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Will United Survive?
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It is unraveling over there:
http://biz.yahoo.com/djus/030304/1728001123_1.html
The financial rats are leaving the sinking ship.
Another point about this staggering loss. It does not take into account they are not making lease payments on their aircraft and no payments for other pre pettition debts.
We are hearing rumors they will not make it through the end of this month. It sure seems like it.
http://biz.yahoo.com/djus/030304/1728001123_1.html
The financial rats are leaving the sinking ship.
Another point about this staggering loss. It does not take into account they are not making lease payments on their aircraft and no payments for other pre pettition debts.
We are hearing rumors they will not make it through the end of this month. It sure seems like it.
Last edited:
KingAirKiddo
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spinup
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Mar 05, 2003 (Chicago Tribune - Knight Ridder/Tribune Business News via COMTEX)
-- United Airlines lost $382 million in January, but its remaining pile of cash
barely declined thanks to drastically reduced employee wages.
The Elk Grove Township-based carrier ended January with $1.78 billion in cash,
down less than 2 percent from $1.81 billion on Jan. 1. That's good news for the
nation's second largest airline, which filed for federal bankruptcy protection
from creditors in December.
After the filing, United's pilots, flight attendants and salaried employees
agreed to temporary wage cuts to help the carrier through the immediate crisis.
A bankruptcy court judge later imposed similar cuts on United's mechanics.
Separately, some good news for United from the Internal Revenue Service may be
bad news for the company's employee owners.
In a private letter to United, the IRS said the sale of an additional 3.9
million shares of employee-owned stock would not jeopardize United's ability to
use massive tax-loss carry-forwards when it emerges from bankruptcy.
The sale of stock in United's employee stock ownership plan by the plan's
trustee, State Street Bank & Trust, had been halted after the bankruptcy court
judge issued an injunction at United's request.
If all the 3.9 million shares are sold, the percentage of employee ownership at
United could fall below 20 percent, the airline said Tuesday. That would trigger
the so-called sunset of the ESOP, which was not anticipated to occur for many
years as employee owners retired and cashed in their shares.
When the sunset occurs, the pilots and machinists unions at United would
continue to hold one board seat apiece. But their "super-veto" powers would go
away.
Under the original ESOP, the board members representing those two unions could
veto certain important actions such as acquisitions, divestitures and the
appointment of a chief executive. But to be able to use the super-veto, the
pilots' and machinists' representatives had to vote together.
In the past, the super-veto was the union's trump card over major management
decisions. For instance, it could have been used to prevent United's management
from selling off pieces of the airline or buying another carrier.
"If sunset happens, certain rights are going to be lost," said Elliott Sloane, a
spokesman for the Airline Pilots Association at United. "We are still opposed to
the sale of the shares that were negotiated as part of the collective bargaining
agreement, and we are disappointed the company endorsed and supported this
ruling by the IRS."
Still, United's common shares are likely to be wiped out as part of the
company's reorganization, prompting the sunset of the ESOP anyway. Even if some
form of employee ownership is reconstituted at a new United, the super-veto
power almost certainly will go away, union leaders admit, so its loss now
doesn't really mean all that much.
United's shares closed down 8 cents to 98 cents on the New York Stock Exchange
Tuesday.
By Susan Chandler
-- United Airlines lost $382 million in January, but its remaining pile of cash
barely declined thanks to drastically reduced employee wages.
The Elk Grove Township-based carrier ended January with $1.78 billion in cash,
down less than 2 percent from $1.81 billion on Jan. 1. That's good news for the
nation's second largest airline, which filed for federal bankruptcy protection
from creditors in December.
After the filing, United's pilots, flight attendants and salaried employees
agreed to temporary wage cuts to help the carrier through the immediate crisis.
A bankruptcy court judge later imposed similar cuts on United's mechanics.
Separately, some good news for United from the Internal Revenue Service may be
bad news for the company's employee owners.
In a private letter to United, the IRS said the sale of an additional 3.9
million shares of employee-owned stock would not jeopardize United's ability to
use massive tax-loss carry-forwards when it emerges from bankruptcy.
The sale of stock in United's employee stock ownership plan by the plan's
trustee, State Street Bank & Trust, had been halted after the bankruptcy court
judge issued an injunction at United's request.
