UAL Faces Delay in Chapter 11 Exit

[iflyjetz]

Have to agree with Flying Titan. There is a lot of blind faith going on this board and a lot of antagonism against somebody who is occasionally correct.

Yes, he is occasionally correct. But he's incorrect more often than correct. I could review his history (UAL/U merge a 'slam dunk,' UCT, ICT, etc), but let's just say that even a blind squirrel finds a nut on occasion. Heck, even I have been correct once or twice.

No doubt, UAL's current situation is not optimum. But many posters fail to understand that UAL is going to bankers for exit financing, not unconventional financing sources. At the start of UAL's chap 11, there was a line down the block of shady characters (Marvin Davis, Carl Icahn, TPG, etc) wanting to provide financing to UAL. We don't hear about those characters anymore because UAL appears to have secured financing from legitimate sources. JPM and C are NOT in the same league with RSA.

 

[ITRADE]

Yes, he is occasionally correct. But he's incorrect more often than correct. I could review his history (UAL/U merge a 'slam dunk,' UCT, ICT, etc), but let's just say that even a blind squirrel finds a nut on occasion. Heck, even I have been correct once or twice.

I was expecting exactly that type of statement. Go figure.

No doubt, UAL's current situation is not optimum. But many posters fail to understand that UAL is going to bankers for exit financing, not unconventional financing sources. At the start of UAL's chap 11, there was a line down the block of shady characters (Marvin Davis, Carl Icahn, TPG, etc) wanting to provide financing to UAL. We don't hear about those characters anymore because UAL appears to have secured financing from legitimate sources. JPM and C are NOT in the same league with RSA.

I wouldn't start holding your nose with respect to RSA. $29 billion in assets is nothing to sneeze at. I'm sure the teachers and government workers in Alabama are quite happy with their asset valuations.

 

[Bear96]

I understand that many of you are bothered by a certain captain's posts here, but it's interesting that none of you have stepped forward to say that - on this point at least - he was right. He's been saying for quite a while that UAL's trip through BK has not been smooth sailing and today's articles certainly back that up. UAL has some major hurdles to clear and they are spelled out pretty well in the articles - pension relief, the ATSB, sniping between creditors about who gets what stake in the new post-BK airline.

I for one have long acknowledged that UA is in big trouble and I have been pessimistic about UA's outlook. If UA is legitimately screwing up, I have no problem about calling it for what it is.

That is NOT the problem I have with USAir320pilot's posts though.

 

[Ukridge]

Although I do not have the expertise to comment on the financial status of the bankruptcy, I must admit to a certain perplexity as I work through this thread. Even the most cursory exegesis of the phrase “When would now be a good time….†leads to some rather problematic issues of interpretation. Yes, I know the famous quote by Erasmus of ‘quot hominess, tot sententiae’ but in this case the opinion is not quite received due to a conflict within the very structure of the sentence. The word ‘when’ would indicate an interrogatory or enquiry that would leave open a range of possibilities on the time continuum. However, I struggle with the near juxtaposition of the words ‘when’ and ‘now.’ Is this sentence an opinion or a question? I understand the difficulties that have been encountered with this poster in reference to the cogent expression and usage of English in previous posts, and this continues in this tradition. Or, perhaps I am merely recognizing a gleeful outpouring of Shadenfreude encased in an awkward verbal construct?
Since my opinion was sought, I will render it thusly. I continued to be awed by the exultation and celebration on the part of some at the demise of another. Most have learned early in life that the measure of the man is not against others but himself. Thus, it should be that the measurement of those delighting in United’s undeniable extremis is to be one of respectful sorrow and not malicious ardour. So much for the virtue of springing from the saddle to render succor to an opponent vanquished. You see, USA320Pilot’s role is that of a poseur. He attempts to frame his comments as the simple and dispassionate relation of information and yet he is hoisted on his own petard by the very language with which he attempts to dissemble – a very appropriate come-a-cropper if I ever have seen one!. If one is to play the role of the cool, disinterested observer then one would be well served to match the presentation in like manner.
Cheers

 

[Winglet]

The sad truth is that there is still way too much capacity in the airline system now. In order to normalize a big chunk needs to come out. The only way that's going to happen is for one or more of the majors to close shop. The economy is still crap despite Bush's rhetoric and looks to remain so even in this election year with the only people doing well being the elite classes of Bush and Kerry types.

