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UAL Gets Closer To Edge  
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Posted (12 years 2 weeks 3 days 15 hours ago) and read 2085 times:


UA now owes $900 million instead of $375 million in the next two weeks. It violated one of the terms of the agreement that it reached with a German lender thus pushing up the due date from 2007 to now. I do not see a way out for UA.

http://www.thestreet.com/_yahoo/funds/ericgillin/10056849.html

33 replies: All unread, showing first 25:
 
User currently offlineJumboClassic From United States of America, joined Jun 2000, 315 posts, RR: 0
Reply 1, posted (12 years 2 weeks 3 days 15 hours ago) and read 2044 times:

I have the feeling that Ch.11 seems the only alternative, but UA is trying to get the ATSB loan first. Just like US Airways - their loan application was approved, and they went to court. Makes sense that even under Chapter 11, they will still benefit from the government approved loan while re-structuring. So all the efforts UA makes to get labor concessions are maybe just to get the loan, not to avoid bankruptcy.

Just my 2c.
JC


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 2, posted (12 years 2 weeks 3 days 14 hours ago) and read 2006 times:

JC,

I think you are right. The problem for UA is that they would have been on thin-ice with the ATSB even if the mechanics had approved the concessions last week. Now UA's immediate debt-load has doubled to an amount that is roughy equal to 50% of the sought after loan guarantee.

There is definitely a political dimension to UA's application as well. If the mechanics come around on Thursday and vote for concessions this time, the pressure will be on the Bush Administration. If UA's application is rejected, they will be blamed for the collapse for the country's 2nd largest carrier with all the problem that brings. If UA's application is approved, the Bush Administration will be accused of favoring large carriers over small ones. Vanguard and some others were rejected.



User currently offlineUnited777ORD From United States of America, joined Mar 2000, 264 posts, RR: 1
Reply 3, posted (12 years 2 weeks 3 days 11 hours ago) and read 1898 times:

ARE THE MECHANICS GONNA LET UAL DOWN?? THAT IS THE QUESTION..

User currently offlineEA CO AS From United States of America, joined Nov 2001, 13740 posts, RR: 61
Reply 4, posted (12 years 2 weeks 3 days 10 hours ago) and read 1853 times:
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While many of UA's fine mechanics know the score and are willing to do what it takes to make their company succeed, 57% of them proved my ex-EA parents right when they said the following:

"Never underestimate a ticked-off mechanic's ability to do the wrong thing in a labor dispute."

I'm PLEADING to all UAL mechanics out there...don't let your pride send this fine carrier into bankruptcy. We all know you didn't get it into this mess, but you can help to save it, and the tens of thousands of jobs it provides.

Vote yes on Thursday.

Even if you can't or won't live with the pay cuts, vote yes anyway. You can look for a new job while holding your old one and preserving the jobs of your co-workers.

Best of luck to all UA employees.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineHole_courtney From United States of America, joined Jun 1999, 569 posts, RR: 1
Reply 5, posted (12 years 2 weeks 3 days 9 hours ago) and read 1823 times:

"I'm PLEADING to all UAL mechanics out there...don't let your pride send this fine carrier into bankruptcy"

-They're trying to protect their jobs in the best way that they can. What is best for the company is not always best for the workers. Not that I know the specifics, but it's a point none-the-less.

"Even if you can't or won't live with the pay cuts, vote yes anyway. You can look for a new job while holding your old one and preserving the jobs of your co-workers."

-No they can't do that. That's what a Union is; it guarantees employment. Along with that agreement of employment, the employee has to honour the contract as well. That's why Unions go against the Employment at Will doctrine, because when you have a contract the employers right to fire you at will is lost, just as your ability to quit at will is lost in the contract as well. Basically, although the mechanics can go looking for jobs, they can't break their contract just as much as United is unable to nullify the contract.

live forever and stay beautiful,
hole_courtney



"[He] knew everything about literature, except how to enjoy it." - Yossarian, Catch 22
User currently offlineMD88Captain From United States of America, joined Nov 2001, 1338 posts, RR: 20
Reply 6, posted (12 years 2 weeks 3 days 9 hours ago) and read 1791 times:

If UAL truly has $900,000,000.00 due in the next week or two the mechanics vote does not matter. Chapter 11 will be filed to protect what cash remains.

