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Cash Squeeze May Put United Airlines In A Bind  
User currently offlineCO767FA From United States of America, joined Aug 2005, 532 posts, RR: 2
Posted (5 years 5 months 2 weeks 5 days 16 hours ago) and read 17655 times:

This is a new article dealing with the ongoing issues plaguing the industry, but specifically targeting UA.

http://www.chicagotribune.com/busine...ted-debt-uaua-jul05,0,755714.story

134 replies: All unread, showing first 25:
 
User currently offlineLAXintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 1, posted (5 years 5 months 2 weeks 5 days 16 hours ago) and read 17628 times:

Its a lot more then United. Both AA and Continental in the last couple of weeks also have taken part in various financial transactions to build cash for the winter - more specifically AA a The $520.1 million 10-year note, and CO a $400mil, 12-year facility that will be used for equipment.

With this summer having been a flop for the industry it could be a dark long winter.



From the desert to the sea, to all of Southern California
User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3806 posts, RR: 29
Reply 2, posted (5 years 5 months 2 weeks 5 days 15 hours ago) and read 17469 times:



Quoting LAXintl (Reply 1):
With this summer having been a flop for the industry it could be a dark long winter.

In many respects, the industry has created its own flop...by consistent excessive cuts in capacity while continuing to price their product in totally undisciplined fire sale panic mode at any point in time when they anticipate that load factors will be anything less than every flight overbooked every day.

What the U.S. legacies and think-alike LCCs have done to themselves should be apparent to anyone of discerning mind: their draconian capacity cuts, far exceeding drop in demand, have had the predicted (at least by yours truly, some 2+ years ago) result of carrying fewer pax at the same old loss leader fares that couldn't sustain profitability even when economies of scale were more favorable to the industry before excessive capacity cuts became all the rave among the legacy and LCC copycat carriers.

From all appearances, the same airlines who have been overly zealous in slashing capacity intend to also create a long dark winter indeed for themselves with plans for still more of their same myopic kneejerk capacity slashing follies by which they created for themselves the flop they have apparently experienced this summer.


User currently offlineLightsaber From United States of America, joined Jan 2005, 13542 posts, RR: 100
Reply 3, posted (5 years 5 months 2 weeks 5 days 15 hours ago) and read 17330 times:
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Interesting breakdown on UA's cash burn and assets. I would like to see this information at a similar level of detail for all the airlines. In particular, how much cash they have above the minimum.

Quoting LAXintl (Reply 1):
he $520.1 million 10-year note, and CO a $400mil, 12-year facility that will be used for equipment.

With this summer having been a flop for the industry it could be a dark long winter.

Ouch... Quite a bit of cash required.

Quoting Tango-Bravo (Reply 2):
by consistent excessive cuts in capacity while continuing to price their product in totally undisciplined fire sale panic mode

To raise fares, they must cut capacity. The problem has been demand-destruction due to the economy. Leisure fares are purely on the internet now. I know of quite a few employers who require employees to now purchase 14+ day advance purchase non-refundable fares (e.g., my employer), as they are no longer willing to subsidize the airlines. Everyone is feeling the pinch.

Yes, we have a problem of copy-cat carriers. We also have a problem in that post 9/11 all of the carriers were sustained. There must be consolidation, but with substantial cost reduction. I'm not in favor of mergers for merger sake as that rarely goes well. I'm guessing many mergers will be a la F9, where a holding company has a stable of airlines. They avoid the seniority issue by keeping each airline separate.

Its going to be a tough winter for the airlines. I'm doubting the government will treat them a la AIG.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineHAL From United States of America, joined Jan 2002, 2572 posts, RR: 53
Reply 4, posted (5 years 5 months 2 weeks 5 days 15 hours ago) and read 17318 times:



Quoting Tango-Bravo (Reply 2):
What the U.S. legacies and think-alike LCCs have done to themselves should be apparent to anyone of discerning mind:

The problem is that it's a Catch-22. If any airline keeps fares well above what the competition charges, nobody will fly them, and they fold even faster. So despite what the all-or-nothing capitalists say, what we have today is too much competition! i.e. too many seats chasing too few passengers. The capacity cuts were needed, but if the industry is going to be able to support itself in the US, even more cuts will be needed.

