UAL Decision Soon Amid Worries/Questions

[On Your Six]

Not trying to get flamed here, but how can UAL justify a loan guarantee (and I know it is just a guarantee) post 9/11 when European airlines like Sabena were forced into liquidation post 9/11 and not allowed support from the Belgian government? Sure, Alitalia of Italy will probably get some support, but Italty likes to break the rules.

I am hopeful that UAL gets the guarantee and continues to improve its cost structure until it reaches profitability - let's get the furloughees back. However, the logic of helping an airline that is currently burning through cash due to high fuel costs and intense LCC competition is a bit difficult to fathom given that other US airlines (like SWA and AirTran) are doing reasonably OK after 9/11... No wonder there are a few upset legislators out there who want to prevent the guarantee.

Read below:



UAL loan decision soon amid fuel, other worries
Thursday May 27, 10:57 am ET
By John Crawley


WASHINGTON, May 27 (Reuters) - United Airlines hopes to hear soon whether it will receive a $1.6 billion federal loan guarantee that is crucial to it exiting bankruptcy, but soaring fuel costs and renewed concerns about exposing taxpayers to struggling airlines have created new challenges.



Current and former government and industry officials who are familiar with United's bid and would only speak anonymously declined to say that these hurdles are insurmountable, but say they present problems that were not as apparent when the application was first considered in 2002.

However, one senior lawmaker believes UAL Corp.'s (OTC BB:UALAQ.OB - News) United, which is based in Elk Grove Village, Illinois, has positioned itself so well politically that approval by the Air Transportation Stabilization Board is inevitable despite the new developments and maneuvering by other airlines to derail the loan guarantee.

The stabilization board, set up to administer loan guarantees for airlines with losses related to the 2001 attacks, operates in near secrecy and would not comment on United. But industry and government sources agree that the groundwork is mostly complete and expect a decision soon.

United Chairman Glenn Tilton has lobbied extensively and has a powerful hometown supporter in House Speaker Dennis Hastert.

"It's a very large airline, it's an election year, and an airline directly attacked on Sept. 11th," one industry insider noted.

United hopes to exit Chapter 11 this summer and needs the guarantee to get $2 billion in private financing.

The board has been stingy but has not rejected a major carrier outright.

Officials familiar with United's application acknowledge that the airline has addressed most big conditions set by the three-member stabilization board, which denied the initial application because of an inadequate business plan.

But they also note concern with fuel cost estimates and worsening financial prospects at US Airways Group Inc. (NasdaqNM:UAIR - News), which received a loan guarantee last year during its bankruptcy and is weighing another Chapter 11 filing.

United's latest fuel estimate is $750 million more than projected at the start of the year and nearly double the figure of several weeks ago, bankruptcy court filings show.

Tilton said United would be profitable this quarter if fuel expenses were not so high, a statement that raised eyebrows.

"There is nothing in the law that says you can bail out airlines because their fuel costs are too high or labor costs are too high, or because they can't manage their low-cost competition," Sen. Peter Fitzgerald, an Illinois Republican and critic of United's application for federal aid, said in an interview.

With the federal board demanding big savings, United said it is considering furloughs to offset fuel expenses. It also raised its fuel surcharge by $5 on most fares.

US Airways, which got a $900 million guarantee, has restructured its loan repayment schedule in recent months. The potential value of US Airways stock warrants held by the government has plunged. Industry officials say the Bush administration is closely examining this scenario with regard to United.

Tilton argues that his airline has overhauled its business plan. United has achieved $5 billion in annual savings and, with congressional help, resolved questions about near-term pension deficits. It has also launched a low-cost carrier, Ted.

But Ed Faberman, president of a trade group for low-cost airlines who actively opposes the guarantee, says nothing is assured. "I think as time goes on there are more and more questions." (Additional reporting by Kathy Fieweger in Chicago).

 

[Lequip]

Enough Already! NO LOAN FOR UAL!! Boo-Hoo, Woe is Me cries UAL. UAL managements can look in the mirror and see who is to blame for the mess they are in. Let em Sink.

 

[flyguppy]

Why don't you stick your "I hate UAL" rhetoric up your arse.

Like the Dude would say, "Yeah, well, that's just, like, your opinion, man."

 

[Heavy Set]

I hope UAL gets the guarantee, but, in case they do not get the guarantee, what is the likely result? What would be the likely next steps?

With relatively high fuel prices, can UAL withstand a zero-guarantee vote?

 

[CRJ Driver]

UAL is still operating the same old way they did before,
pissing money away, painting airplanes, bonus for managment people, ect..... All they did is cut labor cost, so what.

 

[Mr.B]

If you are so adamantly opposed to the loan guarantee maybe a letter to your elected representative is in order. Oh, use the term "boo-hoo". It shows your level of intelligence. I'm sure he'll listen.

 

[Heavy Set]

Can airlines like AMR and Delta claim 9/11 damages 5-10 years from now? Will they be able to get guarantees too if UAL succeeds with its application for a guarantee? Do you think that each major is "owed" a guarantee years and years after 9/11? Wouldn't this set a precedent that most airlines would use later on?

