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Concerns About UA  
User currently offlineATLAaron From United States of America, joined exactly 8 years ago today! , 1022 posts, RR: 3
Posted (6 years 12 months 2 days 3 hours ago) and read 7258 times:
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Ok, so I am curious how concerned we should be about the financial future of UA? It can't be a good sign when everyone else (basically) posted a profit but UA fresh out of BK still could not. How likely is it for UA to end up back in BK? I hate to say it but I think they NEED a merger.

I think they have a great product but apparently just do not have costs in line.

43 replies: All unread, showing first 25:
 
User currently offlineXJRamper From United States of America, joined Dec 2003, 2451 posts, RR: 51
Reply 1, posted (6 years 12 months 2 days 2 hours ago) and read 7177 times:

I wouldn't call UA "fresh out" of BK. It has been over a year since they exited and for the entire fiscal year of 2006, they posted a $440 million profit. For what they have been through, give them a chance.

XJR



Look ma' no hands!
User currently offlineATLAaron From United States of America, joined exactly 8 years ago today! , 1022 posts, RR: 3
Reply 2, posted (6 years 12 months 2 days 2 hours ago) and read 7137 times:
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Quoting XJRamper (Reply 1):
and for the entire fiscal year of 2006, they posted a $440 million profit.

That's not true. According to United's own website:

Since its emergence from reorganization, for the eleven months ended December 31, 2006, the new UAL reported net income of $25 million, an improvement of $423 million, excluding reorganization items, versus the corresponding eleven month period of 2005.


User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9087 posts, RR: 12
Reply 3, posted (6 years 12 months 2 days 1 hour ago) and read 7078 times:

Quoting ATLAaron (Thread starter):
I hate to say it but I think they NEED a merger.

i think that one is going to happen no matter what. UA and CO have wanted to merge as long as DL and NW have wanted to merge. The only problem is who will AA go with? US?

i see in the next 2years
UA and CO merge
DL and NW merge
AA and ?? merge
and US is left out to dry



yep.
User currently offlineATLAaron From United States of America, joined exactly 8 years ago today! , 1022 posts, RR: 3
Reply 4, posted (6 years 12 months 2 days 1 hour ago) and read 7044 times:
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Quoting DeltaL1011man (Reply 3):
The only problem is who will AA go with?

AA would like to see government rules change in regards to foreign airline ownership. They would like to be with BA, IMO. If the other airlines merge that you mentioned watch AA begin lobbying hard for reform, and look for them to get what they want, again IMO.


User currently offlineXJRamper From United States of America, joined Dec 2003, 2451 posts, RR: 51
Reply 5, posted (6 years 12 months 2 days 1 hour ago) and read 7009 times:

Quoting ATLAaron (Reply 2):
Since its emergence from reorganization, for the eleven months ended December 31, 2006, the new UAL reported net income of $25 million, an improvement of $423 million, excluding reorganization items, versus the corresponding eleven month period of 2005.

Oops...i saw that they had an operating earning of $447,000,000 in 2006.

XJR



Look ma' no hands!
User currently onlineFriendlySkies From United States of America, joined Aug 2004, 4094 posts, RR: 5
Reply 6, posted (6 years 12 months 2 days 1 hour ago) and read 7009 times:

Quoting ATLAaron (Reply 4):
AA would like to see government rules change in regards to foreign airline ownership. They would like to be with BA, IMO. If the other airlines merge that you mentioned watch AA begin lobbying hard for reform, and look for them to get what they want, again IMO.

UA has been lobbying for this much harder than any other airline. I could see UA/LH get much closer if the rules are relaxed.


User currently offlineATLAaron From United States of America, joined exactly 8 years ago today! , 1022 posts, RR: 3
Reply 7, posted (6 years 12 months 2 days 1 hour ago) and read 6988 times:
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Quoting FriendlySkies (Reply 6):
UA has been lobbying for this much harder than any other airline. I could see UA/LH get much closer if the rules are relaxed.

I agree. Especially since they do not have a merger carrier in the US at the moment. CO would rather go it alone.


