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United Plans To Buy 4 767s From Creditors  
User currently offlineHoya From United States of America, joined Jun 2004, 387 posts, RR: 0
Posted (9 years 1 month 5 days 11 hours ago) and read 9248 times:

In today's Financial Times (Page 18 in the Companies and Markets section), it is reported that UA plans on buying four 767s from a group of creditors who have threatened to repossess the aircraft. Returning 4 other 767s appears to be part of the deal. The price UA will pay hasn't been disclosed, and the whole deal is subject to court approval. I guess this is sort of good for UA, as they do get to hold on to some 767s needed for their international routes, and they do seem to have enough cash in hand to complete this deal.


Hoya Saxa!!
56 replies: All unread, showing first 25:
 
User currently offlineIkramerica From United States of America, joined May 2005, 21456 posts, RR: 60
Reply 1, posted (9 years 1 month 5 days 10 hours ago) and read 9156 times:

are the returns in addition to the other 5? are they losing 9 or 4?


Of all the things to worry about... the Wookie has no pants.
User currently offlineFriendlySkies From United States of America, joined Aug 2004, 4104 posts, RR: 5
Reply 2, posted (9 years 1 month 5 days 10 hours ago) and read 9150 times:

Ok, let me get this straight. United is going to return 4 767s and then buy 4 767s. That doesn't do anything to solve the problem of the 4 already returned. However, could UA possibly be returning 4 A model 767s and buying 4 ERs to replace the ER's just lost? This would make more sense, as they could keep up the international flying (money-making) and cut domestic 767 routes (most likely money-losing).

User currently offlineBaw716 From United States of America, joined Nov 2003, 2026 posts, RR: 27
Reply 3, posted (9 years 1 month 5 days 10 hours ago) and read 9079 times:

Wait a minute. Now they are going to BUY 4 767s? I'm confused. They are returning 4 767s. Are they going to buy the 4 767s back?

I just read FriendlySkies post...this might make some sense...but I am still confused. What price is UA paying for the 763s? Are they paying market price, or are the lessors sticking them with a higher than market price for these birds?

Now I am really confused.

My brain hurts. They guys are just crazy.

Somebody help me?????

baw716



David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
User currently offlineHoya From United States of America, joined Jun 2004, 387 posts, RR: 0
Reply 4, posted (9 years 1 month 5 days 10 hours ago) and read 9067 times:

From my understanding, based on posts in this forum and the FT article, there were 8 767s that UA and the creditors were negotiating about. 4 767s are going to be returned to the lessors, hence the cancellation of the ORD-EZE flight. The other 4, UA and the creditors apparently were unable to renegotiate new lease rates. I guess the compromise was made that UA would buy those remaining 4 767s from the lessors. This prevented a further loss of 767s that UA desperately needs for its international routes. These 4 aircraft that UA plans to buy already fly for UA, so they are not new. It's just that now the planes will be owned by UA, and not the lessors.


Hoya Saxa!!
User currently offlineFriendlySkies From United States of America, joined Aug 2004, 4104 posts, RR: 5
Reply 5, posted (9 years 1 month 5 days 10 hours ago) and read 9052 times:

It probably won't make sense...you know how Brace is...

"What, it costs too much? Well, then, buy too much of it!"


User currently offlineERJ170 From United States of America, joined Apr 2004, 6747 posts, RR: 18
Reply 6, posted (9 years 1 month 5 days 10 hours ago) and read 9042 times:

Quoting Hoya (Thread starter):
I guess this is sort of good for UA, as they do get to hold on to some 767s needed for their international routes, and they do seem to have enough cash in hand to complete this deal.

So they have enough money to buy 4 767 but not enough to pay their pension payments? I don't think so...



Aiming High and going far..
User currently offlineIkramerica From United States of America, joined May 2005, 21456 posts, RR: 60
Reply 7, posted (9 years 1 month 5 days 10 hours ago) and read 8981 times:

If they can get funding for 4 planes at a lower cost than leasing 8 planes, but can't afford to lose 8 (or more) routes, it makes sense.


Of all the things to worry about... the Wookie has no pants.
User currently offlineClickhappy From United States of America, joined Sep 2001, 9601 posts, RR: 69
Reply 8, posted (9 years 1 month 5 days 10 hours ago) and read 8874 times:
AIRLINERS.NET CREW
PHOTO SCREENER

and of course the loans for the new planes will be guaranteed by the worth of the planes themselves.

User currently offlineCommavia From United States of America, joined Apr 2005, 11386 posts, RR: 62
Reply 9, posted (9 years 1 month 5 days 10 hours ago) and read 8868 times:

I'm a bit confused, so just to be clear: UA is still going to have a net loss of 4 767s that were returned last week?

