UAL Aircraft to be Repossesed This Week?

[h25b]

Ummmm.....no, you're wrong. UAL could have afforded to pay the rates that were being asked for by the lessors. However, it did not make financial sense for the company to pay the rates being asked for, so the planes are being returned to the lessors, per the bankruptcy code. There IS a difference between repossession and returning aircraft under bankruptcy law.

Believe me, it's nothing personal... I just shake my head when people try and make me believe that simple economics somehow doesn't apply to the airlines. United went out and leased these aircraft under set terms per contract, not unlike me going out and leasing my wife's minivan (cool ride, eh ?) ... Now economic conditions have changed throughout the industry and they can no longer afford to pay what obviously the leasing company has established as fair market value. So they have two options...

1. Make their payment as promised under the established lease agreement, or...

2. Turn them back in, get them repo'd, or whatever other politically correct term we can all agree upon.

Like the other guy said, if the planes weren't being pulled away from them UAL would not have spent all of the time in court trying to block exactly that... Your arguement is strictly symantics... Please explain me why this leasing company should have to let UAL pay a lease rate below what they originally agreed upon (AND BELOW WHAT THEY COULD LEASE THEM FOR TO SOMEONE ELSE)... I guess all the businesses dealing with United are expected to take one for the team.

So in conclusion, you're telling me that United was stupid enough to become "PLANE POOR" and now it's time for everyone else in the aviation industry to be at a disadvantage. If that's the case I should have leased that Ferrari after all because by your logic it makes sense AND is fair to the bank...

 

[Echopapa]

A better illustration of your point (since yours was poorly made) would be as follows. H25B's budget has enough "slop" in it to be able to afford the $2500/month payment on a (used) Ferrari if he so chooses. However, if he/she chose to buy that car and make that payment every month, he/she would not have enough left over, for example, to put into his 401K or to have a little extra if an unexpected expense comes up. So even though H25B could buy that Ferrari if he really wanted to, it makes more financial sense for H25B to not be "car poor" and to buy the Civic instead. Further, since a few other "car owners" are having financially difficulties themselves, perhaps a long term deal or alternative for that Ferrari could be found down the road if a little patience is exercied?

H25B was right on. United does not have any extra money and can't afford these planes. When was the last time United brought home enough money to pay the bills?

 

[spinup]

You can paint that pig anyway you like. Bottom line, the aircraft are getting yanked from the UAL fleet. If UAL just wanted to "return" them, I would of guessed UAL wouldn't of bothered with all the legal fees fighting the "repossesion", excuse me return in the first place.

When your company has to start canceling routes (i.e. cutting off revenue) due to a reposs...er return, it is not a normal change of hands under bankruptcy law.

LOL!!! This genius couldn’t be less insightful so far as UAL is concerned. For your education, UAL had secured lease terms with the lenders months ago; for these very airplanes. The creditor's committee felt that UAL was offering too much and rejected the terms. In this instance, UAL management was spot on and the CC was lacking. In the end, and in this case, it doesn’t matter if UAL can afford the airplanes, what matters is what the CC approves. For someone employed by an airline that has been drug through BK twice I would think you would have a better comprehension of facts. Guess not.

 

[Boeingman]

LOL!!! This genius couldn’t be less insightful so far as UAL is concerned. For your education, UAL had secured lease terms with the lenders months ago; for these very airplanes. The creditor's committee felt that UAL was offering too much and rejected the terms. In this instance, UAL management was spot on and the CC was lacking. In the end, and in this case, it doesn’t matter if UAL can afford the airplanes, what matters is what the CC approves. For someone employed by an airline that has been drug through BK twice I would think you would have a better comprehension of facts. Guess not.

It is too bad the link for the ruling from the court is no longer available. I will try and find it though because it makes your comment absurd.

Bankruptcy twice? Yes, but I believe now the time UAL has not spent in it's Bankruptcy has exceeded the total time CAL was in for two. At least we had a plan of reorganization and emerged. Something I have yet to see UAL accomplish.

