UA/UA merger?

[chipmunn]

[FONT face=Times New Roman][FONT size=3][SPAN class=BodyFont]UAL said in its 2Q SEC filing, the Company anticipates significant cash needs for the remainder of 2002, including approximately $200 million in non-aircraft capital spending, a $70 million retro payment under the new contract for the International Association of Machinists and Aerospace Workers (IAM) in December and nearly $900 million in debt maturities in the fourth quarter.[BR][BR]UAL's first fourth quarter debt maturity payment of $375 million is due on November 17 with $525 million due a few weeks later.[/SPAN][BR][BR][SPAN class=BodyFont]The UAL ALPA Economic Restructuring Program (ERP) Term Sheet Overview mailed to the pilot groups said, The Company has done a great job of hoarding cash and drawing on available credit. [STRONG]But United can no longer borrow money from the public markets to fund losses. [/STRONG][/SPAN][BR][/FONT][BR][/FONT]
[P align=left][FONT face=Times New Roman][FONT size=3][SPAN class=BodyFont][SPAN class=BodyFont]UAL MEC WEEKEND UPDATE [BR]Friday, September 27, 2002[BR]By MEC Communications Chairman Captain Steve Derebey[BR] [BR]As we mentioned on Wednesday, United’s union coalition presented to CEO Glenn Tilton a proposal outlining an alternative labor savings framework in support of an application for an ATSB loan. The coalition’s recovery program will provide $5 billion over the next five years. [BR]Subsequently, the Company responded to the union’s collaborative efforts, stating: “We welcome the framework from the union coalition, which has worked diligently to forge constructive recommendations for addressing some of United’s most immediate financial needs. Given the very real deadline imposed by our financial situation, we appreciate this quick but thorough effort. We will study the framework very carefully, and we are committed to responding to the coalition and its members in the days ahead to finalize an updated business plan to take to the ATSB.†[BR][BR]The Company has not yet responded substantively to the union’s proposal. We anticipate that, after its review, the Company will respond to the coalition expeditiously and affirmatively. If that happens, we will then promptly sit down to negotiate a full ERP II agreement with United which will then be brought to the MEC for their consideration.[/SPAN][/SPAN][BR][/FONT][SPAN class=BodyFont][SPAN class=BodyFont][FONT size=3]We expect this to be a deliberate but expedited process.[/FONT][/SPAN][/SPAN][/FONT][/P]
[P align=left][SPAN class=BodyFont][SPAN class=BodyFont][FONT size=3][FONT face=Times New Roman]In the event that tentative agreements with the unions are reached with the Company, they will then submit another application to the ATSB for approval. At that point, the ATSB will decide whether this proposal, in conjunction with the Company’s plan for cost savings, meets the stated requirement that United’s’ cost savings proposal be “deeper, broader, and longer.â€[BR][BR][STRONG]Details of each union’s level of participation have not yet been finalized, and will not be made public until we have a tentative agreement with the Company[/STRONG]. There is no doubt that preliminary figures of participation have been discussed and that each union’s representatives and financial advisors are keenly aware of the extent to which each union is willing to participate, [STRONG][/FONT][/FONT][FONT face=Times New Roman size=3]but only until the Company and the ATSB approve the coalition’s collective participation, as represented by their tentative agreements, will these figures be finalized. [BR][BR][/FONT][/STRONG][FONT face=Times New Roman size=3]Of course, when the MEC finally gives their approval, you will receive the full documentation as you received for the original ERP. There will be a [STRONG]very short period of time[/STRONG] for information to be presented and a membership ratification ballot issued, so we urge you to remain vigilant and open to the flow of information soon to be presented to you. [BR][/FONT][/SPAN][BR][BR][/P][/SPAN]

 

[Ukridge]

Busdrvr:
If the ERP II is passed and UAL realizes ONLY the wage savings, UAL rockets to a level between DAL and Luv at +$52 million. If we get HALF of what we are requesting from the vendors, the number becomes +$177 million

I am glad someone finally brought this point to light. Though I am watching your airline and industry from a distant perspective I have thought that UAL's labor costs were roughly 800B a year. If you take 10% or roughly 800M that alone nearly propels you to profitablity. I agree that the exact numbers will be decided upon in the weeks. In my opinion the crux of the matter is what Mr. Tilton is discussing with your union leadership. If the intent meaningful, then the blocks will fall into place albeit with a little tussle here and there. The ATSB will also know this.
One of the things over which I am perplexed is that as Chip maintains USAirways will emerge from Chp 11 as the new aviation wunderkind, why would UAL not be able to do the same if they entered Chp 11? What I mean is that if Airways can do it having gone into bankruptcy in a much worse position that UAL then why cannot UAL be even better with just 10 to 15% reduction in the wage structure? I must say it must get annoying hearing these couched attacks against UAL all the time. Frankly I would rather enter Chp 11 with the cash that UAL does than the cash that Airways did NOT have. Caveat - I do not know about US bankruptcy laws.
Best all luck to all.
Uk

