US Airways Gets Lender, Bronner comments on UAL, & United Wins Pay Cuts

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chipmunn

Guest
New York Times wrote: David G. Bronner, the chairman of the fund, said in an interview yesterday that the airline, at his urging, would include contingency plans in the restructuring plan in case its financial condition worsens. One of their fears and one of my fears is clearly Iraq, said Mr. Bronner, who has been running Alabama's fund for nearly 30 years. But Mr. Bronner praised US Airways' management, led by its chief executive, David Siegal, as superb.

Chip comments: US Airways' equity investor and the ATSB are requiring more cuts to match revenues with expenses. Without these cuts, the company may not emerge from bankruptcy. The next $200 million in DIP financing and the $240 equity investment require US Airways to meet all of the ATSB requirements; of which one is bankruptcy emergence.

US is seeking ways to add additional revenue with accelerating the timeline to join the Star alliance and negotiating with ALPA to bring 70-seat and 50-seat RJs into the network more quickly.

In addition, the company has agreements in place to cut $425 to $475 million in annual lease expense and there are reports the Seabury Group is negotiating to obtain further lessor relief, although it's uncertain whether or not there will be additional US lessor cuts.

The company is in negotiation with its unions on productivity and retirement changes that may need to be completed by December 9, which is the date the airline intends to submit its final Plan of Reorganization to the bankruptcy court in anticipation of its confirmation hearing.

Separately, there is every reason to believe US could be involved in an interesting corporate transaction in short order, provided the company and its unions can reach meaningful accords.

Chip
 
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chipmunn

Guest
US Airways Gets Lender, Bronner comments on UAL, & United Wins Pay Cuts
NEW YORK (New York Times) - labama's pension fund won its bid yesterday to become the primary lender for US Airways, giving it the leading role in the airline's effort to emerge from bankruptcy court.
Separately, United Airlines, which is seeking to avoid the same fate as US Airways, disclosed that its salaried employees had agreed to pay cuts of $1.3 billion over the next five and a half years as part of an overall $5.8 billion package of concessions from its workers. Pilots for United, part of UAL, also voted overwhelmingly to approve $2.2 billion in concessions as their contribution, the Air Line Pilots Association said yesterday.
At US Airways, the Retirement Systems of Alabama offered in September to invest $240 million for a 37.5 percent stake in the airline, which had filed for Chapter 11 bankruptcy protection. The fund topped an offer by the Texas Pacific Group, which had structured a turnaround plan. The bankruptcy court had set a deadline of Friday for other competing offers, but none were made, said the airline, which is based in Arlington, Va.
The $26 billion Alabama fund, whose other investments include television stations, golf courses and hotels, also provided $500 million in debtor-in-possession financing, of which US Airways has drawn $300 million. The fund already holds $340 million in aircraft leases with the airline. The fund will be able to fill 5 of the airline's 15 board seats.
US Airways said it would file a restructuring plan with the bankruptcy court in mid-December. It still expects to emerge from bankruptcy in the first quarter of 2003.
The restructuring plan is crucial to winning final approval from the Air Transportation Stabilization Board for $900 million in loan guarantees. The board has already granted its preliminary approval. Even so, airline officials have cautioned employees that further cuts may be necessary. David G. Bronner, the chairman of the fund, said in an interview yesterday that the airline, at his urging, would include contingency plans in the restructuring plan in case its financial condition worsens.
One of their fears and one of my fears is clearly Iraq, said Mr. Bronner, who has been running Alabama's fund for nearly 30 years. But Mr. Bronner praised US Airways' management, led by its chief executive, David Siegal, as superb.
They're thinking of everything down the road, he said. The worst thing you could do is get yourself out of bankruptcy and then end up right back into it. Mr. Bronner said he expected the air transportation board to approve the US Airways restructuring plan.
But Mr. Bronner joined the rising tide of pessimism about United's chances of receiving $1.8 billion in loan guarantees as it tries to avoid bankruptcy court.
Noting that US Airways, which is smaller than United, may need to seek more cuts, Mr. Bronner questioned whether the $5.8 billion pledged by United's employees would be enough. He said the board would be asking: Is their plan realistic? Does it get them to where they need to be? The preliminary indication is that it is not there. I think that's evident.
The pay cuts announced for United's salaried employees would take effect on Dec. 1, a day before the airline faces a critical deadline for repaying $375 million in debt backed by aircraft. Those employees are taking cuts of 2.7 percent to 10.7 percent. United said it would issue stock options to all employees taking part in its recovery plan.
Wage cuts for the pilots union will take effect once the recovery program begins. The union said its members had approved the concession package on a tally of 6,526 to 340. About 80 percent of United's 8,800 pilots voted. The package provides for 18 percent pay cuts in 2003 and 2004, with pay restored to 2002 levels by the end of the deal in 2008.
The recovery program is the best and only realistic course of action for United, Paul Whiteford, chairman of the United pilots' union, said in a statement. Glenn F. Tilton, United's chief executive, said in a statement that the pilots' vote demonstrated unprecedented cooperation. We are on a clear path to transform our airline and we must pull together to succeed, he said.
If United is unable to secure approval from the air board for its loan guarantee package and cannot make or extend the debt payment, executives said, the airline will be forced to seek bankruptcy protection.
The announcement of the salaried employees' concessions leaves only United's largest union, the International Association of Machinists, without an agreement. The union represents 26,000 baggage handlers, mechanics and other ground personnel at the airline, with which it has been holding talks in recent weeks.
But the union has resisted granting concessions and in fact rejected US Airways' request for concessions before it filed for bankruptcy. David Gregory, a labor law professor at St. John's University in Jamaica, Queens, attributed the machinists' attitude to a general suspicion that pervades the labor movement in the wake of high-profile bankruptcies at Enron, WorldCom and other companies.
The labor movement just doesn't believe what corporate America is telling them, Professor Gregory said. There is almost a complete disregard for management, and United Airlines is caught up in that.
Moreover, he cited a profound incredulity among ordinary workers that an airline the size of United could end up in bankruptcy court. But Thomas L. Boland, managing partner at the Seneca Financial Group in Greenwich, Conn., said a court restructuring seemed likely for United as the best way to attack its cost structure.
I think that the clock is ticking, and that may be the only way they can perform the radical surgery they need to survive in the long term, Mr. Boland said.
Mr. Boland, the former chairman of the US Airways Shuttle and a longtime executive with Citigroup, advised America West in its successful loan guarantee bid last summer. Mr. Boland noted that even with provisional approval from the air transportation board, US Airways still had to resort to Chapter 11 bankruptcy. He was skeptical of United's plan, outlined on Sunday, that calls for the airline to return to an operating profit in 2004 and to begin repaying the loan guarantees, if granted, in 2005.
It sounds like they're putting a plan together that's saying everything is going to be good in two years, Mr. Boland said. What happens if everything isn't good in two years, and everything comes home to roost, and they'll be in the soup again? They haven't fixed anything, they've just deferred the problem.
 

