How Much Time Do We Have Left?

zonecontroller

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Sep 3, 2002
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ATSB Gives US Airways Narrow Window
Under the new deal, US Airways must "significantly narrow" losses in 2004, regain profitability in 2005 and maintain an unrestricted cash balance of $700 million. The company's current unrestricted cash balance is roughly $925 million.

"This agreement gives us a narrow window for management and labor to ... make the changes necessary to get back to profitability," said US Airways Chairman David Bronner.

The IAM is refusing to reopen its labor contract to make more concessions. The pilots union has agreed to talk with US Airways management again, but the flight attendants union has demanded a detailed business plan before it will consider new talks.

US Airways Chairman David Bronner said the agreement "gives us a narrow window for management and labor to continue to work together to make the changes necessary to get this company back to profitability."

How Much Time Do We Have Left?
In Terms of Dates etc.
No Throwing Stones on this one / How about Time Frames!
 
zonecontroller,

My crystal ball isn't that clear. Much will depend on the revised ATSB requirements and I haven't seen anything detailed on that.

Aside from the loan covenents, an airline can last for a long time on cash flow - even negative cash flow.

Jim
 
90-120 days, about June 30.

The company now needs to raise liquidity through asset sales. The new ALPA RJ scope agreement will likely permit the divestiture of PSA, Allegheny/Piedmont, RJ delivery positions, and MDA, if necessary.

The sooner labor participates in the "Going Forward Plan", the less likely it will be necessary to sell assets. The key is to maintain EBITDAR requirements per the loan guarantee requirements. Thus, improving fundamentals due to falling fuel prices, summer time traffic, and pricing power will be key factors.

In my opinion, PSA, Allegheny/Piedmont, and some gates will be sold. In addition, you will see economies of scale created by consolidating Pittsburgh on and off-site airport operations. Then if necessary, MDA and the Shuttle assets could be divested.

Regards,

USA320Pilot
 
So anyone know what the secret meeting in CCY with mainline and PSA only is about today? or its outcome? I think it will be a little more positive for PSA than previous posters on this thread feel. PSA is the golden child right now. Will be very interesting. Also FAA proving runs and training with flight crews are beginning very soon (april 1st) for the CRJ-701.
 
The new ATSB terms, GECAS support, and S&P not dropping the credit rating is good news, from a corporate perspective. Some of this support was due to ALPA settling the MDA grievance and providing a TA on RJ scope relief last Friday, which will help boost liquidity, reduce unit costs, and reduce long-term debt.

I understand the company briefed the ATSB on the Morgan Stanley report and the board agreed with the company's "Going Forward Plan", which is interesting since the board has rejected other airline loan guarantee applications.

Regards,

USA320Pilot
 
You can only sell what the buyer wants. Furthermore, it may be in PSA's best interest to be sold to another business enterprise.

Regardless, selling the "wholly owneds" eliminates some scope issues for potential M&A activity.

Regards,

USA320Pilot
 
Until January 2005.....
It is an election year. I think the Bush administration release some of the government fuel reserves, therefore lowering the price of fuel. Bet it will happen early summer to give a boost to the economy just in time for the fall elections. Bush will not want any company to go Chapter 7 in the next few months. Next January neither he nor Kerry will care if USAirways goes under.
 
Alf said:
Until January 2005.....
It is an election year. I think the Bush administration release some of the government fuel reserves, therefore lowering the price of fuel. Bet it will happen early summer to give a boost to the economy just in time for the fall elections.
I'll take that bet. There is a beginning to be a great deal of resistance in Congress from conservatives toward using the Strategic Oil Reserves for price manipulation instead of their original intent of protecting us from another OPEC oil embargo.

Also, such an action would have only a temporary effect. Take it from someone who worked for a major oil company for many years, the price of crude oil has almost nothing to do with the price of gasoline at the pump. If Bush releases crude from the SOR, it will be nothing more than a political gesture, and the oil companies will have to lower prices to maintain appearances until they think that the public has gone back to concentrating on re-runs of American Idol. Prices will then start back up.

Now, class, pay attention. You may see this on a test later. The primary controlling factor in the price of gasoline is what the Marketing Department of the oil company thinks you are willing to pay. They raise prices until they see price resistance--you know wild things, like taking the bus or :shock: carpooling, instead of driving alone in your own personal Sherman tank-sized SUV.

Class dismissed. Read chapters 2 and 3 for tomorrow and do the problems at the end of the chapter.
 
USA320Pilot said:
90-120 days, about June 30.

The company now needs to raise liquidity through asset sales. The new ALPA RJ scope agreement will likely permit the divestiture of PSA, Allegheny/Piedmont, RJ delivery positions, and MDA, if necessary.

The sooner labor participates in the "Going Forward Plan", the less likely it will be necessary to sell assets. The key is to maintain EBITDAR requirements per the loan guarantee requirements. Thus, improving fundamentals due to falling fuel prices, summer time traffic, and pricing power will be key factors.

In my opinion, PSA, Allegheny/Piedmont, and some gates will be sold. In addition, you will see economies of scale created by consolidating Pittsburgh on and off-site airport operations. Then if necessary, MDA and the Shuttle assets could be divested.

Regards,

USA320Pilot
USA320,

The ATSB loan requirements have changed. Have you seen the requirments renegotiated?

What the EBITDAR ratio should be is under these new requirments, so hold your tongue in for a minute.
 
Good post Piney Bob
I am with this you on this one. I don't think the 3rd quarter will be as good as you or I would want it to be, but I think you are correct, or close on everything else.
 
If "I understand the company briefed the ATSB on the Morgan Stanley report and the board agreed with the company's "Going Forward Plan"", does that mean that there really is a plan?

From the MEC resolution of Feb 20, 2004:

SUBJECT:
MEC Acceptance of Invitation to Participate in the Creation of a Plan to Return the
Company to Profitability

THEREFORE BE IT RESOLVED that the US Airways MEC directs the Negotiating
Committee to accept the invitation of the Board members and Management to participate in the creation of a plan to return US Airways to profitability

BE IT FURTHER RESOLVED that the MEC directs the Negotiating Committee to
begin participating in the creation of the above Plan, and

BE IT FINALLY RESOLVED that the Negotiating Committee shall report back to the
MEC on an expedited basis as the Plan is developed, providing the MEC with specific
details of the proposed plan prior to the completion of any agreement.

So the MEC directed the NC to talk to the company about CREATING a plan which the company already has developed and now has briefed the ATSB on.

Maybe, just maybe, paying off 25% of the loan had something to do with the ATSB relaxing the covenents and not the supposed plan.

Jim