Doesn't matter to me though. You can keep hiding behind that cloak of denial all you want.

 

[klhoard]

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Maybe they can get a good deal on some of our 727-100's. . . .
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[Diesel-9]

Just heared on the news, four of the 767's were repo'd today

 

[skykid]

Just heared on the news, four of the 767's were repo'd today

Holy Moly!! How did they do it? Did the repo take place in South America? Please give some details and a source for your news. This is great news.

 

[ualdriver]

Believe me, it's nothing personal... I just shake my head when people try and make me believe that simple economics somehow doesn't apply to the airlines. United went out and leased these aircraft under set terms per contract, not unlike me going out and leasing my wife's minivan (cool ride, eh ?) ... Now economic conditions have changed throughout the industry and they can no longer afford to pay what obviously the leasing company has established as fair market value. So they have two options...
1. Make their payment as promised under the established lease agreement, or...
2. Turn them back in, get them repo'd, or whatever other politically correct term we can all agree upon.

Yeah I agree with you so far. I never denied the above. In fact, we still have about 20% of our fleet to negotiate under those very same terms. I'm not trying to be politically correct. The planes weren't repossessed. They were returned to the lessor because the lessor found a better deal somewhere also, or at least claims to, than UAL was willing to pay. Under bankruptcy protection, UAL can reject leases, and they did.

Like the other guy said, if the planes weren't being pulled away from them UAL would not have spent all of the time in court trying to block exactly that... Your arguement is strictly symantics... Please explain me why this leasing company should have to let UAL pay a lease rate below what they originally agreed upon (AND BELOW WHAT THEY COULD LEASE THEM FOR TO SOMEONE ELSE)... I guess all the businesses dealing with United are expected to take one for the team.

They shouldn't have to. And they don't. That's why they took them back. All businesses dealing with United have "taken one for the team." They don't have to, but they did. That's their choice and that's the cost of doing business with the airlines, I guess. If they don't like it, they can go elsewhere, just like these 767 lessors did.

So in conclusion, you're telling me that United was stupid enough to become "PLANE POOR" and now it's time for everyone else in the aviation industry to be at a disadvantage. If that's the case I should have leased that Ferrari after all because by your logic it makes sense AND is fair to the bank...

United was stupid enough to do many things, I'll tell you. How about that? I'm also telling you that UAL is going to take advantage (and has) of EVERY aspect of the bankruptcy process, just like those before us who have cost us billions in dollars since 1978 while they went through their bankruptcies. If it takes 3 years and it's legal to do so- so be it. If the rest of the industry is at a disadvantage........well.......I guess that's their problem just like it has been our problem for the past 27 years.

In my example, buying the Ferrari is a great deal for the bank. The bank could care less if you're "car poor" because you can't afford anything else except your car payment. They only care that you make your payment every month. It's not a good deal for you, however, especially when some Ferrari's(or similar) may be coming to market in the near future at cheaper rates....

 

[spinup]

It is too bad the link for the ruling from the court is no longer available. I will try and find it though because it makes your comment absurd.

Bankruptcy twice? Yes, but I believe now the time UAL has not spent in it's Bankruptcy has exceeded the total time CAL was in for two. At least we had a plan of reorganization and emerged. Something I have yet to see UAL accomplish.

Doesn't matter to me though. You can keep hiding behind that cloak of denial all you want.

Cloak of denial, interesting you direct that to me. Your grasp of facts ends with the front page of the USA Today. You read a web link and offer a shallow and uneducated opinion. Your information without foundation is narrow and worthless. Post your link; it does nothing to further your point.



It seems to me CAL's plan for success is closely related to UAL's. Cut costs. As a pilot group at CAL you've endorsed this course though concessions, yet you apply it in a different light to UAL. In the end, you'll continue to be surprised at every turn (as is proven by your track record) valuing your opinions over fact. That’s your world.

