United Strike?

[crashpad]

What are the odds on one or more of UALs' groups talking a walk, and when?

 

[FlyChicaga]

Talked to a UAL F/A friend at length today about it. According to her, the older F/As with many years on the job are seriously pissed, and could really care less about the legality of a strike. They feel there is nothing to lose, since they only have a few years left to retire. Many of the younger ones (20's/30's) feel there is plenty of time to recover, and don't want to walk. I can see their predicament. Why screw yourself if you have time left in this career? The question, it seems to me, is what is the balance between the senior mamas and younger girls? If the average age is on the high side, it might seem like the strike would hold more weight.

Remains to be seen. I'm curious about the mechanics, particularly with the correspondence that came out saying other airlines mechanics would walk and honor the strike as well.

 

[Mooseflyer]

If the average age is on the high side, it might seem like the strike would hold more weight.

......so to speak.....

 

[frank rizzo]

UAL just reported another 1.1 Billion loss again, the bankruptcy judge just needs to pull the plug . Just cant see them coming out of chapt 11.

 

[skykid]

Frank,

As far as the loss, it doesn't matter if it was 101 million, 1.1 billion, or 10.1 billion. How much cash did they end the qtr with - that is what matters for a company in ch11. Did you see the size of some of those write offs? Answer on the cash - 167 million more than they started the qtr with.

 

[xanderman]

Yeah that's it!

Frank,

As far as the loss, it doesn't matter if it was 101 million, 1.1 billion, or 10.1 billion. How much cash did they end the qtr with - that is what matters for a company in ch11. Did you see the size of some of those write offs? Answer on the cash - 167 million more than they started the qtr with.

Can I get you to balance my check-book? I need more money...

 

[IADBLRJ41]

skykid is exactly right!! Until UAL comes out of CHP 11 they will be able to report whatever they want. Until the creditors say come out UAL will stay in. As a past UAL employee (customer service now AWAC) it is time for them to get off the $hitter and join the real world!

I am crossing my fingers for United, I have always rooted for the home team living in Chicago. However, the employees have been through enough and it is time to see what their business plan has to say.

My 2 Cents

 

[skykid]

xanderman,

Sorry if you don't like the reality. For United fail in Ch11, they or going to have to run out of money, which isn't happening, or have the employees not show up for work. Unless you run a large corporation and are in Ch11, your checkbook has nothing to do with the situation.

 

[Boeingman]

Frank,

As far as the loss, it doesn't matter if it was 101 million, 1.1 billion, or 10.1 billion. How much cash did they end the qtr with - that is what matters for a company in ch11. Did you see the size of some of those write offs? Answer on the cash - 167 million more than they started the qtr with.

Skykid:

Technically that can be a misleading statement. Without having access to the books, it is impossible to tell why the cash balance increased. UAL could have not payed out on a debt, or not debited an amount, carrying the cash on the books past the end of the fiscal quarter just reported.

The loss does matter as creditors, lendors and other financial resources look at the numbers to determine whether they will extend more credit or setting an endless number of terms for the debtor.

 

[chazman]

I read something a few days ago that really made sense. There are no creditors in this airline market. With the amount of debt that is being financed, if you are loaning money to this industry you are a partner not a creditor.

Chaz

 

[Kav]

Frank,

As far as the loss, it doesn't matter if it was 101 million, 1.1 billion, or 10.1 billion. How much cash did they end the qtr with - that is what matters for a company in ch11. Did you see the size of some of those write offs? Answer on the cash - 167 million more than they started the qtr with.

skykid...

Going to have to agree with Boeingman on this one. Sure... you are correct in that a company has to run out of cash to end it all. However, you have only half of the picture. When it comes to corporate finances... a loss on the quarter or the year pushes a company that much closer to running out of cash. Sure... they can cook the books for a short time (months... maybe a year or so... like Enron did) to show themselves cash rich. However, that bottom line of profit/loss will eventually take over. If it is not shown this month/quarter/year... it will be added onto the next month/quarter/year's profit or loss. So... when UAL does go broke... it will just now come in one large fatal swoop, once everything is shown true on the books.

You don't just show a loss and have it not play on the bottom line in any way.

That's the whole picture.

Regards,

Kav

 

[skykid]

B-man, under Ch11 UAL has to make public disclosures that you can look at online. If you see UAL's cash balance start to drain, it's then that you are going to see a flood of news about liquidation and a lack of exit financing. Sorry, but that just isn't happening. In fact, if you remember from a few months ago, there is actually competition with different banks on the exit financing. Granted, exit financing is contengent on the outcome of the court battle over the 2 unions who didn't get a deal done yet, and the flushing of the pensions, which was a big hurdle.

 

[Boeingman]

B-man, under Ch11 UAL has to make public disclosures that you can look at online. If you see UAL's cash balance start to drain, it's then that you are going to see a flood of news about liquidation and a lack of exit financing. Sorry, but that just isn't happening. In fact, if you remember from a few months ago, there is actually competition with different banks on the exit financing. Granted, exit financing is contengent on the outcome of the court battle over the 2 unions who didn't get a deal done yet, and the flushing of the pensions, which was a big hurdle.

