UAL to not make it through the Winter???

[RedDogC130]

You heard correctly. Before anyone else comments on this thread they should REALLY look at UAL's last quarterly report and balance sheet.

There are triggers around $2.2 bil $2.1 bil and lower. Each number activates a higher percentage of holdback by the credit companies. Yes, it will turn in to a death spiral because at the $2.0 bil trigger it gets really ugly (Read BK filing). FYI the reported unrestricted cash on hand was just $2.3 bil.

UAL's position is NOT common amongst the other airlines. Have you guys even seen all of the balance sheets and cash flows? UAL by far is in the worst position followed by LCC and then AMR. Everyone else is on pretty solid footing. For now.

The differences are that UAL is at least 50% upside down on their debt to equity. Very few sources for them left to raise cash. I believe they have about $1.1 bil of unlevered assests to use because no one will give them unsecured credit at this point. How fast was that cash burn rate again?

UAL tanks it is chapter 7. No credit, no plan, new rules, no management and nothing left to negotiate. Leases? Nope, no new acft since the last BK. The lessors, still smarting from the last BK, will tell them to go pound sand and send the acft overseas. The employee group? LOL. That one speaks for itself. The only thing they can cut is the current liabilities with the vendors. Not much help. No bailout. The public is already too fed up.

LCC BK will be 50-50 of a chapter 7, but if it makes it there will be a lot of pain felt by the employees and the airline will be a shadow of its former self ala TWA.

AMR is the only one that will actually benefit from the BK process. Lots of fat to trim. My sympathies to the employees if this happens, but it won't be pretty. They will be a tough competitor coming out of the other side.

now that you say all this, that is exactly what he was talking about...I guess I was paying attention..rare......this sounds very ugly for UA.....might be a blessing for other airlines to pick up their passenger load and possibly make a profit.....maybe those who have been saying a big one need to go to save the industry may have been right after all....

 

[nimtz]

How better our profession will be if only UAL finally crocks!!! Maybe a real career with real pension just might have a chance after all...

 

[737lj]

Tuesday, September 8th - ISH

USA Today will run an article this Tuesday that delves into this very subject. It may run a day later if there is more pressing news, but for now it is slated to run Tuesday, September 8th. I'm hearing that the article will focus a lot of attention on UAL's "liquidity crisis," if there is one.

Not that I'm advocating the USA Today as a reliable source of airline news.

Stay tuned...

 

[ualdriver]

now that you say all this, that is exactly what he was talking about...I guess I was paying attention..rare......this sounds very ugly for UA.....might be a blessing for other airlines to pick up their passenger load and possibly make a profit.....maybe those who have been saying a big one need to go to save the industry may have been right after all....

I think redtailer's synopsis was a little overdramatic, but some of the points I think were OK.

I'm not sure where he got the triggers, unless you read some analyst's opinions and those were his/their guesses. If you listen to the quarterly conference calls, very often reporters will ask the executives about covenants and they won't answer. But somewhere in the 2B area there are probably some triggers where credit card suppliers, for example, will require a larger holdback for future purchases. So a portion of the cash balance will likely go from the unrestricted column to the restricted column to cover that holdback. That's basically there to protect the credit card companies from a bankruptcy because if you buy your ticket on a credit card, the credit card company will owe you a refund if the airline can't fulfill its obligation. The "death spiral" comes into play if unrestricted cash balances fall below another trigger as cash is move from unrestricted to restricted for the credit card company, which could trigger another covenant for another bond holder, which then requires more cash, etc. It's certainly a possibility if the cash burn continues at past rates.

I doubt 2B will trigger a BK filing. I'm not sure where he got that number from. The news release UAL made public at the end of the 2nd quarter showed 2.8B total cash, 2.6 unrestricted, 281M restricted, and 185M tied up as collateral for some hedges. I think we have 1.1B to borrow against after the spare parts were mortgaged. I don't know what that 1.1B will actually fetch on the market, but I doubt it will be as bad as the spare part deal, simply because my understanding is that spare parts just don't make for good collateral like an airplane does, for example. If the debtor defaults, the creditor has to round up the parts, find multiple buyers, sell them, etc., all of which takes time and money, making it a PITA for the creditor. The creditor is compensated for that difficulty and risk by getting a theoretical greater value of spare parts as collateral than the cash he provides.

Regardless, in order for UAL to die by winter, we would have to burn through 1.1B in collateral, and I would WAG well over 1B in cash between now and whatever the OP's definition of winter is. 2.1B over several months? Possible, I guess, but doubtful. The industry has had 2 fare increases stick, UAL is still cutting unprofitable capacity (unfortunately), and I suspect that 3rd quarter numbers will be cash flow positive.