 

[h25b]

O.K. that post seemed a little more reasonable to me... Not that you care.. How ever you want to paint it, it's NOT a good thing..

 

[Spooky 1]

Wsj

The article is on the front page of today's WSJ. Did not bother to read the details but certainly not a good sign.

 

[Immelman]

This is a shame for United.. those aircraft were configured with 3 seating classes and very comfortable. Business seats on those were more comfortable than first on the crappier aircraft (I got to experience it on a business trip). They were very popular with frequent business travellers who preferred to book flights on these because of their configuration. They also had the mini TVs in economy which other UA aircraft (747s, 762s that they got rid of) did not have making them quite desirable.

 

[Boeingman]

Cloak of denial, interesting you direct that to me. Your grasp of facts ends with the front page of the USA Today. You read a web link and offer a shallow and uneducated opinion. Your information without foundation is narrow and worthless. Post your link; it does nothing to further your point.



It seems to me CAL's plan for success is closely related to UAL's. Cut costs. As a pilot group at CAL you've endorsed this course though concessions, yet you apply it in a different light to UAL. In the end, you'll continue to be surprised at every turn (as is proven by your track record) valuing your opinions over fact. That’s your world.

The web link was the actual order form the court allowing the repossesion. It did mention, among other issues, UAL was in default on the leases. Perhaps it is to deep for you to understand anyway. It is not hard to offer an opinion based upon the actual ruling by the judge. Of course, the airplanes leaving the property over there is probably nothing else to worry about either right? Like I said before, go ahead and continue to believe all is well. I don't really care.

All the pilot groups are now being directly affected by UAL actions. For example, can you look at your retireees in the face today? I didn't think so. CAL is no role model by any means. But in 1983, at least I can say I had the integrity to walk and say no deal, unlike you and your fellow pilots today. What Tilton is doing to you guys is in many ways no different than what Lorenzo did in 1983. Except in your case, it is ok.

I have a glimpse of your world because I have been there. The difference betwen you and I is the fact that I understand what is happening.

You are right about one thing though. I am surprised at every turn of the fiscal quarter with the amount of money UAL is bleeding while languishing in bankruptcy. Just when you think the losses won't increase.....

Incidently what is the plan of reorganization fro UAL? Or does the lack of such still not bother those like you? After all this time no less.

 

[spinup]

The web link was the actual order form the court allowing the repossesion. It did mention, among other issues, UAL was in default on the leases. Perhaps it is to deep for you to understand anyway. It is not hard to offer an opinion based upon the actual ruling by the judge. Of course, the airplanes leaving the property over there is probably nothing else to worry about either right? Like I said before, go ahead and continue to believe all is well. I don't really care.

All the pilot groups are now being directly affected by UAL actions. For example, can you look at your retireees in the face today? I didn't think so. CAL is no role model by any means. But in 1983, at least I can say I had the integrity to walk and say no deal, unlike you and your fellow pilots today. What Tilton is doing to you guys is in many ways no different than what Lorenzo did in 1983. Except in your case, it is ok.

I have a glimpse of your world because I have been there. The difference betwen you and I is the fact that I understand what is happening.

You are right about one thing though. I am surprised at every turn of the fiscal quarter with the amount of money UAL is bleeding while languishing in bankruptcy. Just when you think the losses won't increase.....

Incidently what is the plan of reorganization fro UAL? Or does the lack of such still not bother those like you? After all this time no less.

Your abysmal lack of understanding is underwhelming. You compare the environment CAL was experiencing in BK to today’s standards and somehow feel that a timely exit was the correct course of action. Unfortunately for you, your myopic history based viewpoints don't apply today. Your defense mechanism of blaming UAL specifically for your situation, while probably decreasing your anxiety level, does little more than distort reality. I'm done wasting my time with you.

 

[ualdriver]

O.K. that post seemed a little more reasonable to me... Not that you care.. How ever you want to paint it, it's NOT a good thing..

