US Airways regional jet unit closes for good

[700UW]

US Airways regional jet unit closes for good
Friday, March 31, 2006

By Dan Fitzpatrick, Pittsburgh Post-Gazette

US Airways will finally shut the doors on regional jet unit MidAtlantic Airways in late May, resulting in job losses for 78 local airline employees and 368 statewide.

The layoffs in Pittsburgh and Philadelphia could begin on May 28 or as many as 14 days later, according to a letter US Airways sent to the state Department of Labor and Industry. The job losses will add to more than 9,000 eliminated locally since the 9/11 terrorist attacks.

Article

 

[Heinrich]

US Airways regional jet unit closes for good
Friday, March 31, 2006

By Dan Fitzpatrick, Pittsburgh Post-Gazette

US Airways will finally shut the doors on regional jet unit MidAtlantic Airways in late May, resulting in job losses for 78 local airline employees and 368 statewide.

The layoffs in Pittsburgh and Philadelphia could begin on May 28 or as many as 14 days later, according to a letter US Airways sent to the state Department of Labor and Industry. The job losses will add to more than 9,000 eliminated locally since the 9/11 terrorist attacks.

Article

Bah, this sucks. I thought in 2 years US could buy them back and the LGA slots?

 

[robbedagain]

whata complete failure the old mgmt did to this MDA and its employees. Good luck to all the affected employees

 

[totobird]

Does anybody have a breakdown of which 78 employees are being affected ? Does this mean that USAirways Fleet Service will no longer load the flights in Pittsburgh ?

 

[USA320Pilot]

It is my understanding that after the Eastshore Aviation investment US Airways needed to sell another asset to obtain the required funds to exit bankruptcy. The two most marketable assets where transatlantic flying and MDA, which along with the Shuttle and PSA were also marketed.

Once the MDA sale agreement was signed US Airways’ POR gained momentum and other investors appeared and in the end MDA did not need to be sold. However, Wexford Capital and Republic Airways would not back out of the sale and US Airways had no option but to proceed with the transaction.

Did US Airways or its new management team lead by Doug Parker want to sell MDA? No, of course not, but at the time senior management believed the MDA sale was the best option to keep US Airways Group flying and they elected to keep the transatlantic and Shuttle operation intact instead.

Best regards,

USA320Pilot

 

[robbedagain]

It is my understanding that after the Eastshore Aviation investment US Airways needed to sell another asset to obtain the required funds to exit bankruptcy. The two most marketable assets where transatlantic flying and MDA, which along with the Shuttle and PSA were also marketed.

Once the MDA sale agreement was signed US Airways’ POR gained momentum and other investors appeared and in the end MDA did not need to be sold. However, Wexford Capital and Republic Airways would not back out of the sale and US Airways had no option but to proceed with the transaction.

Did US Airways or its new management team lead by Doug Parker want to sell MDA? No, of course not, but at the time senior management believed the MDA sale was the best option to keep US Airways Group flying and they elected to keep the transatlantic and Shuttle operation intact instead.

Best regards,

USA320Pilot

so basically what youre sayign is that it was one of three options and that was basically the best wya to deal with it due to the stubborness of Republic?

 

[USA320Pilot]

PineyBob:

You're right and it's very unfortunate that MDA was sold. The employees who built that operation poored thier heart and sole into the airline and it was a great and profitable entity.

It's too bad it's virtually gone and during the time of its sale there was a lot happening withint the "executive suite". As you clearly know, this was a very difficult time with a lot of angst at the airline.

It is my understanding during Bankruptcy II after management renegotiated or rejected labor, aircraft rental, facility, and other contracts the company and its financial advisors set a course to re-capitalize the balance sheet.

This effort was lead by John Luth of the Seabury Group, who in the past had worked for America West and Air Canada, during their “restructurings†and is now working as a consultant for Northwest.

Luth looked at equity investments, asset sales, debt financing, M&A activity, and other financial vehicles and the company initially sought about $250 million in exit financing. He spoke with more than a dozen potential investor’s before he finally came up with the exit plan, which became dynamic because of ever changing macro economic factors.

This first part of the exit plan that senior management and its advisors elected to execute was the Eastshore/Atlantic Coast and then the Wexford Capital/Republic agreements.

An interesting point to this transaction not often discussed it that United Airlines indirectly helped US Airways survive and if it was not due to United’s bankruptcy proceeding US Airways may not be here today. To drive down its own costs United was attempting to re-negotiate its “fee for departure†agreements with its regional partners or the Chicago-based airline said it could reject the agreement through the courts.

Air Wisconsin knew they could not meet United’s demands and be profitable and the Appleton-based company’s management saw the problems Independence Air had when it tried to become an independent airline. This situation created motivation for Air Wisconsin’s management to seek another airline partner and worked into US Airways’ favor because the mainline carrier required the RJ operator to provide the Arlington-based airline and equity/DIP investment of $125 million.

What most people did not know is that about the time this deal was completed US Airways was $10 million over the minimum cash balances required by the ATSB, which I believe happened February 27, 2005 and was near a potential liquidation.

