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UAL Management speaks! UFB

Mr.B

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365
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Can you believe this idiot! UAL can't hedge as effectively as others because of their hubs proximity to the gulf! YGBSM!



Please furlough me soon or just shoot me.





Dear Fellow Employee,

Today, we provided investors with updated guidance on our expected fourth quarter performance in revenue and fuel.

We also provided additional information about a modification to our agreement with Chase, our largest credit card processor, that suspends the requirement for United to post cash reserves should our cash balance fall below certain levels. This revised agreement instead enables us to use our unencumbered assets as collateral. This change provides the company with greater flexibility, and we will still have more than $2 billion in unencumbered hard assets.

As to revenue, several carriers, including Delta, US Airways and Continental have recently lowered their guidance for the fourth quarter, reflecting weakening market conditions. We also adjusted our revenue growth expectations to reflect the current market. Today, we announced that we expect consolidated passenger unit revenue (PRASM) to increase between 2.5 percent and 4.5 percent year-over-year for the quarter. These numbers are in line with what other carriers have announced.

We also announced what our expected fuel price will be for the quarter and the accounting impact of our fuel hedging program.

In the fourth quarter, we expect to pay on average $2.81 per gallon for mainline jet fuel, rather than the $3.01 we expected to pay previously; and this includes the cash losses on our hedge contracts entered into when fuel was much higher in price. This cash fuel price is what investors will focus on.

Clearly fuel prices coming down is good news for us, and for the industry. Every dollar that fuel declines equates to about $60 million in fuel savings per year for United, excluding hedge impacts. It is important to note, as the price of fuel declines, we benefit on the unhedged portion of our fuel purchases.

Over the course of this year, when fuel prices were escalating, we systematically added hedges to protect us from further fuel price increases. With the recent fuel price decline, we are required to post collateral today to cover potential fuel hedge losses that may occur when our contracts settle.

Unlike most of our peers, we do not currently benefit from cash flow hedge accounting which would not require us to book expenses for hedges in place that have not settled.

To qualify for cash flow hedge accounting, the product hedged must correlate closely to actual fuel cost. Fuel hedging is predominately based on West Texas Intermediate Crude Oil (“WTI”).

United’s hubs are not in close proximity to the Gulf Coast region, so our true cost of fuel includes a charge for transportation cost to our hubs in the Midwest. This makes it more difficult to qualify for cash flow hedge accounting compared to peers that have hubs in Texas and Georgia. The large non-cash accounting charges we expect to book this quarter is one of the main reasons we expect our accounting hedge losses this quarter will be larger than those of some other carriers.

As we’ve said, lower fuel prices benefit our company and all of us. In this volatile environment, we are taking the right steps to ensure that we have the flexibility to achieve our business plan, respond to the current market, and ultimately return United to profitability.

Kathryn Mikells
 

MOCO

Member
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Dec 12, 2006
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BTW, "close proximity" is redundant as it means close, closeness. I gues they are really, very far away from the Gulf.
 

CaptJax

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Mar 3, 2006
Posts
310
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some
UA Collateral On Fuel Hedges - $1B

UAL collateral on fuel hedges rises to almost $1B
AP ONLINE
Posted: 2008-11-25 13:18:00

MINNEAPOLIS (AP) _ Falling oil prices have forced United Airlines to put up hundreds of million of dollars in new collateral on fuel hedges that have turned against it, and on Tuesday it said it had re-worked a credit card agreement to reduce penalties if its cash balance falls.

Based on Tuesday's oil price of around $51 per barrel, United would have to put up some $990 million in collateral, according to a formula for its fuel hedges that it disclosed on Tuesday. By comparison, as of Sept. 30, it had $378 million in cash deposits held by people on the other side of its bet that fuel prices would keep rising.

Shares of United parent UAL corp. jumped $1.67, or 18.9 percent, to $10.52 in afternoon trading. Other airline shares rose, although not as much, as the price of a barrel of crude oil fell $3.37 on the New York Mercantile Exchange to $51.13.