Bankruptcy is not a good thing. That's why we tried like hell to avoid it. When you hear morons at whatever company you're working at saying "we're better off in bankruptcy," they're very, very wrong.

"It's not a good thing".......if you're referring to the 767's well I guess that depends on how you look at it from a business stance. I'm sure it would have been desirable for UAL to keep the aircraft if the city pair (ORD-EZE) was making money, and would have made money in the long term had those upped lease reates been locked in. I suspect that, short term, they may reject some more leases for other aircraft, and take their time finding better deals as the months progress and other airlines restructure.

 

[Boeingman]

Your abysmal lack of understanding is underwhelming. You compare the environment CAL was experiencing in BK to today’s standards and somehow feel that a timely exit was the correct course of action. Unfortunately for you, your myopic history based viewpoints don't apply today. Your defense mechanism of blaming UAL specifically for your situation, while probably decreasing your anxiety level, does little more than distort reality. I'm done wasting my time with you.

I wasn't talking about CAL's history vis a vis yours. When I wrote the comment I should of added what I read about how NWA is now parroting about how they need UAL's cost structure now. Along with DAL and AA. Talk about myopic.

Anxiety? Now that is funny. I neither need nor care if CAL or UAL for that matter stays in business. You can throw out all your pointed barbs and such but it still doesn't change your situation. Your company is bleeding like a stuck pig with no end in sight. You now have lessors repo'g aircraft that UAL was in default on. Not something to take lightly unless of course your complete grasp on reality does not allow you to accept events as they implode around you.

Ignore facts and reality at your own peril. I don't give two sheetz one way or another.

Incidently, the actual ruling is in here:

http://www.ca7.uscourts.gov/tmp/J611K9AO.pdfhttp://www.ca7.uscourts.gov/

When you read it and digest it, let us all know what the terms default and cure mean with regards to a lessee (UAL) not paying and why the lessors took the actions they did. Pay particular attention to the last page. Grab some Pepto Bismol, I think you'll need it. You can also take note I didn't glean that info from the front page of the USA Today.

BTW, I noticed you ignored the comment about your retired pilots. No problem, at least at CAL, as myopic as we are, we didn't stiff our retirees.

 

[ualdriver]

I think I'm going to be done with you, Boeingman after this as well.

UAL was probably in default or going to be in default on lots of things, hence the entry into bankruptcy.


All the pilot groups are now being directly affected by UAL actions.

Actually, all the pilots groups are REALLY directly affected by those who work for carriers that significantly undercut UAL/DAL/NWA, etc. (i.e. legacy) pay rates that included nice work rules (actually CAL's work rules were very poor compared to UAL's and the other legacies, even in the "fat" times), high hourly rates, and a nice pension. When 80% of UAL's domestic routes are covered by low cost competition, there's a choice to be made. Either cut our costs (i.e. pay and work rules) down to those competiting against us or perish. So far, we're chosing the former. I suspect every legacy airline employee will have a choice in the near future.....take the corresponding JetBlue/Airtran/Frontier etc., pay rate and work rules, or burn the house down fighting it.


What Tilton is doing to you guys is in many ways no different than what Lorenzo did in 1983. Except in your case, it is ok.

Actually, it's a lot different. In fact, the 1113(c) and (e) process evolved from abuses guys like Lorenzo used in the past. FYI, Tilton isn't doing anything to anyone. He came on board well after the damage was already done. He's just trying to fix the mess his predecesors left for us and get us out of bankruptcy in relatively one piece.


You are right about one thing though. I am surprised at every turn of the fiscal quarter with the amount of money UAL is bleeding while languishing in bankruptcy. Just when you think the losses won't increase.....

