...depending on where the cost and revenue models end up. But, yes, there is certainly a reasonable chance that DL figured out how to successfully compete against the LCCs. Of course, it helps that they had a chance to see HP and AS do it first...Art at ISP said:
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Dl Fare War + Wn@pit + Existing Losses
- Thread starter enilria
- Start date
us10 said:RSA is an equity investor and like all other equity holders will probably be left with nothing should U reorganize or liquidate.While RSA still controls the majority of board seats the board has a fiduciary responsibility to the creditors while in BK not the owners.
Management now works for the creditors not the equity holders so RSA has little standing and thus little to say.
us10
[post="238971"][/post]
My point is that these guys aren't eager to throw in any more money to protect their original investment. If they were to invest more they could probably prevent their original investment from being totally wiped out as they would be in the driver's seat with the reorg plan.
Instead, they are apparently so sure the situation is unresolveable that they are willing to write off their investment rather than put in another nickel. Meanwhile GE and ATSB are providing money...and the RSA has learned a lot more about the company's situation than either GE or the ATSB.
GE's investment is different from RSA's. The market is still a bit soft for the aircraft, but if they let US fly them for a while, GE gets some money every day that US stays in business. GE's alternative is to park them in the desert.
RSA, OTOH, only gets money if US survives in the long term.
ATSB, as has been repeated ad nauseum, is providing nothing other than labor, really. That is, they have to keep a close eye on US's finances, so somebody's getting paid to do that. That's pretty much the extent of ATSB's contribution.
RSA, OTOH, only gets money if US survives in the long term.
ATSB, as has been repeated ad nauseum, is providing nothing other than labor, really. That is, they have to keep a close eye on US's finances, so somebody's getting paid to do that. That's pretty much the extent of ATSB's contribution.
Rico said:Why? Because U's leadership and strategic business plan has been so bad for so long that they were losing money even when the other airlines were making it hand over fist.
Attention: ALL airlines, with the few exceptions of those with a LCC model, have been losing money. In fact, as much as U has lost, pales in comparison to the total amount of cash that your vaunted DAL and other legacies have lost
[post="238989"][/post]
Actually, I'm afraid you are wrong. In the 4th quarter of 2004 only Southwest is projected to be profitable (even JetBlue has said they will lose) and Southwest would be unprofitable net of their fantastically cheap fuel hedge. So, it is now getting to the point where costs need to be even lower to make money.
ATA and Spirit have among the lowest costs in the industry and both are/were losing boatloads of money.
mweiss said:GE's investment is different from RSA's. The market is still a bit soft for the aircraft, but if they let US fly them for a while, GE gets some money every day that US stays in business. GE's alternative is to park them in the desert.
[post="239187"][/post]
1) The Airbus aircraft would be in Mojave for only a very short time. They are very marketable. GE is taking some Airbus planes back in their last deal w/US that I'm sure they have customers for.
2) The reason the market for leasing aircraft is weak is because by virtue of GE continually lowering lease rates to save airlines like IAir, US, US#2, UA, AA, ATA, etc, etc, etc they set off a domino effect that causes everybody to renegotiate to be competitive with those that already have.
GE is their own worst enemy.
Art at ISP said:If US and other "legacy" carriers follow Delta's lead, this could be bad for LCC's!!
With the traditional carriers offering rational fares, the LCC's lose their advantage.
[post="238972"][/post]
Well, that is just about what happened to the trucking industry.
The old school, unionized carriers had their lunch eaten by new start ups trucking firms like JB Hunt for sometime, until they forced their labor and operting costs down. In the meantime, the cost advantages of the Low Cost Carriers dwindled as they had to pay higher salieries, and their overhead increased.
It is not a huge leap of logic that the same thing will happen with the airline industry. Nor do I think it is an accident.
Some people want to jump up and down about the ATSB supposedly wasting taxpayer money (they are not, everything is covered with collateral). But they fail to realize that despite the initial mandate of the ATSB, it has been used as a tool to encourage changes in the airline industry. They are fullly supportive of what US Airways is doing because that is the kind of changes the government wants to see industry wide.
People want what U is about to become, they want a hybrid carrier offering low fares, yet domestic and international connectivity. They want their TV in their leather seat, and they want to go point to point if possible.
Rule number one, give the customer what they want.
As for the investors like GE, they are doing what is called "investing".
Now, I could explain it out in detail for you, but the general idea is to buy into something at a low price, and sell or hold onto it when it gains value.
The small (yeah small, in terms of real investing, not you) investment will pay huge if US Airways does retool and succeeds.
Now, I could explain it out in detail for you, but the general idea is to buy into something at a low price, and sell or hold onto it when it gains value.
The small (yeah small, in terms of real investing, not you) investment will pay huge if US Airways does retool and succeeds.
RowUnderDCA
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mweiss said:GE's investment is different from RSA's. The market is still a bit soft for the aircraft, but if they let US fly them for a while, GE gets some money every day that US stays in business. GE's alternative is to park them in the desert.
RSA, OTOH, only gets money if US survives in the long term.
ATSB, as has been repeated ad nauseum, is providing nothing other than labor, really. That is, they have to keep a close eye on US's finances, so somebody's getting paid to do that. That's pretty much the extent of ATSB's contribution.
