The ALPA restructuring agreement prevents the company from going below 245 mainline aircraft in bankruptcy and 275 outside of bankruptcy. With this in mind letâ€™s examine what we know:
1. At the end of this year, US was scheduled to operate 315 aircraft, but that has been changed with three developments.
2. US cancelled the four remaining A-321 deliveries.
3. US announced it would remove 57 parked (not included in 315 fleet count) and 32 active aircraft, with a target fleet of 279 aircraft. The 32 aircraft in question were 3 B-757s and 29 B-737s. Last week the bankruptcy court approved 10 of 32 aircraft be returned to the lessor, with the disposition of the other 22 aircraft unresolved.
4. From the announced fleet reduction to 279 aircraft, US can only reduce its by fleet another 34 mainline aircraft while in bankruptcy, but once out of bankruptcy the 275 minimum fleet count should still apply per the ALPA contract.
5. Dave Siegel has told employees at road show meetings in 3 to 5 years US will be out of the turboprop business.
6. US has said it anticipates ordering up to 500 RJs, with 200 firm orders and 300 options. The order will likely include the EMB-170 with six first class seats and the EMB-175 with eight first class seats, both with forward lavatories and wing mounted engines.
7. Rueters said, â€œthe airline has asked a bankruptcy judge to pre-approve a mix of up to 150 aircraft and engine leases that could be rejected down the road.â€
8. The Seabury Group is a investment banking consulting firm lead by John Lutz. Lutz has been coordinating the lease company concessions in an attempt to lower lease rates to current market conditions. For example, the US B-737s are said to have a monthly lease expense of $250,000 to $270,000 per month based on interest rates in the 11 percent area, whereas with todayâ€™s fall in interest rates to about 5.5 percent, a used B-737 could obtained for about $100,000 per month. The Seabury Group is leading the charge to help US operate a fleet with a lower cost to contribute to driving down the airlineâ€™s CASM post emergence. The company is using the threat of returning aircraft through the 60-day bankruptcy process as leverage on the lease companies to â€œplay ballâ€.
9. Reuters said, â€œThe latest motion includes jet aircraft and turbo-props that are currently operated by US Airways and its subsidiaries,â€ which supports the RJ upgrade program and the companyâ€™s effort to lower its aircraft ownership/payment costs.
10. US was only able to obtain 85 percent of its target labor cost reduction; therefore, management is attempting to obtain greater vendor, creditor, and lessor concessions to qualify for the $900 million federal loan guarantee, which is dependent upon a $1.2 to $1.3 billion annual cost reduction.
11. I suspect the â€œwholly-ownedsâ€ will operate RJ aircraft and the employees and equipment can be merged into MidAtlantic (MDA). The new ALPA mainline pilot contract provides for â€œwholly ownedâ€ pilots to have a flow through to MDA. The pilot contract says the order of pilots on the MDA Pilotsâ€™ System Seniority List will be as follows:
US pilots in order of US pilot seniority.
Pilots from Participating â€œwholly-ownedâ€ carriers in order of their positions on the â€œwholly-ownedâ€ pilots seniority list.
New-hire pilots in order of their dates of hire as MDA pilots.
NO period of probation for US and â€œwholly-ownedâ€ pilots.