How Many Chances Does Usair Get?

[boeing787]

Unbelievable


U.S. gives airline breathing room
By Barbara De Lollis, USA TODAY
The U.S. government is poised to extend an agreement with US Airways beyond Thursday's scheduled expiration, allowing the airline to tap more of its dwindling cash to keep flying.
US Airways had about $823 million in cash at the end of November and owes about $718 million on a loan the government guaranteed in 2003.

click for article


MOD NOTE-PLEASE POST A LINK AND NOT THE ENTIRE ARTICLE NEXT TIME.

 

[dfw79]

Answer to the question in the subject...more than a cat.

 

[TomBascom]

Unbelievable

Yeah, if your "business plan" consists of waiting for US to fail it's got to really hurt to see them still there every morning...

 

[Winglet]

And assuming that the ATSB is numbskull enough (they are) to let Lakefield burn even more cash down, what happens after the winter quarter???

Answer: Lakefield is STILL losing money and asks for more time and more concesssions from labor. Business plan? . . . . . same 'ol, same 'ol.

 

[justaumechanic]

The Feds will let them burn it down to the level of what they are owed using assets available to pay off the loan.

In other words nothing will be left for anyone except the ATSB..

HA HA HA.. GECAS can eat it.

 

[EyeInTheSky]

Why do the employees at other carriers wish the death of US Airways so much? Do you honestly believe in your right mind that a US Airways demise is going to stop the LCC phenomenon? Get real. Reality is, paycuts and benefit changes are coming to every carrier whether US Airways survives or not.

 

[CynicalResAgent]

As many chances as Freddy Kruger.

 

[Reservation Agent]

One day the loans will have to be paid...and time will have run out on the promises...U has no colleteral...Debt..debt...leases and owes on everything

 

[7.5victim]

Yeah, if your "business plan" consists of waiting for US to fail it's got to really hurt to see them still there every morning...

[post="237696"][/post]​

I don't think that any carrier has a business plan that consists of "waiting for US to fail". That being said, I would imagine that US makes life very difficult for the legacy carriers, because the need for immediate cash and the temporary rock bottom labor costs while in CH 11 drive too many decisions. The other carriers have to match US even tho' they don't have the same needs.

If US is going to survive, I'd hope they stick to plan and emerge quickly. Odds are more in favor of survival, but I'm not sure you are out of the woods yet. Keep your eye on the prize!

 

[WorldTraveler]

There’s a post on flyertalk saying that a mid-level manager at USAirways told the person who was posting on flyertalk that there is a general recognition at CCY that US is not capable of making it in the medium or long-term. Take it for what it’s worth.

Personally, I think many of US' assets are valuable enough that someone will pick them up. There might be jobs for some of US' people w/ other companies but the airline industry doesn't have a great track record for protecting jobs of failing companies.

There is no doubt that the next few months, if not weeks, are extraordinarily critical for US and the attitude and outlook of its employees can go along way to keeping US flying.

 

[CaptianBoomer]

World Traveler:

FWIW, any middle manager at U doesn't know their arse from a hole in the wall, which is half the reason U is in the position it is. In 14+ years at U, I never saw a middle manager worth minimum wage.

Boeing 787:

I don't know who you work for, but after reading some of your posts here I hope your airline or company never is in the position U is in. There are a lot of people who depend on U to provide for their families and you have the gall to hope for their demise?

Since your screen name implies you like aviation or know something about aviation, you should know even LUV would be losing money in this environment if it weren't for their fuel hedge. If and when their hedge runs out, they will lose money like everyone else. If you repaired your own rectal cranial inversion, you would know that the airlines are all capable of raising fares. When they all cut fares, they all match. You can bet if one or two raised fares a few bucks and it stuck for once, the industry would be better as a whole. Fare reform is a great thing in general, but the glut of $79 fares needs to go away as they are unsustainable in the long term. These fares continue today because the stronger players in the industry (and I use that term very loosely) hope like hell someone goes away. They think that will be the end of their sea of red ink.

Every industry, when there is a hike in production costs or transportation costs passes the increase on to the customers. Further no other industry is taxed to death like the airlines. The airlines just haven't learned yet.

So until the aforementioned things go away, there will be no airline profit.

Bet on it!

Boomer

 

[Rico]

What is this, are you going to post daily whining sessions abot how U deserves to die 787...?

Here's a question for everyone, what is so different between U's using a ATSB backed loan (with everything U has as collateral), vs. the recent Billion dollar loan from GE that Delta obtained by placing everything it had remaining as collateral...?