User currently offlineBR715-A1-30 From , joined Dec 1969, posts, RR:
Reply 7, posted (12 years 2 weeks 3 days 9 hours ago) and read 1784 times:

 Sad. I can't believe it, It is really happening. I don't know what to say. I do have one thing to say. "Thanks alot Jim Goodwin  Angry  Yeah sure" But I still don't know what to say. UAL is in BIG BIG Trouble.  Sad

User currently offlineTbird From United States of America, joined Oct 2001, 851 posts, RR: 19
Reply 8, posted (12 years 2 weeks 3 days 8 hours ago) and read 1762 times:

Whether or not UAL's mechanics vote for the wage cuts UAL is headed for Chap 11. The ATSB decision is not pending on the mechanics vote, it's dependent on UAL coming up with a business plan that works and so for they haven't. The Mechanic's pay cuts are just one piece of the puzzle. As for Bush stepping in and bailing out UAL, it's not going to happen. He would be setting a precedent he cannot set. If he bails out one company 100 others will line up for the same bail out.

I would love to know what's going on behind the scenes regarding lobbying of the other carriers against UAL. I'm sure the large network carriers are lobbying the ATSB not to approve the loan. If UAL files Chap 7 almost overnight, the others carriers will see a huge jump in cash flow. We just have to wait and see.

Regards
Tom


User currently offlineMxCtrlr From United States of America, joined Nov 2001, 2485 posts, RR: 35
Reply 9, posted (12 years 2 weeks 3 days 8 hours ago) and read 1741 times:

If there's one thing I've learned over the years, its that "The government won't let XYZ Airlines fail because of what it will do to the economy" argument is baseless. I'm certain that EAL personnel thought that in 1990 and I know that most of us folks at PA thought that in 1991. Alas, both carriers died within 12 months of each other and the economy, the industry, and life in general, continued unabated. Don't count on the government to do the right thing - 99 out of 100 times, they won't!

MxCtrlr  Smile/happy/getting dizzy
Freight Dogs Anonymous - O.O.T.S.K.  Smokin cool



DAMN! This SUCKS! I just had to go to the next higher age bracket in my profile! :-(
User currently offlineUAL1837 From , joined Dec 1969, posts, RR:
Reply 10, posted (12 years 2 weeks 3 days 8 hours ago) and read 1737 times:

Actually, if the government approves United's loan application (which they most likely will if the mechanics vote yes on Thursday), the other airlines are out of luck, as the deadline has passed for airlines applying for loans from the ATSB.

I think people are blowing this thing way out of proportion. Yes I know United is in dire financial straits, but even if they end up filing for bankruptcy, it would be for Chapter 11, not Chapter 7, which is the "goodbye" bankruptcy that PanAm and Eastern filed for.

Supposedly, the reason why mechanics voted down the concession package was due to something about vacation days, not the actual money itself. The last vote was so close, I see no reason why it should be voted down again.

The rest of United's employees are PISSED at the mechanics for the vote. I talked to a United pilot earlier today that I know and trust, and he said that if they vote it down again, relations between mechanics and the rest of the employees basically will be a bloodbath. I agree with him; what are the mechanics trying to prove? OK they were pissed at management, but Wolf is gone, Goodwin is gone, Dutta is gone, all the bad'uns are gone. United has a new management at the helm, I think they should give Tilton and his people a chance, he seems like he really knows his stuff.

No sense worrying about what we (airliners.net) cannot control.

U N I T E D WILL STAND!!!


