I just heard that the Pension Benefit Guarantee Corp is taking over all US Airways pension plans. However, I'm not exactly sure what this means for the airline. Obviously it will save the company tons of cash but usually whenever PBGC takes over a pension, it is because the company is going out of business... We'll see what announcements are made in the next few days. All I know is that I have one last free ticket to burn.

I would be less concerned about what it means for the airline and more concerned about what it means for the US Taxpayer. The airlines are all seriously underfunded when it comes to their pension plans and the PBGC is facing the prospect of taking on more then their current funding level can handle because of the troubled carriers. There is a real risk the Federal Government will need to kick in money in the next several years. That or the people who fund the PBGC, pension providers, will. Either way, it means a bailout from some, or all, of the taxpayers.

Now, back to USAir. The PBGC taking over a pension plan doesn't neccessarily mean the company is going to liquidate. It basically means the company, the PBGC and the Bankruptcy judge presiding over a case have reached the conclusion that a company qualifies for a "distressed termination" of their plan and their prospect for funding their liability is remote.

Calling a distressed termination of a plan is simply one step a company in severe financial crises takes. USAir may very well be gone shortly after the holidays. But, this PBGC move doesn't make the case one way or the other.

The goal of USAirways is to break all the Unions (last one of importance is the Mechanics one and going to court to break it). Another goal is to lose Pittsburgh as a major hub city and only have USAirways Express operating to transfer customers to places like Philly and/or Charlotte and become a carrier focused on mainly Caribbean travel (if they don't go absolutely bankrupt by then). Anytime I visit Careerlinks in my area (16 miles west of Pittsburgh - a few miles from the airport) I constantly talk to flight attendants, reservationist and ramp agents of long standing trying to get jobs outside the airline industry. So USAirways' future isn't too bright IMO. IMO burn that last free ticket.

<The goal of USAirways is to break all the Unions>

Gee...and I thought the goal was to continue in business.

I've been reading the predictions for US Air on this board for the last 6 months and have concluded that nobody knows nothing (although Ryan's analysis of the pension situation seems right on the mark).

The fact that US Air is abandoning Pitt doesn't necessarily mean anything for other hubs, such as Phila. And it should come as no surprise to anyone that the comapny is laying off, and current employees are looking elsewhere -- that might be part of mgmt's strategy for survivial.

Also, I believe the company got a new credit line from GE, which would carry it through the spring.

My prediction? How the hell would I know?

I am not as pessimistic as some regarding USAirways. Right now it seems they have a big problem not with load factors but with maintaining enough cash in the bank to satisfy the agreements with creditors.

I, for one, wish them well.

This is my take.

I think the government will step in before they let US Airways go under. US Airways is a major carrier and in order for international commerce to continue, our airlines must be supported. Because they are all such bad shape, I think if US Airways falls, the others will soon follow.

I don't think our government can stomache the thought of having to rely on foreign owned carriers.

Just my opinion.

GoTravel,
What I think you need to recognize is that the US Government already bailed out USAir. They filed bankruptcy a second time - after they had already received government loan guarantees.

If USAir is to survive, it will need to do so based on its ability to operate in this environment.

In terms of the impact, if you believe there are too many carriers and that is exacerbating the situation, one could make a pretty strong case that taking seating capacity out of the system, benefits those who remain.

At this point, USAir stays alive on its fundamentals and not because Uncle Sam writes a second check.

Ryan, while I understand that and agree with what you are saying, take a look at Amtrak. Doesn't the government subsidize something like 75% of the company? I'm not sure of the actual number.

Get real! The government continues to do more than some of us think it should for ALL the airlines such as setting up a multi-billion dollar agency to do the "security" and consistently propping them up when they whine about anything and everything. Odd, isn't it, that the so-called "low cost" carriers like Southwest continue to turn a profit in the SAME environment as the "majors" and obviously face the same barriers.

The best thing IMO would be to actually allow a "free market" economy to operate and let a couple of them go into liquidation.

The government does subsidize Amtrak. Whether they should or not is a different question.

UsAir is not Amtrak, a sole provider of a resource that politically is viewed as critical. UsAir has competitors, USAir is an industry where there is competition that can step in and take over their routes - where that makes sense. One could argue that the government subsidy of Amtrak hurts people like USAir. Should we exacerbate that by hurting Continental, Delta, United, JetBlue etc, to prop up USAir?

Providing a government loan guarantee becuase of the impact of 9/11 on the industry is one thing - providing equity financing to prop up a failing business model is a pandoras box that destroys our entire economic system. Government loan guarantees, when they are provided, are meant to be temporary measures and not permanent solutions.

Where should it end? Should we prop up the US textile industry, the automakers, Levi Strauss?

Issues of what it means to be a capitalist economy aside, please tell me what should get cut so that our budget deficit in 2005 doesn't rise even higher then the $400 to $500 billion dollar level where it will be?

The fact is, if USAir can't charge it's customers enough to support itself, why should the rest of us have to pay?

Ryan, please understand I'm not arguing with you (people yell at me all the time for being rude) nor am I disagreeing.

The government subsidizes farmers. That is a pretty big ticket.

As far as the low cost carriers, SouthWest will not continue to enjoy the profits it has in the past because their workforce is now starting to enjoy 'senior' pay.

Don't even get me started with farm subsidies, the impending $12 Billion "payoff" to tabacco farmers, and the other subsidies we hand out.

The simple reality is that the airlines don't have the political clout and the historical precedence of getting a slice of the pie.

When it comes to airlines getting Federal subsidies (which BTW might actually be illegal on some trade deals we've negotiated), I'll use a phrase that several of my ex-collegues from the South were found of "that dog just ain't gonna hunt."

Odd, isn't it, that the so-called "low cost" carriers like Southwest continue to turn a profit in the SAME environment as the "majors" and obviously face the same barriers.

No, SW doesn't operate in the same environment as the majors. As a result, they don't face the same barriers. They don't operate in the big, busy airports because their business model requires minimizing the time spent while being "stacked" above the airport and time spent on the ground. As an example, they fly out of Baltimore but neither of the two big airports serving Washington DC.

So, if you want all airlines to use Southwest's model, you won't be flying into or out of major cities and large airports.

It will be interesting to see how successful Independence does when flying out of Dulles, an airport that so far has been avoided by Southwest.

<Odd, isn't it, that the so-called "low cost" carriers like Southwest continue to turn a profit in the SAME environment as the "majors" and obviously face the same barriers>

If, by environment, you mean "market conditions"..then I would agree.

But of you mean, "operating environment"...there are costly differences. USAir has labor contracts and employee benefits that do not make economic sense in today's price driven market.

In theory, if USAir had the same labor contracts and employee benefits (including pension plan obligations)..they could be far more competitive.

What I don't understand is how the employees think they can get all the money that "they feel entitled to" and still work for a viable airline.

K-9, I agree that no one can really answer if USAir will be around or not. I've followed these discussions very closely (here and elsewhere), as we have many USAir FF miles and 8 current FF award ticketed reservations. I've read opinions ad nauseum about this airline.

No one here has a crystal ball (at least I don't), so all this stuff is merely opinion. I would like to see this airline survive for purely selfish reasons - they are the predominate carrier from our airport.