What Will Atsb Do Now? Post-ch11

[enilria]

The ATSB is a secured creditor. Like an aircraft leaseholder they have the right to take their security elsewhere and have no obligation to renegotiate anything. The ATSB's security is made up of gates and slots at airports like Washington National. I tend to think that the Ch11 takes the pressure off the ATSB to the point where they can "foreclose" without being seen as administering the death blow.

I think they will reclaim their assets while the press concentrates on labor as the cause of the carrier's demise. I expect the ATSB will be shopping the assets to Jet Blue, Air Tran, and Virgin America. This could happen very quickly.

 

[kiloromeo]

the ATSB will not do anything... it is an election year where Pittsburgh is the swing area of a swing state... the real question is the company is paying below market rates for their leases...will the leasing companies petition to pull their planes out?. ...will Broner be an advocate of restructuring or liquidation?

 

[BostonTerrier]

The ATSB is a secured creditor. Like an aircraft leaseholder they have the right to take their security elsewhere and have no obligation to renegotiate anything. The ATSB's security is made up of gates and slots at airports like Washington National. I tend to think that the Ch11 takes the pressure off the ATSB to the point where they can "foreclose" without being seen as administering the death blow.

I think they will reclaim their assets while the press concentrates on labor as the cause of the carrier's demise. I expect the ATSB will be shopping the assets to Jet Blue, Air Tran, and Virgin America. This could happen very quickly.

[post="179191"][/post]​

You may,perhaps, find it to your advantage to read the PR newswire prior to making such a speculation.

Which reads in part:

The Company has been operating with cash obtained from a $1 billion loan, $900 million of which was guaranteed by the ATSB. The ATSB and the other lenders (Retirement Systems of Alabama Holdings LLC (RSA) and Bank of America, N.A.) have agreed to authorize US Airways continued use of those funds. Therefore, in lieu of debtor-in-possession (DIP) financing, US Airways will have access to a portion of $750 million in cash -- which serves as one component of the collateral supporting the ATSB loan -- as working capital. The agreement between US Airways, the ATSB and the other lenders will be presented to the Court at Monday's hearing. In following bankruptcy procedures, a final order on operating cash would then be presented to the Court at a later date.

The Company's current cash position is approximately $1.45 billion in cash, cash equivalents and short-term investments. The outstanding portion of the ATSB loan is $717.6 million.



Best,
BT

 

[mrfish3726]

Kiloromeo,

Are you kidding, the ATSB is part of the Department of the Treasury! You think that they will care if it is an election year? Get a clue Bush nor Kerry really care what will happen to USAIR. If USAIR breaks the covenants the ATSB's job is to act on behalf of the US taxpayer and they will.

 

[enilria]

You may,perhaps, find it to your advantage to read the PR newswire prior to making such a speculation.

[post="179195"][/post]​

I had not seen that, but the ATSB or Bronner did not have much choice but to agree to that. Cash is not a reposessable asset. The judge has full disgression as to the disposition of the company's cash under ch11. Upon entering ch11 all restricted cash automatically becomes unrestricted.

I'm talking about hard assets, not cash, which are subject to reposession. Since the gates and slots are the most valuable item in the company and the ATSB did not agree to refrain from seizing those assets (note that slots/gates are not mentioned, I'm sure that's not a coincidence).

I also stand by my orginal statement that the ATSB can now get away with pulling the slots and gates and they will not look like the bad guy...and thus it won't matter during an election year. Besides if they announce Jet Blue or Air Tran will take over the DCA slots and bring lower fares, it will probably be warmly received by the public in general.

 

[enilria]

Kiloromeo,

Are you kidding, the ATSB is part of the Department of the Treasury!

[post="179268"][/post]​

Actually the ATSB is independent by law and if it weren't United would have gotten the loan. UA was pretty successful lobbying Congress to change the pension legislation (a lot of good it did), but didn't the loan.

As for the Pennsylvania theory, the Republicans do very poorly in PHL, it is in PIT that they have a chance to turn the state. The workers in PIT are stuck in any scenario. Either US Airways management or the ATSB will take their jobs. I think the Ch11 stopped US Airways as a campaign issue. Did you see how little coverage it got on CNN and the nightly news. I timed one minute on ABC news. CNNHN was even less. "and in Virginia US Airways files for ch11 for the second time after labor talks failed" and that was it. That level of coverage ain't gonna impact an election.

 

[FWAAA]

I had not seen that, but the ATSB or Bronner did not have much choice but to agree to that. Cash is not a reposessable asset. The judge has full disgression as to the disposition of the company's cash under ch11. Upon entering ch11 all restricted cash automatically becomes unrestricted.

I'm talking about hard assets, not cash, which are subject to reposession. Since the gates and slots are the most valuable item in the company and the ATSB did not agree to refrain from seizing those assets (note that slots/gates are not mentioned, I'm sure that's not a coincidence).

I also stand by my orginal statement that the ATSB can now get away with pulling the slots and gates and they will not look like the bad guy...and thus it won't matter during an election year. Besides if they announce Jet Blue or Air Tran will take over the DCA slots and bring lower fares, it will probably be warmly received by the public in general.

[post="179288"][/post]​

Filing Ch 11 means there is an automatic stay on all collection activity, including reposession of assets. Even secured ones.

Of course, the secured creditors can petition to lift the stay on their activity, but by then U will have made provisions to bring them current, preventing any reposession of gates/slots/aircraft that U wants to keep, etc. Ch 11 buys time to formulate a plan (which up until now has been sorely lacking at U).

