Delta and United news

[Erndogg]

LATEST NEWS
Pacific Business News (Honolulu) - 6:22 PM HST Monday
DAL treasurer flies; UAL borrow tries

[font=Times New Roman,Times,Serif]Musical chairs continued Monday in the executive suites of Delta Air Lines, while United Airlines unexpectedly announced it needs to borrow more money.

The developments at the second and third largest airlines show continuing financial challenges even though both are flying fuller planes than ever in the midst of what is normally the most profitable part of the season.

Delta (NYSE: DAL) confirmed Monday the departure of Treasurer Todd Helvie. Delta has seen a dozen top managers leave over the past year including several chief financial officers. One of them, Paul Jacobsen, who had been assistant treasurer before leaving to work for the bankrupt energy company Mirant Corp., is returning to be treasurer, Delta said. Last month Delta CFO Michael Palumbo left and was replaced by rehiring Ed Bastian, who had earlier left his own post as comptroller.

Delta is trying to avoid filing for protection from creditors under Chapter 11 of federal bankruptcy law, but CEO Gerard Grinstein says it's not easy.

United Airlines, which has been in Chapter 11 since December 2002 and keeps pushing back the date for filing a reorganization plan, said Monday it needs to borrow another $40 million in debtor-in-possession financing to keep 14 jets from being repossessed.


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© 2005 American City Business Journals Inc.

 

[Whale Rider]

Why don't they just go ahead and ask to be subsidized to stay in business instead of borrow, borrow, borrow! There's going to be a point where they won't pay any of these loans back anyway. Oil is at 63+ dollars a barrel.

 

[On Your Six]

Sorry to say it, but I think Chapter 11 is inevitable for DAL. They might as well take advantage of the bankruptcy laws before the change in October. Why take your chances with the new rules? DAL needs to restructure its debt and get more favorable terms on aircraft (or cut aircraft) while it still can under the existing Chap. 11 system. That probably means more wage reductions for everyone too. Maybe Mesa will buy ASA/Comair in return for some cash - Ornstein is apparently looking. Sad but true....

 

[snow-back]

Six,

Sorry to say I think you're right. I don't think the NWAC mechs will even get the chance to strike, and DAL will be in bankruptcy shortly after NWAC declares BK. I know GL is an optimist (I appreciate that), but he's one of the only optimists left. I for one am hunkering down.

A little off topic and this is purely speculation on my part, but I think you're also right about Comair and/or ASA. We just signed a deal with Mesa and I think we'll sell all or part of our wholly owned connections to Mesa in exchange for needed cash and an expanded long term, cheap connection agreement. I think there's also a chance we'll fragment Song into it's own airline.

 

[Buckaroo]

Six,

Sorry to say I think you're right. I don't think the NWAC mechs will even get the chance to strike, and DAL will be in bankruptcy shortly after NWAC declares BK. I know GL is an optimist (I appreciate that), but he's one of the only optimists left. I for one am hunkering down.

A little off topic and this is purely speculation on my part, but I think you're also right about Comair and/or ASA. We just signed a deal with Mesa and I think we'll sell all or part of our wholly owned connections to Mesa in exchange for needed cash and an expanded long term, cheap connection agreement. I think there's also a chance we'll fragment Song into it's own airline.

If and when you guys file CH11, do you really think that you have a snowballs chance in hell of emerging?

Not a chance!! This pig is toast!!

 

[Big Beer Belly]

United's "plan" needs translation
By Al Lewis
Denver Post Business Columnist


Nobody at United Airlines uses the L-word: liquidation.

Not the top executives, who get paid to navigate the carrier through
the perils of Chapter 11 bankruptcy.

Not the creditors, who know there are already plenty of used jets
mothballed in the Mojave Desert.

Not the employees, who've made enormous sacrifices to keep their jobs
and their company intact.

Not municipal or airport officials in the cities United serves.

Not even the customers, who would lose their long-saved frequent-flier
miles.

"They don't say 'liquidation' for the same reason you and I don't say,
'suicide,"' Evergreen aviation consultant Mike Boyd said. "It would be a
bloodbath for creditors and a disaster for the employees and the consumers.
It would be the worst thing that could happen."

"But somebody has to say it," said Anthony Sabino, a business law
professor at St. John's University in New York. "That's a cold-hearted
reality that I think people may have to face up to."

United is in its third year of bankruptcy. Earlier this week, the
airline said it may not be able to emerge from bankruptcy until next year.