Yes, the product sucks today because of service and capacity cuts. But the airlines aren't making money today even with these cuts because it costs more than most people are willing to pay for a ticket! Unless capacity cuts come into further play allowing the airlines to raise fares to cover expenses, everyone will lose. And don't talk to me about 'overpaid employees'. Every single person working at an airline today is busting their butts trying to provide what service they can in the face of massive layoffs, pay cuts, and departmental budget cuts. The truth is that it's expensive to fly planes, and passengers will soon have to pay the actual cost of their seats - something most passengers have avoided for the past few decades.

HAL



One smooth landing is skill. Two in a row is luck. Three in a row and someone is lying.
User currently offlineUA_727 From United States of America, joined Aug 2001, 215 posts, RR: 4
Reply 5, posted (5 years 5 months 2 weeks 5 days 14 hours ago) and read 17188 times:

.......SIGH,..........

I am very concerned by the high interest borrowing. To me, it's hard not to feed into the desperation messages that are sparking from this move. But evidently the move was necessary...

It is just not a good feel right now. Something is definitely cooking, and I'm freaked. You just look at the sheer economics of this business against the current environment - how are we even here? I'm simply amazed airlines [in general] can operate in such a dire revenue environment, albeit I recognize some were poised much better to weather the storm than others.

Anyone else feel me?

-UA-



"AW - I'm on Board..."
User currently offlineOsprey88 From United States of America, joined Jul 2007, 330 posts, RR: 1
Reply 6, posted (5 years 5 months 2 weeks 5 days 14 hours ago) and read 17181 times:

It has been said many times here and that for the airline industry this recession will become a race to see who runs out of cash first.

This remains the bottom line for the airline industry in the United States.

However, their is a bigger problem here, and the poster above, HAL, is on to it. The overcapacity in the marketplace. HAL said it well:

Quoting HAL (Reply 4):
So despite what the all-or-nothing capitalists say, what we have today is too much competition! i.e. too many seats chasing too few passengers.

However, there is a reason for why we currently have too many competitors. It is called Chapter 11 bankruptcy. Unfortunately in the United States we maintain this hindrance to the free market. And airlines make good use of this nice little section of law. In many ways, the airlines wouldn't need any kind of stimulus money to keep running or need the politicians in Washington to do any "saving" of their companies. They just need the current laws to remain in place and they will live to fly another day.

Will this recession change this? We'll see, but until something gives, and one of the big majors goes down, we'll see the problem of airline un-profitability continue.



"Reading departure signs in some big airports reminds me of the places I've been"
User currently offlineDocLightning From United States of America, joined Nov 2005, 20343 posts, RR: 59
Reply 7, posted (5 years 5 months 2 weeks 5 days 14 hours ago) and read 17130 times:

Who IS doing well right now?

B6?
WN?

Even SQ is having difficulties. EK is doing great because they have that magic copy machine called the Emirates government.

This Boom/Bust cycle that keeps happening keeps destroying airlines. The problem is that as more and more legacies fall, there are fewer and fewer to replace them. We've lost TW, PA, NW, and EA of the legacies. The only legacy that is "new" on the scene is US. Overseas, such venerable names as Swissair and Sabena have ceased to exist. Airlines like Olympic and Alitalia only remain because of circumstance and tricks.

I think we will see a new array of business models emerge to handle our air travel needs. I think business models like Virgin's are one way of the future, especially on overseas operations, while models like B6 and Virgin domestic services, combined with services like AirTran or F9 operating a lower end of the market. I think that we'll see a swing towards internationally-focused airlines and domestically-focused airlines.

For example, I'd never fly UA from SFO to JFK. I'd use VS or B6 for that. But for an overseas destination, I'd use UA (well, I'd use them if their onboard product compared to an overseas competitor...)


User currently offline9252fly From Canada, joined Sep 2005, 1403 posts, RR: 0
Reply 8, posted (5 years 5 months 2 weeks 5 days 13 hours ago) and read 16975 times:

From what I'm seeing the numbers and yields are dismal this summer and that's when airlines are supposed to make most of their money to carry them through the winter. All the talk of an economic recovery seem just that. The amount of capacity that would need to be removed from the system is in excess of the need for the existence of some carriers and that still doesn't help with yields as there is a high resistance to paying anything more than rock-bottom fares. It's just my opinion,but I would have to say the market has collapsed. Forget the any ideas of raising fares.

User currently offlineIkramerica From United States of America, joined May 2005, 21583 posts, RR: 59
Reply 9, posted (5 years 5 months 2 weeks 5 days 13 hours ago) and read 16826 times:



Quoting LAXintl (Reply 1):
CO a $400mil, 12-year facility that will be used for equipment.

