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Derg

New Arizona, Il Duce/Warlord
Staff member
This is sad, sad, sad.


US Airways sale is on

Board chairman says offers for any assets would be welcomed

Friday, January 09, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette

Saying he wants to prevent US Airways from "bleeding to death over time," airline chairman David Bronner yesterday said he is considering the sale of airline assets and emphasized that "everything is on the table."

Such assets could include its coveted Washington-New York-Boston shuttle, hard-to-get takeoff and landing slots at airports in those three cities, the US Airways Express commuter operations, and gates and slots at any of its three hubs -- Pittsburgh, Philadelphia and Charlotte, N.C.

As for Pittsburgh, it's not clear what the airline may try to sell -- or whether there would be any buyers. Under an agreement struck this week, the airline controls only 10 gates at Pittsburgh International, as well as an array of operational facilities and equipment.

Even if all that were offered, observers doubt many airlines, most of which are still in weak financial shape, would be interested in bidding to establish a major presence in a region that's the nation's 22nd largest and fading.

"I don't think Pittsburgh has much value," said Ray Neidl, a New York airline analyst. " I don't think any of [US Airways'] hubs have much value. The only things that have value are the shuttle and the gates and slots in LaGuardia and Boston."

To assist with its review of assets, US Airways has hired New York investment bank Morgan Stanley to evaluate all the options and place them before the US Airways board in February.

The goal is to determine which assets "are worth more to someone else than they are to us," Bronner said. "We may have assets we really don't need."

Bronner, who first hinted at such a full-scale appraisal in an interview last month with the Pittsburgh Post-Gazette, said his goals are to grow the airline, protect stockholders and ensure that the company's losses and high operating costs do not jeopardize $900 million in government-backed loans.

But one option that has drawn increasing speculation -- the possibility the airline may seek to liquidate -- drew a quick dismissal from Bronner, also chairman of the Alabama pension fund that owns a controlling 37 percent stake in the airline.

"Nobody has ever mentioned that," he said. "I certainly have not. You don't liquidate things. If you look at groups of assets, some are material" to their owners and some are not. It is in that vein, he said, that US Airways needs to ask if really needs everything it has.

What happened this week in Pittsburgh, with the airline's decision to re-sign long-term leases for only 10 of its 50 gates, is an example of the decision-making necessary throughout the Arlington, Va.-based carrier, Bronner said.

Allegheny County Chief Executive Dan Onorato said he was not surprised by news of a possible asset sale, noting that he has been saying for some time that the issue is no longer whether US Airways keeps its Pittsburgh hub but whether it survives.

He and the Allegheny County Airport Authority are developing plans to react to two different scenarios -- one if US Airways retains its hub, and the other if the airline drops the hub.

If US Airways decides to sell the 10 gates under long-term leases at Pittsburgh International, it still would have to get the consent of the Airport Authority.

The airline could sell any of its own equipment at the airport, such as computers, machinery or specialized items without authority approval. Or, it could sell the rights to its three-year leases on maintenance hangars, cargo, mail sorting, deicing, and food service facilities, although it is unclear how much value they would have to another carrier.

Airport Authority Executive Director Kent George said his agency would be willing to consider the sale of the gate leases to another carrier "as long as the party it is being assigned to is beneficial to the community and the region."

However, it is unlikely that many airlines would be interested in what US Airways has to sell at Pittsburgh, mainly because the airport already has gate space available to any carrier that wants it.

Of US Airways' assets, the most valuable exist at LaGuardia, where it has 20 gates, and Washington's Reagan National Airport. Both airports are slot controlled, meaning they have restricted landing and takeoff rights, and US Airways controls a number of those slots at both airports.

William Warlick, an airline industry analyst for Fitch Ratings, said he's not sure any of the major carriers are in the position to acquire US Airways assets. He said the most likely bidders would be low-cost carriers or outsiders seeking to break into the U.S. market.

While Charlotte might be attractive as a gateway to Florida and a stopping point for international flights, it's a smaller market, adding that if US Airways decided to cut back there drastically, it would be signaling it no longer wanted to be in business. As for Philadelphia, it's not likely many carriers would desire to go there in a big way because low-cost titan Southwest Airlines plans to begin operations there in May.

Analyst Michael Boyd estimated that the Boston-Washington-New York shuttle, which was a money maker for US Airways in the mid-to-late '90s when business travel was booming along the Eastern Seaboard, might be worth as much as $250 million. But even the shuttle has been losing money due to a post-9/11 slump in business travel and mounting competition from American Airlines, Continental, Delta and even Amtrak.