User currently offlineLegend500 From United States of America, joined Jul 2005, 144 posts, RR: 3
Reply 8, posted (6 years 12 months 2 days 1 hour ago) and read 6988 times:

I don't really think AA need do anything in a case of mergermania. After the bitter TWA pill, AA should be happy to hub-up and battle from its fortress.

Back to UA...it's concerning that their margins already seem pretty thin this close to BK. I don't think it's a big problem yet...but certainly not good news with fuel prices going up.

We'll have to wait and watch.


User currently offlineFloridaflyboy From United States of America, joined Jun 2006, 2000 posts, RR: 0
Reply 9, posted (6 years 12 months 2 days 1 hour ago) and read 6962 times:

One thing we have to remember on the foreign merger thing, is that even if the rules were relaxed, that doesn't mean the Department of Justice would approve a merger or even a closer tie-up between two carriers. Heck, they don't approve all mergers here within the United States, let alone ones with foreign companies.


Good goes around!
User currently offlineIADLHR From Italy, joined Apr 2005, 721 posts, RR: 0
Reply 10, posted (6 years 12 months 1 day 17 hours ago) and read 6683 times:

Quoting Floridaflyboy (Reply 9):
One thing we have to remember on the foreign merger thing, is that even if the rules were relaxed, that doesn't mean the Department of Justice would approve a merger or even a closer tie-up between two carriers. Heck, they don't approve all mergers here within the United States, let alone ones with foreign companies

Exactly, it could also get harder go get one arrpoved if, as expected, the democrats win the White House in 2008. As it is, now, with the democrats controlling congress it would be harder even now than it was a few years ago.


User currently offlineHighFlight1996 From United States of America, joined Jun 2005, 20 posts, RR: 0
Reply 11, posted (6 years 12 months 1 day 17 hours ago) and read 6638 times:

Just as the financials are not all that exciting, I am even more concerned about passenger discontent. While I will not claim to be UA's best customer, I do feel I have enough experience with them to make comments (44 flights this year, 600+ in last 10 years). There ability to provide a competitive product - cost, ontime flights, quality product (amenities, cabin service, etc.) compared to other US carriers is what is going to send them back IMO. The amount of passenger discontent on the plane and in the terminals is increasing rapidly on a weekly basis. For what I am asked to pay for their product, it just is not worth it any longer - and those feelings seem to increase on a weekly basis based on my discussions with other passengers. I have tried to be a loyal customer - even going so far as to pay more for their flights versus some of their competitors, but it just isn't worth it anymore. There are no benefits to it. So, the point of all these comments, is that while I was willing to pay more in the past, I am already diverting my travel to other carriers. Considering I was paying fairly high-priced fares, this will cause problems. (And I am not naive enough to think that it is my contribution alone that will lead to even further deterioration in their financials, but it is the combination of myself and enough other passengers).

User currently offlineUAL777UK From United Kingdom, joined Nov 2005, 3356 posts, RR: 1
Reply 12, posted (6 years 12 months 1 day 16 hours ago) and read 6575 times:

I fly UA alot, mostly Internationally, I flew from LHR-SFO-SYD most recently, all legs were in F. I agree that there are inconsistances in each flight but my most worrying aspects of those flights was the crews. Some of the SFO crews working over the Pacific were just quite frankly an emabarrasment. I just dont understand how someone at the base where they are departing doesmn't pull them aside and has a word with them. Hair was a mess, chewing gum etc. Dont get me wrong that does not go for all of them but it only takes one or two to let the sidse down and on this trip it did and I might add that its not the first time I have noticed this, over th Pacific!. However on the LHR-SFO-LHR legs it was like flying with another airline.......totally different, very smart........come on UA, get it sorted!!

User currently offlineCirrusDriver From United States of America, joined Nov 2006, 141 posts, RR: 0
Reply 13, posted (6 years 12 months 1 day 15 hours ago) and read 6103 times:

Quoting ATLAaron (Reply 2):
excluding reorganization items.

