Ual, Lenders Seek Dip Some Waivers

[767jetz]

Row,

First off, thanks for showing interest in understanding our dilema without, the undertone of gloomy predictions. That is VERY refreshing on this board these days.

I am no bankruptcy expert, so this is only my understanding of the situation. I look at the assets being sold like cash. UA is getting rid of things it doesn't need, in return for money in the bank. So since the $ for these sales improve UA's cash balance, I don't think the creditors would have a problem with it. If the assets were transfered somewhere that the creditors could not get to it, that would be a different story.

Additionally, I believe some of the $ is being used to pay down the debt.

Lesson #2 for "Bankruptcy For Dumbies" complete.

 

[767jetz]

They didn't sell these shares because they had to - it's because diller aqcuired hotwire. What a frickin AMAZING RETURN! THEY MADE $81.2 MILLION!

Now I feel a bit better.

I agree!

You can't be upset about a return like that!

 

[novaqt]

To recap somewhat:

$5 million savings per year from $2.8 billion fuel expense

$20 million savings from outsourcing cabin cleaning

$19.2 million from BA for 4 slots at Heathrow

$85 million earned from sale of stake in Hotwire

$176-258 million earned from sale of stake in Orbitz

$ ? to be earned from sale of surplus inventory at Auction

$ ? to be earned from sale of 18 767-200's


Did I leave any additional earnings out?

Mr. Tilton seems to be navigating through bankruptcy rather well since he brought with him his experience at Chevron.

 

[767jetz]

Finally, there is more reason to believe some form of a UCT will occur, although its final form is unclear.

Now that has to be the most vague statement I've heard in a long time.



There is also reason to believe that the sky will fall, and life on planet Earth will cease to exisit, although when, where, and how it will happen is unclear.

(But if it happens I will claim to be the first to have predicted it. )

 

[Fly]

RowUnderDCA Posted on Oct 16 2003, 03:49 PM

Anyway, U got through bankruptcy by running across the span and making a headlong leap to the other end.

UAL is taking tiny step by tiny step, hoping a gust of wind won't come but otherwise calculating very carefully what's likely to happen with every step.

Beautiful analogy. Just like the kid at school who rushes through his homework so he can get outside to play faster. He better be careful or he just may have to come back inside and do it over (Ch 11) AGAIN!

 

[FWAAA]

To recap somewhat:

$176-258 million earned from sale of stake in Orbitz

$ ? to be earned from sale of 18 767-200's


Did I leave any additional earnings out?

I agree with your point and all your numbers except these two.

UAL's remaining stake in Orbitz after the IPO will still be worth between $176 million and $258 million. The portion they seek to sell is estimated tol bring in between $26 million and $52 million. Source:

http://biz.yahoo.com/rc/031015/airlines_united_1.html

And seriously now, we all know that the 767-200s will bring very little money, and that assumes that anyone even offers to buy them. Old 762s are almost worthless. But who knows? Maybe UAL will get more than beer can value out of them.

 

[UnitedChicago]

I agree about Tiltion's Texaco BK experience. Despite his lack of airline experence...two things always were impressive credentials: be part of the senior management team during the successful bk process and his experience with the oil industry.

The latter I suspect played a big part in the fuel hedge deal recently announced. I noticed part of the DIP amendments mention covering the initial cost of the fuel hedge.

 

[iflyjetz]

Is UAL selling these assets in order to pay-off post-bankruptcy creditors so that they get a pass on possibly missing some financial requirements of the DIP loan? (no sarcasm, just a question.)

RowUnderDCA, I know where the rumor that UAL would miss DIP EBITDA targets originated. We ALL do.
However, if one were to take a look at the number of months that UAL has been EBITDA positive, one would quickly be able to realize that UAL will probably have no problem meeting DIP EBITDA targets through the rest of the year, assuming no extraordinary occurrence within the airline industry.

Someone else (767jetz?) summed up UAL's current disposition of excess assets as a garage sale. Very fitting. For instance, that extra ground equipment being sold would need to be stored. Storage costs money. Why not dump excess inventory?

 

[Falco]

As an outside observer, I must say, I see a lot of BS on this thread from both sides. It seems obvious to me that UAL will not meet its DIP obligations going forward, based on all the projections made by other carriers on profits going forward, and these asset sales give them a little extra room to fix things going forward. What I gather from these events is that UALs going is getting tougher, but not yet dire. And of course Chips hopes that U will get UALs assets is absurd.

 

[novaqt]

CORRECTION

To recap somewhat and put in perspective in one place:

$5 million savings per year from $2.8 billion fuel expense

$20 million savings from outsourcing cabin cleaning

$19.2 million from BA for 4 slots at Heathrow

$85 million earned from sale of 16.5% stake in Hotwire

$26 to 52 million earned from sale of 26% stake in Orbitz

$ ? to be earned from sale of surplus inventory at Auction

$ ? to be earned from sale of 18 767-200's


Did I leave any additional earnings out?

The above is without plowing through the Bankruptcy filings and SEC reports. I am well aware that there are alot more savings from labor contracts, renegotiated leases and vendor contracts and additional savings from outsourcing cargo and maintenance.

 

[atabuy]

Did I leave any additional earnings out?

Since you also have savings there, I will add a few more billion in employee wage reductions. No chump change.

And if we are all real unlucky, pension plans turned over to the Gov.
This is the biggest hurrdle for Ual right now.