C
chipmunn
Guest
On October 22 US Airways chief executive officer Dave Siegel told employees in his weekly recorded message that skepticism is building to the DL, NW, and CO alliance and said members of congress are building opposition to the deal.
Specifically, Senators Specter and Santorum wrote the DOT objecting to the deal and the Air Carrier of Association of America (ACAA), made up of seven low cost airlines led by Southwest & America West, have asked regulators to use the full 150-day process to review the proposed alliance.
The second 30-day DOT three-way alliance review is now underway and will expire on November 21. The DOT said it would consider the ACAA request, but there are now reports the DOT is set to reject the three-way code share proposal.
If the DOT does reject the trilateral alliance, this would put significant added pressures on DL, NW, and CO revenues, which could led NW to make an acquisition offer for some or all of US, to respond to the UA-US code share threat.
Reports inside of NW indicate CEO Richard Anderson is obsessed with the idea of adding the US PHL and CLT hubs to the Eagan-based carrier's network and NW previously expressed interest in obtaining the NW Shuttle.
It's unclear of whether or not any possible corporate transaction between NW & US will materialize, but there have been previous discussions between the carriers.
Meanwhile, UA reported on September 30 it had $1.996 billion in cash, for the traditionally strong third quarter had a cash burn rate of $7 million per day, and its cash burn rate would increase in the fourth quarter. Today UA had to pay a scheduled $41 million public debt payment, debt likely unable to be deferred according to S&P credit analyst Phil Baggaley, and presumably had an October cash burn rate of about $10 million per day. The burn rate and debt payment should put the November 1 cash balance at about $1.645 billion. Furthermore, the company has a $375 million debt payment due on November 17, which it may be able to defer, to German state-owned bank KfW, who also owns 17 rejected US EETCs. It is my understanding KfW was one of the major players unwilling to renegotiate US' leases to market rates, forcing Siegel to file for a formal reorganization.
Rueters reported on October 25 that November 17 is critical day for the Elk Grove Township-based carrier because UA may be forced into a Chapter 11 bankruptcy filing if it cannot make the payment. Several sources familiar with the matter said the bank may be willing to give the No. 2. U.S. carrier about a month or more extension, particularly if it looks to be making progress on labor talks and securing a U.S. government-backed loan. Negotiations with KfW are ongoing, sources said.
As of today, there are no UA labor accords with the AFA making a modest proposal; however, reports within UA indicate the AFA is not pushing the offer and is not holding employee Economic Recovery Program (ERP) union road shows with its rank-and-file membership.
Chip
Specifically, Senators Specter and Santorum wrote the DOT objecting to the deal and the Air Carrier of Association of America (ACAA), made up of seven low cost airlines led by Southwest & America West, have asked regulators to use the full 150-day process to review the proposed alliance.
The second 30-day DOT three-way alliance review is now underway and will expire on November 21. The DOT said it would consider the ACAA request, but there are now reports the DOT is set to reject the three-way code share proposal.
If the DOT does reject the trilateral alliance, this would put significant added pressures on DL, NW, and CO revenues, which could led NW to make an acquisition offer for some or all of US, to respond to the UA-US code share threat.
Reports inside of NW indicate CEO Richard Anderson is obsessed with the idea of adding the US PHL and CLT hubs to the Eagan-based carrier's network and NW previously expressed interest in obtaining the NW Shuttle.
It's unclear of whether or not any possible corporate transaction between NW & US will materialize, but there have been previous discussions between the carriers.
Meanwhile, UA reported on September 30 it had $1.996 billion in cash, for the traditionally strong third quarter had a cash burn rate of $7 million per day, and its cash burn rate would increase in the fourth quarter. Today UA had to pay a scheduled $41 million public debt payment, debt likely unable to be deferred according to S&P credit analyst Phil Baggaley, and presumably had an October cash burn rate of about $10 million per day. The burn rate and debt payment should put the November 1 cash balance at about $1.645 billion. Furthermore, the company has a $375 million debt payment due on November 17, which it may be able to defer, to German state-owned bank KfW, who also owns 17 rejected US EETCs. It is my understanding KfW was one of the major players unwilling to renegotiate US' leases to market rates, forcing Siegel to file for a formal reorganization.
Rueters reported on October 25 that November 17 is critical day for the Elk Grove Township-based carrier because UA may be forced into a Chapter 11 bankruptcy filing if it cannot make the payment. Several sources familiar with the matter said the bank may be willing to give the No. 2. U.S. carrier about a month or more extension, particularly if it looks to be making progress on labor talks and securing a U.S. government-backed loan. Negotiations with KfW are ongoing, sources said.
As of today, there are no UA labor accords with the AFA making a modest proposal; however, reports within UA indicate the AFA is not pushing the offer and is not holding employee Economic Recovery Program (ERP) union road shows with its rank-and-file membership.
Chip