More On Us Airways' Business Partner Ual

[Todd@ual]

Chip,

I'll make some specific, testable predictions.

UAL will emerge from chap 11 and grow like mad in the next few years.

UAL and Airways will merge operations within seven years minus the Pittsburg hub.

There are no problems with exit financing if you simply mean the ability to get cash from some investment group in Alabama or Texas. The challenge is to raise the money from financial institutions who will not make certain demands.

Todd

 

[USA320Pilot]

767jetz:

I agree with your assesment and comments. In regard to the comparison between the business partners, I took the information from the press release, but I could have posted a wrong line entry.

Today Rueters had an interesting quote from Fitch Rating airline analyst William Warlick. As you know, Fitch Rating will audit United's loan guarantee application and will provide a recommendation to the ATSB on whether or not the business plan will meet loan guarantee requirements.

"The takeaway here would be, yes, clear progress but they still lost money in the quarter...I think there's still room for caution here," Warlick said. At around 9.5 to 9.7 cents per mile, UAL's unit costs are not that different from other bigger, older airlines, Warlick noted. "They still have a lot of work to do if they're going to achieve a sustainable competitive advantage over the other network carriers."

767jetz, the challenge for United, in addition to the five points listed above, is that the company's unit costs are still too high to successfully compete with the LCC's. In that sense, we are in the same boat.

Interestingly, Dave Siegel hinted in a speech to the Washington Aero Club last Tuesday that there may be corporate combinations between network airlines when he said, "Again, I don't have all the answers, but I do sense that increased cooperation, coordination, and potentially consolidation between and among network airlines must be another source of strength through enhanced efficiencies, in both marketing and operations."

I would like to know what he means by increased cooperation and coordination and what he "senses".

Regards,

Chip

 

[USA320Pilot]

Cosmo:

United broke out a number of different numbers and breakeven passenger load factor was 89.2, including all charges listed under the United Airlines, inc and subsidiary companies debtor and debtor-in-possession section for the first nine months of the year.

You’re right that the quarterly break even load factor dropped to 81.2 percent, which is an improvement, but I think we all would agree it is still too high and needs to come down.

Regards,

Chip