User currently offlineCloudy From , joined Dec 1969, posts, RR:
Reply 11, posted (12 years 2 weeks 3 days 7 hours ago) and read 1697 times:

____
think people are blowing this thing way out of proportion. Yes I know United is in dire financial straits, but even if they end up filing for bankruptcy, it would be for Chapter 11, not Chapter 7, which is the "goodbye" bankruptcy that PanAm and Eastern filed for
_____

Eastern first filed chapter 11 and then was forced by its creditors, etc. to go chapter 7 because no one was willing to put up the cash to help them emerge from bankruptcy. It languished in C-11 for awhile as Lorenzo, labor, and creditors all duked it out. Meanwhile the airline colapsed for lack of funds.

The same thing is very likely to happen with United.

As has been discussed in other threads..those who are interested in provided some of this cash are not interested in a share of a new, healthy carrier. They are looking to sell some of United's most valuable assets and in so doing earn more than they put in. Even if you had "Angels" rather than "Vultures" providing debtor-in-possesion financing - you would need a heck of allot more of them than were needed to save Continental and America West. United is HUGE and it would take ALLOT of cash to bring it through C-11 substantially intact.

United is to big and has used to much of it's resources trying to survive without C-11. When they do file C-11, it will very likely mean eventual liquidation. There may still be a United in four or five years. Someone will at least buy the operator's certificate and start a new airline - a la Pan AM. But it will be no more than a shadow of what it once was......

It may be to late to fight this. The industry's best hope may be a more slow and organized liquidation that gives travelers and employees time to adjust. I'm afraid current efforts to save the airline will...

1. Not work.

2. Put pressure on relatively healthy competitors like Delta and Continental - who have chosen to let the deadline for loan guarantees pass.

3. Cost the taxpayers billions if United defaults on the loans.

4. May make the liquidation process allot less predictable. If United is going to go bust no matter what happens, trying to hard to save it may just make it go out with a big BANG rather than a whimper...as the world's largest airline suddenly ceases operations. This should be avoided at all costs.

In short...We need an "Airline Hospice" program. If United will die anyway...we should not try to fight it but only make the process of its dying less painfull for everybody involved.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 12, posted (12 years 2 weeks 2 days 22 hours ago) and read 1635 times:

My sense of things is that Tbird has got it right. The Bush Administration cannot bail out an airline just because they are big or important. Although United is logically playing this card in Washington.

I kind of also agree with Cloudy but sense his view is a little too pessimistic. I think United might be able to successfully reorganize through C-11. There might be some less predatory lenders out there but I really do not know.


User currently offlineJumboClassic From United States of America, joined Jun 2000, 315 posts, RR: 0
Reply 13, posted (12 years 2 weeks 2 days 20 hours ago) and read 1591 times:

UAL might stand a chance to reorganize under Ch.11 IF they get the ATSB loan. Otherwise, I'm affraid, it won't be pretty...

JC


User currently offlineAlpha 1 From , joined Dec 1969, posts, RR:
Reply 14, posted (12 years 2 weeks 2 days 20 hours ago) and read 1584 times:

-They're trying to protect their jobs in the best way that they can. What is best for the company is not always best for the workers..

You don't know the history of IAM mechanics, then. They DON'T CARE about the company, period. They were like that at EA, and they seemed to have not learned anything since. How are they protecting their jobs in the best way they can by hurtling the whole company in to bankruptcy, where they wll lose even MORE jobs and wages than they would have lost with this deal?

"Even if you can't or won't live with the pay cuts, vote yes anyway. You can look for a new job while holding your old one and preserving the jobs of your co-workers."

You're assuming they'll have jobs. This carrier is on the thinnest of ice right now, and what is better? To have a job with less pay, or no job at all? That's what it could come down to if serious restructuring at UA does not take place. And if you're in the unemployment line, you should have plenty of time to look for a new job then.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 15, posted (12 years 2 weeks 2 days 20 hours ago) and read 1582 times:

UA is looking into "DIP financing." I am not familiar with how that works. I am not sure whether it is an alternative to an ATSB backed loan or whether it is what the ATSB would be guaranteeing. Does anyone know more about this kind of finance?



