Transformation Plan Update

[PITbull]

Actually, the only way for U to pre-package a voluntary BK, is to buy down the ATSB loan. ATSB Board will not put the taxpayors at risk.

If Bronner decides to invest MORE money of the RSA, and create this arena of threat, both labor and Bronner will lose in BK and in that process.

Keep in mind, that all labor groups have an opportunity to negotiate contracts in BK. If no mutual accord can be achieved, THAN UNIONS ARE RELEASED TO "SELF HELP", WHICH INCLUDES A JOB ACTION.

Bronner will lose his orginal investment and his additional RSA money along with Labor.

Threats are NO way to achieve mutual agreements. This third round must be on LABOR'S TERMS, and any contract language concession, management should be thrilled out of their minds to get.

Will the extent of any concession mirror American Eagle....NOPE.

 

[funguy2]

PITBull... I have to agree with you here...

If US Airways uses current cash to pay down ATSB in order to go through another Ch. 11, then they would enter Ch. 11 with around $250mil unrestricted cash. If they wait until the end of summer, after presumably positive cash flow, then maybe they enter Ch. 11 with $400-$450mil.

At $250mil, I don't believe it will be a Ch. 11. At $400mil, Ch. 11 might be ok, but cash will be tight. The last time US Airways went BK, it was with $500-600mil unrestricted cash.

Another option is to paydown the ATSB, in exchange for more RSA investment, as you noted. Presumably the additional RSA investment would be enough to get through another Ch.11. But, in this case, RSA takes on even more risk. More cash is at stake, and RSA/Bronner potentially lose control anyway.

Look at the situation at Hawaiian. The court-appointed trustee is shopping Hawaiian Air around for the best Ch. 11 BK emergence package. The former CEO, Adams, is competing for control of the company he led to BK. Apparently there are allegations of Adams improperly diverting funds and Boeing's leasing arm, a primary creditor in the case, and the source of more than 1/2 of Hawaiian's planes has basically said they won't work with Adams.

So, RSA could try to put more money into the problem, and lose control (and their investment) in the process anyway. Seems WAY to risky to me.

And I believe you are right about the labor contracts. The company cannot just cancel them, they can only go into NMB style negotiations, which includes self-help after the 30-day cooling period. This is a result of Lorenzo's canceliing of Labor Contracts in CAL's BK of 1983, which essentially broke the unions. Since Labor has the right to organize, the BK law was changed. That's my very short-handed outsiders understanding, anyway.

 

[jack mama]

RSA will not pour more money into US Airways. The number one rule in investing is not to buy more as your investment is tanking...cut your losses to survive another day.

The IAM is damned if they do, and damned if they don't. Unfortunately the company is taking the approach to get the heavy maintenance out, at all costs. Even if the IAM wins, they will never see any money. They may be able to use that as a bargining chip to give back into the pot. If the company is made to pay twice for the HMVs, I predict another CH 11 filing, in which the IAM will become another creditor in line.

And PITBULL...if the unions seek self help, can't the company replace them with non union workers?

 

[jack mama]

And PITBULL what does on Labor's Terms mean? What kind of things is labor looking for in return for the changes being asked of them? More shares, more profit sharing, a 50% payraise, take back the money given to wolf, gangwal, nagin, seigel, cohen, etc?

What would it take to accept the changes?

 

[PITbull]

funguy2,

I have familiarized myself with Bankruptcy filing and the laws. Also the requirements for the ATSB covenants.

Bronner is going to start with the BK threats, like he did in the winter concession of 2002.

I repeat, if he makes this an arena of threat. He will surely lose his present investment and any future investment of RSA by going into a vol. prepackaged BK.

We as labor will than attempt to negotiate contracts, if unsuccessful, Bronner risks job actions by one or more labor groups...

AND THEN ITS OVER.

 

[PITbull]

RSA will not pour more money into US Airways. The number one rule in investing is not to buy more as your investment is tanking...cut your losses to survive another day.

The IAM is damned if they do, and damned if they don't. Unfortunately the company is taking the approach to get the heavy maintenance out, at all costs. Even if the IAM wins, they will never see any money. They may be able to use that as a bargining chip to give back into the pot. If the company is made to pay twice for the HMVs, I predict another CH 11 filing, in which the IAM will become another creditor in line.

And PITBULL...if the unions seek self help, can't the company replace them with non union workers?

