Questions on US Airways'' future

C

chipmunn

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Dear Moderators:
I made the following post and you closed the thread stating it was duplicate information. I disagree with your position because I posted questions throughout the text and asked for legitimate debate, but you denied this specific discussion; therefore, I ask that you do not delete this thread.
Thanks.
Chip
Reposted comments:
US Airways RSA DIP financing agreement requires cost cuts and RSA as the DIP financier said it will move to liquidate the company if labor cost reductions do not occur.
All of US Airways other financing agreements including the federal loan gurantee, equity investment, GECAS DIP financing, and GECAS post bankruptcy financing require all bankruptcy cost reductions to be complete.
With so much on the line and all of the heavy hitters demanding cuts or the airline will liquidate, what do the no voters expect these financial institutions to do if the companny does not obtain ratified TA's with its unions?
Do the no voters believe they will put their capital at risk when their terms to lend US Airways money is not met?
US Airways told the bankruptcy court today that November revenue declined and its net loss widened. The Associated Press reported US Airways' revenue totaled $519 million for the month, down 9 percent from $572 million in October, according to the company's monthly operating report. Net losses amounted to $118 million, a 157 percent increase from $46 million in October.
Becasue of the revenue shortfall, more cost cuts are required or the doors could close foreover. Could this be why every union leadership group has recommended members vote yes on the TA's?
As Chris Chiames said, it appears to me comments by people like Tim Nelson and Jim Root represent dangerous and irresponsible recommendations.
Chip
 
Management has the employees and unions over a barrell right now. That won't be forever. The important thing right now is to live to fight another day! The tide will turn!
 
Chip:

I am honestly not too worried about the TA ratifications. No one wants to give more concessions, but it will be done, even if no one ever admits to voting for the TA.

My real concern for US at this point is its alliance with United. Unlike US, that company did not enter BK with clear cost-cutting targets, an equity investor, or a sound business plan for the future. Furthermore, the UAL DIP Agreement has rather onerous terms which likely mean the end of UA in its current avatar (though the company could continue business with a radically restructured business model). US' ATSB plan depends on revenue generated from a UA alliance; if UA were to stop operating or otherwise revamp itself in a manner detrimental to US, all of US' efforts over the past six months coud be for naught.
 
[P][SPAN class=BodyFont]Chip:[BR][BR]I am honestly not too worried about the TA ratifications. No one wants to give more concessions, but it will be done, even if no one ever admits to voting for the TA.[BR][BR]My real concern for US at this point is its alliance with United. Unlike US, that company did not enter BK with clear cost-cutting targets, an equity investor, or a sound business plan for the future. Furthermore, the UAL DIP Agreement has rather onerous terms which likely mean the end of UA in its current avatar (though the company could continue business with a radically restructured business model). US' ATSB plan depends on revenue generated from a UA alliance; if UA were to stop operating or otherwise revamp itself in a manner detrimental to US, all of US' efforts over the past six months coud be for naught. [BR][BR][/P]
[P][/SPAN][/P]
[P]First, I don't believe it's a done deal until the votes are counted. Too many close minded individuals who want guarantees. As if psychics are at the helm who can tell them everything that will comes down the road in advance. Individuals insist on making a stand, when in reality it will only be U's demise. Some union leaders are far out of their element and are in effect calling for their members slaughter! [BR][BR]UAL problems are only one aspect of U problems. There are many. Maybe U will go on and be a great company or maybe it will simply fail regardless what steps are taken. There are no guarantees in this life to see another tomorrow, and U is no different. If what you read on these boards is indicative of the whole of U's employees attitude, I believe U's fate is sealed. There is so much discord and so much outside pressure pushing for U's demise that between these two powerful forces it will take an even greater force to sustain U from itself and the competitors who want U's demise. [BR][BR]The unskilled employees are going to find life difficult at best and the skilled will be sorry they carried such attitudes when it was not necessary, but it will be too late to change. This is what I observe while working, breathing and living U from the inside. God be with us all.[/P][FONT size=2][/FONT]
 
Deltawatch:

Nobody likes this situation and I hate to see you, me, or anybody else lose pay, benefits, or retirement. What's interesting about your comment is that the AFA & CWA use an electronic voting system and the union leadership gets a daily count of the "yes" & "no" votes from the vendor.

Therefore, the CWA and AFA union leadership have a good idea of what will occur in their ratification process.

Good luck to you my friend, in whatever avenue you elect to pursue.

