Business History Books » Business Plans » US Airways is in trouble
US Airways is in trouble
Question:
> If US Airways folds, would airports like PIT, DCA, and CLT be viable? > I can’t imagine PIT still operating without US.
Some other carrier would grab the sudden opportunity. Last year AirTran increased service at PIT, betting that the proposed UA/US merger would be consummated and that UA would then dismantle the PIT hub operation. It didn’t, they didn’t, so AirTran has since cut most of the new service they added. But if US folds, I’d bet that they, or someone else, would swoop in and fill the void.
Response:
> But if US folds, I’d bet that they, or someone else, would swoop in > and fill the void.
Wouldn’t US Air be likely to sell some of the key routes/assets to UA in order to raise some money to pay creditors prior to declaring bankrupcy ?
Response:
> I disagree about PHL. Its the #5 or #6 metropolitan city in the country. > And the largest metropolitan area with ONE commercial airport. NW would > very much like to acquire PHL.
Good luck to them. The layout of PHL airport makes it pretty awful to be used as a hub operation.
Response:
I can see other carries coming in to fill the void left by US. I know AirTran had mentioned something about wanting to build another hub in the northeast. I know they’ve recently started to build something at BWI. Not sure how that’s all going. I think PIT would be a good choice. AirTran has already shown some interested in PIT. CO would do well at CLT. PHL goes to NW. Time will tell… – Hide quoted text — Show quoted text – > If US Airways folds, would airports like PIT, DCA, and CLT be viable? > I can’t imagine PIT still operating without US.
Response:
> If US Airways folds, would airports like PIT, DCA, and CLT be viable? > I can’t imagine PIT still operating without US.
of course they will be viable, maybe not economically or financially but they will be. Just very much smaller. Add PHL to that list.
Response:
– Hide quoted text — Show quoted text -> >Given the hole that US’s demise will leave in the Northeastern U.S. Aviation > >Network, CO or COExpress (EvpressJet) would be a happy understudy, and they > >already have the staff in the New York area and the aircraft parked > All this is true. However, the possible demise of US also gives PA and > FAA officials a chance to take another look at the overcrowding that > plagues LGA as well. If US flights go away, a consensus may be reached > that it would be better to spread those ops to other metro-area > facilities. > If US Airways folds, would airports like PIT, DCA, and CLT be viable? > I can’t imagine PIT still operating without US.
CLT could still be a very valuable hub – to the right carrier. I can see Continental moving there to corner additional Southeast passengers. DCA is ALWAYS viable. Rich
Response:
> > If US Airways folds, would airports like PIT, DCA, and CLT be viable? > I can’t imagine PIT still operating without US. > of course they will be viable, maybe not economically or financially > but they will be. Just very much smaller. Add PHL to that list.
I disagree about PHL. Its the #5 or #6 metropolitan city in the country. And the largest metropolitan area with ONE commercial airport. NW would very much like to acquire PHL. Rich
Response:
> >Given the hole that US’s demise will leave in the Northeastern U.S. Aviation >Network, CO or COExpress (EvpressJet) would be a happy understudy, and they >already have the staff in the New York area and the aircraft parked > All this is true. However, the possible demise of US also gives PA and > FAA officials a chance to take another look at the overcrowding that > plagues LGA as well. If US flights go away, a consensus may be reached > that it would be better to spread those ops to other metro-area > facilities.
If US Airways folds, would airports like PIT, DCA, and CLT be viable? I can’t imagine PIT still operating without US.
Response:
>> >Given the hole that US’s demise will leave in the Northeastern U.S. Aviation > >Network, CO or COExpress (EvpressJet) would be a happy understudy, and they > >already have the staff in the New York area and the aircraft parked > All this is true. However, the possible demise of US also gives PA and > FAA officials a chance to take another look at the overcrowding that > plagues LGA as well. If US flights go away, a consensus may be reached > that it would be better to spread those ops to other metro-area > facilities. >If US Airways folds, would airports like PIT, DCA, and CLT be viable? >I can’t imagine PIT still operating without US.
Why not? Charlotte and Pittsburgh are definitely cities worthy of several competitive air options. If US Airways goes away, someone else will come in and fill that gap.