The airline also announced another delay in filing its "disclosure
statement" and "plan of reorganization" - two documents that would explain
how United plans to be profitable again.

United blamed a 13-member creditors committee for the delay. It said
the committee, which represents hundreds of creditors, simply needed more
time.

"Both parties agree that this approach and timing can help facilitate
an even smoother exit process," the airline said in a news release.

Nothing at United Airlines can be accurately called smooth except the
talk.

"United didn't do its homework," Sabino said. "Part of this process
involves getting most of the creditors on board. United didn't do that."

So allow me to translate United's statement: Our creditors don't
understand our plan to get out of bankruptcy because we don't really have
one. We believe we can malinger in bankruptcy court for perpetuity. If we
said in 2003 that we'd be out in 2004, we can say in 2005 that we'll be out
in 2006. And in 2007 we can come up with another story about an even
smoother exit process.

"This thing has just been a giant joy ride for consultants, analysts
and lawyers," Boyd said. "The people at the top don't have the ability to
put a plan together to get out of bankruptcy."

He predicts creditors will toss United's management before they let
the airline crash into




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liquidation.
Of course, first the bankruptcy court will tire of United's attempts
to reorganize its debts, and it will allow a creditors group to do it.
Perhaps the time for this decision is coming soon.

United hasn't earned a nickel in five years. It has lost more than $7
billion since December 2002, when it filed Chapter 11. United reported
losses of more than $1.4 billion for the second quarter of this year. Almost
all of the losses were due to cost-cutting efforts.

United emphasized operating earnings of $48 million for the second
quarter. That's a spark of hope, but what I hear United saying is: We would
be profitable if it wasn't for all those pesky expenses.

On the plus side, United CEO Glenn Tilton has led two rounds of wage
and benefit cuts and ditched employee pension plans, if you can call that a
plus.

Overall, Tilton has cut more than $7 billion in operating expenses.
But no matter how much he cuts, oil prices keep rising.

United had pegged its hopes on $50-a- barrel oil. Now oil is at record
highs of nearly $62. Meanwhile, competition from discount airlines continues
to dampen United's ability to raise ticket prices.

Aside from taking the hatchet to its employees and starting a discount
carrier called Ted, Tilton and his team have done little to reinvent the
airline.

They need a fluke to get out of bankruptcy. Either ticket prices have
to rise, oil prices have to fall or some other airline needs to go out of
business.

Nobody wants to say the L-word. It's too horrible to contemplate. But
you can't count on a fluke. And, in the meantime, nobody has seen a viable
plan for this airline.

Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Al at
denverpostbloghouse.com/lewis, 303-820-1967, or [email protected].

 

[snow-back]

If and when you guys file CH11, do you really think that you have a snowballs chance in hell of emerging?

Not a chance!! This pig is toast!!

Hey Mickey Mouse, why does that sound so malicious?

When we file, I suppose we have about as much of a chance as United and USAirways. Maybe Mesa or Air China will buy us. Like I said, I'm hunkering down, which means saving money, paying off debt and looking for jobs. I can sleep easily at night knowing I can keep my family, house, BMW and SUV even if the worst happens.

"this pig is toast"??? Is that a mixed metaphor or something?

 

[Buckaroo]

"this pig is toast"??? Is that a mixed metaphor or something?

No, it's the definition of Delta Air Lines

 

[snow-back]

No, it's the definition of Delta Air Lines

Ouch. Your stinging rhetoric has taken me aback! Did you hone your debate skills by watching Rugrats.

 

[stillflyn]

United's "plan" needs translation
By Al Lewis
Denver Post Business Columnist


Nobody at United Airlines uses the L-word: liquidation.

Not the top executives, who get paid to navigate the carrier through
the perils of Chapter 11 bankruptcy.

Not the creditors, who know there are already plenty of used jets
mothballed in the Mojave Desert.

Not the employees, who've made enormous sacrifices to keep their jobs
and their company intact.

Not municipal or airport officials in the cities United serves.

Not even the customers, who would lose their long-saved frequent-flier
miles.

"They don't say 'liquidation' for the same reason you and I don't say,
'suicide,"' Evergreen aviation consultant Mike Boyd said. "It would be a
bloodbath for creditors and a disaster for the employees and the consumers.
It would be the worst thing that could happen."