 

[Busdrvr]

Chip,
Although this U thread has deteriorated to a chp says UAL will go BK thread, you seem to have a few misconceptions, so I'll try to clear them up.
#1. The level of participation has not been decided. Wrong. The details of the level of participation has not been decided. There is a big fear from each and every group that he is giving more than his fair share. Nobody wants his fair share hand tipped until the company has agreed to the proposal.
#2. It'll never be enough for the ATSB. Wrong. I think the ATSB sent a message by approving a loan for ATA just weeks after they gave the pilots a pay raise. The more important and often overlooked point is UAL does not WANT a loan from the ATSB. A more likely scenario is conditional ATSB approval followed by financing from an outside source.
#3. At 1 billion a year for five years, it just ain't enough. WRONG! I've heard it characterized as only half of what the company needs. WRONG! It is 2/3rds of what the company requested for the next five years. As for year 6, can someone please tell me what the US's GDP, political climate, state of the airline industry, price of fuel, price of butter or anything else will be in 6 years? I ran a few number using 2nd Q 2002 numbers as a referance. UALs numbers are worse compared to the rest of the industry than they normally would be since UAL cut back more than the other airlines, which results in lower A/C utilization rates, higher wages ect. I also corrected UALs 2nd Q numbers for two special one time items they included in wage costs.

EBTD (earnings before Tax and depreciation, I included interest since it must be paid)

AMR -$427 million
UAL -$198 million
NWA -$22 million
DAL +$32 million
SWA +$250 million

If the ERP II is passed and UAL realizes ONLY the wage savings, UAL rockets to a level between DAL and Luv at +$52 million. If we get HALF of what we are requesting from the vendors, the number becomes +$177 million. This does NOT include additional savings and profitability from the new, expanded, lower paying shuttle operation that will be part of the proposal.

In any case, we'll all know the details soon. i think the compnay WILL except the terms, and if they do, believe it or not, expect an A/C order.

 

[Busdrvr]

[blockquote]
----------------
On 9/27/2002 9:28:26 PM TomBascom wrote:

You guys don't get it.

We don't expect to fly coast to coast for $250. Nor do we expect you to match SWA to every detail. (Or worse the amalgam of all the low fare bad ideas and none of the good ones that we're faced with today.)

By the same token there is no justification at all for it to cost $2,500 to fly coast to coast. Nor should it cost $700 to fly MHT -> PHL.

You're selling a different product. You can differentiate it and obtain a premium price for it. But not a premium of 400% or 800%. It isn't that much better and it never was.

----------------
[/blockquote]

Tom and KC,
I see you've got the whole marketing and pricing thing figured out. Might I make a suggestion? UAL, would without a doubt, sell you every seat on every flight for the next year for $0.115 per seat mile. Since your pricing model makes sooo much sense, Buffet, Gates, and Dell would all line up to finance your deal. Then you could sell each and every seat at a small profit, using your pricing model and MAKE MILLIONS

 

[KCFlyer]

[P]
[BLOCKQUOTE]
[P][BR]----------------[BR]On 9/29/2002 1125 AM Busdrvr wrote:[/P]
[P][BR]Tom and KC,[BR]I see you've got the whole marketing and pricing thing figured out.  Might I make a suggestion?  UAL, would without a doubt, sell you every seat on every flight for the next year for $0.115 per seat mile.  Since your pricing model makes sooo much sense, Buffet, Gates, and Dell would all line up to finance your deal.  Then you could sell each and every seat at a small profit, using your pricing model and MAKE MILLIONS [BR] [IMG src=http://www.usaviation.com/idealbb/images/smilies/9.gif] [/P]
[P][/P]----------------[/BLOCKQUOTE]
[P]Busdriver...No, we've only got it half figured out. None of our proposals asked for $9 billion in consessions. If ya don't try it, you'll never know. MHO??? UAL will get the $9 billion they want...they'll file Chapter 11 anyhow, they'll downsize an additional 20-25%, but they'll STILL be charging an arm an a leg for any fare that ISN'T subject to a $100 change fee. And they'll STILL lose money. [/P]

 

[Ukridge]

Sorry, make my previous remark of UAL's labor costs of 8B a year not 800b! 10% of 8b of course is 800m.
Uk

 

[Busdrvr]

[blockquote]
----------------
On 9/29/2002 118 PM Ukridge wrote:

Sorry, make my previous remark of UAL's labor costs of 8B a year not 800b! 10% of 8b of course is 800m.
Uk
----------------
[/blockquote]

Yeah, and people already thought we made too much

 

[batman]

Below is another reason why the current UAL managment team will have no incentive for CH 11. Jack made sure of it!
ps. maybe the moderator should move this thread to UAL since its mostly about UAL. Better yet maybe it should get locked for good.

