update on further concessions

S

sabre

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Aug 20, 2002
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The following is based on a source that I consider credible. I have no inside knowledge and I share this post based on that hearsay.
The company will have to come up with what amounts to another $300 million in the next 12 months in its plan. It's possible that the BK judge is insisting this. That amounts to about another $900 thousand a day, or if you think about it, what US AIRWAYS originally asked its unions for.
In any case, the company is to discuss next week with the unions again and it will be specific. I have been told that the timetable can't afford much delay so I assume it will be a $hit or get off the pot type thing.
There is reason to believe that the company might do a hard sell to the unions in the form of 'chapter 7 or more short term cuts'. Hopefully that won't be the case though.
Personally it seems to me that management is following the TWA model religiously. Cuts, cuts, cuts, then see ya.
I certainly hope that nobody falls for the 'guilt trip' like if we don't go for another pay cut then we will be responsible for chapter 7 thing.
I say to management, either close this down or start managing this company.'
David's decisions of late didn't seem to jive well with our passengers as postings on this board indicate.
I will say this, If a employee is close to retirement then I could understand him/her voting for anything that the company tries to dish out.
ALSO< whoever said the January schedule is loaded is wrong. There will be changes to the Janurary schedule from what I understand and it isn't presently reflected in the computer.
 
sabre,

With all due respect, you cannot blame this issue on a perception that Siegel is not effectively managing the airline. In case you haven't noticed, the industry revenue environment is continuing to rapidly deteriorate beyond even the most pessimistic levels. Nobody knows where bottom is. US Airways projected a certain revenue level in its modeling when it came up with its previous ATSB application that was approved. Due to the ever-worsening revenue outlook, I would imagine that US is being forced to re-vamp their revenue forecast to be less optimistic than it was originally. Yet, they must still achieve the same cost target that yields them a 7% profit margin. So the cost savings and concession numbers must be re-worked to arrive at the same total number. I don't see how anyone can blame this on Siegel. I'm quite sure he is being forced to do this, rather than opting to hit the employees again on his own. That would make absolutely no sense and is something that could be easily refuted.

The bottom line is that as long as the revenue picture continues to worsen, the situations of each airline will worsen along with it. If anyone thinks it's bad now, just imagine what another war with Iraq could do to the industry. It might not directly affect US because they're less exposed to international traffic (specifically trans-Atlantic). But the ripple effect will certainly affect them as it sends oil prices up further and weakens the revenue picture even more.
 
I couldn't agree with you more. It is time for this Company to be managed. Cuts are necessary because Dave doesn't appear to have what it takes to do what is difficult but necessary. He needs to address the fact that the current fare structure is never going to make money for us. He needs to be the industry leader here (a total 180 degree turn for US). Years of poor work rules and poor productivity were not challanged in the recent pay and benefit cuts. I will ONLY consider future cuts in the contect that changes will also be made in areas that always gone untouched in the past. Just because Dave has lowered lease rates is not near enough to give him a passing grade here. I certainly do hope he does better here before he takes his next job!
 
[P]Sabre,[/P]
[P] Sounds like there is some truth to the rumor.[/P]
[P] [/P]
[P][A href=http://money.excite.com/jsp/nw/nwdt_ge.jsp?news_id=cmt-295w6957&feed=cmt&data=20021022]http://money.excite.com/jsp/nw/nwdt_ge.jsp?news_id=cmt-295w6957&feed=cmt&data=20021022[/A][/P]
 
It is amazing how much credibility someone can get from quoting an AP story. :)

Either way the highlights of the story...$1.3 billion is savings has already been achieved...they need to get the airline between $1.4 & $1.6 billion. So the airline is almost there. They did state that they will not come back for more wage cuts...but we know that something needs to be done about work rules. If that fails, then it is on to squeeze the aircraft leases a bit more.
 
