United Edges Closer To Exiting Ch 11

[mrfish3726]

UniTED isn't in the clear yet there 767jetz. As the price of oil continues to climb it will probably still be a set back for UniTED to exit BK. It hit $65 a barrel today and is predicted to hit $70 a barrel before the end of summer. I am sure the business model they tried to sell the banks wasn't with oil at $65 to $75 dollars a barrel.

 

[Fly]

Good. Then we'll just stay put in BK and watch you squirm. Obviously, no one is forcing us out, so stay in. Seems to piss off the competition, must be a good place to sit tight.

 

[WorldTraveler]

I have participated in every forum on this board and I don't recall ever being told that one had to pick one forum and stick with it. I post when I think there is commentary to be said. Yes, I have a bias for DL and I have been harsh on UA for a reason: UA has been blessed with some of the best assets and routes in the industry. Although I don't talk about politics much on this forum, I'm equally as critical of the USA for not using our resources and power for the betterment of the world and for hoarding and wasting so many of the world's resources; I am not a socialist. Those in positions of power and leadership are ALWAYS held to very high standards. ALWAYS. UA has been an industry leader for decades; DL has been an underdog for almost all of its existence.

Let’s be perfectly clear about one thing: UA is not out of bankruptcy yet.

If DL does go into bankruptcy, I expect they will move very quickly to stabilize their finances and right size their airline. It is very likely that they will quickly lower their current legacy segment costs even further, probably to true LCC levels and will at the same time raise revenues by removing excess capacity. Bankruptcy does afford the opportunity to reject leases and DL would probably reject leases on the remainder of their 737 classic fleet, possibly a number of non-ER 767s (24 of them), and possibly some of the 57 leased MD-88s. Of their regional aircraft, about half of the CRJ-100/200s are leased and most of the ATRs. It is anyone’s guess what DL might do with their network but it is certain that a number of aircraft will come out if DL has the opportunity to reject leases.

However, if DL starts a large scale rejection of leases in bankruptcy, it will be because those aircraft cannot be sustainable given fuel prices which may not come down for years. If DL is able to dump much of its less fuel-efficient fleet, AA will find it almost impossible not to start dumping its older aircraft as well; none of the McDonnell Douglas designed or built aircraft compare favorably on a fuel usage basis with competing models exc. possibly for the MD-90 but including the 717 flown by Airtran. 737 classics and older Airbuses also don’t work. UA, US/HP, and CO also may find it necessary to remove the remainder of its 737 classic fleet. NW is in a particularly difficult spot because they do own nearly all of their older aircraft which means they can’t get rid of those aircraft through bankruptcy. I have previously posted fuel specific aircraft CASMs but there are significant portions of every carrier’s fleets that are not viable at $60+ oil prices except for perhaps B6. While labor has born much of the brunt of high costs in other areas, they cannot make up the for the fuel inefficiency of a number of aircraft. As legacy labor costs come down relative to LCCs, the LCCs cannot sustain cost uncompetitiveness in their fleets. It is also not sustainable to fly the current amount of seats in the industry at the 70% load factors that are typical through much of the winter, fall, and spring.

Let’s also be clear that $60 plus oil is not sustainable for any of the network carriers and will not be sustainable for any of the LCCs except for WN since it is the only carrier with hedges going into 2006. However, WN’s hedges do not grow as its fleet grows so even if it takes on new capacity, it is doing it at current fuel prices. Fuel contracts for early 2006 are already being quoted above $60. Some economists are saying that such high fuel prices will push the economy into a recession, which will further harm airlines. Record high fuel prices compounded by falling demand spell doom for the airline industry and for creditors and lessors to the industry.

The long-awaited shakeout in the industry may well be upon us. Given the amount of restructuring that will take place, no airline is safe. And the airlines that end up in bankruptcy – which may include everyone not already there – will be because they didn’t manage their businesses but because the airline industry is not sustainable at current fuel prices.

If DL does file for bankruptcy, it is very likely that they will be just the first of most of it not all other airlines that will also be forced to file. And the airlines currently in BK will have to go back for even more cuts.