"Nothing that US Airways has makes any money right now," said another airline analyst, Darryl Jenkins. "None of this is good. If I were a US Airways employee right now, I would not be going out and spending money I did not have."

Leaders of the pilots, flight attendants and machinists reacted coolly to yesterday's news of a possible asset sale, saying Bronner's plans do not change their feeling that the unions, having granted $1 billion in wage-and-benefit concessions in the past 18 months, have no more to give.

But local airline analyst Bill Lauer urged the unions to take yesterday's news seriously.

Bronner "is much more capable of looking at this situation cold-bloodedly," he said. "They may very well be fixed on a course toward liquidation."

Bronner said he was trying to work out a "solution" between management and the unions that ensures that the company is able to cut costs and meet the covenants of $900 million in government-backed loans it received while reemerging from bankruptcy in 2003.

One such covenant requires that the company keep its cash and cash equivalents above $1 billion, a figure that soon could be in jeopardy because the airline is burning through an estimated $1 million in cash a day.
 

BoeingDrew

Well-Known Member
I always feel bad when i hear about all those great carriers from the past that are now gone (Pan-Am & TWA). I guess U.S. Airways is now gonna be on that list in a few months. It really is sad, because they where such a great carrier. The real shame in this is all those employees that will now be jobless, and there families.
 

Joshua949

New Member
I have flown on US Airways once a few years back. It was a peacefull flight & this was before 9/11. The plane wasn't even half full. The service was nm really , but the plane was clean unlike some LCC's. I do feel sorry for everybody at US Airways who are & might become jobless.
 

stuckingfk

Well-Known Member
[ QUOTE ]
I have flown on US Airways once a few years back. It was a peacefull flight & this was before 9/11. The plane wasn't even half full. The service was nm really , but the plane was clean unlike some LCC's. I do feel sorry for everybody at US Airways who are & might become jobless.

[/ QUOTE ]

I am not trying to start a fight, but what is your problem with the LCC's? You bash them every chance you have, and since you are just a passenger, I would like to know why you have this stance on the LCC's.

[ QUOTE ]
I would like to fly for American. Of course, I would really fly for any airline that hires me.

[/ QUOTE ]

If I were in hiring, I would never hire a man who doesn't like my carrier. It is a bad image for the company and I would only like pilots who share the same vision for where the airline is going.
 

Joshua949

New Member
[ QUOTE ]
I am not trying to start a fight, but what is your problem with the LCC's? You bash them every chance you have, and since you are just a passenger, I would like to know why you have this stance on the LCC's.

[/ QUOTE ]
I'm not the only one bashing LCC's. Also, some people bash every chance they get against MAJORS. Everyone has his/her own opinion on LCC's & majors.

[ QUOTE ]

If I were in hiring, I would never hire a man who doesn't like my carrier. It is a bad image for the company and I would only like pilots who share the same vision for where the airline is going.

[/ QUOTE ]

Well, don't come against me on this one. If you look in the topic called Best Airline To Fly For? then you'll notice that I'm not the only one who gave a specific airline then "I would fly for any airline that would hire me."
 

triplec76

Well-Known Member
Hell, I dont even know what LCC stands for. Maybe thats from my lackluster education at UVSC. (That was just a joke I couldnt resist, Ophir!
)

Okay, after a quick search I now know what it stands for. Of course Ive heard the term before, just never seen it as LCC. Sorry.
 

stuckingfk

Well-Known Member
iowapilot,

if you relly don't know what it means, it stands for Low Cost Carrier, aka Jet Blue, Southwest, Frontier, AirTran, etc.
 

Maximilian_Jenius

Super User
I'll say it again...If I was a US AIRWAYS employee I'd seriously start hording cash if I hadn't already.

For when that rainy day comes, and it sounds as if it is coming very soon.

Furthermore I'd be very,very worried.

Eastern, Pan Am, TWA and now US-AIRWAYS.


Matthew
 

John_Jones

New Member
Yeah its unfortunate. I enjoy US Airways, I fly them a lot out of Baton Rouge to visit familly back in Charlotte. They are a nice airline, not the best I've flown but very good anyway.
 

triplec76

Well-Known Member
I dont mind LCC's. I just dont understand how it all works out in the end though as a profitable business. I dont know if people are fooled into thinking flying a jet is cheap or what. Jet aircraft are just so high maintenance and inefficient. Along with costs associated with ambulance chasers, I honestly have no idea how any of them make it.