I think you're misunderstanding me. I am not saying UAL is pulling a long term Enron with numbers. However, cash balances are a very misleading indicator of a companies health when viewed only as a snapshot. Example and this is really basic, but on Tuesday you get paid. That night you write a check for the house payment. The checkbook shows a loss since you will (and they must debit) the ledger. But, since the check hasn't cleared your true cash balance if you printed your actual bank statement online shows a larger amount. I know it is a lame analogy but by delaying or stretching payments which is perfectly legal, skewers a day to day reporting of a companies actual cash balances. The losses at UAL are very serious and should not be minimized as to the damage it is doing to the company. Both financially and from a creditor viewpoint.

I keep hearing about banks in competition for underwriting but there has been, in reality no firm offers on the table for some of the very reasons you mentioned. What is happening and the unions just can't seem to get a grasp on it, is the banks are dictating the terms of all of our collective bargaining agreements. Management is pleased because they can whine that they can't get financing now from the banks under the current labor contracts. A win win situation for management.

Mark my words UAL is going to come back after ALPA for more cuts under the actual or pretense they need to lower costs for exit financing. I also believe the Judge is going to continue to rubber stamp whatever Tilton wants. It sounds like the mechnaics are saying enough. I don't know, it will be interesting, but should any of the unions strike or participate in CHAOS, it will really put pressure on cash flow which in turn will get the creditors attention.

The bottom line is cash flow. Once that stops or gets interupted, it is all over.

 

[skykid]

The bottom line is cash flow. Once that stops or gets interupted, it is all over.

That's what I've been saying! You are saying exactly what I've been saying - what can kill United is United, in the form of employees not accepting the situation. Sorry folks, but barring employees walking of the job, or another major event such as a significant terror attack, United is coming out of Ch11.

I will mark your words. I can promise your mgt is coming after your pension, that is a certainty Bman. Whether or not UAL mgt is coming back to the pilots I think is doubtful.

 

[Boeingman]

That's what I've been saying! You are saying exactly what I've been saying - what can kill United is United, in the form of employees not accepting the situation. Sorry folks, but barring employees walking of the job, or another major event such as a significant terror attack, United is coming out of Ch11.

I will mark your words. I can promise your mgt is coming after your pension, that is a certainty Bman. Whether or not UAL mgt is coming back to the pilots I think is doubtful.

I disagree about what can only kill UAL is UAL. Think of it this way. If NOTHING changes within the industry, and assuming UAL browbeats the other unions on their pension, they don't walk and you do get the loans. How will UAL service the added debt under a plan yet to be brought forth? The only plan has been to chop labor. TED obviously isn't cutting it. The loans and exit financing is not a cure for a failed business plan. Cutting labor is not a substitute for no business plan. All they do is buy time. UAL is losing a lot of money and you have to remember they are paying zero on prepetition debt.
All of that will not magically vanish. Exit financing is not a gift. It does have to be repaid. If UAL is losing money IN bankruptcy, how do you think they will make enough money OUT of bankruptcy? The costs for these loans will far exceed bankruptcy costs. Money is not going to be loaned because they are nice guys. They will demand and extract a hefty price, rest assured.

Now that I mentioned costs, look at the hundreds of millions in banruptcy expenses UAL has payed out to date. Do you honestly believe that UAL wants to be paying that money? Although bankruptcy sheilds these corporations (for far to long I believe) from some debt, the expenses are enormous. If Tilton had a real plan to get out to avoid the very expensive bankruptcy costs he would of done it already. My point: There is still no plan but to stall and hope the economy changes or oil comes down. Many issues can still kill UAL that are completly out of UAL's hands.

No doubt they are coming after our pension. The 58% of the pilots who voted for our concessoin package will have a very rude awakenng soon. AA, DAL & NWA management will go after their pensions as well. The precedent has been set. Right or wrong, two of the strongest ALPA groups in the industry allowed it to happen and like dominos the rest will follow. So how will a weakened UAL fresh from C 11 with exit financing debt to service compete then with others lowered CASM due to the destruction of their pensions? My point, your reprieve is only temporary in nature.

As for your contract, one only has to look as far as USAir as to what your management will do. There is still no plan other than cutting labor costs and to date, that has not been enough. Reading between the lines as to what Tilton has been saying, they are already thinking of more cuts.

 

[skykid]

Excellent points. No time to get back to you now, I disagree with most of your points, we agree this industry is in the crapper. Very quickly, you said the precendent has been set with UALs pensions with what will happen to the rest of the legacies. I agree that if UAL comes out of Ch11 successfully it will quicken the loss of the other airlines pensions. But, in the long term, United has very little to do with the fact that pensions aren't a part of this century. With or without United, the rest of the big boys that have pensions wont compete with the LCCs and keep them. The auto industry is going to be an even bigger mess - their pensions are HUGE compared to the airline industry, and the US auto industry wont compete with the rest of the world and keep them. The PBGC bailout will make the savings and loan ballout look like chump change.

 

[Boeingman]

Might not be this easy for UAL after all to dump the pensions. This gets more interesting by the minute. I was wondering how long it was going to take for somebody in government to realize exactly what you just said


http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B40C7B7F8%2D353A%2D47AD%2D942C%2D438D0DC86683%7D

 

[skykid]

I wouldn't count on these folks getting the legislation through. They needed to be working on this sh!t last year, when it was already obvious what was coming.

 

[Boeingman]

I wouldn't count on these folks getting the legislation through. They needed to be working on this sh!t last year, when it was already obvious what was coming.

Agreed, but never doubt the ability of the government to push something if it is going to cost them their own money. Or, making something retroactive.

The journey into uncharted waters continues.