hope this hasnt been posted before,but here goes.
What is UAL''s survival plan?
By Sandra Jones
When UAL Corp. appears before U.S. Bankruptcy Court Chief Judge Eugene Wedoff in Chicago next week, the airline company will have to present a solid business plan and establish financial credibility as it attempts to reorganize.
UAL’s United Airlines—the world’s second-largest air carrier—has struggled for a year with little success to convince lenders, its unions and the federal airline bailout authority that it has a viable plan for survival.
Now, the bankruptcy judge overseeing United’s reorganization has taken the airline to task for being too vague in explaining how it reaches essential financial conclusions.
In UAL’s first public appearance in Bankruptcy Court on Dec. 30, Judge Wedoff chastised the company’s managers for failing to “engage in even the roughest†financial analysis as it starts to make its case.
“Frankly, the judge said to management in so many words, ‘Get real,’ †says bankruptcy expert William Brandt, president and CEO at Development Specialists Inc., a Chicago-based corporate restructuring firm. “It appears that they don’t have a good handle on the numbers. This whole case will turn on financial credibility.â€
The Elk Grove Township-based airline, which filed for Chapter 11 bankruptcy protection on Dec. 9, has been criticized repeatedly for a business plan that is either unrealistic or short on specifics.
Analysts lay much of the blame on UAL Chairman and CEO Glenn Tilton, an oilman with no airline industry experience who was hired in September to save United. While Mr. Tilton has been praised for initially easing the carrier’s contentious labor relations, the former ChevronTexaco Corp. vice-chairman has failed to surround himself with advisers needed to build a credible financial plan, analysts say.
“Nobody believed their numbers, including the (Air Transportation Stabilization Board)†says Raymond Neidl, an airline analyst at New York-based Blaylock & Partners L.P. “The time for fun and games is past. This company is in deep trouble. They have one shot, and if it doesn’t work, the ball game is over.â€
Complete coverage of this story appears in the Jan. 6 issue of Crain’s.
What is UAL''s survival plan?
By Sandra Jones
When UAL Corp. appears before U.S. Bankruptcy Court Chief Judge Eugene Wedoff in Chicago next week, the airline company will have to present a solid business plan and establish financial credibility as it attempts to reorganize.
UAL’s United Airlines—the world’s second-largest air carrier—has struggled for a year with little success to convince lenders, its unions and the federal airline bailout authority that it has a viable plan for survival.
Now, the bankruptcy judge overseeing United’s reorganization has taken the airline to task for being too vague in explaining how it reaches essential financial conclusions.
In UAL’s first public appearance in Bankruptcy Court on Dec. 30, Judge Wedoff chastised the company’s managers for failing to “engage in even the roughest†financial analysis as it starts to make its case.
“Frankly, the judge said to management in so many words, ‘Get real,’ †says bankruptcy expert William Brandt, president and CEO at Development Specialists Inc., a Chicago-based corporate restructuring firm. “It appears that they don’t have a good handle on the numbers. This whole case will turn on financial credibility.â€
The Elk Grove Township-based airline, which filed for Chapter 11 bankruptcy protection on Dec. 9, has been criticized repeatedly for a business plan that is either unrealistic or short on specifics.
Analysts lay much of the blame on UAL Chairman and CEO Glenn Tilton, an oilman with no airline industry experience who was hired in September to save United. While Mr. Tilton has been praised for initially easing the carrier’s contentious labor relations, the former ChevronTexaco Corp. vice-chairman has failed to surround himself with advisers needed to build a credible financial plan, analysts say.
“Nobody believed their numbers, including the (Air Transportation Stabilization Board)†says Raymond Neidl, an airline analyst at New York-based Blaylock & Partners L.P. “The time for fun and games is past. This company is in deep trouble. They have one shot, and if it doesn’t work, the ball game is over.â€
Complete coverage of this story appears in the Jan. 6 issue of Crain’s.