767jetz

Veteran
Aug 20, 2002
3,286
2,779
ATTENTION ALL READERS:

Chip Munn has changed his nick-name from Mr. there is reason to believe to Mr, there is EVERY reason to believe.


Also, we have a new conspiracy theory. With the death of the Unique Corporate Transaction (UCT) we have the birth of the Interesting Corporate Transaction. (ICT)

Oh boy... Here we go again!
 

LDKIAM

Member
Oct 29, 2002
99
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Chip, you are wrong, the company is not negoiating with the mechanic and related at all, have not asked us for anything, all the company did last week while going over some language in the new agreements was show the finanicail information to the IAM.[BR]All of this was discussed on our chairman's and AGC conference call this morning.[BR]SO I repeat, THE COMPANY and the IAM ARE NOT NEGOTIATING FOR ANYTHING!
 
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chipmunn

Guest
Ual767jetz:

A few weeks ago I posted comments about UA's new business plan not meeting ATSB requirements, I received criticism for these posts, and now there are multiple news reports that is the case.

Today the New York Times wrote, noting that US Airways, which is smaller than United, may need to seek more cuts, Mr. Bronner questioned whether the $5.8 billion pledged by United's employees would be enough. He said the board would be asking: Is their plan realistic? Does it get them to where they need to be? The preliminary indication is that it is not there. I think that's evident.

I publish this information so UA employees, who read this board, can understand what it is going to take to prevent bankruptcy, which I can assure you do not want to enter.

Regarding your conspiracy comment, the interesting corporate transaction plan comes from inside and outside the company from sources who spoke on the condition of anonymity. Will it occur, maybe, maybe not. But, we are much closer than you think to an announcement about a deal involving US.

Chip
 
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chipmunn

Guest
LDKIAM:

The company has talked with each union and provided labor leaders with a power point presentation discussing revenues, revenue projections, advance bookings, and other fundamentals. During these individual meetings the topic of voluntary concessions was discussed and the company has said it will not seek a S.1113 proceeding.

However, if a union elects to not enter into formal discussions I understand the company has other strategies it can implement, which are permitted within the current agreements that will lower employee expense across-the-board.

The company's survival is at stake and management intends to take every action required to return the company to profitability.

Chip
 

USAirBoyA330

Veteran
Aug 23, 2002
724
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Well, I hate to inform people that AFA Leaders have NO intention of giving anything more especially productivity. I can also tell you that IT WON'T happen by December 9th and if it ever did....AFA would insist on a vote. I think we are all just sick of hemorrhaging F/A's and seeing our peers get cut left and right. Why would AFA hand them the knife to cut us more?
I have spoken with SEVERAL AFA leaders and they have the mindset of....the company has gotta do what it's gotta do but they will NOT give them the tools to inflict more job losses on the F/A group. As one said the well is dry. If they need it bad enough they can petition the court for it. I am just sick of the whole thing. It might not be the best attitude but I am not going to sit around and smile about constantly coming to work with the threat of loosing my job. They have done NOTHING to boost moral around here. I rallied for cuts the last time to save this place and it was exhausting. I am not going to do it again. This time what they are wanting is WORSE!...They don't want $$$...they want our job.
 