In fact, former ALPA MEC chairman Bill Pollock told the Pittsburgh Post-Gazette on March 26 "three or four" points when US Airways almost went out of business, when it looked more likely that it would fail than survive. The lowest point was in the fall and winter of 2004 when the airline needed "another week of breathing room" on a line of financing backed by federal loan guarantees. "We were busting our [loan] covenants," agreements with lenders to meet certain financial guideposts, "left and right," he said. "It was grim, I don't know how else to say it."

See Story

In a strange way what’s interesting is that United indirectly helped save US Airways because if it had not forced Air Wisconsin to find another partner, which created the $125 million equity/DIP investment, the new US Airways may not be flying today.

Meanwhile, as exit-financing negotiations proceeded another roadblock appeared and that was rising energy prices. US Airways and its creditors committee knew the company would need to increase its liquidity further or find a merger partner, which could bring more funds to the new business enterprise.

Then the company sought a “dual track†approach to seek exit financing and complete its POR. Discussions where held with other interested investors and potential merger partners that included a number of different options. These options included acquiring United and that option was code-named "Project Minnow," with US Airways as the small fish gobbling the bigger one according the Pittsburgh Post-Gazette.

See Story

Complete a fragmentation to Virgin Atlantic, split the company up with other legacy carriers, selling assets to companies like JetBlue, AirTran, or Southwest or merging.

In the end, the new US Airways was formed with a series of transactions that included the Eastshore Agreement, MDA sale, and the America West merger, but it needed help from Air Wisconsin and other transaction to proceed. Interestingly, I believe Air Wisconsin can be rewarded for its investment and can sell its stake in the company after today and the people to suffer are the MDA employees.

If there is any good news is that the new US Airways has begun recalling employees and hopefully all of the former MDA employees will be back at the mainline in the not-to-distant future. Why? The marriage of US Airways and America West has so far proven to be a success and has the consent of the investment community who has seen its stock rise about 75% since it became listed as the company moves towards its first operational annual profit in many years in 2006.

Finally, another interesting article on US Airways’ emergence and corporate combination journey can be viewed in the following column:

See Story

Regards,

USA320Pilot

 

[Rico]

Or to look at it another way...

We trade the E-170's for E-190's, recall everyone, finally drop the "Midatlantic" nickname, and go right back to doing what we have already been doing.

In the meantime, our pilots take a few months off with (fulough) pay, and either enjoy the summer with their families, or work elsewhere in the industry until they are ready to return...

 

[RowUnderDCA]

Or to look at it another way...

We trade the E-170's for E-190's, recall everyone, finally drop the "Midatlantic" nickname, and go right back to doing what we have already been doing.

Yes, that's a good phase 1....

Phase 2: buy back the slots

Phase 3: dump Republic/Wexford entirely

 

[NAPAUS]

Or to look at it another way...

We trade the E-170's for E-190's, recall everyone, finally drop the "Midatlantic" nickname, and go right back to doing what we have already been doing.

In the meantime, our pilots take a few months off with (fulough) pay, and either enjoy the summer with their families, or work elsewhere in the industry until they are ready to return...

Now thats the exact way everyone should be looking at it. FINALLY, a true positive spin!!!!

 

[fr8tmastr]

It is my understanding that after the Eastshore Aviation investment US Airways needed to sell another asset to obtain the required funds to exit bankruptcy. The two most marketable assets where transatlantic flying and MDA, which along with the Shuttle and PSA were also marketed.

Once the MDA sale agreement was signed US Airways’ POR gained momentum and other investors appeared and in the end MDA did not need to be sold. However, Wexford Capital and Republic Airways would not back out of the sale and US Airways had no option but to proceed with the transaction.


Best regards,

USA320Pilot

Its amazing in BK, Airways can change aircraft leases, break contracts at will, increase management bonuses, and generally destroy tens of thousands of employees lives with layoffs and elimination. But stand back, a deal with Wexford in which $$$ has not even changed hands is untouchable. How high can I raise the BS flag on this one?

This sale remained for 1 reason and 1 reason only, that one reason is the exit financing of top managements golden parachutes.
100 mil deal including simulator
somewhere in the neighborhood of 40 mil went to satisfy ATSB loan guarantee's (170 were collateral) Remove the sim from that total (we are keeping it) and that leaves 30 to 40 mil net proceeds from the transaction. Anyone care to remember how much the braintrust in CCY took in bonuses last fall?