Both use cash from private sources, both ae fully backed by collateral (in the form of gates/slots, etc...)

Face it, all the legacies are in the same boat, trying to shove us over the side (fare war) just to lighten the load is only going to tip it over for all of us.

Thing is, with the cost cuts, we can swim, can the other airlines...?

 

[mweiss]

...the airlines are all capable of raising fares.

[post="239198"][/post]​

Of course they are. But are they capable of generating more profits by doing so?

We're having a discussion over in this thread about that very topic. Or laying the groundwork to be able to intelligently discuss that topic, anyway.

You can bet if one or two raised fares a few bucks and it stuck for once, the industry would be better as a whole.

So you say. And you're even right, in a sense. But what you're really saying is that we need to have a de facto monopoly industry. Explain why that's a good thing, from a global perspective.

These fares continue today because the stronger players in the industry (and I use that term very loosely) hope like hell someone goes away. They think that will be the end of their sea of red ink.

If they do, then they're betting the company on it. It will work either way, from an industry perspective...but some of those players may not be around to see it.

Every industry, when there is a hike in production costs or transportation costs passes the increase on to the customers.

Not every industry. And even those that do tend to pass on only a portion.

Further no other industry is taxed to death like the airlines.

Pure crap. Gasoline is more heavily taxed than airline tickets.

 

[WorldTraveler]

Rico,
with all due respect, the loans GE made to DL and what other lenders made to other airlines such as AA and NW that have recently tapped the capital markets are different purely in the sense that private, commercial markets were not willing to loan US the money they needed unless the government had provided guarantees that those loans would be repaid. Yes, nearly all of the legacy airlines have virtually all of their assets encumbered in order to secure their debt but US is the only legacy airline that had to ask for government backing to obtain financing.
As has been pointed out before, the US governmet will not lose money on US because they are the highest priority guarantor of US' debt. However, I do not believe other creditors will allow the ATSB to assert its priority on secured real property assets such as aircraft. The ATSB could very well allow US to run down its reserves to the point that the loan is secured by the value of its slot holdings and operating rights.

Further, other airlines are cutting costs and generating new revenues as well so US is not gaining an advantage that other carriers cannot also gain if not surpass. Airlines such as AA, CO, and DL have built their turnaround plans around significant increases in capacity which serves to lower unit costs. UA and US are both shrinking their operations or replacing mainline capacity with regional jets which have higher unit costs. Regional jets work well in tapping new revenues but they do not work very well at increasing profits in a diminishing revenue environment such as we are in now.

Michael,
glad you're back. The airlines cannot raise fares now as evidenced by the continuing decreases in average fares. The actual lowest fare is not shrinking but airlines are losing the ability to sell a proportion of tickets at the higher fares and it will only get worse as several legacies and all LCCs continue to expand capacity over the next few years. Nobody has advocated a monopoly but there is no example in the world where an airlines or other heavily capital intensive transportation enterprises are profitable in a completely market driven economy. While it might help stabilize the industry somewhat if one or two major carriers failed, there is too much capacity that will flow back into the industry for it to be profitable for quite some time. The only way the airline industry will be profitable is for there to be some controls on the amount of capacity in the industry - something Washington is loathe to do. In the absence of those controls, the weakest carriers must be allowed to exit the market. In that regard, the Europeans understand the industry far better than the Americans because they have demonstrated a willingness to let European carriers fail despite much stronger nationalistic ties to their carriers than what any US airline has.

 

[CaptianBoomer]

Weiss:

Gasoline:

Prove it. Some airline tickets are taxed at over 50%.

As far as general fares go, look at history. If you go back 25 years, fares have never been lower. And that isn't counting the effects of inflation.

Secondly, I am not advocating the airlines acting as one, as in a monopoly situation. I am advocating they price their product at the cost at an absolute minimum. No entity, whether it be Wal-mart, Target, or Starbucks can consistently price their product BELOW cost and stay in business. Further you can bet you buns that if the price per pound of coffee goes up 50% in a year, Starbucks will pass that cost on to their customers. It isn't price gouging, it is economics.

Been to Home Depot lately? I have. Lumber and plywood have all gone up 25-30 %. Some of this can certainly be attributed to the demand side with all the home repair in Florida from the Hurricanes. But I'll bet most of it is transportation costs in the form of higher fuel costs.

The airlines collectively hope someone goes out while at the same time hoping they can hang on long enough to benefit. They together must learn to to live on more lower fares and less high dollar ones ala Delta. They can raise fares, they just won't.

Boomer