US Air Bankrupt (Again?)

[mmadhatter]

Just heard on the news that US Airways declared that it is bankrupt and will be out of business by year end! We have tickets booked for Jan 8th for the AOS from Boston to San Juan. Any thoughts. Should we start shopping again? We got a good deal ($300 each) On Expedia they are up to $800 each now. Boo-Hoo. The insurance we have doesn't cover bankrupt airlines. Double Boo-Hoo

[bUU]

We were in the same boat. Tickets on US Airways in late January, to San Juan. The word, though, is that US Airways is just filing Chapter 11 again, though you could be right that they'll liquidate by the end of the year.

 

We already bit the bullet, knowing that as soon as the airline goes Chapter 7 every other airline is going to fill up. We booked alternative airline arrangements (using FF miles) on American, which we'll use instead of our US Airways tickets regardless. Best case scenario, if US Airways survives, we'll pay the $100 penalty (call it travel insurance) and us the remainder of our ticket value for another flight next year.

 

I can't recommend the same approach for others, but it basically boils down to how much risk are you willing to have hanging over your head with your cruise coming up?

[smeyer418]

I just looked at both CNN and NYTimes. They are both not reporting that US Air has filed. They report there are on going negotiations that if they fail, US Air will have to file again.... There may be some story around and this may be close to true but I can't find it yet....

[bUU]

I've got an alarm set for the news on US Airways, so I'll hear as soon as any major news service releases. I don't think we'll see anything until at least 3pm tomorrow, and it may not even been until Monday morning, given the "progress" of the negotiations with the pilots.

[thelbert]

I'm holding four tickets to New York in November. Have always flown with them. Hate to lose that money. What chances do we have of going?

 

How bad is United holding two tickets for March from RDU to FLL.

Who is not in trouble now?

[bUU]

No meetings are scheduled as of a half hour ago. They've got a deadline on Wednesday... we'll see.

[kenmel]

We live in Charlotte, a major hub if USAIRWAYS. The paper here (Charlotte Observer/ http://www.charlotte.com) has been running a special feature every day about the airline and making speculations about what the effect will be if/when they declare bankruptcy again. It would effect not only customers (especially frequent flier miles) but also the large number of employees that live here.

[DanJ]

The problem with USAir is they have the highest cost structure of any of the major airlines, and their bread and butter routes are in the east where they are getting killed by the likes of Southwest, Jetblue and AirTran. Part of the requirements of the government guarantee that got them out of Chapter 11 last time is that they maintain $700 million in the bank. Not exactly sure what the government will do when (not if) USAir falls below that number soon, but without government backing, other lenders aren't too likely to come forward to bail them out again.

 

To put in perspective how much money they are looking to cut, the company is asking the pilots for an average of $90,000 per year per pilot to be cut. Obviously this isn't salary directly, but benefits and pensions as well. I've been hearing similar averages coming from Delta, which is next up on the Chapter 11 block.

[JanetMarie]

Yes, Delta is changing one of its hubs in TX, and laying off 7,000 in the hopes of restructuring.

Just because an airline, US or Delta, are in BK, does not mean that it is going out of business. It's simply a restructuring. And this will not be the first time for US Air, either!!! :cool:

[bUU]

Delta's biggest problem in Dallas is that it is actually American's hub too, and it's rather difficult to make do sharing a hub. American and United do it in Chicago, but that's the only significant example of that. I don't understand why Delta stuck it out in DFW as long as they have.

 

Regardless, this time is different, I think, for US Airways. This is almost assuredly the beginning of (or perhaps the middle of) the end for US Airways. Their best hope is to go the way of TWA, i.e., go into liquidation (Chapter 7, not Chapter 11) and have some airline (probably United, if any) pick out the best pieces (hopefully including their FF program -- I've got 245K miles in US Airways) of the wreckage, and let the rest just die.

[hdawson]

Chapter 11 is for the purpose of restructuring the company. Again. Restruction requires capitol. When your credit rating is low junk status, who is going to loan more money for a failing company? I think there is a program between the majors whereby the tickets on the failed company will be honored by the other majors but on a space available basis which may not meet your schedule requirements.

[bUU]

That actually was an FAA regulation (brought about by the Air Transportation Safety and System Stabilization Act). Unfortunately, that provision expired in Feburary 2003. The airlines have no agreement among themselves, not even the majors, to accept each others obligations without a means of being reimbursed for the service provided by the debtor. In other words, once US Airways goes Chapter 7, no other airline will accept US Airways tickets without some other agreement being signed.

 

US Airways passengers, like myself, have to face the fact that, worst-case scenario, the tickets we've purchased could end up worthless. It is quickly reaching the point where another airline accommodating us would constitute the best-case scenario, at least for reservations past the end of the year (and perhaps as soon as past the election).

 

--

 

I just read an update on this: The Regulation was extended to November 19, 2004, so folks with tickets for flights through then have some possibility of being accommodated on other airlines, in case US Airways goes Chapter 7.

