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As you probably know, I'm not real happy with USAirways.

Their "new" (read: old) plan is to continue to cut wages, blame their grief on the pilots and flight attendants, and then repeat ad nauseum.

Methinks they'd be better off facing the competition head on and get the 'fighting spirit' to survive. Employee concessions and massive layoffs didn't work smart guys? Shoot, perhaps if you do cut and layoff more, it'll work this time! Not.

It almost reminds me of the joke we told about our old CEO Ron Allen in the early 1990's. Ron decided to get into the watermelon business. He's going to sell each watermelon at a loss, but make it all up with volume.

Seems like USAir continues to blame the battery for the engine's inability to start when it needs a starter coil and a friggen alternator.

US Air Shops Assets -Sources
Thursday January 8, 5:15 pm ET
By Kathy Fieweger and Tom Johnson

CHICAGO/NEW YORK Jan 8 (Reuters) - US Airways (NasdaqNM:UAIR - News), still struggling financially less than a year after emerging from bankruptcy, is looking to sell a variety of assets including its East Coast shuttle, several airline and banking sources said on Thursday.

Industry sources said the sale plans were a clear indication that business is still tough at the No. 7 U.S. airline despite an eight-month stay in bankruptcy that extracted concessions from unions, lessors and other parties.

While the situation is complex, sources said the decision to sell assets was prompted mostly by the company's failure to win pilot union support for a revised business plan proposed by management and its need to meet terms of debt obligations.

The stay in Chapter 11, which ended in March, in some cases worsened relations with some organized labor groups as pay rates fell and pensions were slashed. Pilots last month called for the resignation of Chief Executive David Siegel, saying they had lost faith in his ability to save the airline.

Shares of the airline, which recently began trading on Nasdaq, fell 5.6 percent or 38 cents to $6.36 on Thursday.

US Airways has hired Morgan Stanley to advise it on the sale process, sources said.


The assets are being shopped around to various airlines including low-cost carriers and other parties including Richard Branson, the British airline entrepreneur, sources 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. The hubs are in Pittsburgh, Philadelphia and Charlotte, North Carolina.

Also on the block, according to sources, are various gates, slots at slot-controlled airports -- for example at New York's LaGuardia airport -- and routes. No aircraft or transfer of employees is contemplated at this point, they said, speaking on condition of anonymity.

"It is a partial breakup (of the company), that's for sure," one banking industry source said. "A lot of strategic investors would be interested in a combination of these assets. The question is going to be how the pilots respond to this."

US Airways also has to compete against new low-cost services being offered by competitors.

Southwest Airlines (NYSE:LUV - News), a formidable foe for any airline, recently announced it would begin service to Philadelphia.

US Airways wants any potential interest submitted by the middle of the month, according to one source, with the board set to meet in February to decide what to sell.

In a message to employees earlier this week, US Airways Chairman and Chief Executive David Siegel expressed new frustration with the refusal by labor groups and postponed hub visits to discuss strategy with employees.

"As a result (this outreach) is now on hold and we're going to have to spend the next few weeks examining our alternatives to meet our financial commitments," Siegel said in his taped message.

Siegel stressed the airline must meet financial targets in the first half of this year to comply with terms of the $900 million federal loan guarantee,

Complicating matters, sources noted, is US Airways' loan guarantee from the federal government, which would have to approve any transfer. US Airways obtained loan backing from the Air Transportation Stabilization Board to get out of bankruptcy last March.

US Airways had no comment on the issue. Morgan Stanley also declined to comment.
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...It almost reminds me of the joke we told about our old CEO Ron Allen in the early 1990's. Ron decided to get into the watermelon business. He's going to sell each watermelon at a loss, but make it all up with volume....