Response:
>These obligations include the payment >of ground rentals to the Port Authority and the payment of principal >and interest on $189 million par value special facilities revenue >bonds issued by the Port Authority, which amount is included in our >total $1.6 billion guaranteed obligations described above. If US >Airways defaulted on these obligations, we could be required to cure >the default, at which time we would have the right to occupy the >terminal"
Given the hole that US’s demise will leave in the Northeastern U.S. Aviation Network, CO or COExpress (EvpressJet) would be a happy understudy, and they already have the staff in the New York area and the aircraft parked (including a bunch of MD-80’s and ATR 42’s-perfect for a LGA hub) available to set up operations. In addition, PANYNJ may verymuch like to use the US terminal at LGA to consolidate operations into while the Central Terminal is completely rebuilt, etc. -Erik
Response:
– Hide quoted text — Show quoted text ->These obligations include the payment >of ground rentals to the Port Authority and the payment of principal >and interest on $189 million par value special facilities revenue >bonds issued by the Port Authority, which amount is included in our >total $1.6 billion guaranteed obligations described above. If US >Airways defaulted on these obligations, we could be required to cure >the default, at which time we would have the right to occupy the >terminal" >Given the hole that US’s demise will leave in the Northeastern U.S. Aviation >Network, CO or COExpress (EvpressJet) would be a happy understudy, and they >already have the staff in the New York area and the aircraft parked (including >a bunch of MD-80’s and ATR 42’s-perfect for a LGA hub) available to set up >operations. >In addition, PANYNJ may verymuch like to use the US terminal at LGA to >consolidate operations into while the Central Terminal is completely rebuilt, >etc.
All this is true. However, the possible demise of US also gives PA and FAA officials a chance to take another look at the overcrowding that plagues LGA as well. If US flights go away, a consensus may be reached that it would be better to spread those ops to other metro-area facilities. CO has recently added several ExpressJet flights at JFK, so it is possible. Of course, the shuttle flights would still likely be based at LGA.
Response:
> People like Gordon Bethune (along with David Neeleman and Herb Kelleher) are > the type of visionary leaders that will guarantee that CO, WN and B6 will be > around for a LONG, LONG time. We need leaders like these three running the > big USA airlines as soon as possible–especially at UA and AA.
Didn’t US Air just hire a new president with a legit successful airline background?
Response:
todays newspaper said usair can continue as it is only until september if they dont get the $
Response:
>Didn’t US Air just hire a new president with a legit successful airline >background?
Yes, although his name escapes me right now…I believe he was the President of Continental Express.
Response:
Interesting tidbit from the Continental Air 10K "We remain contingently liable until December 1, 2015, for US Airways, Inc.’s obligations under a lease agreement between US Airways and the Port Authority of New York and New Jersey related to the East End Terminal at LaGuardia airport. These obligations include the payment of ground rentals to the Port Authority and the payment of principal and interest on $189 million par value special facilities revenue bonds issued by the Port Authority, which amount is included in our total $1.6 billion guaranteed obligations described above. If US Airways defaulted on these obligations, we could be required to cure the default, at which time we would have the right to occupy the terminal" – Hide quoted text — Show quoted text ->todays newspaper said usair can continue as it is only until >september if they dont get the $
Response:
Joe: here is the mail I received from USAIR: Dear MATT [...], 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 RESPOND TO THIS MESSAGE. If you have any questions about your account, please e-mail the unregister for future e-mails, please log into your Dividend Miles Account at http://www.usairways.com/dividendmiles/index.htm click on Access Account and from the Account Menu, go to Update Profile. All Dividend Miles Terms & Conditions apply.
Response:
> Witness TWA an airline that wan’t as good that went under how many times?
On the other hand, witness Continental was was also pretty sick, got 2 rich uncles (one of them being Air Canada) to buy it, put Bethune at the helm, and look at how well it has done since.
Response:
> On the other hand, witness Continental was was also pretty sick, got 2 rich > uncles (one of them being Air Canada) to buy it, put Bethune at the helm, and > look at how well it has done since.
People like Gordon Bethune (along with David Neeleman and Herb Kelleher) are the type of visionary leaders that will guarantee that CO, WN and B6 will be around for a LONG, LONG time. We need leaders like these three running the big USA airlines as soon as possible–especially at UA and AA. — Raymond Chuang Mountain View, California USA
Response:
>People like Gordon Bethune (along with David Neeleman and Herb Kelleher) are >the type of visionary leaders that will guarantee that CO, WN and B6 will be >around for a LONG, LONG time. We need leaders like these three running the >big USA airlines as soon as possible–
here, here! 
I am proud to say that Gordon Bethune is my boss. What a leader! I highly recommend his book, "From Worst to First". I picked it up during my flight attendant training, and read it during my ‘breaks’ from studying…the more I read, the more excited I became at the thought of being a part of the CO team!
