based on observations of recent events, and reasonable assumptions in the future (oil is not going to 25 a bbl, the iraq war will not be over, ect...)
i believe it is imperative to avoid BK at Almost any cost (whoa slow down and read on). This is based on the UAL 3rd denial and subsequent dont ever ask again for ATSB backing, then after shopping around commercial for comercial money again coming up with Zippo. (without going into UALs problems) suffice to say that exit financing is basically non-exsistant for airline companies at this juncture. Throw in an election year and there is not much political motovation until after Novemeber.
As business plan based on gaining revenue due to the predicted failure of a competitor is also not acceptable to banks (see DAL). The courts will be used most predominately to rachet down contractual obligations (as UAIR has found out once) AMR was not less than moments away from filing 2 seperate times in the recent past indicating play ball or risk it all concept. (signaling the company's intent to use the courts to go after labor contracts first and foremost) now coupling that together in todays snapshot economic enviroment i conclude that BK might be a one way trip.
Having said that, the second part of the queston (UAIR 1 year from now) could be most interesting as i have said in the past UAIR (in my own opinion) is not the most likely candidate to shutdown. and for the same reason should say a 20% reduction in flights of a competitor result in more fares for UAIR does not the situation quickly reverse itself where say that competitor is cutting flights, still losing money while UAIR picks up just enough revenue to force it into the black. then it could be argued "the plan is working" and more money might flow (meaning more travelers might book away from a crumbling carrier and towards one that looks like it will be around longer). Sure reduced wages will improve the balance sheet from its present form. but will that be enough? again i have always thought that will help but that is not what is wrong here. and until you correct the root of the problem the problem still exsists.
so if you choose to agree with things i have said, then it should be fair enough to state that in this case its the last one standing that will win not the biggest. the trick is to navigate this patch in such a way that there is a tomorrow and as in times of ill the employees gave, upon better times the company reciporcates such a relationship would indicate yes we are all in this together.
so you want a look into the future? sure guessing can be fun too. somebody i'm sure will reference this and point it out to me (Which i hope is the case) so summer of 05......... i think oil will be sub 33. but not sub 28. hence the trend is downward, the overall economy will stall due to another few intrest rate hikes but regain its footing and continue pushing towards 3% growth of gdp. i suspect that a fall rally in the markets will hesistate as the elections grow nearer, absent any major terrorist incidents overall airline passenger traffic will continue to rise meaning industry gross revenues will increase. While PHL seems to have become a battleground should AMR or DAL enter BK the other one will follow in order to achieve costs comparisions. all the while UAIR can begin to trumpet its horn we are NOT in bankrupcty, we ARE cash flow positive, as costs drop for DAL and AMR look for increased Pressure on SWA from not only them in there base cities (mco/dfw) (yeah i know swa goes to hobby) but there might be a war among the discounters at some point again allowing UAIR to recover even further. SO yeah i guess 1 year from now i still see it flying how many jets and with how many employees? well there's the million dollar (or 4.5 in siegels case) question. I see no reason for further personnel cuts other than through attrition and if that continues to be the case a by next summer UAIR will have to begin recalling former employees.
now if oil rises (terror incident, iraq war ect) or another (god for bid) event occurs then all bets are off at that point i would suspect multiple fillings and multiple shutdowns to occur but that is worst case.
Specifically could you imagine what would happen if 737s are replaced by Emb 170s? but then with the AMOUNT of EMBs coming it would eventually result in more staffing rather than less. Currently i see UAIR approaching the same situation as the early 90s. the d9s were getting old, the company was losing money, there was a war on , oil was 50 a bbl (intrest rates were at 8% not 1.5) and yes a recession and election were upon america. the dishartening thing is that history (for the company ) has repeated itself and it seems that it did not learn from the first go round. The good news is every employee left has been there done that before and knows exactly what its going to take. 10 years later do they still have it in them? i would NOT bet against that group, the most gutsy, hardest working people i have ever come across in the airline industry.
