Financial Analysis

C

chipmunn

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On September 30 US Airways reported it had $1.33 billion cash on hand including $897 million in unrestricted cash, cash equivalents, and short-term investments and $433 million in restricted cash.
On December 3 the company said it had a consolidated cash balance of $830.7 million on October 31, which appears to not include the restricted cash. The net difference between the September 30 unrestricted cash balance and October 31 consolidated cash balance is $62.3 million.
The airline said it had $45.6 million net loss and $18.9 operating income that shows the cash burn rate moderated to about $1.5 million per day, during a period when there was unprecedented industry wide revenue deterioration and increasing cash burn rates.
Seasonally the first and fourth quarters are US Airways worst financial periods; however, the airline will recognize cost benefits from the end of furloughed employee severance payments, closure of excess facilities, reduced aircraft rental fees, lower facility lease expenses, and reorganizing costs.
The intent of the additional $200 million per year in additional labor cost reductions is to adjust the business plan to comply with the DIP financing credit facility covenants and to meet the ATSB 7 percent profit margin. The target labor productivity/benefit cost reductions per employee group (excluding pension liabilities) are:
ALPA- $101 million
AFA - $26 million
IAM-M - $45 million
IAM-FSA - $14 million
CWA - $ 11 million
TWU - Dispatchers - $ 2 million
TWU FCTI - $.2 million
TWU Simulator Engineers - $.1 million
Management - $4 million
Total - $200 million per year
In addition, US Airways has substantial cash funding requirements related to its employee defined benefit pension plans. Based on current forecasts, US Airways will be required to contribute to its retirement plans approximately $3.1 billion for the years 2003 through 2009, including $52 million in 2003 and $900 million to $1.0 billion in 2004.
Approximately 70 percent of this obligation is for the pilot group and 30 percent for the other employee groups; therefore, on average from 2003 to 2009 the ALPA retirement fund contribution is about $2.17 billion and the other employee groups $930 million.
During the six year period of the loan guarantee (January 1, 2003 to January 1, 2009), the average pilot pension contribution for the current plan would be about $362 million per year and for the other employee groups $138 million per year.
The ALPA MEC has charged the negotiating committee to enter into discussions with the company, which will likely reach the company’s target numbers of $101 million per year in productivity, benefit, and W-2 cuts and resolve RJ issues. In addition, ALPA will likely meet the company’s request to change the defined benefit contribution plan, reducing US Airways’ annual pilot retirement plan contributions by about $77.7 million per year.
Assuming ALPA reaches its concession target, if the non-pilot employee groups do not obtain similar accords with the company, to reduce employee expenses by $99 million per year, the airline would not achieve its financial requirements for maintaining debtor-in-possession (DIP) financing to receive final ATSB approval for the government loan guarantee.
At this point the PBGC could determine the pension plans for those unions who do not reach concessionaire accords would meet the PBGC’s “distressed terminationâ€￾ test and the defined benefit plans could be terminated, resulting in an average $138 million corporate bottom line savings per year from 2003 to 2009.
The $138 million non-pilot retirement plan contributions plus the potential ALPA $101 million productivity, benefit, and W-2 savings would provide the corporation with about $239 million per year in additional savings or $39 million more than the $200 in additional cuts necessary to obtain the credit facility and loan guarantee required to emerge from bankruptcy.
Chip
 
PineyBob,

Thank-you for the good will. I too wish you and your family well for the Holidays and the New Year!

Us maintenance types want this company to survive and be able to retire from it.

For years we've been yelling fire, and have been told that we're ignorant knuckle draggers because of it.

As professional troubleshooters, we have come to the conclusion that "if you keep on doing what you have been doing, you'll always get what you've always got".

We reluctantly gave more than we wish we had already.

We have been barraged by numbers and appeals until we can't bear anymore.

Unfortunately my view is the commonly held view here at the Charlotte Maintenance Hanger.

Therefore:

The answer is NO.

Let them do, whatever it is, that they are going to do.