Falling oil prices have stung United and other airlines because they bet that oil prices would rise. Airlines still save money because their fuel bill shrinks, but the hedging losses have forced them to take non-cash charges that could turn into cash losses if oil prices stay at current levels or fall further.

Based on Thursday's oil prices United said it expects to end the fourth quarter with $232 million in cash hedging losses, and another $138 million in noncash losses.

Chicago-based United said that without hedging it would have paid $2.57 per gallon of jet fuel during the current quarter. Counting hedges that have settled, that price rises to $2.81 per gallon. If current paper hedge losses become a reality, that price would rise to $3.70 per gallon, United said. United said it expects to use 500 million gallons of fuel for its mainline flying during this quarter.

United also said it bought put option contracts aimed at capping hedging losses if oil prices keep falling.

United ended the quarter on Sept. 30 with $2.93 billion in unrestricted cash. If that fell below $2.5 billion, one of its credit card processing agreements required it to put up additional cash reserves above the current $25 million.

On Tuesday United said it had made a deal with the processor to push that cash requirement back to Jan. 20, 2010. In exchange for that leeway, United put up as collateral planes appraised at $800 million.

United can end the arrangement early if it wants to, and revert to its prior deal with the credit card processor. Under that arrangement, United's 25 percent cash reserve requirement jumps to 15 percent of its advance ticket sales if it has less than $2.5 billion in cash, with higher reserves if its cash drops further.

"In an environment where revenue and fuel remain uncertain, we believe the modified agreement provides the company with increased flexibility," United spokeswoman Jean Medina said.
 

pipe

fuggedaboutit
Joined
Oct 27, 2005
Posts
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Glenn Tilton is an unmitigated A$$clown! When will it end? We're losing money because oil is going up. We're losing money because oil is going down. We're losing money because of labor.

YOU"RE LOSING MONEY BECAUSE OF GLENN! WHERE IS THE BOD????!???!?

PIPE
 

Full of LUV

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Posts
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Yeah, what they need is an oilman.....

Glenn Tilton is an unmitigated A$$clown! When will it end? We're losing money because oil is going up. We're losing money because oil is going down. We're losing money because of labor.

YOU"RE LOSING MONEY BECAUSE OF GLENN! WHERE IS THE BOD????!???!?

PIPE

I guess what UAL needs is an oilman, someone who understands the oil industry. Heh, I think Dick Cheney will be available soon......
 

Ralph Cramden

Took the Red Pill
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May 7, 2005
Posts
351
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2much
From the letter:

"Clearly fuel prices coming down is good news for us, and for the industry. Every dollar that fuel declines equates to about $60 million in fuel savings per year for United."

Wow! You guys are really fuel efficient for a global mega airline! I flunked calculus in college, but if you save a buck a gallon and save $60M in a year, you use 60M gallons. I would think UA would use a slight bit more gas than this in a year!

He may be using the barrel price, but in the letter he is talking about the gallon price. Maybe Mr. Tilton flunked math as well?
 

Skippy

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Jan 14, 2002
Posts
561
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N/a
when ive been flying, ive seen tons of ferry fuel /economic--- like 8 k worth all the time--- they put the price on teh release- it's over a dollar cheaper wherever we go-- ORD must have some high ass taxes---- cant they get tankers in lake michigan? im going to call BS on this--- so we just tanker it form MSP-- nice


oil goes up , we suck,
oil goes down, we suck

labor at mesa type wages--- we still arent making money----GMAFB
 

Yuppyguppy

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Nov 17, 2003
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934
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8000+
well I know in order to do such a great job "navigating" the current crisis we must pay top dollar for executive retention...so we are surely getting the biggest bang for our buck here at UAL.
 

Schwanker

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Dec 17, 2001
Posts
486
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That letter is just a bunch of double speak and parsing of words. What they're trying to say is UAL MGT really $UCKS!

Wishing the best for all UAL employees!

Schwanker
 

Draginass

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Nov 29, 2001
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5000+
United execs aren't stupid. They're going to milk this gig until the milk's all gone, then they're going to the gubment again for another slice of the pie.
 

Sonny Crockett

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United......its time to CRY!