Chip
 
Cavalier:

If the employee posts on this site were truly representative of the US rank-and-file, then EVERY TA would have been rejected and the company would have liquidated months ago.
 
Chip thank you for complaining about the closer of your thread. The poor judgment demonstrated by the moderator causes this forum to lose credibility. It’s call selective censorship!
 
Thanks Chip, Iv always managed to be successful and I plan to continue. This was once a great job and it’s been very good to me. To be honest with you I saw the handwriting on the wall years ago and started planning for today. The mismanagement of this company dating back to the US/PI merger, the over all movement in the USA to convert every business to a Wal-Mart model. The use of employee groups against one another, (Express pilots against Mainline pilots, Maintenance against ALPA, AFA etc.) management has perfected the game plan. Chip it’s not over the more RJ’s on the property the closer you guys (mainline pilots) are to were I am today, they are coming to get you next. Hopefully you guys can get a couple more good years out of it before they do. I owe a lot to this company and my job. . .I’m set financially, I been able paid off a $350,000 piece of property and I’m totally debt free. Iv fought the good fight, right to the end………and Im afraid its here for Customer Service.
 
Well, Chip you do not have to worry about the CWA TA. I have learned from a reliable source the vote will be much closer this time, but it appears it will pass. I personally feel that the company could have accomplished it’s turn around without dismantling one of it’s biggest asset, the frontline customer service group. There may be a price to pay for doing so, time will tell. I can tell you from my own observation that the service AA passengers get from American Eagle is very sad. Most of us are making plans to leave, the ones I have talked to that plan to say are not going to bust their butts any longer. And like many have stated a very few, can do not do any better and u is stuck with them. Good luck to all.
 
Avek:

I agree with your assumption and management clearly understands this point. As you know, the business plan presented to the ATSB called for $300 million in future alliance revenue and this issue must be addressed through other revenue enhancements and/or cost cuts to qulaify for hte loan guarantee.

Some of this revenue will come from the Star alliance, where Star members will now have greater incentive integrate with US, now that UA has announced it will downsize and may sell assets.

However, if UA is forced to sell assets for the reasons you described, the Chicago-based airline's best option may be to divest of these assets to its U.S. domestic alliance partner US, to keep revenue within the alliance versus transferring it to the competition.

Interestingly, UA's DIP financing agreement requires UA to maintain its revenue and cash flow, while simultaneously cutting costs. This is a very difficult task, but UA could keep a lot of this revenue by selling gates/equipment to US in cities like SAN, LAX, SFO, SEA, and DEN, as well as gates/slots at ORD. In addition, UA could sell US some of its fleet to US where its employees could operate these assets at lower cost/more productive contracts, provided all of the TA's are ratified or new contract terms imposed.

I think it is quit obvious UA and US need one another and interestingly if UA is forced to divest of assets to prevent a total liquidation, it clearly would be better for Glenn Tilton to sell the assets to US.

Let's not forget US and its pilot negotiators had contract language (that did not end up in the recent restructuring agreement modification), that would have required RSA to provide funding to buy the assets of a major airline that had over $3 billion in quarterly revenue, provided US management elected to pursue such course of action.

Clearly for the US ALPA Negotiating Committee to have included this verbage in contract language and the parties to have discussed this clause at the negotiating table, there must be reason for ALPA to believe some sort of "interesting corporate transaction" could proceed. Obviously, time will tell whether or not this could occur.

Chip
 
Chip...I don't think RSA wants to stick around if the labor contracts changes have not been "agreed" to. Airlines don't work well if labor is po'd. If the company's plan B is to force their will on labor,they will have to find some other dip.
 
Chris, what you fail to understand about many of the fleet service and customer service employees, is we feel no matter which way we vote we will be out of a job. The MDA in many cities are not considered an option. Most ground employees I have talked to are planning life outside of USAirways.

Sad to say I do not feel the need to save a pilot or flight attendants job. I do not have a pension, only a 401K that can be rolled over upon my departure, unlike pensioned employees we have less invested in the future of the company.

Since 1989 50% of the stations I have worked have become express. Many of us are numb to the threat of loss of job, we have experienced that threat for over a decade.

You have said quit. But I still like my job. I enjoy the process of working a flight and solving problems of customers and employees. I also love airplanes, often stopping a moment just to watch one take off and land. Having other skills and could do other jobs but I chose the airline business. I will always be grateful for the opportunity USAirways has given me in pursuing this career.

Despite all of this I will vote yes. As there is a chance to be able to receive severance, barring war. Though a no vote will place me in just about the same position.
 