User currently offlineUA744Flagship From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 1 month 5 days 9 hours ago) and read 8714 times:

Here is what I understand from the information in the organization.

There were 8 original "at risk" aircraft as a result of the Appeals court decision.

*5* aircraft were returned on or before June 3.

I've heard the company has come to agreements on the remaining *3* (not 4) "at risk" aircraft - that could mean buying them outright.

That leaves us with 17 767-300ERs currently, and for the foreseeable future (1 a/c was returned to the lessors outside of the 5 "at risk" aircraft earlier this eyar).

As a result, the possible intl route cancellations and ripple down effects (intl route upgauges and frequency reductions) I hinted at earlier probably won't happen.


User currently offlineIkramerica From United States of America, joined May 2005, 21456 posts, RR: 60
Reply 11, posted (9 years 1 month 5 days 9 hours ago) and read 8702 times:

Thanks. makes it clear. Is it possible that they were able to come to terms to buy one of the already returned ones? Considering it's still in UA colors and trim, wouldn't be that out of line.


Of all the things to worry about... the Wookie has no pants.
User currently offlineN1120A From United States of America, joined Dec 2003, 26338 posts, RR: 76
Reply 12, posted (9 years 1 month 5 days 8 hours ago) and read 8648 times:

Quoting FriendlySkies (Reply 2):
United is going to return 4 767s and then buy 4 767s. That doesn't do anything to solve the problem of the 4 already returned. However, could UA possibly be returning 4 A model 767s and buying 4 ERs to replace the ER's just lost

The main problem was not A market vs. B market, as all of UA's 763s, to my knowledge, are B-market. The issue was that the reposessed aircraft are 3-class, international configuration aircraft. I am betting they are buying the 3-class jets and returning 2-class domestic birds



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 13, posted (9 years 1 month 5 days 8 hours ago) and read 8637 times:

They are all B market, but they've been crippled for domestic service. The engines have been downrated and, if I'm not mistaken, fuel tanks somehow removed.

N


User currently offlineHoya From United States of America, joined Jun 2004, 387 posts, RR: 0
Reply 14, posted (9 years 1 month 5 days 3 hours ago) and read 8286 times:

Wow, surprised not to see the UA bashing crowd on this thread.

Anyway, how long does it take(or will it take) for UA to reconfigure the domestic 767s into the international standard? Is it actually still possible to do that even if they have been 'crippled'? And how costly with that be?



Hoya Saxa!!
User currently offlineStevenUhl777 From , joined Dec 1969, posts, RR:
Reply 15, posted (9 years 1 month 5 days 3 hours ago) and read 8145 times:

Quoting UA744Flagship (Reply 10):
As a result, the possible intl route cancellations and ripple down effects (intl route upgauges and frequency reductions) I hinted at earlier probably won't happen

That's great news...potentially. If so, does that mean that maybe ORD-EZE is back on? UA did publically announce that it was suspended as a result of these "returns".


User currently offlineTrevD From United States of America, joined Jun 2004, 327 posts, RR: 3
Reply 16, posted (9 years 1 month 5 days 2 hours ago) and read 8057 times:

Quoting Gigneil (Reply 13):
They are all B market, but they've been crippled for domestic service. The engines have been downrated and, if I'm not mistaken, fuel tanks somehow removed

There is no such thing as a B market 767. The A market .vs. B market only applies to the 777-200. Nor has it evolved to a phrase of art.

There are 767-300 non-ER's and 767-300ER's. Simple.


User currently offlineLorM From United States of America, joined Jun 2004, 409 posts, RR: 1
Reply 17, posted (9 years 1 month 4 days 23 hours ago) and read 7506 times:

Quoting Gigneil (Reply 13):
They are all B market, but they've been crippled for domestic service. The engines have been downrated and, if I'm not mistaken, fuel tanks somehow removed.

Funny thing, I was returning home on the 31st of May, and while catching UA 43 DEN-HNL home, we left about just hour late flight due one of pressurization outflow valve actuators not working.

The aircraft on this flight was a 767-300ER (sorry didn't get any reg). During the wait at the gate since I was in first in 6A, I stood up at door 1L which was still open and attached to the gate. The captain came outside the cockpit and started to chat with me and another passenger. The topic eventually came to UA's situation about the 767s that were being lost to the leasors, and then engines. He stated that UA operated a mixed fleet of 763s with the 62,000lbt and the 56,000lbt engines.

