United Expects Friday To Be The Day

[koko nw]

Just like it happened at US Air X 2, CAL X 2 !!, America West, TWA X 3, ect....

Boeing man I'm not saying it's right, but the precedence has been set, BY OTHERS and nary a whimper from the grand stand. Why?

UAL would be foolish not to use any and all means available to survive and hopefully prosper.

Koko

 

[boeing747-800]

Hope they will prosper too.

 

[exepress]

to the "pilots" of this post who seem to have a clamor for a pay raise for the current ceo....i lost most of my pension and it sounds like you did as well....get a clue.

 

[Andy]

to the "pilots" of this post who seem to have a clamor for a pay raise for the current ceo....i lost most of my pension and it sounds like you did as well....get a clue.

I not only lost my pension, I lost my job (I've been furloughed for almost 4 years). But it wasn't thanks to Tilton; Goodwin (and to a lesser extent Creighton) was responsible for that.
Funny thing is, 'ol Jimmy Goodwin was chosen as CEO over Nardelli, current Home Depot CEO, as Greenwald's replacement. Why? Because Mad Dog Dubo thought that Nardelli was going to be too tough on us unions, so he got a patsy, Jimmy Goodwin, elected to CEO. Between Jimmy and Rono Dutta, they came up with the brilliant idea of buying USAirways for many multiples its value along with the Avolar concept. So, UAL's senior management spent a couple of years diverting UAL resources and flushing tons of cash down the crapper on stupid ideas. All the time, Mad Dog was saying that the takeover of USAirways was a good thing for UAL. Jimmy and Rono's trip on the road to nowhere left UAL woefully unprepared for the events of 9/11. Would Nardelli have done better? I don't know, but he's been able to navigate Home Depot through a rough stretch where Lowe's has been conducting a full scale assault on Home Depot.

When Tilton took over the helm of United, UAL was pretty much written off as a soon to be deceased legacy; souvenir hunters were starting to buy up UAL paraphenalia. Holly Hegeman had UAL on the 'Titanic watch.' By the time that SARS hit, I didn't expect to work another day at United. You can say that Tilton had nothing to do with UAL surviving that time period and is now about to emerge from BK, but I'd have to respectfully disagree with you. He made a lot of difficult decisions. Yes, he extracted a lot of concessions from the work force, chiefly the pilot group. But, as many more senior pilots kept reminding those of us who were furloughed, our furlough was 'for the survival of the company.' And need I remind you that C2003 passed by a majority vote of the pilots? This sodomizing of the pilots (and other labor groups) by management was completely consentual. All of the employee pay and benefit cuts have been painful, but I'd rather go back to a job at UAL than to be able to add a dead company to my resume.
I'm not clamoring for a pay raise for Tilton, he's just another overpaid CEO; all CEOs are overpaid. But if I were to choose between Tilton and an incompetent overpaid CEO, I'd take Tilton any day.

 

[G4G5]

Andy,
You and I have gone around with this before. I can't sing the same praises for Tilton. I think anyone who is looking to bring a company out of CH11, whose business plan is predicated on $50 a barrel oil is a fool.

Todays price is $68.48 cents. Off the top of my head that's 20% higher then he needs to pull a $915 million profit. I don't have the numbers on the road with me but what happens to costs for every penny the price of oil goes up?

Why come out now? You have Osama and Iraq and your target oil price is $18.48 above what you need. Once you come out you are subject to the new BK laws.

Once again I only wish the best for the UAL employees but this guy is a moron. He is going to take his stock and cash out. This time next year what kind of cash reserves will you have with oil remaining North of $60 for a year.


United Airlines Gets Clearance
To Exit Bankruptcy Protection
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
January 21, 2006; Page A4

