From the 10-Q:

"...the Company also recognizes that in order to successfully restructure the Company, alternative restructuring scenarios in the context of a judicial reorganization must also be considered."

The newswires are picking this up right now.

yep, looks like they are dangling out the threat of bankruptcy as a way to extract concessions...

http://biz.yahoo.com/rb/020510/airlines_usairways_2.html

Let's note that what US has said is that they're going to seek the federal loan guarantees. If they can't get an agreement with creditors and labor - then bankruptcy is an option (and I'm guessing that this also means, in case we don't get federal dollars too). So, it's not, we're going to file for Chapter 11 - it's we might if things don't fall into place.

I don't see if as trying to extract concessions - it's saying, hi, we're in trouble, please help us by giving us concessions. If labor wants to go with "max pay, to the last day" - the last day will come soon enough. I know that labor has been asked a lot by previous management - and they're going to be asked for more again. It's now in their hands - and hopefully, something fair can be worked out.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
yep, looks like they are dangling out the threat of bankruptcy as a way to extract concessions...

http://biz.yahoo.com/rb/020510/airlines_usairways_2.html</font>

I think it's simply a case of having to recognize reality, especially if Congress pulls the plug on the ATSB. There's really no news here. Everybody at the company knows that something will have to be done on the wage/benefit/work rule front. Further, Chapter 11 is not necessarily the end of the world for the company.

In email today.
Dear xxxxx

I wanted to take this opportunity to report to you on US Airways and our plans for making sure the airline continues to provide you the best service possible.

Looking back to last summer, our airline faced a number of difficult, but foreseeable financial challenges. But these difficult challenges quickly grew with the tragic - and unforeseeable - terrorist attacks of September 11. As you know, these attacks have changed our industry dramatically.

One effect has been to alter significantly the mindset of the traveling public. Every traveler knows the attacks have had a substantial impact. And while all airlines are contending with the business fallout from September 11, economically, US Airways has been the hardest hit. The post-September 11 reluctance to fly has been most pronounced on the East Coast, where most of our flights are concentrated. US Airways was most heavily impacted by the prolonged closure of Reagan Washington National Airport. Additionally, we're the only airline that has to compete not only with our airline competitors, but also with cars and trains on many of our short-haul routes. The end result is that the events of September 11 and the ensuing deep-rooted changes to our industry are challenging the short and long-term financial health of US Airways.

We are moving quickly towards both a short-term and long-term solution. Today, we filed a document with the Securities and Exchange Commission describing our various restructuring options, including our intention to apply for financing assistance from the Air Transportation Stabilization Board (ATSB). Clearly, our preferred approach, which we are vigorously pursuing, is to reach an accord with our stakeholders, including our employee groups and vendors, on a restructuring plan and to obtain the federal assistance. As the filing with the SEC indicates, however, if US Airways is unable to do so, alternative restructuring scenarios in the context of a judicial reorganization also must be considered. Simply stated, this means reorganization under the protection of the U.S. bankruptcy laws.

Under existing federal law we will submit a loan application to the ATSB by June 28. If we were going to meet this short timetable everyone in the US Airways family, including management, labor, and our vendors, has to sign off on a new business plan in the coming weeks.

We expect to meet all the criteria to be eligible for the ATSB loan guarantees and to meet the application deadline. As part of this process, we will take steps to restructure this company, but we are committed to preserving our existing routes, and serving our communities.

As this process moves forward, I will continue to keep you abreast of our plans. As a frequent traveler, you are familiar with the challenges facing the airline industry. We at US Airways are taking immediate action to ensure that we can build on our legacy of providing outstanding service and getting you where you want and need to go.


Sincerely,


B. Ben Baldanza
Sr. Vice President, Marketing and Planning

Reading more into is as more news gets posted, I have to make the observation that it is not just about getting concessions from the employees. It looks as though they are putting the ATSB on notice that if they don't cough up a loan guarantee, they'll simply file CH 11. IMO, I'd prefer it if they took a trip thru CH.11. As I've said many many times here, the bailout had good intentions, but produced the wrong result.

I was going to post the same e-mail as Aussie just has posted! http://www.flyertalk.com/forum/wink.gif

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Flyertalk.com ...because miles & points don't grow on trees!

At least I burned up 150,000 miles in awards during the past 12-14 months. I don't treat miles like a retirement fund like I used to. Still have quite a few miles as most FT'er have.

