What's up with 9e

[crazyjaydawg]

Does Pinnacle actually own the aircraft, I was under the interpretation that they were owned by a Canadian holding company, and when all payments, from United and Pinnacle, are in they would go to Pinnacle.

TucknTruck, if God forbid they started pulling airplanes would the pilots go with them? You guys have one list now, I would assume that would mean the f word.

Dude you just summed up the entire thread in a couple of questions. Yes EDC (Export Development Canada) is the lien holder and lending Pinnacle the money for the Qs and 16 900s.

And the second question is answered just as many times in this thread, most recently by kellwolf above

 

[ctab5060X]

Does Pinnacle actually own the aircraft, I was under the interpretation that they were owned by a Canadian holding company, and when all payments, from United and Pinnacle, are in they would go to Pinnacle.

Export Development Canada is not a holding company. They are the Canadian government's export credit agency; basically a government-owned corporation (a Crown corporation). Air Canada was like this until they became a private corporation.

Think of the EDC as Canada's version of our Export-Import Bank. They loan money to foreign companies that are purchasing Canadian exports.

 

[ctab5060X]

If it's more than 4% in a 12 month period (which if all the Qs were pulled, it certainly would be), then yes. The pilots should go with the airplanes. How that happens is anyone's guess. My bet is they'd be offered positions as new hires at the new airline.

However it would happen, it would be a nightmare of a mess. Could you imagine 'furloughing' the bottom pilots with the first airplanes, them getting hired at CommutAir, and them ending up senior to pilots they were junior to at Colgan?

 

[TUCKnTRUCK]

Does Pinnacle actually own the aircraft, I was under the interpretation that they were owned by a Canadian holding company, and when all payments, from United and Pinnacle, are in they would go to Pinnacle.

TucknTruck, if God forbid they started pulling airplanes would the pilots go with them? You guys have one list now, I would assume that would mean the f word.

11 are owned by Pinnacle, 2 by a bank and leased back, (not sure if they purchased the replacement for 200wq with the ins. pay out.. i assume no) 15 held by EDC.

Parts inventory I "thought" was somewhere near 11mil? not sure about that one though, so don't quote me. Do you think commutair could buy out nearly 200m worth of airplanes, pick up the bank note on another 15-17, and pay the contract that comes with it? Keep in mind, we carry more pilots per plane, and are required an additional FA per plane. If united owned the planes, then it would be a possible move, but as it's been stated, they don't. You would see 5-6 CA per plane, with another 5-7 FO's per plane (maybe more) come with them.

I really think management over there would drop a brick if they saw the pilot contract coming with it...

Any airline that were to pick up the Colgan operation, would have to be in position to fully buy another operation. It wouldn't be like 9E buying messaba with Delta help. They would have to foot the entire bill. If United was going to have to cover the costs, it becomes cheaper for them to modify the 9E contract.

I wouldn't completely rule it out... but I think sheer numbers wise, Commutair making a move like that could very well doom the company. I don't think they could do it on their own, but who knows..

 

[ctab5060X]

Any airline that were to pick up the Colgan operation, would have to be in position to fully buy another operation. It wouldn't be like 9E buying messaba with Delta help. They would have to foot the entire bill. If United was going to have to cover the costs, it becomes cheaper for them to modify the 9E contract.

I think you are spot on with your last statement. Even if CommutAir were to somehow acquire the Q400s, United would want a similar CPA to what they have with Pinnacle. With those kind of numbers, CommutAir would be in the same situation, if not worse, that Pinnacle is currently in... airplanes that are not making money. Pinnacle has the revenue from nearly 200 jets to help cover the red numbers, CommutAir would have the revenue from less than 25 airframes.

If United was to do a 'buy out' of the Q400s, could they afford the price tag during the middle of their merger?

 

[jtrain609]

I think you are spot on with your last statement. Even if CommutAir were to somehow acquire the Q400s, United would want a similar CPA to what they have with Pinnacle. With those kind of numbers, CommutAir would be in the same situation, if not worse, that Pinnacle is currently in... airplanes that are not making money. Pinnacle has the revenue from nearly 200 jets to help cover the red numbers, CommutAir would have the revenue from less than 25 airframes.

If United was to do a 'buy out' of the Q400s, could they afford the price tag during the middle of their merger?

No, but Wells Fargo could. Just have United call up their buddies over there and say, "Hey listen, we're gonna ditch this CPA with Pinnacle for some Q400's, you wanna buy them up and then lease them back to us? We'll sublease them to some other regional and put them on the hook for the lease."