The only way fares are going to recover is if customers have to compete for available seats.

UAs has terminal problems if the economy stays in the dumps this year and deflation continues in the airline industry. For U, I think it's already all over but the shouting. It'd take a miracle for Siegel to pull it out at this point. A merger between U and another major? Like throwing a guy in a sinking boat an anchor.

 

[iflyjetz]

I wouldn't start holding your nose with respect to RSA. $29 billion in assets is nothing to sneeze at. I'm sure the teachers and government workers in Alabama are quite happy with their asset valuations.

Ah, you have chosen to look at RSA from a diametrically opposite point of view than that of a UAIR employee or investor. Yes, Bronner has done well heading the RSA.
His stake in UAIR is one where he is able to extract extortionary rates for the RSA 'investment' in UAIR. If I were an Alabama employee with retirement funds investested in RSA, I'd be very happy. But don't waste anyone's time misrepresenting RSA's involvement in UAIR as a good thing for UAIR. It is NOT good for UAIR.


As for the expected response to your comment on a certain individual being occasionally correct, you gave him less than a ringing endorsement. 'Occasionally correct?' Look at the definition of occasional: 'Occurring from time to time. Not habitual; infrequent.' If that's not a left handed compliment, I don't know what is.

 

[ClueByFour]

I found the following sentence interesting of note that nobody has picked up on: "People familiar with the company's finances said United is concerned that it might not meet its May hurdle, which will require positive earnings, as measured before interest, taxes, depreciation, amortization and aircraft rents, for the past 12 months."

Missing a DIP has been postulated at every DIP hurdle since UA entered Chapter 11. They have hit all of them. At least one poster has a rather chapped backside over this very fact.

 

[avek00]

767jetz responds:
My opinion of this article is that after talking with the banks, the ATSB is confident that based on UA's business plan they have more access to capital markets than originally expected. This is a good sign. Expect to see a revision to the agreements with JP Morgan and CitiGroup that will have each lending UA $250Million each in unsecured money. (instead of the original $200M)

No, it's a sign that the ATSB is not interested in extending a guarantee, since a lack of access to the capital markets is one of the primary conditions that must be met in order to be considered for Board approval. As you alluded to in another thread, any money that United could possibly find on its own would carry much higher interest rates and more onerous covenants than an ATSB-backed loan. It seems as if the ATSB is basically saying that terrible private financing terms don't equate to a lack of market access, so UA might have to bite the bullet and take whatever "bad money" it can find.

 

[savyinvestor]

Clue:

With all due respect, you're wrong.

Regards,

USA320Pilot

I thought this type of response was to be avoided? Assume a suspension will be given.

 

[jimntx]

The sad truth is that there is still way too much capacity in the airline system now. In order to normalize a big chunk needs to come out. The only way that's going to happen is for one or more of the majors to close shop. The economy is still crap despite Bush's rhetoric and looks to remain so even in this election year with the only people doing well being the elite classes of Bush and Kerry types.

The only way fares are going to recover is if customers have to compete for available seats.

UAs has terminal problems if the economy stays in the dumps this year. For U, I think it's already all over but the shouting. It'd take a miracle for Siegel to pull it out at this point. A merger between U and another major? Like throwing a guy in a sinking boat an anchor.

A year ago I would have agreed with you wholeheartedly. However, I'm afraid that today, the demise of a major--UA, U, or even AA--would not necessarily result in a return of rational (from the airlines' viewpoint) fares. I fear that such an event would result in a ramping up of service by one or more of the LCCs to the suddenly underserved destinations.

