USA320Pilot
Veteran
- Joined
- May 18, 2003
- Messages
- 8,175
- Reaction score
- 1,539
It appears US Airways management has begun another third party communication campaign that observers have repeatedly witnessed during the past 18 months, to influence Allegheny County Airport Authority (AGAA) leaders for upcoming negotiations to keep the Pittsburgh hub intact, and with the IAM-141M on the A320 outsourcing, which could begin as early as Monday, October 6.
As previously reported on September 30 US Airways filed a shelf registration statement (Form S-3) with the Securities and Exchange Commission (SEC), registering for the resale of certain shares of Class A common stock on the NASDAQ stock exchange. This document painted a somewhat dim view of US Airways as a reorganized company and I find the timing suspect.
The filing occurred the same day that the (AGAA) released an opinion from Mark Taylor, a consultant and principal in Leigh Fischer and Associates, that took exception to US Airways’ study that claimed the loss of the carrier's Pittsburgh hub would cost the region $1.8 billion a year and 17,100 jobs. In addition, the Pittsburgh Post-Gazette reported last week a key element in the airline's plan to make a profit has been its plans to deploy hundreds of regional jets on its short-haul routes. But the carrier warned, "We may not be able to meet our commitments to purchase flight equipment, which could result in penalties and impair our ability to execute our regional jet business plan," further creating fear among interested parties.
Then on Friday, October 3, the Post-Gazette reported Allegheny County Chief Executive Jim Roddey said yesterday officials expect to finish the plan either today or early next week and then deliver it to Gov. Ed Rendell, who is leading the negotiations with the airline (to save the Pittsburgh hub). The county's plan will be in response to a proposal delivered by US Airways at a meeting in Harrisburg on Sept. 17 in which the airline proposed increases in sales, car rental and hotel taxes to cut $500 million in airport debt. The county's counter-proposal is expected to focus on ways to reduce the debt without raising taxes to cut the overall costs to US Airways and other airlines operating out of Pittsburgh.
Meanwhile, following the morning Post-Gazette article, Friday’s stock market action had an interesting twist. When the stock went up $1.50 to close at $8.25. This move represented a +22.22% change on volume of 248,400 shares. Obviously the stock was under accumulation by investors who were unmoved by today's financial performance news.
I recognize that the company must notify investors of any potential risk, but I find the timing of these announcements and the SEC filing to be a planned third party communication campaign executed by US Airways’ chief executive officer Dave Siegel. I believe it’s important to note the company reported on June 30 it had about $2 billion cash-on-hand, the airline has begun an expensive campaign to repaint the entire fleet, the company received very favorable financing for its recent RJ order that airline analyst Ray Neidl said this was “impressiveâ€. In addition, RSA, BOA, GECAS, Farallon Capital Management, Oaktree Capital Management, and Goldman Sachs & Co., and the ATSB have all invested in US Airways. These respected financial institutions all bought stock or secured loans indicating their support of US Airways, basically putting their money where their mouth is in support of the airline.
Separately, the Charlotte Business Journal reported on Friday, October 3, before the stock market opened, "Ten years from now, I think Alabama's investment in US Airways will be viewed as one of the best investments ever," says Harlan Platt, a finance professor at Northeastern University in Boston. He suspects the three investment firms are also on to something, given their reputation for shrewd investing. "One of the best ways to make money these days is to be an equity participant in a new bankruptcy reorganization plan," he says. "Essentially they are buying an airline at bargain basement prices."
In addition, Maintenance sources said US Airways will begin its A320 family outsourcing on Monday, October 6, and there could be a public announcement tomorrow. Apparently, the company and the IAM will meet on Monday to discuss the issue and in preparation of this event and the Pittsburgh hub negotiations, Siegel told employees in his weekly telephone recording to employees, US Airways' results for the third quarter won't fare as well as its competitors'. "While other airlines are hinting that they may break even or show a profit for the quarter, that is not going to be the case for US Airways, I'm sorry to say," Siegel said.
Furthermore, Siegel said “challenges still remained for US Airways to hit targets for introducing regional jets into serviceâ€, which is a cornerstone to restructure due to the revenue generated by these jets to meet ATSB loan requirements.
Published reports indicate 150 out of the 170 RJs ordered by US Airways were financed through GECAS and with long-term leases with Bombardier and Embraer. However, these lease terms have restrictive covenants that may influence the AGAA and IAM negotiations.
Seprately, Aviation Week & Space Technology previously reported, US Airways’ financial strength as it emerged from Chapter 11 bankruptcy protection on March 31 – a $1 billion loan built around a 90% federal guarantee of repayment – is a potential financial threat. Under terms negotiated by the government’s Air Transportation Board, ATSB, the loan is secured by, in US Airways’ words, “first priority liens on substantially all of the unencumbered present and future assets (of the airline), including certain previously unencumbered aircraft, aircraft engines, spare parts, flight simulators, real property, takeoff and landing slots, ground equipment and accounts receivable.†The loan contains covenants setting debt-ratio, fixed-charge and liquidity standards and limiting dividend payments (the carrier reported in Wednesday’s shelf registration statement to the SEC it does not intend to pay cash dividends in the foreseeable future).
It appears from published and other reports, US Airways will make major announcements regarding the Pittsburgh hub negotiations and the A320 family outsourcing in the immediate future and there could be some interesting news associated with the announcements. In addition, once the Pittsburgh hub negotiations are complete, there is reason to believe if a corporate transaction proceeds between US Airways and United Airlines, presumably to provide the Chicago-based carrier with exit financing, that deal could occur before the end of the year.
