United Airlines Announces Launch of Senior Secured Notes Offering

[Shrek]

United Airlines Announces Launch of Senior Secured Notes Offering
Source: United Airlines

30/12/2009​

United Airlines (“United”), a wholly-owned subsidiary of UAL Corporation (“UAL”) (Nasdaq: UAUA), announced today that it plans to offer, subject to market and other conditions, $500 million aggregate principal amount of senior secured notes due 2013. The notes will be the senior secured obligations of United. United’s obligations under the notes will be guaranteed on a senior unsecured basis by UAL and UAL’s subsidiaries that are guarantors or direct obligors under its senior secured credit facility. The notes will be secured by certain of United's routes, takeoff and landing slots and airport gate leaseholds utilized in connection with these routes. The collateral is currently encumbered under United’s senior secured credit facility but would be made available by substituting other collateral into the senior secured credit facility. United intends to use the net proceeds from the offering for general corporate purposes.
The notes will be offered and sold only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and to non-U.S. persons in accordance with Regulation S under the Securities Act. The notes will not be registered under the Securities Act or state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.


Thoughts?.......

 

[Rick James]

Wow, it looks like they want to leverage assets, that are already leveraged. Good luck to United and more importantly the employees.

 

[ual321]

Desperate diseases must have desperate remedies.......

 

[AA717driver]

So the holders of the original senior notes secured by these gates/slots/routes suddenly get tugs/lightbulbs/gate signage as collateral instead?

Nice bait and switch. Who'da thought Tilton would pull something like that?



TC

 

[ualdriver]

United Airlines Announces Launch of Senior Secured Notes Offering
Source: United Airlines

Thoughts?.......

Obtaining liquidity while they can I'd guess. Maybe use that money to pay off more expensive money. Maybe just sit on until the economy has stabilized and they have a clearer idea of how this "recovery" is going to shake out.

 

[Yuppyguppy]

perhaps one of the smarter moves by the idiots at UAL management...time will tell

 

[J32driver]

perhaps one of the smarter moves by the idiots at UAL management...time will tell

Dude... this wreaks of desperation. They are mortgaging something that is already mortgaged. They then have to shuffle collateral up the food chain. Its a chain reaction. Someone at the bottom of the food chain now winds up with squat for collateral... (something that has already been mortgaged 3 or 4 times probably). If I were an investor.... I'd RUN!

 

[bizicmo]

buying Delta

 

[bluechunks]

If I were an investor.... I'd RUN!

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

 

[chignutsak]

Grade FFFFF, which means Moody's will rate it AAA

 

[StaySeated]

Wow their balance sheet is downright scary.

They just had a $175MM offering four months ago. The only way they could sell those notes was offer them at a discount and at a rate of almost 13% interest.

Now they are borrowing another 1/2 billion? Who in the world would get in the long line of unsecured creditors at this point?

Their unencumbered assets have gone from $3 Billion to $1.1 Billion, in less than 12 months.

 

[satpak77]

Wall Street likes it, stock is at new highs for the last 52 weeks

 

[densoo]

They must be taking advice from the unions which advises members to extend all credit lines to the max just before a strike because once the strike begins there will no credit extended to you, unemployed.

 

[whymeworry?]

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

Do you research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

 

[whymeworry?]

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

 

[whymeworry?]

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

 

[whymeworry?]

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

 

[whymeworry?]

Indeed. At this rate UAL will be almost as leveraged as CAL or JetBlue (for two quick examples) in another couple years.

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

 

[FLYLOW22]

It's gonna take a while to do all that research...

 

[chppr5]

All you financial wizards make me laugh. Why are you flying for a living?????

 

[bluechunks]

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

Really?

What significant assets does CAL own that are unencumbered?

Show your work.

 

[freightdogfred]

I did my research...All the airlines, with LUV being the notable exception, are leveraged to the hilt, and United with eroded profit margins and a top heavy cost structure is realistically on life support at this time. Their fleet is aged, and with some serious large maturing debt, it would be a good time to start shorting their stock, IMHO. They are the equivalent on the Brontosaurus thrashing on the edge of the LaBrea tar pit, and barring a dramatic turnaround in the world economy I don't see how their fortunes can change.
Don't shoot me, I'm just the messenger...Best o luck

http://www.routesonline.com/news/24...s-structure-unsustainable-in-current-economy/

 

[freightdogfred]

Do your research. CAL is nowhere near the toxic levels of leverage of UAL (or DAL/NWA and AA for that matter).

This is true, but they will be facing some real pressure in the next two years as some 1.8 billion in debt obligation matures. Source?

http://cts.businesswire.com/ct/CT?i...lan=en_US&anchor=www.fitchratings.com&index=1

"Continental's cash obligations for 2009 are significant but manageable in comparison to March 31 unrestricted liquidity of $2.65 billion. Scheduled debt maturities for the remainder of 2009 total $442 million, and Continental now expects to make cash pension contributions of approximately $75 million over the rest of 2009. Given the maturity and pension funding profile for 2009, the need for incremental access to debt capital markets (beyond committed aircraft financing) appears limited. However, looking ahead to 2010 and 2011, heavy scheduled debt maturities will likely force Continental to access the credit markets if unrestricted cash balances are to be maintained above critical levels (in the $1.5 billion to $2 billion range). Scheduled debt maturities for 2010 total $770 million, and $1.1 billion in debt comes due in 2011. An easing of credit market tightness over the next few quarters therefore seems necessary if Continental is to avoid the need to push aircraft capital commitments out further beyond 2009."

 

[quinnlake]

It's gonna take a while to do all that research...

thanks for the laugh!

 

[g-code]

I did my research...All the airlines, with LUV being the notable exception, are leveraged to the hilt, and United with eroded profit margins and a top heavy cost structure is realistically on life support at this time. Their fleet is aged, and with some serious large maturing debt, it would be a good time to start shorting their stock, IMHO. They are the equivalent on the Brontosaurus thrashing on the edge of the LaBrea tar pit, and barring a dramatic turnaround in the world economy I don't see how their fortunes can change.
Don't shoot me, I'm just the messenger...Best o luck

http://www.routesonline.com/news/24...s-structure-unsustainable-in-current-economy/

Q2 and 3 posted positive cash flow. We will see what Q4 holds on the 16th.

 

[Russ]

Their fleet is aged

UA fleet age isn't that bad. AA and DAL have older average fleet age. Continental's fleet is approaching 10 years, just a few better than United. Stock is trending up. The street is somewhat bullish on them.

I wouldn't drop your dark suit in the cleaners quite yet.

 

[Mr.B]

All you financial wizards make me laugh. Why are you flying for a living?????

Exactly.

 

[Captzaahlie]

wow what a deal.....

Can anybody say ponzi scheme?

 

[Jon Rivoli]

The largest obstacle to raising cash through secured debt right now sits in the Oval Office. What he did to the bond holders at GM (gave them $.29 on the dollar and called them greedy for wanting what is their due.) has made creditors very leary of lending to anyone who is strapped for cash. That is why UAL paid the premium on their last issue. In bankruptcy the SECURED debt holder are supposed to get paid first, hence the term secured. With the governments demonstrated willingness to wipe out your investment while giving the company to the unions investors are justied in thier reluctance.

 

[Floatplane]

JetBlue Financial Statement

http://www.google.com/finance?q=NASDAQ:JBLU&fstype=ii