Wake us up when it's time to leave.
 

tug_slug

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[P class=MsoNormal style="MARGIN: 0in 0in 0pt"][SPAN style="FONT-SIZE: 10pt; COLOR: black; FONT-FAMILY: Tahoma"]Piney Bob,[BR][BR]Im afraid that after what the company did to our coworkers in TPA repeet isnt the only one that feels that way. I worked with allot of those people in San Diego before U shut that hanger down as well, hearing what Dave did was something that didnt sit well with me at all.[BR][BR]Should the mechanics and related give into management’s demands it could cost us nearly 1000 jobs. Jobs that we will never get back should the company ever recover. [BR][BR]Most of us are worried about whats going on today, not about a pension we may never see anyway. If the company feels the need to freeze my pension so they can qualify for more funding so be it. If I were to vote yes on these concessions (which I wont should it come a vote) I'll only be voting myself out of a job with no chance of ever coming back.[/SPAN][?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:eek:ffice:eek:ffice" /][o:p][/o:p][/P]
 

ForkTime2002

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[FONT face="Times New Roman" size=3][STRONG]You have more to lose than we do, let 'em take your pension at gunpoint man,be my guest.[BR][BR]What do guys senior to YOU think? Guys at the top,nearing the end.They as gung ho as you are? Will they be willing to dig deep for guys that are 10,15,20 years away from tapping into the pension? [BR][BR][BR]At what point have we given enough to "Turn things around"?[BR][BR][BR][BR]We gave in the first round,and looky here..its seigal and bronner looking for more.mr.friendly wants pension changes or else...[BR]the guy from alabammy wants work rule changes or else...[BR][BR]Dude, they could sub out every job in the IAM and CWA and they'd still be looking at [EM]your[/EM] wallet.[BR][BR]As many others have said, a yes vote means you willingly vote yourself out of a job with zero prospects for return.[BR][BR]who should fall on their swords Chip? Maintenance? Ramp? Agents? Res? [BR][BR]who amongst us will allow their workgroup to be contracted out so that others can remain employed?[BR][BR][BR][BR][/STRONG][/FONT]
 

delldude

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Oct 29, 2002
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[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/3/2002 9:58:25 PM repeet wrote:
[P]Chip, [BR][BR]We don't care.[BR][BR]Our answer is NO.[BR][BR]Let them do, whatever it is, that they are going to do.[BR][BR]Wake me up when it's time to leave. [/P]----------------[/BLOCKQUOTE]
[P][/P]PIT AGC bill frieberger was approached as to the pension dilema and stated....something to the effect-your biggest burden is the pilots,i suggest you go talk to them.$150,000.00 for retirement?[BR]WOW......wish mine was that good...somethings going to give here...facts prove who is the burden...it ain't me, it ain't you-its them.....delldude accused of pilot bashing....
 

pitguy

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Aug 21, 2002
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I ditto what the other mechanics are saying. No more cuts for the mechanics. If the other groups want to ante up more cash let 'em. We are done. Also management is not fooling anyone by not taking their fair share of concessions and job cuts.

-Also per crew scheduling I am told numerous pilots are only working 20 hours per month and getting paid for 72 (full pay). I am told when they get called they try to make any deal they can to have the next guy called so they can stay home knowing they will get paid anyhow. That is not fair even to the other pilots.
 

MarkMyWords

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Aug 20, 2002
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pittguy,

It is very easy to sit back and look into other unions contracts and decide what you think is fair for them to give back. The unions, and their memebers, need to focus on their own contracts and the items contained in them. The company and ALPA are fully aware of their financial responsibility in the equation. That is why ALPA is being asked to pony up 101 million of the 200 being sought after, and mtc is only being asked for 45 million. I would say you had a legitimate gripe if the company was asking for equal concessions from all employee groups. It seems the company knows who is causing what type of financial burden on the company and is asking for the proportionate concessions. All told, ALPA will have ponyed up nearly 600 million in concession for an employee group of only 4800. They have made a significant contributions because they realize the seriousness of the situation our comapny is facing. Is the IAM willing to do the same thing? No. They would prefer to sit with their head in the sand (at US and UA) and pretend they are not a part of the problem. Rather then look at other employee group contracts and criticise about things you have no idea about, look inside your own.

And by the way, 72 hours for a reserve pilot is not full pay. It is the minimum a pilot or flight attendant can be assured to make so that they can make a living. That is the price that we, as a company, pay to ensure that we have coverage for vacations, sick calls and operational irregularities. If you were a reserve crew member don't you believe you should be paid something to be at the companies beck and call 20+ days a month? Those people have to eat! Yes, the reserve system is in need of a massive overhaul and I am sure that is included in the productivity package presented to ALPA.

Bob....