User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6729 posts, RR: 24
Reply 16, posted (12 years 2 weeks 2 days 19 hours ago) and read 1550 times:

The DIP financing would be needed if UAL goes into CH11 BK.

If UAL is able to secure the ATSB backing, they would then have 3.8 Billion in cash (1.8 Billion cash on hand + 2.0 Billion ATSB backed loan). In the short term, that would be enough money for UAL to pay off the EETC loans and the KfW loans, plus do more restructuring without filing CH11 BK.

Of course, if the restructuring doesn't go well or the economy continues to flounder, UAL could still be forced into CH11 further down the road.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 17, posted (12 years 2 weeks 2 days 19 hours ago) and read 1537 times:

That is really strange about IAM. This is sort of an academic question but what exactly do IAM members perceive as their "best interests"? If you have studied advanced economics or seen "A Beautiful Mind", the concept of Nash equilibrium would suggest that the mechanics would take into consideration the future of United along with their own individual situations. This rationality is strangely absent from the IAM's rank-and-files' thought process.

User currently offlineHmflyer From United States of America, joined Jul 2001, 83 posts, RR: 0
Reply 18, posted (12 years 2 weeks 2 days 19 hours ago) and read 1535 times:

UAL only has $1.0B in cash right now. That is why things are at a critical stage. They wouldn't be so close to bankruptcy if the had $1.8B. Right now they have less cash than Continental, an airline 1/2 their size. That is why UAL is in trouble.

User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 19, posted (12 years 2 weeks 2 days 19 hours ago) and read 1517 times:

I have the same understanding as HMflyer. UA will have $1.9 billion in cash with a ATSB backed loan. They have $1 billion now, they owe $ 900 million within 10-14 days. That's how I arrived at my figure. They will have to go into Chapter 11 whether they get a loan or not.

I give credit to Tilton for trying so hard to avoid bankruptcy. I hope the unions appreciate what he is attempting to do in this siutation. Bankruptcy will wipe out their equity in the company. It would be far easier for him to declare bankruptcy and cut costs under the protection of the court but he has chosen the high road.


User currently offlineFDXmech From United States of America, joined Mar 2000, 3251 posts, RR: 34
Reply 20, posted (12 years 2 weeks 2 days 18 hours ago) and read 1479 times:

This potential bankruptcy has ramifications way beyond United's borders.
United, as financially sick as they presently are, have huge market share as opposed to PanAm or Branniff in their latter days. If United goes into chapter 11, they will have a major cost advantage over a healthier AA and Delta.

It obviously would benefit the entire industry if United didn't go ch.11 and precipitate a disasterous downward spiral price war that the industry can ill afford at this juncture. When CO went ch.11 back in 1990, the majors complained bitterly of the cost advantage this gave them. CO was not nearly the behemouth of present day United.



You're only as good as your last departure.
User currently offlineFDXmech From United States of America, joined Mar 2000, 3251 posts, RR: 34
Reply 21, posted (12 years 2 weeks 2 days 18 hours ago) and read 1480 times:

This potential bankruptcy has ramifications way beyond United's borders.
United, as financially sick as they presently are, have huge market share as opposed to PanAm or Branniff in their latter days. If United goes into chapter 11, they will have a major cost advantage over a healthier AA and Delta.

It obviously would benefit the entire industry if United didn't go ch.11 and precipitate a disasterous downward spiral price war that the industry can ill afford at this juncture. When CO went ch.11 back in 1990, the majors complained bitterly of the cost advantage this gave them. CO was not nearly the behemouth of present day United.