If all the 3.9 million shares are sold, the percentage of employee ownership at
United could fall below 20 percent, the airline said Tuesday. That would trigger
the so-called sunset of the ESOP, which was not anticipated to occur for many
years as employee owners retired and cashed in their shares.
When the sunset occurs, the pilots and machinists unions at United would
continue to hold one board seat apiece. But their "super-veto" powers would go
away.
Under the original ESOP, the board members representing those two unions could
veto certain important actions such as acquisitions, divestitures and the
appointment of a chief executive. But to be able to use the super-veto, the
pilots' and machinists' representatives had to vote together.
In the past, the super-veto was the union's trump card over major management
decisions. For instance, it could have been used to prevent United's management
from selling off pieces of the airline or buying another carrier.
"If sunset happens, certain rights are going to be lost," said Elliott Sloane, a
spokesman for the Airline Pilots Association at United. "We are still opposed to
the sale of the shares that were negotiated as part of the collective bargaining
agreement, and we are disappointed the company endorsed and supported this
ruling by the IRS."
Still, United's common shares are likely to be wiped out as part of the
company's reorganization, prompting the sunset of the ESOP anyway. Even if some
form of employee ownership is reconstituted at a new United, the super-veto
power almost certainly will go away, union leaders admit, so its loss now
doesn't really mean all that much.
United's shares closed down 8 cents to 98 cents on the New York Stock Exchange
Tuesday.
By Susan Chandler
KingAirKiddo
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boeingav8r
Computer Desk Captain
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- Posts
- 101
I really have not been keeping up with the UAL/ch. 7 thing, but I keep hearing how it's getting worse and worse. How do you think the industry will be affected if one of the worlds largest airlines are liquidated. Over 10,000 or so pilots out of a job (including the ones already furloughed). Will this benefit AA and DL or cause them to file ch11? How much worse can things get for all of us.
I've been furloughed for over a year now...I've dealt with it, moved on and have finished feeling sorry for myself, but seeing UAL liquidated is like re-living that hell all over again. So very depressing...good luck to all UAL employees
I've been furloughed for over a year now...I've dealt with it, moved on and have finished feeling sorry for myself, but seeing UAL liquidated is like re-living that hell all over again. So very depressing...good luck to all UAL employees
120% Torque
Well-known member
- Joined
- Oct 17, 2002
- Posts
- 277
Business
United cites business fare cuts for revenue gain, but rivals scoff
March 4, 2003
By Dave Carpenter
United Airlines said Monday it is pulling in an extra $20 million to $25 million per month in revenue as a result of the sharp reduction in business fares it made eight weeks ago.
But in a reflection of the controversy stirred by the January fare change, the claim was greeted skeptically by at least one competitor.
Bankrupt United issued a statement saying the lower fares have proven ''good for United's bottom line,'' despite rival airlines' claims that the fare war was taking a toll on the revenues of not only other major carriers but United itself.
''Contrary to some reports in the media, the increase in business passenger volume has more than offset the lower fares,'' said Doug Hacker, executive vice president for strategy at United.
United put the revised pricing structure into effect Jan. 6 on last-minute fares out of Chicago and Denver--its top two hubs--giving customers up to 40 percent off unrestricted fares.
Other carriers and some industry analysts criticized the move, which came after a year in which the nine major U.S. airlines lost more than $11 billion combined.
Northwest Airlines said last month it was losing $10 million in monthly revenue as a result of the lowered fares, as did US Airways. Northwest also estimated that United was losing $30 million a month because of it.
A Northwest spokeswoman did not immediately respond to a request for comment on United's estimate.
Minneapolis-based airline travel analyst Terry Trippler said United's statement clearly was a response to Northwest's earlier comment, underscoring the high-stakes competition between the two.
''It's all about Asia,'' said Trippler, of cheapseats.com. ''United and Northwest are neck and neck [on routes] to Asia. It's a highly competitive market and a profitable run.''
If United ultimately is forced to cut back on its Pacific routes or sell them to stay in business, he said, Northwest would be the big benefactor. ''I really think those two airlines are battling for survival, and for growth,'' he said. ''Northwest clearly has the upper hand, but in this industry things can change very quickly.''
US Airways officials expressed skepticism about United's estimate. They said they see no evidence that the fare structure is generating more travel in the industry and questioned whether United could have gotten enough passengers to shift from other airlines to account for $20 million in additional revenue.
