PSA53
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UAL Post 87 Million Loss For November

Wed Dec 22, 2004 5:04 am

I don't have all the details yet,but UA
posted a November loss of 87 million.



[Edited 2004-12-21 21:07:54]

[Edited 2004-12-21 21:09:51]

Update.
http://biz.yahoo.com/rb/041221/airlines_united_earns_1.html

[Edited 2004-12-21 21:13:14]

[Edited 2004-12-21 21:30:02]
Tuesday's Off! Do not disturb.
 
Thrust
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 5:53 am

what was their last quarter loss? Because 87 million is well...not good  Big grin UA really can't afford these losses, and the fact they are restructuring and cutting pension funds during this time, well, an 87 million loss is an ominous sign.
Fly one thing; Fly it well
 
quickmover
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 5:57 am

The way I read the yahoo release is that this number included a gain of around $140 mil. from the sale of Orbitz. Without that gain, the loss would have been much larger.
 
artsyman
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 5:57 am

United has lost huge amounts of money for 18 straight quarters. They are still losing roughly 3-5 million every single day.

J
 
ba777-236
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:03 am

I'm a bit confused by this part in the article:

"The cash balance increased approximately $97 million during the month of November."

How did their cash-on-hand increase, when UA made a loss? If the cash didn't increase... would they not have posted a profit, rather than a loss?  Confused
I like British Airways! I'm not sure why, but I do! ;-)
 
TWFirst
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:14 am

>>How did their cash-on-hand increase, when UA made a loss.<<

Probably because of the Orbitz transaction.

And this isn't a quarterly loss, it's a MONTHLY loss!
An unexamined life isn't worth living.
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:15 am

How does a company post hundred million dollar loses the last 18 quarters in a row and continue to operate?

A liberal is a man who is right most of the time, but he's right too soon.
 
FA4B6
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:17 am

How does a company post hundred million dollar loses the last 18 quarters in a row and continue to operate?

Thats what I have always wondered. How does this happen?
"Leap! And the net will appear."
 
TWFirst
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:20 am

>>How does a company post hundred million dollar loses the last 18 quarters in a row and continue to operate?<<


SIMPLE. It borrows money. Lots of it. It files for bankruptcy, therefore it's protected from creditors. It lowers it's liabilities through the bankruptcy process and when it believes it's cost structure and business model is such that it can make a profit going forward, it exits bankruptcy.
An unexamined life isn't worth living.
 
artsyman
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:26 am

United have twice borrowed vast amount of money to help them ride through this bankrupcy. Aside from needing to overcome an $8.3 billion dollars shortfall to their pension, they will also have billions of dollars of debt repayments from the borrowings from the this bankrupcy.

Even without these alarming problems, I still think United will struggle just to get profitable.

J
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:26 am

professor westbrook didnt teach me shit in bankruptcy I guess...
A liberal is a man who is right most of the time, but he's right too soon.
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:28 am

Artsyman,

I agree with you 100%, the airline isn't even turing a profit, how the hell are they gonna get out of bk? Hell, when was the last profit for AA or NW? Around in circles we go some more!

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
DLKAPA
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:31 am

Actually the last profit for NW was the last time they posted their earnings report. NW isn't doing to badly.
And all at once the crowd begins to sing: Sometimes the hardest thing and the right thing are the same
 
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jfklganyc
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:34 am

I loved Prof Westbrooks! When did u graduate?

UA is in saaaad shape. I now put them on the near extinct list with US. At first I thought they were too big for this--but not anymore.

PJ
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:38 am

are you serious?

AA777jr

[Edited 2004-12-21 22:44:29]
A liberal is a man who is right most of the time, but he's right too soon.
 
legendDC9
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:44 am

Isn't it amazing though, that UA and US far that matter, with all these losses, quarter after quarter are still able to find lendors? Nothing against these airlines but any other business would be cut off with a credit rating that would not allow it to borrow for chewing gum. Still, every month we hear someone else coming to the "rescue" only to see their cash infusion go up in smoke. If I was a major bank, looking at lending money I would tell UA; You can only borrow against actual assets, treat them like they walked into a pawn shop. You want money? I want an office building, how about the space for your city ticket office in down town Chicago? New York? London? I move in now... If you default, I keep it. Fair, isn't it?
 