Is this simply to pay for new aircraft?

Quoting UA_727 (Reply 5):
I am very concerned by the high interest borrowing.

Hi interest borrowing preceeds inflation. Lenders have to try to protect themselves knowing that ultimately, the loans could end up being below market rate in the future.

Inflation allows for airlines to raise fares at some point, though of course, all their input costs go up, too.



Of all the things to worry about... the Wookie has no pants.
User currently offlineLAXintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 10, posted (5 years 5 months 2 weeks 5 days 13 hours ago) and read 16791 times:



Quoting Ikramerica (Reply 9):
Is this simply to pay for new aircraft?

Yes its a 12-year $389.7 million facility that will be used for new equipment.

The AA notes on the other hand however offer a bit more flexibility as they can be drawn and kept as cash, while the CO ones are only for equipment and collateralized as such.
In reality it just really means CO does not tap other cash and uses this new facility instead. The net effect either way is extra money to play with at the end of the day for the airlines.



From the desert to the sea, to all of Southern California
User currently offlineFrmrCAPCADET From United States of America, joined May 2008, 1743 posts, RR: 1
Reply 11, posted (5 years 5 months 2 weeks 5 days 12 hours ago) and read 16747 times:

United's high interest rates are the result of high risk.


Buffet: the airline business...has eaten up capital...like..no other (business)
User currently offlineUal777 From United States of America, joined Aug 2003, 1564 posts, RR: 5
Reply 12, posted (5 years 5 months 2 weeks 5 days 10 hours ago) and read 16235 times:



Quoting Tango-Bravo (Reply 2):

What the U.S. legacies and think-alike LCCs have done to themselves should be apparent to anyone of discerning mind: their draconian capacity cuts, far exceeding drop in demand, have had the predicted (at least by yours truly, some 2+ years ago) result of carrying fewer pax at the same old loss leader fares that couldn't sustain profitability even when economies of scale were more favorable to the industry before excessive capacity cuts became all the rave among the legacy and LCC copycat carriers.

I think it is the massive drop in demand more than anything else.

Quoting UA_727 (Reply 5):


I am very concerned by the high interest borrowing. To me, it's hard not to feed into the desperation messages that are sparking from this move. But evidently the move was necessary...

It is just not a good feel right now. Something is definitely cooking, and I'm freaked. You just look at the sheer economics of this business against the current environment - how are we even here? I'm simply amazed airlines [in general] can operate in such a dire revenue environment, albeit I recognize some were poised much better to weather the storm than others.



Quoting FrmrCAPCADET (Reply 11):
United's high interest rates are the result of high risk.

I think the high interest rate is a combination of coming inflation, the tight credit market, and the type of collateral used to raise the money.



It is always darkest before the sun comes up.
User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 24
Reply 13, posted (5 years 5 months 2 weeks 5 days 10 hours ago) and read 16213 times:



Quoting DocLightning (Reply 7):
Who IS doing well right now?

I can tell you for sure that F9 is. Bash me all you want but go look at their monthly court filings that is required for the company to do. Their numbers do not lie.



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineDL Widget Head From United States of America, joined Apr 2000, 2100 posts, RR: 5
Reply 14, posted (5 years 5 months 2 weeks 5 days 9 hours ago) and read 16076 times:

The article also mentioned this possible scenario...

"The prospect of another lean winter for U.S. carriers could spur more consolidation, analysts said, with United and Houston-based Continental Airlines as the likeliest carriers to head back into merger negotiations."

"The cascading issues, analysts think, could force United to again attempt to merge with Continental"

Favorite topic on anet but the stars are starting to line up for this merger to come to fruition as well as others that some folks have a hard time accepting. This industry is going to look vastly different 5 years from now after the shakeout begins winding down.


User currently offlineBluesky02 From , joined Dec 1969, posts, RR:
Reply 15, posted (5 years 5 months 2 weeks 5 days 6 hours ago) and read 15532 times:

All I have to say is this industry is not for the faint of heart.

