The Latest Fleet News

[BoeingBoy]

Several happenings to report from filings that were posted this morning....


There's finally a Section 1110 agreement with Embraer/Jurema Ltd for the 7 Emb-170's that are already on the property. This wraps up agreements on all 22 planes already delivered. Docket #1654


Snecma Aircraft will "buy out" GE's interest in 5 B737-400's with the leases continuing at $100,000 per month payable in advance. GE had agreed to this "foreclosure" as part of their global settlement. Docket #1658


Some of the language in the GE global settlement is cleaned up, primarily in two areas.

As you may recall, GE is buying 3 A319's, 3 A320's, 3 A321's, 14 spare engines, 9 CRJ-200's, and 1 CRJ-700 on which they previously held the mortgage notes. These will be leased back with the term of the lease expiring the earlier of BK emergence or 6/30/05. During the wait for all this to be approved by the court, U made a required payment on the mortgages on these planes. The amount of that payment will now be available to be drawn back out by U (assuming approval by the court).

[Almost forgot the second area] Corrected the priority of liens that GE will hold on certain CRJ's. Docket #1659


And finally, it has nothing to do with airplanes, but U asked the court for approval to sell the jetways on B/C concourses in PHL to the city and lease them back. The proceeds will go into a fund to be credited toward the lease payments due the city for our PHL facilities in 2005. As part of this agreement, PHL will pay 50% of the cost of promoting PHL-Barcelona/Venice service in 2005/2006 up to an annual cap of $250,000, and PHL agrees to seek airline approval for an expansion of the B/C security checkpoint. Docket #1660

Jim

 

[delldude]

And finally, it has nothing to do with airplanes, but U asked the court for approval to sell the jetways on B/C concourses in PHL to the city and lease them back. The proceeds will go into a fund to be credited toward the lease payments due the city for our PHL facilities in 2005. As part of this agreement, PHL will pay 50% of the cost of promoting PHL-Barcelona/Venice service in 2005/2006 up to an annual cap of $250,000, and PHL agrees to seek airline approval for an expansion of the B/C security checkpoint. Docket #1660

Jim

[post="242529"][/post]​

burning the furniture to keep the house warm??

 

[mweiss]

burning the furniture to keep the house warm??

[post="242532"][/post]​

A more accurate analogy might be getting an interest-only mortgage on the furniture.

 

[BoeingBoy]

Correct, Michael, at least until the credits run out. No dollar figures are in the filing, so it's impossible to tell when that will be. At that point, it may be more or less expensive to lease rather than own.

As an aside, this is presumably some of the ATSB collateral so their permission is required (and presumably has been received).

Jim

 

[boeing787]

:down: Nothing like selling your planes off for regional jets. Garbage out garbage in. Good luck yall over at shitaco, messa, or psa.

 

[mweiss]

Something else to add about the jetways...

Owning them gives a couple of advantages:

• Depreciation, which generates tax breaks
• Collateral against future loans
• Residual value when they are finally sold (even if just for scrap)

Depreciation doesn't buy them anything when they're losing money...US Airways has way more tax credits now (from losses) than they can hope to use for many years into the future.

So we're left with the collateral and residual values. Getting those upfront in cash is useful when you've got cash issues. :huh:

I didn't see anything yet suggesting that these were part of the ATSB collateral, but if they were the ATSB would have had to approve the transaction.

 

[BoeingBoy]

I didn't see anything yet suggesting that these were part of the ATSB collateral, but if they were the ATSB would have had to approve the transaction.

[post="242565"][/post]​

OK, I found it in a note to the appraisals of non-cash collateral in the filing for use of the cash collateral. The footnote applies to the catagory of assets called "Ground Service Equipment".

"This includes Ground Service Equipment, Aircraft Power and Conditioned Air Units, and
Passenger Loading Bridges." [Emphasis mine]

That doesn't necessarily mean that these jetways are part of the non-cash collateral, but I assume they are.

Jim

 

[mweiss]

Jim,

Thanks for the research. As you noted, it might not refer to these jetways, but it's a reasonable assumption.

Perhaps this is part of the reduction in collateral ratio?

 

[BoeingBoy]

I've seen nothing that suggests a change to the ATSB requirement that proceeds from asset sales must be used to prepay the loan principal, but that doesn't mean it hasn't changed.

But that is why I assume that the ATSB would have to agree to this sale/leaseback since the proceeds don't go toward prepayments.

On another note, you mentioned not needing more income tax credits. Seems like I've seen something somewhere about bankruptcy modifying/altering/eliminating (or having some effect on) tax credits. I did notice that the Sep 12 - Oct 31 financial statement showed over $7 million in income tax credits while the Nov statement showed $0.

Jim

 

[mweiss]

Oh, yeah...I forgot about the tax credit issue. You'd think it would have been obvious.

 

[fatherabraham]

I hope under this lease agreement of gates that someone is now responsible for cleaning the interior floors. The residual dust, dirt and trash is an embarrasment
on usairways image.

 

[BoeingBoy]

As you may recall, GE is buying 3 A319's, 3 A320's, 3 A321's, 14 spare engines, 9 CRJ-200's, and 1 CRJ-700 on which they previously held the mortgage notes. These will be leased back with the term of the lease expiring the earlier of BK emergence or 6/30/05. During the wait for all this to be approved by the court, U made a required payment on the mortgages on these planes. The amount of that payment will now be available to be drawn back out by U (assuming approval by the court).

[post="242529"][/post]​

Sorry, guys and gals. There's a couple of typo's in the above. It should read:

3 A319's, 3 A320', 6 A321's, 28 spare engines, etc.

What's interesting is that there is no mention of what happens when the short-term leases expire on the earlier of BK emergence or 6/30/05. Certainly the leases could be extended but GE could also take the airplanes and lease them somewhere else. Keep in mind that these airplanes are not part of the 31 to be returned to GE over the next 3 years.

Jim

 

[motnot]

So BoeingBoy, can you sum up how the fleet has changed since the bankruptcy filing, and how it will be further changing or potentially could based on any unsettled claims on aircraft?

Just for those of us who have trouble keeping track of the overall.

 

[BoeingBoy]

If you're talking about mainline, most of the airplanes are settled as far as 1110 agreements are concerned.

There are a handful (5-10) for which 1110 agreements have not been reached - they are subject to agreements extending the 60-day 1110 period.

There are a double handful (25 or so) for which US Bank is the Trustee of the ETC's where there is still an unsettled dispute about compensation for the decrease in value of the planes due to continued us. The hearing is scheduled for sometime next month (Feb), IIRC.

Going forward, there are the 25 planes to be returned to GE thru 2007.

There are another 12 covered in a post above which GE is buying and leasing back to us. These leases expire upon the earlier of BK exit or 6/30/05. What happens to these planes after that is not spelled out in the court documents - we could keep them, they could be returned to GE, or some combination.

Jim

 

[Heinrich]

6 A321s is a LOT of PAX on a day/week/month and it would seem to me those PAX would come out of the west coast market, which is where USAir needs to expand and to keep the stage lengths longer and costs down and revenue up! :blink: