United Capital speculation

[contrail67]

Possible aircraft announcement???...not sure what may be in the works.


NEW YORK (AP) — A JPMorgan analyst on Friday upgraded shares of United Airlines' parent UAL Corp. all the way to "Overweight" from "Underweight," suggesting investors buy up shares before an expected capital plan is announced next week.

 

[~~~^~~~]

Interesting. Jamie Baker appears to be advising that UAUA is "not dead yet." He certainly isn't writing about profits, but thinks that United can pile on some more debt, or unlock some more shareholder value.

Those are not reasons that compel me to go buy stock.

NEW YORK (MarketWatch) -- The parent company of United Airlines, UAL Corp., may be on the road to bankruptcy, but not at the accelerated pace suggested in its recent stock price, said J.P. Morgan analyst Jamie Baker on Friday. In a note to investors, Baker raised his rating on UAL to overweight from underweight. "United shares have fallen too fast and furiously, implying a higher risk of near-term bankruptcy than justified," Baker wrote. "While not for the meek, we strongly recommend purchase of shares in advance of next week's conference call, which may be accompanied by significant capital announcements." UAL doesn't appear to be at risk from Chapter 11 until 2009, and only if management ignores capital opportunities at its disposal, Baker added.

 

[Secret Squirrel]

Yea, more debt is exactly what will make United better.

 

[contrail67]

Yea, more debt is exactly what will make United better.

Just speculation and sometimes a company will aquire debt to make a profit, or increase the chance to. Kinda like a person taking out a business loan...debt...to start a Papa Johns. How terrible of an idea.

This could be a cash building plan too...probably more likely.

I guess you could call JP Morgan and the folks on Wall Street or better off United and tell them what a terrible idea this might be. Sure they will listen.

No matter how you look at it...Building Capital or cash balances is positive if it happens.

 

[~~~^~~~]

Duplicate post...

Good luck to United employees. Life with the McKinsey Consultants running the place has been tough.

 

[Colonel Savage]

Amazing the speculation a little $15 drop in oil prices will cause.

 

[amF16]

By capital opportunities, I think he is talking about raising money(capital) by selling assets, (ie frequent flyer program, int routes, training center). Not buying airplanes that will increase liabilities.

 

[D-Bo]

By capital opportunities, I think he is talking about raising money(capital) by selling assets, (ie frequent flyer program, int routes, training center).

Probably more like you hope that's what he meant.

 

[amF16]

Probably more like you hope that's what he meant.

Sorry for trying to inject some common sense into the thread. I'm sure that a company that is announcing the grounding 737s and 747s because they are losing money on those planes, is planning to spend money on new planes. So they can fly around them at a loss too.

 

[D-Bo]

Sorry for trying to inject some common sense into the thread. I'm sure that a company that is announcing the grounding 737s and 747s because they are losing money on those planes, is planning to spend money on new planes. So they can fly around them at a loss too.

Go back and read what you typed in your first reply. You said "I think he is talking about". Quote what he said that gave you the idea. Otherwise, it's only your personal opinion. Which, in that case, you should have just said "what I think".

 

[amF16]

Go back and read what you typed in your first reply. You said "I think he is talking about". Quote what he said that gave you the idea. Otherwise, it's only your personal opinion. Which, in that case, you should have just said "what I think".

"UAL doesn't appear to be at risk from Chapter 11 until 2009, and only if management ignores capital opportunities at its disposal, Baker added."

Capital opportunities....raising capital(ie cash) not capital expenditures. Why would spending money help stave off bankruptcy.

 

[frog_flyer]

Jamie Baker is probably the only analyst that has a clue. You'll notice that his estimates are usually much more pessimistic than consensus.

His reports are pretty hilarious; definitely get your hands on one if you can.
​

 

[D-Bo]

"UAL doesn't appear to be at risk from Chapter 11 until 2009, and only if management ignores capital opportunities at its disposal, Baker added."

Capital opportunities....raising capital(ie cash) not capital expenditures. Why would spending money help stave off bankruptcy.

I'm sure that why he changed his opinion of the stock to outperform. But, go back to my previous post and tell me where I said I disagreed with what you said. I was making a point that if interpret what someone is thinking, you should quote them. Otherwise it's personal opinion.

But to your point, while UAL management was in their quest to hide money, they paid down 2.5 Billion in debt. While hiding money from the employees, they Fd themselves in the end. So UAL is far from completely leveraged even though the idiots running this joint would now have to borrow against the equity created by paying down that debt, at a high percentage.

So, these MF crooks still owe me some money and I want it right now.

 

[Secret Squirrel]

Just speculation and sometimes a company will aquire debt to make a profit, or increase the chance to. Kinda like a person taking out a business loan...debt...to start a Papa Johns. How terrible of an idea.

This could be a cash building plan too...probably more likely.

I guess you could call JP Morgan and the folks on Wall Street or better off United and tell them what a terrible idea this might be. Sure they will listen.

No matter how you look at it...Building Capital or cash balances is positive if it happens.

Yea, successful companies. Not companies that are scheduled to loose $8-20 per share (about 1-3 billion dollars) this year. Their capital plan could be to cash out assets, sell off anything worth money and call it a day. In other words return capital to the share holders before there is nothing left mortgage. I do not hope this is true but be very careful. What is good for the stock holder is not always good for the employee. Good luck to all UAL employees.

