US Airways Dividend Miles (Pre-FlightFund Merger) - US Airways loses loans on 100 Jets

Guys this is really starting to get depressing. Rumor has it that GEC pulled the plug on the financing. This will now limit them this fall in growing. My question is what now? All this news is really making me feel :(

Rumor also has it that US could turn a small profit at the end of the 3rd quarter. However the month is not over yet. Let's hope they do as it may help out a little while they are in court.

http://www.washingtonpost.com/wp-dyn/articles/A30152-2004Sep17.html

US Airways Loses Loans For 100 Jets
Planes Were Integral To Restructuring Plan

By Keith L. Alexander
Washington Post Staff Writer
Saturday, September 18, 2004; Page E01

US Airways has lost financing for nearly 100 regional jets that were to be a key component in its restructuring plan.

With the carrier in Chapter 11 bankruptcy protection, its aircraft manufacturers Bombardier and Embraer decided to terminate their financing contracts on the jets.

US Airways had built part of its transformation plan around the use of the 50- to 70-seat aircraft during its previous restructuring in 2002. The carrier hoped to deploy the jets on many of its shorter or less popular routes and use them to expand service to short-haul destinations.

Meanwhile, UAL Corp.'s United Airlines, which has been operating under Chapter 11 for nearly two years, said yesterday that it would have to cut an additional $500 million in annual costs as part of its effort to emerge from bankruptcy. Additional jobs will be lost, the company said. United has already cut about $5 billion, with about half coming from cuts in employee pay and benefits.

A bankruptcy judge yesterday approved United's bid for a 30-day extension to develop a business plan without the threat of a competing proposal from creditors or private investors.

US Airways' unsecured creditors are scheduled to meet Monday in Arlington to form a creditors committee.

US Airways' loss of its regional plane orders was a major blow to the carrier's restructuring efforts. Besides aiding expansion plans, the smaller planes burn less fuel than jets, a feature that would have helped the carrier reduce its fuel costs.

"This is one of the many reasons we advised our labor leaders that it would be much worse for the company if it had to file Chapter 11," said US Airways spokesman David Castelveter. "We'll have to adjust our plan accordingly, but our ability to grow will be limited."

Merrill Lynch analyst Michael Linenberg said the airline would now be forced to "retool" its fall schedule since the planes were going to be used on several medium-size business routes, such as those from Charlotte to Minneapolis and Dallas and Philadelphia to Minneapolis.

US Airways filed for Chapter 11 protection Sunday after its labor groups rejected $800 million in annual pay and benefit cuts as part of its overall effort to trim $1.5 billion a year in costs.

By their own admission, all assets are pledged, so they cannot borrow any more. This is the effect of that circumstance. In this morning's NYT, an article says they are going to ask the court to impose (or allow them to do it) the pay cuts they could not negotiate. The idea is to use the monies they save from that in place of debtor in possession financing. A little like having the surgeon donate blood while he operates. What a shame. Took a transcon from CLT to SEA last night, and it was flawless. They are really trying.

By their own admission, all assets are pledged, so they cannot borrow any more. This is the effect of that circumstance. In this morning's NYT, an article says they are going to ask the court to impose (or allow them to do it) the pay cuts they could not negotiate. The idea is to use the monies they save from that in place of debtor in possession financing. A little like having the surgeon donate blood while he operates. What a shame. Took a transcon from CLT to SEA last night, and it was flawless. They are really trying.


I wonder if by chance if the courts allow the cuts for all the unions...if this will help them attact someone to bail them out of BK. They would have acchieved their costs cuts. Hopefully this will not drag on for months as time is not something that they have.

HEY ROACHES ARE WE DOING THAT BAKE SALE OR WHAT?? US NEEDS OUR HELP

The over/under on US is November 5, '04. Just long enough for election day to come and go and the ink to dry on the results.

I have been concerned about my award tickets, departing 10/31 (180,000 mile burn), however you have put my mind at ease. I believe that you're certainly correct that IF US will liquidate it will be after the election. I'll be back by then!



The over/under on US is November 5, '04. Just long enough for election day to come and go and the ink to dry on the results.

I doubt the election has anything to do with it, much less the results of whoever is in 1600 or The Capitol.

Embarer and Bombardier have lots of customers for their planes - customers who are in a position to make payments. It makes sense for them to suspend deliveries to US in favor of airlines that not only can make payments, but make them at the signed rate (if US is smart, they'd use BK to hammer down those rates on the planes they have taken - and will take - delivery on).

All the "experts" and pundits say that at least one of the majors has to die if the rest have any chance. Having filed twice in twelve months, the creditors might have decided that US is the one that must go and sell it off for what they can get, in the hopes of keeping their other, larger airline clients around. Then again, they might be fighting tooth and nail to keep the airline going in the hopes that they will meet their obligations in full down the road.

On the contrary, this has everything to do with politics, and in that context, the election is a major way point. For the moment, it buys them time because, while they have clearly embarrassed the administration at an inopportune moment, and you can bet there are some tight jaws along the Potomac,the party in power doesn't want labor beefs in two key states (PA and NC) approaching a tight election. As soon as that is settled, look out. Already, Senator Santorum of PA has tangled with the rank and file. Unfortunately, it's a bit of a conundrum. Thanks to labor pulling the plug (certainly not without provocation) nobody's going to want that workforce, especially if they just want pieces, and can simply line up at the courthouse. Having swallowed hundreds of millions in Pension money from Alabama, and other monies from a major lender/investor (GE Capital), it's hard to imagine anyone else with a stomach for it. A real shame, but kind of a law of physics. Eventually the bank account sort of runs dry.

On the contrary, this has everything to do with politics, and in that context, the election is a major way point. For the moment, it buys them time because, while they have clearly embarrassed the administration at an inopportune moment, and you can bet there are some tight jaws along the Potomac,the party in power doesn't want labor beefs in two key states (PA and NC) approaching a tight election. As soon as that is settled, look out. Already, Senator Santorum of PA has tangled with the rank and file. Unfortunately, it's a bit of a conundrum. Thanks to labor pulling the plug (certainly not without provocation) nobody's going to want that workforce, especially if they just want pieces, and can simply line up at the courthouse. Having swallowed hundreds of millions in Pension money from Alabama, and other monies from a major lender/investor (GE Capital), it's hard to imagine anyone else with a stomach for it. A real shame, but kind of a law of physics. Eventually the bank account sort of runs dry.



Agreed! The most telling sign that politics plays a role aside from the fact politics almost always plays a role is the fact the ATSB didn't object to US dipping into their loan money. If this were 6 months from now they would have objected and thrown road blocks in US's way.

Agreed! The most telling sign that politics plays a role aside from the fact politics almost always plays a role is the fact the ATSB didn't object to US dipping into their loan money. If this were 6 months from now they would have objected and thrown road blocks in US's way.

Not really - ATSB has nothing to lose by allowing US to dip somewhat into the loan money, as the liquidation value of the airline would still cover the outstanding guaranteed loan balance.

Not really - ATSB has nothing to lose by allowing US to dip somewhat into the loan money, as the liquidation value of the airline would still cover the outstanding guaranteed loan balance.


The liquidation value remains to be seen as book value and actual value are completely different. US hired Morgan Stanley back in the spring and they've been unable to muster any bids worth looking at. The Deal (a magazine published by Bruce Wasserstein and targeted to the Wall St community) indicated Morgan was looking for $150 - $200 million for the shuttle operation. I will bet you dollars to doughnuts that everyone takes a haircut.I will also assure you a private lender wouldn't have extended US the same courtesy the ATSB did. Assets are only worth what someone will pay for them. That premise assumes there are buyers able to pay anthing for them.

I will also assure you a private lender wouldn't have extended US the same courtesy the ATSB did.

Actually, private lenders had to agree to the plan - since Bank of America provided the loan guaranteed by the feds. My understanding is that BofA was involved in discussions for quite a while before the 2nd bankruptcy.

Actually, private lenders had to agree to the plan - since Bank of America provided the loan guaranteed by the feds. My understanding is that BofA was involved in discussions for quite a while before the 2nd bankruptcy.


You have a point about Bof A making the loan but I'm certain they wouldn't have gone along with this were it not for the government gurantee. BofA can sleep easily at night knowing ultimately they won't loose anything.

If you read the bankruptcy filing tidbits on these threads, you noted that B of A sells those credit card miles you earn on the co-branded VISA to US. Taken together, it makes for a complex relationship, with them being each other's customer.