Those lawyers and executive compensation add up, dont they? Knowing UA management, they will start laying off more worker bees while taking enormous pay raises for themselves. They will call it "key employee retention", and lobby for more ways to screw the passengers and its employees through mergers and bankruptcies. What a mess! I am sure that all you CEO cheerleaders on A.net can justify Titlons pay and bonuses. It's ok though, nothing wrong here, just give us your money..........  banghead 


User currently offlineLaxintl From United States of America, joined May 2000, 24361 posts, RR: 47
Reply 14, posted (6 years 12 months 1 day 15 hours ago) and read 5935 times:

While Q1 was disappointing primarily due domestic RASM, I would not worry about UA financials at the moment. If you dig into the numbers they are on pretty good footing, building up huge cash reserves (almost $4B), and paying off debts quite well ($1B on Q1), while cost are running even below plan.

Here are some comments by analysts about the carriers results last week.


Bear Stearns
Cash is King. With no aircraft deliveries in sight, the free cash flow potential remains powerful. Our combined 2007 and 2008 estimated free cash flow at UAL equate to over 61% of UAUA's $4.4 billion equity market capitalization. Extend the analysis out to 2009 and the potential free cash flow could cover the entire current market cap. After paying down roughly $1bn in debt ahead of schedule in 1Q and continued strong cash flow projections, UAL may soon be in a position to use some of this enormous cash.

Lehman
On a relative basis, we continue to favor UAUA shares given valuation.

Morgan Stanley
Cost improvements remain on track. In 2006, United forecasted $400 million in cost savings for 2007, $135 million of which was realized in 2006. Management reiterated that it is on track to achieve the remaining $265 million of projected cost savings in 2007.

Merrill Lynch
Mar Q results lighter than expected UAL reported Mar Q loss per share of $1.32. Excluding special items, Mar Q loss per share is $1.31. While the headline result was disappointing, if we were to adjust for all special items as well as the deferred revenue from Mileage Plus, net loss for UAL would have been about $44 million, which is $14 million lower than our estimate. As some do not view all of the one-timers as truly one-timers, it probably makes sense to look at United on a cash flow basis. In that regard, the company generated $626 million of cash from operations for the quarter.



From the desert to the sea, to all of Southern California
User currently offlineJetjeanes From United States of America, joined Oct 2004, 1429 posts, RR: 1
Reply 15, posted (6 years 12 months 1 day 14 hours ago) and read 5877 times:

United will be able to pull out. they have done an excellant job so far


i can see for 80 miles
User currently offlineN174UA From United States of America, joined Jun 2006, 994 posts, RR: 0
Reply 16, posted (6 years 12 months 1 day 14 hours ago) and read 5577 times:

Quoting HighFlight1996 (Reply 11):
I am even more concerned about passenger discontent.

 checkmark  This is one of their biggest concerns right now. Same goes for US.

Quoting Laxintl (Reply 14):
If you dig into the numbers they are on pretty good footing, building up huge cash reserves (almost $4B), and paying off debts quite well ($1B on Q1), while cost are running even below plan.

 checkmark  Yes. Look at the short term and long term cash inflows. They are the most important. You can have a month or a quarter of loss, but if you're cash flow positive, you're in good shape in the long run. United's assets (I should say those that were mortgaged during Ch. 11) are no longer collateralized, and United was able to lower the interest rate on its debt. They are focusing on cleaning up the balance sheet, which is necessary regardless of whether they want a merger or not.

Quoting Laxintl (Reply 14):
it probably makes sense to look at United on a cash flow basis. In that regard, the company generated $626 million of cash from operations for the quarter.

Yep. See above.


User currently offlineLincoln From United States of America, joined Nov 2004, 3887 posts, RR: 8
Reply 17, posted (6 years 12 months 1 day 14 hours ago) and read 5403 times:

Quoting DeltaL1011man (Reply 3):
i think that one is going to happen no matter what. UA and CO have wanted to merge as long as DL

Unless I missed something, UA has wanted to merge with CO, but CO has absoultely no desire to merge with UA.



CO Is My Airline of Choice || Baggage Claim is an airline's last chance to disappoint a customer || Next flts in profile
User currently offlineATLAaron From United States of America, joined exactly 8 years ago today! , 1022 posts, RR: 3
Reply 18, posted (6 years 12 months 1 day 13 hours ago) and read 5256 times:
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Well I am sure there is passenger dicontent, I just find it hard to believe that it is any worse than any other airline. If you hang around A.net long enough there will be a thread with 100+ posts about dicontent at AA also. There seems to be plenty of complaints coming out regarding US as well. I will say I don't read many complaints about CO.

