UA/US Merger

[CaptJax]

UA May Ask For Credit Revision

United Airlines may ask for credit revision: report


NEW YORK (Reuters) - UAL's (UAUA.O) United Airlines is mulling asking its banks to rejig the terms of its credit facility in an effort to get crucial financial flexibility, the Financial Times reported on Monday.

The carrier may approach its lenders, Citigroup (C.N), JPMorgan Chase (JPM.N) and Credit Suisse (CSGN.VX), as early as Monday to request concessions on its financing arrangements, the FT said, citing people close to the situation.

The ability of airlines to comply with bank covenant and loan agreements has already been reported to be a near-term concern. Northwest (NWA.N) has asked lenders in its $1.2 billion bank loan to do away with fixed-charge coverage ratios for the next 12 months, according to Reuters Loan Pricing Corp.

As of March 31, United had a cash balance of $2.9 billion and a coverage ratio of 1.5.

United representatives were not available immediately for comment.

(Reporting by Aarthi Sivaraman; Editing by Quentin Bryar)

05/05/08 04:36 ET

 

[reepicheep]

Tossing around the word 'yield' without mentioning cost eliminates any credibility from your argument. Of course USAirways (East) has higher yield flying -- and they had it through two bankruptcies. Mostly a management problem.

I agree...the price for servicing all those high-yield routes is incredibly steep. 2 BK's, 40% pay cuts, loss of pensions, downsized by 30% and they still have the highest costs in the industry. Building an entire legacy airline around short-haul flying in the northeast has proven to be a failed strategy.

 

[On Your Six]

I agree...the price for servicing all those high-yield routes is incredibly steep. 2 BK's, 40% pay cuts, loss of pensions, downsized by 30% and they still have the highest costs in the industry. Building an entire legacy airline around short-haul flying in the northeast has proven to be a failed strategy.

Don't let the Easties hear you say that. They'll disagree until the cows come home...

 

[AWACoff]

United Airlines Offers 7 Percent Fee for Waiver

May 5, 2008

United Airlines is offering lenders in its USD$1.55 billion bank loan a 7 percent fee to grant it crucial financial flexibility, lenders in the deal said on Monday.
United is asking lenders to waive until June 2009 an applicable fixed-charge coverage covenant, a term in its lending agreements. The fixed-charge coverage ratio stipulates that its earnings exceed fixed finance charges such as interest and lease payments by at least 1.5 times.
The ability of airlines to comply with loan agreements has become a concern in the industry as rising fuel prices and falling consumer demand weigh heavily on carriers.
In the last five months, seven US airlines have filed for bankruptcy or stopped operating, including Frontier Airlines Holdings, Skybus Airlines and ATA Airlines. Analysts expect further casualties and do not rule out the bankruptcy of a major carrier.
United Airlines is offering a 7 percent fee for lenders who commit to the agreement by 5 p.m. on Monday but will lower that to 5 percent for lenders who miss that deadline but grant approval before 5 p.m. Tuesday.
Northwest Airlines recently asked lenders in its USD$1.2 billion bank loan to do away with fixed-charge coverage ratios for the next 12 months. Northwest paid a 5 percent fee to all the lenders who approved the waiver.
United Airlines is reportedly in merger talks with US Airways, according to sources familiar with the matter. UAL and US Airways have both been in bankruptcy within the last three years.

(Reuters)