 Wink


User currently offlinePar13del From Bahamas, joined Dec 2005, 7663 posts, RR: 8
Reply 16, posted (5 years 5 months 2 weeks 5 days 6 hours ago) and read 15434 times:



Quoting Osprey88 (Reply 6):
However, their is a bigger problem here, and the poster above, HAL, is on to it. The overcapacity in the marketplace. HAL said it well:

Is it really that there is overcapacity or all airlines are simply trying to fly the same routes as others rather than looking for other oppertunities? Example, for many years DL, CO and others made money flying into secondary airports across the pond, as soon as Open Skies kicked in the spent millions getting slots to fly into LHR, to be able to afford it they had to dump some of their secondary profitable routes. Now they are trying to shape the market by forcing more pax to travel via LHR, sort of if you fly there they will come, it will take a couple years for their investment in those slots to pay off.

On the plus side, the reduction in frequency has made air travel more comfortable, the number of airlines trying to take off at 9:00am for example is down, these days you actually push back and take off within the hour.

Quoting Osprey88 (Reply 6):
However, there is a reason for why we currently have too many competitors. It is called Chapter 11 bankruptcy. Unfortunately in the United States we maintain this hindrance to the free market.

How exactly, the US is one of the few countries where you are allowed to invest your money where and how you want. It is not government money which is used in Chpt.11 but private funds, if no private funds are found the company goes to Chpt.7. I do not think that you want to propose that the government should decide who is allowed to invest in what, at least domestically.

One other thing, we all hear that the airline industry has been loosing billions for many years and only Chpt.11 has kept some of them around, yet there are investors and workers all lined up to get into the industry, someone somwhere must know something the rest of us do not.  Smile


User currently offlineSxf24 From United States of America, joined Aug 2007, 1262 posts, RR: 0
Reply 17, posted (5 years 5 months 2 weeks 5 days 5 hours ago) and read 15279 times:



Quoting Ual777 (Reply 12):


Quoting FrmrCAPCADET:
United's high interest rates are the result of high risk.

I think the high interest rate is a combination of coming inflation, the tight credit market, and the type of collateral used to raise the money.

The note is priced for higher risk. Look at the interest rates other airlines are paying...


User currently offlineChrisNH From United States of America, joined Jun 1999, 4164 posts, RR: 2
Reply 18, posted (5 years 5 months 2 weeks 5 days 5 hours ago) and read 15195 times:



Quoting Tango-Bravo (Reply 2):
In many respects, the industry has created its own flop

I agree 100%. The effects of this recession notwithstanding, airlines have created enemies out of the people they purport to serve. They all seem to be in a hyperventilated contest to see which airline can fly the longest non-stop route with the smallest possible aircraft; they seem to be hell-bent on 'fee-ing' people to death; and they seem to legitimately hate their customers. So against that backdrop, the airlines are worrying their furrowed brows over a 'drop in revenue.' How puzzling that these two things might be related.


User currently offlineChicagoFlyer From United States of America, joined Jan 2006, 274 posts, RR: 0
Reply 19, posted (5 years 5 months 2 weeks 5 days 5 hours ago) and read 15089 times:

This is an article in the Tribune and this is the only reason it is focused on United rather than any other airline. I just want to point out this little nugget:

Quote:
United also stands to gain hundreds of millions of dollars related to its fuel hedges if oil prices stay close to current levels.

This shows that the author misunderstands the issue. UA (and any other airline) will be more than happy to experience a fuel price that makes it lose $ on hedges because its overall fuel bill declines. Making "millions of dollars" on hedges is actually a bad sign.


User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2264 posts, RR: 8
Reply 20, posted (5 years 5 months 2 weeks 5 days 4 hours ago) and read 14821 times:



Quoting DL Widget Head (Reply 14):
The article also mentioned this possible scenario...

"The prospect of another lean winter for U.S. carriers could spur more consolidation, analysts said, with United and Houston-based Continental Airlines as the likeliest carriers to head back into merger negotiations."

"The cascading issues, analysts think, could force United to again attempt to merge with Continental"

Favorite topic on anet but the stars are starting to line up for this merger to come to fruition as well as others that some folks have a hard time accepting. This industry is going to look vastly different 5 years from now after the shakeout begins winding down.

I would be very surprised if CO will do a full merger with UA, given how heavy UA's debt burden is.

I think CO would be more likely to buy certain assets of UA in bankruptcy, so they would get the assets without the debt. My "breakup" scenario for UA would be:

CO takes UA's ORD and DEN hubs
AA takes UA's IAD and SFO hubs
DL takes over UA's operation at LAX



Seaholm Maples are #1!
User currently offlinePraimondi5484 From United States of America, joined May 2007, 7 posts, RR: 0
Reply 21, posted (5 years 5 months 2 weeks 5 days 4 hours ago) and read 14818 times:



Quoting ChicagoFlyer (Reply 19):
This shows that the author misunderstands the issue.

Don't most of them?



praimondi5484
User currently offlineCO767FA From United States of America, joined Aug 2005, 532 posts, RR: 2
Reply 22, posted (5 years 5 months 2 weeks 5 days 4 hours ago) and read 14723 times:



Quoting AirframeAS (Reply 13):
I can tell you for sure that F9 is. Bash me all you want but go look at their monthly court filings that is required for the company to do. Their numbers do not lie.

Does F9 pay its creditors the total amount owed each billing cycle? During BK are they paying all of their lease agreements and obligations? Why don't they "go it alone" if their model is so successful?


User currently offlineDLDTW1962 From United States of America, joined May 2009, 393 posts, RR: 0
Reply 23, posted (5 years 5 months 2 weeks 5 days 4 hours ago) and read 14626 times:

I hate to say this. But, I think the only way UA is going to get itself straighten out is if they
file for bankrupcy. That way they can get themselfs down to a lean operation and up grade
their inflight service. I know this would not be good for the union workers as their contracts
would be voided. However, if they did do this. I would like to see a complete clean out of
the top management team. If you get them out durning this time, UA may have a chance
to remain in business.

Just a thought. So don't flame me please

Chuck


User currently offlineIncitatus From Brazil, joined Feb 2005, 4068 posts, RR: 13
Reply 24, posted (5 years 5 months 2 weeks 5 days 4 hours ago) and read 14491 times:



Quoting Tango-Bravo (Reply 2):
In many respects, the industry has created its own flop...by consistent excessive cuts in capacity while continuing to price their product in totally undisciplined fire sale panic mode at any point in time when they anticipate that load factors will be anything less than every flight overbooked every day.

This does not make sense from an Economics perspective. Supply, demand and pricing are related. Smaller supply with stable demand means higher prices. And currently we are in a recession, so demand is going down. Airlines may cut supply and see no upward movement in average fares paid.