The January 10 vote by the IAM, AFA, & CWA will obviously be interesting and I thought it would be interesting to discuss what could happen if any or all of the remaining unions fail to ratify their TA’s. To start this thread I asked some question to create thought-provoking discussion and I have thought about what could occur if a TA fails rank-and-file ratification.

If the deal(s) are not approved, US Airways is in violation of the bankruptcy financing agreements and RSA has said they would withdraw their financial support, which management said would led to certain liquidation. Nobody wants this to occur; therefore, what could be management options?

First, management would have to convince RSA, the unsecured creditors, the ATSB, and GECAS that it could obtain required cuts through other means to meet the financing requirements. These could include:

1. Seek to terminate IAM and AFA pension plans. These two labor groups possess about 24 percent of US Airways projected $3.1 billion retirement obligation from 2003 to 2009. If these plans were terminated, the airline could save about $744 million or $106 million per year. The mechanics and F/A’s would then be eligible for reduced pension awards and obtain PBGC minimum benefits, while the company would obtain relief and help in funding the pilot pension. In fact, in his December 24 letter to all employees US chief executive officer Dave Siegel said, “The only thing that puts the IAM and AFA pensions at risk is a ‘no’ vote on ratification.â€￾

2. Implement AFA “me tooâ€￾ contract changes to improve productivity in areas such as scheduling and duty rigs to match changes to the ALPA contract.

3. File a S.1113(e) motion with the court seeking immediate W-2 cuts. An option would be for the company to seek a 5 percent cut in the event of war or another terrorist attack plus another 5 percent to offset the lack of productivity and benefit changes agree to by other labor groups. What’s interesting about this option is that the first ever S.1113(e) hearing will be held this Friday, January 10, in the UA vs. IAM proceeding and there could be a legal precedent for US management to use against labor.

4. After completing the S.1113(e) hearing, if US management was successful to obtain let’s say a 10 percent W-2 cut from any union who does not ratify a TA, then the company would have time to file a full S.1113 motion, even though it signed a S.1113 letter stating it would not use the legal remedy. The company could then move to eliminate severance pay and have the court impose productivity and benefit changes.

5. Move to close more mainline stations, replace this service with RJs, and furlough CWA and IAM-FSA employees. In addition, this would free up free up mainline aircraft to fly into new markets where the company could use contractor support for IAM and CWA functions.

6. Seek to close mainline operations at UA stations such as ORD, DEN, SAN, LAX, SFO, and SEA. US is already moving to UA’s SEA North Terminal in May and there are reports a similar move could occur in LAX. Without ratified agreements, the company could seek these changes to reduce costs by allowing its alliance partner to handle all mainline flights. This could also be done on a reciprocal basis in cities like PIT, CLT, PHL, & DCA, where US employees would work UA flights, without an increase in manning to improve productivity for both airlines.

7. US is currently evaluating changes to the Shuttle product to provide a competitive product at a lower cost. One change the airline could implement is to fly the new projected MDA EMB-170 on this route. This aircraft is not an RJ in a traditional sense, but has a cabin more like a B-737. The company could fly this product in its new MDA division and furlough current mainline DCA, LGA, and BOS employees and replace them with new MDA employees.

Management has been one step ahead of labor during this restructuring, the court has agreed to virtually all company motions, and the future of the airline lies in the decisions of the union rank-and-file. This situation sucks and nobody likes it, but I believe the question is if any TA is not ratified, could management be forced to transition to what the company believes is a “labor friendlyâ€￾ to a Labor unfriendlyâ€￾ restructuring and seek to impose some changes like the one’s listed above?

Also noteworthy, could US obtain deeper cuts on those unions who do not ratify their TA, which would make the company financially stronger and have more assurance of obtaining its required financing? Could the union provide management with motivation to seek this alternative course of action?

Let’s not forget, US senior vice president of corporate affairs Chris Chiames said, “(comments by people like Tim Nelson and Jim Root) represent dangerous and irresponsible recommendations.â€￾

As I have said before, this situation sucks for all US employees, but as Oldiebutgoody said, “Management has the employees and unions over a barrell right now. That won't be forever.â€￾ In my opinion, now is not the time to vote with emotion, but with logic because whether it's liquidation or forced changes, the end result could be much worse for those employee groups who vote “noâ€￾.

Chip
 
Chip, You forgot the company can also SEEK TO TERMINATE ALPO's pension plans. That would be a HUGE SAVINGS !!!