"But somebody has to say it," said Anthony Sabino, a business law
professor at St. John's University in New York. "That's a cold-hearted
reality that I think people may have to face up to."

United is in its third year of bankruptcy. Earlier this week, the
airline said it may not be able to emerge from bankruptcy until next year.

The airline also announced another delay in filing its "disclosure
statement" and "plan of reorganization" - two documents that would explain
how United plans to be profitable again.

United blamed a 13-member creditors committee for the delay. It said
the committee, which represents hundreds of creditors, simply needed more
time.

"Both parties agree that this approach and timing can help facilitate
an even smoother exit process," the airline said in a news release.

Nothing at United Airlines can be accurately called smooth except the
talk.

"United didn't do its homework," Sabino said. "Part of this process
involves getting most of the creditors on board. United didn't do that."

So allow me to translate United's statement: Our creditors don't
understand our plan to get out of bankruptcy because we don't really have
one. We believe we can malinger in bankruptcy court for perpetuity. If we
said in 2003 that we'd be out in 2004, we can say in 2005 that we'll be out
in 2006. And in 2007 we can come up with another story about an even
smoother exit process.

"This thing has just been a giant joy ride for consultants, analysts
and lawyers," Boyd said. "The people at the top don't have the ability to
put a plan together to get out of bankruptcy."

He predicts creditors will toss United's management before they let
the airline crash into




--------------------------------------------------------------
Advertisement


--------------------------------------------------------------




liquidation.
Of course, first the bankruptcy court will tire of United's attempts
to reorganize its debts, and it will allow a creditors group to do it.
Perhaps the time for this decision is coming soon.

United hasn't earned a nickel in five years. It has lost more than $7
billion since December 2002, when it filed Chapter 11. United reported
losses of more than $1.4 billion for the second quarter of this year. Almost
all of the losses were due to cost-cutting efforts.

United emphasized operating earnings of $48 million for the second
quarter. That's a spark of hope, but what I hear United saying is: We would
be profitable if it wasn't for all those pesky expenses.

On the plus side, United CEO Glenn Tilton has led two rounds of wage
and benefit cuts and ditched employee pension plans, if you can call that a
plus.

Overall, Tilton has cut more than $7 billion in operating expenses.
But no matter how much he cuts, oil prices keep rising.

United had pegged its hopes on $50-a- barrel oil. Now oil is at record
highs of nearly $62. Meanwhile, competition from discount airlines continues
to dampen United's ability to raise ticket prices.

Aside from taking the hatchet to its employees and starting a discount
carrier called Ted, Tilton and his team have done little to reinvent the
airline.

They need a fluke to get out of bankruptcy. Either ticket prices have
to rise, oil prices have to fall or some other airline needs to go out of
business.

Nobody wants to say the L-word. It's too horrible to contemplate. But
you can't count on a fluke. And, in the meantime, nobody has seen a viable
plan for this airline.

Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Al at
denverpostbloghouse.com/lewis, 303-820-1967, or [email protected].

United recovery plan

Note: The following is a letter to the editor published in today's Denver Post in reaction to a column written by Al Lewis, which appeared in Friday's editions. The letter was written by Jake Brace, Chief Financial Officer of United Airlines.

Al Lewis shows a fundamental lack of knowledge of United Airlines' very real progress in restructuring, the U.S. bankruptcy code and the airline industry in general. Criticizing from the sidelines without understanding or accountability is easy. It is also irresponsible and does a disservice to the many United employees in Denver and throughout the organization who have worked so hard to make United a vastly improved company since we entered bankruptcy.

United was ready to file our Plan of Reorganization on Tuesday of last week. We made the decision, however, to temporarily hold that filing at the request of our Creditors' Committee. This is exactly the kind of collaborative approach that we have pursued throughout our restructuring. Lewis' attempt to give a negative spin to our efforts to work closely with a key stakeholder is misleading to your readers and out of touch with the underlying facts.

Lewis' bluster about a possible liquidation is pure sensationalism. The U.S. needs strong network carriers able to compete both domestically and overseas. The work the employees of United have done to focus on our customers, improve operational performance, reduce costs and improve revenue position United to be one of those carriers. Lewis' contention that there has been little reinvention of United is contrary to much of the reporting that has appeared in The Denver Post.

United will exit bankruptcy and will do so as a dramatically improved, competitive company. We will, however, do that on a schedule that meets the needs of the company and our stakeholders, not those of an ill-informed columnist.