UAL Loses $520 mil on fuel hedges

[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

 

[V-1]

Hindsight is 20/20.

Not to cheerlead UAUA management, but if oil prices climb to $170/barrel next spring/summer, they'll look pretty smart.

In any event, wasn't Tilton one of the airline executives that signed off on that ridiculous "Stop oil speculation" memo that got so much press coverage just a couple of months ago? Perhaps he should have heeded his own demand?

Oh, the hypocrisy!

 

[123]

Hindsight is 20/20.

In any event, wasn't Tilton one of the airline executives that signed off on that ridiculous "Stop oil speculation" memo that got so much press coverage just a couple of months ago? Perhaps he should have heeded his own demand?

Oh, the hypocrisy!

Not that I am a fan of UAL management, but where exactly is the hypocrisy in this? There are two primary reasons for hedging: 1. a common business practice used to reduce risk and exposure to variable costs in a commodity (note that the purchaser of the hedge is actually impacted/uses the commodity) and 2. a speculator that has no invested interest in the actual commodity and their only interest is in a short term gain on either the increase or decrease in price.

 

[magrs]

Has AMR hedged up there also?

I know CAL and UAL did, but AMR could be the wild card in all of this. If they didn't hedge yet, it could become quite a windfall for them in '09.

 

[Poahi]

Hindsight is 20/20.

Not to cheerlead UAUA management, but if oil prices climb to $170/barrel next spring/summer, they'll look pretty smart.

In any event, wasn't Tilton one of the airline executives that signed off on that ridiculous "Stop oil speculation" memo that got so much press coverage just a couple of months ago? Perhaps he should have heeded his own demand?

Oh, the hypocrisy!

You're right about the possibility of oil going up to $170, but I think most analysts were thinking is wasn't going to do that. I think the legacy airlines were a little late to the hedging party.

BTW, it's not speculating if you actually consume oil.

 

[nosoupforyou!]

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????


Dude that's peanuts.

Last quarter, UAL posted a loss of 2.7 BILLION. Now, that equates to 30 MILLION FREAKIN' DOLLARS A DAY!

and guess what the stock did the next day?

.......it went UP 50%

WHAT KINDA MONKEYS ARE RUNNING THIS JUNGLE!

 

[contrail67]

CHICAGO, Sept. 18 /PRNewswire-FirstCall/ -- UAL Corporation UAUA, the holding company whose primary subsidiary is United Airlines, completed the amendment of its co-branded card marketing services agreement with Chase Bank, as well as amended its credit card processing agreement with Chase/Paymentech L.L.C. These agreements boost United's liquidity by approximately $1.2 billion, including $1.0 billion in the short term and an additional $200 million over the next two years.
"This is one of the many steps we are taking to improve our liquidity and increase the amount of cash we have on hand to strengthen our business for all our stakeholders in this volatile fuel environment," said Jake Brace, executive vice president and chief financial officer.
Under the terms of the agreement, United has received an additional $600 million from Chase in consideration for the advance purchase of frequent flyer miles and for extending the agreement. As part of the transaction, United has granted a security interest in various assets, including specified intangible Mileage Plus assets. United continues to have more than $3 billion in unencumbered hard assets to use to raise additional liquidity if needed.
With its amended credit card processing agreement, United realizes a return of more than $350 million of restricted cash back to the company compared to its prior reserve requirement

 

[ReverseSensing]

BTW, it's not speculating if you actually consume oil.

It may not be manipulative "speculating", but it is a speculative endeavor. Just because you're doing it as a business practice to have some measure of fixed future costs doesn't mean it doesn't affect the speculative market.

People can draw a moral distinction between speculators playing the ups and downs and corporations securing hedges to lock in known costs, but both activities put pressure on the cost of the commodity. That's why some say there is irony in airline execs bemoaning speculation on the one hand while they go out in the market and speculate with hedges on the other hand.

 

[AAflyer]

Has AMR hedged up there also?

I know CAL and UAL did, but AMR could be the wild card in all of this. If they didn't hedge yet, it could become quite a windfall for them in '09.

AMR did not.....

AAflyer

 

[WalterSobchak]

disregard...

 

[UAL-GSO]

Not sure if this has been posted before. Please feel free to use this link to let Tilton know exactly what you think of his leadership ability. Try it -it's fun!

http://www.glenntilton.com/write-glenn-tilton/