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This also reminds me of one of my classes in the mid-70's when I was in MBA school. This particular professor had, in the late 1950's, worked for Convair in San Diego when they were developing the 880/990 series. He related several stories about his time there, but the one I always remember is the one when he tried repeatedly to point out to senior management that they were pricing the airplanes too low, that they were losing money on every sale. He was told "not to worry, we'll make it up on the volume." "You're new here...", they would say, "...just watch and learn how this business operates..."

It was then that he thought about a career change. He realized a while later that these guys were used to selling to the government, that they could easily pad government contracts to cover their commercial sins. Unfortunately their sins on this program were many, and the government quit buying B-36 bombers a little earlier than they had planned.
You remember when the merger between UAL and US Airways was being talked about and how the folks at US Airways said they had no plans to do anything other than merge?

Me thinks they should have had a plan just in case, especially after that merger started to run into anti-trust trouble.

And Doug, think there would be any interest from your employer in picking up the remainder of the shuttle that you don't own?
I wonder how this is gonna affect Mesa/Air Midwest. One of the things up for slaughter is the regional stuff. Even though Mesa is charging rock bottom, Crazy Eddie prices, I don't think US Air would have a problem cutting them out and running with what they have left. I've already decided to NOT go the MAPD route and just CFI it for a year or two, but my friend is almost DONE with the PACE program. He's already been reamed by Airline Training Academy, and if this falls through, he's done. I'd really like him to do something other than push buttons on rides at Universal for the rest of his life.....
Tony, I bet Mother Delta would be interested in that, but Uncle Sam probably wouldn't like the ATL boys having a near-monopoly (Eagle runs a few RJs in the shuttle markets) on the shuttle. If another major were to buy it, I think Continental would be the most likely based on operating patterns and finances, but I think that fairly unlikely. Now, AirTran making a play for it would not surprise me a bit.

US Airways has got some serious problems, no doubt about that. Of course people were saying that back when a guy named Seth Schofield was in the big office at the Crystal Palace. Anybody remember him?

US is starting to look more and more like TWA did ... something nobody can make money with, no matter what they do. Of course, I'm not sure the current management team could make money running the US Mint.

Interesting times we live in, for sure ...


I doubt this would have a tremendous impact on Mesa/Air Midwest, Colgan, Chautauqua, or any of USAir's other regional partners. I think what they're trying to get rid of is the wholly-owned subsidaries--PSA, Piedmont, and Allegheny. While it would definately suck for the other US Airways Express carriers to have the mainline hurting, Mesa seems to be spread out enough that the sale of the wholly-owneds probably wouldn't hurt it too bad.

Do you happen to know the specifics of the "business plan" ALPA objects to? Are they now claiming to need further concessions from pilots aside from what they got in the new contract during the bankruptcy? Because it seems to me that they've gotten plenty out of the pilots already...

(from ALPA website)
ALPA leaders noted that the senior managers’ calls for labor costs on a par with those at Southwest Airlines have, in fact, already been met. In the first half of 2003, US Airways applied 38 cents of every revenue dollar to pay for labor, whereas at Southwest this expenditure was 40 cents per dollar. The pilots’ share of those total labor costs amount to 13 cents at US Airways and 12 cents at Southwest. A 12-year captain at Southwest earns eight percent more per hour than a pilot in the same position at US Airways.

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USAirways has major problems. I have actually heard the engine not starting because the "battery". And several counts of "APU" problems on their 737s. It will be interesting to see what happens.

I am flying USAirways BDL-CLT-SAV in February. And taking United Express back

But... The parents are paying! So why complain about USAir.
While the pilot union's stance of no further negotiations with the current group of managment is not something I agree with in theory, in principle they have been through more then enough. You can only cut away so much before you start getting into really serious problems. In the manufacturing world it is called a circle of death (or something similar) where you look at a product line and deem it unprofitable, and cut it. But what happens is that all the other overhead/fixed costs that that line was supporting move over to other lines and make them unprofitable. And then they get cut... and it goes on. Anyhow, I hope USAir can pull it together but as someone said, they are looking more and more like TWA.