Is It True?

[whlinder]

Baldanza would understandably like to run an airline and nobody cannot be replaced.

[post="238353"][/post]​

For once I actually agree with you.

But I also agree with funguy: Who the heck would want to work there and take on that risk? I mean I find many of the jobs listed as open at US very interesting and intriguing (ones I am qualified for) but I sure as heck don't have the risk tolerance for them and I know the pay won't be enough to offset that risk.

Regarding the RJs, I still haven't heard why its ok for US to fly RJs around as a LCC but at the same time FlyI is losing money worse than anyone.

The optimists seem to sing the tune of "Once the transformation plan is implemented, we'll be fine." And I hope that happens. But after reading Siegel's quote as well as the one from the board member, I have to ask: Who is going to be around to oversee the implementation of the plan?

Another thought, one that might warrant a seperate thread, regarding an UCT/ICT/IUD: UA has been screwing with their BK judge, and he seems open to competing business plans. Can someone do the same for US? Could TPG present a business plan to both courts planning to merge the bankrupt companies? (I honestly have no idea and don't know too much about the BK proceedings)

 

[funguy2]

whlinder:

good point on the "who will implement the plan".

And good question on the merger/BK issue. If you continue to assume that someone is looking at the UCT, its a valid question. And clearly, UAL and UAIR do not have to resources to complete this on their own (as by going to BK court, they essentially say "I do not have enough cash to pay my current bills.")

 

[RowUnderDCA]

Will BBB running Spirit complicate U's plans at FLL? Won't BBB know how to confound U at FLL? On the other hand, Wolfe's taking the helm of U led to an attempted merger with his prior employer UA. I really don't think there is room for U and Spirit (NK?) on the East Coast if U's plan is to succeed. Both will need to grow, especially NK.

I have to admit that I haven't figured out whether the posters on this thread are implying that BBB was or was NOT the architect of U's expansion in the Caribbean and/or FLL plan. ha... maybe U can work a code share with NK. But there's scope against, that right?

 

[RowUnderDCA]

I think it might have crossed TPG's mind to let RSA have it and pick up the pieces for less later, however, I wonder if they'd really bother with combining U and UA. I'd think it would be too much headache for not enough benefit. Participate in the reorg of one but not both. To discuss the one I'd suspect they'd choose, I'd have to change boards.

 

[mweiss]

I know you're kidding, Michael

[post="238368"][/post]​

Yes, I am.

...but if a carrier had some available cash lying around (it wouldn't take much), they might be smart to buy both airlines just to liquidate them - keeping the bits and pieces that were attractive, of course.

True enough. So, who's got cash lying around?

As of 9/30/04
WN had $1.8B
DL had $1.4B
NW had $1.3B
CO had $1.1B
B6 had $0.4B
FL had $0.3B
AA had $0.1B
F9 had $0.1B

WN is in the best financial condition to buy, but their method of gaining market share is placing an order with Boeing. B6 is in much the same boat (though they don't buy American).

AA, and F9 are not rich enough to do it.

DL seems to be using their cash to fund the shift in pricing.

FL's really borderline to be acquiring. I doubt they'd be able to accomplish much by acquiring US...though imagine what could happen if they bought UA out of DEN! Certainly they wouldn't want to swallow the UA elephant, even if they were to try to sell off parts after the acquisition. Imagine that indigestion.

CO's in debt up to their eyeballs...the cash investment isn't likely to buy them much, particularly in light of their presence at EWR. Maybe they'd be interested in the LGA slots, considering that they own the gates...but it's hard to believe that they'd be better off running that show themselves.

That leaves NW. I could imagine them being happy to pick up US's gates and slots. The A320s at both airlines use the CFM56s, which is a help. The 737s are useless to them, and the 767s aren't exactly helpful (though at least there's some commonality with the 757s). Speaking of which, the 757s are not engine-compatible (US has Rolls, NW has Pratts).

So maybe NW would be interested in gates (BOS and DCA...maybe they'd be able to get a deal with CO for LGA), slots (DCA, and LGA if they can get the gate deal with CO), and some slightly used A320s. Not a bad use of some of their cash.

 

[BoeingBoy]

True enough. So, who's got cash lying around?

[post="238417"][/post]​

Not that I think anyone would do what I "suggested" (or that the government would approve of who I had in mind as having the cash), but I think you missed one of your numbers....

From AMR's 3Q04 report from their website:

"Ends Quarter With $3.6 Billion In Cash And Short-Term Investments, Including A Restricted Balance of $481 Million"

At current prices, it'd only take about $300 million to buy both companys, and that's paying about a 50% premium.

Jim

 

[madders]

i am betting Nocella will replace him the bbb

 

[mweiss]

From AMR's 3Q04 report from their website:

"Ends Quarter With $3.6 Billion In Cash And Short-Term Investments, Including A Restricted Balance of $481 Million"

[post="238421"][/post]​

Point taken. I was using the strictest definition of cash, rather than cash & short-term investments. If you include the short-terms, all of those numbers rise (though, obviously, by varying amounts).

 

[funguy2]

I think it might have crossed TPG's mind to let RSA have it and pick up the pieces for less later, however, I wonder if they'd really bother with combining U and UA. I'd think it would be too much headache for not enough benefit. Participate in the reorg of one but not both. To discuss the one I'd suspect they'd choose, I'd have to change boards.

