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Attn. United Haters

furlough-boy

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Looks like your wet dreams of a UAL failure will not be fulfilled.

AP
United Gets $3 Billion in Exit Financing
Thursday August 25, 6:47 pm ET
By Dave Carpenter, AP Business Writer
United Airlines' Gets $3 Billion in Exit Financing Offers

CHICAGO (AP) -- United Airlines' parent company said Thursday it has secured new commitments from banks for up to $3 billion in debt financing that should enable it to emerge from Chapter 11 bankruptcy by late 2005 or early 2006.
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While the financing is not yet final, UAL Corp. hailed the revised proposals as a strong endorsement of the new business plan it formulated this summer even as the steep increase in fuel prices continues to squeeze carriers' bottom lines.

The commitments from the four financiers -- Citibank, JPMorgan Chase & Co., Deutsche Bank and GE Commercial Finance -- were disclosed as the Elk Grove Village, Ill.-based airline updated its status in a filing with federal bankruptcy court.

The latest evidence of the industry's financial hemorrhaging came in a separate announcement Thursday when United said it registered a $274 million net loss for July. That pushed its losses to $2.8 billion this year and more than $7 billion since it entered bankruptcy in December 2002.

Chief Financial Officer Jake Brace said the fact the lenders are willing to provide more than the $2.5 billion United sought testifies to the resilience of its new business plan even amid daunting conditions for airlines. He said United is continuing to negotiate the cost and terms of the financing, but has fully underwritten offers it could put into place now if it so chose.

United has not yet publicly disclosed its new business plan or laid out its strategy for returning to profitability for the first time since 2000. Brace said only that it would be filed in the "not too distant future" with its plan of reorganization.

"This validates our business plan and demonstrates that despite the fact that the industry environment has gotten tougher, the United business plan can attract even more all-debt exit financing than it could last winter," Brace said in an interview.

Despite its long streak of money-losing, airline analyst Mike Mooney said United remains a worthy investment risk for the banks because of several strengths: its international route network, strong U.S. hub structure, long-term labor deals in place and the shedding of its multibillion-dollar pension obligations.

"It's a tough business right now, and certainly one can critique the overall success of United's management team -- the amount of time they've spent in bankruptcy," said Mooney of the Boyd Group in Evergreen, Colo. "But United has a beautiful franchise. The banks see the opportunity to step in on that, which puts them in a very preferred position assuming there is a successful emergence."

The banks had tentatively agreed in January to provide up to $2.5 billion in debt financing, but that was before soaring fuel prices forced United to devise a new business plan. Oil prices, now topping $67 a barrel, have risen more than 50 percent this year.

The company attributed the latest monthly loss to $350 million in reorganization expenses -- mostly from renegotiating leases on some of its aircraft. It said its monthly operating profit more than doubled to $113 million from $51 million a year earlier, despite fuel costs that increased by $127 million. Passenger unit revenue rose 9 percent over July 2004.

CEO Glenn Tilton told employees that the improved operating earnings, coupled with the financing commitments, "show just how far we have come at United."

Besides nailing down the financing, United still must resolve the status of 14 airplane leases after settling lengthy disputes over the leases on another 105 jets. It also is seeking to extend by two months, until Nov. 1, management's exclusive right to file a reorganization plan for the company. Both issues are expected to be addressed at United's monthly bankruptcy court hearing Friday.
 

crashpad

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It's clear UAL is carefully planning to emerge from CH.11 as a tactical competitor in the airline industry. Streamlining, paycuts, truely friendly skies and a diehard desire to survive are what's setting apart the new from the old UAL.
 
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FlyBoeingJets

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crashpad said:
It's clear UAL is carefully planning to emerge from CH.11 as a tactical competitor in the airline industry...

What is a "tactical" competitor? Are there guns involved?
 

F9 Driver

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What's the old saying?

"When you owe the bank $100,000 the bank owns you.
When you owe the bank $100,000,000 you own the bank."

UAL owns a few banks by now.

How long after ch11 and the GAAP let the books settle down before the (mis) management team burns thru 3B+ ?

