The reason UA has the cash now is because of the lease deferrals. Its about $1.8BB now, but it all comes under review in March. With a continued fall in yields - some corporations now have a moritorium on all non-essential business travel, things only continue to get worse on the yield side. Add to that a spike in fuel prices, and cash burn could get back up to pre chapt. 11 levels. Also, keep in mind while cutting back on capacity is the rational decision in the short term to preserve cash, unit costs ultimately increase due to lost scale efficiences and increased average seniority.
Deathwatch for UAL
- Thread starter wts54
- Start date
UKRidge wrote
The hurdles from the creditors are high and cash is being bled. There has been however, a reduction is staffing pay (30% for the highest paid group) and a reduction in lease payments. The question then remains how much of a savings has United realized from these lease negotiations? I would surmise that it is significant. Did not the company request that the info be kept under privy seal? This then leads me to ask, if labour cost and lease costs have been markedly reduced, how do the other carriers seem to be on easy street while prognostications of United's demise are rampant.
I agree that the labor group pay cuts are saving money. But, do not forget that, for now, these are only temporary.
I disagree about the lease payment savings. The lease rates of 154 aircraft, whose leases have already been negotiated, are exactly the same as pre-bankruptcy. Currently that is over 25% of the fleet. When this is over who knows what the total fleet count will be? I would bet that it will be less than the current 463. So, the percentage of leases that are the same as last November will be higher than 25%. Now the company has to negotiate leases for the rest of the aircraft. If you held one of those leases, and knew that the first group of lease holders got full price, would you accept any less?
The hurdles from the creditors are high and cash is being bled. There has been however, a reduction is staffing pay (30% for the highest paid group) and a reduction in lease payments. The question then remains how much of a savings has United realized from these lease negotiations? I would surmise that it is significant. Did not the company request that the info be kept under privy seal? This then leads me to ask, if labour cost and lease costs have been markedly reduced, how do the other carriers seem to be on easy street while prognostications of United's demise are rampant.
I agree that the labor group pay cuts are saving money. But, do not forget that, for now, these are only temporary.
I disagree about the lease payment savings. The lease rates of 154 aircraft, whose leases have already been negotiated, are exactly the same as pre-bankruptcy. Currently that is over 25% of the fleet. When this is over who knows what the total fleet count will be? I would bet that it will be less than the current 463. So, the percentage of leases that are the same as last November will be higher than 25%. Now the company has to negotiate leases for the rest of the aircraft. If you held one of those leases, and knew that the first group of lease holders got full price, would you accept any less?
PITbull
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[blockquote]
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On 2/16/2003 10
30 AM Ukridge wrote:
This is interesting banter about the imminent liquidation of United, Indeed the situation is grave but I need to pose a question concerning this. United seems to still have a cash balance. The hurdles from the creditors are high and cash is being bled. There has been however, a reduction is staffing pay (30% for the highest paid group) and a reduction in lease payments. The question then remains how much of a savings has United realized from these lease negotiations? I would surmise that it is significant. Did not the company request that the info be kept under privy seal? This then leads me to ask, if labour cost and lease costs have been markedly reduced, how do the other carriers seem to be on easy street while prognostications of United's demise are rampant.
What I am asking is this: For years I have read in the press that United must get its costs under control. They seem to be doing just that, yet the press completely ignores these efforts and moves forward with its predictions.
Again, as an outside party I am not familiar with the entire process. I do enjoy though noting the logical errors in the reporting. It has been brought to the point that if the analysts are so sure of the course then why do they not run the company? Why has the bankruptcy judge not brought them in as freinds of the court to dispense their expert opinion? What SPECIFIC actions should then United take? Are cutting costs not important? Are lease renegotiations not saving money?
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[/blockquote]
You, my friend, are getting very close to the "conspiracy theory"...closer, closer, almost... (think...all about labor...concessions, billions and billions in savings), almost there...keep thinking...strategy, scheming, burn cash now, savings down the road...thinking...LCC...thinking...outside box...thinking....close to liquidation...thinking...labor jobs...get them to their knees to give what's wanted....thinking....tell labor groups the Majors wants their demise...give....give...Labor must give....thinking....