Say for instance, UA goes Chap. 7. ATA "over-water" qualifies their flight crews during new hire training to support their charter business as well as their scheduled domestic service. ATA's flight attendant training last 4-5 weeks. There would be a host of highly qualified UA pilots on the street. And, lord knows there is a plethora of a/c available for sale/lease which would be exponentially increased by the addition of UA's a/c to the sale table. How long would it take ATA to double/triple its service out of Chicago? Or any of the other LCCs, for that matter?

Even though AA has almost 6,000 of us f/a's on furlough and a host of pilots available for callback, corporations the size of AMR have not historically been capable of the flexibility needed to react quickly to events. For AA to grab any of UA's international flying, the following would have to occur...
1. Determine what routes they want to serve and how much service to provide.
2. Determine how many flight attendants and cockpit crews would be needed to support the service.
{Already I see weeks of committee and sub-committee meetings ahead. <_< }
3. They would have to extend proffers for the International bases involved. I think that under the CBA, proffers must be open for some minimum period of time.
4. Once the proffers were awarded (which more than likely would involve some flight attendants who were already International transferring to a more desirable base which means zero gain to the total corps), you have to train those flight attendants coming from domestic.
5. Recall a/c from the desert or lease/buy additional a/c.
6. I'm sure there is something I've omitted, but I'm only a junior {furloughed} flight attendant; so, I don't really have a total grasp of the "big picture."

I think someone else, probably one or more LCCs, would step in to fill the void. And, I don't think any of them would risk alienating their customer base by jacking up fares to what the majors had historically charged.

 

[BillLumbergh]

Clue:

With all due respect, you're wrong.

Regards,

USA320Pilot

I thought this type of response was to be avoided? Assume a suspension will be given.

Sorry, but what's deragotory about saying one is wrong.

If we did that, we would have about five members.

 

[iflyjetz]

Missing a DIP has been postulated at every DIP hurdle since UA entered Chapter 11. They have hit all of them. At least one poster has a rather chapped backside over this very fact.

It's been extremely difficult for me to nonrev lately. (Furloughed employee; BP-8C). If the jets are packed in March, I shudder to think what May holds for me. The loads are very high. I don't know what all of the fares are, but I looked at buying a ticket ... prices appear to be climbing rapidly.

 

[iflyjetz]

Sorry, but what's deragotory about saying one is wrong.

If we did that, we would have about five members.

Bill, I think that Savvy is quoting from Scot's warning note on the UAIR board.

Didn't ya get the memo?

 

[atlmd80]

No doubt, UAL's current situation is not optimum. But many posters fail to understand that UAL is going to bankers for exit financing, not unconventional financing sources. At the start of UAL's chap 11, there was a line down the block of shady characters (Marvin Davis, Carl Icahn, TPG, etc) wanting to provide financing to UAL. We don't hear about those characters anymore because UAL appears to have secured financing from legitimate sources. JPM and C are NOT in the same league with RSA.

Iflyjets, You are correct that we have not heard from those types of equity investors recently. The question is- Will we hear from them in the future? Who was the ATSB talking about when they said to go get 100 million from another source? The loans from JPM and C were based on the applied for loan. What effect will this change have on the JPM and C loans? Another question is how long will the Judge give for Mgt to present its POR? If this extention is not given will one of shady equity investors come out with its own plan?

 

[iflyjetz]

Iflyjets, You are correct that we have not heard from those types of equity investors recently. The question is- Will we hear from them in the future? Who was the ATSB talking about when they said to go get 100 million from another source? The loans from JPM and C were based on the applied for loan. What effect will this change have on the JPM and C loans? Another question is how long will the Judge give for Mgt to present its POR? If this extention is not given will one of shady equity investors come out with its own plan?

All good questions. I don't know how this will change the terms with JPM and C, but I'd be surprised if they walked away from the business. Cautionary note: I've been wrong in the past and will be wrong in the future; this may well be another topic that I'm wrong about.

As for the extension of the POR, Judge Wedoff said at the very beginning of BK proceedings that his primary concern was the long term viability of UAL. I anticipate him to rubber stamp another extension of the POR. See cautionary note above.