USAirBoyA330

Veteran
Aug 23, 2002
724
0
Chip:
My intention is not to argue with you. I am trying to tell people that if they think AFA is giving anything else, they are mistaken. As of this morning AFA says they are not in discussions and don't intend to be. AFA leaders say the well is dry and IT IS. Even if AFA talked with the company about more productivity cuts aka.....job cuts, it would be voted on by the membership. I can tell you that any such vote will FAIL. The F/A's here are not going to give anymore.
I guess the company will have to take it in court or downsize the fleet. Yeah....it's sucks but that's the way it is. So I guess Plan B needs to be dusted off because no cuts will be made ... much less ratified by Dec 9th.
 

USAirBoyA330

Veteran
Aug 23, 2002
724
0
Yes, I have heard of Me Too and I have had discussions with our AFA Leaders about those rules in the past few weeks. AFA has been trying to get the membership to ditch those Me Too rules for YEARS! The F/A's get screwed more ways than you can count with those rules.

Chip: What would you like us to do? Lets all line up outside Crystal City and open our wallets. Then...management can come out with a big vacuum hose and just suck away. Oh wait....they don't want more money.....they just want to cut about 2000 F/A's off the payroll and work the rest down to the bone. Silly me. You think we should embrace this? I value your posts for the most part but this is getting really silly. Like we should just hand over everything or something. The company can do what it has to do but at least we won't have hung ourselves. This company is just once self induced crisis after another. The sky has been falling since I set foot on the property and you can't save managment from themselves. The more we give...the more they need. It's a never ending cycle. If they sky is going to fell then let it but I am not going to shoot myself before it does.
 

Dark Wrench

Member
Aug 30, 2002
44
0
www.usaviation.com
[blockquote]
----------------
On 11/19/2002 11:48:20 AM LDKIAM wrote:

Chip, you are wrong, the company is not negoiating with the mechanic and related at all, have not asked us for anything, all the company did last week while going over some language in the new agreements was show the finanicail information to the IAM.
All of this was discussed on our chairman's and AGC conference call this morning.
SO I repeat, THE COMPANY and the IAM ARE NOT NEGOTIATING FOR ANYTHING!
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[/blockquote]
Siegel: More savings necessary; US Airways to take pension charge
Dateline: Monday November 18, 2002

US Airways CEO David Siegel told employees the airline has been meeting with union leaders to identify cost savings as it adjusts its profitability target to qualify for its federal loan guarantee because the “expected revenue recovery†has not materialized.

“While the sacrifices from our employees that they have already made have been significant, they did fall short of our original target,†Siegel said in a taped message. “Without getting into details, there are significant savings to be gained and productivity improvements such as eliminating outdated and costly work rules.â€
Siegel said US Airways has “obtained as much as possible†from aircraft lessors, lenders and vendors and those savings “actually exceeded†the carrier’s targets by a “significant amount. “We are going to work tirelessly with your union leadership to resolve these issues and I’m very confident we’ll be successful,†he said. “We’ve come too far not to complete the task to ensure our survival.â€

Siegel also mentioned that Friday was the deadline for competing bidders to submit proposals to become the company’s equity sponsor during its reorganization. Retirement Systems of Alabama currently is the sponsor with a $740 million investment in return for a 37.5% stake in the airline upon its emergence from Chapter 11 bankruptcy. Siegel said the company will make an announcement concerning the bids this week.

Separately, US Airways Group said in a government filing that it will be required to record a “significant minimum pension liability†as of Dec. 31 with an expected additional charge to stockholders’ equity of $700-$800 million as a result of continuing declines in interest rates and the market value of the assets held in its defined benefit pension plans. The minimum pension liability will reflect the amount by which the pension plans’ accumulated benefit obligation exceeds assets in excess of amounts previously accrued for pension costs.

US Airways has “substantial cash funding requirements†related to employee defined benefit pension plans, and based on current forecasts the company said it will be required to contribute approximately $3.1 billion for the years 2003-09, including $52 million in 2003 and $900 million-$1 billion in 2004.
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
Chip,

Care to share a few more details, such as the airline(s) that could be involved. Your comments were extremely vague and considering how anything you post these days seems to invite ridicule and insult from certain posters, I'm wondering why you shared it at all without any further elaboration. But you've got my curiosity.
 
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chipmunn

Guest
USAirBoy330:

You are right, the company will do what they have to do. Have you heard of me too?

Chip
 
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chipmunn

Guest
USAirBoy330:

I do not like this situation any more than you do. Plan and simple, it sucks. But, the fundamentals speak for them self.

Management is working on a business plan to address the short-term problems and if we can get through this immediate crisis, I believe the medium and long-term will be brighter. In fact, it could be much brighter dependent on certain outside events.

Chip