For someone not familiar with the process, you are closer and more familiar than most on these boards.
"Been here, done that".
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On 2/16/2003 10
30 AM Ukridge wrote: This is interesting banter about the imminent liquidation of United, Indeed the situation is grave but I need to pose a question concerning this. United seems to still have a cash balance. The hurdles from the creditors are high and cash is being bled. There has been however, a reduction is staffing pay (30% for the highest paid group) and a reduction in lease payments. The question then remains how much of a savings has United realized from these lease negotiations? I would surmise that it is significant. Did not the company request that the info be kept under privy seal? This then leads me to ask, if labour cost and lease costs have been markedly reduced, how do the other carriers seem to be on easy street while prognostications of United's demise are rampant.
What I am asking is this: For years I have read in the press that United must get its costs under control. They seem to be doing just that, yet the press completely ignores these efforts and moves forward with its predictions.
Again, as an outside party I am not familiar with the entire process. I do enjoy though noting the logical errors in the reporting. It has been brought to the point that if the analysts are so sure of the course then why do they not run the company? Why has the bankruptcy judge not brought them in as freinds of the court to dispense their expert opinion? What SPECIFIC actions should then United take? Are cutting costs not important? Are lease renegotiations not saving money?
----------------
[/blockquote]
You, my friend, are getting very close to the "conspiracy theory"...closer, closer, almost... (think...all about labor...concessions, billions and billions in savings), almost there...keep thinking...strategy, scheming, burn cash now, savings down the road...thinking...LCC...thinking...outside box...thinking....close to liquidation...thinking...labor jobs...get them to their knees to give what's wanted....thinking....tell labor groups the Majors wants their demise...give....give...Labor must give....thinking....
For someone not familiar with the process, you are closer and more familiar than most on these boards.
"Been here, done that".
Ukridge
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- Aug 27, 2002
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PITbull
I am actually trying to become like Mr. C. Munn. I have noticed a marked abscence of his posts as of late. I think that if I try hard enough I may start to be invited to the parties of the landed gentry and drink Cote de Rhone 1992 with the likes of Messrs Wolf, Carty, Tilton, and Mullin. I like the idea of the role. I think I could parlay it into additional employment here on the eastern side of the pond except the players would be the leaders of EasyJet, Ryan Air, LH, Swiss, AF, etc.. I could then write a column on the internet.
The observer role allows a rather impartial perspective. Though lacking in the knowledge of how your business are run it is amusing to try to follow the convulted logic of the analysts and media. I would think that with the state of the economy as it is in America and the world, and with pending war, they would mute their cheerleading about flushing 80,000 jobs down the toilet.
As for the conspiracy. Well, maybe, for as the famous Swedish chancellor Axel Oxenstjerna said during the Thirty Years War: You see my, son, by how little wisdom the world is ruled!"
Cheers
I am actually trying to become like Mr. C. Munn. I have noticed a marked abscence of his posts as of late. I think that if I try hard enough I may start to be invited to the parties of the landed gentry and drink Cote de Rhone 1992 with the likes of Messrs Wolf, Carty, Tilton, and Mullin. I like the idea of the role. I think I could parlay it into additional employment here on the eastern side of the pond except the players would be the leaders of EasyJet, Ryan Air, LH, Swiss, AF, etc.. I could then write a column on the internet.
The observer role allows a rather impartial perspective. Though lacking in the knowledge of how your business are run it is amusing to try to follow the convulted logic of the analysts and media. I would think that with the state of the economy as it is in America and the world, and with pending war, they would mute their cheerleading about flushing 80,000 jobs down the toilet.
As for the conspiracy. Well, maybe, for as the famous Swedish chancellor Axel Oxenstjerna said during the Thirty Years War: You see my, son, by how little wisdom the world is ruled!"
Cheers
