UAL Faces Delay in Chapter 11 Exit

[funguy2]

By the way, doesn't pushing back UAL's emergence beyond June 30 throw off someones predicted UCT/ICT ? Seems there was something about that June 30 date. Most respectfully, Savy

Exactly. Not only that, but over the past year, US Airways has burned a little bit more than $1mi/day. That means, their next cash crunch, barring an asset sale, will be in the fall, when their unrestricted cash balance falls to the current $700mil covenant. Moreover, the last time US Airways went bankrupt, they had $500-600mil in the bank...

So, if you believe the UCT theory, the delay in the UAL BK means that USAirways will not have any cash to throw at the UCT. They will need to rely on the good Doctor Bronner and the proceeds from the sale of all their commuters/Shuttle, etc. Frankly, I don't think that is very likely.

 

[767jetz]

HEY! Here's a thought:

Perhaps after reading all of a certain USAirways captain's speculations, Tilton decided the best strategy was to hang out in CH11 until US runs out of money! After all, no one in UA management so much as scratches their private parts without considering how it would affect, or be effected by, USAir.

 

[mweiss]

In the case of CO they closed DEN for the greener pastures of GSO. That lasted about a year.

The timeline is close, but not quite there. GSO was built up in 1993 as the hub for CALite (sort of). When Gordon took over, he pulled the plug on Lite, and shifted resources from DEN to EWR, not to GSO.

 

[novaqt]

USAirways is supposed to become fully onboard as a full member of the Star Alliance in May 2004 instead of acting member as they are now. If UA does not emerge from CH 11 BK until late summer or Sept. and USAirways cash flow worsens, will the BK Ct put its blessings on a court merger with UA?

 

[Just Plane Crazy]

What ever happens, U is more interested to become a full member of STAR than any one wants to admit. Just in case (and I pary it will not happen) UA will be closed down, U will be the successor in line to carry all the STAR PAX in the US. There is no other airline that could immediately step in. For U it wold be an immediate boost. And in case UA (and I am betting on that one) will come out of Chapter11 they will not buy U. Why buy someone if they are a part of the team. Let them handle their own weight.

 

[ITRADE]

What ever happens, U is more interested to become a full member of STAR than any one wants to admit. Just in case (and I pary it will not happen) UA will be closed down, U will be the successor in line to carry all the STAR PAX in the US. There is no other airline that could immediately step in. For U it wold be an immediate boost. And in case UA (and I am betting on that one) will come out of Chapter11 they will not buy U. Why buy someone if they are a part of the team. Let them handle their own weight.

There is the answer!

US will join * and will not allign with NW.

'nuff said.

 

[funguy2]

HEY! Here's a thought:

Perhaps after reading all of a certain USAirways captain's speculations, Tilton decided the best strategy was to hang out in CH11 until US runs out of money! After all, no one in UA management so much as scratches their private parts without considering how it would affect, or be effected by, USAir.

You know, I had a very similar thought. I'm glad to see that there is some other rational (even when sarcastic) thoughts out there.

 

[WorldTraveler]

The biggest obstacle to UAL getting an ATSB loan guarantee is that they are STILL not profitable and are not even close. UAL can tell us all about the things that other people have to do to help them turn their company around but they aren't admitting that UAL still lost $1.4B on an operating basis last year, which is more than any other US airline lost. They topped that off with a nearly $200M operating loss in January. We should be hearing the February number soon but it is bound to be incredibly negative based on the extraordinarily high fuel costs and continued invasion of low cost carriers into UA's transcon markets. The outlook for the network carriers as a group is bleak but it's especially bleak for an airline that is in bankruptcy and has not turned the corner to operational profitability despite dramatic steps forward because of huge labor concessions. Further UAL seems to be taking a very antagonistic approach to getting concessions from every entity that it needs to help it get out of bankruptcy - creditors, lessors, municipalities, and employees. UAL has very dangerously assumed that these groups will all go along with them because there is too much to be lost by those entities walking away from UAL. Even if UAL gets every one of the 8 obstacles laying in its path resolved to their satisfaction (which is very unlikely given how much they are ticking everyone off), the ATSB will not guarantee any loan if they still are not making money. The lesson from USAirways' loan guarantee was that they convinced everyone that they had a sound plan and would be profitable when they have struggled from the minute they left bankruptcy. There is no one who believes the network carrier industry has turned the corner and that includes UAL. No investor - the ATSB, commerical banks, and private equity investors - is going to invest in UAL if they continue to lose money and cannot very convincingly turn the ship around post haste.

