U A L : D E N I E D ! ! ! ! ! ! ! ! ! !

[vc10]

UAL denied---on the tape now.

 

[NYRANGERS]

Note second paragraph

US denies United Airlines $1.6 bln loan guarantee
June 17, 2004 7:21:00 PM ET






WASHINGTON, June 17 (Reuters) - United Airlines lost its bid for a $1.6 billion federal loan guarantee on Thursday, prompting new uncertainty about its prospects for emerging from bankruptcy this fall.

The Air Transportation Stabilization Board voted to reject United for a second time, but said it may reconsider the matter if the airline chooses to submit another application in the coming days.

United, the No. 2 U.S. airline and a unit of UAL Corp. (UALAQ), has been operating under Chapter 11 protection since December 2002. The airline said it needed the loan guarantee to back $2 billion in private financing that is crucial to its restructuring. REUTERS © 2004 Reuters

 

[sandman2122]

Geez VC10 - don't get too happy about it....

 

[UpNDownGuy]

Don't worry, UAL folks...

This is obviously posturing by the ATSB. They are either trying to require more onerous conditions, or simply trying to give the public the impression that they are protecting their tax dollars diligently. The "try back in a couple of days" is a dead give-away. I will stick with my prediction that UAL gets the loans, probably next week. I feel for all the folks waiting on pins and needles for another week.

 

[vc10]

!!!!!! = surprise, not happy. Happy would have been accompanied by

 

[Dizel8]

Just wondering how many more tries UAL management gets? Because the paper work was filed in a timely fashion, they could potentially keep doing this for quite some time.

For the people at UAL, I hope some kind of solution is reached sooner rather than later.

 

[Flying the Line]

I see an asset sale in their future.

 

[On Your Six]

What would have to change for there to be reconsideration? UAL's crappy situation will be the same next week. Other airlines continue to outpace UAL - blaming 9/11 now vs. later will not change the situation. I am not that optimistic - I think a reduction in overhead and some asset sales (and/or grounding airplanes) in the near future are very likely. With fuel prices so volatile and LCC competition increasing in every market (note future entry of Virgin America, the growth of Frontier in Denver and the startup of Independence Air), there is no way that the Gov't will back an airline that could STILL tank and eventually waste taxpayer money if a guarantee is offered to cover the banks.

 

[NYRANGERS]

United is not going anywhere. The big down side to this is, I think what they mean by re apply later is.......get more concessions from labor and we will re examine the loan guarantee. United employees should not have to pay for the mistakes of managment with their jobs. United will get the loan once they have another round of cuts, then that cut will be the starting point for Delta, American, NW, etc.

 

[mach none]

What has United's management changed since they filed? Nothing? Started TED (The Economic Disaster). Labor should not have to go to the table again, but probably will. Just to bailout lack of leadership for the 10 years or so.

I don't know what the answer is, but is appears they have everything resting upon the ATSB loan approval.

 

[NYRANGERS]

I think Glen Tilton indicated that United could survive without the loan guarante. Maybe that is why they did not get it, but I do think they will be just fine, well as fine as you can be in the new era of lcc's and low paid pilots. I think we all may be headed there fast.

NYR

 

[400ACapt]

Nyranger

What makes you think the government will bail out UAL because of poor management decisions?? You have to be kidding! Does EASTERN mean anything to you? I suggest that you read a little history about airlines that went under because of bad management!

 

[NYRANGERS]

From the ATSB

From the ATSB




"Given these circumstances, a majority of the board believes that the likelihood of United succeeding without a loan guarantees is sufficiently high so as to make a loan guarantee unnecessary," the board said in a letter to United Chief Financial Officer Frederic Brace.

Company officials have been reluctant to discuss alternative financing. Brace said several months ago that the company would get out bankruptcy "one way or another."

 

[banned username 2]

United Chief Financial Officer Frederic Brace.
Brace said several months ago that the company would get out bankruptcy "one way or another."

He's the freakin' CFO... What else is he going to say??? He can't run through the halls and yell "The sky is falling! The sky is falling!" Management has to keep their "game face" on for Wall Street... They can't let the street see them sweat, no matter how bad it gets... Just like on the Titanic, "Keep the band playing, it'll calm the passengers" the Captain ordered... And the music played on...

 

[sgu]

Well what else is he going to say??? He can't run through the halls and yell "The sky is falling! The sky is falling!" Management has to keep their "game face" on for Wall Street... They can't let the street see them sweat, no matter how bad it gets... Just like on the Titanic, "Keep the band playing, it'll calm the passengers" the Captain ordered...

Absoloutely correct! Can anyone really trust what mgmt has been saying? I am sure they cursed the board under their breath and then the sweat started...It will be interesting to watch to say the least. To those employees at UAL stay strong and continue to fight what you believe is the right thing to do.