[SUSANITA]

We are flying USAirways this Saturday, hope they hold out that long! ;)

 

This upcoming flight would have given me enough FF miles for a free flight for my upcoming February cruise. You can bet that I'm not taking any chances now, and will book with another airline.

 

Best of luck to all of you that are holding USAirways tix.

[bUU]

I just updated my earlier message.... thought it was important enough to post separately:

 

 

I just read an update on this: The Regulation was extended to November 19, 2004, so folks with tickets for flights through then have some possibility of being accommodated on other airlines, in case US Airways goes Chapter 7.

[Maria65]

I'm booked for late October on US Air, but it's a codeshare situation with United. I actually booked through United. Does anyone know if United is obligated to honor my tickets on another flight in case US Air shuts down operations?

 

US Air has been offering outrageously low prices out of Philadelphia ever since Southwest entered the market. They seem to run an awful lot of flights to the same destination as well, convenient for travelers but expensive to the airline if they're flying half empty.

[MGoBlue2]

We are flying USAirways this Saturday, hope they hold out that long! ;)

 

This upcoming flight would have given me enough FF miles for a free flight for my upcoming February cruise. You can bet that I'm not taking any chances now, and will book with another airline.

 

Best of luck to all of you that are holding USAirways tix.

I had a lot of United FF miles two years ago when it looked like they might go under. Rather than take a chance of losing them we booked a quick trip to Hawaii. You might look into using them somehow before February if you're concerned.

[bUU]

Well it's official. This is directly off the front page of US Airway's website:

On September 12, 2004 US Airways filed plans for a judicial restructuring.

 

Customers should not notice any changes to flight operations or customer service because of this filing. All bookings will be honored and there are no changes to our ticketing policies.

 

We understand you may have questions and concerns about this announcement. For more information on our restructuring you may visit www.transformingusairways.com

 

[RM]

OH MY! Now I'm really worried, first it was hurricanes and now our airline is in deep trouble.

 

Do you think I'll make our cruise on the 24th??? Hope they are able to stay afloat long enough for me to get this well deserved vacation after Charley and Frances......

[bUU]

I take this as good news, actually. That means they're not going directly into liquidation. I suspect that they'll be in Chapter 11 at least until after the election.

 

I'm considering making a last-minute change to my existing reservation I have for my flight to San Juan in January (which I no longer need) -- changing it into an early November reservation somewhere, just so I can use up the value in case US Airways goes Chapter 7 (though even November might be too late...)

[Globaliser]

Regardless, this time is different, I think, for US Airways. This is almost assuredly the beginning of (or perhaps the middle of) the end for US Airways. Their best hope is to go the way of TWA, i.e., go into liquidation (Chapter 7, not Chapter 11) and have some airline (probably United, if any) pick out the best pieces (hopefully including their FF program -- I've got 245K miles in US Airways) of the wreckage, and let the rest just die.

Yikes - that's a lot of miles to go down the drain. Why don't you come over to Europe a couple of times in Envoy, to burn them up?

 

I agree with your view, though. Unlike previous recent Chapter 11 forays by airlines, they have agreed no debtor-in-possession financing for this filing. That's because the reality is that there is nothing left against which to raise any sort of money. This looks like a Chapter 11 filing that's the last step before liquidation - no more assets, no more ideas.

 

FWIW, I've been posting updates on US on this thread for the people who are reading it, although it looks like nobody here needs any more info than they're able to get for themselves.

[smeyer418]

here is the CNN story and the dividend airmileage program is continiuing according to the story

 

http://money.cnn.com/2004/09/12/news/fortune500/usairbank/index.htm?cnn=yes

[bUU]

Until the liquidation, at least.

[DJHere]

In November 2001, I had a cruise booked with United States Lines in Hawaii and in 2002 I had air fare with Van Guard to Miami, both company's filed bankruptcy. I notified my Visa and they were able to credit my account for

both of the purchases.

 

So it might be worth checking out...

[bUU]

I've been reading more on this bankruptcy, and found a FAQ that had some very disturbing info. I encourage folks to read Edward Hasbrouck's blog. This is what he said, in part, on USENET:

1. As discussed in my FAQ, the law imposing a (very

limited) obligation on some USA-based airlines to

transport holders of tickets on other USA-based

airlines that cease all service (for a fee, if they

fly the exact same routes, and if they have space

available after selling as many of their own tickets

as they can), is currently scheduled, after two

extensions, to expire automatically after 18 November

2004. No bill to extend it is pending in Congress.

[Sea Island Lady]

I received an email this morning from USAir. Below is just a part of the letter.

 

You should understand that US Airways is not going out of business. The Chapter11 process will allow US Airways to complete its restructuring initiatives while we continue normal day-to-day operations. There will be no changes to our flight schedule as a result of this filing. Every ticket will be accepted and honored in accordance with current US Airways policies; refunds and exchanges will be made as usual. Reciprocal agreements with other air carriers, including affiliates, Star Alliance and codeshare partners, will remain fully intact and continue without interruption.