While full planes certainly don't equal profits it does show passengers are booking, and I have a flight booked with UA in May that I can't even get seat assignments for because it is full. Their loads are doing well at least from my experience so far in 2007. BTW my itinerary is CLE-ORD-SJU-ORD-CLE.

Quoting Lincoln (Reply 17):
Unless I missed something, UA has wanted to merge with CO, but CO has absoultely no desire to merge with UA.

Nope, I believe you are correct.


Also, let the predictions begin on what UA will do with all of this cash they are building. I believe I read somewhere recently that they do not expect any aircraft orders in the "near" future.


User currently offline777fan From United States of America, joined Jan 2006, 2481 posts, RR: 3
Reply 19, posted (6 years 12 months 1 day 13 hours ago) and read 5057 times:

Quoting Legend500 (Reply 8):
I don't think it's a big problem yet...but certainly not good news with fuel prices going up.

You're right - fuel prices will continue to be a thorn in UA's side. IIRC, their BK reorg plan was based upon $50/bbl oil; it hasn't been close to that in some time and probably won't any time soon. The best solution to that problem will be to continue to hedge fuel prices and stress performance efficiency. New a/c (787?) or winglets down the road will help with the fuel burn issue as well.

Quoting HighFlight1996 (Reply 11):
I am even more concerned about passenger discontent.

No doubt - I'm also a UA P/E and attempt to give UA the benefit of the doubt whenever I can but have noticed that on at least my last few flights, the crews appear to do little more than ride along with the pax. The service is robotic at best and indifference abounds. I normally shy away from providing online feedback but felt compelled to do it after my last segment (ORD-BWI) in which a pax toting a stroller for her daughter was allowed to bring it onboard only to find that there wasn't any overhead storage room left (hello, closet?!). The FA publicly chastised the poor woman because she "should've known better" than to expect there to be room left on a full a/c. Instead of offering to help, she went on to claim that it was "impossible" to check the stroller because the cargo door was closed (it does open up again, right?!). Unreal.

Quoting ATLAaron (Reply 18):
I have a flight booked with UA in May that I can't even get seat assignments for because it is full

I found the same thing. Flights between any of the DC area airports and ORD are pricing out at a minimum of $192.80 for weekends (THU-SUN or FRI-MON) between now and August. FWIW, WN isn't any cheaper, nor does it offer more flights.


777fan



DC-8 61/63/71 DC-9-30/50 MD-80/82/83 DC-10-10/30 MD-11 717 721/2 732/3/4/5/G/8/9 741/2/4 752 762/3 777 A306/319/20/33 AT
User currently offlineN844AA From United States of America, joined Jul 2003, 1352 posts, RR: 1
Reply 20, posted (6 years 12 months 1 day 13 hours ago) and read 5022 times:

Quoting Lincoln (Reply 17):
Unless I missed something, UA has wanted to merge with CO, but CO has absoultely no desire to merge with UA.

I think CO may have been very interested in UA's routes and some of their assets, but the sticking point was probably who would be in control. CO would love to regain a hub at DEN (past and present leadership has said as much) and maybe have IAD to relieve some of their EWR operations, but only if Houston was running the show.



New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9087 posts, RR: 12
Reply 21, posted (6 years 12 months 1 day 13 hours ago) and read 4977 times:

Quoting Lincoln (Reply 17):
Unless I missed something, UA has wanted to merge with CO, but CO has absoultely no desire to merge with UA.

When US failed to buy DL they both wanted to merge if......(look down)

Quoting N844AA (Reply 20):
I think CO may have been very interested in UA's routes and some of their assets, but the sticking point was probably who would be in control. CO would love to regain a hub at DEN (past and present leadership has said as much) and maybe have IAD to relieve some of their EWR operations, but only if Houston was running the show.

