Slot Swap
- Thread starter Hope777
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WorldTraveler
Corn Field
- Dec 5, 2003
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the timeline is for other competitors to gain access to the new slots before DL and US can swap their own swaps... not sure of the exact implementation schedule for DL and US but there was a proposal at one time that the new carriers would get something of a headstart in starting their new routes before DL and US and that at least the LGA swaps would be done in a couple groups...
honestly, that is probably as much to DL and US' benefit as it is for their new competitors because DL and US can see how their competitors will use their slots and then make their own choices.
WorldTraveler
Corn Field
- Dec 5, 2003
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not sure of your meaning but DL and US will receive the revenue for the slots they have to divest.... the slot transfer is between DL and US and the successful bidders then have to provide payment to DL and US for the slots which they will acquire.
.
that is the same concept that was used in the AA-BA slot divestitures (BOS and MIA) that were part of the approval for the oneworld transatlantic joint venture.
robbedagain
Veteran
did DL pay US the 66.5 mill plus the route with it yet or does that have to wait til the DCA decisionis done by the feds?
WorldTraveler
Corn Field
- Dec 5, 2003
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doubtful... it probably will happen only when the slots are actually transferred which will also coincide with the payments from the other airlines who are bidding on the slots... it will be interesting to see what the slots are worth.
The transactions should show up on the 4th quarter financial statements.
robbedagain
Veteran
It sounded to me like that Delta is the one selling all of the slots and would receive all the funds for them. It was one of the answers during the Q and A.
Listen to the call at about the 53 minute point.
http://www.usairways.com/en-US/aboutus/investorrelations/webcast.html
If US was smart, its agreement with DL allocated all risk of mandatory slot divestiture with DL, so the divested slots would come from DL and not from US.
Which is exactly what they did.
So for DCA, US will get 42 slot pairs which represents no change from the original deal back in 2009. The only difference is that DL will give up an additional 8 pairs that will go to carriers with less than 5% share.
US Airways' Earnings Conference Call: October 27, 2011
Daniel McKenzie - Rodman & Renshaw, LLC, Research Division
Scott, when does the impact of the slot swap begin showing up in the schedules data? And then related to that, is there any revenue risk in the transition that we need to worry about?
Daniel McKenzie - Rodman & Renshaw, LLC, Research Division
Scott, when does the impact of the slot swap begin showing up in the schedules data? And then related to that, is there any revenue risk in the transition that we need to worry about?
Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division
All right. And then lastly, with the DOJ, they're still studying it. In theory, you could proceed even if DOJ was still studying it. They would have to make a decision whether or not to try to block it. But DOJ can study, you could proceed in theory, right?
J. Scott Kirby
Well, I don't know. I...
Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division
Ideally, you don't want to do that. But in theory, that wouldn't stop it from happening, would it?
J. Scott Kirby
Well, in theory, you're correct.
Ted Reed - TheStreet.com
All right. I'd also like to ask one question about national. When it finally happened, it's going to be a big boost for US Airways, isn't it to have so much presence at national?
J. Scott Kirby
Well, we said publicly that it's going to be worth $75 million a year for us. It will be good for US Airways. It's one of those rare transactions that's going to be good for US Airways, good for Delta and good for consumers as we have a larger operation with more connectivity at national airlines -- national airport.
Click here to read the story.
Daniel McKenzie - Rodman & Renshaw, LLC, Research Division
Scott, when does the impact of the slot swap begin showing up in the schedules data? And then related to that, is there any revenue risk in the transition that we need to worry about?
Daniel McKenzie - Rodman & Renshaw, LLC, Research Division
Scott, when does the impact of the slot swap begin showing up in the schedules data? And then related to that, is there any revenue risk in the transition that we need to worry about?
Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division
All right. And then lastly, with the DOJ, they're still studying it. In theory, you could proceed even if DOJ was still studying it. They would have to make a decision whether or not to try to block it. But DOJ can study, you could proceed in theory, right?
J. Scott Kirby
Well, I don't know. I...
Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division
Ideally, you don't want to do that. But in theory, that wouldn't stop it from happening, would it?
J. Scott Kirby
Well, in theory, you're correct.
Ted Reed - TheStreet.com
All right. I'd also like to ask one question about national. When it finally happened, it's going to be a big boost for US Airways, isn't it to have so much presence at national?
J. Scott Kirby
Well, we said publicly that it's going to be worth $75 million a year for us. It will be good for US Airways. It's one of those rare transactions that's going to be good for US Airways, good for Delta and good for consumers as we have a larger operation with more connectivity at national airlines -- national airport.
Click here to read the story.
From the same transcript....more slots in DCA? Maybe.
"Michael Linenberg - Deutsche Bank AG, Research Division
Okay. And then just my second question and this is, Scott, for you or Doug or maybe even Steve. It was -- I think Bloomberg had an article out recently, maybe it was last night about Republic looking to sell some DCA slots to raise some money. And I realize this transaction was done before your time. But from what I know, I believe that you do have a call option on that. So if, for some reason, you weren't to exercise that, could they sell them away from you or they have -- they can only deal with you? Can you just give us some color on what they can and can't do?
Stephen L. Johnson
I'd just say that you're right. We have a call option on those slots.
Michael Linenberg - Deutsche Bank AG, Research Division
And leave it at that?
Stephen L. Johnson
Yes."
Scott later says they are slots we are flying anyway under the US Airways banner. But an interesting twist, I forgot about the call options.
Maybe WorldTraveler can show the unwashed like me what the implications are here? (thanks if you do!)
RR
"Michael Linenberg - Deutsche Bank AG, Research Division
Okay. And then just my second question and this is, Scott, for you or Doug or maybe even Steve. It was -- I think Bloomberg had an article out recently, maybe it was last night about Republic looking to sell some DCA slots to raise some money. And I realize this transaction was done before your time. But from what I know, I believe that you do have a call option on that. So if, for some reason, you weren't to exercise that, could they sell them away from you or they have -- they can only deal with you? Can you just give us some color on what they can and can't do?
Stephen L. Johnson
I'd just say that you're right. We have a call option on those slots.
Michael Linenberg - Deutsche Bank AG, Research Division
And leave it at that?
Stephen L. Johnson
Yes."
Scott later says they are slots we are flying anyway under the US Airways banner. But an interesting twist, I forgot about the call options.
Maybe WorldTraveler can show the unwashed like me what the implications are here? (thanks if you do!)
RR
Dog Wonder
Veteran
BoeingBoy
Veteran
- Nov 9, 2003
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It means that US can buy the slots Republic may sell if they match the highest offer from anyone else - it's the same as was the case when US only managed the Shuttle. Since those slots are being used by Republic for USX flights, buying them back probably wouldn't make any difference in the DOT's approval of the slot swap, but if someone else bought them it would reduce the number of slots US effectively has in DCA. IIRC, US fought to get those slots converted from "commuter" to mainline slots so MDA could use them for the 170's. If that's the case, WN, B6, and any other mainline carrier would probably also like to have them so if Republic does decide to sell there could be a bidding war. If I recall WN's quarterly filing correctly, they have $3.7 billion in unrestricted cash and another $800 million in an untouched revolving credit facility (and have said that they'll be "aggressive" buyers of available slots". AA has $4+ billion in cash, DL $3.3 billion, UACO $8.2 billion.
Jim
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