WOW! No more wage cuts huh? They can just throw the junior guys and girls off like sand bags off a hot air balloon. Yeah!...we should be happy about that. I was willing to give a bit more but because I was under 5 years...I didn't have a choice. So instead of me making a little less $$$.....I can now make NOTHING.
 
UAL777flyers comments are dead on accurate and I would like to thank our UAL friend for his insightful thoughts. I have learned over the years, posts written like UAL777's are read by thousands of lurkers who clearly understand the facts, whereas those you post rebuttals without facts are emotional comments based on frustration.

Meanwhile, here are some additional US restructuring facts:

1. Yesterday there was a meeting of the creditors committee known as 341 meeting. The 341 meeting is a meeting where the creditors asked representatives of the company questions relating to the company’s financial affairs.

2. At the meeting US lead bankruptcy firm Skadden & Arps told the creditors that US already has achieved $1.3 billion in annual savings. But costs targets must be increased to $1.4 billion to $1.6 billion to obtain the loan guarantee due to decreasing industry-wide revenues.

3. US is hoping the remaining cuts can be obtained from aircraft lessors, but if not they will have to come from another source, probably labor, if the company is going to be able to emerge with access to additional funds.

4. Although it has not been made public, I understand the company is threatening to reject 9 additional B757s for which the bondholders have had it up to their eyeballs and are threatening to call Siegel's bluff. If the company rejects those 9 aircraft, the total number in the fleet would fall to 20, I believe, which is typically the magic threshold that all airframers claim is required for enough critical mass to justify a fleet type. If this occurs, it is possible that management could reject all of the B757s.

Chip
 
If the needed difference is only about $200 million, I'm quite confident US could find these savings without having to obtain further wage cuts. Perhaps some efficiency changes with certain groups could do it, or perhaps more job cuts.

But to blame Siegel for this is extremely naive and shows a lack of understanding of the facts and the situation. US is in bankruptcy court, folks. Therefore, the shots are not being called by Siegel. The shots are being called by the Creditor's committee and the judge. US must get approval for ALL major decisions. Siegel has no control over the ever-worsening industry revenue picture. To blame him for that would be like blaming the National Weather Service for a hurricane. I think he has done an admirable job in his short tenure at US. He has made many difficult, but necessary decisions. Anyone who thinks that all he has achieved is lowering lease rates needs to get in touch with reality and look a bit harder at all that has been accomplished in a short amount of time to save US Airways from almost certain liquidation. In order for US to implement a completely new fare structure, they would have to prove the revenue value and get approval from the judge to do it. How do you accurately prove the revenue benefit when nobody has a clue how much worse the industry revenue picture will get? Give the guy a little bit of credit. Without him, your company would be toast already.
 
Just curious if anyone knows if the CCY lease has been revisited ($wise or giving up some space) and if the continuing contracts of previous management has been adjusted in any way. What are they going to do , quit?
 
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I do believe David is to blame, but not in total.
But to be objective, I must admit that management must start managing this company instead of thinking about old or new bonus plans.

I blame him for playing a game, the same corporate greed game that all others in his world have played. I do not feel compelled to offer apologies to the current management team while fellow workers are being laid off. And yes, Wolf is the COB still. Anyone who says the COB does not have power is a liar. They just changed the WOlf image and put in some young exec named David who wears polo shirts...you know, just like the neighbor next door.

If you think for one minute that David didn't know about gas increases or possible war in Iraq then you are only fooling yourselves. That speculation has been going on since summer at least. My grandma talked about it at the July 4th picnic.

The truth is that the possibility of war with Iraq and inflated gas prices were already projected. For anyone in his right mind to suggest that our company didn't know this while they were shoving down our throats a labor enemy contract is less than reasonable.
Either this company knew this [which it did] or they are managing this company on a one or two week interval period [in which case this company is doomed anyway]. I wouldn't be surprised if certain execs here are taking turns managing this company. Maybe more passengers will get pissed by further management decisions. Ask our CWA workers if David's decisions have made the passengers, we are trying to keep, happy.

