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[USA320Pilot]

United sees exit from bankruptcy

Airline is targeting operating profitability for all of 2004

CHICAGO (AP)- United Airlines remains on track to emerge from bankruptcy late next spring and turn a profit for 2004 after seeing encouraging progress this summer and fall, CEO Glenn Tilton said.

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Regards,

Chip

 

[trollydolly]

I am glad to see this bit of news. It not only is great for the employees at UA, it is also good for our partner U. The article did mention working on the Atlantic market, which U has also stated they have been wanting to do. Best of luck to both carriers.

Sincerely,

Agap

 

[ITRADE]

Wonder whats going on.

However, if the difficulty I'm experiencing securing a business class seat to China next week is any indication, UA should be making money right now.

 

[christopherrobin]

Isn't it the target of all airlines to make a profit? Why is this news? Do we really think that UAL is going to make a profit in 2004? They have yet to show a plan.

Smoke and mirrors for tomorrows announcement of their quarterly results. Remember that these results are going to include money made from their garage sale in LA and the sale of the slots to BA.

 

[767jetz]

WOW! I can't believe my eyes!

Chip, since I am always one of the first to counter your negative posts, let me also be one of the first to thank you for posting a positive news article about UAL.

We are all waiting in anticipation of the Q3 report, but those brief words from Tilton paint what is probably the most optimistic picture I've seen yet. Let's all hope it is not just for public consumption, and UA's performance will live up to Tilton's expectations.

Thanks again.

767jetz

 

[Cosmo]

Nice post, Chip.

Further on this subject, United just issued its 3rd quarter 2003 financial report which showed a $19 million operating profit and other positive trends. This is good news for both United and its code-sharing business partner US Airways!

Here's the United press release detailing its 3rd quarter results.

 

[ITRADE]

Nice post, Chip.

Further on this subject, United just issued its 3rd quarter 2003 financial report which showed a $19 million operating profit and other positive trends. This is good news for both United and its code-sharing business partner US Airways!

Here's the United press release detailing its 3rd quarter results.

Not too bad. Still a deep net loss, but much better YOY.

If UA manages to pull itself out of the dumps while US continues to flounder along, you all might have to admit that Chip's UCT may be a bit more plausible than you all would like to admit.

After all, UA and US's fleet are essentially complete matches at this point (excepting the A-330s which can be easily sold to NW).

 

[Cosmo]

If UA manages to pull itself out of the dumps while US continues to flounder along, you all might have to admit that Chip's UCT may be a bit more plausible than you all would like to admit.

Under that scenario, there might be a UCT but it won't be US Airways (or Bronner) doing the buying! 😛

 

[AOG-N-IT]

Engine and on-board avionics differences do not make for a cost effective exchange.

Yes the A330 is an airframe hybrid in the mix....but this blanketing statement is too far off to be true in practical means.

Try finding stuff for the two different fleets and see how they inter-change...then get back with us.

 

[USA320Pilot]

767jetz & Cosmo:

I’m not against United Airlines or its employees and I only report what I have heard from knowlegable sources. I fully understand why you do not want to lose one single aircraft, one single job, and one single ASM and if I was in your shoes I would feel the same way.

The issue for United is the same for US Airways – a rapidly changing industry where RASM is being ratcheted down by LCC's. As I have said on countless occasions, I believe United will emerge from bankruptcy, but it may have to sell assets to emerge.

The company has been and continues to be in discussion with US Airways about the transfer of United assets into US Airways, which could be a means to make both companies survive. In addition to providing exit financing, a deal between RSA and United to shift assets to US Airways could cut United’s costs, improve US Airways revenue, and help United meet the ATSB requirement of a 7% profit margin in 7 years.

Meanwhile, I’m sure the ATSB and its consultants are watching closely the effects that LCC expansion will have on United’s loan guarantee application and revenue forecasts. This LCC problem is going to haunt both of our companies forever and either we collectively find a way to regain profitability, or both companies could fail.

If a deal occurs, it occurs and if it doesn’t, it doesn’t. My comments are not designed to inflame people and its not about me writing about potential corporate transaction that could help my "lot in life". It’s about two companies who are talking about a potential deal, which may or may not occur.

United is showing signs of progress, but five challenges reamin: the ACA/Dulles issue, EETC renegotiations, municipal bond litigation between the airline and the cities of San Francisco, Los Angeles, Denver, Chicago, and Newark/New York, the underfunded pension, and exit financing.

Can these all be over come? I believe so, that's why I have said I believe the company will survive.

