UAL selling assets

[beech1900kid]

I found this on yahoo airilne news. Also I read an article recently on the net that UAL is selling their 767-200s. I hope this does not continue too much with other assets.

Associated Press
BA buys four Heathrow take off slots from United, source says
Saturday October 11, 6:59 pm ET
By Michael Mcdonough, Associated Press Writer

LONDON (AP) -- British Airways has bought four trans-Atlantic take off slots at London's Heathrow airport from rival United Airlines, a source with knowledge of the transaction said Saturday.

BA paid 12 million pounds (US$19.2 million) for the prime slots from Heathrow to New York after an auction among carriers, the source said, speaking on condition of anonymity.

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The purchase expands BA's dominant position at Heathrow airport, Europe's busiest, giving it 41 percent of the take off slots.

A BA spokeswoman refused to confirm or deny the transaction.

"We are constantly seeking ways to grow our operation at Heathrow and to improve flight schedules to make them more attractive to customers," spokeswoman Joanne Devereux said.

"We are not prepared to go into details about discussions with other airlines about slots as they are commercially sensitive and subject to confidentiality agreements," she said.

A United Airlines spokeswoman in Britain could not immediately comment. Phone calls to Airport Coordination Ltd., the company which allocates slots at Heathrow, went unanswered Saturday.

 

[catIIIc]

this is not very good. LHR is a very lucrative route, it was the start of TWA's demise when Uncle Carl sold their LHR slot to AA. The Pacific may be next. Good luck to everybody

 

[General Lee]

That really is amazing. LHR is a "bread and butter" route---full of business travellers. I wonder which airplanes UAL plans to dump if they can't get the leases to their liking? This could get interesting.

Bye Bye--General Lee

 

[sstearns2]

Well, it said they sold 4 slots, but how many does UAL have total? I agree it is not a good sign. 20 mil is a drop in the bucket for them. Why would they take the time to sell just these slots?

Scott

 

[Heavy Set]

Who cares about slots in a CASH CRUNCH? All you need to do is survive.... Sure, long-term considerations like lucrative Heathrow slots are important, but you need a short-term to have a long-term... Sounds like UAL is getting desparate during the crappy, low-passenger Fall season...

 

[UpNDownGuy]

Not good...

I think this is a horrible manuever by United. I'm sure a company the size of United can come up with a better way to raise $20 million than selling off LHR slots. Those things are gold. The only excuse I can think of is that the slots were in a very undesirable time. Something like an 8:00 pm departure, where you wouldn't want to go westbound against the flow. Maybe they are trimming the fat from their LHR schedule, and only plan on deleting the unprofitable time slots?????? UA guys????

 

[propjob27]

Pan Am did the same thing. In 1985, they sold their New York to Toyoko rotes and the JFK 747-200's to United. This definately indicates big trouble.

 

[skykid]

I wouldn't get too excited yet. UAL's strategy is to get leaner but maintain the route structure. Obviously UAL will end up with less airplanes and less frequency in some places - I can't believe that would be a surprise to anyone. If this report is true, UAL will still have about 9 more takeoffs per day from LHR than a lot of other airlines.

 

[goflyme]

You guys amaze me with your logic, 20 million is nothing, but you need to look at what those slots feed, and the long term goals. Now there will be more cuts, which will result in more cost saving. This is an obvious sign that UAL is in trouble and have no intentions of keeping the airline the size it is. They have already stated they will shrink the airline, and I would expect most of the east cost to be deserted by UAL. They have a code share with USair, dispute with ACA, and a loosing hub (IAD).

 

[skykid]

LONDON, Oct 12 (Reuters) - British Airways Plc (London:BAY.L - News) said on Sunday it had bought four slots at London's Heathrow Airport from UAL Corp (OTC BB:UALAQ.OB - News) in a move aimed at consolidating its position at the world's busiest international airport.

A spokesman said BA had bought slots for four flights a day -- two arrivals and two departures -- but declined to give a value for the deal.

---This Reuters report says its two arrivals and two departures, not four takeoffs. Which is it, anybody know?

