Us Airways And Atsb Restructure Loan

As reported over on Airliners.net, the title was wrong, it should have read:

"Captain Smith Rearranges Titanic Deck Chairs; Claims Present Course Just Fine"
 
Here's the kicker statement ladies and gentlemen:

"The company and the ATSB also agreed to modify other terms and provisions, including lifting certain restrictions on the company's ability to pursue asset sales."
 
Sadly, it appears that once again, UAIR management has chosen a short term fix, rather than a permanent one. I still think the company could be fixed, but the leadership lacks the intestinal fortitude to do so.
 
ITRADE said:
Here's the kicker statement ladies and gentlemen:

"The company and the ATSB also agreed to modify other terms and provisions, including lifting certain restrictions on the company's ability to pursue asset sales."
I am sure that that we are all mis-reading this statement. It really means that US Airways will be able to pursue the asset sales of other airlines... Hence the UCT/ICT/merger is just around the corner, with US Airways as the surviving company.

Yes, I am being sarcastic. But I bet somebody out there is looking to spin the story this way...
 
Take that back, and 7.5victim should take note of the following paragraph. This one is the real kicker:

"The amended loan agreement was completed along with US Airways filing its Form 10-K with the U.S. Securities and Exchange Commission (SEC) for the fiscal year ended Dec. 31, 2003, which includes the independent auditors' (KPMG LLP) report to shareholders. The auditors report indicates that "the company's significant recurring losses and other matters regarding, among other things, the company's ability to maintain compliance with covenants contained in various financing agreements, as well as its ability to finance and operate regional jet aircraft and reduce its operating costs in order to successfully compete with low-cost airlines, raises substantial doubt about its ability to continue as a going concern."
 
Note that the operative there (other than the regional jets) is the reduction of costs, not the increase in revenue. Clearly, KPMG believes that it is a cost issue, not a revenue issue.
 
Today's ATSB announcement provides US Airways with relief, places greater pressure on the employees to participate in the "Going Forward Plan", and moves the company closer to being involved in a corporate transaction.

There is not question the company has problems with GECAS, the independent auditor, S&P credit rating service, and the ATSB, not to mention intense and relentless LCC pressure. These are all being simultaneously addressed.

The assets sales will be PSA followed by Allegheny and Piedmont. If necessary, the new ALPA RJ agreement may provide for MDA to be "spun off", which could be next, followed by the Shuttle. It's far less likely the Shuttle will be sold and management has indicated its performing better. This cash infusion can then be used to further pay down the loan guarantee to $500 million, which will permit a corporate transaction to proceed.

As I have said before, US Airways has M&A options and today's ATSB news provides the company and its employees the opportunity to collectively move forward with the "Going Forward Plan".

However, I believe it's important to note that if the employees do not participate in the "Going Forward Plan", the airline could be liquidated. US Airways' plan is to have everybody on board by June 30 and then move forward as a stable imdependent enterprise, which will be involved in a corporate transaction. Is it coincidental that United Airlines has said it will emerge from bankruptcy on June 30, which is about the same time US Airways wants to have its "Going Forward Plan" in place? Moreover, what will Northwest Airlines have to say about this?

Regards,

USA320Pilot
 
Too much negativity here guys. Shouldn't someone point out the positives?

1) This certainly gives U some much needed time and space to breathe.

2) This reduces the airline's overall debt by a significant chunk and the subsequent cash requirements associated with that debt.

3) This allows U to reap the benefits of some of its just enacted measures to cut costs and increase revenue - i.e. new RJs now being delivered, more point-to-point and Caribbean flying, an improving (though slowly) economy which should drive more traffic and more revenue during the industry's busiest months. This should also instill confidence in the public that U will be around long enough for them to book tix for their summer vacations in FL, the islands and Europe.


I'm not pretending that this means U is out of the woods, but this airline was up against a serious wall. Now, that immediate threat to the future of the airline is out of the way.

Much will depend on the outcome of yet another round of concessionary negotiations with labor and, hopefully, some fresh ideas like those discussed on this board from time to time (rolling hub in PHL immediately comes to mind). Hopefully, wich Bronner more involved at this point, a new course can be charted for the long term. At least now, there's time to find out.
 
Flying Titan:

I agree with your comments. Separately, Bruce Lakefield, the former CEO of Citigroup Europe and David Bronner's right hand man, is now the point man for RSA's involvement with ALPA. Lakefield had dinner with the ALPA MEC Officers, Negotiating Committee, and Advisors on Tuesday. The social meeting began to lay the groundwork for upcoming talks.

In addition, expect the Company and the Negotiating Committee to announce a RJ scope tentative agreement (TA) before the end of next week, which will permit the sale of PSA and transfer of CRJ-200 and CRJ-700 delivery positions, increase the number of CRJ-700 positions permitted to be flown in the US Airways Express network, a new MDA clause, and EMB-170 adjustments.

Do not be surprised if this agreement also provides provisions for Chautauqua, Republic, and Shuttle America.

Regards,

USA320Pilot
 
And I believe that unless a new management team is put in place as part of the "Going Forward Plan" the airline WILL be liquidated. This isn't about employees saving the company. This is about an inept management continuing to focus on putting buckets under leaks instead of fixing the roof. And utilizing the fear factor as the way to motivate employees to continue to give more.

We cannot save the airline. Only a competent management can do that. That is what the "Going Forward Plan" needs to address. Any further employee participation should be linked to replacing Siegel. Then maybe you can finally see your UCT come to fruition.

mr
 
See... And you heard it here first!

I guess US Airways would never consider selling off assets and using the proceeds to actually fix the items that create "the company's significant recurring losses"? No, this is a company which you, USA320Pilot, believe will only survive by buying another bankrupt company.

Have you noticed the successful companies just go out and do their own thing (think WestJet or Southwest), while the less successful companies keep combining until they end up with one giant failure (think Air Canada/Canadian/WardAir/Eastern Provincial/Pacific Western series of mergers 1984-2004 or USAir/Piedmont/PSA/Empire, etc or Continental/Eastern/NYAir/PEOPLExpress/Frontier).

Companies which raise "substantial doubt about its ability to continue as a going concern," are not generally companies which can go out and acquire other companies. Who would finance such a thing? Answer: Nobody. US Airways needs to get its own house in order. Focus on that instead of this mythological UCT/ICT/merger/corporate transaction/whatever todays term is.