Thrust
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:48 am

A MONTHLY LOSS, TWFirst!  Wow! THey are doomed. 87 million per month means they will be out of cash very shortly. If this restructuring operation fails, UA will be finished. the lendors are running out, and so is time....this is not how to get out of bankruptcy by June 2005.
Fly one thing; Fly it well
 
artsyman
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 6:50 am

You can only borrow against actual assets, treat them like they walked into a pawn shop.
****

They are borrowing against actual assets. Planes etc. The problem going forward is now, that some of the lenders are now trying to reposses planes and assets, and courts are blocking them. If this continues, UAL will not get another penny.

Chapt 11 is pretty pathetic at the best of times, but when the person you are refusing to pay for their planes is not allowed to take them back because you are not paying for them, then there is something wrong.

J
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:10 am

I just don't understand how a company going on 3 yrs of bk is still getting sympathy from courts...
A liberal is a man who is right most of the time, but he's right too soon.
 
Cactus739
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:14 am

United filed for bankruptcy in December of 2002.

They have only been in bankruptcy for 2 years now.
You can't fix stupid.... - Ron White
 
legendDC9
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:16 am

"Chapt 11 is pretty pathetic at the best of times, but when the person you are refusing to pay for their planes is not allowed to take them back because you are not paying for them, then there is something wrong."

Can you explain what you wrote here, I am not sure I follow. The difference between what I am saying and what is going on is this: If you are the airline and put your airplane up as collatoral to guarantee a loan and you go into BK, the court can void out that contract to and you will be out the money. UA still has possesion of these assets even though they owe billions of dollars, so where does it end? under my "evil" plan, anything you put up as collateral, I want physical possesion of. So in general it is a trade, cash for assets. You pay up, you can have it back, if you don't, I keep it. Obviously aircraft cannot be a part of the equation since banks have no need to just "hold" aircraft. However, real estate space in big cities is always at a premium and that can be transfered over be used, just sign it over.

Yes, I know, this is pretty nuts but with UA not being able to pay up and are under court protection, why would you not want to guarantee your loan this way?


 
Byrdluvs747
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:20 am

I also don't understand how UA can continue to lose sooo much money and still remain in business. At what point does someone say enough is enough?

I don't want UA to die, but I just can't believe a company, even one the size of UA, can post loses of $80 million a month for the past 18 months and still have investors willing to part with their money.
The 747: The hands who designed it were guided by god.
 
Thrust
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:21 am

UA has only until June 2005 to get out of Chapter 11, then they are in major trouble. Only two years of bankruptcy is a huge issue for them right now...I forget what they will earn by emerging from bankruptcy by this time, but I figure if they don't meet this date they will be in Ch. 11 truly indefinitely.
Fly one thing; Fly it well
 
Thrust
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:22 am

Eventually their lendors will give up, and UAL will be left to rot.
Fly one thing; Fly it well
 
TWFirst
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:23 am

>>I just don't understand how a company going on 3 yrs of bk is still getting sympathy from courts...<<


The court considers what is best for shareholders, and it's not often that it's best for shareholders that a company ceases to exist. Although United is posting losses, as an operating entity it's still generating revenue and thus can make payments to creditors. If a company ceases to exist, it stops generating revenue. So if the court believes there is a possibility that a company can continue to survive in the long term, it is not going to order liquidation.

(edited for typo)

[Edited 2004-12-21 23:24:44]
An unexamined life isn't worth living.
 
scotron11
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:29 am

That is what happened when some lenders tried to repossess 14 UAL aircraft pledged as collateral. The bankruptcy Judge issued a temporary restraining order. Under bankruptcy law, lenders can repossess their assets after 60 days after a filing. Usually the lenders and the airline come to some agreement before it gets that far. Curious why it didn't happen in this case.
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:29 am

I think UA will go down in the record books for classic filing and handling of Chp 11. If I'm not mistaken, my Bankruptcy textbook makes reference to court rulings on the UA Corp. I sold the book, or would check it out. I know Enron is already being used as examples in textbooks of what not to do in business practices.
A liberal is a man who is right most of the time, but he's right too soon.
 
rparker537
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:37 am

People need to remember that accounting ("profit" and "loss") terms are NOT cash terms. You can lose money due to non-cash charges (write-offs, for example). Many expenses, such as depreciation, are non-cash.
 
N867BX
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:48 am

Interesting story in the Minneapolis paper on Monday. http://www.startribune.com/stories/535/5141415.html
Don't know how to make it clickable, I'm not too bright.