So what is the ratio of 62kbt and 56klbt equiped aircraft? He also said something to the effect that in didn't matter what seat config, they were in, domestic or international, that the fleet was varied.
-Mike



Brick Windows
User currently offline777ER From New Zealand, joined Dec 2003, 12082 posts, RR: 18
Reply 18, posted (9 years 1 month 4 days 22 hours ago) and read 7312 times:
AIRLINERS.NET CREW
FORUM MODERATOR

I don't find this confusing. 4x B767s will be returned but then UA will buy 4x B767s

User currently offlineUA744Flagship From , joined Dec 1969, posts, RR:
Reply 19, posted (9 years 1 month 4 days 22 hours ago) and read 7270 times:

Quoting StevenUhl777 (Reply 15):
That's great news...potentially. If so, does that mean that maybe ORD-EZE is back on? UA did publically announce that it was suspended as a result of these "returns".

ORDEZE is definitely a goner, effective today -- that was a result of the 5 recent 763 returns/repos... other routes weren't affected because, as I said before, this had been prepared for (just in case) for quite some time with the allocation of 763s to domestic-only flying.

Now those intl 3-class 763s flying domestic only are gone, but the other 2 "at risk" routes for cancellation are no longer "at risk".


User currently offlineNorthstarBoy From United States of America, joined Jun 2005, 1824 posts, RR: 0
Reply 20, posted (9 years 1 month 4 days 21 hours ago) and read 7152 times:
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It almost sounds like a stalling tactic on United's part. United must know, on some level, that eventually they may have to give up the aircraft, but by putting a good faith offer on the table to purchase the aircraft in question, United can stave off the creditors' repossession action at least until the end of the summer season, at which point United can either pony up the money and actually purchase the aircraft (creditors are happy, they get some of the money owed them, united is also happy, they don't lose valuable equipment needed for higher yield international routes) or they can give up the aircraft, having used them all summer on higher yield international routes (concievably united is still happy because they get to keep using the aircraft in question while the finance people fight it out), with the understanding that they won't need them during the winter season, and the further understanding that they're going to have to do some equipment reshuffling in time for next year's summer season.

All in all, no matter how it turns out, this may be a win-win for United, and frankly, United needs a win

Scott



Why are people so against low yields?! If lower yields means more people can travel abroad, i'm all for it
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 21, posted (9 years 1 month 4 days 20 hours ago) and read 7004 times:

Quoting NorthstarBoy (Reply 20):

It almost sounds like a stalling tactic on United's part.

Or flying by the seat of your pants. I think if you study UAL's time in Chap 11 and all the moves they have made, you either have to admire them or hate them.

The restraining order granted by Wedoff which the appeals court squashed, was certainly a stalling tactic on UAL's part. Their lawyers probably knew they were on thin ice, but at least it bought them time.

Then again it could bite them where it hurts. Now that they have apparently settled four, what happens with the other 171 aircraft they are trying to renegotiate? Reports says UAL is trying to reduce their annual lease costs by $900M.

If all their lessors start playing hardball, it won't be just one route that will be cut!


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 22, posted (9 years 1 month 4 days 19 hours ago) and read 6812 times:

Quoting ERJ170 (Reply 6):
So they have enough money to buy 4 767 but not enough to pay their pension payments? I don't think so...

Airplanes are needed; ponzi schemes are not.


User currently offlineN1120A From United States of America, joined Dec 2003, 26338 posts, RR: 76
Reply 23, posted (9 years 1 month 4 days 19 hours ago) and read 6797 times:

Quoting TrevD (Reply 16):
There is no such thing as a B market 767. The A market .vs. B market only applies to the 777-200. Nor has it evolved to a phrase of art.

No, an A market aircraft is one that has higher density and flys on shorter hauls. The A333 and 772A are perfect examples. So are both the 762 and 763. B market aircraft fly on longer, but not ultra long hauls, and generally in a lighter configuration. The 763ER is one of these aircraft. The C market is ultra-long hauls. Hence A, B and C market also apply to Airbus planes



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 24, posted (9 years 1 month 4 days 18 hours ago) and read 6721 times:

Quoting N1120A (Reply 23):
an A market aircraft is one that has higher density and flys on shorter hauls. The A333 and 772A are perfect examples. So are both the 762 and 763. B market aircraft fly on longer, but not ultra long hauls, and generally in a lighter configuration. The 763ER is one of these aircraft. The C market is ultra-long hauls. Hence A, B and C market also apply to Airbus planes

I recall first seeing the terms of art A-market, B-market, and C-market in Jane's All the World's Aircraft in the early 1990s in the article on the B777, then in development. If I recall correctly, there was little if any explanation and I inferred from the context that readers were expected to have familiarity with the terms.


