UAL Loses $520 mil on fuel hedges

[StopNTSing]

What RedDogC130 said....

At the rate Wall Street is imploding, there may not be any money left in the Fed's coffers to bail out an airline or six! :crying:

 

[SpauldingSmails]

Frankly, I don't see why people believe the government will even bail out an airline. I always hear, "They're too big they won't let them fail." I don't know who "they" are to stop it.

Remember, Eastern and Pan Am were not exactly small players either. Someone is going to eat it, and its not the purview of government to stop it.

 

[MALSR]

Don't worry United, the U.S. government will bail you out.

 

[FatesPawn]

trading 101 would tell you to cover that position with a short as soon as the mkt fell. They are so stupid it is embarassing.

Raoul,

This isn't directed at you, but the premise of UAL losing 520mil on hedges is more about GAAP accounting than actual losses.

SWA pulled this on us when they cyphered our "profit" sharing last year. The gains from hedges - even if UNREALIZED - must be accounted for. Since losses are the same, UAL will have to show that too. SWA may show a loss in the coming quarters because they had to show a GAIN during the oil run-up. Now, they have to show the "perceived" loss even though they never made a DIME on those positions.

-fate

Oh.... and as for the govt caring about legacies... you only have to look as far as the rejected ATSB loan application to see how far the govt will back legacies.

 

[FatesPawn]

Oh, and I have trouble balancing my checkbook - so take that financial info as PILOT MUMBOJUMBO....

 

[nosoupforyou!]

I am quite confident United will be around for our lifetime at least. 4 years in BK, goatf**king everyone they owed money to, all the while undercutting competitors prices. Yep, that's the way it works.

When you get to be that big and owe so many massive corporations so much money, you get propped up until the key players get thier money back. Small fries lose though. I have no pity on the investors though! Especially those shorting motherf@@kers.

It's OK, UAL is playing with monopoly money. It won't affect you..............that much........well maybe it'll cost you your job but you'll be fine.

 

[123]

Airlines and the financial markets are two entirely different markets and impacts to the public. I do not believe that the government would attempt to bail out any airline, especially right now. After these last few takeovers by the government, they are looking for a few companies to make an example of. Notice they have not saved Lehman. They will need to convince corporate executives that the govt will not come running to the rescue for their mistakes. The takeovers by the govt this week and last are supposed to be viewed as saving the public and not saving the company. The Fed does not want a repeat of the Saving and Loan defaults decades ago.

 

[spciii]

Just think how well United will do when their hedges run out!!

That . . . . . was hilarious

 

[QCappy]

I think this is even worse news than the fuel hedge loss:

UAL anticipates it will end the quarter with $2.9 billion in unrestricted cash, down from $4.4 billion at the end of the second quarter.

http://www.marketwatch.com/News/Sto...12-3E96-4D28-ABCB-F51A4BE79A47}&siteid=yhoof2

 

[PlaneDrvr]

First, I want to say that I am not here to bash UA, as I know that ALL airlines are in a Bad Way; with the high (and unstable) fuel costs and the slowing economy.

That said, I look at yahoo and marketwatch finance/airline business news almost everyday to keep up with what's going on in the industry; and came across this article. I will put the link here (hope it works for you guys), but the last part of the article talks about UA's 'pre-announce' of 3rd Qtr results.

http://www.marketwatch.com/news/sto...910-33EC-4365-B4EC-F499ECA70109}&siteid=yhoof

Here is the interesting (or surprising) quote from the last part of the article;

"UAL anticipates it will end the quarter with $2.9 billion in unrestricted cash, down from $4.4 billion at the end of the second quarter. "

Now, if I did the math right and made sure to carry the "1" that means they went through about $1.5Bil in cash, in the 3rd Qtr. And again, if I did the math right, that's a cash burn of about $16Mil./day????

The 2nd. and 3rd Qtr. are normally the best for most airlines (the bread and butter); and with one more Qtr. like that, and UA could be close to default on the covenants of their debt?? I believe they have to have about $1.2Bil. to avoid a default, but could be wrong on that issue.

Again, not trying to bash UA or any other airline, just thought it was noteworthy. I will be really interesting in about a month to see what All #s all the airlines put up, probably won't be pretty.

Anyway, for what its worth.

PD

 

[PlaneDrvr]

I think this is even worse news than the fuel hedge loss:

UAL anticipates it will end the quarter with $2.9 billion in unrestricted cash, down from $4.4 billion at the end of the second quarter.

http://www.marketwatch.com/News/Sto...12-3E96-4D28-ABCB-F51A4BE79A47}&siteid=yhoof2

Cappy,

You beat me to it; we must have been typing at the same time. A different article, but said the same thing.

 

[satpak77]

trading 101 would tell you to cover that position with a short as soon as the mkt fell. They are so stupid it is embarassing.

and you my brother, are 100% correct. they should have had a trailing stop order in place and shorted the pi** out of it as it fell on heavy volume

they could have made more money on a short sale than they do selling tickets !!!!

(true statement !)

 

[satpak77]

FYI that trading requires credit worthiness and if they are loosing millions trading futures they can be forced to LIQUIDATE if they cannot cover their losses.

Look at all the "hedge fund blowups" recently, same thing. Except now the fund is called "UAL"

 

[GoodTimes]

If only UAL could find someone from the oil industry to be CEO :nuts:

 

[CubsFan]

UAL cash

For what it's worth, I think the $4.4 bil in cash for UAUA at the end of the second quarter is inaccurate. According to this PR news release from UAUA regarding quarterly financials they ended the 2nd quarter with $2.9 bil, not 4.4 bil in unrestricted cash.

Here's the link to the UAUA press release for the second quarter:

http://clearstation.etrade.com/cgi-bin/bbs?post_id=8750887