If we actually ended up in Chapter 11, personally I doubt it would ultimately end up being a liquidation. If we were talking last OCT-NOV, yeah. Not today. I think they'll just take what little we employees have left through the 1113c process after we refuse to cooperate (kiss scope, codeshare, in-house training, bunkees, etc., goodbye), screw the creditors again, and come out a smaller virtual airline with major outsourcing on both the widebody and narrowbody ends, much to the detriment of us employees. That's my guess.

 

[Loco Gringo]

You guys just prove how INSANE core republicans have become. Very short memories of life under your king bush. Obama hasn't even talked about UAL or any other airline. Every bailout was directly caused by the deregulation and subsequent raping of corporations- never mind the blatant government interference in employee negotiations. You all need to realize that this country needs labor every bit as much as executives and management. Either gets too much power and the economy will shut down. Everything that you crazy socialist conspiracy theorists blame Obama for was created by disfunctional republican "pro-business" policies. Things will get back in balance and we'll be fine- but don't confuse yourself- you want to blame someone but don't want to blame bush- fine. Go look in te mirror. Executives and businessmen have way more of a sense of entitlement than any worker I've met lately. And being in the airline industry- you ought to feel ashamed for continuing to buy into it.

(ahh... But you're core beliefs don't allow you to feel shame or regret or accept any responsibility at all- so keep blaming Obama for cleaning up the messes you made)

My bad, I thought the financial melt down was ultimately precipitated by Freddie Mac and Fannie Mae, two liberal pet projects. Bush tried for eight years to find the votes to rain them in and close some of there loop holes but the votes never materialized.

http://www.youtube.com/watch?v=cMnSp4qEXNM

I'm a fiscal conservative so Bush was not my first choice but compared to Al Gore come on.

to keep from hi jacking the thread; Yes Obama care will cover United....

 

[waveflyer]

Come on. You prove my point. Republicans are supposedly the party of responsibility. Yet cannot take any. You are honestly blaming a bill from 1977 for todays economic problems? And not the rolling back of glass-steagal in 1999. Which is more plausible? Did republicans not have majority control of both houses of congress For 12 years-and the white house for 6 years? And you blame democrats? How do you do that and expect anyone to buy anything your selling when it comes to responsibility?

And of course you don't like bush ..... Now. It's hypocritical. Why don't you just say you screwed up? It's the sign of being a grown adult.

 

[St. Nic]

I think redtailer's synopsis was a little overdramatic, but some of the points I think were OK.


If we actually ended up in Chapter 11, personally I doubt it would ultimately end up being a liquidation. If we were talking last OCT-NOV, yeah. Not today. I think they'll just take what little we employees have left through the 1113c process after we refuse to cooperate (kiss scope, codeshare, in-house training, bunkees, etc., goodbye), screw the creditors again, and come out a smaller virtual airline with major outsourcing on both the widebody and narrowbody ends, much to the detriment of us employees. That's my guess.

I would agree with pretty much everything you said. It seems to me UAL is in big trouble but when you look at what PanAm was like towards the end and how USAir keeps getting nine lives back you can see that there may be quite a bit of life left in UAL, at least in some form. UAL has already suffered a tremendous amount of furloughs and downsizing and perhaps some more is on the way, but you have to ask yourself "how much worse can it get for a United pilot"? How much worse can it get for the industry as a whole? IMO there will be some changes these next twelve months which will affect two or three companies greatly, but overall the industry won't change much from the slow contraction we are now seeing on all fronts. One other point is hopefully we will start to see the end of the fee-for-departure contracts with the regional jet operators. Subsidizing money losing routes with expensive small jets is becoming more noticed in the era of collapsing revenues.

 

[Bringupthebird]

Now- we are in power. We've reached out way more than republicans ever did. Now it's simply time to ignore your yelling. Children should be treated like children.

And those are the views of the person who wants to directly address the nation's school children and enlist their help for his agenda. Why would anyone bother to work with a group who threatened to ignore their contribution and do whatever they pleased anyhow? It's USAPA on a grand stage.

Now the "advisers" ("kick 'em in the groin", Axelrod, et.al.) are telling an already out-of touch Bambi that he should become even more out of touch by trying to support the ramrod strategy. He's got the covering his ears part ok, but he has to work on humming to himself loud enough to drown out the warnings of the opposition.

If Bambi would wake up, he'd see that Congress is telling him to do this because they aren't about to be his fall guys for the mess he created.

 

[DiverDriver]

"You are either with us or against us." -King George

I guess only repubes get to use that logic.

 

[Old Crow]

It must be recognized that SWA, and now Republic are cutting the prices out of Denver. Republic is going to replace Frontier in DEN and there you have a low cost city mecca. United cannot survive there in the domestic battle. You can bet on it. Obama will own a percentage of United in due time.