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UAL Liquidation?

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I heard rumors that UAL was having a lot of trouble with liquidity. With the recent news that LUV had to borrow at a 10.5% interest rate (yowza!) with stellar credit and a strong balance sheet, I wonder if the capital markets are simply closed to UAL.

A year ago, I would have thought that a UAL liquidation was a fantasy, but I also would have thought that LUV borrowing above 10% was a fantasy too.

Less than a year ago, UAL's market cap was some $400 million, yet the unrestricted cash in the band was $1.8 billion. So you could buy the whole airline, throw away all the physical assets and still have $1.2 billion profit.

Of course, you really couldn't, that ignores the debt, but don't you think UAL should trade for at least the value of the cash in its checking account?
 
Highly doubt it. there would be rumors of a Ch 11 filing first, and while UAL is cutting a lot more than others, I don't think they're that close to the edge.

A company can file for chapter 11 but it's not automatically granted. UAL would have to have the funds to support the chapter 11 plan. If not enough funds from would be investers, then move on to chapter 7 (liquidation).

Many people think that chapter 11 is an automatic give me, and that's not true.

I've heard the same rumor a few months back, predicting early in 2009 UAL is doomed. Seem's like airlines can always find investors no matter how bad it looks or scarce the funding is. Time will tell.
 
I know that other airlines (not going to name names) in their independent analysis of UAUA have predicted that they will be in CH 7 before too long. I do not know where they get that from, but that is first hand info.
 
Somehow I can't see our Government bailing out the automakers and a few months later watching UAL shutdown.
That said I could see them parted out ala PanAm.
 
Somehow I can't see our Government bailing out the automakers and a few months later watching UAL shutdown.
That said I could see them parted out ala PanAm.


I agree. There's a lot of things attractive that UAL is sitting on (Pacific routes, slots, etc)...the issue will be whether parting with those leaves an operation that can still survive. Let's hope for the employee's sake that they hold on.

stlflyguy
 
Cutting service completely to MIA and maybe a few other cities. Lots going to the RJ's

And I see that as stupid as TWAs sale of the London Routes, PAAs sale of their Pacific Ops...

And now that I think of it, neither one of those operations is around either. Hmm...
 

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