Should U be looking for another code-share partner

[Cosmo]

[blockquote]
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On 2/20/2003 12:57:07 PM chipmunn wrote:

I agree that US has problems, but the US restructuring is scheduled to be completed in 39 days and US is sitting on a $1 billion loan guarantee, $240 million equity investment, and its principal financier is telling the press he would buy UA assets "if it would be beneficial to US Airways."
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[/blockquote]
Everything that you mentioned -- all of it -- is still tentative: emerging from Chapter 11 at the end of March, the loan guarantee, the equity investment, and any UA asset acquisition. It might happen, it might not.

[blockquote]
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On 2/20/2003 12:57:07 PM chipmunn wrote:

On the other hand, UA is asking the court and its lenders for financial relief because the company apparently will not meet its lending terms, the airline has been turned down for a $1 billion federal loan guarantee, and the Chicago-based carrier has not begun it restructuring. In fact, UA asked the court to extend the period it has to renegotiate aircraft leases and plans atleast 18 months in bankruptcy.
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[/blockquote]
Like US, UA certainly has its problems. But much of what you say is either old news or is simply not true. For instance, the ATSB turned down UA's loan guarantee application about 10 weeks ago, but also invited UA to re-apply with a better proposal (which explains why UA employees are now being asked to reduce their salaries by more than $2.5 billion annually over 6 years versus about $1.1 billion annually over 5 years in the previous plan). And as for restructuring at UA, it has indeed begun with salaries being cut "temporarily" (although anyone thinking that the cuts will be restored while UA is in bankruptcy is deluding themselves) and aircraft lease negotiations being started. So while it's true that not too much has happened yet, UA said from the beginning that it would be a much longer process than US went through. IMHO, the fact that that is proving to be the case is not really news. The issue is whether UA will have enough time and cash to make the necessary changes to enable it to emerge from bankruptcy, but nobody has that answer right now.

[blockquote]
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On 2/20/2003 12:57:07 PM chipmunn wrote:

Moreover, what is even more telling is one of the four UA DIP financiers, J.P Morgan, had its equity analyst tell CBS.MW that for the airline industry as whole the most favorable scenario involves the shutdown of UA.
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[/blockquote]
However, it's noteworthy that Mr. Baker did not say that a UA shutdown was the most favorable scenario for US.

[blockquote]
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On 2/20/2003 12:57:07 PM chipmunn wrote:

In regard to a US pilot strike, the pension cannot be terminated until March 31, the day US gets access to its new liquidity. Then if ALPA's S.1113 position is agreed upon, then the fist day ALPA could strike would be April 1, the day after US obtains its financing.
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[/blockquote]
If the pension issue is not solved by March 31, then US will not get its new liquidity by that time. And you have to love the irony of a possible pilots' strike happening on April 1.

[blockquote]
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On 2/20/2003 12:57:07 PM chipmunn wrote:

What would happen to US with its balance sheet repaired and then a pilot job action? I do not know, do you?
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[/blockquote]
Nope, I don't know either. But I think that it's safe to say that a "pilot job action" would be very detrimental to US' future.

 

[Cosmo]

[blockquote]
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On 2/20/2003 127 PM chipmunn wrote:

Merrill Lynch analyst Michael Linnenberg is now also discussing a UA shutdown as a means of curing industry ills. There seems to be Wall Street momentum growing towards encouraging a full blown UA liquidation, versus an "interesting corporate transaction".
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[/blockquote]
Chip, you're confusing "momentum" with "discussion and speculation". While it's certainly true that UA could end up liquidating, and it's also true that it might be better for the airline industry as a whole (as might any airline liquidation), talking about it does not make it any more or less likely to happen.

And while we're talking about "discussion and speculation", I found it to be interesting that the article you quoted mentioned a number of airlines that would benefit from UA's demise, either financially or by taking over some of UA's routes and/or hubs. The airlines identified were AirTran, America West, American, Continental, Delta, JetBlue, Northwest and Southwest. US Airways was conspicuously absent from that list.

[blockquote]
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On 2/20/2003 127 PM chipmunn wrote:

Cosmo, the intent of the "unique corporate transaction" would not only be to reduce cost, but for UA to keep some of the incremental revenue by keeping passengers within the domestic network.
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[/blockquote]
That's simply not true. Under the current UA/US code-sharing deal, the carrier that flies the plane gets the revenue. So unless you are suggesting that the deal be changed to benefit UA, there is no "incremental revenue" for UA to keep.

 

[diogenes]

It's of interest to note U has been in worse shape than UA in any time frame you care to examine, but all of a sudden, the business press wants to vote UA off the island. How come?

Could it be that U management has fulfilled this administration's and every CEO's dream by busting up labor for years to come? And that 'bust-up' will ricochet all over AA, DL, and NW? And the pension debacle will open the floodgates on DBRP's outside the industry? I predict that within 5 years, the business press will tout Dave as an industry giant and visionary for bringing labor to heel.

