Ual October Numbers

[Busdrvr]

747,

UAL has traditionally lowered it's lease rates by taking an equity stake in the jet (extra cash up front). Think of it as a "lease to own" proposition. As UAL got closer to ownership of the jet (end of the lease term), the accrued "equity" in that jet. In other words, once the lease is over, they owned it, and thus had the value of that ownership on the balance sheet. When the lease were rejected, they lost that equity, BUT in return, get to lease the jet for MUCH cheaper rates in the future (but the leasor gets to keep his 20 year old 737, instead of it becoming an UAL static display at DIA like that 727...) Net effect is a "special charge" but no money is really lost)

 

[iflyjetz]

OK!! who want's to teach me this type of an accounting?

747, it's standard GAAP accounting. When I took an accounting course in college, my professor started the first class with the following joke:
A large company need a new CFO (chief financial officer) and had three candidates. The interviewer decided that he would have the CFO compute the company's quarterly earnings, and gave each candidate the company's books.
The first candidate came back and said, 'I show a profit of 10 cents per share in the last quarter.'
The second candidate, after going over the books said, 'I show a profit of 9.7 cents per share.'
The third candidate never even opened the books. When the interviewer asked what the profit per share was, the candidate responded, 'What do you want it to be?'

There are a number of ways to produce whatever quarterly result the company desires. Just think of Enron and how they were able to show massive fictitious profits. The same can be done for fictitious losses.
The positive cash flow is a healthy sign.