It basically says that GE has an interest in propping up failing carriers because of their aircraft leasing business. I guess it is in there best interest to keep the excess capacity flying rather than have them parked somewhere. Used aircraft values would plummet if UA and US were to shut down.
 
avek00
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 7:59 am

"Isn't it amazing though, that UA and US far that matter, with all these losses, quarter after quarter are still able to find lendors?"

Actually, both carriers are UNABLE to find any lenders beyond those already tied to the company - hence UA's lack of emergence financing and US' lack of a DIP facility.

"Used aircraft values would plummet if UA and US were to shut down. "

Bingo. THIS is the reason why the aircraft lessors have been willing to work with UA and US despite their bad management and schizophrenic business plans - the sudden influx of several hundred new/midlife jets would ruin both the new and secondhand commercial aircraft markets for nearly a decade.
Live life to the fullest.
 
mm320cap
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 8:04 am

Never in my life have I seen a thread where such a huge lack of understanding has been spouted with such vigor. I'm not even going to bother to try to explain anything because it would simply take too long. Suffice it to say, absent a strike at United, watch and learn.
 
ORD2PHL
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 8:08 am

Actually the last profit for NW was the last time they posted their earnings report. NW isn't doing to badly.

BAH.

From NWA's 10-Q as filed with the SEC for three months ended 9/30/04:

Net Income (Loss): (38) (in millions)

and for 9 months ended: (436) (again, in millions)


Hardly looks like a profit to me, please check your facts people.

ORD2PHL


 
StowAway
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 8:19 am

>UA has only until June 2005 to get out of Chapter 11<

Well, this past year it was said that "United has until June 2004 to get it's stuff together." United won't go down until the government lets it go down. Hopefully that will be sooner than later. United is a waste of taxpayer's money, and just an overall bad investment. The horse has broken all of it's legs, turn it into glue.  Smile

A monkey's ass always talks crap.
 
N867BX
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 8:46 am

Mm320cap

Ignorant or not we all will watch and learn. I simply would not put a wager on UA surviving. If the market for used aircraft gets better, GE will pull the rug out from under them quite quickly. For as long as I can remember (around dereg.), UA has never been one of the more conservative airlines. Its done OK in good times but almost always loses money in bad to mediocre industry conditions. This is a hard habit to break I think.
 
mm320cap
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 9:57 am

N867bx,

I wouldn't wager on United surviving either. That is why I have dusted off my resume and started applying elsewhere. However, the people posting on this forum are just plain wrong about much of what they say. That's ok, but when it is stated as fact I just have to shake my head. Kind of reminds me of the press... read the USA Today and they tell you that pilots have agreed to consessions. We haven't agreed to squat. Haven't voted on a thing. That is the type of error that is absolutely critical.

When you read something like StowAway's analysis of United's financial condition, it is hard not to just wonder where they get their opinions from. United won't go down until the government lets it? Huh? How is the government propping up United? Last I checked we were turned down 3 times for an ATSB Loan GUARENTEE - not even a loan! Did anyone read their reasoning? It was criminal. "United is not an essential part of the US aviation transportaion system". Oh, but America West is?? How about Evergreen? Last I checked United was FINALLY awarded two slots from DCA past "the arc". That is after just about every low cost carrier on the planet was granted multiple routes. United was forced to reduce flights into/out of Ohare while others were allowed to expand service. United spends 44 cents of every dollar on taxes and security. No relief from the government in sight. Oil prices through the roof is what is crippling United right now. Do you see the government doing anything to lower them? Hell no... what business is Bush in? How do you think the oil companies are doing? United wants to terminate the pensions of its employees. The government could have prevented this by granting an ATSB loan guarentee, but they didn't. Now they are complaining that this might bankrupt the PBGC. Well, perhaps they should have thought of that sooner!!

StowAway: "United is a waste of taxpayer's money." Huh? Are you high, or just stupid? United is surviving right now in spite of the government, not because of it. They are playing the cards in Ch. 11. Guess what, it's all legal! Those are the rules, and United didn't make them. They are just trying to use them to their full advantage. Don't like it? Change the rules, but you can't blame United for operating in the system that was created by the U.S. government. Sorry I had to go off on you, but when you say something totally wrong and then follow it up with a cute little smiley face, you deserve it.