 

[spacewaitress]

If DL does file for bankruptcy, it is very likely that they will be just the first of most of it not all other airlines that will also be forced to file. And the airlines currently in BK will have to go back for even more cuts.

It's just a question of when. Oil is the wild card, and its not looking good for UAL or any of the airlines.

 

[ZMAN777]

737 classics and older Airbuses also don’t work. UA, US/HP, and CO also may find it necessary to remove the remainder of its 737 classic fleet.

For the record, UAL doesn't operate any 737 classics. We haven't since late 2001.

If DAL does file they will definitely remove some capacity from the system which will help with the current overcapacity in the system. Expect a number of RJ's to be parked/returned.

With FlyI on the ropes expect even more capacity to be withdrawn, especially out of Dulles. They've already stated they'll pull-back on their A319 transcons which will be to UAL's advantage. It'll all get a bit more interesting within the next few weeks.

Cheers,
Z B)

 

[RowUnderDCA]

No - I don't feel smug at all. I do - however - take pleasure in pointing out when people are clearly wrong in their opinions. Opinions that are so clearly biased.

[post="287368"][/post]​

Hey, Webster, isn't that a pretty good working definition of "smug?"

 

[TechBoy]

For the record, UAL doesn't operate any 737 classics. We haven't since late 2001.

[post="287459"][/post]​

Ummm, the last time I checked, UA has a large number of 733s and 735s.

 

[ZMAN777]

Ummm, the last time I checked, UA has a large number of 733s and 735s.

[post="287479"][/post]​

Perhaps it's my mistake. I was referring to 737-200's. Those went to the desert on/about 1 Nov 2001.

Cheers,
Z B)

 

[SVQLBA]

Perhaps it's my mistake. I was referring to 737-200's. Those went to the desert on/about 1 Nov 2001.

Cheers,
Z B)

[post="287483"][/post]​

300/400/500 = "classic"
600-900 = "NG" (next generation)
100/200 = ??? BO? (Bleedin' old?)

 

[JungleClone]

We need to keep things in proper perspective. Yes, UA has made tremendous strides in cutting costs over the last 2 1/2 years. But isn't that what a company is expected to do in bankruptcy? Wouldn't any other airline, or any other company, in UA's situation have done the exact same thing? So the only real kudos I give to UA senior leadership is that they've thus far been able to do what is expected of a bankrupt company in their position. But even given all the massive cost cuts UA has made, we're still nowhere near sustained profitability.

Where is the business plan that will get us there? I have my doubts one even exists. Oh, don't get me wrong. I know a plan is being finalized. But I seriously doubt it will get us back to profitability. Not with the current leadership team. I stand by my opinion that the only way UA EVER gets back to sustained profitability is with a different leadership team in place. This current team has more than had their opportunity and have thus far squandered it. Time to show your cards.

 

[UnitedChicago]

Not with the current leadership team. I stand by my opinion that the only way UA EVER gets back to sustained profitability is with a different leadership team in place.

[post="288211"][/post]​

Agree!!

 

[novaqt]

JungleClone:

You seem to think that a change in leadership team is always the answer. For your information, those who have been making decisions for how this company runs is Kirkland & Ellis (bankruptcy lawyers), the bankers (dip financiers) and the consultants. Jake Brace was charged with navigating through bankruptcy and makes the court appearances. Keeping Jake Brace in his position masterfully makes him single-handedly the savior or fall guy if United's business plan fails. Being in bankruptcy and having the guidance of the lawyers, bankers and business consultants will actually teach our guys how to correctly run a business, not just an airline. Tilton is the figurehead that has the overall oversight over the Leadership team and makes sure that what the lawyers, bankers, consultants and judge says get put into place. Tilton also meets with Congress on all airline issues where he is required to attend. I frankly think that Tilton has done a good job under the mess he was handed from Goodwin and his boys. Any of those management people who are left are laying low in their jobs. You haven't heard anything from Doug Hacker. He is still there.