 

[amF16]

Moody's cuts UAL debt ratings deeper into junk

Fri Jul 18, 2008 5:19pm EDT
NEW YORK, July 18 (Reuters) - Moody's Investors Service on Friday cut its ratings on UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz), the parent of United Airlines, saying high fuel prices and a worsening economy is likely to result in negative free cash flows in the near term.
"As non-fuel operating costs for United are somewhat higher than peers, partly due to the fleet age and the overhead from an extensive route network, when combined with the unprecedented fuel costs, negative free cash flow at the airline is likely over the near term," Moody's said in a statement.
The cumulative effect of negative cash flow and net losses over time is a worsening UAL credit profile, Moody's said.
Moody's cut UAL's corporate family rating two notches to "Caa1," seven steps below investment grade at "B2." The ratings outlook is negative, indicating the likely direction of the rating over the next 12 to 18 months.
UAL has adequate liquidity, with around $2.7 billion to $2.8 billion in cash last time it disclosed its position, and before actions to increase its liquidity, Moody's added. The airline also has a meaningful level of assets, such as aircraft, which could be used to raise additional cash, it said.
The company's ability to sustain its liquidity, however, could be pressured over the coming year due to costs from reducing its work force, Moody's added. (Reporting by Karen Brettell; editing by Gary Crosse)

 

[amF16]

Probably more like you hope that's what he meant.

UAL (UAUA: Nasdaq)
By JPMorgan ($5.07, July 18, 2008)

SHARES OF UAL (ticker: UAUA), the parent of United Airlines,] have fallen too fast and furiously, implying a higher risk of near-term bankruptcy than justified, in our view.

[We are upgrading shares to Overweight from Underweight.]

While not for the meek, we strongly recommend purchase of shares in advance of next week's conference call, which may be accompanied by significant capital announcements.

This isn't a sector call. We continue to believe a "Buy The Survivors" call is premature, given the continued war of attrition that most remain engaged in. But that shouldn't prevent us from making relative value calls.

To that end, we believe shares in United have been unfairly punished, and may potentially stand poised for a significant, near-term bounce.

We believe incremental capital raising is imperative for United. And we readily concede that in the complete absence of such efforts, United's prospects appear grim. But just how likely is that?
[uaua]

Numerous carriers have readily proven that the capital markets do in fact remain open for airlines. It is unclear why this would not similarly prove true for United, assuming management acts quickly.

Put differently, only in the utter absence of incremental capital or accompaniment of air-related terrorism can we foresee a 2008 United bankruptcy filing.

But the market apparently disagrees. United's market capitalization continues to rest some 4% below where its predecessor's sat just six-months before filing Chapter 11. We won't argue that Chapter 11 remains one of several potential outcomes in 2009 (likely toward the back-half).

But we strenuously disagree with the market having come to this conclusion with such ferocity, while failing to give United management credit for the runway that we believe remains available.

What do AirTran (AAI), [American parent] AMR (AMR), Continental (CAL), JetBlue (JBLU) and Southwest (LUV) have in common? They've all undertaken substantive capital efforts in recent months. We've already identified the need for United to do the same; the only question appears timing and magnitude.

We would be surprised (and disappointed) if United didn't announce at least $1 billion of incremental borrowing, possibly as early as Tuesday.

We're not embracing fundamentals. Sure, United entered the downturn with both lower liquidity levels (absolute and as a percent of trailing revenue) and lower margins than its legacy peers.

And we are on record with our general lack of enthusiasm for its cost control capability. This isn't a recommendation predicated on a renewed embrace of management or significantly revised fundamentals. In fact, our estimates remain untouched.

But we also point out -- to United's credit -- that it is already subject to a stiff credit-card processing holdback of 25%, whereas most others remain (for now) with zero holdbacks. For some, this may be viewed as a negative. To us, it suggests less incremental risk to United than, say, AirTran, which is poised to renegotiate its contract early next year.

 

[contrail67]

By capital opportunities, I
think he is talking about raising money(capital) by selling assets, (ie frequent flyer program, int routes, training center). Not buying airplanes that will increase liabilities.

Guess JP Morgan saw this coming.


CHICAGO, July 22 /PRNewswire-FirstCall/ -- UAL Corporation UAUA, the holding company whose primary subsidiary is United Airlines, today announced that it reached an agreement in principle with its Mileage Plus co-branded bank card partner, Chase Bank U.S.A., N.A. ("Chase"), and Paymentech, one of its credit card processors, to extend the term of their respective agreements.
As part of the transaction, United will receive a payment of $600 million from Chase, which relates to the advance purchase of frequent flyer miles and the extension of the contract. The company also expects this transaction will improve cash flow by about $200 million in the next two years.
In addition, the level of reserve or holdback that United is required to maintain under its credit card processing agreement with Chase / Paymentech L.L.C. has been reduced to $25 million. This reduction will result in the release of approximately $350 million in previously restricted cash.
As a result of its agreement with Chase, the company expects to increase its cash position by approximately $1.2 billion, including $1 billion in the short term and an additional $200 million over the next two years. Combined with the previously announced approximately $550 million raised from new transactions in the second and third quarters, the company will have increased its total cash balance by $1.7 billion and continues to have more than $3 billion in unencumbered hard assets.
About United
United Airlines UAUA operates more than 3,200* flights a day on United and United Express to more than 200 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. With key global air rights in the Asia-Pacific region, Europe and Latin America, United is one of the largest international carriers based in the United States. United also is a founding member of Star Alliance, which provides connections for our customers to 965 destinations in 162 countries worldwide. United's 55,000 employees reside in every U.S. state and in many countries around the world. News releases and other information about United can be found at the company's Web site a