UAL seeks 1.8 billion loan...

A1FlyBoy

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CHICAGO –– United Airlines asked the government Monday for $1.8 billion in loan assistance, making it the biggest carrier yet to seek help from a loan guarantee program created to prop up the ailing industry after Sept. 11.

The nation's No. 2 airline, which has lost about $1 billion since the attacks, is the third major carrier to seek federal guarantees, following America West and US Airways.

Elk Grove Village, Ill.-based United said it would ask the Air Transportation Stabilization Board to back 90 percent of a $2 billion loan.

Chairman and chief executive officer Jack Creighton called United "the perfect candidate" for the program, since it was a target of the attacks.

"We're now burdened by short-term financing needs that are driven by the aftermath of Sept. 11th and aggravated by the weak economic recovery," Creighton said. "While we continue to explore financing alternatives, we don't believe they will be sufficient because our access to the capital markets has been severely restricted."

Creighton had said United would apply if it got wage concessions from its workers. It has since ordered pay cuts for its 11,000 management and salaried employees, estimated at $430 million over three years, and reached a tentative pay-cut agreement with its 9,200 pilots worth another $520 million over three years.

Federal approval of its application is not assured.

Not only have its mechanics and flight attendants not agreed to cuts, United has come under fire within the industry for seeking government funds despite the fact it was in trouble before Sept. 11.

Shares in United's parent company, UAL Corp., fell 44 cents to $11.51 in afternoon trading on the New York Stock Exchange.
 

ShawnC

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Err me thinks its not the fact that people don't want to travel. They do its the fact that they hate to use the airlines. It takes about the same amount of time to drive from New Jersey to Florida as it takes to fly.

And its costs about the same too. Why would one want to fly, when he can drive and not be treated like a common criminal at an airport.
 

generaltso

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What kind of car are you in that it takes the same time to drive from NJ to FL than to fly? That car from back to the future?

People are coming back to the airlines. UAL has had a good recovery, but they were so screwed up before because of the .com thing... they lost a lot of business because of that... as did most of the airlines. I think United, USAir are trying to get loans with good terms not only because of 9/11 but the condition they were in before hand.
 

Marmaduke McPug

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I think the industry is recovering albeit sloooowly but it is recovering. AWA is reportedly recalling its pilots and what we see here is UAL willing to float a 1.8 Billion dollar loan to keep going, evidently UAL believes the growth is there to allow a timely repayment of this loan.

Hopefully we will see a turn around this summer and airlines like Delta will call off its predicted furloughs.


Mike
 

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generaltso said:
What kind of car are you in that it takes the same time to drive from NJ to FL than to fly? That car from back to the future?

People are coming back to the airlines. UAL has had a good recovery, but they were so screwed up before because of the .com thing... they lost a lot of business because of that... as did most of the airlines. I think United, USAir are trying to get loans with good terms not only because of 9/11 but the condition they were in before hand.

I THINK he means that by the time you drive to the airport, arrive a minimum 2 hours in advance, deal with all the other common delays with airlines today, do the 3 hour flight and get your bags at the end and drive to your final destination... It would nearly be faster to simply drive from your house to your desitination...

I don't think the .com thing had much to do with the airlines... .com screwed the Tech Sector not the Transportation index.... UAL lost a LOT of its (high-paying) Business Travelers during the summer of 2000 when the pilots did their work slowdown... and the Business travelers were sick of being inconvienienced so they went elsewhere and never came back (understandably so)....

UAL was hurting before 9/11 hit, they were posting losses for the quarters before 9/11... The fiscal quarter ending 6/30/01 (April-June 2001) UAL posted a loss of -$365,000,000.00 just for that 3 month period (that's $4 million per day! The Quarter ending 9/31/01 they posted a loss of -$1,159,000,000.00 just for that 3 months (REMEMBER only 19 days of that quarter were AFTER 9/11) (that's $12.7 Million per day)

UAL has been in a world of hurt financially for quite some time now... It will be interesting to see how they fare in the end...

Fly Safe!
 

NYRANGERS

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Marmaduke McPug said:
I think the industry is recovering albeit sloooowly but it is recovering. AWA is reportedly recalling its pilots and what we see here is UAL willing to float a 1.8 Billion dollar loan to keep going, evidently UAL believes the growth is there to allow a timely repayment of this loan.

Hopefully we will see a turn around this summer and airlines like Delta will call off its predicted furloughs.


Mike

Delta anounced today 30 more furloughes for August to bring the total to 835
 

publisher

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This sort of says, heh, if I am going to ask for money, let's ask for a good pile.

It will be interesting to see how this goes from here. Without across the board cuts by employee groups, suppliers, and creditors, I don't know to what level the board will support this.

UAL waited til the sentiment for this has waned and hence they have less chance than others. They may be going on the -whatever we get is better than nothing-- approach.

The bigger problem is that by the time they ever get their act together, what markets and marketshare will they have. They can protect Chicago and Denver but the rest may be up for grabs.
 

aero99

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This am they said it was AA that asked for the 1.8 billion on the radio....either I wasn't awake yet, or the Dallas Radio has their heads up their a$$.
 

skykid

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It will be difficult for UAL to get the loan. First, UAL has close to 3 billion in cash. Next, they have more than that amount in unincumbered assets and can get loans in the private sector. Applying for the loan is good strategy for mgt even though UAL doesn't need the money short term (they could operate for years under current conditions). If another terrorist event occurs that puts a huge crunch on travel, it would be nice to have the extra cash. Also, applying for the loan puts concessions on the front burner. I think we will see more airlines joining Continental in protesting UAL's application.
 
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