N867bx,

Your post is thoughtful and rational, for that I thank you. GE is one of many companies that is interested in lending United money provided they can extract more concessions and terminate their pension obligation. If you look at the DIP lenders, there are Banks involved. Airbus is rumored to be in talks. There is more to it than just being stuck with used aircraft, in my opinion. United's potential is absolutely huge. So is the risk. If they can finish destroying the labor contracts on the property and negotiate rock bottom lease and UAX rates, their route structure and fleet should make them a serious force. The evidence of such is there. There is a reason why Gordon Bethune wants us out of business so badly. IF we are successful in restructuring, we will be tough to beat, and all the other airlines will have to go through the painful cost extractions we just went through - which is TOUGH going, as you can see from United. It's a BIG "if", no doubt. You are smart not to bet on it, but there will be many that will.

Note: As an employee, this is a difficult place to be in. Sure I want United to be successful. However, in doing so, we will have lowered the bar for our profession and our industry so low that one really has to wonder if we will be able to attract any bright people into the business any more. This is a conundrum. I'm not sure what the solution is. Do we lower our own future, or just draw the line in the sand for the good of the profession and move on?
 
StowAway
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 10:06 am

>StowAway: "United is a waste of taxpayer's money." Huh? Are you high, or just stupid? United is surviving right now in spite of the government, not because of it. They are playing the cards in Ch. 11. Guess what, it's all legal! Those are the rules, and United didn't make them.<

Feel better? The government has given United money in the sum of hundreds of millions of dollars. The government has issued orders that block creditor's from getting planes back. The government has given EXTENSION after EXTENSION for UAL to get their ducks in a row, and get responsible for finances. Not high, not stupid, just think United is a major waste. When I worked in the Express program, I met a lot of the corporate people with UAL. I can honestly say their views on the industry are completely jaded, and judgements are asinine.

Joel
A monkey's ass always talks crap.
 
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mariner
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 10:16 am

Mm320cap:

I sympathize with your position - I very much hope that United survives and have said so, many times, on this board from the first day of the bk.

However, if you are going to criticize others, a couple of your own facts are a bit suspect.

United did not apply to the ATSB three times, they applied twice. After the first refusal, United admiited that the figures they had given to the ATSB were "optimistic".

However, United was given the opportunity to apply again, the ATSB in effect extending their own deadline. No other airline in the US was given this opportunity.

It is sad to report that most of the figures United presented to the ATSB in that second application have also proved to be "optimistic".

The reason you state for the ATSB's second refusal is only a part of the reason they gave.

Nor did Mr. Tilton help the case by saying, publicly, a few days before the final decision, that United did not actually need the guarantee.

I am very confused as to how the ATSB guarantee would have saved the pensions, because that money was to be used as working capital, not to reduce old debt. But, hey, a lot of people believe it, so what the heck?

cheers

mariner
aeternum nauta
 
N867BX
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 11:13 am

Mm320cap:
Good luck on keeping your job. I've been out of the industry since 1998. I really miss the job. I don't miss the uncertainty that many of you are going thru right now.
 
PVG
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 1:33 pm

I think that the term cash-flow needs to be applied. You can increase your cash on hand and still post an accounting loss.

With regards to whether they will survive, if the deal will the pilots is approved and they can shed the pension obligations, they will be a force to reckon with. I wouldn't be so sure that UA is not going to survive.

Chap. 11 is available to every company. They are playing by the rules as laid out by the law. CO did it twice. HP once or twice. Why wasn't anyone complaining then? Why should the government let them go away? Do you think that the EU would let LH close, or AF? Would Japan let NH close? I doubt it? Why is it that everyone in the U.S. is so free market blah blah blah until it's their own neck on the line? When the steel industry was threatened by imports they begged and got import duty protection. The textile mills are now going to get some protection from Chinese imports with quotas going away. The farmers get subsidized. Americans pay twice as much as the rest of the world for sugar to protect the corn syrup producers.

What the government needs to do is impose a moratorium of say 18 to 24 months on anti-trust law enforcement with regards to the airline industry. This way we can have mergers and consolidation and let the market find it's way to equilibrium. There will be less airline jobs, but the airlines will merge their best assets and be free to code-share flights without the threat of being sanctioned by the government for anti-competitive behaviour. The revenue/capacity side of the business needs to be addressed once and for all.
 
aa777jr
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 2:19 pm

Actually the last profit for NW was the last time they posted their earnings report. NW isn't doing to badly.

BAH.

From NWA's 10-Q as filed with the SEC for three months ended 9/30/04:

Net Income (Loss): (38) (in millions)

and for 9 months ended: (436) (again, in millions)


I checked http://www.hoovers.com and got the same numbers.

