Status of Avolar

[Slim177]

This is not to bad mouth Avolar or rub salt into the wound, just what's going on? When they were starting up several Avolar pilots were on this site promoting and informing us about Avolar. Could you please tell us what your status is? Is Avolar still flying and what are they telling you about the future?
Thanks,
Hoping no one goes without a job,
Slim

 

[Boz]

This venture is over, UAL is simply cutting its losses and trying to get back to running the Airline again.

UAL Plans No Further Investment in Avolar


CHICAGO - UAL Corp. said on Friday that it has stopped seeking outside investors for its business jet unit Avolar and plans to halt further investment of its own, a move analysts said could be the beginning of the end for the fledgling unit.
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The parent of United Airlines also said Stuart Oran has stepped down as Avolar's president and Doug Hacker will serve as acting president after UAL (NYSE:UAL - news) halted a months-long search for an investor to take a majority stake.

``It sounds like it is being put out to pasture. Obviously if they are cutting funding and they haven't obtained an outside investor that implies that there really isn't a white knight on the horizon,'' said Richard Aboulafia, senior aircraft analyst at the Teal Group.

UAL formed Avolar in May 2001 to tap corporate America's appetite for business jet travel by selling part ownership interest in planes. UAL decided to look for outside investors for the start-up following the Sept. 11 attacks as the carrier struggled with huge losses.

The No. 2 U.S. airline posted an industry record net loss of $2.1 billion last year as the U.S. economy and travel slumped following the attacks. UAL plans to ask workers for billions of dollars in concessions to help restore financial stability, and it continues to dismiss the possibility of bankruptcy.

In a regulatory filing with the U.S. Securities and Exchange Commission on Friday, UAL said it intends to halt its financial commitment to Avolar on March 31.

``This move is consistent with our previously stated intentions to protect United Airlines from further financial exposure to this business and to achieve the best return for UAL on its investment,'' UAL Chief Executive Jack Creighton said in a statement.


AVOLAR A DISTRACTION

Avolar may not be beyond hope, but the odds have been against it from the start with strong competition well rooted in the market, Aboulafia said.

``They are trying to preserve the initial investment but don't want to put any more capital into the enterprise,'' ABN Amro airline analyst Ray Neidl said. ``They have been saying that all along.''

However, halting further investment in Avolar is not enough, aviation consultant Michael Boyd said.

``This is a sideshow, not a bad sideshow, but one that is going to divert their energy from their core business,'' Boyd said. ``United has enough trouble on its plate with its scheduled business. Why do they have management talent running off worrying about a separate business?''


SIGNIFICANT WRITE-OFF POSSIBLE

UAL's board of directors authorized investment of up to $250 million when it formed the business jet unit in May 2001, according to the SEC filing.

Through January, UAL had invested $102 million in Avolar for advance payments on aircraft purchases and operational expenses. It could face a significant write-off if the new strategy fails, UAL said in the filing.

Oran said in January that Avolar expected revenue of $400 million to $500 million in 2002, rising to more than $1 billion by the end of its fifth year of operations.

Avolar's aircraft choices include Beechjets by Raytheon Co. (NYSE:RTN - news), Learjets by Bombardier Inc. (Toronto:BBDb.TO - news), Gulfstreams by General Dynamics Corp. (NYSE:GD - news) and Falcons by Dassault Aviation.

At the end of 2001, Avolar had agreements with Gulfstream and Dassault to buy 82 jets for $1.9 billion, after deducting advance payments for delivery starting in 2002, with options to buy 142 more, UAL said in the filing. It can cancel the purchase of specific aircraft with certain conditions.

Shares of UAL rose 80 cents, or 4.9 percent, to $17.20 Friday on the New York Stock Exchange.

 

[Slim177]

I read and heard all the news reports. I was wondering if one of their pilots would share his insight. Are they still flying the DA-50s? Are they doing charters? What is the current and short term future of Avolar?