If only Bethune took over....

ps. I don't like the way UAL does business much, but I don't want them - or their jobs - to go away.
 

Redmeat

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F9 Driver said:
How long after ch11 and the GAAP let the books settle down before the (mis) management team burns thru 3B+ ?

That was my first thought. So, they got more money. What is the point? That is what UAL is good at, smoking thru tons of cash with little to show for it.
 

radarlove

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Redmeat said:
That was my first thought. So, they got more money. What is the point? That is what UAL is good at, smoking thru tons of cash with little to show for it.
\

Not so fast there. UAL just reported an operating profit (operating results exclude all non-cash items, so it's the most important measure) of $114 million.

They're doing fine, cash-wise actually.

It looks like UAL will actually make it through.
 

Mugs

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At the very least we will get to see the unlimited jumpseat program come to life next month. Looking forward to seeing all of you, even the bashers.
 

Andy

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crashpad said:
I think it's unlikely we'll see significant re-hiring for many, many years.

Are you talking recalls or hiring off the street? TK has been building a pool of TIs (Training Instructors; pilots with a seniority number who leave the line to teach at TK in Denver). I anticipate a lot of training to occur once UAL emerges from chap 11. Also keep in mind that UAL has somewhere on the order of 300 retirements in the next year; since the line pilots are already stretched thin, the retirements will have to be replaced with furloughees.
There is no more downguaging to an RJ-50 or 70 from mainline equipment. It looks like all of the RJ-70s will be upguages from the RJ-50. I think that UAL has filled their optimum percentage of express aircraft/mainline fleet. I do not anticipate the RJ-70 to fill the 737's flying.
While it is currently not a pretty picture at UAL, I think that UAL has seen the worst of it.
The current recall ratio is approx one bypass for one accepting; I would expect the bypass rates to increase further down the seniority list. I would be surprised if it took longer than spring 2007 to burn through the entire furlough list. After the furlough list is burned through, it goes back up in reverse seniority for all pilots who elected to take bypasses.
 

skykid

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How long after ch11 and the GAAP let the books settle down before the (mis) management team burns thru 3B+ ?

I think anyone with the ability to think critically and objectively, and with a basic understanding of corporate finance, can see there are 3 "legacy" airlines that are going to be able to make money even with jet fuel at the current price. Two are doing it right now, and one more will be in 4-6 months. Its all right there in the numbers.
 

AMRCostUnit

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F9 Driver said:
How long after ch11 and the GAAP let the books settle down before the (mis) management team burns thru 3B+ ?


If UAL's international routes had to be sold are they worth more than $3B? That could be the reason the loans being made. I can't even imagine what the terms and condtions are going to be...

Unit
 
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Why does Yo-nited need $3B in exit financing???

I thought retarTED was supposed to save them......
 

JayhawkDude

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3 Legacies

skykid said:
I think anyone with the ability to think critically and objectively, and with a basic understanding of corporate finance, can see there are 3 "legacy" airlines that are going to be able to make money even with jet fuel at the current price. Two are doing it right now, and one more will be in 4-6 months. Its all right there in the numbers.

Ok, I'll bite- which three?

And why?
 

race#53

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JayhawkDude said:
Ok, I'll bite- which three?

And why?


United, US Airways, Delta

All will be rehabilitated in chapt 11.

The rest should have followed them but their share price
and shareholders prevented it.
 

G4G5

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UAL May Get $3 Billion in Loans As It Seeks to Leave Bankruptcy

The Wall Street Journal, August 26, 2005

United Airlines parent UALCorp., shopping for a financing package that would allow it to step out of bankruptcy-court protection late this year or in early 2006, said the four lending institutions that earlier expressed interest have submitted updated proposals -- some to provide as much as $3 billion in debt-based financing, $500 million more than the company was seeking.

Glenn Tilton, UAL's chief executive, said in a message to employees that based on a review of the carrier's business plan, "these global financial institutions see opportunity in United, even in the midst of the...brutally competitive industry environment."

While he didn't name them, United has said the four potential lenders competing for its business are Citigroup Inc., J.P. Morgan Chase & Co., General Electric Co. and Deutsche Bank AG.