UAL Corp.'s United Airlines got the green light Friday to emerge from bankruptcy-court protection in early February, ending the largest, longest-running airline reorganization in history.
In Chicago, U.S. Bankruptcy Court Judge Eugene Wedoff, who earlier in the week resolved a thicket of 11th-hour objections, approved the amended reorganization document, clearing United to issue new shares and give its unsecured creditors stock for their claims. The carrier's creditors earlier voted for the plan.
United hopes to emerge on Feb. 1, after a legal-appeals period expires, and it finalizes its $3 billion exit-financing package and selects a market on which to trade its new stock.
While some issues related to the bankruptcy case remain to be litigated, Judge Wedoff effectively ended United's nearly 38-month stay in Chapter 11 of the U.S. Bankruptcy Code. "If there is not a feeling of exultation in the room, perhaps at least there could be a feeling of relief," the judge told the courtroom. "Three years ago, United Airlines was, bluntly, in danger of dying, with all of its assets liquidated and all of its jobs lost." But through the disappointments and compromise of the bankruptcy-court process, he said, the company "once again has the potential to be a profitable investment, a reliable business partner and a stable employer."
Jake Brace, UAL's chief financial officer, said the company on Monday will close the syndication of its exit financing, which is being provided by J.P. Morgan Chase & Co., Citigroup Inc. and General Electric Co. Proceeds will allow United to repay $1.1 billion owed on an interim bankruptcy loan and top up its cash balance.
United hasn't announced its new ticker symbol, nor has it decided whether the new shares will trade on the New York Stock Exchange or the Nasdaq Stock Market.
On the day the company formally emerges, its existing common and preferred shares will be canceled. The 125 million new shares are expected to start trading at around $15, according to estimates by United and its financial advisers, giving the company an equity value of $1.9 billion. On that basis, unsecured creditors are expected to reap four cents to eight cents on each dollar of their claims.
But recent trading in bankruptcy claims and UAL's unsecured bonds has indicated that UAL's new stock might perform much better, giving creditors more of a recovery. "I've learned not to predict stock prices or values," Mr. Brace said. The airline's 400 executives are in line to receive 8% of the new shares in stock options or restricted stock, with the awards vesting over four years.
United, the nation's second-largest airline by traffic behind AMR Corp.'s American Airlines, is a far different company than it was when it sought protection from its creditors in late 2002. At the time, it suffered from a general downturn in air travel, the aftermath of the Sept. 11, 2001, terrorist attacks -- when two of its jetliners were hijacked -- and outsized costs and low productivity that stemmed from a failed experiment in employee ownership during the late 1990s.
Its stay in court protection initially was expected to last 18 months. But a federal panel empowered to grant loan guarantees to help airlines with liquidity troubles after 9/11 three times rejected UAL's bid for aid. So United was forced to address its shortcomings at a time when the industry was being roiled by high fuel expenses and growing pressure from low-cost discount carriers.
United has incurred $13 billion in losses in the past four years.
While in court protection, Chicago-based United shed $7 billion in annual expenses. Its employees made two rounds of concessions and lost their defined-benefit pension plans, which were underfunded and handed off to the government. Now the carrier is betting that its lower costs and improved revenue performance will return it to profitability.
United's five-year business plan covering the period through 2010 is predicated on its traffic, capacity and percentage of seats filled remaining more or less constant, according to bankruptcy-court documents. It believes its mainline unit revenue, or passenger revenue taken in for each seat flown a mile, will rise a little more than 2% a year, down from 5.2% growth in 2005.
It also forecasts that long-term oil prices will be about $50 a barrel. Based on that scenario, UAL expects to report operating profit of $915 million this year, not including an $11.3 billion accounting gain it will book related to the bankruptcy case.

 

[Andy]

Andy,
You and I have gone around with this before. I can't sing the same praises for Tilton. I think anyone who is looking to bring a company out of CH11, whose business plan is predicated on $50 a barrel oil is a fool.

Todays price is $68.48 cents. Off the top of my head that's 20% higher then he needs to pull a $915 million profit. I don't have the numbers on the road with me but what happens to costs for every penny the price of oil goes up?

Why come out now? You have Osama and Iraq and your target oil price is $18.48 above what you need. Once you come out you are subject to the new BK laws.

G4G5, I watched painfully on the sidelines as everyone predicted the death of UAL. Is Tilton perfect? No way!
While he may have publically passed off $50 a barrel oil in the business plan, he has quietly hedged behind the scenes. I don't have the figures on it, but it's a decent percentage of UAL's usage. And UAL didn't stop hedging at $50/barrel; they kept hedging as it got higher. Another little thing that he's done is securing for UAL pipeline usage into the major airports. He locked up all of the remaining pipeline capacity into the DC area almost two years ago, as well as made sure that there would not be any supply interruptions at other major hubs. It's those little behind the scenes moves that we don't hear much about. And don't forget, he's an ex-oilman who knows what's currently happening in the business; I'm sure that he calls up his buds from ChevronTexaco on a regular basis.

