120% Torque
Well-known member
- Joined
- Oct 17, 2002
- Posts
- 277
Will united escape a Chapter 7 breakup and liquidation? It is a hobby of mine to try and figure these things out before they happen. I have been gathering info from various news sources and message boards but some of the info (as with all media) is not always accurate or reliable. What do you guys/girls think of some of the excerpts posted below and United's chances of comming out of this in one piece?
" DIP stipulations require that the company lose NO MORE than $964 Million between 12/01/02 and 02/28/03. That means that during this 90 day period the company can AFFORD to lose NO MORE than an average of $10.7 Million per day. But during the entire month of December the company had already lost $682 Million (at $22/day)...so that means that during January and February the company can AFFORD to lose no more than $282 Million...which averages a maximum of $4.7 Million per day. But the company RIGHT NOW is STILL losing close to $20 Million per day. Current projected payroll cuts for the next 59 days are much less than $282 Million. Tilton already is behind the power curve; the only last-chance option would be to begin immediate asset sales, otherwise the company will be out of operating cash before the end of next month. Remaining DIP funds legally cannot be accessed if the above mentioned conditions are not met by February 28th. The banks will pull the plug. "
Look at the stock chart, this company has been " bleeding out " for years ! Money has been siphoned every place that it could be, including funds that should have gone into the pension fund. This Airline " owns " 50 airplanes out of the 4 or 500 it has posession of. Very soon there will be ZERO equity in this company. Liabilities will equal or surpass it's assets !
Ray Neidl, airline analyst for Blaylock & Partners in New York, said United must take dramatic steps if it is to emerge from bankruptcy as an aggressive competitor. "The bottom line at the end of the day is this airline doesn't survive long-term unless it can get its cost-per-available-seat mile down to 9 cents," he said, noting that United spends more than 11 cents per available seat mile. "It will take every trick in the world to get it that far, and it still will be very iffy [about whether they will survive]," Neidl said.
Michael Boyd, president of the Boyd Group, an airline consulting group based in Evergreen, Colo., dismissed the outline of the restructuring plan as being too little, too late. "This is trendy lunacy. It will go very well in the [business] schools, but in the real world, it's glub, glub city," Boyd said, in reference to his concern that United may not survive. Productivity is the key and the low cost carriers are proof that deregulation is working. The new Model is already in place and the majors are attempting to reinvent themselves to reflect that model. It's absolutely unbelievable that the Break-Even load factor (for UAL) is higher now than before the jet age, with all of the productivity gains of the jets!
Sorry to say. DAL, AMR and UAL will probably not survive, at least with their current business model, (and that's an understatement). It still looks like to me that the management of the majors are expecting an economic recovery to save them, not gonna happen! There is no doubt in my mind that UAL is history. They (UAL management) are now attempting to lineup creditors to loan them the money that they anticipate the feds will co-sign for. If they are having trouble getting loans that they anticipate to be Federally guaranteed what does that say ?
Our aviation industry downturn "remains severe" and predicted market recovery by Boeing is pushed back to 2005. CEO Phil Condit.
Business - USA TODAY Wed Jan 29, 7:32 AM ET
UAL seeks more time to locate lenders. Marilyn Adams USA TODAY: " UAL is asking a bankruptcy judge to give its bankers more time to find additional lenders to contribute to a $1.2 billion loan package needed to keep the company operating. "
In reference to United starting a low cost alter ego airline:
In the biggest threat yet to the troubled carrier's turnaround effort, Paul Whiteford, a member of United’s Pilot union, pledged to fight the plan "by every lawful means available to us." Other union officials couldn't be reached or declined to comment, but some privately expressed deep opposition to the idea of a separate, lower pay scale for United's new discount carrier. "That ain't gonna happen unless the judge forces it down our throat," says one veteran pilot involved in union matters. "That's a strike issue." One analyst stated that slow-downs, sickouts, etc could push the company off the "cliff" into chapter 7
Continued....
" DIP stipulations require that the company lose NO MORE than $964 Million between 12/01/02 and 02/28/03. That means that during this 90 day period the company can AFFORD to lose NO MORE than an average of $10.7 Million per day. But during the entire month of December the company had already lost $682 Million (at $22/day)...so that means that during January and February the company can AFFORD to lose no more than $282 Million...which averages a maximum of $4.7 Million per day. But the company RIGHT NOW is STILL losing close to $20 Million per day. Current projected payroll cuts for the next 59 days are much less than $282 Million. Tilton already is behind the power curve; the only last-chance option would be to begin immediate asset sales, otherwise the company will be out of operating cash before the end of next month. Remaining DIP funds legally cannot be accessed if the above mentioned conditions are not met by February 28th. The banks will pull the plug. "
Look at the stock chart, this company has been " bleeding out " for years ! Money has been siphoned every place that it could be, including funds that should have gone into the pension fund. This Airline " owns " 50 airplanes out of the 4 or 500 it has posession of. Very soon there will be ZERO equity in this company. Liabilities will equal or surpass it's assets !
Ray Neidl, airline analyst for Blaylock & Partners in New York, said United must take dramatic steps if it is to emerge from bankruptcy as an aggressive competitor. "The bottom line at the end of the day is this airline doesn't survive long-term unless it can get its cost-per-available-seat mile down to 9 cents," he said, noting that United spends more than 11 cents per available seat mile. "It will take every trick in the world to get it that far, and it still will be very iffy [about whether they will survive]," Neidl said.
Michael Boyd, president of the Boyd Group, an airline consulting group based in Evergreen, Colo., dismissed the outline of the restructuring plan as being too little, too late. "This is trendy lunacy. It will go very well in the [business] schools, but in the real world, it's glub, glub city," Boyd said, in reference to his concern that United may not survive. Productivity is the key and the low cost carriers are proof that deregulation is working. The new Model is already in place and the majors are attempting to reinvent themselves to reflect that model. It's absolutely unbelievable that the Break-Even load factor (for UAL) is higher now than before the jet age, with all of the productivity gains of the jets!
Sorry to say. DAL, AMR and UAL will probably not survive, at least with their current business model, (and that's an understatement). It still looks like to me that the management of the majors are expecting an economic recovery to save them, not gonna happen! There is no doubt in my mind that UAL is history. They (UAL management) are now attempting to lineup creditors to loan them the money that they anticipate the feds will co-sign for. If they are having trouble getting loans that they anticipate to be Federally guaranteed what does that say ?
Our aviation industry downturn "remains severe" and predicted market recovery by Boeing is pushed back to 2005. CEO Phil Condit.
Business - USA TODAY Wed Jan 29, 7:32 AM ET
UAL seeks more time to locate lenders. Marilyn Adams USA TODAY: " UAL is asking a bankruptcy judge to give its bankers more time to find additional lenders to contribute to a $1.2 billion loan package needed to keep the company operating. "
In reference to United starting a low cost alter ego airline:
In the biggest threat yet to the troubled carrier's turnaround effort, Paul Whiteford, a member of United’s Pilot union, pledged to fight the plan "by every lawful means available to us." Other union officials couldn't be reached or declined to comment, but some privately expressed deep opposition to the idea of a separate, lower pay scale for United's new discount carrier. "That ain't gonna happen unless the judge forces it down our throat," says one veteran pilot involved in union matters. "That's a strike issue." One analyst stated that slow-downs, sickouts, etc could push the company off the "cliff" into chapter 7
Continued....