 

[skykid]

Heavy Set, the loan guarantee program deadline is long since past, there is no precedent since the program no longer exists. United applied for the guarantee well within a year of Sep 11, 2001 and this is unfinished business. The ATSB doesn't have a deadline to decide on this.

CRJ Driver, how about using this thread to explain how United is doing it the same old way, with some specifics. You could start with the "bonus for management people, " and explain how that program works. Maybe then you could explain how to be in business for 80 years and not paint airplanes.

 

[Russ]

OY6
I speak only to the European connection. It wasn't but a few years ago that many of the Euro carriers had a cradle to grave unspoken guarantee from their respective governments quite often via % ownership. Do a search of Air France in the 90's and look at the protection they received. To a lessor degree British Airways also. If memory serves me correctly, US airlines have in the past helped to bail out Euro airlines within their alliances in times of need.

As to the UA loan, I dunno.

 

[BLUE BAYOU]

It's an election year, no one is going to let UAL die... at least not this year...

 

[typhoonpilot]

This is from today

UAL (OTC BB:UALAQ.OB - News), the bankrupt parent of United Airlines, reported a net loss of $137.3 million in April, according to a regulatory filing made Thursday. Based in Elk Grove Township, Ill., UAL (UALAQ: news, chart, profile) had an operating loss of $75 million, better than the $220 million loss in suffered the same month last year. But rising fuel prices defeated UAL's bid for a profitable month. United aims to exit Chapter 11 bankruptcy by the end of this summer, but that is likely to hinge on whether it secures a $1.6 billion federal loan guarantee from the Air Transportation Stabilization Board.

Still losing $2.5 million per day on operations. That can't be favorable for the decision process. I agree it probably won't be allowed to die before the election and maybe not ever as it fits into the category of " too big to fail ". Still, something has to change there because it can't keep going like it is.

Typhoonpilot

 

[Publishers]

Funds

As you remember. they did receive government funds at the time of the disaster plus a possible loan guarantee.

Both of these were to cover direct losses, not of market losses, but direct losses related to the closing of airspace and the restricitions and other costs that came from it.

This is not a bankruptcy loan or a loan for subsequent market losses. Naturally the airlines portrayed these losses as high as they could to get as much as they could get.

This approach is hurting them now as they want too much and much of it is not directly ----key word--- directly associated with 9/11

 

[Extra300S]

F9 got the loan backing sooooo why can't UAL? Looks like the allmighty Frontier LCC took a loss as well........

TED is doing well, people want the service and Miles on UAL, we also fly to TOKYO and LONDON, of course out COSTS are higer, we have SEVERAL types of airplanes and our employee's actually make a LIVING instead of paycheck to paycheck.




Frontier on course for $5.4M loss
High fuel prices, weak sales could end profitable string

By David Kesmodel, Rocky Mountain News
May 27, 2004

Frontier Airlines is expected today to end a string of three profitable quarters by posting a loss that one analyst said might top $5 million and disappoint Wall Street.

Citing high fuel prices and weaker-than-expected sales, analysts on average have been projecting a net loss of about $1 million, or 3 cents a share, for the three months ended March 31.

J.P. Morgan analyst Jamie Baker said Wednesday he expects Frontier to record a net loss of $5.4 million after reviewing financial results the Denver- based discounter filed recently with the U.S. Department of Transportation.

In the filing, dated May 12, Frontier said its net loss in its fiscal fourth quarter was $5.4 million, or about 14 cents a share.

Baker said "Form 41" Transportation Department filings can differ from results reported under generally accepted accounting principles, or GAAP, by excluding one- time gains or charges. But he said he didn't expect any one-time items in the results Frontier will post today.

"We believe Frontier's net loss will reach $5.4 million," he said in a report to investors.

Frontier's filings with the Transportation Department have matched results reported under GAAP in seven of the previous eight quarters, he said.

Frontier spokesman Joe Hodas stressed that the numbers submitted to the Transportation Department are "preliminary and unaudited." He wouldn't comment further.

Baker had been projecting that Frontier would break even in the January-March quarter.

A year earlier, the airline recorded a company-record loss of $13 million as it suffered from Denver's worst blizzard in years.

A loss in the latest period would be the fifth in the past nine quarters for Frontier, which ranks second after UAL Corp.'s United Airlines in the number of passengers served at Denver International Airport.

"For a low-cost carrier, Frontier's grasp on profits is elusive at best," Baker said in his report.

Baker said Frontier's results since 2002 compare favorably with those of big hub carriers such as American. But other discounters have done better, with AirTran reporting only one quarterly loss since the beginning of 2002 and JetBlue and Southwest reporting none, he said.

"In the post-9/11 revenue environment, Frontier therefore appears capable of profit only when oil prices are low and/or UAL mismanagement is high," he said.

