Wholly Owneds To Be Sold?

[USA320Pilot]

Earlier today in another forum I wrote that a strong possibility would be for the company to sell its "Wholly Owned" Express division. With the company consolidating Allegheny and Piedmont Airlines into a small turboprop operation and converting PSA Airlines to a CRJ-200 and CRJ-700 operation, one option could be to spin off this operation to obtain needed capital. Then the airline could negotiate a binding memorandum of understanding to code share the operation with US Airways. One carrier who may be interested in this option would be Mesa Air Group. Mesa’s has a current partnership with US Airways and its chief executive officer Jonathan Ornstein is a personal friend of US Airways chief executive officer Dave Siegel. Recently Mesa attempted a similar takeover of Atlantic Coast Airlines and if successful, Mesa would have code share the regional operation with United Airlines.

Also noteworthy, during the last United-US Airways merger attempt, United reached a memorandum of understanding to sell the "Wholly Owned" US Airways Express carriers to Atlantic Coast Airlines, if the merger proceeded, for $200 million. Today the "Wholly Owneds" are smaller companies, but US Airways could obtain about $150 million for the operation and lower its capital diversion by reaching an agreement with Bombardier to transfer the CRJ-200 and CRJ-700 PSA delivery positions to Mesa.

Tonight it has come to my attention that Mesa CEO Jonathan Ornstein wrote to his employees today, "Without significant progress on cost reductions at USAIRWAYS it looks like things are going to get fairly difficult over there. Even with the recent round of concessions USAIRWAYS costs remain much higher than those of it’s primary competitors Southwest and JetBlue. The business has changed dramatically and USAIRWAYS must take the necessary steps to survive in an environment of low fares and low costs. I think it is important that we do everything we can to help USAIRWAYS return to long term financial viability and ask that you be supportive of their efforts to get back “on track.â€￾ I will also tell you that the potential sale of assets is being closely studied by your management for any potential opportunities that may arise. We will keep you updated as the situation progresses. Have a great weekend and thanks again for all the hard work over the holidays. We greatly appreciate it.

Most sincerely,

Jonathan

Then in a special bulletin today US Airways CEO Dave Siegel said, "If there are some ways to improve our balance sheet, we must consider those options. If there are some strategic partnerships that would enhance our financial standing, we must consider those as well."

Sincerely,

Dave Siegel

Chip comments: Late today US Airways told J4J pilot candidates it’s reducing the January 19 PSA pilot class and there will be no further pilot hiring until March, even though aircraft delivery’s are continuing. In addition, the pilot recruiting office reportedly told one pilot that "something must be going on". In my opinion, the entire “Wholly Ownedâ€￾ US Airways Express Division could be sold to Mesa Airlines for about $200 million and then US Airways and Mesa will code share the regional flying.

Respectfully,

Chip

 

[46Driver]

My guess is (and not to stir up trouble but just my crystal ball) is that MESA has their sites set on USAir itself - not the wholly owned. Ornstein has longed wanted to start a LCC (very similiar to what ACA is doing). MESA has the extra certificates from Midway, and Ornstein came to MESA from Richard Branson's Virgin Express. If USAir goes under, I expect to see Branson and Ornstein get firesale prices on the aircraft that are applicable to a LCC and start Virgin America with MESA as its regional feed. Not good news for USAir, UAL, or Independence Air.

 

[autofixer]

So ??????

 

[USA320Pilot]

46Driver:

I do not believe Mesa has the expertise to operate an international airline. In regard to Virgin USA, there is the 49% foreign ownership and antitrust issues with Lufthansa and other Star partners.

Finally, US Airways ALPA now appears ready to talk with the company.

See Story

Regards,

Chip

 

[MarkMyWords]

Personally, I think that there will be many threats made in the next couple of weeks, with regards to selling off assets of the companies and the potential suitors that they will go to. If the unions don't come to the table then, as the pressure heats up I believe that Dave and Dave will sell off the wholly owns to Mesa to prove to the unions that they are serious. This will finally bring all parties to the table for talks. Where it goes from there is anyones guess. The Wholly owns being sacrificed to Mesa ensures that the flying remains within the company umbrella and not sectioned off to a competitor like AA. Ridding us of the shuttle assests or selling a hub (still don't understand how you can sell a hub...) would only deliver the assets to the hands of the competition.