The current cash on hand will more than cover DIP loans and the $3 Bil loans upon emergence will provide UAL cushion for quite a while. UAL's emerging prior to the summer season; the best time of year for airlines.

Here's another thread from the past, when it finally looked like UAL's darkest days were over (Feb 04):
http://forums.flightinfo.com/showthread.php?t=29367
Makes for interesting reading.

Do I think that Tilton's the greatest thing since sliced bread? No, but given that he followed in the footsteps of Goodwin and Creighton, the bar wasn't set all that high for him.

 

[WhiteCloud]

On the day the company formally emerges, its existing common and preferred shares will be canceled. The 125 million new shares are expected to start trading at around $15, according to estimates by United and its financial advisers, giving the company an equity value of $1.9 billion.

On that basis, unsecured creditors are expected to reap four cents to eight cents on each dollar of their claims.

Reap? Please.

 

[G4G5]

Andy,
I hope you are right but their are some non believers (like Philip Baggaley of Standards & Poors) other then me.
http://www.usatoday.com/money/biztravel/2006-01-22-united-cover-usat_x.htm?csp=N009

'More complicated'
Not everyone is a fan of the changes. Airline consultant Mo Garfinkle, who advised the creditors committee during the restructuring, remains concerned about the complexity of the retooled operation and questions whether the new services are profitable.
"United hasn't restructured its basic business," he says. "They have made the business more complicated, not simpler. They still think they should be all things to all people."

United has been losing market share in all five of its hub cities, with the deepest loss in Denver — a 55% market share vs. 73% in 2000.

Baggaley of Standard & Poor's worries about the United balance sheet. United is leaving bankruptcy with more than $17 billion in debt, even after chopping away $8 billion in Chapter 11. That leaves the carrier highly leveraged compared with most companies.
United projects it will break even or turn a profit in 2006, but Baggaley forecasts a modest loss. United's business plan assumes $50-a-barrel oil prices, on average, ahead. S&P, by contrast, predicts $60 a barrel this year and $55 a barrel next year.

United faces intangible risks, too. Despite angry union opposition, the carrier leaves Chapter 11 with a new management incentive plan that rewards 400 executives with a total of 10 million stock shares, 8% of the reorganized company.
"If the stock price goes up and 400 people get really wealthy, I hope the employees don't revolt," says Swelbar.
Airline spokeswoman Jean Medina contends the executives' equity stake is needed to retain top performers and tie the company's success to executive rewards.

If it smells like it and looks like it................... Tilton and Brace realize that with the recent run in airlines stocks NOW is going to be the best time for them to cash in on their boat load of stock options.

This is what Grienstein recently said about the price of fuel at Delta:"Every time jet fuel prices go up by a penny per gallon, it costs Delta an extra $25 million per year because the airline uses 2.5 billion gallons in a typical year"

Lets assume that UAL uses close to the same amount of fuel annualy as DAL. So at $25 mill per penny, an increase of $1 dollar equals a $2,500,000,000 increase. Thats $2.5 billion per dollar increase. Now Baggaley of the S&P feels oil will be at $60 all year. Thats $10 over the $50 a barrel, the UAL geniuses feel they need to make just $915 million in profit. FYI a $10 a barrel increase equates to a $25 BILLION dollar loss!

Or another way to look at it is UAL $915 million dollar profit will be wiped out if Oil rises just 36 cents. So anything above $50.36 and they are losing money.

IMHO, they are looking to cash in on their stock options at the expense of the employees.

 

[Sonny Crockett]

G4G5,

Don't know why you are so concerned about UAL, but anyway.....Tilton has told the UAL employee group that UAL will break even with oil at $67.

I know you wish our demise, sorry AINT GONNA HAPPEN

 

[G4G5]

G4G5,

Don't know why you are so concerned about UAL, but anyway.....Tilton has told the UAL employee group that UAL will break even with oil at $67.

I know you wish our demise, sorry AINT GONNA HAPPEN

Please provide me with the quote. this is the first I have seen of that figure.

I am quoting Jack Brace from Saturday's WSJ:
It also forecasts that long-term oil prices will be about $50 a barrel. Based on that scenario, UAL expects to report operating profit of $915 million this year