You're only as good as your last departure.
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 22, posted (12 years 2 weeks 2 days 17 hours ago) and read 1451 times:

Here is an article that supports FDXMech's comment:

http://www.nytimes.com/2002/12/04/business/04EURO.html

The "No" vote was not only a protest against managment but apparently against union leadership also:

http://www.nytimes.com/2002/12/04/business/04LABO.html


User currently offlineLJ From Netherlands, joined Nov 1999, 4477 posts, RR: 0
Reply 23, posted (12 years 2 weeks 2 days 17 hours ago) and read 1437 times:

I would love to know what's going on behind the scenes regarding lobbying of the other carriers against UAL. I'm sure the large network carriers are lobbying the ATSB not to approve the loan.

It's not a very big secret that AA, DL, CO and NW are lobbying extensively against the UA loan (they acknowledged this in public).

UAL only has $1.0B in cash right now. That is why things are at a critical stage. They wouldn't be so close to bankruptcy if the had $1.8B. Right now they have less cash than Continental, an airline 1/2 their size. That is why UAL is in trouble.

Moreover all cash currently is UAL's possesion is already committed. Given that after the $900 million some other (large) payments are due early next year.

This potential bankruptcy has ramifications way beyond United's borders.
United, as financially sick as they presently are, have huge market share as opposed to PanAm or Branniff in their latter days. If United goes into chapter 11, they will have a major cost advantage over a healthier AA and Delta.


According to one analyst (Ray Neidl I think) the doomsday scenario is Chapter 11 for UA and then dragging down the entire US aviation with it. Therefore I reckon that the other airlines hope for a Chapter 7 instead of Chapter 11.

BTW how big is the chance that UAL will get the loan if the US government knows that the chance of UAL entering Chapter 11 is present? Allthough Chapter 11 doesn't mean the end it may be beneficial for the creditors to apply for Chapter 7 as soon as UAL enters Chapter 11 as they know they get part of their money back from the US government. Result: the US government aka US taxpayer is taking up the bill.

UA is looking into "DIP financing." I am not familiar with how that works.
Is a special kind of financing whereby the investors receives a very high % plus the fact that they are preffered debtors meaning that in case of Chapter 7 they're the first ones to receive their money back. Sometimes the investor receives some sort of collateral, but that's not needed (BTW GE Capital s a very important player in the DIP financing arena)



User currently offlineBDRules From United Kingdom, joined Oct 2000, 1501 posts, RR: 3
Reply 24, posted (12 years 2 weeks 2 days 16 hours ago) and read 1427 times:

R there going to be any cheap flights on UA now then  Wink/being sarcastic

Joking apart. This is terrible. UA have always been a world leader and now they seem to be fading away which i hope doesnt happen


25 AA717driver : UAL is different from the previous Ch. 11's in that they still have quite a few very valuable assets. They haven't gotten to the point that they have
26 N79969 : AA717Driver, Thank you for the DIP info. I think the additional $500M they owe now is a whole new pinched loaf actually. Things could deteriorate very
27 Post contains links N79969 : Rationality is officially out the window: http://biz.yahoo.com/ap/021204/united_mechanics_3.html
28 Post contains links MD88Captain : For some different perspective on the coming UAL bankruptcy please refer to Michel Boyd's website for interesting perspective. http://www.aviationplan
29 Post contains links MD88Captain : Boyd really says some insightful things in the link I just posted. Here it is again, because I think it is REALLY good stuff: http://www.aviationplann
30 N79969 : Great article...thank you.
31 Post contains images 9844 : Rationality is officially out the window: Paid to stay at home...9-p Pay and Benefits: Pilots will receive pay subject to applicable longevity increas
32 N79969 : Some of the pilots would have collected 80% of their pay to stay at home...ALPA did not buy. I think it is pretty clear that UA's managment made some
33 MD88Captain : 9844. Are you sure rationality is out the window? Do you now the the agreement you posted (way too long BTW) costs more than the HUGE training costs r
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