Response:
- Hide quoted text — Show quoted text -> I guess we’ve known about this for a while. > I haven’t seen the e-mail yet, but US Air is sending a message to > Dividend Miles members saying that they intend to apply for federal > money soon, and that if they don’t get the money, it’s good-bye. > I’m told that the e-mail reads like sort-of a good bye letter. Sad. > Is (will) US Airways the first big player to fold? > Will any other carrier step in and take US’s routes (and / or honor > their FF miles?) > Will the gov’t step in with cash? > Will US Airways still be flying come June? > Care to give some sort of source? Reference? I’m looking at the first > quarter statement right now, and while they’ve lost a bit of cash, I > can’t see any press release or info. relating to what you’ve just said.
Okay; so it does say that they are applying for a loan, and if it doesn’t come, there will be restructuring. It’s quite a step, though, from restructuring to bankruptcy. A.
Response:
– Hide quoted text — Show quoted text -> > I guess we’ve known about this for a while. > > I haven’t seen the e-mail yet, but US Air is sending a message to > > Dividend Miles members saying that they intend to apply for federal > > money soon, and that if they don’t get the money, it’s good-bye. > > I’m told that the e-mail reads like sort-of a good bye letter. Sad. > > Is (will) US Airways the first big player to fold? > > Will any other carrier step in and take US’s routes (and / or honor > > their FF miles?) > > Will the gov’t step in with cash? > > Will US Airways still be flying come June? > Care to give some sort of source? Reference? I’m looking at the first > quarter statement right now, and while they’ve lost a bit of cash, I > can’t see any press release or info. relating to what you’ve just said. >Okay; so it does say that they are applying for a loan, and if it doesn’t >come, there will be restructuring. It’s quite a step, though, from >restructuring to bankruptcy. >A.
Witness TWA an airline that wan’t as good that went under how many times?
Response:
>> I haven’t seen the e-mail yet, but US Air is sending a message to > Dividend Miles members saying that they intend to apply for federal > money soon, and that if they don’t get the money, it’s good-bye. >Care to give some sort of source? Reference?
http://biz.yahoo.com/rb/020510/airlines_usairways_9.html They are indeed threatening bankruptcy. US has a bunch of problems, notably shorter routes than other big airlines, and expensive unionized labor. In the airline biz, bankruptcy threats are the way you tell the unions that you’re serious about getting concessions from them. In the long run, bankruptcy isn’t always bad. Continental went bankrupt twice, and look where they are now. — John R. Levine, IECC, POB 727, Trumansburg NY 14886 +1 607 387 6869 Member, Provisional board, Coalition Against Unsolicited Commercial E-mail
Response:
It is a nice touch that they got the email out to members before issuing the press release (by about 2 hours): Dear Cedric Nagy, 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 – Hide quoted text — Show quoted text ->>I haven’t seen the e-mail yet, but US Air is sending a message to >>Dividend Miles members saying that they intend to apply for federal >>money soon, and that if they don’t get the money, it’s good-bye. >Care to give some sort of source? Reference? > http://biz.yahoo.com/rb/020510/airlines_usairways_9.html > They are indeed threatening bankruptcy. US has a bunch of problems, > notably shorter routes than other big airlines, and expensive > unionized labor. In the airline biz, bankruptcy threats are the way > you tell the unions that you’re serious about getting concessions from > them. > In the long run, bankruptcy isn’t always bad. Continental went > bankrupt twice, and look where they are now.
Response:
I guess we’ve known about this for a while. I haven’t seen the e-mail yet, but US Air is sending a message to Dividend Miles members saying that they intend to apply for federal money soon, and that if they don’t get the money, it’s good-bye. I’m told that the e-mail reads like sort-of a good bye letter. Sad. Is (will) US Airways the first big player to fold? Will any other carrier step in and take US’s routes (and / or honor their FF miles?) Will the gov’t step in with cash? Will US Airways still be flying come June?
Response:
- Hide quoted text — Show quoted text – > I guess we’ve known about this for a while. > I haven’t seen the e-mail yet, but US Air is sending a message to > Dividend Miles members saying that they intend to apply for federal > money soon, and that if they don’t get the money, it’s good-bye. > I’m told that the e-mail reads like sort-of a good bye letter. Sad. > Is (will) US Airways the first big player to fold? > Will any other carrier step in and take US’s routes (and / or honor > their FF miles?) > Will the gov’t step in with cash? > Will US Airways still be flying come June?
Care to give some sort of source? Reference? I’m looking at the first quarter statement right now, and while they’ve lost a bit of cash, I can’t see any press release or info. relating to what you’ve just said. And, I’m a Dividend Miles member, and haven’t seen any email. A.