.........................................
September 28, 2002
Big equity package for UAL's Tilton

WASHINGTON—United Airlines parent UAL Corp. awarded 1.15 million stock options and 100,000 shares of restricted stock to Glenn Tilton on Sept. 2, the day he came on board as chairman, CEO and president, according to a report filed with the Securities and Exchange Commission.

The options are priced at $3.03 and can be exercised in four equal installments, starting immediately, the report says.

While the signing bonus could become worthless if UAL goes bankrupt, it's in line with the type of incentive a large, financially distressed company would pay to attract an executive to turn the firm around, says Steven Hall, managing director of Pearl Meyer & Partners, an executive compensation consulting firm in New York.

You want to put a meaningful amount of equity before a new CEO in that situation, he adds. If he can get the stock price back to $20, he'll do very well.

A UAL spokesman declined comment.

 

[Oliver Stone''s Apprentice]

[blockquote]
chipmunn wrote:
This thread has wandered off of the topic and should return back to a UA-US corporate transaction. [/blockquote]

Perhaps it has wandered so much because this conspiracy theory you keep promoting is about as likely to happen as it is for Pan Am III to be the market leader anywhere other than at an airport where they're the only carrier providing service...

 

[UAL777flyer]

Busdrver,

Expect an aircraft order? What is your source for this info? We've still got a bunch more A319's and 320's with deliveries deferred out until 2004/2005. I really can't see an aircraft order being placed until somebody can get a handle on where this industry is going and what kind of revenue stream we can conservatively expect. Is this just informed speculation on your part or have you actually heard this from reliable sources?

 

[Busdrvr]

[blockquote]
----------------
On 9/29/2002 11:16:26 PM avek00 wrote:

Batman:

I'm confident that Tilton would receive an equity package similar to (and probably greater than) his sign-on deal should he successfully restructure United through a Chapter 11 filing. Thus, I don't believe that those stock options would prove decisive in choosing to take the course that seems increasingly inevitable...
----------------
[/blockquote]

I wouldn't count on it in the current management greedy, management bad!! political enviroment. In any case, the goings on behind the BOD door would likely make a VERY good novel, and would possible replace Survivor or Big Brother as the champion of back stabbing deals and coup attempts. Also, any voluntary BK deal would require the approval of either the IAM or ALPA rep (likely NOT gonna happen).

 

[avek00]

Batman:

I'm confident that Tilton would receive an equity package similar to (and probably greater than) his sign-on deal should he successfully restructure United through a Chapter 11 filing. Thus, I don't believe that those stock options would prove decisive in choosing to take the course that seems increasingly inevitable...

 

[Busdrvr]

[blockquote]
----------------
On 9/29/2002 1049 PM UAL777flyer wrote:

Busdrver,

Expect an aircraft order? What is your source for this info? We've still got a bunch more A319's and 320's with deliveries deferred out until 2004/2005. I really can't see an aircraft order being placed until somebody can get a handle on where this industry is going and what kind of revenue stream we can conservatively expect. Is this just informed speculation on your part or have you actually heard this from reliable sources?
----------------
[/blockquote]

Let me at least rephrase, we may take some of those defered deliveries early. re: last sentance- A little of both

 

[argentomaranello]

BUSDRVR:

T think you're right that the neither the ALPA nor the IAM members of UAL's BOD are likely to be early supporters of any resolution calling for filing a Ch.11 petition. In fact, I think you're so right that I have previously written that UAL labor's denial and intransigence in the face of an obvious financial disaster about to hit the great carrier is at the core of the UAL fragmentation theory. Ch.11 works best if it is entered early and with sufficient cash on hand; the mindset that you describe for the ALPA and IAM people on the UAL BOD is likely to contravene that very principle. If UAL stumbles into bankruptcy because its labor masters won't come to their senses until there is literally no cash left in the till to even cover the payroll, then fragmentation looms more likely than not.

 

[TomBascom]

[blockquote]
----------------
On 9/29/2002 1125 AM Busdrvr wrote:
Tom and KC,
I see you've got the whole marketing and pricing thing figured out. Might I make a suggestion? UAL, would without a doubt, sell you every seat on every flight for the next year for $0.115 per seat mile. Since your pricing model makes sooo much sense, Buffet, Gates, and Dell would all line up to finance your deal. Then you could sell each and every seat at a small profit, using your pricing model and MAKE MILLIONS
[img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
----------------
[/blockquote]

Yeah, right. Great idea, I'll call Bill and Warren this afternoon... [img src='http://www.usaviation.com/idealbb/images/smilies/10.gif']

They're too stuck on the idea that they should be selling those seats for $1.00 per seat mile. If they were really so willing to sell them for $0.115 they'd be doing so.

Airline people have a problem -- they don't ever have to actually buy tickets. They're completely disconnected from the reality of the running a business that uses travel services. If I did buy [b]all[/b] the seats can you imagine the howls when the non-revs find out what this stuff actually costs? Or when the company has to actually pay for commuters and company business -- they'd pretty quickly change their tune on a whole bunch of ticket policy decisions.