If they do actually go chapter 11 what happens to the stockholders? Are they instantly completely wiped out? Or are they just in a long line with dim prospects?

At $3.00 a share it seems like a better investment than a lottery tickets...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by TomBascom:
If they do actually go chapter 11 what happens to the stockholders? Are they instantly completely wiped out? Or are they just in a long line with dim prospects?

At $3.00 a share it seems like a better investment than a lottery tickets...</font>

Chapter 11 doesn't end operations, so the stock will still be worth something. Only in a liquidation would the stockholders be last to be paid (i.e., never).

To make something complicated as simple as possible, holders of shares of common stock are always "below" holders of debt (be that trade debt or market debt) in the pecking order of right-to-assets. In a liquidation bankruptcy, its unlikely that you would receive anything for your shares. In a reorganization bankruptcy, things get a little more complicated. If you're not a shareholder now, don't buy. Some good advice I once heard: "don't try to catch a falling knife." I may have seen it on FT even!

For anyone who would be intrested in investing in a troubled company like US is now.I would suggest you buy there secured debt which may trade now for cents on the dollar.This is if u belive that the company will be able to get pass this crisis.
-howie

The better question: how best to hedge your miles if they do file? Will miles be wiped out? Is it better to convert to certificates?

Anyone recall what happened in other airline bankruptcies?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by A Delta CUSTOMER!:
Will miles be wiped out?...
Anyone recall what happened in other airline bankruptcies?</font>

Mileage not lost:
Eastern, Pan Am, TWA
Mileage lost: Midway (Metrolink), Kiwi?, Ansett (Australia)
Bankrupt airlines that survived:
Continental, National
(list not complete)


[This message has been edited by Skylink USA (edited 05-11-2002).]

My wife is a corporate bankruptcy attornedy and most of the advice above is sound, except for the statment about buying stock now and your investment surviving a bankruptcy -- that rarely pans out, and as noted above, the priority for payout as against the secured noteholders, and even unsecured debtors is worse -- so stock purchase is very iffy, IMHO.

I think given the TWA scenario, the miles are safer, but remember, the TWA bankruptcy was part of a purchase by a healthy AA in very robust business times, pre-9/11. This is not the same scenario, as all the airlines are hemmoraging $$, and UA, the earlier suitor, has major $ problems of its own.

If you are really heavily invested in USAir, I would look to use some of your miles, even into a Swiss tix, that may at some point be redeposited, for a later flight on Swiss (?) if you can't use it immediately.

Also, can you exchange some miles for HHonors points??

Just a suggestion.

Good Luck!

FYI--the reason the word bankruptcy is mentioned is because the SEC requires companies to disclose their liquidity position in their 10-Q filings. Gaining leverage with Congress or unions is a side benefit.

Stockholders--30% of the value of the stock was wiped out Friday. This is because equity holders rarely get anything in a chapter 11 even if the company emerges successfully from bankruptcy.

SkylinkUSA -

For the record, Pan Am miles were lost, but only if you elected to stay with PanAm, and not convert your miles to Delta when DL bought the European system. PanAm frequent flyers (can't remember the program name now) had the choice to make.

Just to state the obvious - you don't need to wait around for a liquidation to get a return on your money from buying US stock at current sub-$3 per share prices.

If outlook improves near-term, and stock goes 'way up' to $4 per share, you've made 25%. Of course, all this bankruptcy talk could lead the stock much lower.

Who buys stock waiting for their payback from the company?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by hscottm:

If outlook improves near-term, and stock goes 'way up' to $4 per share, you've made 25%. Of course, all this bankruptcy talk could lead the stock much lower.
</font>

I made the mistake of buying Continental stock several years ago right before they went into bankruptcy hoping that my little investment would turn into millions. I ended up losing on this one, but who knows with USAir.

Same shirt.

The problem is in a lot of bankruptcies where the company is really trying to restructure, the existing stockholders are wiped out and new stock is issued to the bondholders. Your better bet is to buy any outstanding US Airways bonds, which may or may not be converted to stock at some point that would be much more valuable than US's existing stock.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Beckles:
Your better bet is to...</font>


... not touch this one with someone else's 10 foot pole.

I would take all of geo1004's US miles, sell them on Ebay, and use the money to buy US Airways bonds ...

Sorry Beckles. It's too late.

There is no way you can stop my master plan of buying this airline and renaming it AirGeo. http://www.flyertalk.com/forum/biggrin.gif