Yes.Zarah said:
The deal is on hold, although the time frame has not been released.
Another waiting game, I guess.
Maa - Republic Sale
- Thread starter goodgirl37
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The deal is on hold, although the time frame has not been released.
Another waiting game, I guess.
BoeingBoy's analysis is very good and the most important point in this discussion. The added liquidity of the Republic deal is not as much of a requirement now as it was before with additional investors, added liquidity, increased ticket prices/revenue, and the America West pilots notifying management that they want the new US Airways to fly EMB-190 on the mainline and they're "willing to discuss competitive pay rates with the company."
Starting on Tuesday both the US Airways and America West ALPA TCC will begin transition discussions with management, lead by Jerry Glass, and this topic will be high on the union's list of priorities.
Also notewrothy, when US Airways and Republic reached their agreement, US Airways had not reached agreement with other investors and financiers. However, today the new company is on target to raise about $1.5 billion with or without the Republic deal.
In my opinion, the Republic pilots may have "shot them self in the foot" and not only could they lose US Airways Express EMB-170 and EMB-190 flying, but EMB-145 flying too.
Regards,
USA320Pilot
Starting on Tuesday both the US Airways and America West ALPA TCC will begin transition discussions with management, lead by Jerry Glass, and this topic will be high on the union's list of priorities.
Also notewrothy, when US Airways and Republic reached their agreement, US Airways had not reached agreement with other investors and financiers. However, today the new company is on target to raise about $1.5 billion with or without the Republic deal.
In my opinion, the Republic pilots may have "shot them self in the foot" and not only could they lose US Airways Express EMB-170 and EMB-190 flying, but EMB-145 flying too.
Regards,
USA320Pilot
ringmaruf
Veteran
Flying Titan said:
Oh, I totally agree, I think keeping MidAtlantic inhouse is the only right option.
But what Jim said is true--US has gone and stupidly boxed themselves into a corner, and they need to sell things now for at least $125 million to satisfy the ATSB.
Now perhaps the ATSB won't make them prepay that much due to the new equity, but I wouldn't bet on it, seeing as how the ATSB is hoping for $250 million in sales, and the $125 million is the minimum they'll accept.
And I just don't know what else US has to sell at this point. The 10 737s are a start. US does own 4x B762ER (648, 649, 650, 656) outright; It could do a sale-leaseback with them, but I don't know the going rate for a 15 year old 767 right now, it might not be enough. And I think that's all the birds that US owns that aren't mortgaged to the hilt, aside from perhaps a few Dash 8's or whatever, and a few simulators.
It could probably still sell/leaseback the commuter LGA/DCA slots, but I don't know that anyone else would promise to sell them back in the future like Republic was going to, and selling those slots without the right to repurchase them would be a really bad idea. The commuter slots plus the 737s plus the 767s should be enough to satisfy the ATSB, though.
One thing I think would be an interesting move would be for US to sell a minority stake in Dividend Miles, like Air Canada recently did with its frequent flyer program; AC got a pile of money for a small stake in Aeroplan. Sadly, I don't think anyone at CCY is that creative to think outside the box here though.
I just hope, for the MidAtlantic employees' sake, that this isn't all a bunch of nonsense that will get their hopes up for nothing. Then again, with the number of times US has screwed them, they probably don't get their hopes up easily anymore.
BoeingBoy
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USA320Pilot said:
When the agreement with Republic was reached, you are correct.
However, when the announcement was made that the plane/slot sale would proceed (June 23), the only investor that hadn't been announced yet was Tudor (July 7) and their $65 million. I'd have to look thru the BK filings to be sure, but I believe that the announcement of forgoing the investment agreement with Republic was simultaneous with the Tudor agreement. Taken all together, they gave up $225 million from Republic ($125 million investment plus $100 million plane/slot sale) and got $65 million from Tudor.
It's purely a guess on my part, but I suspect that the AWA pilot's stand on the Emb-190 together with the MDA pilots solidarity may have been big factors.
Jim
[Out of curiosity, does anyone know where the other $10 million for the Emb-170/slot sale went? The original agreement was for $110 million and the company's press release (and media articles that followed) listed the deal as worth "approximately $100 million".]
BoeingBoy:
I would have to look back at the press releases and bankruptcy filings to be sure, but I thought the Republic equity investment and the MDA sale was the second financial transaction, following the Air Wisconsin deal.
I believe labor issues at MDA and the Republic IBT have contributed to the sale not closing, but I believe your point about the relatively small amount of liquidity obtained for the balance sheet and improved revenue probably has more to do with the MDA deal not closing.
Regards,
USA320Pilot
I would have to look back at the press releases and bankruptcy filings to be sure, but I thought the Republic equity investment and the MDA sale was the second financial transaction, following the Air Wisconsin deal.
I believe labor issues at MDA and the Republic IBT have contributed to the sale not closing, but I believe your point about the relatively small amount of liquidity obtained for the balance sheet and improved revenue probably has more to do with the MDA deal not closing.
