UAL chapter 11

[TurboS7]

I saw on another board that UAL was going to file Chapter 11 at the end of this week. Anyone heard anything about that.

 

[I.P. Freley]

Sounds like baseless rumor-mongering to ME, but what do I know? I can't find a job to save my life.

 

[1900laker]

Last I had heard, they had enough funds and loan guarantees to carry them through the summer at least. But who knows, I could be wrong.

 

[TurboS7]

With renewal of a pilot contract looming if they went Chapter 11 they could enforce emergency work rules and bend the contract to whatever they would need. Guess we'll see.

 

[dashtrasher]

Loan guarantees? I thought only AWA and Vangaurd had applied for them?

 

[TurboS7]

Right now UAL is loosing 16M per day. Even the greatest of loan guarentee's isn't going to help you.

 

[skykid]

UAL Chapter 11

TurboS7 - I had to jump in here on this one. I don't know how much money UAL is losing a day. I bet very few people do. 16 mil a day? Maybe back in Sep or Oct, but not today. UAL has not taken any government loans. UAL pilots are in not even close to being up for a new contract. Bankrupt on Monday? I'm not going to pretend to know the answer to that. Here's what I do know. Pres Bush appointed a three member Pres. Emergency Board. They listened to United Mgt talk for two days about how the rough shape of the company. Then IAM 141M got to talk for two days pleading the case for a raise for mechanics. The PEB then recommended a 37% raise. Would you recommend that kind of wage increase for a company about to go bankrupt? Can a company with 3 billion (according to the Wall Street Journal) in liquid assets even go bankrupt? Has United repeatedly said in the press - as late as last weekend - that bankruptcy is not being considered now, so they can look stupid next Monday? My guess is probably not.

 

[RueterF16]

I was in a class of 6 at Midway who were told they were financially stable too...... $ 16 million a day is about right for the size of airline they are....

 

[ifly4food]

You think just maybe this rumor you've bought could be one last desparate attempt to influence the PEB?

 

[hawkerjet]

I also heard that rumor out here in LA and I heard it from a furloughed United pilot. Maybe he was disgruntled,I don't know, but they are also looking for a buyer for their fractional start up, Avolar.

 

[sydeseet]

They aren't looking for a buyer for Avolar, just another investor. "Risk sharing" is a standard way to fund an undertaking like Avolar. Let's all remember that there is hardly a major airline flying that hasn't been on the brink of Chapter 11 before. They will get through it, but a 37% raise on behalf of the mechanics is probably not a step towards recovery. Raises period are out of the question for any of us, I just want my job back.............

 

[TurboS7]

All I have done is repeat facts that were presented on another board. There were also many rumors from employee's posted etc. I did not repeat that, I was just asking if anyone else had any more information. Thanks for your input.

 

[dashtrasher]

So what was the other board were you got your "facts"

 

[1900laker]

Hey sydeseet,

Raises period are out of the question for any of us, I just want my job back.............

Shhhhhhh dude. Careful how you say that. You are being recalled, and from all the inside info, we aren't doing that bad. That's why they couldn't justify keeping that pay cut around for more than 2 months. So it kind of depends on the situation of your company and whether you are making money. I would agree however that many of the majors are in financial trouble, so a big pay raise SEEMS to be out of the question for any of their labor groups right now. But Mgmt has a way of making their bottom lines look bad around contract time anyway. Delta was famous for showing a loss on paper when in truth, they were making record profits quarter after quarter. They were taking the profit and expanding the airline, calling this a restructuring expense. I find it strange too, that companies are not divulging just how much help they got from the Gov't. (ours included). You should have seen the CFO explaining the scenario in such a way as to completely leave out any shred of evidence as to how much we got other than to tell us that we did get some. It reminds me again why I wanted to be a pilot and not a pencil pusher.

 

[A1FlyBoy]

UAL

Consider the source of information, especially from message boards. While this may be the finest board I've found to date, things written from those not in the know may have some basis, but are usually unfounded. UAL is NOT going to file Chapter 11 and will make it through these turbulent times. Support UAL and buy some stock or write them for an Annual Report and keep up with the WSJ, NY Times, and Chicago Tribune.

 

[MartinFierro]

I have no clue about the validity of UAL filing chapter 11 or what not. I personally find it hard to believe UAL is in that serious trouble. But, at the same time, back in the day, who would have ever thought that there would be no more Pan Am or Eastern? How things change....

 

[SaifAir]

I read in the Wall Street Journal that they had enough cash until mid March.

Who Knows until it happens.....

 

[flydog]

If you take a look at the latest SEC findings you will see...

UAL has assets of 5.6 billion + inventory of 300 million for a grand total of about 6 billion in assets

They have debt of 8.3 billion. This is about 2.3 billion in the hole

As far as cash on hand it is close to 300 million and they are losing 2.3 million per day. This is about 4 months of working capital

Obviously short of turning a profit the only way to continue to operate is to borrow more money

 

[MsFan]

Yeah, but would you loan them money right now? I wish them luck because UAL going down would be bad for all of us. But they seem to be running out of aces pretty quick.