Its against the law, and the company will be sued in court. That was attempted by Icahn and TWA. before their BK, TWA f/a went to court. I don't remember the outcome.
But, at that point. Its over, anyway. The company does not have sustaining power.

It behooves the company at present, to leave the threats at the front door, and negotiate with Labor fairly. Any gives, at this point, the co. should welcome. This is all subject to f/as approving the opening of contracts.


On labor's terms, means fairly negotiated and goals that are attainable. We CANNOT forget that we have done this twice in 18 months. Management wants us to forget, but we can't cause we are still living it.

No profit sharing. Profits will not materialize if management continues tobuy small jets or larger a/c.

5,000 shares of stock each, may spark some interest in participation.

 

[ktflyhome]

I was just told the other day, that U is just 1% of Bronner's investments and this all has to do with nothing but his EGO. Any thoughts on this??? In other words, what do we (USAirways really mean to him in the long run?) :huh:

 

[PITbull]

I was just told the other day, that U is just 1% of Bronner's investments and this all has to do with nothing but his EGO. Any thoughts on this??? In other words, what do we (USAirways really mean to him in the long run?) :huh:

kt,

Nothing. U means he stays in the papers and makes himself famous in Alabama. Hell, he probably will make a run for Governor if he is successful with U. The outsourcing of jobs from USAirways, and providing the work for Alabama, will fair good for him there. He also provides discounts to the RSA pension participants on USAirways. In exchange, he gives us free advertising....so he says.

I have never seen a BOD of a company get so entrenched with labor and get so intimately involved in the operation like this U Board.

 

[ClueByFour]

So, US intends to walk out of an operationally unmatched hub at which it enjoys monopoly pricing power, in favor of hubs with less O and D (CLT) and LUV out for a fight (PHL), and BTW PHL recieves flow control if there is rain anywhere between BOS and BWI.

Good luck, folks. Look for the following:

1. Drop in revenue as the PIT hub is pulled down and the core FFs start shifting carriers.

2. Drop in any assistance US will ever get from PA at PHL or anywhere else.

3. An LCC focus city at PIT within 18 months.

4. No ability at all to commute in or out of PIT.

 

[PITbull]

So, US intends to walk out of an operationally unmatched hub at which it enjoys monopoly pricing power, in favor of hubs with less O and D (CLT) and LUV out for a fight (PHL), and BTW PHL recieves flow control if there is rain anywhere between BOS and BWI.

Good luck, folks. Look for the following:

1. Drop in revenue as the PIT hub is pulled down and the core FFs start shifting carriers.

2. Drop in any assistance US will ever get from PA at PHL or anywhere else.

3. An LCC focus city at PIT within 18 months.

4. No ability at all to commute in or out of PIT.

BINGO!

 

[PITbull]

Bob,

LGA is a USAirways Hub, however, quite small.

 

[ClueByFour]

3. An LCC focus city at PIT within 18 months.

No LCC's will come given the current "Stick up rates" charged by ACAA. Do you have proof to the contrary? Oh not to worry Big Steel is coming bacl, Typical PIT.

Bob, I suggest that you actually visit Pittsburgh sometime and take a look around at the businesses that are thriving. Steel has been dead for 20+ years. The economy is driven by some manufacturing, biotech, finance, health services, and high technology. I hate to burst the stereotype for you, after all. It makes such a nice sound bite on the board and whatnot, but it's about as far off base as it gets.

PIT's major mistake was embracing a business (in the form of US) in the early 1990s and giving them the keys to the kingdom.

That said, if you have been paying attention, PIT's cost, after debt reduction sans any potential slot revenue or state relief will drop to about $8. Right about Philly's. If the state sends any money PIT's way or any slot revenue, it could drop down to $6.

That's not that far off a nonhub average of a airport that size, and had US not yanked the number of flights back (PIT was at around $7.25 before US started pulling back), it would be down around $5. Besides which, somebody flying P-t-P does not care about a cost they can simply pass onto the customer in any case (which, is exactly what US has been doing for years in any case).

There is a fascinating article linked to somewhere on this forum about "life after the hub." The folks in RDU and BNA are doing just fine, thanks. As a former PIT resident (and still a PA taypayer by proxy), I'd rather see PIT have lower fares and fewer direct flights rather than take a $500 million dollar gamble (again!) on a business plan that has been unable to succesfully fry an egg.

