It's going to be either a really long road or a very short one.
http://biz.yahoo.com/rb/041130/airlines_united_1.html
http://biz.yahoo.com/rb/041130/airlines_united_1.html
Another Monthly Loss
- Thread starter Borescope
- Start date
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #3
Resolving the pension mess will have more of an impact on UA's ability to emerge from bankruptcy than will operating results. Ultimately, if UAL can't pay, dragging the process out will only serve to weaken them but at this point not everyone is convinced that UAL NEEDS to dump its pension obligations.
http://yahoo.reuters.com/financeQuoteCompa...30531421_newsml
Don't worry. UAL's creditors won't pull the plug as long as UAL can keep things going and pay the minimum bills or someone else comes along to buy them.
Right now the former looks fairly likely, even if UAL might be stuck in bankruptcy for a good long time.
http://yahoo.reuters.com/financeQuoteCompa...30531421_newsml
Don't worry. UAL's creditors won't pull the plug as long as UAL can keep things going and pay the minimum bills or someone else comes along to buy them.
Right now the former looks fairly likely, even if UAL might be stuck in bankruptcy for a good long time.
Although the reported cash balance looks fairly impressive ($2.3 billion), when the restricted cash is subtracted ($837 million), and the outstanding balance of the DIP loans is subtracted ($863 million), the reality is that UAL has only $600 million or so of cash.
The creditors have agreed to waive the EBITDAR requirements for Q4. I agree that the creditors won't pull the plug, but new capital or loans are required.
UAL simply can't afford to pay the pension contributions that the PBGC is demanding.
Now UAL has to survive the fourth quarter and the first quarter of 2005 without running out of cash. Fuel is still expensive, and cash inflow typically wanes in Nov - Mar.
It looks bleak.
The creditors have agreed to waive the EBITDAR requirements for Q4. I agree that the creditors won't pull the plug, but new capital or loans are required.
UAL simply can't afford to pay the pension contributions that the PBGC is demanding.
Now UAL has to survive the fourth quarter and the first quarter of 2005 without running out of cash. Fuel is still expensive, and cash inflow typically wanes in Nov - Mar.
It looks bleak.
whatkindoffreshhell
Veteran
UA could remain in BK for years, as long they keep juggling.
Perhaps you remember that the former LTV Steel Company stayed in CH11 for seven years until their legal case regarding pension termination reached the Supreme Court.
LTV ultimately lost, both in the Supreme Court and the marketplace.
If LTV had used their years in BK to focus on becoming a better steel company rather than placing one big bet on the pension issue they might still be pouring steel today.
Which reminds me of a trivia question: did you know that you can pour water on steel but cannot pour steel on water?
Answers anyone??
Perhaps you remember that the former LTV Steel Company stayed in CH11 for seven years until their legal case regarding pension termination reached the Supreme Court.
LTV ultimately lost, both in the Supreme Court and the marketplace.
If LTV had used their years in BK to focus on becoming a better steel company rather than placing one big bet on the pension issue they might still be pouring steel today.
Which reminds me of a trivia question: did you know that you can pour water on steel but cannot pour steel on water?
Answers anyone??
LTV was also a big defense contractor. That entire thing was a mess. With UAL the Independent Fiduciary Services of Washington, D.C wants the company to pony up over $900M with a minimum of $260M to the pension plan.
Judges in the past have ruled for the pension plan. This will be interesting, seems that the Independent Fiduciary Services says that Ual has not terminated their pensions yet and need to pay.
Judges in the past have ruled for the pension plan. This will be interesting, seems that the Independent Fiduciary Services says that Ual has not terminated their pensions yet and need to pay.
UseYourHead
Veteran
- Apr 1, 2003
- 720
- 0
The bottomline is that the longer UAL is in BK, the longer UAL is not in complete control and able to execute the best business practices, and so on.
It would be best to take care of ones problems, restructure debt, and exit. Without a company controlled plan, the loss of control is ultimately possible...and that is a less than than good path for employees.
It would be best to take care of ones problems, restructure debt, and exit. Without a company controlled plan, the loss of control is ultimately possible...and that is a less than than good path for employees.
whatkindoffreshhell said:
jimntx
Veteran
UseYourHead said:
Exactly. I think the judge has already signaled that his patience is wearing thin. Just because LTV was allowed to stay in BK for 7 years does not set a precedent that every company gets to stay that long. At some point, the judge is going to entertain motions from creditors/others to terminate the company's exclusivity and allow alternate reorg/liquidation plans.
But, I don't think just trashing the employee pay and benefits qualifies as "a workable business plan." Is there anything else that would point to a serious effort by management to do something other than same-old-same-old, but with lower pay for employees?