Regardless, here’s an interesting comparison between our two airlines:

United Airlines (UA)

UA’s third quarter net loss was $367 million

Break even load factor – 89.2%
Actual passenger load factor – 76.3% (up 4.8 points year-over-year)

RASM – 8.83 cents (up 95 cents year-over year)
CASM – 9.88 cents (down $1.02 cents year-over-year)

US Airways (US)

US’s third quarter net loss was $90 million, which included a non-cash charge of $24 million for the employee stock distribution plan

Break even load factor – not reported
Actual passenger load factor – 73.5% (up 1.5 points year-over-year)

RASM – 10.56 cents (up 76 cents year-over-year)
CASM – 10.98 cents (down $1.01 year-over-year)

Chip comments: The US – UA operating statistics indicate both companies cut their expenses by about $1.00 per ASM. US maintained a RASM premium of 68 cents over UA, while UA had a higher load factor than US by 2.8 points. UA reported a break even load factor of 89.2%, however, US did not report this statistic.

Regards,

Chip

 

[767jetz]

Not too bad. Still a deep net loss, but much better YOY.

If UA manages to pull itself out of the dumps while US continues to flounder along, you all might have to admit that Chip's UCT may be a bit more plausible than you all would like to admit.

I knew it wouldn't be long before the UCT reared it's ugly head again.

Unless you were joking, I don't see the logic of this statement. WHEN UA pulls itself out of this mess, and if US continues to flounder (your words, not mine) why on earth would UA have to sell off assets to US to emerge from BK? Are you implying a possible reverse UCT where UA gets assets from US?

Let's not drag a positive thread straight down into the gutter, OK?

Back on topic... What I found most impressive was that our operating profit increased $665 Million over Q3 last year (over half a BILLION bucks, folks!), positive cash flow was $3 Million per day, DIP covenants were met again for Sept, and EBITAR requirements are expected to be met for October as well.

These are some very, very substantial improvements, and a far cry from the doom and gloom predicted by a few.

 

[USA320Pilot]

767jetz:

I agree that United has made good progress, but challenges remain. Big challenges.

My only point is that if United is forced to sell assets, the domestic alliance makes US Airways the best option for your company because unit revenue could be protected due to the domestic alliance, which may be necessary to obtain the loan guarantee.

If United does not need to sell assets to emerge, than I doubt a UCT or any other kind of deal would occur, unless the two companies decided they must merge to lower unit costs to fight the LCC's.

I do not want to drag this thread through the UCT either, so let's not discuss this issue further.

Regardless, United did a better job in Q3 and is making progress to emerge.

Regards,

Chip

 

[767jetz]

If a deal occurs, it occurs and if it doesn’t, it doesn’t. My comments are not designed to inflame people and its not about me writing about potential corporate transaction that could help my "lot in life". It’s about two companies who are talking about a potential deal, which may or may not occur.

Chip,

I will agree that challenges still exist, particularly the 5 you mention. However my sources and also IMO, they are all obstacles that can be resolved without the need to turn to an equity sponsor like RSA.

If a deal is being talked about with US Airways, it is a "dooms day" scenario only, and I believe it is prudent and responsible for Tilton to cover all the bases.

As you say, it may or may not occur. And from what I can gather from my sources, it becomes less and less likely as UA continues it's strong recovery progress.

Of course a transaction would benefit US, as long haul flying would reduce US costs. I disagree that it could be beneficial to UA, except in the worst case scenario.

I hope you will at least concede that UA has met it's DIP covenants for September and is expecting to meet them for October as well, which is not what you claimed previously. I am not trying to start an argument here. Only to point out that perhaps your sources are not always as accurate as you say they are.

I have said this before and will say it again. I hope each of our companies will solve their own problems seperately and continue to benefit from the code share. I am becoming more optimistic about UA's future by the day.

767jetz

 

[Andre1980]

This is good news from UAL! 🙂 The other important facts I picked up reading their finanical reports were that CASM after special charges were 9.88 cents and before thoes charges it is 9.67cents. The breakeven factor was 81.2% after special charges and 79.3% before the special charges and this is better than the 92.3% for the same quarter of 2002.

 

[Cosmo]

Chip:

Some of the numbers you quoted for United are wrong or misleading.

According to United's press release issued today, the following are the correct figures:

Net Loss = $367 Million (misleading because only $37 million of that amount was not special charges [related to aircraft sales or retirements] or reorganization items)

Passenger RASM = 8.83¢ (misleading/understated because it does not include Express carrier revenues -- either those revenues must be included or the Express carrier expenses must be removed from operating CASM for a meaningful comparison)

Operating RASM = 9.95¢ (includes Express carrier and all other revenues)

Operating CASM = 9.88¢ (somewhat misleading/overstated because it includes Express carrier expenses but not Express carrier ASMs)

Actual Passenger Load Factor = 80.2% (up 4.8 percentage points)

Breakeven Passenger Load Factor = 81.2% (down 11.1 percentage points)

So in reality, United compares somewhat more favorably than your numbers would indicate.