Funny how nobody posted UAL's increased service of late to the Far East, Caribean, or Mexico, but get some potentially bad news out there and man that's good stuff, huh?

 

[UpNDownGuy]

Got a link to the new service by any chance? It's not on the UAL website. I'm particulary interested in the Far East additions...any out of SEA?

 

[skykid]

No, I don't think you will find anything international out of SEA, but I don't know for sure. I'm talking about service out of LAX/SFO/ORD and the new code share agreement between UAL and Air China that extends the UAL code to Guangzhou, Shenyang, Xi'an, Fuzhou and Shenzhen, from Shanghai and Beijing. From what I heard there's at least 100,000 folks over in China so you might as well get them flying. UAL has new weekend service to Cancun, Grand Cayman, and the once weekend service to San Juan is about to be daily.
Bottom line on the LHR thing - pulling out completely would be devastating, no question. Selling 15% of slots is not quite the same thing.

 

[General Lee]

I know UAL is delaying emerging from Chap 11 until it can find exit financing---and Sen. Fica from Florida (who is on the Aviation sub-comittee) said he doesn't want to give any of the airlines any more money. They will be looking for other investors, but the huge pension problem makes them unattractive. (That is mainly due to their stock price being stuck at under $1 because they are in Chap 11) They can't stay in Chap 11 for too long---the judge will only give them so many extensions. They may have to sell assets to pay off creditors and try to re-emerge with a smaller investor that offers less.

Bye Bye--General Lee

 

[Flying Freddie]

General Lee,
You under estimate the power of the American judicial system. As long as the lawyers can make money from UAL there will be a way to keep it in Chapter 11. Take the old Airlift Airlines. They were in Chapter 11 for 10 years.

 

[the turtle]

Midway is a prime example of a company that continues to languish in Chapter 11.

 

[buzzer]

There may be more to than this that meets the eye. UAL is not using those slots right now. Some people believe that the slot controls may be lifted or changed in the next few years. If that is the case than those slots my be worth a lot less in the future. Perhaps is was a good idea. On the other hand more and more flying seems to be going to the STAR partners on Int. routes and too much of that doesn't look good as some have mentioned. The globalization of the airlines is slowly coming into focus.

 

[Boeingman]

Burning the furniture to heat the house? This alone may or may not be a concern. But if other asset sales are announced it sure means there are some real financial problems developing.

The third, fourth and first quarter will either make or break them.

 

[skykid]

From the Gen
I know UAL is delaying emerging from Chap 11 until it can find exit financing.......

Nope - look at the original time frame and strategy that called for middle of 2004. UAL put out word they were CONSIDERING early exit last Summer in my opinion to draw attention to early progress in restructering.

---and Sen. Fica from Florida (who is on the Aviation sub-comittee) said he doesn't want to give any of the airlines any more money....

Sooo! Sen Fica will not be in the top 20 of politicians trying to influence the ATSB. Do you understand this is not a give away? These are loan guarantees already approved by Congress and UAL can apply past the deadline because the rejection last year was left open-ended.

They will be looking for other investors, but the huge pension problem makes them unattractive....

Other investors from who?

They may have to sell assets to pay off creditors and try to re-emerge with a smaller investor that offers less....

You are way off if you think trimming LHR by 15% is the start of a sell off to pay creditors. UAL's cash balance improved by over 100mil in Aug alone. You are right on by seeing that the pension problem is the major hurdle. UAL is working several different avenues including Congress and the IRS and hopefully wont have to come to employees. Retirement funding is a scary thing in this business if you ask me. Even if you work for a smaller airline and are in love with your stock options, you are exactly one bad day away from seeing it go. Take care!

 

[banned username 2]

This alone may or may not be a concern. But if other asset sales are announced it sure means there are some real financial problems developing.

SpeedNews.com just reported United Airlines has posted 18 767-222s as available for sale. Six aircraft are available for immediate sale, while the remaining twelve will be available for sale as they retire from United Airline's schedule over the next 15 months.

 

[sstearns2]

I think they've been planning to get rid of the 767-200s for a while now. They are the only type using that engine and it's uneconomical to operate such a small fleet of engines. The 767-300 and 747-400 use the same engine.

Scott