Meanwhile, UA, the flagship carrier for labor, couldn't get favorable press for helping little old ladies cross the street.

What it boils down to is 9/11 gave country club Republicans the chance to put a hurt on labor that will last for decades. And the press, owned and operated by those self same ccR's (and that ain't Creedence ) are the circus barkers for this act.

I never was a Gore fan, but there is no way his admin. would have held hands with management and used the ATSB to flatten labor.

Politics matter!

 

[DLFlyer31]

[blockquote]
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On 2/20/2003 3:09:23 PM chipmunn wrote:

Why do we have all of this independent news activity, as well as independent analyst comments, simultaneously today?

Why are the commentators discussing a potential liquidation of UA because they envision a "best-case" scenario (for the industry) that involves the shutdown of the Chicago-based airline?

Chip

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[/blockquote]

It's not really independent, Chip. One analyst says something and the other analysts usually hop on the bandwagon. No analyst wants to appear as if they are missing a potential story, so they immediately generate their own drivel.

The media works the same way. One writer takes something from an analyst report and makes a story. All the other media simply cut, copy and paste. There's very little orginality or thought put into the articles which explains why most of them are usually wrong.

Remember, the media had the same slew of reports about US many months ago. The industry would be better w/o US as well, however UAL's problems just happen to be the flavor of the month.

 

[autofixer]

diogenes, I agree with you until you interject politics into the mix. Remember President Clinton hammered labor as much as any Republican. I am a registered Libertarian, so I guess I am looking at the issue outside of most peoples'ideology. I personally feel the Rep. and Dems. are just as bad across the board.

 

[Schwanker]

[blockquote]
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On 2/20/2003 3:09:23 PM chipmunn wrote:

Cosmo, what's your point and why be so defensive? My comments today have been predominantly directed at what has been said in the news media.

Regardless, as I said before, what I find interesting is that today three independent news sources, the USA Today, CBS.MW, and Dow Jones, all wrote a column regarding the downsizing and potential liquidation of UA.

Is this a coincidence, or are the "tea leaves" indicating this idea is a means to fix the industry wide economic problem, with war in the Middle East about to break out?

Why do we have all of this independent news activity, as well as independent analyst comments, simultaneously today?

Why are the commentators discussing a potential liquidation of UA because they envision a "best-case" scenario (for the industry) that involves the shutdown of the Chicago-based airline?

Is this a coincidence or maybe rumblings of something else?

Chip

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[/blockquote]

Chip, I figured you would know the answer to this one. United is in the process of scaring the living ***** out of its employees. SOUND FAMILIAR? They do need their contracts in place by March 15th (I believe this is the date). Are you surprised about the chapter 7 scenario being displayed? HOW QUICKLY WE FORGET!

Schwanker

 

[DCAflyer]

What part of "no time" don't the UAL MEC's understand? Tilton is clearly their best chance at survival right now. They can't afford the distraction.

I sure hope Dave is making it a priority to get into STAR post haste.

 

[ITRADE]

[blockquote]
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On 2/20/2003 10:18:51 AM chipmunn wrote:

Itrade:

SNIP

In regard to the hubs, as it was explained to me, ORD has a significant O&D presence and separates the two domestic route networks into what the Marketing Department's (of both airlines) refer to as Chicago West and Chicago East. ORD could be a critical link to provide US a stong East-West passenger flow pattern, and the much needed midwest hub, which is a very important strategic asset for a comprehensive US domestic route network.

SNIP

Chip
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[/blockquote]

I'm having problems envisioning a US Airways operated hub at ORD when there is already a hub at PIT. This was one of the major questions during the attempted merger and it was assumed that PIT was going to be on the receiving end of the axe blade if the merger went through.

 

[DCAflyer]

United unions look to replace Tilton-Business Week
Thu February 20, 2003 07:37 PM ET
CHICAGO, Feb 20 (Reuters) - Leaders of the pilots and machinists unions at United Airlines have been talking to potential investors in an attempt to get a bankruptcy judge to replace Chief Executive Glenn Tilton, Business Week reported in its latest edition released on Thursday.
According to the article, Tom Buffenbarger, president of the International Association of Machinists, and Paul Whiteford, head of the Air Line Pilots Association, have been talking to former United CEO Gerald Greenwald, as well as David Bonderman and his Texas Pacific Group, George Soros, Marvin Davis, the Blackstone Group, and several state pension funds.

Union officials and potential investors told Business Week the unions' goal was to find a partner and go jointly to U.S. Bankruptcy Judge Eugene Wedoff in the next few weeks with a competing recovery plan for the airline.

Spokespeople for the IAM, ALPA and United Airlines all declined to comment on the Business Week article.

Elk Grove Village, Illinois-based United, the No. 2 U.S. airline and a unit of UAL Corp. UAL.N , filed the largest bankruptcy in aviation history in December. The pilots and machinists both have seats on the company's board of directors. (Chicago Equities Desk, edited by Michael Miller; (312) 408-8787, chicago.newsroom@reuters.com))

 

[DCAflyer]

Itrade said:

I'm having problems envisioning a US Airways operated hub at ORD when there is already a hub at PIT. This was one of the major questions during the attempted merger and it was assumed that PIT was going to be on the receiving end of the axe blade if the merger went through.