You asked about manangement shake ups in CCY. I can tell you first hand that CCY is 1/2 of what it used to be. In our glory days, we used to occupy 8 or 9 floors of the building we are in. Now we have eliminated so many middle management and office jobs that we are now consolidated down to 1/2 the office space we used to have. Same thing in RIDC park in PIT. We have completely vacated 1 of the buildings we used to occupy here. I have also heard (rumor) of additional management cuts in January. Every department and employee group in the company has shared in the pain when it comes to job losses.

I would like to add one more thing. When the first round of concessions were being negotiated, every group was given a target number of what was expected from them in a concessionary contract. Those numbers were then revised down 13-15% across the board, EXCEPT for management. They still met there target number 100%. And I am not just talking executive management. I am talking ALL management within the company. From Shift Managers on up to Dave. While I agree that 4 million from the management group seems like a low number, there are not a lot of productivity enhancements that can be made here because there is no featherbedding in our work rules and we have no pension. If you will notice, the employee groups that are being asked for the largest concessions are the employee groups that still have their pensions. The rest of us gave that golden gooses up long ago.
 

oldiebutgoody

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Aug 23, 2002
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[blockquote]
----------------
On 12/4/2002 7:04:41 AM PineyBob wrote:

Chip,
Be honest with me on this. As a PAX I think 4 million from the salaried side is as big an insult as the TPA/MCO massacre! Questions
1. How many support staff work in CCY?
2. How many have gotten the boot at CCY?
3. How does the staff size at CCY compare to other airlines of similar size?? CO, SWA, NW. I mean if I was a union member and I found out that say CO, NW & SWA had say 20% to 22% of the total workforce involved in support/HQ functions and US was at say 26%, I wouldn't give one friggin penny until HQ/Support numbers were in line with the industry! Has anyone done any competitive benchmarking??


----------------
[/blockquote]
Probably be complete this afternoon (now that you brought it up....)
 

oldiebutgoody

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Aug 23, 2002
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[blockquote]
----------------
On 12/4/2002 7:45:16 AM PineyBob wrote:

Well it was/is supposed to "shared sacrifice" that costs had to be brought in line with competition. I only ever spoke to one manager at CCY and if he is representative of the mind set at Fort Fumble then there is plenty of dead wood to be pruned. What an insulting, arrogant moron he was. Telling me and I quote, "Well we are an industry of fine print" when I pressured him on an issue that felt was deceptive and misleading. I think that 4 Million needs to be more like 10 or 20 million and the cuts should start with Ben Baldanza.
----------------
[/blockquote]
You hit the nail on the head. Customers, as well as most employees, feel that the "fine print" involved in airline operations is excessively unfair. Whether it's weird fare rules or interpretation of contracts, it all boils down to the same thing. Nobody trusts anyone to be fair and honest anymore. You can't blame labor for being skeptical of management's motives when you can NEVER get straight answers from them. I believe passengers feel the same, and that is a major factor in why full service carriers are in such a fix today. At least the guys like SWA and Airtran, while not offering many of the services, don't rip some off at the expense of others. The concept of fairness is a very strong motivator. I hope management realizes this soon and restructures the business to incorporate this concept as a major goal of it's operations!
 

autofixer

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Aug 20, 2002
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Pilots will give up minumum pay the day that mechanics give up pushbacks, paid lunch and breaks, paid time to wash up at the end of the shift, overtime (you know, you get called out to sign off a log book--say 5 minutes work--and you get paid 4 hours pay)...look in the mirror...they are coming after you! Union brotherhood, bull! I will never belong to a union again! Thanks to all of U employees for opening my eyes over the past 15.5 years!
 
OP
C

chipmunn

Guest
MarkMyWords:

Your last post was well written and accurate. ALP will likely reach an agreement and so will some of the other employee groups.

For those who don't reach consensual accords with management the company has two options: Agree with the PBGC to terminate your pension and/or seek to have the court order deeper cuts.

Failure of the company to reach its profit targets will jeopardize the DIP credit facility and loan guarantee, which could take the formal reorganization into liquidation.

Management will do what is necessary to survive and either labor cooperates or they don't. Regardless, management has options to deal with the situation.

Chip
 

Rob

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Aug 19, 2002
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"What is the maximum amount that PBGC can guarantee?"

I believe that in the USW cases, PBGC payments to pensioners worked out to about 60% of what had been the pension plan's obligation.