As I read somewhere (very possibly here), turbines were designed in a time when fuel efficiency wasnt as big of an issue as it is now. I think the best investment anyone could make would be in a new propulsion system or another means of getting the aircraft higher, quicker with more people. It really is such a fine balance between so many variables, it boggles my mind sometimes.
 

stuckingfk

Well-Known Member
My question for Joshua949 was basically why he bashes LCC's and other airlines that don't have that almighty AA on the tail.

I don't wish bad on any airline. If an airline fails, that is more of our own (I am not there yet, but hope to be) on the street. Which we all know sucks. But every chance Josh gets, he is bashing some LCC and I don't think he has a reason to hate them.
 

Ecl!pse

Well-Known Member
Yep, this is sad to hear this. I LOVE US Airways (if you couldnt tell), but this does not look good...however, there is still hope, and they can pull out of it, so we shall see...
 

Joshua949

New Member
[ QUOTE ]
My question for Joshua949 was basically why he bashes LCC's and other airlines that don't have that almighty AA on the tail.

I don't wish bad on any airline. If an airline fails, that is more of our own (I am not there yet, but hope to be) on the street. Which we all know sucks. But every chance Josh gets, he is bashing some LCC and I don't think he has a reason to hate them.

[/ QUOTE ]

Hate is crucial word to use I believe. If I have used it forgive me. I don't hate them it's just that I don't have interest in them. I praise AA b/c their the company that pays the bills, puts food on the table, gives great benefits, health insurance, etc., etc., etc. Why would I not praise a company that does that. It's just like the company (job) that puts food on your table, etc. As long as LCC's are here in the market place they're going to compete with the majors & the majors are going to compete with the LCC's. Well, some LCC's are taking over routes that some of the majors own & as well are hurting them in some way. It's not good when another company hurts your company then that can sometimes have a bad effect on you such as layoffs, pay cuts, loss in benefits, etc. This will not have a negative effect on the company all the time, but sometimes it just makes a company hurt even worse than they do now. Now do you understand why I dislike the LCC's?
 

pilot602

If specified, this will replace the title that
[ QUOTE ]
To assist with its review of assets, US Airways has hired New York investment bank Morgan Stanley to evaluate all the options and place them before the US Airways board in February.

The goal is to determine which assets "are worth more to someone else than they are to us," Bronner said. "We may have assets we really don't need."


[/ QUOTE ]

This pretty much sums it up. The fact that the management of the airline doesn't know what it's own assets are worth is about as classic an example of complete and total incompetence as you can get. This is why the company is in the position it now finds itself.

Inept, incompetent management has sunk this airline and it started it Wolf.
 

Phatty

New Member
I am not trying to start a fight, but what is your problem with the LCC's? You bash them every chance you have, and since you are just a passenger, I would like to know why you have this stance on the LCC's.

"Just a passenger"...Maybe you should start calling them customers and remember who pays your salary.
 

Mongoose

New Member
errr... any chance we could stop tolling the bell for the death of a decent carrier that is currently trying get out of financial difficulties.

I'm sure we've all had hard financial times and I don't think any of my family wouldn't have felt too good about reading comments like "Poor Mongoose and the Mongoose family, they'll be homeless any day soon".

So how about a fraction more respect and optimisim for the US Airways family, currently trying to get themselves out of those difficulties.
 

tonyw

Well-Known Member
Because the US Airways family is taking exactly the WRONG track to get out of touble. You've got some very desireable assets, such as gates at DCA, which will never be expanded; the shuttle, and so on. And you want to sell those?

Stupid. These are the assets that MAKE YOU MONEY! And you want to sell it.

I think the airline is on the way out the door. Like I said, if UAL had some money right now, they'd get their merger after all.

Edited to add that I don't mean you are stupid, Mongoose. I mean that the management of US Airways is.
 

Maximilian_Jenius

Super User
Well Mongoose we all hope that your airline does in fact survive and come back stronger then ever.

Hell I don't need to be competeing with more outa work pilots in 2-3yrs. when I ready to start shopping my resume around.

But like Tony said you don't give away your most prised possesions and still hope to rebound.

Everyone knows US AIRWAYS and DCA are synomous so why sell those gates also everyone knows that US AIRWAYS controls the east coast so why sell your profitable east coast shuttle routes. Doesn't make sense.

Sounds like a garage sell and everything and anything is up for grabs.

I support US AIRWAYS employees and families but I blame management.


Matthew
 

Mongoose

New Member
Ooo... good point Max, I should have pointed out that I'm not a US Airways employee (although I am a regular customer of theirs). Was just using my name as an analogy... didn't mean to imply anything more. Sorry about that.
 
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