UAL codeshare partner USAirways studies it''s options

737nCH11

Senior
Mar 4, 2003
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According to the Birmingham Business Journal, UAL partner USAirways is looking at ways to create liquidity. One option cited by USAirways sources is to sell assets to raise cash.

What assets could be on the auction block, and who could pony up the dough?
 
Early morning Christmas Present of information? Anyone willing to bet he will touch this with a ten foot pole?
 
How about this have Chip lease himself out to the national enquirer for 6 months then he can write some stories, they will get a reaction, and voila they are rolling in cash. Its only a joke Chip
 
My sources tell me that UAL Senior VP Flight Operations Steve Fort has stated that UAL is in talks with several lenders for exit financing. Could these funds be used to purchase USAirways assets? It is also widely rumored that UAL stands a much better shot at getting the ATSB loan guarantee this time around. When the loan guarantee process was established it was understood that the funds secured by the federal government could be used to purchase assets from another carrier. If UAL obtains the loan guarantee, could the funds be used to purchase USAirways assets?

Before you dismiss this line of reasoning, consider this: USAirways is recreating itself as a regional carrier. It's short stage lengths lend themselves to regional jets. USAirways was cobbled together from several regional carriers, and it could become profitable by returning to that niche.

UAL CEO Glen Tilton, on the other hand, has stated both publically (to the press and analyst groups) and privately (union groups and UAL town hall meetings) that he doesn't want to shrink UAL. Granted, some downsizing will occur, i.e. placing rjs on some routes. For the most part my sources tell me that UAL's new pay rates make a majority of their routes profitable again.

UAL has also announced their intention to proceed with their low cost operation. They are playing this pretty close to the vest at this point, but VP Sean Donohue has stated that the LCO will start with 40 UAL aircraft and conceivably grow from there.

With USAirways considering selling assets and UAL potentially looking for narrowbody aircraft for their LCO, could this finally be the unique corporate transaction taking shape?

Think about it for a minute. USAirways is dropping stations like SNA because they can feed their east coast passengers to UAL on rjs and still make money via the codeshare agreement. UAL started flying DEN-CLT a few months ago with mainline aircraft to transfer passengers to USAirways rjs. Rumor has it that UAL is dissatisfied with Atlantic Coast because of customer service issues. Who better to replace ACA's east coast feed than USAirways?

USAirways buys rjs to feed UAL's mainline flights. UAL purchases USAirways' A320 fleet, because with the new pilot pay rates they are now more profitable to operate than rjs. CEO Tilton has publicly stated that he would like to return UAL mainline flights to routes handed over to United Express by then CEO James Goodwin.

When one thinks about it, it seems perfectly logical. USAirways is guaranteed stability by feeding UAL. UAL gets a once-in-a-lifetime opportunity to scoop up some pretty decent A320s, and gains the added advantage of tapping into USAirways' strong east coast presence by using U as it's new United Express feeder. From the author's perspective, it is a match made in heaven.
 
737NCH11:

737NCH11 said: "According to the Birmingham Business Journal, UAL partner USAirways is looking at ways to create liquidity. One option cited by USAirways sources is to sell assets to raise cash. What assets could be on the auction block, and who could pony up the dough?

Chip comments: 737, are you a sophist too? The article discussed US Airways and its decision to explore ways to create liquidity for shareholders. Moreover, the company has about $2 billion in liquidity and has no intention to sell assets. Here's a link to the article:



US Airways studies options to create liquidity
US Airways is exploring ways to create liquidity for shareholders as it works to meet the standards to have new common stock listed on a national exchange.

Complete Story: [url="http://birmingham.bizjournals.com/birmingham/stories/2003/07/14/daily20.html"]http://birmingham.bizjournals.com/birmingh...14/daily20.html[/URL]

737, part of US Airways' restructuring plan calls for it to issue common stock to employees and this decision is to find a market to trade the shares, which will provide an economic boost to employees. Here's another link for you to clearly understand the situation, unless you have become like Ukridge.



US Airways seeks to list stock

Airline is exploring ways of listing the shares on Nasdaq

GREENSBORO/WINSTON SALEM (Business Journal) - US Airways Group Inc. is weighing options for having its new common stock listed on a national exchange.
Complete Story: [url="http://www.bizjournals.com/triad/stories/2003/07/14/daily27.html"]http://www.bizjournals.com/triad/stories/2...14/daily27.html[/URL]

737, you said, "One option cited by USAirways sources is to sell assets to raise cash. What assets could be on the auction block, and who could pony up the dough?"

Can you show me where this was said?

I can assure you US Airways is not trying to sell assets and is in fact looking at acquiring Swiss International's A330s. Moreover, the company is in negotiations to build additional terminals at DCA & LGA, per a conversation I recently had with Dave Siegel.
However, it has come to my attention that RSA holds a significant number of United’s EETC’s for different fleet types. Furthermore, there are reports circulating that US Airways’ chairman of the board David Bronner, who is also RSA’s chief executive officer, is considering different ways to hedge his exposure to United’s restructuring since his organization reportedly holds United aircraft debt instruments, although its unclear how this report could unfold. This issue has observers wondering where Bronner could elect to place United aircraft if the EETC restructuring negotiations become unsuccessful between RSA and United or if the company is forced into a distressed asset divestiture by either its creditor’s committee, its DIP financiers, or the bankruptcy court.