The position of the workers on this property, no matter if they are a pilot, mechanic, ground person, F/A should be for management to either shut this company down....or start managing this company. This company has done nothing but jack us workers around for the longest time. And you all know it, some of you just don't have the balls to admit it.

And for those in denial...it is the TWA model. Let workers give, then tell them it wasn't enough because of 'new' unforseen reasons, then lay them off, lay off more, etc. then package it up real nice for...well you know the rest of the story.

love joesy
 
Sabre...I use to work for a company where I lost faith in management. Why? They decided to pick up a little company called Time Warner that completely destroyed the stock we were being fed by the buckets. When things started to happen I didn't care for, I trained my last class handed in my badge and said so long. The point...if you are so negative about U's management and how you no longer have respect for them - QUIT. If you are in a smaller city...there is no reason you can't go work for another call center or airline as a CSR. The only way for a company to succeed is for all employees to be behind the person in charge - Dave (though techinically it is some judge, but just go along with it). If Wolf was still in charge this airline would be liquidated right now. He would have taken his cash and ran. However, the stock is now worthless to what it use to be and the company is in bankruptcy. Wolf may still be Chairman of the Board...but what does that get him? Nothing. The stock will be re-issued after emergence and Wolf will be removed (even though he is already scheduled to retire) from having anything to do with it. Does Wolf have any power? Sure - at a consulting level and helping with some political connections he may have. However, Wolf isn't running the company now. Dave & David, as well as the Bk Court are running things now.
 
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DFW said I copied an AP post or something.

Well, if you see my post it was timed in at 4pm whereas the AP or other wires timed in at around 8pm. A difference of 4 hours.

I was just glad to get the info to you regardless who you believe. But, all the info I posted has not been posted by the AP yet. Carefully re-read my post.
The company is talking about layoffs at this point [not surprising to anyone] but my source says the company is entering discussions with the unions next week. First exploratory but it will move on to more contentious talks in time.

If you really want to put the pressure on me about how credible my source is then I will leave you with one thing. Think $2hr for ground employees. I was not told about Pilots but if $2 is about 10% then think 10% for Pilots. And it may only be for short term. Gut check says unions will cry foul but in the end $1.50 or benefit/work rule reductions will be put to a vote.

Listen to me now, but believe me later, that should be fair, right?
 
[BR][FONT face=Times New Roman size=3]Sabre:[/FONT][BR][BR][FONT face=Times New Roman size=3]Do the OMB Guidelines for the federal loan guarantee require a business plan that projects a 7 percent profit margin over 7 years?[/FONT][BR][BR][FONT face=Times New Roman size=3]Does this business plan need a projected B credit rating with verfication from an outside auditor, in this case Fitch Rating? Does Fitch have to provide a positive recommendation to the ATSB for the applicant to obtain the loan guarantee?[/FONT][BR][BR][FONT face=Times New Roman size=3]Can you tell me how management could have predicted fares would fall to 20-year lows, there would be increased security costs been imposed on the airline industry, that war-risk insurance would continue to climb to all time highs, and fuel prices would rise in response to a pending war with Iraq? [/FONT][BR][BR][FONT face=Times New Roman size=3]US Airways required a $1.8 to $1.9 billion bottom line change prior to the above mentioned problems exasberating in September. Now the bottom line change must be about $2.0 to $2.2 billion per year to get the loan guarantee due to falling revenues, per the information provided at yesterday's 341 creditors meeting.[/FONT][BR][BR][FONT face=Times New Roman size=3]With all due respect, it's not rocket science to understand if revenues fall, costs must be further cut to obtain the loan guarantee. Moreover, the creditors will demand a ROI, whether it's through a formal reorganization or an asset liquidation. [/FONT][BR][BR][FONT face=Times New Roman size=3]Without US Airwasy meeting the OMB guidelines for a loan guarantee, the airline will not have access to the funds necessary to emerge.[/FONT][BR][BR][FONT face=Times New Roman size=3]Chip[/FONT]
 
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