More On Rj Financing

USA320Pilot

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May 18, 2003
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RJ financing falls through for US Airways

WASHINGTON (ATWOnline) - Regional jet manufacturers Bombardier and Embraer have terminated their financing agreements for some 100 regional jets ordered by US Airways after the airline went into its second bankruptcy last week.
The 50/70-seat RJs were seen as a key element in the bankrupt carrier's first recovery scheme.

"It's not unusual for a company under bankruptcy not to obtain financing or take delivery of aircraft. It's more accurate to say that we are not pursuing financing discussions right now because there is no point," Bombardier VP-Corporate Communications John Paul MacDonald told ATWOnline. "Once the company leaves bankruptcy, financing discussions will resume."

To date, US Airways has accepted delivery of 35 CRJ200s, five CRJ700s and 22 Embraer 170s from an original order for 170 RJs, airline spokesperson David Castelvetter told this website. There will be no further RJ deliveries, he added. Embraer spokesperson Doug Oliver said the company will continue to discuss its "future" with the airline.
 
So then Ornstien and Mesa will pick up the jets, as well as the associated expenses, and run them on the routes the affiliates and MDA were going to run them on anyhow.

This could be viewed as good news for the company and bad news for the affiliate carriers and MDA who were hoping to have more jets to expand the work force at lower wages and work rules. Now, Mesa will be doing the same thing and the company will "farm out" yet more work away from the mainline.

I don't see this as materially affecting the transformation plan if there is indeed a plan other than busting the unions and farming out work.

mr
 
mw,
do not assume that farming out flying will result in a sustainable company. There is some degree of control that an airline has to take if it is going to rely so heavily on regional jets. If US outsourced all of their RJ flying but kept their mainline flying in-house, they would have to absorb all of the risk associated with the RJ flying but have little control; current RJ contracts provide very little risk to the operator and a great deal of risk to the marketer and bill payer. There will be plenty of companies that will fly RJs for US or any other airline as long as there is the prospect of making a quick buck without any risk.
I don’t think it’s any mistake that two of the largest and most experienced regional jet marketers, American and Delta, have a combination of owned and contracted regional carriers. Ownership of some provides a great deal of control and the ability to move assets as needed while contracting adds an additional level of service that is, in one sense less flexible, but at the same time less committed.
 
Just a note on the RJ thing....I've heard that PSA has already furloughed some pilots in training....not good!!!
 
the turtle said:
why are you folks so sure it will be Mesa?
[post="182662"][/post]​
I will say it time and time again, MESA can barely run what they have now much less add anymore. Its a deplorable operation. Low cost at any cost.
 
javaboy said:
just thinking out loud here,

if Ge pulls financing on EMBs,

what about the other airplanes backed by GE (currently on property)

what about the engines backed by GE (currently on property)

and wasnt the entire gonna save the company plan by buying loads of EMBs?

how big a jump is it from no $$ for EMBs = No EMBs, No EMBs = no transformation plan.

i sincerly hope that this a "required" step in the process in order to renegoiate the terms of the contracts themselves.
Still a tip of the cap to all the employees who continue to work in this time of uncertainty, thank you for being professional.
[post="180688"][/post]​


this is what i have been wandering. maybe i am way off but here goes.
why does u have to use rjs for their plan. why cant they continue to put planes at midatlatnic but not use rjs from emrbraer. why cant they use old planes like 737s or dc9s or something like that that they are not using anyways. wouldnt that make good sense.
that way they wouldnot have to worry about bying more planes but they could still use midatlatnic as a way to bring people back to work and also expand into the caribean places that they wanted midatlatnic to go. couldnt this work. just to use what they already have. >? thanks.
 
atlantis,

"why cant they use old planes like 737s or dc9s or something like that that they are not using anyways."

Two problems, one of the "as I understand it" variety and the other I know.

1 - I understand that we don't have old planes sitting somewhere idle. Other than 1 727-200 that we are leasing to someone (as of the last I saw), we are operating all the airplanes we own or lease. The planes we parked were all returned to the leasors. Again, this is my understanding only.

2 - The scope language in the pilot's (at least) contract prohibits any affiliate or W/O'ed (including MDA in that though technically it's not) from flying anything with over 76 seats (70 except for the E-170). This is what prevents the company from moving all the planes (up to and including the A-330's) to MDA (or W/O'ed or affiliates) and firing all the mainline employees.

Jim
 
But doesn't #2 kind of make a point that the judge will find supportive of management's offer? If ALPA itself has said.... of course it's ok to pay some pilots much less... as long as you keep my salary higher, how does the U ALPA say what's good for the goose isn't good for the gander?

I guess if U were looking to abrogate Mid-Atlantic's wages too, then that might be seen as unreasonable. I don't know. It just seems I can conceive of more convincing arguments in favor of an 1113e. It does seem pretty stinging, though.

Wouldn't the furloughs out of seniority likely be the step just before liquidating anyway? You don't do heart massage on a patient with a bit of erhythmia, but wait for cardiac arrest, at least.
 
Can anyone verify/expound on the furloughs at PSA? Details are appreciated.

thanks,
jm
 
PineyBob said:
Your Screwed!


[post="182760"][/post]​

Just a quick reminder. The use of the word "Your" shows possession. The use of the word "You're" is equal to "You are".

Just a little pet peeve of mine.

:p
 
Bob,

I've taken the liberty of rephrasing your list:

If you enter into an agreement? You're screwed - the company can still go to the judge and abrogate that agreement (per 1113 letter proffered).

So you end up before the judge? You're screwed - there's a good chance of liquidation anyway.

If the company liquidates? You're screwed - unless you have a plan B.

Jim

PS - Just remember, based on what's in the BK filings, we have to have $725 million in unrestricted cash on Oct 16 or the ATSB can call the loan. As someone we know and love says....

tic toc tic toc