CO wants to be control just DL wants to be in control if they merge with NW



yep.
User currently offlineN844AA From United States of America, joined Jul 2003, 1352 posts, RR: 1
Reply 22, posted (6 years 12 months 1 day 13 hours ago) and read 4937 times:

Quoting DeltaL1011man (Reply 21):
CO wants to be control just DL wants to be in control if they merge with NW

Right, but by all accounts, CO is the better-run airline. They've avoided bankruptcy since the ... pre-Bethune unpleasantness, and have remained solvent since then. Plus employee relations and customer satisfaction have remained strong throughout. Not to say that UA management hasn't done a good job with a difficult situation, but I'd rather see CO's management team take the helm of a combined airline.



New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
User currently offlineScorpy From United States of America, joined Dec 2006, 400 posts, RR: 1
Reply 23, posted (6 years 12 months 1 day 12 hours ago) and read 4871 times:

Quoting N844AA (Reply 20):
I think CO may have been very interested in UA's routes and some of their assets, but the sticking point was probably who would be in control. CO would love to regain a hub at DEN (past and present leadership has said as much) and maybe have IAD to relieve some of their EWR operations, but only if Houston was running the show.

This may have also looked more attractive before the open skies agreement as it would have given them heathrow access, which was not available to them - buying slots would be much cheaper than buying UA.


User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9385 posts, RR: 52
Reply 24, posted (6 years 12 months 1 day 12 hours ago) and read 4831 times:

This is just my personal opinion, but I seriously hope that there are not any more large airline mergers. Airfares in the summer can be quite expensive, and more competition will keep the fares lower.


If you have never designed an airplane part before, let the real designers do the work!
25 B757fan : I don't foresee a DL / NW merger and even less of a merger between CO / UA. IMHO a much better merger would be DL / AA, and NW / UA. CO and US Air sho
26 VictorKilo : UA may be generating cash now, but I wonder if they are taking the steps they need to take now so that they can remain competitive in the future. On t
27 Scorpy : What could they possibly have to gain from this? Fleet commonality is over-rated when you consider the sizes of the fleets of the main american carri
28 Vega : UA and US (again) - much more favorable political and industry environment than during the prior attempt. IF US goes with the 787 (instead of the A350
29 DeltaL1011man : What will DL gain from AA......yes a larger Latin America route map but thats about it(and DL would be back in DFW) what will DL gain from NW.......T
30 EKSkycargo370 : I can't see UA being around for long,sad but true,ageing fleet,ageing crew,poor service.
31 HighFlight1996 : Agreed, we can all find reasons to complain about any airline. I guess my experience is talking to fellow road warriors in the airports, in line, and
32 Rbgso : How about a USAir and Alaska Air merger? That looks like it might have a chance. Doesn't help much with trans-Atlantic routes, but the domestic route
33 Luv2fly : Let us see what is wrong with what you said. #01. US is a strong Airbus carrier. #02. CO is only Boeing! So where is this same fleet you speak of?
34 CirrusDriver : Oh, dear Lord, please don't. Talk about taking a perfectly good airline (still customer service and overall quality oriented) like AS and merging it
35 UAL777 : Huh? They have positive cash flow, paid down debt by 1.4 billion, and their fleet age is about 12 years old. The crews are getting old but it is the
36 Mcdu : I am sorry I don't have the source for the following news article but it came from one of the new sites. Anyway, it is my opinion that Tilton is payin
37 Flightopsguy : With OMP (ORD Moderization Program) things will get worse, not better, for the next several years. Ask people in the know about config Plan B and per
38 Floridaflyboy : I don't think this would happen. First of all, Alaska Airlines and US Airways have very very different corporate cultures, and are significantly diff
39 SkyyMaster : Arrrrghhhh!!!! PLEASE no more merger talk, at least give it a few months break!
40 777fan : I grabbed a nice pic of the north end of the field construction while flying into ORD a week ago last Friday - really gives you an idea of how massiv
41 Afrikaskyes : Blame it on the swimming pool in UA's backyard.
42 Adambrau : Didn't the Denver storms happen in Decemebr 2006. I think I was flying thru on the 28th and had to re-route via ORD, and that was the second one after
43 LAXdude1023 : No, you didnt miss anything. The only time CO has shown any interest is if CO would face too much competition from other mergeing carriers and if CO
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