Regards,
USA320Pilot
ringmaruf
Veteran
Anybody know what the breakup fee for the Republic deal is? I looked at the investment agreement, from March (haven't seen anything more recent), and there doesn't appear to be one; in fact, it seems to insist on specific performance.
BoeingBoy
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As I said, you are correct about when the two agreements with Republic were reached. Those two agreements gave the company the right to 1) require that Republic invest $125 million and/or 2) sale the aircraft/slots to them for $110 million.
However, on June 23 the company issued a press release stating that they were going thru with the aircraft/slot sale agreement. At that time, the only investor that hadn't been made public was Tudor - that announcement came July 7 (and one would assume that negotiations with Tudor were ongoing when the intentions to consummate the sale to Republic were announced).
Jim
[Edit - If I recall correctly, the investment agreement was contingent on the sale being consumated but I'd have to check to be sure - Jim]
However, on June 23 the company issued a press release stating that they were going thru with the aircraft/slot sale agreement. At that time, the only investor that hadn't been made public was Tudor - that announcement came July 7 (and one would assume that negotiations with Tudor were ongoing when the intentions to consummate the sale to Republic were announced).
Jim
[Edit - If I recall correctly, the investment agreement was contingent on the sale being consumated but I'd have to check to be sure - Jim]
ringmaruf
Veteran
BoeingBoy said:
Did US really have a choice though? I thought Republic had the right to buy MidAtlantic even if US didn't want to sell it. Or was that only if Republic went through with the equity investment?
BoeingBoy
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I just checked the agreement, and as I read it the option is entirely on the US side except that the sale must be consumated in order that US insist on the investment.
To quote the filing that accompanied the agreement:
Conditions. A number of conditions must be satisfied or waived by the Investor before the Debtors may exercise the Equity Investment Option, including, without limitation, customary closing conditions and the following:
(viii) The Debtors shall have exercised and consummated the Slots Option and the purchase by Republic of the Currently Owned Aircraft shall have been consummated;
Jim
ps - you asked about any breakup fee. I didn't see one either, except there are certain fees:
Fees and Expenses.
(i) Upon the Effective Date, Group shall pay to the Investor non-refundable fully paid fees as follows: (A) $735,000, if the Slots Option has been exercised, irrespective of whether Group elects to exercise the Equity Investment Option, and (B) $200,000, if the Slots Option has not been exercised.
(ii) If the Investment Agreement terminates and Group has not exercised the Slots Option, Group shall reimburse the Investor for all reasonable fees and expenses incurred by or on behalf of the Investor in connection with the negotiation, preparation, execution and delivery of the Transaction Documents; provided, that the aggregate amount of such reimbursement shall not exceed $200,000.
(j) Chautauqua Pre-Petition Claims. In settlement of issues surrounding the 1999 Jet Service Agreement, and in consideration of the Investment Agreement, the Debtors have agreed that upon the entry of the Omnibus Order, Chautauqua shall be deemed to hold an allowed pre-petition unsecured claim in these chapter 11 cases in the amount of $3.2 million on account of claims arising under the 1999 Jet Service Agreement (the “Chautauqua Pre-Petition Claimâ€). US Airways will not be required to cure any default under the 1999 Jet Service Agreement in connection with the entering into and assumption of the Amended and Restated JSA.
To quote the filing that accompanied the agreement:
Conditions. A number of conditions must be satisfied or waived by the Investor before the Debtors may exercise the Equity Investment Option, including, without limitation, customary closing conditions and the following:
(viii) The Debtors shall have exercised and consummated the Slots Option and the purchase by Republic of the Currently Owned Aircraft shall have been consummated;
Jim
ps - you asked about any breakup fee. I didn't see one either, except there are certain fees:
Fees and Expenses.
(i) Upon the Effective Date, Group shall pay to the Investor non-refundable fully paid fees as follows: (A) $735,000, if the Slots Option has been exercised, irrespective of whether Group elects to exercise the Equity Investment Option, and (B) $200,000, if the Slots Option has not been exercised.
(ii) If the Investment Agreement terminates and Group has not exercised the Slots Option, Group shall reimburse the Investor for all reasonable fees and expenses incurred by or on behalf of the Investor in connection with the negotiation, preparation, execution and delivery of the Transaction Documents; provided, that the aggregate amount of such reimbursement shall not exceed $200,000.
(j) Chautauqua Pre-Petition Claims. In settlement of issues surrounding the 1999 Jet Service Agreement, and in consideration of the Investment Agreement, the Debtors have agreed that upon the entry of the Omnibus Order, Chautauqua shall be deemed to hold an allowed pre-petition unsecured claim in these chapter 11 cases in the amount of $3.2 million on account of claims arising under the 1999 Jet Service Agreement (the “Chautauqua Pre-Petition Claimâ€). US Airways will not be required to cure any default under the 1999 Jet Service Agreement in connection with the entering into and assumption of the Amended and Restated JSA.
ringmaruf
Veteran
Yeah, that's what I saw too. The paragraph that troubles me, though, is:
Section 10.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief.