 

[TacoTurbine]

UAL

According to "Union Sources", from the mouth of Jack Creighton:

IF the mechanics strike: Chapter 11

IF concessions cannot be worked out: Chapter 11

IF revenues do not continue to improve: Chapter 11

Apparently it was presented in a non-threatening, matter-of-fact way.

But look, Chapter 11 is "reorganization" and many airlines have emerged from this before. Ugly yes, but not the end of the road. I personally think it won't come to that; but it absolutely could.

Keeping the faith,

Taco

 

[~~~^~~~]

There seems to be conjecture that the 16 million dollar a day loss reported from UAL is a tactic to influence labor negotiations. Candidly, folks who believe companies can make ficticious reports simply do not understand the law.

Publicly traded companies have a fiduciary obligation to shareholders. Violation of the reporting standards can not only result in civil litigation, but also criminal prosecution.

There is precedent for Chapter 11 restructuring and the move makes more sense while there are still assets to reorganize the company with.

Many of you read that Avolar is dead without outside investment - this only makes sense.

The bankruptcy and restructuring of UAL also makes sense, how long can a company afford to lose 2 billion a quarter - after a while it sue adds up...

 

[flint4xx]

Their CEO was quoted as saying that unless there is an unforseeable change in the industry soon, his company will be faced with Ch 11 reorganization in the near future.

I got that from Yahoo Aviation news. You can't bleed that much cash forever. The proverbial dust hasn't settled yet from 9-11. Just 'cause they reorganize under ch 11 doesn't mean they will go out of business. It just protects them for awhile.

 

[sewertube]

My 2 cents

Not to fuel the rumors more, but I heard it like Taco explained it, if those things happen then chapter 11 will happen. Especially if and when the mechanics raise goes through, that will push them over the edge. The reason for chapter 11 will be to get "emergency action" on the current contracts. Including the ridiculous pilot wages they signed not too long ago. That is definitely a gaping wound. This is just how it has been explained to me, and probably mostly more heresay. Personally I think bankruptcy couldn't happen to a better airline....

 

[Chocks]

Grow up!!

"Personally I think bankruptcy couldn't happen to a better airline...." Grow up. I can't believe you would be happy about the prospect over ten THOUSAND pilots out of work. These are over 10 THOUSAND of pilots with families, kids, dogs, etc. Wow. "Ridiculous Wages" Why SHOULDN'T the person DIRECTLY responsible for the LIVES of over 200 people (777 Captain) make the same as a lawyer or doctor? I can't believe you are in this line of work - obviously you don't have the integrity, mental capacity and maturity to be responsible for the well being of others. Go sell cars or something.

discusted.......Chocks

 

[kilomike]

Well said, Chocks!!

 

[EAP]

Here here!

 

[TurboS7]

The problem is that if UAL does go Chapter 11 then it owes nothing(tecnically is has no duty to pay unless told to by the courts everything goes on hold) on past leases, fuel charges, catering charges and maint. This will send a shock right through the industry. It would enable them to cut cost to compete and would put other airlines in trouble as they would have no choice but to cut fares for market share. I am still owed 45K from my business that receivable started out as a Chapter 11 then went to a Chapter 7 writeoff. The point is that I had to run my business with the loss on the books for 5 years, it sure didn't help the cash flow. There are people in the S.Fla area still trying to recover from the bankrupcy of EAL and Panam. It hurts and for all of our sakes I hope that it doesn't happen.

 

[sewertube]

Didn't mean to come off so cold...

Sorry to set off such a riot on here, I do apologize for the statement about bankruptcy not happening to a better airline. I have some emotions about them due to their lack of customer service over the years as a business traveler, shouldn't have let that out. But--

From a business standpoint I was merely saying in order to SAVE UAL the best alternative may be chapter 11, I did not say 13 so try to keep them straight. They are under such a financial drain, partly due to the high salaries they are paying, that it may be the only way to keep going. I just disagree with the on going attitude from senior pilots that feel getting furloughed is just something junior guys have to endure. I would reather see less pay to keep everyone employed, but I guess that is why I will never own a major airline.

I too am "discusted."

 

[~~~^~~~]

Sure, flying is flying but crashing a 300+ pax airliner is a bigger deal than crashing a 12 seat aircraft.

I can think of a dozen folks who would beg to differ...

 

[XNav]

For those of you in disbelief over the financial state of UAL, I personally don't think the severity of their current situation can be overstated. They lost 35 bucks a share in '01 and are forecast to lose another 22 bucks a share this year. The stock is trading in the 14-15 dollar range as of today. That means two years of losses will total about FOUR TIMES THEIR MARKET CAP. Chapter 11 may be the best way to go while there is still some meat on the carcass to be salvaged. Waiting may simply be prolonging the inevitable while simultaneously limiting their options to reorganize and keep operating after a bankruptcy filing.