This is how XJT's aircraft are leased.

It makes sense from a tax purpose to do exactly that for United, Pinnacle gets the airframes off their certificate, and then Wells Fargo gets to sell them to some third world country operator in another 15 years when they're clapped out.

 

[TUCKnTRUCK]

No, but Wells Fargo could. Just have United call up their buddies over there and say, "Hey listen, we're gonna ditch this CPA with Pinnacle for some Q400's, you wanna buy them up and then lease them back to us? We'll sublease them to some other regional and put them on the hook for the lease."

This is how XJT's aircraft are leased.

It makes sense from a tax purpose to do exactly that for United, Pinnacle gets the airframes off their certificate, and then Wells Fargo gets to sell them to some third world country operator in another 15 years when they're clapped out.

i don't think that works out as easily in today's market. Picking up 200 mil l that would be lost in the next round of ch 11 filings would be a rough pill for wells Fargo to swallow.

The cheapest option would be 9e. It's not like somebody can really do it for less right away.

 

[PropDriver]

No, but Wells Fargo could. Just have United call up their buddies over there and say, "Hey listen, we're gonna ditch this CPA with Pinnacle for some Q400's, you wanna buy them up and then lease them back to us? We'll sublease them to some other regional and put them on the hook for the lease."

This is how XJT's aircraft are leased.

It makes sense from a tax purpose to do exactly that for United, Pinnacle gets the airframes off their certificate, and then Wells Fargo gets to sell them to some third world country operator in another 15 years when they're clapped out.

I'm no accountant, but I don't think Wells Fargo can/will go out and buy $200 million worth of airplanes and lease them to a company that's currently losing money

 

[upup89]

I just cant see commutair taking anything on out of this whole deal. yea we are hiring and upgrading a lot currently but we are being told that is because we are currently short staffed. not that im someone in the know.

 

[TUCKnTRUCK]

I just cant see commutair taking anything on out of this whole deal. yea we are hiring and upgrading a lot currently but we are being told that is because we are currently short staffed. not that im someone in the know.

I don't think many people would want to take it on. It's a big operation on a very very tight budget. I think the only people who could really swallow it, would be current q400 operators, with already solid bankrolls. Maybe horizon? Republics got the lynx ticket... But I don't think they make that move.

Maybe American coming out of ch 11 buys them and sticks them in the islands?

 

[kellwolf]

Wells Fargo COULD, but whoever struck that deal might likely be unemployed come the next board meeting. Why would a bank foot the bill for airplanes that are in a losing operation only to turn around a lease them again....into a similar operation? It would really be like buying a foreclosure from another bank after it had been on the market for 2 years and trying to sell it for the exact same price. Sure, it COULD happen, but I don't think it's a likely scenario.

I don't think someone buying the whole shebang is a likely scenario, either. The one that scares me is a slow wind down of the Colgan/Mesaba (what ARE we calling it now, anyway?) and a slow spin up of someone else's operation.

 

[upup89]

I completely understand tensions and rumors would be running rampant at a time like this, but our growing pains placing the 5 Q300s on the line were frustrating at best. I couldnt imagine some of the situations being tossed around in this thread involving Commute. Best of luck with everything guys.

 

[jtrain609]

i don't think that works out as easily in today's market. Picking up 200 mil l that would be lost in the next round of ch 11 filings would be a rough pill for wells Fargo to swallow.

The cheapest option would be 9e. It's not like somebody can really do it for less right away.

One Boeing 777 costs over $250 million. I'm willing to bet they have the cash sitting around to handle a few Q's.

And better yet, if United wants to dump them, SOMEBODY will want to lease them from the bank. It's a win/win for everybody but the Pinnacle pilot group.

 

[TUCKnTRUCK]

One Boeing 777 costs over $250 million. I'm willing to bet they have the cash sitting around to handle a few Q's.

And better yet, if United wants to dump them, SOMEBODY will want to lease them from the bank. It's a win/win for everybody but the Pinnacle pilot group.

How is that a win for anybody? In no logical terms is it easier for them.

 

[ClarkGriswold]

Someone just posted on the other site that the latest rumor is slow parking of the saab as to not cause any furloughs with all of our attrition and being short already. This makes me believe that if we ditch that money losing operation, United will probably be willing to fork over a little more to us for the Qs to make us some money since it wont cost them as much as it is now to have both fleets flying for them.