Also noteworthy, reports indicate United’s code share partner US Airways now has its Buenos Aires sales office open, but the company does not currently offer its own service to Argentina. From this observer’s perspective, this seems strange unless Buenos Aires and South America figure’s into US Airways' future plans.

Finally, with the slow fall and winter travel season approaching and United not having exit financing, the requirement to pay back the DIP loan, the very real possibility the company will violate its DIP requirements, and no equity plan sponsor, can you tell me how a bankrupt company can buy assets of a solvent-restructured airline?

Thanks.

Chip
 
737:

Your post made it sound as if the airline would sell mainline aircraft regardless if this was your intent, however, the company is required to operate 279 mainline aircraft that exceed RJ maximum certificated gross weight limits per the ALPA contract. In fact, this clause was part of the CRJ-705 issue.

In regard to assets that could be sold, I suspect wholly owned Dornier 328s, Dash 8''s, the Dash 8 simulator, "wholly owned office facilites, and some Pittsburgh facilities will be sold or returned to the lessor as RJs replace the turboprop aircraft and the company consolidates the regional airlines.

I believe it would be better to say US Airways Group "could sell assets to raise cash and liquidity", which could occur with 3rd world airline operators.

In regard to the Asiana B767s, Siegel told me about his interest in rationalizing the fleet on our jumpseat and about Asiana''s aircraft, but he decided to order A330-200s instead, which are scheduled to begin delivery in 2007. Siegel also told us that the A330 was an option, but that Asiana was a possibility. Considering Airbus held the unsecured creditor''s committee chairman position and the European company had two other committee members, it is not hard to understand why US Airways ordered more Airbus aircraft.

Best regards,

Chip
 
Chip,

I''ll let the UAL employees fight their own battles. I''m just thinking aloud with my posts, but I think it makes perfect sense.

Answer me this before I sign off for the night: My sources at UAL ALPA, and UAL CEO Glen Tilton have stated that UAL is coming out of CH11 in either Q4 03 or Q1 04. Are you going to stand here and tell me that you know more than they do? Do you really think that they would be making such bold statements if they didn''t intend to do it?

If CEO Tilton has stated repeatedly that he has no wish to fragment the airline, why do you contiuously quote from a Dave Bronner interview that is several months old? That story was an eternity ago in the history of UAL''s CH11 process. Many positive events have transpired for them that makes your Unique Corporate Transaction theory look pretty shaky.

One more point and then I promise I''m going to bed. You say that you only post about UAL because they are tied to USAirways. Why not post on the AMR board because Eagle is competing with the USAirways shuttle? Why not post on the Southwest board because they drove USAirways out of BWI? Why not post on the JetBlue board because CEO David Neeleman has publically hinted at his interest of moving in on USAirways at PHL?

Every airline interacts with USAirways at some point. However, you seem to ignore 95% of what is actually impacting your airline, and instead focus your energy on bringing to light anything negative relating to UAL. To lend credence to your arguments, can you please cite examples where you have posted positive comments? From this author''s perch it appears you have a mighty big axe to grind.

Regards,

737nCH11
 
LOL.

Chip, your writing style, rhetoric, and online persona is being mocked. In fact, 737nCh11 has mimicked your post format to the T.

"My sources tell me" that "meanwhile" you are clueless about it.

Maybe you should stop calling others sophists and remember the words of Socrates: "Know thyself."

Regards.
 
N230UA:

N230UA said: "Chip, your writing style, rhetoric, and online persona is being mocked. In fact, 737nCh11 has mimicked your post format to the T."

Chip answers: I understood this point as well, but I thought it would be appropriate to clearly state the facts. Moreover, I believe 737nCH11's post is more one of frustration than facts.

Best regards,

Chip
 
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On 7/17/2003 1:00:41 AM Chip Munn wrote:

I can assure you US Airways is not trying to sell assets and is in fact looking at acquiring Swiss International''s A330s. Moreover, the company is in negotiations to build additional terminals at DCA & LGA, per a conversation I recently had with Dave Siegel.​

Is there space at DCA for this? That terminal is brand new, is The Star Alliance''s East Coast feeder US Airways out of space?


And The Star Alliance''s East Coast feeder US Airways should be able to raise some cash when they sell some Airbii delivery slots to the Star Alliance airlines who will actually be doing the flying.
 
"Your post made it sound as if the airline would sell mainline aircraft regardless if this was your intent, however, the company is required to operate 279 mainline aircraft that exceed RJ maximum certificated gross weight limits per the ALPA contract. In fact, this clause was part of the CRJ-705 issue."

Ah, but the contract is subject to change, after all, I am sure Mr.Siegle and Mr.Bronner can bully their way to everything they want. After all, Mr. Bronner calls the shots these days. We know how labor friendly he is!

U solvent? Well, kind off, still losing money and market share, in debt to the hilt, nothing left to borrow against or borrow from, doubt the RSA will pony up more cash. Be much easier to pull the plug and sell the office furniture.

Mr.Munn, work on fixing U before anything else!
 

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