Looks like UAL Ain't gettin the Loan

[TrimixDeepDiver]

Aid for UAL won't fly?
Senator says carrier can't meet criteria for loan guarantee

By John Hughes, Bloomberg News
May 19, 2004

U.S. courts probably would block a federal loan guarantee for United Airlines because the carrier is ineligible for the assistance, said Republican Sen. Peter Fitzgerald of Illinois, the carrier's home state.

Competitors of UAL Corp.'s United would file a lawsuit if a government board backs a $1.6 billion loan guarantee for the Chicago-based airline, because the law that created the aid program says carriers may be compensated only for losses related to the Sept. 11, 2001, attacks, Fitzgerald said in an interview.

"I can't conceive of any airline making a persuasive demonstration that losses it is sustaining in 2004 are the result of those terrorist acts of 2001," Fitzgerald said. "It's just not believable.

Read it here

 

[On Your Six]

Oooh crap! On top of that say thanks to the Saudis for selling us out at the gas pump. How many more negative things can this company sustain?

 

[DrvA320]

>>"I can't conceive of any airline making a persuasive demonstration that losses it is sustaining in 2004 are the result of those terrorist acts of 2001," Fitzgerald said. "It's just not believable.<<

How lame. Just goes to show you don't require brains to be a politician.

United has never made an argument that its current shortfalls are the result of 9-11. I believe however that United would claim that 9-11 did help push it into CH11.

A valid reason to request (and receive) a loan "gaurantee" IMHO.

Obviously I am not a UAL hater like many others on this board!

 

[Extra300S]

Here is the rest of the story. Seems like Frontier is trying to put up a protest along with SURPRISE! SURPRISE! Airtran....





A United spokeswoman said Fitzgerald's comments are at odds with all other Illinois representatives, who support the Dec. 18 application to help the airline raise $2 billion to exit the industry's largest bankruptcy. The company, Denver International Airport's dominant airline, sought protection from creditors in December 2002 after the Air Transportation Stabilization Board rejected an application for a guarantee.

Fitzgerald, 43, who will not seek a second Senate term this fall, said he had refrained from lobbying the board on any United application and now might urge the panel to reject the request, citing the legal merits.

"If that board is actually considering doing this at a late date, it raises all sorts of questions because the board doesn't appear to have authority to compensate carriers just because they are unprofitable," Fitzgerald said.

The Air Transportation Stabilization Board is "evaluating the United application on its merits based on the statutory criteria," spokeswoman Anne Womack Kolton said.

United's application has won broad support from both political parties, said Jean Medina, a United spokeswoman.

"His views run counter to the rest of the Illinois delegation to the U.S. Congress," she said of Fitzgerald.

"We believe we meet the criteria, have a compelling application and should be approved," Medina said.

United rivals have said the carrier will be unable to meet the board's criteria.

United's financial losses resulted from decisions by the carrier, including creation of low-fare carrier Ted, repainting aircraft, buying new uniforms and paying higher fuel and security costs, said Ed Faberman, president of the Air Carrier Association trade group, whose members include Denver-based Frontier Airlines, Spirit Airlines and AirTran Airways.

"We've raised some questions to the board as to whether this is from 9-11," Faberman said. The terrorist attack on New York and Washington "was almost three years ago, and in the interim they are spending all kinds of money."

Faberman said he doesn't envision filing a lawsuit if the board approves United's request, citing the challenge of overturning an agency decision.

Tim Wagner, a spokesman for American Airlines, said, "We have no plans to sue anybody over the ATSB's decision, whichever way it goes."

Gordon Bethune, chief executive of Continental Airlines, said at the Society of American Business Editors and Writers annual meeting May 3 that United's application should be granted if the board thinks the carrier meets all the criteria.

He added: "It's a pretty tough criteria to meet three years later."

 

[bigred]

This article is mainly about one senator's "opinion." Who knows what the ATSB will actually do.

 

[House_X]

Here is the rest of the story. Seems like Frontier is trying to put up a protest along with SURPRISE! SURPRISE! Airtran....

You left out Independance Air, we would like to sign up for the protest as well...

