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On 10/19/2002 3:39:57 PM chipmunn wrote:
Oldiebutgoody:
US are not meeting its revenue targets, which are part of the ATSB business plan and draft “Plan of Reorganization”. The company must convince the ATSB and court that it can obtain a 7 percent profit margin, which can be accomplished through cost cuts or revenue gains to change the bottom line.
The only US cost measures realized is from W-2. Productivity changes and head count reductions are not saving the company money until all severance ahs been paid. There have been additional savings from reduced lease expenses on facilities and aircraft rentals, but those just started to take affect.
US is better suited than other carriers to weather a war in the Middle East because we have the least international exposure. The greatest amount of revenue loss during the 1991 Gulf War was in the international markets, primarily transatlantic, due to passenger fear of leaving the country.
In regard to pensions, the problem is with the bond market. When the FOMC lowers interest rates bond prices go up and yields go down. Bonds are secure investments, which is responsible fund manager investments, however, when prices go up and yields go down there is less interest expense that is placed back into the fund. This lack of retirement fund interest income reduces the amount of money the security produces; thus the fund becomes underfunded. The problem for company’s who have a cash outflow, is if they do not have the funds to keep operating they surely do not have the funds to keep the pensions fully funded.
The retirement fund problem is not unique to US Airways and is being felt throughout the country. The problem for all corporations is how to fund a defined benefit plan when you need every penny of your capital to keep the business an ongoing concern.
With the PBGC a member of the unsecured creditors committee, who must agree to the Plan of Reorganization, you can bet this issue is being closely watched.
Since the US equity security is trading OTC, I believe the company is still required to issue quarterly earnings report.
Chip
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Interestingly enough many of the productivity givebacks in the IAM TA are having the opposite effect. Extending the work day by a half hour is not, in any way, increasing productivity. All it means is they stand in line a little longer waiting for the clock to change.
When it comes to the lost holidays and vacation, almost everyone plans on using sick time to make it up. Sick time is much, much more expensive for the company to deal with than planned vacation - because there is no control over when it happens.
So, it appears that management did nothing more than tick people off. TPA is still putting out pretty good work and at a reasonable rate (no work slowdowns, etc), however no one is going the extra mile either.