What Does R S A Own?

[Justme]

According to MSNBC RSA owns 22,669,412 out of 57,000,000 shares of UAIR.

According to US Airways website regarding 2002 Ch. 11:
Q. Who gets stock in the newly reorganized company and in what proportions?
A. New common stock will be issued in two classes. There are 51.1 million shares of Class A common stock and 5.0 million shares of Class B common stock. The allocation is as follows:

-Retirement Systems of Alabama, which is investing $240 million in US Airways, will hold 36.6 percent (of a fully diluted basis) of the Class A shares and all of the Class B shares

-Members of the Air Line Pilots Association: 19.3 percent of the Class A shares

-Other employees: 10.8 percent of the Class A shares

-Unsecured creditors: 10.5 percent of the Class A shares

-The Air Transportation Stabilization Board (ATSB): 10.0 percent of the Class A shares

-Management: 7.8 percent of the Class A shares

-General Electric: 5.0 percent of the Class A shares


My question is this: Stockholders do not get ownership at bankruptcy emergence unless secured and unsecured creditors are made whole. That can't happen I would think. So does RSA enter Chapter 11 and lose all ownership and their entire initial equity investment of $240M? Why do I think not? I know I am taking a chance here, and that I may be proven wrong any minute, but I think that they will absolutely not enter Chapter 11 or 7 for that matter. They lose all their equity investment. Why should they enter BK??? They have 60, 70, 80, 90, 100 seat SJs that are either on property, contracted for, or will be in the not to distant future being flown by 2 pilots making not more than a combined $100,000. It's a gold mine. I think that greed has gotten the better of them and they are not satisfied with those numbers at just the wholly owneds, MDA/MAA, and the contract carriers. They want the 144 and 180 passenger jets flown for close to the same cost for the flight crew. And the same goes for express and mainline-express station people....they's already have them at low cost.

So with the last trade on Friday listed by FreeRealTime.com at $1.35 I think that there is a huge opportunity to come in with a low five digit number and end up with a low six digit number after just a year or so. And you're betting your $10K against RSAs $240M. But I have already said "NO MORE AIRLINE STOCK!" That means that I am going to have to miss out on this opportunity. But I am telling you that it's there for the taking.

So here's my prediction: NO BK for UAIR and stock is trading over $15 by next June. Contracts? Won't happen, company is bluffing. RSA will do what it takes to meet all required payments and ATSB loan requirements. New CEO by December 1st of this year.

jm

 

[TechBoy]

Interesting theory, but it doesn't jibe with the fact. US was about break even in the best quarter of the year. There's no way they are going to be profitable by next summer absent enormous employee givebacks and/or a huge fall in the price of oil. Neither are likely.

A more likely outcome for any sucker that buys UAIR at $1.35 is that they get wiped out in BK.

 

[jimntx]

RSA will do what it takes to meet all required payments and ATSB loan requirements. New CEO by December 1st of this year.

jm

[post="179001"][/post]​

So, in other words, you are saying that Dr. Bronner was lying through his teeth when he told an Alabama newspaper a few weeks ago that RSA absolutely will not put another dime into US Airways. RSA will not be hurt in the least if it loses the entire US Airways investment. The $240 million represents less than 1% of the total assets of the RSA. I should have been so lucky myself to lose only 1% of my total portfolio value over the last two years.

 

[Justme]

Jim,

It isn't the loss of the $240M but losing the potential upside if he keeps it afloat. As for his statement, what else would he say if he wanted to open contracts.

If he gets 500 CRJ-200s/700s and ERJ-170s/190s flying 60-105 people around at less than half the employee cost of mainline and other majors he's got a huge upside potential. Doesn't he?

jm

 

[jimntx]

I doubt there is an upside now. That ship has sailed. I do not believe that another round of concessions by the employees will do anything to save a company that has been so ineptly managed for as many years as US Airways has been. The problems pre-date RSA's involvement for quite some number of years.

When I was in graduate school, my macroeconomics professor told me that the oil company I worked for had survived (it has since been bought out by another larger oil company) on sheer cash flow alone because it had the reputation of being the worst-managed company in the Fortune 50. I'm talking about a company that made $120 million/month just from trading crude oil with other oil companies (and that was just a small part of their business). US Airways does not have that kind of cash flow.

Beside that, for the next few years NO airline has a "huge" potential upside. Sheer survival is what is facing most, and even airlines like Southwest are admitting that profits are not going to be the same going forward as they have been in the past.

 

[Justme]

I know I am taking a chance here, and that I may be proven wrong any minute, but I think that they will absolutely not enter Chapter 11 or 7 for that matter.

See, I was right!

No, Jim and all of the rest of you were right.....I was wrong.

that's why I told myself NO MORE AIRLINE STOCK!!!

jm

 

[jimntx]

Well, I have always said that buying airline stock--with the possible exception of LUV--is a crapshoot. You might as well be lighting your cigars with $50 bills. There's just about the same rate of return.

 

[usair_begins_with_u]

What Does R S A Own?

 

[Justme]

that's tooooo good