United Airlines' stock dives another 21 percent
By Dave Carpenter
ASSOCIATED PRESS
Saturday, August 3, 2002
CHICAGO -- United Airlines' long-descending stock plunged another 21 percent Friday after the airline confirmed that it had hired bankruptcy attorneys months ago.
UAL Corp.'s stock fell $1.07 to $4.15, down from $35 a year ago.
United spokesman Joe Hopkins confirmed that the airline had hired bankruptcy lawyers, although he said the hiring was shortly after last year's terrorist attacks -- not earlier this year, as the Business Week report that prompted Friday's stock dive said.
Hopkins declined to comment directly on the prospects of bankruptcy, although he said the bankruptcy firm, which he would not identify, has been retained.
"We're continuing to try to get our labor costs down as part of our recovery, and we're continuing to pursue our loan guarantee through the Air Transport Stabilization Board," he said.
Last month, United reported a second-quarter loss of $341 million, attributing it to widespread fare reductions by discount air carriers and limited spending by business travelers. It warned that it would suffer losses for the remainder of the year, after losing an industry-record $2.1 billion in 2001.
Among its concerns is paying a $900 million debt due in the fourth quarter.
The Elk Grove Village, Ill.-based airline asked the federal government in June to back 80 percent of a $2 billion loan. The government made $10 billion in loan guarantees available to airlines to help carriers in the wake of the terrorist attacks.
Fears of bankruptcy first surfaced last October, when then-CEO James Goodwin warned that United could go out of business this year if it could not stem huge losses that worsened dramatically after Sept. 11. Goodwin resigned in the resulting furor, replaced on an interim basis by UAL board member Jack Creighton.
United has since shored up its cash position by selling planes and making other cutbacks. Excluding $273 million in restricted cash, it reported a hefty cash balance of $2.4 billion as of June 30.
But the airline has said it is virtually shut out of borrowing markets, hurt by its weak standing and the sputtering economy.
Morningstar analyst Jonathan Schrader said bankruptcy is "certainly a possibility" for United, although not necessarily imminent.
"Eventually, unless they make significant changes to their operating structure, they're going to fold," he said. "Their balance sheet is increasingly weak, and they can't take continuing losses by lowering fares."
Anyone have any opinions about the future of UAL? If they go under what happens to companies like ACA?
By Dave Carpenter
ASSOCIATED PRESS
Saturday, August 3, 2002
CHICAGO -- United Airlines' long-descending stock plunged another 21 percent Friday after the airline confirmed that it had hired bankruptcy attorneys months ago.
UAL Corp.'s stock fell $1.07 to $4.15, down from $35 a year ago.
United spokesman Joe Hopkins confirmed that the airline had hired bankruptcy lawyers, although he said the hiring was shortly after last year's terrorist attacks -- not earlier this year, as the Business Week report that prompted Friday's stock dive said.
Hopkins declined to comment directly on the prospects of bankruptcy, although he said the bankruptcy firm, which he would not identify, has been retained.
"We're continuing to try to get our labor costs down as part of our recovery, and we're continuing to pursue our loan guarantee through the Air Transport Stabilization Board," he said.
Last month, United reported a second-quarter loss of $341 million, attributing it to widespread fare reductions by discount air carriers and limited spending by business travelers. It warned that it would suffer losses for the remainder of the year, after losing an industry-record $2.1 billion in 2001.
Among its concerns is paying a $900 million debt due in the fourth quarter.
The Elk Grove Village, Ill.-based airline asked the federal government in June to back 80 percent of a $2 billion loan. The government made $10 billion in loan guarantees available to airlines to help carriers in the wake of the terrorist attacks.
Fears of bankruptcy first surfaced last October, when then-CEO James Goodwin warned that United could go out of business this year if it could not stem huge losses that worsened dramatically after Sept. 11. Goodwin resigned in the resulting furor, replaced on an interim basis by UAL board member Jack Creighton.
United has since shored up its cash position by selling planes and making other cutbacks. Excluding $273 million in restricted cash, it reported a hefty cash balance of $2.4 billion as of June 30.
But the airline has said it is virtually shut out of borrowing markets, hurt by its weak standing and the sputtering economy.
Morningstar analyst Jonathan Schrader said bankruptcy is "certainly a possibility" for United, although not necessarily imminent.
"Eventually, unless they make significant changes to their operating structure, they're going to fold," he said. "Their balance sheet is increasingly weak, and they can't take continuing losses by lowering fares."
Anyone have any opinions about the future of UAL? If they go under what happens to companies like ACA?