Yup, we just keep losing money but our cash balance keeps going up. My in-law is an accountant and he kind of has a rule of thumb when he looks at a company's financials.......follow the cash! Oh yeah, from Continental's latest 10Q filing......Wow, a 184M loss for the 1st quarter of '05, a 48.4% INCREASE in losses over '04. Just when you think the losses won't increase! And then it states....
........We have significant financial obligations due in 2006 and thereafter, and we will have inadequate liquidity to meet those obligations if the current adverse environment for network carriers does not improve materially and we are unable to increase our revenues or decrease our costs considerably or raise additional liquidity through financing activities and/or by selling non-strategic assets. Our recent pay and benefit cost reductions will help us reduce our costs, but in and of themselves are not expected to restore our profitability in the current environment..........

Now I certainly DO NOT wish my friends at CAL (I do have friends there) ill will, but Boeingman, it looks like we might see if you're all talk or if you're going to burn the place down to teach "the man" a lesson! I suspect the former.


Incidently what is the plan of reorganization fro UAL? Or does the lack of such still not bother those like you? After all this time no less.

You don't get to see the plan of reorganization. You're the competition. However the 4 banks that are providing us exit financing, assuming we are able to exit bankruptcy in the future (I think we probably will) DO get to see the existing plan. And they seem to be pretty content with it because they've agreed to hand us a couple of billion for our troubles this fall. Even if you did get to see it, you probably wouldn't like it too much........

P.S. Believe it or not, I agree with the NY Court's ruling.

 

[skykid]

B-man,

I always enjoy debating you and enjoy your posts. The comment you made about looking the retirees in the face will come back to roost in my opinion, regardless of what happens at United. CAL can't compete in this century with those pensions. With the victories United mgt won today (which by the way are several times over more important than any "repos"), your pensions are going to go quicker, and I don't blame you for being bitter about that. If United disappeared without a trace today, you still have the growing, more modern model of airline that unfortunately any "legacy" won't compete with in the long haul. The inevitable is put off a few years. So you, in my opinion, are going to get to test what you call an integrity issue. No job no pension, or just no pension.

 

[Boeingman]

B-man,

I always enjoy debating you and enjoy your posts. The comment you made about looking the retirees in the face will come back to roost in my opinion, regardless of what happens at United. CAL can't compete in this century with those pensions. With the victories United mgt won today (which by the way are several times over more important than any "repos"), your pensions are going to go quicker, and I don't blame you for being bitter about that. If United disappeared without a trace today, you still have the growing, more modern model of airline that unfortunately any "legacy" won't compete with in the long haul. The inevitable is put off a few years. So you, in my opinion, are going to get to test what you call an integrity issue. No job no pension, or just no pension.

Likewise from me debating with you and reading your opinions.

I actually agree with you Kid. But I still say the actions of ALPA within UAL will start the pension tide rolling downhill for us all. No emotion here just a matter of facts and numbers. You are right that now all the other legacies will have to beat their employees into submission to match UAL's costs and lack of pensions. My comment was based on the fact UAL ALPA should pf pushed much harder to protect their own pensioners retirement plans. I just didn't see much of a fight in that area.

I disagree about the repos as far as a long term basis. On a tit for tat snapshot you are correct that the IAM bullet is far more important as of today. However, the fact that lessors had to sue UAL for their property and for cures on default of the lease terms, will not bode well for future aircraft financing and lease programs for UAL. In fact, and it has been written, it is going to make it difficult for other carriers with poor balance sheets to negotiate terms in the future.

You are also correct that the model is changing. My belief is should UAL survive and now others it seems wil have to follow another reduced cost structure, the LCC's advantage is going to vanish.

I think I already took that test in 1983.

 

[Boeingman]

I think I'm going to be done with you, Boeingman after this as well.

Fair enough

UAL was probably in default or going to be in default on lots of things, hence the entry into bankruptcy.