 

[eaglefly]

The "ATSB" (Airline Transportation STABILIZATION Board) was created to assist airlines as a result of the Sept. 11 attacks.

Any damage from 9/11 is not now a factor in the airline industry.

Load factors are as high as ever, i.e. PEOPLE ARE TRAVELING.

UAL's primary problem is BAD MANAGEMENT combined with new economic reality.

The business traveler that previously accepted being overcharged is not now or ever going to pay that price anymore and as a result, yield is down.

Way down.

Whta is happening in the industry now is basically "Walmart-ization".

For the most part, people value PRICE more than any other factor, be it stereo equipment, beer, furniture or transportation.

Businesses are DEMANDING their people be VERY price concious when selecting air travel. Leisure travelers would rather get cheap tickets (with little "frills") and spend the money they saved WHEN they get to their desired destination NOT getting there.

IF UAL were to get this "loan" and default it would be you and I (the taxpayer) who would pay for it.

To give UAL a loan at this point is CORPORATE WELFARE subsidized by the TAXPAYERS.

That is NOT what the ATSB was established for.

Either UAL survives in the free market on its own or it does not.

The taxpayers should no longer bear the burden and bail-out INCOMPETENT CORPORATE MANAGEMENTS whether it is airline, computers or "widgets".

He is saying this because he has more inside knowledge of reality than us pilots.

....and that reality SHOULD NOT provide ANY airline, now or in the future any further assistance UNLESS another TERRORIST event were to strike the industry.

Stabilze means STABILIZE.

NOT support, coddle, nurture or assist INCOMPETANT MANAGERS WHO MAKE BAD DECISIONS AND FOLLOW FAILING STRATEGY.

 

[efiscompmon]

For the most part, people value PRICE more than any other factor, be it stereo equipment, beer, furniture or transportation.

At first I thought you meant airline supplied amenities...

To give UAL a loan at this point is CORPORATE WELFARE subsidized by the TAXPAYERS.

Either UAL survives in the free market on its own or it does not.

The taxpayers should no longer bear the burden and bail-out INCOMPETENT CORPORATE MANAGEMENTS whether it is airline, computers or "widgets".

One could make the argument that that already happens when an air carrier continues to operate while under Chapter 11 for an extended period of time and continues to price its product below its cost. I might submit that UAL has not been in the "free market"--DAL, CAL, NWA and others don't get to defer paying their bills.

Mike Boyd once suggested that air carriers should be forced to suspend operations (actually, he said surrender their certificates) once they are bankrupt. Where might DL, AA, CO, NW (and our average industry wages!) be if UAL and AAA were made to cease ops until reorganization was complete?

Not anti UAL and certainly not wanting anyone to lose their jobs--just asking an academic question: How have these two airlines affected YOUR career earnings?

 

[DrvA320]

>>You left out Independance Air, we would like to sign up for the protest as well...<<

House_x,

Don't worry. You are on "The List".

 

[skykid]

efiscompmon, I'm just curious because I haven't been following this very closely - which bills besides prepetition from Dec 2002 hasn't United paid?

Eaglefly you said:

"The "ATSB" (Airline Transportation STABILIZATION Board) was created to assist airlines as a result of the Sept. 11 attacks. Any damage from 9/11 is not now a factor in the airline industry."

Do you know when United applied for the guarantee, and what the ruling was exactly in 2002? A lot of people either don't know, or want to pretend they just asked for this guarantee, and its a little more complicated than that.

"IF UAL were to get this "loan" and default it would be you and I (the taxpayer) who would pay for it."

Can you back that up on paper? You would have to use United's balance sheet, have an advanced understanding of bankrupcty accounting and law, and see the specific terms of the guarantee which doesn't exist at this time. I've spent days studying this bankrupcty stuff and analyzing the numbers and I will admit I am not an expert. I can find however, after trying very hard, no dispute in the numbers United has for collateral, and have noticed the lobbists against the guarantee don't have any specifics either. Since you state your assertion as a point of fact, maybe you can.

"UAL's primary problem is BAD MANAGEMENT combined with new economic reality."

You are certainly entitled to that opinion. Could you also give some examples of some of the bad decisions the new mgt has made? Take care!