25 Post contains images KC135TopBoom : Let me get this straight. UA didn't pay the leases on these airplanes, because they didn't think they had too (until they lost the appeal). Then they
26 N79969 : Chapter 11 is some kind of bizzarro world. However it starts making some sense if you assume that rule #1 at UA is to preserve cash whatever way possi
27 PlaneSmart : Their financiers are advancing $'s so UA can buy UA configured aircraft to continue generating revenue. Advancing $'s for UA to pay pensions may crea
28 Access-Air : Maybe actually buying planes instead of leasing them is the better solution to EVERY airline's problems.....Its lieke paying high rent on an over pric
29 Ultrapig : Ladies and Gentlemen: UA is almost certainly using boorowed cash for the purchase of these planes and the lender will have a lien. Here is an example
30 Post contains images Zvezda : Defined Benefit retirement programs are ponzi schemes. The replacement of UA's DB retirement program with a Defined Contribution program was necessar
31 AussieItaliano : Do you know if this is going to be permanent or temporary until a solution can be worked out?
32 Mm320cap : I said I was never posting on this forum again.... but it's kind of like crack, I suppose. Here is the situation. 4 767-300ER's were returned to the l
33 UA744Flagship : According to someone in ops who maintains a fleet list, 5 were returned, and there are 3 staying. I don't have access to unimatic, so someone who doe
34 Mm320cap : UA744Flagship, I had initially heard 5 as well. 4 at the end of May and 1 at the beginning of June. Flight Ops and ALPA have both told us that only 4
35 UA744Flagship : Thanks - I'll pass this on to the ops guy...
36 Fly2LAX : Aircraft 6348: Ferried May 31 SFO-MZJ Lease Return Total Time: 56470:27 Total Cycles: 9199 Aircraft 6350: Ferried June 5 SFO-MZJ Lease Return Total Ti
37 UA744Flagship : Well looks like the ops guy was right then. I was skeptical of the report of only 4 going back - he is usually very on top of things. Unless we are br
38 Scotron11 : I said I was never posting on this forum again.... but it's kind of like crack, I suppose. However, welcome back!
39 Mm320cap : Very interesting!! Well, I guess that just goes to show you how much we are kept in the loop over in flight ops!! Thanks for the updated and accurate
40 Paul : Pardon the pressumption but would the returned planes likely to have been the 767's with the older livery. I am scheduled on a a UA763 LHR- IAD -LHR a
41 UA744Flagship : Yes - all the returned planes had the old livery. That would have been even more embarassing if they had been repainted - but those planes were known
42 NW747-400 : Concerning engine thrust ratings...engines are flat rated by the use of ID plugs. An ID plug is just an electronic signal that "tells" the EEC or FACE
43 StevenUhl777 : ...and that's the problem...that's how we got into this situation in the first place! Isn't it like a dog chasing its tail? Ok...so the 4 are bought
44 UA744Flagship : You're in finance, no? Me, I'm not a finance type of guy. But I remember one of my professors explaining that capital leases (sale-leasebacks) became
45 FA4UA : exactly Hass, and I am a Finance guy. Additionally you reduce liabilities because worse case you can default on the agreement in bad times and the pl
46 StevenUhl777 : 744Flagship and FA4UA: Thanks for the refresher on leases...while I am a "finance guy" that part of it was either forgotten or never sunk in to begin
47 UA744Flagship : Wait... now I'm confused - it looks like we *did* purchase four at "market rates". But I'm guessing the 4th was the 763ER WFU earlier this year, and n
48 DAYflyer : How the hell can they do that? They dont have enough cash to buy toilet paper, let alone 4 767. Anyone that lends UAL money at this point is asking fo
49 Zvezda : It's a safe bet that the aircraft are collateral.
50 UA744Flagship : A bit of research with any financial resource will show you that UAL has well over $2 Billion in unrestricted cash.
51 Mm320cap : Did a little more digging and this is what I came up with. UA744Flagship was exactly right. We did return 5 767-300's. 4 were in service, and one was
52 Hoya : Any info on which specific 767s were bought? And is it 4 after all? Does that mean 9 767s were 'at risk', because all the information posted points to
53 UA744Flagship : There was one 767-300ER quietly sent to the desert earlier this year. At the start of 2005, we had 23 767-300ER "MZ" (3-class) aircraft. Sometime duri
54 Hoya : Thanks for the info and the effort UA744Flagship! Very much appreciated!
55 Mcg : When a company goes into Chapter 11 all of it's leases for all equipment and real estate must be renegotiated to reflect current market lease rates. I
56 Hoya : Any new updates on which specific aircraft are being purchased? So in total, is UA losing 4 or 5 767s in this whole scheme?
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