(10 years working at UAL and this place SUCKS)
 

CaptJax

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some
UA Shares Slide

UAL shares slide on planned $200M stock sale
AP ONLINE
Posted: 2008-12-01 15:06:00

MINNEAPOLIS (AP) _ Shares of United Airlines parent UAL Corp. fell sharply on Monday as it disclosed plans for a $200 million stock sale.

The whole airline sector was down on recession news, with the Amex Airline Index falling 8.2 percent. But UAL was down 19 percent, falling $2.11 to $9.14 in afternoon trading. The shares have been volatile, trading between $16.59 and $7.53 over the past month alone.

The news of UAL's planned stock sale came after the company issued revenue guidance last week that disappointed some airline watchers.

The stock offering might have surprised some people because United's share price is so low, causing concerns about dilution of existing shares, said airline analyst Helane R. Becker at Jesup&Lamont Securities.

Also Monday, Credit Suisse analyst Daniel McKenzie lowered his price target on UAL to $13, down from $17. Because of UAL's weaker revenue prediction and losses on fuel hedges, McKenzie now expects United to lose $4.30 per share for the fourth quarter, rather than the $1.15 per share loss he expected previously. He left intact his 2009 earnings prediction of $1.85 per share.

As of Monday, analysts surveyed by Thomson Reuters were expecting a UAL fourth-quarter loss of $2.86 per share, on average, and a 2009 profit of $2.59 pershare.
 

rumrunner300

Old and Bitter
Joined
Feb 15, 2006
Posts
113
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United......its time to CRY!


(10 years working at UAL and this place SUCKS)

You got the sticker I left you?? More in my v-file, tell your friends.

Peace out.

p.s. the wagon is still up for grabs!! :)
 
Last edited:

contrail67

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UAL shares slide on planned $200M stock sale
AP ONLINE
Posted: 2008-12-01 15:06:00

MINNEAPOLIS (AP) _ Shares of United Airlines parent UAL Corp. fell sharply on Monday as it disclosed plans for a $200 million stock sale.

The whole airline sector was down on recession news, with the Amex Airline Index falling 8.2 percent. But UAL was down 19 percent, falling $2.11 to $9.14 in afternoon trading. The shares have been volatile, trading between $16.59 and $7.53 over the past month alone.

The news of UAL's planned stock sale came after the company issued revenue guidance last week that disappointed some airline watchers.

The stock offering might have surprised some people because United's share price is so low, causing concerns about dilution of existing shares, said airline analyst Helane R. Becker at Jesup&Lamont Securities.

Also Monday, Credit Suisse analyst Daniel McKenzie lowered his price target on UAL to $13, down from $17. Because of UAL's weaker revenue prediction and losses on fuel hedges, McKenzie now expects United to lose $4.30 per share for the fourth quarter, rather than the $1.15 per share loss he expected previously. He left intact his 2009 earnings prediction of $1.85 per share.

As of Monday, analysts surveyed by Thomson Reuters were expecting a UAL fourth-quarter loss of $2.86 per share, on average, and a 2009 profit of $2.59 pershare.

Building more cash for a reason.....
We have also taken a number of steps in the fourth quarter to further strengthen liquidity. We received 65 million dollars from an aircraft financing that closed in the third quarter. In addition, the agreement we announced last week with Chase (see November 25 story, Fourth Quarter 2008 Investor Update) will also help to strengthen our liquidity position, providing us with needed flexibility. We also anticipate completing a 150-million-dollar aircraft financing transaction.

HMMMMMMM.
 
Last edited:

Jonny Sacko

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Dec 22, 2005
Posts
748
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changs
What's 150 mill get you? Is that down payment on 50 or 100 jets?? I honestly don't know, but am glad they will finally start ordering. I still think that Piss ant Tilton just wants to break her up. Maybe the parts aren't bringing enough for that loser. Someone pulled their head off the desk, wiped the slobber from their mouth and said, "lets buy something"??

I really wish UAL ALPA came out with a statement about the continued push for slavery mixed with crooked judges all equaling the death of Airlines, and management is enjoying the ride everyday.
 
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