Regarding the VFF defection, ask around and see how many AA EXPs there are in STL these days. Or CPs out of BWI. US will have to give this base of folks a reason to fly them over the competition--they had direct service, now it's a toss up.

 

[RWerksman]

1. Drop in revenue as the PIT hub is pulled down and the core FFs start shifting carriers.

Let's see the research to support this assumption? these guys can count, whether they know what to do with the numbers is open to debate.

How can you even come close to questioning this? You want proof? I AM YOUR PROOF. Go to FlyerTalk and look at more proof there. Dont be blind.

And what am I going to count? The overpriced fares that I have always paid? The amount of times USAir has 'F'ed Pittsburgh? Oh, I know... the people that realize how big of a market that PIT can be with realistic, non-monopolistic fares.


2. Drop in any assistance US will ever get from PA at PHL or anywhere else.

OH, And they have just been handed the keys to the treasury now? I'll guarantee that Rendell had some behind the scenes hand in SWA picking PHL. Somebody is PO'ed at US, so why bother as long as Eddie and Arlen control the purse string?

No they havent been handed the keys to the treasury. You want to know why? U has been stupid in both places --- Overcharging and underserving. What benefit does U bring to PA?



3. An LCC focus city at PIT within 18 months.

No LCC's will come given the current "Stick up rates" charged by ACAA. Do you have proof to the contrary? Oh not to worry Big Steel is coming bacl, Typical PIT.

This is not, AND WILL NEVER be a parallel to the decline of the steel industry. Please quit trying to change the focus of the conversation.

LLCs will come to PIT. The #7 city in the US (if the city and county combine as some expect) will prove a very tempting target. Will it be a hub? No, never again. BUT other carriers will come despite the ACAA.



4. No ability at all to commute in or out of PIT.

Again we know this exactly how? LGA has small comuter planes arriving for that purpose and LGA isn't a hub.

Do I really even need to counter this?



To sum up everything - I generally agree with alot of what you say. This happens not to be one. No offense intended -- just getting a little passionate here.


(edited to be less of an angerball - and then again becuase I cant spell...)

 

[USA320Pilot]

US Airways can enter bankruptcy and preserve the equity. It's not automatic that the security will be cancelled, therefore, David Bronner could maintain control and file a S.1113 action against any union.

If the unions reject the deal, they are free to exercise self help and the company is free to use replacement workers.

In addition, another option would be for the company to execute a pre-packaged bankruptcy filing and then issue a new security to current holders. The implications is that the creditors could suffer less and the target be labor.

In regard to to Clue's comments, I believe his argument is invalid:

Clue said: "Drop in revenue as the PIT hub is pulled down and the core FFs start shifting carriers."

USA320Pilot responds: PIT resources will be redeployed to Boston, New York, Washington, Philadelphia, Europe, the Caribbean, and westward. The new flying will generate more profits and support key business accounts in the Northeast Corridor.

Clue said: "Drop in any assistance US will ever get from PA at PHL or anywhere else."

USA320Pilot responds: Philadelphia is going to see an increase in capacity and jobs, therefore, the city will likely favorably react to the announcement. The Commonwealth new this announcement was coming, which I have said on this board for months.

Clue said: "An LCC focus city at PIT within 18 months."

USA320Pilot comments: PIT's O&D traffic is quite low, although it's growing and the airport has high unit costs. Dependent upon how the long-term debt is restructured, the airport unit costs will grow when US Airways exits this fall, therefore, the airport will be less attractive to LCC's.

Clue said: No ability at all to commute in or out of PIT.

USA320Pilot comments: The new schedule will provide significant service to current hubs and focus cities, therefore, this should not be a huge problem. Moreover, commuting is an employee option that does not effect corporate planning.

Respectfully,

USA320Pilot

 

[PITbull]

Bob,

Your statement is strictly opinion. I too live in Pittsburgh my entire life, and we do not have an inferiority wanna-be -PHL complex. Not in the slightest tinge. It permeates what society???


Where you get your ideas?


USA320,

You talk jeberish. the BK code 1113 is protection to allow unions to negotiate contracts in BK to reach an accord. If unachievable, they are released to self-help.

Go read the code. Bronner can't file a 1113 action. You have it confused with some other code. Bronner won't last that long to replace a work force.

However, we can try it out.....