Regardless of the short-term effect, said Stephen Usery, US Airways' vice president of marketing and revenue management: ''I find it very difficult to believe that there would be enough sustainable share-shift [from other carriers] to support a long-term increase in revenue for United.''
Lehman Bros. analyst Gary Chase said he was ''shocked'' by United's claim and eager to see the details backing it up. ''We thought for sure it would be revenue-negative in the early going,'' he said.
United, which filed for Chapter 11 bankruptcy protection on Dec. 9 and lost $3.2 billion for the year, must show regular and swift progress toward becoming profitable again or risk losing its interim financing.
Northwest lost $798 million last year.
In bankruptcy court Monday, the airline lost a bid to force the government to hand over $388 million in long-disputed tax payments after Judge Eugene Wedoff refused to go along with its tactics for recovery under an emergency motion. The company said it would initiate a new proceeding, Dow Jones Newswires reported.
Shares in United parent UAL Corp. fell 2 cents to close at $1.06 on the New York Stock Exchange.
AP
United cites business fare cuts for revenue gain, but rivals scoff
March 4, 2003
By Dave Carpenter
United Airlines said Monday it is pulling in an extra $20 million to $25 million per month in revenue as a result of the sharp reduction in business fares it made eight weeks ago.
But in a reflection of the controversy stirred by the January fare change, the claim was greeted skeptically by at least one competitor.
Bankrupt United issued a statement saying the lower fares have proven ''good for United's bottom line,'' despite rival airlines' claims that the fare war was taking a toll on the revenues of not only other major carriers but United itself.
''Contrary to some reports in the media, the increase in business passenger volume has more than offset the lower fares,'' said Doug Hacker, executive vice president for strategy at United.
United put the revised pricing structure into effect Jan. 6 on last-minute fares out of Chicago and Denver--its top two hubs--giving customers up to 40 percent off unrestricted fares.
Other carriers and some industry analysts criticized the move, which came after a year in which the nine major U.S. airlines lost more than $11 billion combined.
Northwest Airlines said last month it was losing $10 million in monthly revenue as a result of the lowered fares, as did US Airways. Northwest also estimated that United was losing $30 million a month because of it.
A Northwest spokeswoman did not immediately respond to a request for comment on United's estimate.
Minneapolis-based airline travel analyst Terry Trippler said United's statement clearly was a response to Northwest's earlier comment, underscoring the high-stakes competition between the two.
''It's all about Asia,'' said Trippler, of cheapseats.com. ''United and Northwest are neck and neck [on routes] to Asia. It's a highly competitive market and a profitable run.''
If United ultimately is forced to cut back on its Pacific routes or sell them to stay in business, he said, Northwest would be the big benefactor. ''I really think those two airlines are battling for survival, and for growth,'' he said. ''Northwest clearly has the upper hand, but in this industry things can change very quickly.''
US Airways officials expressed skepticism about United's estimate. They said they see no evidence that the fare structure is generating more travel in the industry and questioned whether United could have gotten enough passengers to shift from other airlines to account for $20 million in additional revenue.
Regardless of the short-term effect, said Stephen Usery, US Airways' vice president of marketing and revenue management: ''I find it very difficult to believe that there would be enough sustainable share-shift [from other carriers] to support a long-term increase in revenue for United.''
Lehman Bros. analyst Gary Chase said he was ''shocked'' by United's claim and eager to see the details backing it up. ''We thought for sure it would be revenue-negative in the early going,'' he said.
United, which filed for Chapter 11 bankruptcy protection on Dec. 9 and lost $3.2 billion for the year, must show regular and swift progress toward becoming profitable again or risk losing its interim financing.
Northwest lost $798 million last year.
In bankruptcy court Monday, the airline lost a bid to force the government to hand over $388 million in long-disputed tax payments after Judge Eugene Wedoff refused to go along with its tactics for recovery under an emergency motion. The company said it would initiate a new proceeding, Dow Jones Newswires reported.
Shares in United parent UAL Corp. fell 2 cents to close at $1.06 on the New York Stock Exchange.
AP
HA25
Tokyo Tokyo!
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boeingav8r said:
Don Carty said over and over a year ago that there is one too many "major" airlines out there... so I would imagine if UAL or US Air went under, they would all pick up the slack and the industry would be better off... The dislocated "junior" pilots at the failed airlines would also likely find work fast at the remaining majors as their fleets grow with the sale of the assets of the failed airline.
BTW.. what's with the Christopher Lowell Avitar?
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