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Attn. United Haters

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furlough-boy

Well-known member
Joined
Mar 19, 2002
Posts
158
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.
 
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.
 
Last edited:
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?
 
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.
 
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.
 
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.
 
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.
 
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.
 

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