UAIR cash on hand

[Noam]

I've heard a lot of rumors and opinions about UAIR going into bankruptcy again sometime towards the end of the summer.

However, at the end of Q1 they had approximately 978 million of cash left. Assuming their current rate of loss remians, couldn't they theoretically survive through at least a chunk of 2005?

Just trying to get a handle with my meager economic upbringing.

Noam

 

[J32driver]

Bankruptcy costs an airline a lot of money. If I remember right, United had set $1 Billion as the amount they needed to have on hand in order to enter bankruptcy and not liquidate.

Don't quote me on that though.

No doubt about it, USAirways is hurting really bad.

 

[reepicheep]

Bankruptcy is likely so as to abrogate the contracts of non-pilot work groups who will probably not come on board willingly outside of CH. 11. Non pilot costs have to come way down or pilots will not climb on board anyway. $50,000/yr. cleaners, 10 peole milling around when you pull in but no one will marshall you in, etc...

 

[Boeingman]

If they file chapter 11, I highly doubt anyone will loan them money to reorganize and emerge. The RSA has most of their tangible assets secured and the industry environment, especially for U, looks bleak (a.k.a SWA). They simply do not have the cash on hand or access to capitol markets to survive another 11 filing.

 

[G4G5]

http://stocks.usatoday.com/custom/usatoday-com/html-story.asp?guid=%7B1EDBC221%2DCAF3%2D463F%2D8B28%2D9DDBEBF42DC3%7D

this won't help

 

[satpak77]

I would not plan on a second bankruptcy.

Ch.11 is not the "magic pill" that is taken every time an airline or a company runs into tough waters.

One time, sure, Ch.11 is a legal means to escape obligations to pay creditors and re-organize the business so that obviously you can pay the creditors at a later time. However the price is steep, credit ratings, trust, etc suffer.

Unfortunately lift does not make airplanes (especially the airliner type) fly. Nor does hope put Jet-A into airliner fuel tanks.

Money does both.

To stay operating, US Air needs

1) Good credit
2) Excess cash and more of it
3) Lower costs
4) A supportive marketplace receptive to US Air ("the flying public") that will pay for seats and replenish the coffers discussed in #2

Cash can be raised by selling assets (gates, airplanes, etc) but this hurts #4.

Unfortunately points 1 to 3 are not there, and point 4 is being eroded by Air Tran, SWA, JetBlue.

With poor credit, borrowing ability is hurt, with no physical green cash to pay the electic bill, and no one to borrow it from, only one thing is left.

The lights get turned off

please note all the points above are under the responsibility of corporate management, CEO, Marketing, etc etc.

Management dropped the ball with US Air

 

[lowecur]

Don't count UAIR out just yet. They supposedly will break even this quarter according to Lakefield, and are getting around 3 E-jets per month, which will go to 4 per month after the 1st of the year. I look for them to go back to 11 for 6 months till they break the mechanics union.

 

[reepicheep]

Another filing could be perilous; there is no guarantee that an effort to abrogate the contracts of non-participating unions would succeed. Even if it did a union could strike or do a slow-down.

However, there is a growing body of opinion that believes another half-assed transformation effort largely on the backs of the pilots will not work, and the only way to finally secure reasonable non-pilot labor costs could be a prepackaged Ch. 11 filing.

In the words of a management pilot we had on our jumpseat, this time may be an all-or-nothing affair.