C
chipmunn
Guest
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 termination†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
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 termination†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