UAL Update: Hmmmm?

[1900laker]

Excuse me but wasn't United supposedly in a position as little as a year ago to try to buy out or merge with USAir and assume its 4 Billion dollar debt? Well, they didn't have to assume that debt and I would have to say that if they were prepared then, they are likely prepared now. Look for a turnaround of United's doom and gloom by end of the summer.

The unions at United are oldhats at playing the game with the company. I believe that while their current situation is not good, it is probably better than what management is trying to portray. I don't believe the mechs. would have pushed so hard as to demolish the company, esp. in light of the rest of the industry right now. I'm sure they calculated out with the union's financial experts exactly what they believed the company could afford.

Also, not all airlines benefitted from the industry bailout. I know for a fact that Delta did not accept any of the bailout money, since it already had loan guarantees that it secured on its own and they did not want the stipulations attached to the bailout to be forced on them.

 

[Tim47SIP]

1900 wrote "Also, not all airlines benefitted from the industry bailout. I know for a fact that Delta did not accept any of the bailout money, since it already had loan guarantees that it secured on its own and they did not want the stipulations attached to the bailout to be forced on them."

I think you are talking about the loan guarantees program, not the bailout here. Delta did get funds from the Gov for their losses in revinue for the period after 911 and the end of the year, but did not take the loan. AW is the only one that I know of who actually took the loan. Although I havn't been following this part of the industry very closely, I do know that Delta included the money received in their total loss for the fourth quarter of last year.

 

[publisher]

Thanks

Thanks Tim for pointing out that mistake. Delta did receive substantial funding under the program.

Secondly, if you think the deal with the United labor is done, you are saddly mistaken. They settled on the terms and conditions they did because they had little choice. The company cannot let messing with the mechanics contract take their focus from getting concessions from everyone including the mechanics who just got the raise.

Lastly, assumption of billions in debt means little if it is backed by assets of more value.

 

[1900laker]

So USAir has assets worth more than $4 billion?

 

[publisher]

Study

Well without looking I do not know how much they have.

Of the debt, obviously a certain amount is secured and some unsecured. Some debt may be subordinated.

One question is what is the hidden reserve or the value between current market and the depreciated book value.

Lastly, what is the debt to net worth ratio after the merger.

In short, there are a good many variables. Things worth X before September 11 may not be worth much now. That is what due diligence is for.

You also missed the point on the mechanic contract..... It had absolutely nothing to do with what the company could afford. The bottom line is that we are going ot demand more so when we give concessions, we will end up with more.

 

[1900laker]

Ok, I'll buy that. Good explanation on the mechanics situation.