So the Airways pilots took huge paycuts and lost their pensions to finance the 170 division all so they can pay for yet another bonus to self proclaimed "talent"

 

[HogDriver]

USA320Pilot,

You are right that it is unfortunate the way events lined up against the MidAtlantic brand unit. And I appreciate your recall of events concerning the near collapse of US Airways. Your writings are always interesting to read. No one doubts the airline nearly crashed and burned several times before pulling out of it's dive. But what adds insult to injury, and burns someone like myself who put his heart, soul and talents into MDA, is how the unit was treated by both ALPA and the company while it was operating and being sold. In typical US Airways managment style, the employees were screwed and mistreated from start to finish, and ALPA (which should have worked for the pilots there) allowed it to happen. I can accept the need to sell the unit for money to keep the whole operation running, though in the end it was not needed, but when it came to how to deal with the employees transfering to Republic (or any other buyer) the company decided to once again go for the money instead of taking care of it's own. Why go to the trouble of setting up a LOA (I forget which one) that deals with selling MDA, if you are going to ignore it? They had the opportunity to do the right thing and hold Republic to taking everyone in the unit along with seniority, pay, etc., as directed by the LOA for the sale of the WHOLE division, but chose to toss the employees aside, make the sale easier for Republic to take, and pay an army of lawyers to open the loop holes to make it happen. Yes, the arbitrator ruled against us (which really made our case for the lawsuit that MDA is US Airways, not a stand alone airline), but the company could have done the right thing from the beginning, honor the intent of the MDA sale LOA, take care of the folks that built the operation from the ground up (for grossly low pay and benefits and contract) and come off with better relations with its whole employee group. Sadly, the leadership (which is mostly gone now) stayed true to form and behaved as they always had.

My intent here is not to debate the lawsuit, or any other part of ALPA's failure to the MDA pilots with you. Frankly, you would'nt understand anyway, not having gone through the last couple of years at MDA. The bottom line is due to narrow vision and poor leadership, several golden opportunities were lost (a sad trend that drove the airline into 2 bankruptcies in the first place). Republic could have taken on a turn-key operation with highly trained and motivated employees and the company would be reaping the benifits from that operation and a happy employee force. Instead, anger and distrust lingers and Republic's operation is crap on wheels.

I agree with you, the future looks brighter with recalls and better leadership in place. Hopefully, a chapter like MidAtlantic will never play out again.

 

[FlyOnWall]

Yes, that's a good phase 1....

Phase 2: buy back the slots

Phase 3: dump Republic/Wexford entirely

Amen. This whole thing is truly disgusting and they will have to do damage control with thier employees over it for years. What this had said to the under ten year crowd at US Airways is:

* Even if you are eligible for welfare, you are not cheap enough.

* We can make up false entities and deny you your seniority and longevity, even tell you that you don't work for US Airways.

* We will outsource anything and would call an A350 a regional jet and call it US Airways Express if we could. In fact, if Embraer or Canadair made a widebody we could convince you that it's a regional jet.

* We will pit you against other employees and make them believe you are inferior.

* Quality service means absolutely nothing to us, we could care less that your "division" was the most customer praised part of US in the past decade.

* Management retention bonuses are far more important than 800 jobs, and service levels on hub to hub and midcon flights.

* We can find ways to break your contracts, use loopholes to outsource your jobs, but will tell you straight-faced that as one of the biggest airlines in the world with huge Washington DC ties, can not get out a deal with an Indiana commuter airline.

* We don't mind that Texas will never again be served on time, or that evacuation slides will be blown every week, or that a large part of our network will be manned by inexperienced commuter pilots and even more inexperienced and immmature flight attendants.

* Our most important assets and slots mean nothing compared to golden parachutes, we are always looking to sell, sell, sell.

* We don't value our customers or thier opinions.

* We don't mind causing anger or even violence.

* We will not acknowlege the retirement of a mainline fleet that is larger than our 757, A330, 767, and A321 fleets, and will not even comment on the loss of a thousand jobs directly again.

* We will allow pretty much anything by a contract operation. Appalling customer service, inability to staff aircraft, no followed schedule, and broken or ferrying aircraft are all preferable to a high quality, lower cost operation by our own employees.

* Loyalty, sacrifice, and dedication will get you exploited, laughed at, and uncerimoniously replaced and thrown out the door.

* We are always looking for ways to get rid of you and will.

 

[MarkMyWords]

We don't mind that Texas will never again be served on time, or that evacuation slides will be blown every week, or that a large part of our network will be manned by inexperienced commuter pilots and even more inexperienced and immmature flight attendants.

I was right there with you until you go and make an ignorant comment like this. This is the same mentality that you hated when the "old" mainline F/A's nicknamed the "new" F/A's as the "Crazy Eights" and the "Nutty Nines".

 

[FlyOnWall]

That I hated? I think you are confusing me with another poster. I've never talked about crazy 8s or nutty nines. Although I understand the nutty nines are what made up MidAtlantic flight attendants. Those are affectionate terms that are a part of airline life, like "senior mama", "slam-clicker" or "crash pad". Nothing offensive about it at all.

Your mistaken identity aside, I stand by my "Ignorant" comment. Republic is awful. Ask anyone. They seemed to start off on an OK foot but are drowning at the moment. Word from gate agents in DC is that thier crews mostly F/As simply don't show up at all or show up late. They have a huge turnover, an RP pilot told a gate agent they are severely understaffed for f/as by aboout 60, and just lost another 30 in one month. They are required to take all 28 of the US planes by May but don't have enough staff for what they have now. Unfortunately thier business plan banked on MidAtlantic pilots and F/As being desperate enough to apply for a new hire job there and they were hugely mistaken.

They are making Mesa's CLT CRJ900 operation look good. At least thay have people to fly the planes and don't harass the customers.