 

[jtrain609]

How is that a win for anybody? In no logical terms is it easier for them.

Check this out.

United: Gets to either ditch the Pinnacle contract that isn't going to be flown and take those planes and either farm them out to somebody else, or in the worst case, return them to the bank. In either event, United isn't on the hook for anything. In the best case situation, United is able to take those aircraft and move them from carrier to carrier as they see fit. Companies do this kind of stuff all the time, see FedEx with their fleet of Caravans. Additionally, in leasing the aircraft from the bank, and then subleasing them to another regional, they get the tax advantages of having a lease vs. an aircraft own outright.

The Bank: The bank gets to get their hands on a hot aircraft that is selling well around the world. SOMEBODY will want the aircraft, whether it's United or another carrier in this country or another one. Because it's a secured interest, they'll be able to sell it for cash if, somehow, they can't get the thing to fly for somebody. What do you think Q's are going for right now? I'm willing to bet there isn't that much of a mark down because they're used, and thus the aircraft are little more than an investment that'll either pay a dividend by being leased, or they'll be a safe, yet low yield investment for their cash. These guys make out like bandits, basically.

Pinnacle: Gets to ditch an unprofitable part of their operation and right size the company towards the types of operations that will make them the most money. Instead of getting the 7% from the pilot group, or whatever they're asking for, you get rid of part of the pilot group. Problem solved.

The Pinnacle Pilot Group: Gets screwed.

How is this NOT exactly how every other financial transaction in this industry has ever worked? The bank makes money, the company makes money, the pilots lose.

 

[ClarkGriswold]

Putting all your eggs in Deltas basket is not smart, nor be the best idea for the company. See post above, sounds like that seems to be more of a likely scenario. United wont find anyone to fill the void that cutting our operation would cause.

 

[TUCKnTRUCK]

Check this out.

United: Gets to either ditch the Pinnacle contract that isn't going to be flown and take those planes and either farm them out to somebody else, or in the worst case, return them to the bank. In either event, United isn't on the hook for anything. In the best case situation, United is able to take those aircraft and move them from carrier to carrier as they see fit. Companies do this kind of stuff all the time, see FedEx with their fleet of Caravans. Additionally, in leasing the aircraft from the bank, and then subleasing them to another regional, they get the tax advantages of having a lease vs. an aircraft own outright.

The Bank: The bank gets to get their hands on a hot aircraft that is selling well around the world. SOMEBODY will want the aircraft, whether it's United or another carrier in this country or another one. Because it's a secured interest, they'll be able to sell it for cash if, somehow, they can't get the thing to fly for somebody. What do you think Q's are going for right now? I'm willing to bet there isn't that much of a mark down because they're used, and thus the aircraft are little more than an investment that'll either pay a dividend by being leased, or they'll be a safe, yet low yield investment for their cash. These guys make out like bandits, basically.

Pinnacle: Gets to ditch an unprofitable part of their operation and right size the company towards the types of operations that will make them the most money. Instead of getting the 7% from the pilot group, or whatever they're asking for, you get rid of part of the pilot group. Problem solved.

The Pinnacle Pilot Group: Gets screwed.

How is this NOT exactly how every other financial transaction in this industry has ever worked? The bank makes money, the company makes money, the pilots lose.

There are 4 used ones sitting pretty at sky service in YYZ right now. Held by none other than a bank.

United has already invested a fair amount into the Q, in a time when they and every major carrier is reducing the number of regional planes they own, you think they would want to pick up the lease on some? What cost advantage is there to farming out the flying? It really won't be done cheaper.

Pinnacle doesn't want to get rid of the planes. They want to get rid of the contract. Big difference. With the right contract the plane performs very well.

Further, the Q as is, is too large for united scope. If they move them, they have to pull seats.

Lastly, Colgan already tried to get cal/ united to buy and lease back airframes. They didn't want them. The Q was even hotter back then. I doubt their position has changed. They are already looking at going on the hook for the 787s etc.

While playing buddy buddy moving airplanes around may sound good, there isn't enough in it for them.

When was the last time mainline bought 30 used airframes... From their regional feed no less?

 

[ctab5060X]

So...

It's the 15th...

Only thing I have heard so far this morning is that PBS is completely down.

 

[Screaming_Emu]

United wont find anyone to fill the void that cutting our operation would cause.

Huh?

I'm not saying that any regional is better than any other. But saying that any of our crappy airlines is "irreplaceable" is laughable.