UAL seeks to void union contracts

[mackinhoes]

What are you guys all worked up about????

Once George W's tax breaks for the rich kick in, the economy will go Mach 3+. Businessmen will have soooo much money to spend on over-priced, last minute tickets on over-booked airplanes that revenues at the majors will soar.

Not only will I get a furlough recall, but the captain upgrade is just around the corner. I can't wait.

George Bush. Friend of the airlines (management). I can't wait for anyone one else to run against him.

 

[Clownpilot]

No, Sorry

Entering Chapter 11 removes control of the company from management and places it in the hands of the judge. Strategy is no longer an issue. The only thing that matters is paying the creditors. Look at all the airlines that have entered bankruptcy in the past 20 years. Of those, all but 2 have failed and disappeared completely. The other 2 diminished in size to the point where they were mere shells. It just isn't possible to compete in bankruptcy. While you alleviate immediate debt, your credit rating drops so low that every creditor might as well be a loan shark at the rates you pay and the creditor's bills always come first. No, AA will avoid BK at all costs. This is all about the last ones standing. Wait until U disappears. They are in a death spiral. This industry is changing no doubt. But in 2 years it will be amazing how much things change yet stay the same.

My prediction has nothing to do with equity ratings etc, etc, just plain common sense. AA's has a very, very aggressive marketing department. They will do anything to beat the competition. If they feel that for one moment that UAL will have a marketing advantage by being in Chapter 11 then they will go Chapter 11 to meet the challenge. Especially since at this point they are bleeding just as bad as UAL. Another interesting part of history is that every airline that has gotten the South America routes out of Miami is not with us anymore. Something to think about.

 

[mackinhoes]

The bankruptcy judge appoints a master who makes most of the decisions regarding the classification of the creditors, percentages of their claims that they may recover and whether some creditors' claims are even valid. The master also renegotiates the terms of repayment. These decisions may be appealed to the district judge and later, to the circuit court of appeals.

Most business decisions are not made by the master, but are still made by management. Further encumbering assets and negotiating any new debt is subject to the master's approval. Continuing poor management practices, including pissing off all the employees, overloading the company with VP's, encouraging poor productivity by killing morale, these are not evaluated by the master.

Prognosis: poor.

 

[Slim]

According to analysis of AMR, UAL and DAL, Morningstar published the market capitalization of the three holding companies.

AMR: $3.8 billion
DAL: $3.1 billion
UAL $525 million

This is as of late summer/early fall 2002.

AMR (American) and DAL (Delta) are in much better financial shape than UAL (United). The statement that AA isn't far behind United where a BK filing is concerned is ludicrous, or uninformed at best.

AA is trying to reduce their operating costs. So are other carriers. In this environment, who wouldn't?!?!! At the end of 2001, I read that UAL's break even load factor was 98%! Several months later, the same source said it was down to 89%.

 

[rjcap]

The statement that AA isn't far behind United where a BK filing is concerned is ludicrous, or uninformed at best.

The basis for this statement is the continued losses in excess of 1 billion a year.

At the end of 2001, I read that UAL's break even load factor was 98%! Several months later, the same source said it was down to 89%.

Very questionable considering that United showed up to bankruptcy court losing 20 million per day.

SLIM,

Who cares about unencumbered assets and market capitalization. Not one of these airlines has any real borrowing power in the marketplace these days.

Considering borrowing off of your unencumbered assets, If your operating a negative cash flow entity you can only tread water for so long.
i.e. how long can you live off of your credit cards while your unemployed ?

Also, used airliners are probably 50 cents on the dollar these days. If they were financed years ago then they are very likely upside down on the loans/financing. Not a pretty situation if you want to reduce your fleet size.

Cheers

 

[skykid]

Clownpilot, would you mind supplying the financial, legal, and historical facts and statistics to back up these three statements:

1. Ch 11 removes control of the company from mgt and places it in the hands of the judge.

2. Strategy is no longer an issue.

3. "U" is in a death spiral.

I appreciate your assessment but please provide the numbers you ran to reach these conclusions.

Specifically, in addition to the applicable list of requirements you needed from Turbo, I need a comparison of decisions made by "U" mgt vs Ch 11 court rulings, the source of strategic moves "U" has appeared to make in the past month and how the industry will or wont respond, an indepth analysis of the differences between past airline bankruptcies and present ones, an analysis of bankruptcy law to include Section 1113 Petitions, and possible effects of a Gulf War and Korean War.

I'm sure I've left some out but I'm sure they're included in your indepth analysis. I'd appreciate those numbers as soon as you can send them. I don't necessarily agree or disagree with your statements, but possibly reasonable people, even industry experts, would disagree with your all or part of your assertions.

thank you

 

[Chas]

My 2 cents

PILOTYIP its not just 10,000 pilot jobs there are hard working FA's with mortgages too as well as other employess some which have shownb there greed others have not. I know this is a pilot board but a alot of families are possibly in a "world of hurt"

 

[pilotyip]

I stand corrected

You are right I should have said 50K+ employees and not 10K pilots, but like you said most of the slant on this board is pilot, I stand corrected