[post="238414"][/post]​

Hehe I couldn't agree more.

 

[funguy2]

You missed:

HP $0.4B (although much borrowed)
AS $0.9B (and profitable in the 3Q)

 

[mweiss]

You missed:

HP $0.4B (although much borrowed)
AS $0.9B (and profitable in the 3Q)

[post="238432"][/post]​

Yes, I did. It's hard to remember the whole list when I'm doing those sorts of replies. 🙂

AS has been profitable more often than not (on a quarter by quarter basis) since 2001. But they'd have no use for any of US's or UA's fleet. I think it'd be too much of a stretch for them to come blasting into the East Coast markets (especially with a name like Alaska). I doubt that they'd want to add a DEN hub, either, especially if it means daily head-to-head with a LCC.

HP has the big debt problem. They could take the 737s, but I don't know if they even have any of those left in their fleet anymore. Even if they do, they've been phasing them out. They do still have Rolls-engined 757s, so they could take on some more. The A320s are not engine-compatible between HP and US, but they are compatible between HP and UA. If HP could get past the debt issue, they'd probably do well in DEN.

 

[sfb]

The problem with spinning a potential ICT/UCT/whatever is that airline mergers are expensive. I simply cannot see anyone willing to spend a half billion dollars or more trying to integrate US Airways with another carrier. It's even more far-fetched to believe that someone would use a post-bankruptcy US Airways to acquire another airline, given that the company hasn't even found anyone to provide real DIP financing.

In any case, the Airbus fleet with CFM engines would be a serious impediment to most possible acquirers. NW also operates similar Airbus aircraft and has a decent cash position (around $2.5B in cash and equivalents), but they're also up to their necks in debt, with about $15 billion in debt and pension liabilities. HP has different engines and in any case needs to hold on to its cash what with installment payments on its ATSB-guaranteed loan coming due. (And HP does still operate a substantial fleet of 737-300's). United is bankrupt with no clear path to emergence, and for that airline's management to attempt a reprise of the UAL-U merger after terminating pensions and two rounds of paycuts would lead to a meltdown that would make the Summer of 2000 look like a picnic.

It makes sense for BBB to go to Spirit, since it looks like he'd be the president there and, more importantly, would get a generous option package for when privately-owned Spirit does its IPO. The bad news for US is that both airlines are building up FLL, and NK has lower costs.

 

[DOODY]

Here it is........

1/12/2005
Spirit Airlines Appoints Ben Baldanza President and Chief Operating Officer
FORT LAUDERDALE, Fla. (January 12, 2005) – Spirit Airlines is pleased to announce the appointment of B. Ben Baldanza as President and Chief Operating Officer of the company. He will join Spirit on January 24, 2005.

Baldanza will be directly responsible for the bulk of Spirit's business, including operations, maintenance, sales and marketing.

"During these very challenging times, we are delighted to welcome someone as qualified and talented as Ben Baldanza," said Jacob Schorr, Chairman and Chief Executive Officer, to whom Mr. Baldanza will report. "With vast domestic and international experience, he brings an outstanding balance of operational, financial, and marketing expertise. He is well qualified for our domestic and international expansion where we have opened three new routes in less than four months. I am confident that Ben is the ideal person for this position in these incredibly interesting and challenging times, and look forward to welcoming him to our family of employees on January 24th."

"I am excited to join Spirit at such an exciting time in the company's development. While the airline industry is in a massive state of change, Spirit has the cost structure and the fundamentals to ensure stability and growth," said Baldanza.



Baldanza most recently served as Senior Vice President of Marketing and Planning at US Airways. In this position, he was responsible for route planning, scheduling, pricing and revenue management, as well as marketing, sales, cargo, distribution, and US Airways’ international division. Prior to US Airways, Baldanza served as Managing Director and Chief Operating Officer of Grupo Taca, an airline based in El Salvador currently serving 34 cities in 19 countries. Baldanza previously held positions at Continental Airlines, where he was Executive Vice President Marketing, Northwest Airlines, and American Airlines.

Baldanza holds a Bachelor of Arts degree in economics from Syracuse University and a Master of Public Affairs, specializing in transportation and economics, from Princeton University

 

[mweiss]

The problem with spinning a potential ICT/UCT/whatever is that airline mergers are expensive. I simply cannot see anyone willing to spend a half billion dollars or more trying to integrate US Airways with another carrier.

[post="238485"][/post]​

It's been said on this forum many, many times...

Nobody's going to buy US Airways. The company is worth less than the sum of its parts. If it were the 1980s, some corporate raider would swoop in, sell off the pieces, and pocket the change.

The best that anyone can hope for is that someone buys the gates and slots, and maybe some of the aircraft. I find it exceptionally hard to believe that the seniority lists would end up anywhere but the shredders.

Lest it sound otherwise, I want to make it clear that I'm disappointed that it came to this. The vast majority of US employees didn't deserve any of this. You invested your time, energy, and expertise in a company that was managed by a string of people who were either unwilling or unable to retune the company to survive a changing landscape.

 

[USA320Pilot]

A corporate transaction for any legacy carrier would require venture capital, however, the investment banking community is discussing different corporate modeling scenarios and US Airways is part of the discussions.

There could be news regarding a deal in the not-so-distant future, but nothing will probably happen until US Airways gets its finances in order and emerges from bankruptcy.

Regards,

USA320Pilot