Respectfully,
Chip
😛h34r:
As previously reported on September 30 US Airways filed a shelf registration statement (Form S-3) with the Securities and Exchange Commission (SEC), registering for the resale of certain shares of Class A common stock on the NASDAQ stock exchange. This document painted a somewhat dim view of US Airways as a reorganized company and I find the timing suspect.
The filing occurred the same day that the (AGAA) released an opinion from Mark Taylor, a consultant and principal in Leigh Fischer and Associates, that took exception to US Airways’ study that claimed the loss of the carrier's Pittsburgh hub would cost the region $1.8 billion a year and 17,100 jobs. In addition, the Pittsburgh Post-Gazette reported last week a key element in the airline's plan to make a profit has been its plans to deploy hundreds of regional jets on its short-haul routes. But the carrier warned, "We may not be able to meet our commitments to purchase flight equipment, which could result in penalties and impair our ability to execute our regional jet business plan," further creating fear among interested parties.
Then on Friday, October 3, the Post-Gazette reported Allegheny County Chief Executive Jim Roddey said yesterday officials expect to finish the plan either today or early next week and then deliver it to Gov. Ed Rendell, who is leading the negotiations with the airline (to save the Pittsburgh hub). The county's plan will be in response to a proposal delivered by US Airways at a meeting in Harrisburg on Sept. 17 in which the airline proposed increases in sales, car rental and hotel taxes to cut $500 million in airport debt. The county's counter-proposal is expected to focus on ways to reduce the debt without raising taxes to cut the overall costs to US Airways and other airlines operating out of Pittsburgh.
Meanwhile, following the morning Post-Gazette article, Friday’s stock market action had an interesting twist. When the stock went up $1.50 to close at $8.25. This move represented a +22.22% change on volume of 248,400 shares. Obviously the stock was under accumulation by investors who were unmoved by today's financial performance news.
I recognize that the company must notify investors of any potential risk, but I find the timing of these announcements and the SEC filing to be a planned third party communication campaign executed by US Airways’ chief executive officer Dave Siegel. I believe it’s important to note the company reported on June 30 it had about $2 billion cash-on-hand, the airline has begun an expensive campaign to repaint the entire fleet, the company received very favorable financing for its recent RJ order that airline analyst Ray Neidl said this was “impressiveâ€. In addition, RSA, BOA, GECAS, Farallon Capital Management, Oaktree Capital Management, and Goldman Sachs & Co., and the ATSB have all invested in US Airways. These respected financial institutions all bought stock or secured loans indicating their support of US Airways, basically putting their money where their mouth is in support of the airline.
Separately, the Charlotte Business Journal reported on Friday, October 3, before the stock market opened, "Ten years from now, I think Alabama's investment in US Airways will be viewed as one of the best investments ever," says Harlan Platt, a finance professor at Northeastern University in Boston. He suspects the three investment firms are also on to something, given their reputation for shrewd investing. "One of the best ways to make money these days is to be an equity participant in a new bankruptcy reorganization plan," he says. "Essentially they are buying an airline at bargain basement prices."
In addition, Maintenance sources said US Airways will begin its A320 family outsourcing on Monday, October 6, and there could be a public announcement tomorrow. Apparently, the company and the IAM will meet on Monday to discuss the issue and in preparation of this event and the Pittsburgh hub negotiations, Siegel told employees in his weekly telephone recording to employees, US Airways' results for the third quarter won't fare as well as its competitors'. "While other airlines are hinting that they may break even or show a profit for the quarter, that is not going to be the case for US Airways, I'm sorry to say," Siegel said.
Furthermore, Siegel said “challenges still remained for US Airways to hit targets for introducing regional jets into serviceâ€, which is a cornerstone to restructure due to the revenue generated by these jets to meet ATSB loan requirements.
Published reports indicate 150 out of the 170 RJs ordered by US Airways were financed through GECAS and with long-term leases with Bombardier and Embraer. However, these lease terms have restrictive covenants that may influence the AGAA and IAM negotiations.
Seprately, Aviation Week & Space Technology previously reported, US Airways’ financial strength as it emerged from Chapter 11 bankruptcy protection on March 31 – a $1 billion loan built around a 90% federal guarantee of repayment – is a potential financial threat. Under terms negotiated by the government’s Air Transportation Board, ATSB, the loan is secured by, in US Airways’ words, “first priority liens on substantially all of the unencumbered present and future assets (of the airline), including certain previously unencumbered aircraft, aircraft engines, spare parts, flight simulators, real property, takeoff and landing slots, ground equipment and accounts receivable.†The loan contains covenants setting debt-ratio, fixed-charge and liquidity standards and limiting dividend payments (the carrier reported in Wednesday’s shelf registration statement to the SEC it does not intend to pay cash dividends in the foreseeable future).
It appears from published and other reports, US Airways will make major announcements regarding the Pittsburgh hub negotiations and the A320 family outsourcing in the immediate future and there could be some interesting news associated with the announcements. In addition, once the Pittsburgh hub negotiations are complete, there is reason to believe if a corporate transaction proceeds between US Airways and United Airlines, presumably to provide the Chicago-based carrier with exit financing, that deal could occur before the end of the year.
Respectfully,
Chip
😛h34r:
