US Airways out of business on January 15?

[nystate]

http://www.pittsburghlive.com/x/tribune-review/regional/s_291263.html

Expert: 'Collapse' of airline imminent


Every January, Vaughn Cordle, chief analyst with Airline Forecasts of Washington, D.C., issues his prediction of the industry's 10 biggest stories of the year.
No. 1 on his 2005 list: the liquidation of US Airways.

"I think we're on the verge of the collapse of US Airways," Cordle said.

Aviation analyst Michael Boyd, of Evergreen, Colo., agrees. "Stick a fork in them. They're done," he said.

Fare wars, high fuel prices and bitter labor relations that resulted in an operational meltdown that stranded thousands of customers over Christmas have financially weakened the nation's seventh largest airline beyond recovery, experts said.

Even if US Airways succeeds in securing $1 billion a year in labor savings, it most likely will be too little, too late, they said, to save one of Western Pennsylvania's largest employers, with more than 6,000 local workers.

An unofficial dead pool has begun.

Cordle predicted that US Airways, which filed for bankruptcy protection in September, will run out of cash and shut down in March, typically the airline's low point in cash flow.

Boyd said it will collapse next month.

William Lauer, who follows the airline for Tarentum-based Allegheny Capital Management, heretofore had been somewhat of a maverick, refusing to predict US Airways' demise. But now he acknowledges that the airline's days may be short.

The "kill shot," he said, is not Southwest Airlines' decision to launch service at Pittsburgh International Airport in May. It was the Christmas fiasco, a sign of US Airways' seemingly intractable labor problems that has spooked customers and creditors alike.

"Clearly," Lauer said, "there has been a lot of damage" to the brand.

Boyd said that Southwest's decision to begin service in Pittsburgh is a sign that the low-cost carrier believes US Airways, which operates 225 flights a day at Pittsburgh International Airport, is on the verge of closing.

"What they are saying is that, by the time they begin service in May, they believe US Airways will be a non-entity in Pittsburgh,'' Boyd said, "either through flight reductions or going out of business. Most likely, the latter."

Their comments contrast sharply with those of US Airways Chief Executive Officer Bruce Lakefield, who told employees Friday that he was "upbeat" about the future. He said that the flight attendants' ratification of a $94-million-a-year cost-saving contract and a forthcoming ratification vote on $300 million a year in labor savings by mechanics, baggage handlers and fleet-service workers are major developments that help move the airline forward in its transformation plan.

"We're pulling together and getting things done," Lakefield said.

US Airways is trying to stay afloat through cuts in labor costs, cooperative creditors and vendors, and access to about $700 million worth of federally guaranteed loans backed by the Air Transportation Stabilization Board. Most of its assets are pledged as loan collateral.

The ATSB agreement expires Jan. 15. If the ATSB refuses to grant an extension, US Airways will be forced to shut down immediately.

US Airways also must make $260 million in aircraft lease payments in January and February.

If many customers shun the airline in coming months because of the Christmas catastrophe and fears that the airline is going out of business, US Airways won't have enough to cash to continue operations and make the lease payments, forcing it to default on the ATSB loans.

In another sign that it was struggling, US Airways asked a bankruptcy judge for an additional six weeks to file a reorganization plan. The plan is expected to be filed in late February.

Boyd said he had heard reports that, contrary to initial fears, January bookings did not drop precipitously immediately after the Christmas breakdown. (US Airways refuses to discuss advance bookings.)

Cordle, however, said that the Christmas travel disruptions rattled some creditors, including at least one aircraft lessor he declined to identify.

Another jolt to the system, such as a labor strike, could kill US Airways immediately, Cordle said.

The International Association of Machinists and Aerospace Workers, which represents almost 9,000 mechanics, baggage handlers and fleet-service workers, is conducting a strike authorization vote.

IAM-represented employees may go on strike by Jan. 22 if the rank and file refuses to approve a new contract calling for more than $300 million a year in wage and benefit cuts.

Cordle said a major labor disruption could spook creditors and vendors into demanding immediate payments from US Airways, triggering a financial run on the airline.

"If one (creditor) pulls, they all will pull, and the company will collapse," he said.

[FWBHurricane]

US Airways has stopped it services in Okaloosa Regional Airport...the last flight for that carrier was yesterday at 4:10 i think. They are frantically trying to find new carriers for our airport, since Delta is leaving Okaloosa Regional sometime at the end of January.

[nystate]

I'm thinking of booking a quick hop to LGA and back on US Airways sometime this week so I can get one last ride in before they go under. The December sickout and luggage fiasco certainly didn't help their image, and people are hesitant to book on them now since they could go under at any time.

My best estimates on the effects of a US Airways collapse on the following cities:

Pittsburgh- Already being de-hubbed by US, the airport is a shadow of what it once was. No more transatlantic flights from PIT, but Southwest will show up soon and it wouldn't surprise me if a few other low cost airlines moved in as well.

Charlotte- the city would lose about 90% of its daily airline service, but Delta would probably step in to try and fill the gap.

Philadelphia-Another city that would be hard hit. Expect Northwest or Delta to make a move in the event of a US collapse.

Countless smaller towns and cities will lose their only airline service for a while until another airline moves in. As for my area, US is the only airline to fly to ART and has a larger presence at SYR than any other airline. We would certainly be on the list of places most affected by the collapse.

If you have to book on US, do so through United. That way, if US does go under, United will still probably put you through on a UAL flight.

[rainstorm]

labor unions have killed them. amazing that they would intentionally kill the airline at christmas. they deserve not to have jobs, and i hope the taxpayer doesnt have to bail them out

[Scorpion]

That sucks, I have traveled on US Airways many times. It would be sad to see them go under. I never had any problems with them.

[Stephanie]

labor unions have killed them. amazing that they would intentionally kill the airline at christmas. they deserve not to have jobs, and i hope the taxpayer doesnt have to bail them out

Labor unions are a problem, but they were the ones that had their wages cut 3 times in order to "save" US Air. The brain surgeons at the top were also to blame for having to declare bankruptcy 2 times in the the last 2 - 3 years. I wonder what their give backs were.

All airlines are having problems, but you have to wonder why companies like Southwest and Spirit are doing so well compared to US Air.

Philadelphia has been a major hub for US Air as well. You'd have to wonder why that type of support from a major International Airport and city did not help them.

RIP US Air. I'm tired of hearing about their problems, just like SEPTA's.

[Terry]

Rats. I love those DeHavilands and I have a $100 credit....better get flying...

[alicia-w]

US Airways has stopped it services in Okaloosa Regional Airport...the last flight for that carrier was yesterday at 4:10 i think. They are frantically trying to find new carriers for our airport, since Delta is leaving Okaloosa Regional sometime at the end of January.

where did you hear about Delta? What we were told is that they're cancelling flights to Dallas. Not pulling out of the airport....

[FWBHurricane]

I probably read it wrong but i think its just ending services to Dallas/Ft. Worth....my bad

[Lindaloo]

labor unions have killed them. amazing that they would intentionally kill the airline at christmas. they deserve not to have jobs, and i hope the taxpayer doesnt have to bail them out

Labor unions are a problem, but they were the ones that had their wages cut 3 times in order to "save" US Air. The brain surgeons at the top were also to blame for having to declare bankruptcy 2 times in the the last 2 - 3 years. I wonder what their give backs were.

All airlines are having problems, but you have to wonder why companies like Southwest and Spirit are doing so well compared to US Air.

Philadelphia has been a major hub for US Air as well. You'd have to wonder why that type of support from a major International Airport and city did not help them.

RIP US Air. I'm tired of hearing about their problems, just like SEPTA's.

Well said.

[Pburgh]

Talk to the employees and say he needs to give concessions or else.

Talk to the Airport and say he needs to lower costs or else.

This is the style of USAir management. They've held Pittsburgh hostage for years. I say good riddance.

[rainstorm]

labor costs with the major airlines are way too high. also, the union knew when they sabotaged us air at christmas they might kill the airline, these union employees think they work for thier union, and not the airline. they deserve to lose their jobs. every one of them. they decided to rip the customer and the airline at christmas. its like a person on a mountain cutting their own lifeline.

[nystate]

labor costs with the major airlines are way too high. also, the union knew when they sabotaged us air at christmas they might kill the airline, these union employees think they work for thier union, and not the airline. they deserve to lose their jobs. every one of them. they decided to rip the customer and the airline at christmas. its like a person on a mountain cutting their own lifeline.

True, but bad news for all of the non-union employees and even the US Airways customers that will be affected by this as well.

[rainstorm]

labor costs with the major airlines are way too high. also, the union knew when they sabotaged us air at christmas they might kill the airline, these union employees think they work for thier union, and not the airline. they deserve to lose their jobs. every one of them. they decided to rip the customer and the airline at christmas. its like a person on a mountain cutting their own lifeline.

True, but bad news for all of the non-union employees and even the US Airways customers that will be affected by this as well.

not really, thats the beauty of the free enterprise system, when there is a demand for a product, someone will come up and supply that demand. not 1 cent of tax money should go to propping up any failed business, or union job

[MGC]

Unions did not kill any airline. There is a glut of seats that along with increased fuel prices are the main problem. Deregulation killed the airlines. Once the airlines were deregulated there was a dog-eat-dog era of one airline aquiring another airline. Top managment are to blame. They went on a spending spree, got way too deep in debt. Once massive overcapacity was acheived they cut fares below costs. It is a vicious cycle. Don't be surprised if my favorite, Delta goes under too. This will also cripple the aircraft manufacturing business too. A couple of major airlines out of business will dump a ton of used aircraft on the market. Who will buy a new plane when you can get a used one on the cheap.....MGC

[Stephanie]

labor unions have killed them. amazing that they would intentionally kill the airline at christmas. they deserve not to have jobs, and i hope the taxpayer doesnt have to bail them out

Labor unions are a problem, but they were the ones that had their wages cut 3 times in order to "save" US Air. The brain surgeons at the top were also to blame for having to declare bankruptcy 2 times in the the last 2 - 3 years. I wonder what their give backs were.

All airlines are having problems, but you have to wonder why companies like Southwest and Spirit are doing so well compared to US Air.

Philadelphia has been a major hub for US Air as well. You'd have to wonder why that type of support from a major International Airport and city did not help them.

RIP US Air. I'm tired of hearing about their problems, just like SEPTA's.

Well said.

Thanks! I'm just full of surprises aren't I?

[streetsoldier]

Who will buy a new plane when you can get a used one on the cheap.....MGC


Al Qaida (through any of their licensed subsidiaries around the world)?

[rainstorm]

Unions did not kill any airline. There is a glut of seats that along with increased fuel prices are the main problem. Deregulation killed the airlines. Once the airlines were deregulated there was a dog-eat-dog era of one airline aquiring another airline. Top managment are to blame. They went on a spending spree, got way too deep in debt. Once massive overcapacity was acheived they cut fares below costs. It is a vicious cycle. Don't be surprised if my favorite, Delta goes under too. This will also cripple the aircraft manufacturing business too. A couple of major airlines out of business will dump a ton of used aircraft on the market. Who will buy a new plane when you can get a used one on the cheap.....MGC

have to disagree. competition lowers prices, and it gets rid of uncompetitive businesses. the old carriers, saddled with high union costs will fail, and they should. i fail to see the problem here. businesses fail on a daily basis, and will continue to do so.

[nystate]

not really, thats the beauty of the free enterprise system, when there is a demand for a product, someone will come up and supply that demand. not 1 cent of tax money should go to propping up any failed business, or union job

Still, you are looking at tens of thousands of people out of work. More than likely other airlines will increase capacity by recalling their furloughed employees, leaving the former employees of US Airways S.O.L.

In a way I don't blame the employees of US Airways for protesting. Their pay just keeps getting slashed and slashed. Just look at the average hourly payrates of a US Airways 737 FO and Captain when compared to those of pilots of 737s for other airlines-

US Airways 737 FO-$85/hour
CAPT-$125/hour

Delta 737 FO-$106/hour
CAPT-$156/hour

Southwest 737 FO-$120/hour
CAPT-$182/hour

A US Airways captain with 12 or more years of experience under their belt is getting paid about the same as a First Officer, a lower position, at low cost carrier Southwest.

In other news- looks like US will live past January 15. Just how far past remains in question-

http://biz.yahoo.com/rb/050110/airlines_usairways_1.html

[MGC]

Helen, look at the automotive industry. GM and Ford, both unionised companies are competing well with non-union auto manufactures. Are you going to argue that Ford should shut down because of higher labor costs than say Nisson? The argument that companies with higher costs are doomed is myopic at best. The airlines problem is not union labor. Its problem is over capacity. There are simply too many seats per revenue dollar. There are just too many airlines for the US market. Did Eastern or PanAm fail because of high labor costs? No, they failed because they didn't have enough passengers filling seats. I flew PanAm from NY to Washington once. There were about 6 passengers on a 727. Last time I flew from New Orleans to Norfolk thru Atlanta on Delta the planes were only half full at best. Simple math yeilds that too many seats chasing too few butts equals airline bankruptsy......MGC