Stop pop up ads
25 UAORD2000 : Well, apparently there is supposed to be a "big" announcement soon. Is anyone else sick of the "big announcement" rumors?
26 CO767FA :
27 MasseyBrown : And last week, twenty or thirty years behind the times, the DOJ objected to the ATI expansion chiefly because reduced competition would harm consumer
28 Lightsaber : It is sad/scary in the environment out there. I agree with your assesment of what CO would want. But WN will dilute the value of the DEN hub. Perhaps
29 NYC2theworld : Doubt CO would take just only ORD and DEN. CO likes to control its hubs with an iron fist, fighting it out with WN at DEN and AA and WN at ORD is not
30 AirNZ : There's nothing "behind the times" about it, and IMO it was correct. The DOJ is not responsible for airline survivability. Whilst price increases mig
31 Ikramerica : So it's hardly something to get worked up about, then. That CO is getting financing to continue delivery of new aircraft in this environment is a goo
32 Tango-Bravo : Even though flights are fuller than ever... So capacity cuts on an even more massive scale, resulting in service which causes even more resistance to
33 FRNT787 : They arnt merging with anyone. Republic has invested a lot in F9, and seems to like their business model. Republic is acting as a Holding Company for
34 Lightsaber : At a -27% return UAUA needs to do something different. Look at the stock symbol LUV, they are hurting, but still (barely) in the black. Unfortunately
35 AirframeAS : That is way above my pay grade, but I am sure Mariner would be more informed than I am. I am not a bean counter, but I do know we have been paying Fi
36 MasseyBrown : Nor are they responsible for consumer protection. Among the absurdities in their position is, after one part of the authorship argued the utter illeg
37 FRNT787 : In glancing through old press releases, it appears Republic loaned an initial $30 Million in DIP financing in Aug of last year, and in March added an
38 WA707atMSP : There is no way the US DoT will allow CO to take over UA's IAD hub, because it is too close to CO's EWR hub. Likewise, DL will not be allowed to take
39 United1 : First UA is NOT being broken up, quite frankly there is nothing new in that article by the Chicago Tribune. Also realize that you can substitute AA,
40 AirframeAS : Thanks for the clarification, I now understand what you mean.
41 ItalianFlyer : My thoughts exactly! The Trib is focusing on UAL because UAL is the hometown airline...just as the AJC would do the same piece on DL or DMN on AA, et
42 WA707atMSP : My point is not that DL has a god given right to be the largest airline on the planet. My point is: 1. If any airline, be it AA, DL, UA, or even WN,
43 Post contains images Mariner : That's pretty much it, except that the initial $30 million DIP loan was repaid. There's a lot more to it, but this is a thread about United. Anyone w
44 AADC10 : It does not work that way. Other than squatting on gates and in some cases slots, any airline can fly anywhere they want domestically. If CO wanted t
45 IFly2Eat : CO does not want IAD or DEN- period. They will take either SFO or LAX (whichever ends up being a bargain.) The over lap with DEN/ORD and IAH is too mu
46 AirNZ : Actually, whilst not a first and foremost part of their writ, I would suggest they are. One such aspect is they are responsible for ensuring the Amer
47 CO767FA : Based on what?
48 FRNT787 : Thanks a lot for that. I was trying to go purely off the press releases, and that is what i came up. Always good to hear from you on F9 issues. As to
49 Post contains links Bluesky02 : Well said. Ted Reed wrote this article at The Street.com a couple weeks ago about this. http://www.thestreet.com/story/10520...ited-airlines-gets-no-
50 STT757 : Why would CO not take UA's Asian/Pacific operations?.. That and LHR slots would be the first items they bid on.
51 Tango-Bravo : Thank you ... I have sometimes wondered if I am the only a.netter who sees ATI and alliances and codeshares for what they really are: legalised collu
52 MasseyBrown : The DOJ is the US Government's lawyer; and for the last several administrations DOJ has done little on their own initiative outside of civil rights e
53 Ckfred : You have to remember that U.S. public policy favors allowing a debtor, whether an individual or a Fortune 50 company, a chance to work out deals with
54 United1 : Typically you'd be right if this were a merger of two viable companies but in the senario your proposing UA would have failed as a going concern. Dem
55 CO767FA : Yes - United's name, but CO's Logo and paint scheme! Now, now - you don't know that - for all we know, CO might have a suitor all lined up to swoop i
56 United1 : Actually one look at their balance sheet tells me that..... For all we know UA could announce a rather large cash infusion.....perhaps from Germany?
57 EMB170 : I don't know, but I would doubt that. Especially after all of the time, trouble, and $$ they just spent into making T8/T9 at JFK really nice. Agree o
58 Hiflyer : From the article linked in the OP "This is a trying time," former Continental CEO Gordon Bethune said. "Their cost of debt indicates their weakness in
59 CO767FA : What does UAUA's balance sheet tell you? Perhaps. You have got to be kidding - if that were done, the board would be empty. They get credit where cre
60 9252fly : If they were to ever merge,than I too also thought it the perfect combination. Question is what colours would be used? I like the CO colours more,may
61 United1 : Actually UAs leading the legacies for all of 2009.....not just April. UA made some fundamental changes in their operations during the start of fourth
