UAL Liquidation?

[Indy319FA]

Not saying I believe this, but the credit markets are very tight for those companies with perfect ratings. UAL would have a hard time getting loans to get through bankruptcy so liquidation is likely unless they can find some way to get funds to survive.

Does anybody know if UAL is paying market prices for fuel? If they have hedges, what are they paying?

 

[pilotgolfer]

Does anybody know if UAL is paying market prices for fuel? If they have hedges, what are they paying?

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Everybody pays market prices for fuel. The fuel hedges are just a futures contract that offsets the price of the fuel bill (or in UAL's case causes a $900 million cash charge). Its not like the fuel guy gets out of the truck and changes the price when he drives from SWA's guppy over to United's airbus.

 

[jmreii]

Not saying I believe this, but the credit markets are very tight for those companies with perfect ratings. UAL would have a hard time getting loans to get through bankruptcy so liquidation is likely unless they can find some way to get funds to survive.

Does anybody know if UAL is paying market prices for fuel? If they have hedges, what are they paying?

Any company, aviation or not would be well advised to stay away from bankruptcy right now unless they have the funds in hand to find their way out of it.
This is one of the many reasons auto manufactures would like to stay away from bankruptcy. I ask you, are you feeling lucky? Well, are you!

 

[Indy319FA]

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Everybody pays market prices for fuel. The fuel hedges are just a futures contract that offsets the price of the fuel bill (or in UAL's case causes a $900 million cash charge). Its not like the fuel guy gets out of the truck and changes the price when he drives from SWA's guppy over to United's airbus.

I understand what hedges are. Sorry if it wasnt clear. My question was if United has hedges in place, and how much they are paying per barrel.

 

[Remington]

Around 100

 

[Remington]

If the gubm't would have let UAL and Useless air go out of business in 2002, it would be a whole differnt ballgame.

 

[whymeworry?]

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?

Stocks trader below book value all the time. Just because you can buy all the outstanding stock for less than cash on hand or book value, doesn't mean you will get access to those assets/ funds. Shareholders are paid LAST after the government and creditors. Creditors would likely shred up any remaining asset, including cash, amoung themselves leaving the holder of the $400 million in stock with nothing but worthless paper.

 

[waveflyer]

If the gubm't would have let UAL and Useless air go out of business in 2002, it would be a whole differnt ballgame.

Now this is ignorance i don't like to let slide. Look it up in Aviation Week - they were highly critical of the administration's attempt to pick winners and losers through the ATSB. And they were trying to pick UAL as a loser in part b/c of the GOP's disgust with the summer of hell. (Remember McCain's reaction?)

UAL never got an ATSB guarantee.

They applied when everyone else did- and were denied for being too weak. If you want me to list all the different airlines that did receive approval for their guarantee i will- but let's just say they include Aloha and ATA and leave it at that. I'm pretty sure even great lakes was awarded one. They applied later for a 2.2 billion loan guarantee and were denied for being too strong. At what point they crossed the weak/strong line is a mystery. Then announcing they would have to cancel the pensions if they didn't get the next guarantee- they filed for a 1.9B guarantee. (Now remember- this is not a loan- it's simply a guarantee from the U.S. Gov't so UAL could receive affordable interest rates. (As the housing bubble is teaching us through ARM's the interest rate really is everything.))

So here was Bush's choice. Grant the 1.9B guarantee and worst case scenario- taxpayers would be on the hook for it. But you've already stated UAL is too strong. So that possibility especially with low interest rates is remote in our own estimation. Or deny the loan, at which point UAL will cancel the pensions, and the U.S. govt/taxpayers/US=you and I- would be on the hook to the PBGC for over $5Billion.

What did Bush do?

Denied.

We're all that much broker. Lose. Lose. Lose. Nobody won- unless your goal is to gut the unions. Then it was simply a price to pay. That'll show those united pilots what happens if they mess with our transportation system.

USAir's another story.

 

[contrail67]

If the gubm't would have let UAL and Useless air go out of business in 2002, it would be a whole differnt ballgame.

More ignorance on FI.com

 

[Kugelblitz]

Well, the monsters have already taken the defined benefits and fed them to the CEO's thereof...so who are the real monsters???

Agreed. I just don't buy the argument that someone "can't" go out of business, unless the employees themselves are the top 1/10 of 1% of our society- like the executives that received the 1.5 trillion dollar no accountability payday from our government. Now of course if you are a company with unions, well that is a different story....we need accountability now.