I agree with Chip, I think the wholly owned express carriers were slated to be sold at some point, unfortunately they will pay the price earlier then later when we could have possibly gotten a better price.

Again, this is just my opinion.......not meant as fact.

 

[46Driver]

MESA doesn't have cash to purchase anything. They tried to do a stock for stock swap in their hostile takeover attempt of ACA.

I also believe MESA doesn't have interest in any part of USAir with the exception of what they can use for a LCC in the states - they would rely on Virgin for their international flights.

In this environment, who would be interested in USAir's wholly owned (since MESA can't finance anything). UAL?

 

[DorkDriver]

200 million? Who would pay 200 million for three airlines with nothing but turboprops and a handful of CRJs? JO could barely get 10 million to buy Midways second hand scraps. Comon Chip, think a little. I know you have no problem with sacraficing the WO's, United, or anyone else that gets in your career paths way, but be reasonable here. The WO's at this point have no value except for operating certificates. PSA, ALG, PDT have no gate space or assets to offer MESA. Why would JO buy any airline with pilots closing in on 20 years+ seniority. PSA is going to be the cash cow that saves mainline, why sell it now before the seeds have a chance to grow?

 

[Stuka Luva]

One thing I'm curious about...isn't PSA supposed to be one part of the recovery solution? No one has seen the plan yet (I want to as well naturally), but I thought that PSA would be the express carrier along with Mid Atlantic operating bigger jets and finally of course Mainline in it's current form (plus maybe 60 more Airbus). Why would Dave sell PSA off when it's part of the future structure and return to profitablility? PDT and ALG I am sorry for, as most likely they won't have a future in Group. Perhaps Dave would sell these two to JO so he could supplement Dash flying that Mesa does in Florida. OR perhaps PSA could be IPO'd and Dave could sell 49% of stock for some quick cash. Bah...who knows... All I know is that we've gotta see the plan and Mgmt and Unions need to start talking.

Good luck to us all.

Just my $0.02

 

[USA320Pilot]

In an article titled, "US Air Shops Assets ", Reuters said the assets include the airline's shuttle service between Boston, Washington and New York, its US Airways Express regional jet service, and possibly one of its three hubs, according to sources.

Dave Siegel has said he wants to have 2 or 3 Express operators presumably to rationalize the product, lower unit costs, and reduce US Airways Group's capital diversion from its core business.

Respectfully,

Chip

 

[OldpropGuy]

In an article titled, "US Air Shops Assets ", Reuters said the assets include the airline's shuttle service between Boston, Washington and New York, its US Airways Express regional jet service, and possibly one of its three hubs, according to sources.

Could this possible sale not include MidAtlantic also? The planes do have EXPRESS painted on them for some reason. This division will certainly be the most valuable, therefore yielding the most cash when sold!

 

[T-bone]

The idea of selling express is like selling your shoes in the winter for 3 bucks needed to survive by procuring a happy meal. At the end of the day your money would be gone you would be hungry again but it would still be winter and you would now have no shoes.

Besides who would buy what has next to no value and if the shark shows a little patients may soon be free. :down:

 

[T-bone]

Could this possible sale not include MidAtlantic also? The planes do have EXPRESS painted on them for some reason. This division will certainly be the most valuable, therefore yielding the most cash when sold! [/quote]
In point of fact MidAtlantic currently owns no aircraft or equipment. Making it's value highly suspect! 😉

 

[OldpropGuy]

I'm not sure Ornstein will be interested in the wholly owneds. Their contracts are way too expensive compared to Mesa's.

After all he paid for CCAir, he never did get their pilots to come down to Mesa standards and benefits, until he shut them down. Then he threw those who were hungry enough to come back on the Mesa list at povery wages. It seems he wasted more than a few dollars on that deal. Why would he want to go through that again?

Now if he can come out with some of mainline's assets without the workers, then he will be all over that! His goal is not to remain a little, looked down on, RJ operator. His ego is much larger than that!

 

[flyin2low]

Look, the Emperor has NO clothes.............. 😀


Let's see the all great plan Dave!

 

[usfliboi]

usair has long debated selling merging and selling the wholly owns. This isnt really new.