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
N754PR
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 3:03 pm

I think I need to get that UA 744 in the new scheme quick.... at this rate they will close down.
Bush, your a sad, sad man.
 
mm320cap
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 3:04 pm

OK, here we go.

StowAway,

No, I don't really feel better. One of the things that I hope that you learn a little later in your life is that there is nothing smiley faced about people facing the loss of their jobs, the ability to support their family, and the prospect of watching 10-30 years of their lives flushed down the toilet. Your blase, glib attitude towards United's troubles is offensive to those of us who have sacrificed much and face serious challenges in basic living.

You are right about one thing. The government did give money to United after 9/11... along with every other airline. They then set up a $10 Billion loan guarentee program to help those airlines that were negatively affected by 9/11. Look up how much of that money was actually used. Here, I'll do it for you... less than 20%. And how much of that went to United? 0. Your assertion that "the government" is blocking creditors and "the government" is granting extensions in BK court is just plain wrong. It is THE JUDGE who is making those decisions. "THE GOVERNMENT" is actually about to sue United in BK court over the pension termination issue. THE JUDGE will decide on that issue as well. If you have a beef about what is happening with United in court, go talk to him. He, and he alone, is responsible for the structure of the proceedings during our Ch 11 process. As for our senior management's competence... when were you at Express and who specifically did you talk to? You won't see me arguing that there is much to be desired in their managment style. Some of them are quite good, some are absolutely horrible. Give me names, and I'll be happy to tell you which ones are worth anything.

Mariner,

Actually, I wrote that United was "turned down" 3 times, not applied 3 times. The first rejection came with a note that the numbers were too optimistic. Along with that was the opportunity to resubmit, which we did. The second rejection came with a similar answer. The final rejection came quite shortly after the second one, and included the following explanation. United did not need the loan guarentee (which Tilton had said, as you pointed out), that United was not a vital part of the US air transportation system, and lastly that United's problems were not caused by 9/11. The last two really slayed me. Apply Frontier, who did receive a loan guarentee, two both of those criteria, and you will see why I'm confused.

As far as the ATSB Loan guarentee saving the pensions... There were creditors lines up ready to extend a 2 Billion dollars of exit financing contingent on the ATSB decision. First $200, then $400 million of it was to be unprotected by the ATSB guarentee, but the commitment was their. Had the ATSB granted approval, United's exit financing would have been in place and we would be out of Chapter 11 right now, with our present labor agreements in place. The pensions were included in those agreements. StowAway, this is another example of the government actually hindering United's Ch 11 exit. Perhaps you think United could not have survived outside of Ch 11 right now. Maybe, maybe not. One thing that seems to be forgotten. Chapter 11 is HUGELY expensive. The costs of operating in Bankrupcy are astronomical. Legal fees, people booking away for fear of what is going to happen to their tickets, etc. Also, with 2 Billion dollars of financing, United's cash position would have been stronger than most of the legacy carriers out there right now. But it's all speculation now. Thanks for the well wishes, Mariner and N867bx.

PVG, thanks for pointing out that Chapter 11 is available to any and all airlines. There is a reason everyone fights like hell to avoid it. It is hell on earth. Why do so many people here think it is some sort of company picnic? Those of you that do obviously haven't been there. These have been the most stressful two years of my life.
 
planenutz
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 3:25 pm

Because I travel a lot for business my company maintains TravelGuard as an insurance retainer for me when I travel. I received an email from them saying that they will no longer cover trips involving UA. Hopefully this is something that they do to all carriers in bk, and don't expect the worst to happen at UA.
Not all who wander are lost....
 
cloudy
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RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 3:36 pm

The court considers what is best for shareholders, and it's not often that it's best for shareholders that a company ceases to exist. Although United is posting losses, as an operating entity it's still generating revenue and thus can make payments to creditors. If a company ceases to exist, it stops generating revenue. So if the court believes there is a possibility that a company can continue to survive in the long term, it is not going to order liquidation.
--------

The court considers the creditor's interests before that of the shareholders. In a typical chapter 11 bankruptcy, the shareholders walk away with nothing or next to nothing. Even if the company rises to greatness again, the pre-bankruptcy stockholders usually don't get squat. Usually shares in the reorganized company are distributed to the various creditors, and some is also sold on the market to raise cash. Any shares of stock in the pre-bankruptcy company are simply canceled.