True statement. The problem here is specifically the default on leases hence the repo. Unlike your comrade spinup you seem to grasp the fact that this wasn't a dispute about a lease price but an actual default. You know spin up seems like a pretty good name for him trying to "spin" the 763 repo's

Actually, all the pilots groups are REALLY directly affected by those who work for carriers that significantly undercut UAL/DAL/NWA, etc. (i.e. legacy) pay rates that included nice work rules (actually CAL's work rules were very poor compared to UAL's and the other legacies, even in the "fat" times), high hourly rates, and a nice pension. When 80% of UAL's domestic routes are covered by low cost competition, there's a choice to be made. Either cut our costs (i.e. pay and work rules) down to those competiting against us or perish. So far, we're chosing the former. I suspect every legacy airline employee will have a choice in the near future.....take the corresponding JetBlue/Airtran/Frontier etc., pay rate and work rules, or burn the house down fighting it.

Agreed about CAL. I am in no way a CAL apologist for our work rules and working conditions. You are married to your carrier for better or worse. When I went to work for CAL in the late 70's, it was the airline to be at. Although the misfortunes I suffered here forced me to start a business that has allowed me not to give a crap about what happens in the future to us or the industry. Forced change can be a good thing.

Your example of the legaices exclude one important thing. None of those carriers have 20 - 30 year pensioners and high seniority employees. Apples to Oranges in comparisons. It will be interesting to read these boards in 25 years to see how our friends at the LCC's view their retirement plans and such, if they are around that long when/if the legacies get their CASM's in the same neighborhood.

Actually, it's a lot different. In fact, the 1113(c) and (e) process evolved from abuses guys like Lorenzo used in the past. FYI, Tilton isn't doing anything to anyone. He came on board well after the damage was already done. He's just trying to fix the mess his predecesors left for us and get us out of bankruptcy in relatively one piece.

The end result is the same thing. If any of the ALPA groups could of stopped the attack on pay and benefits to the extent that has taken place, UAL would of been the last one I thought would of gone this far. That is a compliment by the way.

Make no mistake, your managemnt will come back for more. The employees there (and everywhere else) to date have shown that fear and intimidation has permeated negotiations in the industry.

Yup, we just keep losing money but our cash balance keeps going up. My in-law is an accountant and he kind of has a rule of thumb when he looks at a company's financials.......follow the cash! Oh yeah, from Continental's latest 10Q filing......Wow, a 184M loss for the 1st quarter of '05, a 48.4% INCREASE in losses over '04. Just when you think the losses won't increase! And then it states....

Now I certainly DO NOT wish my friends at CAL (I do have friends there) ill will, but Boeingman, it looks like we might see if you're all talk or if you're going to burn the place down to teach "the man" a lesson! I suspect the former.

Thanks for the financial lesson about CAL. To rely on increasing cash balances as a barometer of fiscal health is not wise. Many things can be delayed or deffered carrying the books from one quarter to the other. It is a fact of life in business. The bottom line is cash flow and ultimatley losses. Your credit ratings, ability to borrow all depend on those things. To rely on on one facet of the equation is wrong.

You don't get to see the plan of reorganization. You're the competition. However the 4 banks that are providing us exit financing, assuming we are able to exit bankruptcy in the future (I think we probably will) DO get to see the existing plan. And they seem to be pretty content with it because they've agreed to hand us a couple of billion for our troubles this fall. Even if you did get to see it, you probably wouldn't like it too much........

Now that is funny. You must really believe there is a plan of reorganization out there just waiting to be filed. Is that why UAL continues the very expensive process of bankruptcy by delaying? C'mon.

2 Billion more debt? Nobody is "handing" you guys anything. It will come with a very steep cost. It never ceases to amaze me how people think all this magical money fro DIP and exit financing is thought of as a gift.

From the statement of liking UAL's reorganization plan. UAL could live or die just like CAL. Personally, for me, it makes zero difference. That's the nice thing about being forced to earn a living outside of this industry, in the end, you just don't care what happens and enjoy the flying. Like the job was when I first got hired.

P.S. Believe it or not, I agree with the NY Court's ruling.

Actually it was an Illinois District court and yes they did make the right decision.