DCAflyer replies:

Are you saying that PIT wouldn't (or shouldn't) be sacrificed if U could, somehow, miraculously pick up ORD? Dream on, Buddy!

 

[RowUnderDCA]

ITRADE, DCAFlyer-

I just hope that U management isn't only thinking about UA's assets. It just seems like the automatic, but not necessarily wise, thing to do. Let the other carriers pay for the right to get into a big, fat mess. U can link up with AM West and pick up assets as the merry go round spins stuff off.

 

[Hope777]

ITrade, I don't know the last time you flew thru PIT, but it is a ghost town. Durring this busy Holiday week, mainline loads are horrible. You could fly just RJ's and handle most of the passengers. PIT is to US what CVG is DL, an RJ HUB nothing more nothing less.

 

[chipmunn]

The Dogfight for Control of United

CHICAGO (BusinessWeek Online) - Can beleaguered UAL Corp.'s United Airlines be saved from going out of business altogether? Ever since the carrier entered bankruptcy in December, CEO Glenn F. Tilton has been under attack by skeptics who say his recovery strategy isn't viable. As the airline burns through $10 million a day, United needs a new flight plan fast.

http://biz.yahoo.com/bizwk/030221/nf200302...02_db016_1.html

 

[chipmunn]

Itrade:

ORD has significant O&D traffic and great facilities, although the airport needs another runway. This is the most important factor in hub profitability.

PIT is an excellent facility and the only thing the airport needs is another 3 million people living in the Three Rivers area - something Chicago provides.

If a deal proceeds, I expect the company to try and obtain ORD gates/facilities and grow PIT primarily with MidAtlantic, while maintaining the current hub East-West flow pattern. Marketing personnel have told me the key to PIT is the connecting traffic and in particular the feed from BOS, LGA, and DCA. Moreover, during the last merger review, I was told the two hubs would not compete with one another.

Meanwhile, it appears UA is unraveling faster than expected and the unions are leading the way for a dogfight for control of the "Titanic" of the airline industry.

The company has a variety of DIP loan covenants including EBITDAR (Earnings Before Taxes, Interest, Depreciation, Amortization, and Aircraft Rent), which is a common industry cash flow measure, minimum cash balance targets, reduced capital expenditures, and specific reporting requirements.

EBITDAR is the most critical and comprehensive requirement and the covenant requires monthly compliance starting in February 2003. In December 2003 the requirement is for the airline’s EBITDAR to be $575 million.

I understand the airline is likely violate terms of the agreement as early as March,
Management has begun discussions with lenders for EBITDAR relief and is seeking bankruptcy court approval to amend terms of a $300 million loan, to avoid breaching the finance agreements.

Now comes news today that the unions are creating a dogfight for control of UA and the employees are trying to replace Tilton.

What the heck is going on in the union halls? They might not like UA's "Plan for Transformation" and the LCC, but these guys are bleeding at an enormous rate and there is very little time to start something new.

Furthermore, J.P. Morgan, one of four key DIP lenders, issued a report yesterday stating the "best-case" scenario involves the shutdown of UA.

Separately, Today's Business Week Online column UA may sum it up best. The magazine discussed the change of control issue and in its opening sentence said, "Can beleaguered UAL Corp.'s United Airlines be saved from going out of business altogether?"

Unfortunately, this disaster is taking a devastating turn almost every day and what's sad is it didn't need to happen, for either UA or US.

Chip

 

[PITbull]

[blockquote]
----------------
On 2/20/2003 3:53:20 PM diogenes wrote:

It's of interest to note U has been in worse shape than UA in any time frame you care to examine, but all of a sudden, the business press wants to vote UA off the island. How come?

Could it be that U management has fulfilled this administration's and every CEO's dream by busting up labor for years to come? And that 'bust-up' will ricochet all over AA, DL, and NW? And the pension debacle will open the floodgates on DBRP's outside the industry? I predict that within 5 years, the business press will tout Dave as an industry giant and visionary for bringing labor to heel.

Meanwhile, UA, the flagship carrier for labor, couldn't get favorable press for helping little old ladies across the street.

What it boils down to is 9/11 gave country club Republicans the chance to put a hurt on labor that will last for decades. And the press, owned and operated by those self same ccR's (and that ain't Creedence ) are the circus barkers for this act.

I never was a Gore fan, but there is no way his admin. would have held hands with management and used the ATSB to flatten labor.

Politics matters!
----------------
[/blockquote]


Dio,

The way you think......talk about having hinesight, insight, and forsight...

I AM JUST LOVING YOU TO DEATH!

Were we together, once or twice, in a past life?
[img src='http://www.usaviation.com/idealbb/images/smilies/2.gif']