62 Post contains links Lightsaber : Good point. Then there could be a bidding war for the LAX terminals. That takes easier credit than is available in today's market. Oh, there is still
63 Falcon84 : I still see CO refusing a merge with UA at this time. I think if UA does go into banruptcy, it won't come out this time. Just a feeling. And, one rea
64 AirNZ : Absolutely, and I agree with you 100%....and more! I can see absolutely no valid, legimitate reason for any form of ATI in any industry except to rig
65 United1 : If you take a look at all of the legacies numbers and pull out goodwill and intangible assets you'll find that all 5 of the legacies have negative eq
66 Coalways : I think CO will buy and take some of UA assest and routes to perserve them and fly the routes for maybe a merger maybe 5, 10, 15, 20 years from now? B
67 MasseyBrown : A profit is not too likely; but a positive cash flow (which UA achieved in the first quarter even without counting new borrowing) is possible and wou
68 Airbazar : That's bullocks. They aren't making money because they seem to be paying more attention to what the other is doing rather than take a good hard look
69 Airfrnt : Denver has a huge O&D market simply because of the much higher propensity to travel by air, and geographic location. No doubt in my mind that CO woul
70 Lightsaber : Good point. You said what I should have. Interesting point. I do not disagree that all of the legacies are not in good shape. There I disagree. The o
71 United1 : Not really AA and US are also starting to hit limits and minimums, DL is expected to burn through a fair amount of cash this year and even CO is star
72 Iloveboeing : I totally agree with you! These airlines have thrown the idea of product differentiation in the trash. There's practically no difference on the servi
73 UA_727 : That is NOT why CO is transitioning into STAR - stop the madness, please!!! The major capacity cuts at UA are done and over with - United's focus and
74 Tango-Bravo : Having indeed dug their own grave in this regard by their dysfunctional responses to the consequences of more than a decade of obsession with load fa
75 9252fly : Correction. What the average "Joe" really cares about it price (Price is King)and unfortunately that has been the main contributor to the drop in ser
76 Falcon84 : It most certainly is one of the calculations in CO's thinking, trust me! Yes, STAR offers more options for CO passengers around the world. It's a bet
77 AirframeAS : Why can't CO just codeshare like AS does? That is so much less of a hassle and they wouldn't need to deal with the DOJ.
78 Ual777 : That is wishful thinking. Sorry, but it is. UA is MUCH bigger than CO is and owns roughly half of their aircraft. UA got hit really hard because of t
79 AirNZ : EXACTLY, and what I've been trying to get across for a long time! Excellent post indeed, and well said. To enlarge further even: 1. Those here who ar
80 MasseyBrown : In which case we would devolve to a public-be-damned oligopoly of two or three airlines, which is not a consumer-friendly outcome. Modern governments
81 LDVAviation : If that's true, why did UA's mainline yield factor (passenger revenue per passenger mile) decrease 10.4% in the first quarter of 2009 to $11.77? Has
82 Lightsaber : Interesting detail I did not know. That makes next winter a tough time for AA. Does anyone have the bond ratings of the airlines? I have an *old* gra
83 UAL777 : Changes in the airline business occur over quarters not instantly. Further AA has more corporate contracts than any other US airline which helps bett
84 CO767FA : UA's aircraft is becoming less and less valuable each day - 13.5 Avg Fleet Age vs CO's 9.5 Avg Fleet Age. If more carriers park planes, those owning
85 UAL777 : CO only owns about 10% of their fleet if I recall correctly. Owning the birds as they age is better than leasing them. Even though UA takes a depreci
86 Falcon84 : Size doesn't matter here, nor does owning aircraft. All indications were, last year, that if a merger had happened, CO was going to buy UA, not the o
87 United1 : Really what indications were those?
88 CO767FA : Not completely true - in this environment, the lender is going to offer much less than the book value - unless the plane is highly sought after (dema
89 United1 : Theres a point to a hypothetical conversation about a merger that isn't in the cards right now for either airline? I'm not sure why it matters one wa
90 CO767FA : For the old CO people who didn't get any respect during our uglier time we understand and many are letting you know that to be true, but many at UA s
91 EMB170 : It sounds to me like if there is any kind of CO/UA deal that could happen, it would be like the DL/PA deal a few years back...Can anyone sum up in a
92 Ual777 : Technically Northwest bought Delta too. IT would make sense for CO to buy UA and not the other way around because of UA's market cap. That doesn't ma
93 Post contains links CO767FA : May figures are out - Looks kind of disappointing for UA's leading example for the legacies - but the good news is they could very well bounce back f
94 Post contains links DL Widget Head : http://www.transtats.bts.gov/OT_Delay/OT_DelayCause1.asp?pn=1 Well, United1 is right if you take NW out of the equation but since technically, they a
95 CO767FA : No doubt it appears to be that way, but the point has to do with the latest report - to think that the changes will keep UA at the top is unrealistic
96 AirlineBrat : Was that DL or UA? In 1992, UA purchased PA's lucrative LHR hub between the US and LHR and flew 727-200's between LHR and quite a few European cities
97 DL Widget Head : What's being discussed here are operational statistics from the begining of 2009. The facts are, UA has greatly improved their operations from a year
