAN style=FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman'; mso-fareast-font-family: 'Times New Roman'; mso-bidi-font-size: 10.0pt; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA]The airline now has deals in place with all its major labor groups, thanks to Friday's agreements with the International Association of Machinists (IAM) and the Association of Flight Attendants (AFA) on more contract changes. IAM and AFA originally opposed further talks. AFA urged members to ratify its deal, which it says would save the airline $492.7 million during 6.5 years. IAM also endorsed ratification, saying its deals would save $45 million a year for mechanics, and $14 million a year for fleet service workers.[BR][/SPAN][FONT face=Times New Roman size=3][BR][STRONG]US Airways Liquidity Analysis[BR][/STRONG][BR]Provided US Airways’ labor groups ratify their TA’s, the company and the PBGC agree upon retirement plan restoration funding, and the airline obtains final ATSB approval for the loan guarantee, US Airways 2003 year-end cash on hand estimate is provided below: [BR][/FONT][FONT face=Times New Roman size=3][BR]January 1, 2003 cash balance: $638 million[BR]GECAS Advance: $18 million [BR]Final DIP payment: $200 million[BR]ATSB loan guarantee: $1 billion[BR]Equity investment: $240 million[BR]DIP repayment (2): ($500 million)[BR]1st cash burn rate @$3 million/day estimate (3): ($270 million)[BR]March 31, 2003 cash balance: $1.326[BR][/FONT][FONT face=Times New Roman size=3][BR]April 1, 2003 cash balance: $1.326 billion[BR]2nd, 3rd, & 4th quarter profit estimate: $41 million[BR]December 31, 2003 cash balance (3): $1.367 billion[BR][/FONT][FONT face=Times New Roman size=3][BR]Note (1): The October operational cash burn rate of about $1.5 million per day was offset and appeared better than actual because the company did not have to pay aircraft lease rates for the first 60 days of bankruptcy.[BR][/FONT][FONT face=Times New Roman size=3][BR]Note (2): The DIP agreement requires RSA to be repaid the $500 million bankruptcy credit facility upon emergence with ATSB backed funds. [BR][/FONT][FONT face=Times New Roman size=3][BR]Note (3): The first quarter 2003 cash burn rate and last three quarters of the year profit was based on the company’s December 20 POR and Disclosure Statement predicting US Airways would lose $229 million in 2003 before posting a $122 million profit in 2004. [/FONT][/P]
 

genejockey

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Aug 22, 2002
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Thanks for the summary Chip. What is the timetable for ATSB approval? Will they grant final approval prior to emergence from BK and payment upon emergence? Or will they hold final approval until emergence from BK? I don't recall any specifics on this.
 

USFlyer

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Aug 19, 2002
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[blockquote]
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On 12/30/2002 5:24:27 AM genejockey wrote:

Thanks for the summary Chip. What is the timetable for ATSB approval? Will they grant final approval prior to emergence from BK and payment upon emergence? Or will they hold final approval until emergence from BK? I don't recall any specifics on this.
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[/blockquote]

One point of clarification: The ATSB does not provide the loan; they only backup a loan so a private lender is willing to take the risk. The latest loan to close was for, I believe, Aloha, where Citibank actually loaned the money to them.
 

genejockey

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Aug 22, 2002
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I understand that the ATSB does not provide the loan. And I know that US cannot recieve any money until they emerge from BK. I just wanted to know if the ATSB could grant final approval while US is still in BK.