 

[lowecur]

The Air Transportation Stabilization Board voted to reject United for a second time, but said it may reconsider the matter if the airline chooses to submit another application in the coming days.

I doubt they can resubmit anything in the next few days that would change their mind, since the ATSB already stated that UAL can survive without the guaranty. Further payroll cuts would take months to finalize, and anything else they could do in the short term is just window dressing.

UAL will have to bite the bullet and start to restructure it's route network. This will probably mean that Denver, IAD, and SFO will downsize by 20 to 30% each. This is not good news for Mesa, and to some extent Skywest. I think Republic will be alright with their 145's and 170's, but they can choose to opt out if UAL doesn't emerge from Bankruptcy shortly. It will be interesting to see what they do.

The winners here will be VirginUSA, Frontier, and the new Independence. Skywest will wait to see what happens with DL before making a decision on starting an LCC, but Mesa will probably not wait much longer. I look for them to announce something before the end of summer. The next six months will be the biggest morph this business has ever seen. Good luck to everyone.

 

[Skygod]

ATW story:

ATSB rejects United loan guarantee application
Dateline: Friday June 18, 2004

The US Air Transportation Stabilization Board late yesterday rejected United Airlines' application for a $1.6 billion loan guarantee but apparently left the door open for the carrier to come back a third time with a revised filing.

United had been seeking the guarantee to secure $2 billion in new borrowings necessary to fund its exit from bankruptcy. It was the second time in 18 months that the board rejected a United application. The first rejection, in Dec. 2002, led to the carrier’s bankruptcy filing later that month.



According to Reuters, Federal Reserve Board Governor Edward Gramlich, chairman of the ATSB, and Brian Roseboro, undersecretary of the treasury for domestic finance, voted to deny United's application. The third member of the board, Dept. of Transportation Undersecretary Jeffrey Shane, deferred his decision for one week pending further discussions with United regarding its most recent proposals to the board.

In a statement, DOT said it "remains prepared to consider United's application in the event that United submits a request for reconsideration accompanied by additional financial information."

Credit Suisse First Boston analyst James Higgins, in a stock report released yesterday prior to the decision, predicted the outcome but also that United will manage to restructure without a guarantee. "History suggests that it is very hard to kill a large airline like United without significantly more chapters in the book being played out," he wrote.

However, the carrier must overcome a pending liquidity crunch, as its cash position is likely to fall to below $800 million by the end of 2004, "versus a comfortable level that would be three times that amount," stated the analyst. Asset sales are an option, as is some capacity shrinkage.

United will have to ask its employees for additional sacrifices in terms of reduced pay, work rules and benefits, and also attack its nonlabor costs again in order to attract new private financing. According to a recent presentation by Northwest Airlines, UAL's nonlabor unit cost is higher than all of its peers except for US Airways even after 18 months of bankruptcy reorganization. In his report, Higgins estimated United would need to trim $600 million from nonlabor expense just to be at the average of its legacy peers, and he is not sure this is possible.--Perry Flint

 

[Cactus73]

I don't see this as bad news for Mesa or Skywest. United's international flights are their best bet for cash right now. They need Mesa and Skywest to feed IAD, LAX, and SFO. I doubt United will leave IAD as their international flights there are their backbone to Europe.

I think Ted will go the way Song will eventually.

 

[everyonedoa360]

UAL has 2.5 Billion in cash, in CASH. They are not going out of business any time soon (thank goodness) Nor do they need to start selling off things to make it work. TED is and was a bad idea, I’ll give you that. But UAL will make it through this with or without the loan.

It’s sad that our Government seems to think that USAir should get money, but not a company that will actually be around in 5 years. But then again, our government makes bad decisions every day (well at least for the last 3 years or so)

 

[Saluki Dawg]

UAL management still doesn't get it. They are in Chapter 11, and they need to start acting like it. UAL just wants to pretend like they never declared bankruptcy, keep their mansion, country club membership and Ferrari. Other than labor and benefit concessions, they have done almost nothing to show the ATSB that they are serious about emerging from Chapter 11. When CAL filed Chapter 11, they closed DEN, sold gates and slots at LAX, gave back aircraft, and substantially downsized in order to survive. And survive they have. US Airways, also did a lot of the same things. Unfortunately, for US Airways, it may be too late for them, but UAL still has time. But they are going to have to swallow their pride and make some very difficult decisions in the not too distant future if they want to have a future. Selling of assets in a limited amount seems to me to be their only alternative at this point. I see them possibly selling their Pacific Routes or selling their slots at DEN, IAD, or a few of their LAX slots as distinct possibilities.