USAirways

[roz]

NEW YORK (CNN/Money) - US Airways Group is likely to file for bankruptcy court protection as soon as Sunday, according to a published report.

The New York Times reported the imminent filing Friday, quoting people briefed on the situation. It would be the second trip into bankruptcy for the nation's No. 7 airline in just over two years, but this time it could find difficulty emerging from bankruptcy court protections.

Both the Times and the Wall Street Journal reported Friday that the company has no collateral with which to arrange interim financing in the event of a bankruptcy filing, forcing it to get by on unrestricted cash on hand and complicating any effort to reorganize.

Normally companies that file under Chapter 11 of bankruptcy code, which allows for continued operations, announce a financing package that allows them to fund operations while operating under bankruptcy protection. Without such financing, there is a risk the company could be forced into Chapter 7 bankruptcy, which would bring on liquidation.

The Times quotes airline spokesman Christopher Chiames as saying a final decision on filing has not yet been made, but adding, "All along in this process, we've acknowledged that a bankruptcy filing might be necessary."

Pilots at US Air will hold an emergency meeting Friday, but it was unclear if they would resurrect concessions that management insists its needs.

The special meeting of the executive committee of the Air Line Pilots Association at the airline will be held at a hotel at the Pittsburgh airport just days after the committee rejected a proposal for nearly $300 million in annual labor concessions.

The company says it must have $800 million in concessions finalized from all its unions this month to help avoid filing for bankruptcy. The company faces a deadline next week for a $110 million pension payment.

Bill Pollock, chairman of the union's executive committee, told pilots Wednesday the proposed concession deal, while painful, would be better than what might be forced on workers during bankruptcy.

Pollock also said minor changes to the latest proposal might satisfy the 12-member executive committee, which is sharply divided over the composition of givebacks that include hefty pay cuts, a reduction in pension benefits, and work rule and productivity changes.

[Kristie]

ok.. ummm.. maybe it's just me, but i thought USAir was already in bankrupcy? didn't the pilots already give like MAJOR concessions? giving another $800 million would be like working for free then wouldn't it?

doesn't sound like mangement did what it was supposed to do!

[lucky81698]

They came out of bankruptcy way too early. Now they are screwed. At least Seagull (Spelled that way on purpose) got his golden parachute though. Now ALPA is concerned the company will go BK and start furloughing out of seniority. There have been rumors they want to get rid of the 737s and will just furlough any pilot flying it since it will cost too much to retrain them on the airbus. Ironically, I believe the 737s are based in PIT and PHL and pretty senior, so the 4 reps that didn't allow a vote might just screw themselves and those represent. Of course this is all based on "rumor" from a USAir pilot I know and the fact that they just don't liquidate. I wish them all luck, they have alot of good people there.

[roz]

No, Kristie.

They emerged from Chapter 11 prior to the March 31, 2003 deadline of having their credit card contracts cancelled. The Alabama Retirement loan is fully secured with gates at DCA and LGA and other tangible assets. All the other debts are secured by their various creditors.

The pilots already gave concessions--twice--including their pension which was turned over to the PBGC. The problem is that their pension was limited by law to:
Here are the maximum benefits that PBGC would pay:
If you retire at 60, the annual maximum benefit is $28,500.

If you retire at 65, it rises to $43,977.

If you retire at 70, the annual guarantee reaches $73,000.

So they lost their pension beyond $28,500 (which, frankly most of us in the rest of the working world don't have at all--they are a dying concept!).

What happened is that in Philly and Pitt, they overthrew their negotiating committee with very senior pilots. The senior pilots who are now in charge don't care about anything but protecting what they have. The current proposal calls for a reduction in contributions to the defined contribution plan put into place to replace the defined benefit plan. They current negotiating committee (which is dominated due to representational size by Philly and Pitt) is against that. We will see. The IAM and F/A's are also not coming to agreements. This weekend will tell all. A $100+ million pension payment is due 9/15 for the F/A's and IAM. That would bring the company close to default on the federal loan guarantee loan covenants.

Bronner has said he's willing to give it all up and bring it to Chapter 7. He doesn't care because his investment is secured. Chapter 7 means liquidation.

What would that do to MESA, CHQ, and all the other contracted carriers?

[Anonymous]

http://biz.yahoo.com/prnews/040912/nysu016_1.html

[roz]

That was me--the site keeps logging me off!

[Kristie]

So the F/A's had been talking and decided to break off talks right before the news bulletin about going back into bankrupcy came out?

Roz, what would be your take if USair implodes? what do you think would happen to the regional carriers?

[roz]

There are a lot of rumors about them using the bankruptcy to abrogate the current contracts with regional carriers. There are rumors, for instance, that PDT will be the only carrier flying the turbo props. What that means for Colgan and Mesa, if true, I don't know.

People have said that Johnny O wants to pick up the slack if US Airways implodes. I haven't read Mesa's annual report and filings to see what their financial condition is at this time. Thus, I can't comment on their ability to finance their own planes to expand to cover the flying lost if US Airways implodes. I do know that as recently as a few years ago, they could not obtain financing for their RJ's. Instead others had to obtain the financing and lease the planes to Mesa as part of the contract agreement (at least that's what US Airways did).

How's that for a definitive answer? [img]/forums/images/graemlins/confused.gif[/img]

[Anonymous]

I've read lots of interesting hoopla about how US Airways can sell off its assets. I didn't understand the hoopla because, to my understanding, all the real assets are pledged for loans already. So, to anyone thinking that there is value in the "Shuttle", forget it. The "Shuttle" is just a bunch of pledged aircraft, pledged slots, and pledged gates. So someone else owns that. Does anyone think someone would also buy the pilots, union agreements, etc?

What amazes me is how clueless the management at US Airways is. If you read their 80+ page filing, they have no plan. Their big plan is to launch service out of FLL to the Caribbean and South America. But if you read the fine print you discover that the service won't start until February, 2005 and that they have not even applied for the routes (you need to apply for international routes). In the interim, without any public notice other than the DOL website, Spirit applied for and received approval for those very same routes last March. They launch service in November on brand new Airbus aircraft. Their home base is FLL. So US Airways big plan is to launch service to compete with a LCC in the base of the LCC? Is that dumb or what? Service to Cancun out of PHL was $1200 roundtrip as of last December 17th when US Airways had the monopoly in the area. The next day it dropped to $450. Why? Spirit started service out of Atlantic City for $450 to Cancun. The difference is that Spirit makes money at that rate and US Airways loses money at that rate.

We could go into a city by city analysis. It makes me sick. I'm so glad we had the foresight to leave them in August, 2001. I'm so sad about those that stayed and did their best.

Here's one article:
http://biz.yahoo.com/rb/040914/airli...airways_5.html

[roz]

Sorry, once again, that was me. Everytime I sign onto this board it drops my previous log on.