[post="239187"][/post]
I've been trying to imagine how 'purchasing' U would work. If U is as successful as possible, when it emerges from bankruptcy, could RSA be the equity sponsor again? I suppose so. But wouldn't they have to be the highest bidder? I know that some have speculated that U's stock might not have to be cancelled, so RSA can retain their ownership share. But doesn't that presume that all unsecured creditors are payed 100% (who are they?) and that secured creditors get their payments according to valid terms or get the assets?
So, when does the BoD get to argue to keep its stock holdings? Can they argue to the judge, "hey, judge, the creditors are getting enough, so can we, the stockholders keep our stock (perhaps after some dilution) and perhaps buy more to take U private?" Or does each individual stock holder make an argument, separate from the BoD or in some kind of committee of stock holders?
Then if U were to be purchased by an outside group, they'd have to win the bid and propose cancelling the stock, right?
I won't even get into how another air carrier would really benefit from U's lower labor costs. Didn't even AA raise TWA's labor costs when acquired?
RowUnderDCA said:I know that some have speculated that U's stock might not have to be cancelled, so RSA can retain their ownership share. But doesn't that presume that all unsecured creditors are payed 100% (who are they?) and that secured creditors get their payments according to valid terms or get the assets?
So, when does the BoD get to argue to keep its stock holdings? Can they argue to the judge, "hey, judge, the creditors are getting enough, so can we, the stockholders keep our stock (perhaps after some dilution) and perhaps buy more to take U private?" Or does each individual stock holder make an argument, separate from the BoD or in some kind of committee of stock holders?
[post="239211"][/post]
I agree with you.
By not making provision for all of its debts, U's stock will be canceled. U stiffed its DB plans and many other creditors.
Presumably, those creditors will be issued stock in the reorganized U, along with any new equity investors stupid enough to throw good money after bad. RSA could inject new equity in exchange for some new stock, but is Bronner that stupid? His job probably isn't currently threatened just because his earlier investments in U have completely failed, but if he throws any more good money after bad, he just might lose his cushy gig.
Assuming a plan of reorg is ever submitted, it's a certainty that it will provide for cancelation of U stock. I don't see any arguments that current equity holders have.
Yes, and theoretically yes. The creditors have to agree to sell the company, and the judge has some leeway in the direction of that decision.RowUnderDCA said:If U is as successful as possible, when it emerges from bankruptcy, could RSA be the equity sponsor again? I suppose so. But wouldn't they have to be the highest bidder?
They have, but it's pretty much a fallacy.I know that some have speculated that U's stock might not have to be cancelled, so RSA can retain their ownership share.
Whenever they want. They just won't get it granted.So, when does the BoD get to argue to keep its stock holdings?
Basically, yes.Then if U were to be purchased by an outside group, they'd have to win the bid and propose cancelling the stock, right?
Rico said:As for the investors like GE, they are doing what is called "investing".
Now, I could explain it out in detail for you, but the general idea is to buy into something at a low price, and sell or hold onto it when it gains value.
The small (yeah small, in terms of real investing, not you) investment will pay huge if US Airways does retool and succeeds.
[post="239199"][/post]
Now I see the light.
They are investing and will make a big windfall just like the RSA did. :down:
Rico said:Some people want to jump up and down about the ATSB supposedly wasting taxpayer money (they are not, everything is covered with collateral). But they fail to realize that despite the initial mandate of the ATSB, it has been used as a tool to encourage changes in the airline industry. They are fullly supportive of what US Airways is doing because that is the kind of changes the government wants to see industry wide.
[post="239197"][/post]
You are 100% correct in your assessment.
The day I'm waiting for (see my tagline).
When every freakin' job in the US is outsourced or right-sized.
Maybe THEN will folks realize that they squandered their birthright.
One can dream.
.. There is good reason why Bronner {RSA} has not agreed to invest more $$$ into Usairways, {YET}..enilria said:My point is that these guys aren't eager to throw in any more money to protect their original investment. If they were to invest more they could probably prevent their original investment from being totally wiped out as they would be in the driver's seat with the reorg plan.
Instead, they are apparently so sure the situation is unresolveable that they are willing to write off their investment rather than put in another nickel. Meanwhile GE and ATSB are providing money...and the RSA has learned a lot more about the company's situation than either GE or the ATSB.
[post="239186"][/post]
It's the same reason why operational changes {such as "rolling" the hubs} have not been accomplished....
Bronner, along with the dishonorable Judge Mitchell, have not completely finished screwing over USAirway's labor force..
Management must be careful not to make too many obvious operational changes until labor is whipped into submission. The situation must be made to look dire in order to get as much concessions as possible..
In the future, look for more investment from Bronner and "finally" the much needed operational changes....
The reason Usairways is not predicting a profit until 2007 is due to Southwest's ability to fuel hedge, {$26/ barrel vs. $40's/ barrel} this allows Southwest to set the fares.
As time goes on, this advantage will level out..
Ummmmm reread my post please, I said every carrier with the exception of those using a Low Cost Carrier model. That would include the airlines you mentioned as being profitable.enilria said:Actually, I'm afraid you are wrong. In the 4th quarter of 2004 only Southwest is projected to be profitable (even JetBlue has said they will lose) and Southwest would be unprofitable net of their fantastically cheap fuel hedge. So, it is now getting to the point where costs need to be even lower to make money.
ATA and Spirit have among the lowest costs in the industry and both are/were losing boatloads of money.
[post="239188"][/post]