 

[ukipilot]

not dead yet

All this means is that yes, United is not going to invest any more money into avolar, and yes they are not seeking outside investment, United sees potential and wants to keep all of the profits, so how will avolar buy aircraft you ask, and pay employes? They will get a loan from a bank, if they got money from an investor, any profit made would have to go to that investor, with a loan, they will have to pay that back, but once things kick in high gear, the loan can be paid off and Avolar can run on its own or they can keep a line of credit going, this is not the first time this has been done, that is how EJA started before buffet took over, in fact united has lines of credit with many banks

 

[rice]

FWIW, I recently completed an interview with A+. Everyone I dealt with was great and very enthusiastic about the company's future. With that said, never was there any mention that UAL was going to issue a press release or that the CEO was resigning. In fact we were presented with a quick bio of all the major players in the organization and were lead to believe that all were in for the long haul. What does this mean? I have no F@#$ing idea!! But either the interviewers were kept out of the loop or they are some pretty good poker players.

Gumby how 'bout some insight!!

Rice

 

[Chocks]

Avolar future ?

I've been with Avolar for almost two months, and here is all I know.

1 - The news on friday was a blow to say the least - we had heard that there was a buyer who was ready to sign.

2 - The new CEO has said that he isn't there to dismantle Avolar - but to make it run more efficently.

Here is my gut feeling:

Avolar will continue to exist, but not in the gradiose matter in which it was designed. We do have paying customers/owners, and ARE generating revenue.

As a relatively low-paid pilot, imho IF they decide to keep it running in a "trimmed down" version - I will probably keep my job. I can't say the same for the 30 or so VPs on the payroll. Much of the "extra" infrastructure might be slimmed down a bit.

Other than that, I don't know anything. There is a market for the service we provide, and if we can keep costs under control (i.e. continue to take advantage of moving pilots around on UAL passes instead of buying last minute tickets) I think we can turn a profitable business.

That's all I know. I was pretty much offered a chance to go back on active duty on Friday, an offer that I put in my back pocket. It would mean good $$ and some job security for a while until UAL brings me back, but it would mean a move for my family - don't really want to do that right now.

Wish us luck - it would suck to get layed off by UAL corp twice in 4 months.

Chocks

 

[publisher]

Say again, over

Is that the fat lady I hear singing.

Bank loans and keeping the profits, I do not think so. This was corporate speak for if it does not lose any money and we do not have to make any commitments to it and it can grow for its meager current revenue, great. If not, we do not care, it is no longer an issue.

 

[Diesel]

Chocks

Thanks for the information. Although I know it would suck to be furloughed twice from UAL you have to do what you have to for the sake of your family. You have obviously put your country before them previously and we thank you.

That being said-

I am sorry to hear of A+ in a bad position. I was looking forward to them raising our industry pay rates into something that is very strong, with work rules to follow.

My question is this to you-

Do you feel that the newspaper articles got what is going on right or are blowing it out of proportion? Is there stuff we are missing or some deals that are going on maybe with flexjet that someone else is using to play hard ball?

I'm just throwing out what if's just to see if there is something going on behind the scenes that we are missing.

Thanks for the info,

D

 

[TrumanSparks]

I have a couple of good friends that work at A+ and I would hate to see it come to an end for them. They are very excited and enthusiastic about what they are doing.

I know A+ added a leased Lear 60, so I’m guessing they are planning to tough it out. My guess is that they will operate as a charter/Frax under North American Jet and slowly buildup and expand with what they have (only a guess). There is a very big profit margin on the sale of shares, and I believe they have a good handle on expenses. They have very good talent in their management, so don’t count em out just yet.

As for the loans and line of credit, well I would construe that as additional financial backing on UALs part, that’s basically what they have been saying they are not going to do. I also don’t believe there are any tie ins with other fractionals, good or bad.

 

[Slim177]

Thanks for the replies!

I do not believe that A+ is turning a profit. They are flying a few aircraft for demos and some charters( or owner sell offs). This will not turn a profit!

We have over 400 aircraft and it is hard to maximize the occupied rate. Avolar had potential and may still have a life if they get a huge cash injection! Any pilot who believes in a dream will have come to EJA, if you want to live a nightmare; it appears Avolar is your place!

It is interesting that the pilots who were constantly posting info about Avolar are nowhere to be seen! Where are the die hard pilots promoting the future of Avolar? It appears they do not want to burn their bridges or ruin their credibility......

This is not an EJA vs Avolar war of words, just an attempt to find out WTF!
Thanks for the support and info!
Slim