There are two things that a bankruptcy judge may consider in his decisions. He wants to avoid liquidation if possible to avoid displacements among employees, vendors, etc. He also wants to make sure the creditors get as much of their investment back as possible. When it is possible to pay them back at all, they are paid of with asset sales or with equity positions in the reorganized company. A bankruptcy court forms a committee of creditors to help him decide what will happen with the company's assets. This committee does not consider the interests of the shareholders until the interests of the creditors have been taken care of.

In a liquidation, a company's remaining assets are disbursed according to the following priority. First, employees are paid any wages+benefits due them. After that, secured creditors are paid. Then, in this order, non-secured creditors, preferred stock holders, and common stock(or other equity) holders. Notice that the common stock holder is at the bottom of the heap. If you own equity in a company, you are taking a greater risk than if the company simply owes you money. You also, most of the time, stand to gain more if the company succeeds.

IN SHORT...Don't think that the bankruptcy judge is supposed to care about the interests of the stockholders. He cares about two things, a company's survival and the creditor's getting as much of their money back as possible. From a stockholder's point of view, chapter 11 amounts to a surrender. You throw yourself at the mercy of the court and the creditor's committee, who care more about their own interest than yours. That is one of many reasons why it tends to be done only as an absolute last resort.
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 4:08 pm

The notion of UAL's three applications to the ATSB is maddening. The company provided three unrealistic financial pictures to the ATSB, got special dispensation to allow it to do so, and still couldn't meet the basic financial requirements that others, Frontier and America West included, were able to.

United blew it three times. And you want me to feel sorry for them? Uh, no.

As for the "9/11 caused this" line, how many times are we going to trot that out? The obvious fact that UA can't get its ducks in a row even with court protection should serve as at least a hint that management wasn't exactly top-notch pre-9/11. What makes UA different from AA? Why was AA able to avoid Ch11? They were hit just as hard by 9/11. Ahh, yes -- they avoided Ch11 with better (still not great) management.

It is not the government's responsibility to pay for security, subsidize oil, or rub the feet of the UA board whatsoever. The costs of the industry are what they are, and if others can make a decent go of it, there's absolutely no reason that UA couldn't, other than stubborn management and, simply put, ineffective business planning.

And we should subsidize that? Again, uh, no.
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 5:03 pm

As bad as it would be for the PBGC, lets hope the IAM and AFA agree a similar deal with UAL on the termination of their current defined plans. Under the PBGC cap, their members will suffer, but not as much as some fear. Maximum cap under PBGC for someone retiring aged 65 is $44,365. A typical mechanic with 30 years service gets a pension of $22K, FAs even less. Pilots are harder hit because of their higher salaries.

But, if UAL really does take-off, everyone will benefit in the long run.
 
OHLHD
Posts: 2903
Joined: Fri Dec 03, 2004 6:02 am

RE: UAL Post 87 Million Loss For November

Wed Dec 22, 2004 8:42 pm

Really bad.

How in this world is it possible to let such a company still run their business.
I hope that UA survives, but wouldn´t it be better if they cease their operations???
What can you do to turn such heavy looses into profit.
It is getting really serious now.
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: UAL Post 87 Million Loss For November

Thu Dec 23, 2004 12:36 am

Planenutz

Working in the travel related industry let me say this. Travel guard no longer covering UA flights is not a good sign. Everytime I have seen them do this with other companies, those companies are no longer around. Hope this time it turns out differently then it has for all the other companies travel guard stopped covering.
You can cut the irony with a knife
 
TWFirst
Posts: 5752
Joined: Wed Apr 19, 2000 5:30 am

RE: UAL Post 87 Million Loss For November

Thu Dec 23, 2004 12:59 am

Cloudy... thanks for the clarification and further explanation. I intended to use the word creditors where I used the word shareholders in that first sentence.
An unexamined life isn't worth living.
 
masseybrown
Posts: 4406
Joined: Wed Dec 11, 2002 2:40 pm

RE: UAL Post 87 Million Loss For November

Thu Dec 23, 2004 1:17 am

OHLHD, the US bankruptcy law (Chap 11) is written to give the bankrupt company almost every opportunity to reorganize and recover from its losses. Rightly or wrongly, this was done in order to preserve the livelihoods of as many employees as possible; and, in practice, this has worked against the preservation of assets owed to creditors. Chapter 7 (liquidation) is much more straightforward and aimed at satisfying creditors.

Whether we agree or not, the US bankruptcy law operates just the way the Congress wants it to operate.

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