As for Republic having an option to buy MDA, you're right, I don't see that in the agreement. But what I'm thinking of is the press release, which says:
After the effective date of US Airways’ Chapter 11 plan of reorganization, in the event that US Airways does not exercise the slots sale/leaseback option, Republic has an option to purchase/assume debt and leases for all 28 EMB-170 aircraft and to fly them as US Airways Express. The net effect, should this portion of the agreement be implemented, would be the sale of US Airways’ MidAtlantic aircraft to Republic.
Section 10.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief.
As for Republic having an option to buy MDA, you're right, I don't see that in the agreement. But what I'm thinking of is the press release, which says:
After the effective date of US Airways’ Chapter 11 plan of reorganization, in the event that US Airways does not exercise the slots sale/leaseback option, Republic has an option to purchase/assume debt and leases for all 28 EMB-170 aircraft and to fly them as US Airways Express. The net effect, should this portion of the agreement be implemented, would be the sale of US Airways’ MidAtlantic aircraft to Republic.
BoeingBoy
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You're right about Republic's option to insist on the aircraft sale/lease transfer - I missed it. The agreement says:
Section 6.03 Republic Aircraft Transaction. If the Company and/or US Airways exercises and completes the Slots Option, the Investor shall complete the Republic Aircraft Transaction (subject to the applicable conditions thereto and to the terms and conditions of Exhibit B). If the Slots Option has not been exercised, the Investor shall have a one-time option, exercisable by written notice to the Company at any time during the thirty (30) day period commencing upon either the Effective Date or the date of termination of this Agreement (unless such termination is pursuant to Section 9.01© or (d) hereof), to purchase the Owned Aircraft and to assume the leases of the Leased Aircraft under the terms of the Republic Aircraft Transaction as provided in Exhibit B. If so exercised, the Company shall cause its Affiliates to enter into the Republic Aircraft Transaction (subject to the applicable conditions thereto) within thirty (30) days of delivery of such notification (or such other date as the Investor and the Company shall agree in writing). Prior to the expiration of Republic’s option, neither the Company nor US Airways shall, directly or indirectly, enter into any agreement or arrangement with respect to such Owned Aircraft and Leased Aircraft that would materially change the Company’s or US Airways’ ownership interest in such Owned Aircraft or Leased Aircraft.
Of course, the agreement is subject to termination for various reasons, with the most likely being "the Investor or the Company, if the Closing shall not have occurred on
or before December 31, 2005" or "mutual agreement in writing by the Company and the Investor" since most of the rest deal with breaches by one side or the other.
Jim
Section 6.03 Republic Aircraft Transaction. If the Company and/or US Airways exercises and completes the Slots Option, the Investor shall complete the Republic Aircraft Transaction (subject to the applicable conditions thereto and to the terms and conditions of Exhibit B). If the Slots Option has not been exercised, the Investor shall have a one-time option, exercisable by written notice to the Company at any time during the thirty (30) day period commencing upon either the Effective Date or the date of termination of this Agreement (unless such termination is pursuant to Section 9.01© or (d) hereof), to purchase the Owned Aircraft and to assume the leases of the Leased Aircraft under the terms of the Republic Aircraft Transaction as provided in Exhibit B. If so exercised, the Company shall cause its Affiliates to enter into the Republic Aircraft Transaction (subject to the applicable conditions thereto) within thirty (30) days of delivery of such notification (or such other date as the Investor and the Company shall agree in writing). Prior to the expiration of Republic’s option, neither the Company nor US Airways shall, directly or indirectly, enter into any agreement or arrangement with respect to such Owned Aircraft and Leased Aircraft that would materially change the Company’s or US Airways’ ownership interest in such Owned Aircraft or Leased Aircraft.
Of course, the agreement is subject to termination for various reasons, with the most likely being "the Investor or the Company, if the Closing shall not have occurred on
or before December 31, 2005" or "mutual agreement in writing by the Company and the Investor" since most of the rest deal with breaches by one side or the other.
Jim
ringmaruf
Veteran
BoeingBoy said:
I hope so, for the sake of the 850 employees that are truly awesome airline employees.
Whatever way it goes, those MAA pilots ROCK!!!
BeingBoy:
I believe it is now far more likely than not that MDA will not be sold to Republic.
Separately, Flight International just provided another story on the the new US Airways EMB-190 situation.
See Story
As negotiations unfold, it will be interesting to see how this all washes out regarding America West Express, MDA, US Airways' wholly owneds, and its affiliate carrier's
Regards,
USA320Pilot
I believe it is now far more likely than not that MDA will not be sold to Republic.
Separately, Flight International just provided another story on the the new US Airways EMB-190 situation.
See Story
As negotiations unfold, it will be interesting to see how this all washes out regarding America West Express, MDA, US Airways' wholly owneds, and its affiliate carrier's
Regards,
USA320Pilot