 

[enilria]

Filing Ch 11 means there is an automatic stay on all collection activity, including reposession of assets. Even secured ones.

Of course, the secured creditors can petition to lift the stay on their activity, but by then U will have made provisions to bring them current, preventing any reposession of gates/slots/aircraft that U wants to keep, etc. Ch 11 buys time to formulate a plan (which up until now has been sorely lacking at U).

[post="179294"][/post]​

The ATSB isn't going to transfer the assets tomorrow. For one thing, the slots must have uninterupted use or they would be subject to retrieval by the FAA. I would look for the ATSB to announce in coming weeks that a deal is in place with another carrier to take effect 60-90 days from now. The only way US Airways can avoid reposession is to stay current in their payments on the ATSB loan which there is almost no way they will be able to do.

US Airways must become current on liabilities incurred since ch11 (or renegotiate them) in short order (lease payments, loan payments, etc.) or face reposession of secured assets. What usually happens with airplanes is the company keeps making payments while they renegotiate or the airline stops paying because they know the airplanes won't be reposessed. These slots are a lot more valuable than airplanes because their is a glut of airplanes and a shortage of slots/gates at LGA/DCA/etc.

 

[WorldTraveler]

Fish,
it's a matter of timing, not politics. The ATSB will do what it has to do to protect the American public's money. It is unlikely that a liquidation could take place in 60 days unless US wants it to

 

[enilria]

Fish,
it's a matter of timing, not politics. The ATSB will do what it has to do to protect the American public's money.

[post="179587"][/post]​

I see A320Captain speculating that there is exit financing available. While I think this is optimism, the ATSB has nothing to gain from US Airways emerging from Ch11 because they will lose virtually their entire claim against US Airways.

Their best move to get their money back is to repo the slots/gates citing default on their loan which would probably force a cessation of service and then allow the ATSB to get in line for some of the cash that remains in the ch7 process.

I don't see a scenario where liquidation isn't the ATSB's best move. Ponder for a moment how much DL moving the DFW hub into ATL/CVG combined with IAir and WN@PHL are costing US Airways or will cost them. It's a fantastic sum that a 20% pay cut won't solve. The combined effect has to be $500-700m per year in lost revenue.

Look at these economics just for WN at PHL. Pretty much every passenger they will carry came from US Airways. If WN carries 100 passengers per departure and arrival at PHL x 50 departures and 50 arrivals x $100 fare x 365 days = $365 million each year of lost US revenue. This also ignores the fact that WN will be at 100 departures in a year and US actually added capacity to compete in the markets rather than shrinking. This is insurmountable.

 

[jack mama]

eni,
i have to disagree...the ATSB nor the gov't want US Airways in Ch 7. They generate 9 billion in revenue a year, i'm sure it would blow our minds to know how much they bring uncle sam in taxes?

 

[enilria]

eni,
i have to disagree...the ATSB nor the gov't want US Airways in Ch 7. They generate 9 billion in revenue a year, i'm sure it would blow our minds to know how much they bring uncle sam in taxes?

[post="179716"][/post]​

That revenue/tax base will just be replaced by the onslaught of capacity from Jet Blue/Air Tran/Southwest/etc. If you chart industry revenue a few years from now if UAir is gone it won't even be blip. Look here at 1991 when Pan Am Eastern died, by 1993 it's like it never happend.

Another interesting note from that chart is that airlines haven't achieved more than a 0% margin over a Republican President's term since deregulation, while they have been profitable under every Democratic President since deregulation (Carter). I say that as a point of interest, not as praise for Democrats.

 

[PITbull]

Fish,
it's a matter of timing, not politics. The ATSB will do what it has to do to protect the American public's money. It is unlikely that a liquidation could take place in 60 days unless US wants it to

[post="179587"][/post]​

Hate to blow all the speculation here guys....but USAirways has received relief from the ATSB. They have been given permission to use the CASH that was suppose to be restricted to protect and maintain the covenants with the ATSB.

Well, ATSB said that U could use the money to operate in BK...go figure.Oh, and restricted and unrestricted cash is $1.4 billion. Doesn't sound like a co. going off a clif.

It sounds like more of a co. that doesn't want to make any pension payments and slam the IAM and now the rest of the employees.

As I've said over and over and over again on these boards...and as you notice, I have not waivered on this....

IT IS NOTHING SHORT OF A DAMN CONSPIRACY TO GUTT LABOR AND LABOR AGREEMENTS.

The immediate hearing is on Oct. 7 to ask the courts for susation of past and future pension payments under the 1114 filing. (Open to the public).

This co. is NOT going out of business as far as the ATSB, RSA, GE can help it. If that were the case, these entities would take their money off the table now.

 

[enilria]

Hate to blow all the speculation here guys....but USAirways has received relief from the ATSB. They have been given permission to use the CASH that was suppose to be unrestricted to protect and maintain the covenants with the ATSB.

[post="179728"][/post]​

I think you missed my post. The ATSB had no choice. Cash is not "reposessable" in Ch11. Based upon past airline Ch11s, the judge ALWAYS gives the company unfettered access to its cash to keep operating until there is none left. That agreement just allows the ATSB to look like they are cooperating since they have no other option.

The real question I originally posted is will the ATSB take back the hard assets that are security, slots and gates. They have the right to do that in Ch11.

 

[ktflyhome]

I am so glad you know it all, since you are going into Management..... I guess you have the last word. Don't forget what you told Lindy...

This is nothing persoanl at all, just on wht you yourself have posted of late. Best to you Pitbull and your future in Management.