His comments followed a negative report Friday by Raymond James & Associates analyst Jim Parker.

Parker, who owns Frontier shares, cut his earnings estimates for each quarter of fiscal 2005, which began April 1. For the April-June quarter, he cut projected profits to 5 cents a share from 11 cents.

He said he made the cuts primarily because of the recent rise in crude oil prices to about $41 a barrel. Frontier hedged only 7 percent of its fuel needs for the first six months of 2004.

In addition to high fuel prices, analysts are concerned about Frontier's tough pricing competition and the possibility that United's new budget carrier, Ted, will wrest cost-conscious fliers from Frontier at DIA.

Frontier shares fell 10 cents, or 1 percent, to $9.55, Wednesday and are down 33 percent this year.

 

[SMMustang]

Here ya go Mr. B!


http://www.house.gov/writerep/



http://www.senate.gov/general/contact_information/senators_cfm.cfm







I wish to voice my opinion on the United Airlines Federal Loan Guarantee. I am not in favor of the loan guarantee and request your influence to deny them the loan guarantee.



United has been a fiscally irresponsible corporation for quite sometime that has already cost the taxpayers with federal financial help. More loans would only create a bigger financial burden to taxpayers once the company does fail completely.



The employees would have to opportunity to find employment with new carriers that are much more fiscally sound and would be a lesser burden to the taxpayer.



Thank you, for your time and consideration. I look forward to following your support in this issue.







Sincerely,





**feel free to edit as desired**

 

[SMMustang]

On mine I made "United Airlines Federal Loan Guarantee. I am not in favor of the loan guarantee" bold so they could cut to the chase.

It is easy to write congress use the links above, copy and paste my letter, add your own info/#s if you wish.

 

[bpapaDC8]

We pilots sure are some backstabbin mofos. I'd sell my soul to get your seniority number, job, etc.

Those of you who write to Congress be sure to tear the Pilot unity, Defending the profession,or 9-11 never forget stickers off your bags first.

bpapa

 

[On Your Six]

I guess the next question is what will likely happen IF UAL does not get the loan guarantee? What would be the likely next steps?

 

[Mach 80]

>>>>We pilots sure are some backstabbin mofos. I'd sell my soul to get your seniority number, job, etc.

Those of you who write to Congress be sure to tear the Pilot unity, Defending the profession,or 9-11 never forget stickers off your bags first.<<<<

You got it all wrong man. The reason we're writing is so there can finally be a strong industry and to actually defend the profession. Bankruptcy laws and other artificial means such as loan guarantees are keeping weak airlines afloat and not permitting business Darwinism to take place. There are too many seats chasing too few people at too low fares because bankruptcy laws and loan guarantees are keeping these weaklings afloat and greatly harming the rest of the industry. Additionaly the bankrupt airlines are driving the pay rates down. Let natural business Darwinism take place and quit propping up the weaklings which in the long term is harming all our careers. When you go out of business and get hired at a stronger airline you will enjoy a more secure future and in the long term, will have less heartburn so accept it and move on. The industry will not get stronger and more secure unles the weaklings are permitted to wither away and quit using 9/11 as an excuse. Bad things happen to businesses all the time and they have to be tough enough to survive them. Besides, all 9-11 did was speed up the inevitable,

 

[MW44]

Mach 80 stated

"The reason we're writing is so there can finally be a strong industry and to actually defend the profession. Bankruptcy laws and other artificial means such as loan guarantees are keeping weak airlines afloat and not permitting business Darwinism to take place. "

There is a contradiction in that statement. Corporate Darwinism won't stop if/when Ual dissapears, and as long as people continue to start new airlines in a saturated market aviation will never be a "strong industry."

Pilots writing congress asking them to deny Ual's loan are not looking out for the industry. Give us a freekin break man. They are looking out for their own seniority number, upgrade, future growth, etc. I would wager that quite a bit of your sentiment comes from jealousy/ anger over everything Ual has stood for. But I know, just like Ty, you probably never wanted to work for Ual.

I liked your statement that bankrupt airlines are driving the wages down. After two rounds of concessions and cancelling their pensions the Us Air pilots are finally making less than SWA, which pays more than any other LCC. I think you would be hard pressed to find ANY airline analysts that would say the legacy carriers who have been through bankruptcy have been the main force behind declining salaries/benefits.

 

[Mugs]

USAir and UAL gone. Get ready for "the MESA effect." Yeah sure, that will help bring the standards back up. They will just have to change those ads in Flying magazine ---- you know--- the give us all your your cash and we will turn you into an airline pilot in 8 months at our pilot mill by the beach ads. They can keep the picture of the strary-eyed (and sun-tanned) youngster standing proudly in his shiny new uniform. They will just need to substitue an A-320 for an RJ in the background.

Hey, Mach 80 --- man--- do you think all those seats chasing too few customers disappear with a liquidation? Or do you think that just maybe they might come back and suddenly make you and the improvements you obtain over the years the new standard for "high cost?" Defend the profession with your letter. Good luck.