The funding would allow UAL to repay a $1.3 billion interim loan it has been relying on in its 33-month stay in Chapter 11. The company said it hopes to file its plan of reorganization and disclosure statement with the U.S. Bankruptcy Court in Chicago soon, possibly as early as next week.

Those documents will detail how much the various classes of creditors might be expected to recover when the company recapitalizes.

Once the disclosure statement explaining the plan of reorganization is approved by the judge, the creditors get to vote in a process that can take several months.

The Elk Grove Township, Ill., company had intended to make those filings with the court in early August, but its creditors committee asked for more time.

Since then, UAL has concluded important negotiations with lessors that own more than 100 jetliners it operates and has won court decisions that reduced some large municipal-bond liabilities, Mr. Tilton said.

UAL yesterday also reported a net loss of $274 million for July, a result that included $350 million of mostly noncash reorganization expenses relating to renegotiated aircraft financings.

It said it will continue to record large noncash-reorganization items in the third quarter, which is typical for a company in the final stages of Chapter 11

It's not $3 billion, it's actually $1.7 billion once they pay back the $1.3 billion. One can only hope that their exit plan revolves around a way to remain profitable in the $65 a barrel era. Because in a $65 and above world $1.7 won't go that far.

If not, and they have somehow decided that their exit plan revloves around profitability at $45-50 a barrel. It might explain why all of a sudden 4 major banks have decided to come forward.

Let's use some common sence her folks. Why all of a sudden would Citibank get involved with UAL? They underwrite AMR's FF program and have been in bed with AMR for years?

Because the prosperity of UAL is good for AMR? Or could it be that they stand to make some money on UAL? Now if you were lending $3 billion, you need to ask the question is UAL worth more seperated or as a whole?
 
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skykid

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G4G5,

I'd think you would just quit opining on anything relating to this subject. You are the guy who said the PBGC would liquidate United, and later that Congress would undo the pension termination.

Ok, I'll bite- which three?

And why?

United, US Airways, Delta

All will be rehabilitated in chapt 11.

The rest should have followed them but their share price
and shareholders prevented it.

No. AMR, CAL, and UAL. If you analyze the numbers from the last quarter you can see these airlines can deal with fuel costs even at the level there are at right now. My opinion is NWA is within a year or two of turning it around, even with the current labor problems. Unfortunately Delta doesn't have the route structure, in my opinion, to survive on its own out of Ch11, and way too much debt.
 

furlough-boy

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G4G5 said:
The funding would allow UAL to repay a $1.3 billion interim loan it has been relying on in its 33-month stay in Chapter 11. It's not $3 billion, it's actually $1.7 billion once they pay back the $1.3 billion. One can only hope that their exit plan revolves around a way to remain profitable in the $65 a barrel era. Because in a $65 and above world $1.7 won't go that far.


Math in public can be dangerous.:) Don't forget UAL currently has 2.8 billion in cash. So 2.8+1.7= 4.5 billion to come out with.
 

G4G5

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What's the quote from? Their not mine.

Let's see, Citibank is financially tied to AMR with the FF program and the CItibank card.

Last month UAL did not have an exit plan, this month they do? And all of a sudden 4 large banks come running to lend billions? Things that make you go hummmm.

Now we have $65+ a barrel oil prices, winter around the corner, the traditional low point for airline profits around the corner, 2 out of UAL's 4 largest competitors heading into CH 11 and Citibank all of a sudden wants to go to invest in UAL?

Can you say quick buck? Or do you actualy think that they are in it for the long haul.
 

G4G5

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furlough-boy said:
Math in public can be dangerous.:) Don't forget UAL currently has 2.8 billion in cash. So 2.8+1.7= 4.5 billion to come out with.

The title of the WSJ article is :
UAL May Get $3 Billion in Loans As It Seeks to Leave Bankruptcy.

The article states:
The funding would allow UAL to repay a $1.3 billion

The last time I check $3 billion - $1.3 billion = $1.7 Billion. Were you home skooled? The article doesn't mention a single thing about $ 2.8 billion.
 
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