 

[avek00]

The biggest obstacle to UAL getting an ATSB loan guarantee is that they are STILL not profitable and are not even close. UAL can tell us all about the things that other people have to do to help them turn their company around but they aren't admitting that UAL still lost $1.4B on an operating basis last year, which is more than any other US airline lost...

WorldTraveler:

Your comments are right on target. While United has undoubtedly made progress in terms of cost cuts, the bottom line is that no amount of concessions is going to stop the incredible losses, since IMHO radical changes to the company's business model are required for a decent chance at survival. UAWHQ's notion that the company can simply cut costs and tread water till bluer skies arrive is downright absurd, and explains why the ATSB will continue to give United a hard time ad infintum.

 

[Just Plane Crazy]

The biggest obstacle to UAL getting an ATSB loan guarantee is that they are STILL not profitable and are not even close. UAL can tell us all about the things that other people have to do to help them turn their company around but they aren't admitting that UAL still lost $1.4B on an operating basis last year, which is more than any other US airline lost. They topped that off with a nearly $200M operating loss in January. We should be hearing the February number soon but it is bound to be incredibly negative based on the extraordinarily high fuel costs and continued invasion of low cost carriers into UA's transcon markets. The outlook for the network carriers as a group is bleak but it's especially bleak for an airline that is in bankruptcy and has not turned the corner to operational profitability despite dramatic steps forward because of huge labor concessions. Further UAL seems to be taking a very antagonistic approach to getting concessions from every entity that it needs to help it get out of bankruptcy - creditors, lessors, municipalities, and employees. UAL has very dangerously assumed that these groups will all go along with them because there is too much to be lost by those entities walking away from UAL. Even if UAL gets every one of the 8 obstacles laying in its path resolved to their satisfaction (which is very unlikely given how much they are ticking everyone off), the ATSB will not guarantee any loan if they still are not making money. The lesson from USAirways' loan guarantee was that they convinced everyone that they had a sound plan and would be profitable when they have struggled from the minute they left bankruptcy. There is no one who believes the network carrier industry has turned the corner and that includes UAL. No investor - the ATSB, commerical banks, and private equity investors - is going to invest in UAL if they continue to lose money and cannot very convincingly turn the ship around post haste.

Maybe no US investor, but as I have said it before, LH and SQ would like to invest but the US ownership regulations will not allow them to take a big interest in UA. The goverment has to change the rules and this may all be just a tactic to delay everthing till the rules are changed and non US investors can take over.

 

[avek00]

Maybe no US investor, but as I have said it before, LH and SQ would like to invest but the US ownership regulations will not allow them to take a big interest in UA. The goverment has to change the rules and this may all be just a tactic to delay everthing till the rules are changed and non US investors can take over.

SQ invest in United!? LOL. They won't even CODESHARE with United; what makes you think that they will invest in the company?

 

[boeing787]

Do you guys know the business plan? No. Do the banks and the ATSB? Yes. Enuff said.

 

[Just Plane Crazy]

SQ invest in United!? LOL. They won't even CODESHARE with United; what makes you think that they will invest in the company?

They are a partner in STAR and a big contributor to UA's domestic network. They are also close to LH. Not every one looks at UA as bad as you do and US investors. Just because they don't code share it dosn't mean that they are not willing to invest. Does SQ code share with any one? It is their way of doing business. They invest and buy and they don't follow every ones elses way of doing business. And look they are better of than any of the US carriers. They had their share of problems too but they are better off.

 

[Just Plane Crazy]

Do you guys know the business plan? No. Do the banks and the ATSB? Yes. Enuff said.

I did not implicate that I know the business plan. I implicated that there is a future and it might look different than every one thinks. There is a log going on and it is not all bad. Look at the posetive side, UA and U are still up and running!

 

[767jetz]

Do you guys know the business plan? No. Do the banks and the ATSB? Yes. Enuff said.

Thank you very much! Finally a voice of reason.