98 UAL777 : Jeez, when will people get it? Wishful thinking. PanAm's Pacific division was sold off "in the night" when they had DAYS of cash left. It was either
99 UA_727 : Dude, that was harsh - what gives? That's pretty ignorant to say that "UA STAFF" doesn't understand...bla bla, whatever point you were trying to make
100 WA707atMSP : I'm not a member of either the pro-UA faction or the pro-CO faction on ANet (I'm a member of the pro-AA faction), but I need to say something to get
101 Tommy767 : Personally I'm for a merger even if there is a massive amount of debt involved. I think if cherry picking occurred at a defunct UA, CO wouldn't be as
102 Post contains links DL Widget Head : Commented on another post but was directed here... Very interesting indeed. I hope that things turn around soon in this industry or it could get real
103 OP3000 : I think your first sentence contradicts the last one about CO being conservative. The high debt that UA carries would not be something a conservative
104 MasseyBrown : WSJ has a grim article today also, citing the usual reasons without any new information - in fact, I wondered why they printed the story. A Monday fil
105 Lightsaber : Just enough to make it interesting. In other news... water is wet. (In other words, I agree with you, why did they print it?) Lightsaber
106 Tommy767 : I meant personally -- merging is something I would like to see but since it didn't happen in april 2008, it won't happen anytime soon. CO is taking t
107 Post contains links Max999 : A New York Times article today also talks about the airlines' cash crunch...in particular US Air and United being the worst off. http://www.nytimes.co
108 United1 : Great actually.... despite a second place finish in May UAs still in first place overall for the year. UA 80.41 US 79.61 DL/NW 79.0 AA 77.62 CO 76.92
109 AirFrnt : The UA contingent continues to look at CO as a White Knight that will somehow get UA out of the mess it is in. I don't think anything could be furthe
110 CO767FA : Sure - CO is learning from the master!
111 MasseyBrown : CO won't buy UA on their own; but I could see it happening if CO allies with somebody like TPG. It won't be TPG, since they have bigger problems than
112 United1 : Not sure what your anti UA bias is (and quite frankly don't care) but IF your a CO employee can I just say that if I were you I would be rooting for
113 ItalianFlyer : Excellent analogy United1! As i have said on here and to my friends and flying partners...the fuse has been lit everywhere...the fuse may be longer w
114 EA CO AS : Wrong on both counts - UA isn't that much bigger anymore, and most of the aircraft they owned have been leveraged via EETCs. UA is running out of une
115 Ual777 : I am right on both counts. CO had a consolidated ASM count of 29,294 (in millions). Excluding regional affiliates it was 26,323. UA's consolidated AS
116 EA CO AS : I fail to see how 12.3% equals being "much bigger," but hey - knock yourself out. You were talking about "owned aircraft" - I was simply pointing out
117 Ual777 : It is when it is 3.5 billion available seat miles. Also the consolidated is a more accurate picture than purely mainline anyway. It tells me they wer
118 EA CO AS : Per Bloomberg, it was the most expensive debt placement by UA in over 9 years. How is that "easy cash," exactly? Read on from a letter issued by UAL'
119 AirFrnt : No it can't. There might have been a shot for foreign ownership under the Bush administration, but the current administration is so hip deep in Union
120 UAL777 : That goes in line with what I just said.
121 EA CO AS : Except for the fact that you - like UA's ALPA MEC - have spun it as an "easy cash" transaction - when in actuality, it sounds like this was anything
122 AirFrnt : Read that whomever is giving them money thinks there is a large chance that they are going to loose their shirt, so they jacked the interest rate way
123 MasseyBrown : My intent was to show the surviving company with 25% foreign ownership with an equivalent amount of new debt, also held by the foreign equity holder.
124 Post contains links United1 : Actually UA did.... "The disclosures came in messages sent by W. Douglas Parker, the chief executive at US Airways, and Glenn F. Tilton, the chief ex
125 EA CO AS : Can you blame them? That's like suggesting Stevie Wonder take over the last leg of the Tour de France for your team.
126 AirFrnt : That's because it's not the way it happened. The UA/US merger was supposedly agreed on, but it failed in the exact same point as the CO merger did -
127 Post contains links DL Widget Head : That's the way I remember things. Take a look at these articles. United1 got it right. CO turned down UA at the point of due diligence but UA broke i
128 United1 : Fine then prove that it was entirely due to UAs financials.....you can't. There isn't anything public on COs motives and the only thing that I can te
129 DeltaL1011man : Not from what the AJC said. CO/UA would have only a 2% larger market share than DL/NW and this was BEFORE UA cut out the 737 fleet. IMO its like that
130 AirFrnt : Not entirely, but it's the vast vast majority of the reason why.
131 CO767FA : Why should anyone take your word for it- anymore than AirFrnt's comment on why CO backed out of talks with UA?
132 United1 : No one should take any ones word on this board for anything other then what it is....an opinion. All I can tell you is that you should read everyones
133 CO767FA : Hmmmm....I think BA might have a rough go of it after asking staff to work for free due to their financial situation. I doubt any AF/KL or LH are goi
134 AirFrnt : Because I have the Wall Street Journal. Financial Times and economist on my side
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