hoya
Posts: 452
Joined: Wed Jun 23, 2004 2:25 pm

United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:17 am

In today's Financial Times (Page 18 in the Companies and Markets section), it is reported that UA plans on buying four 767s from a group of creditors who have threatened to repossess the aircraft. Returning 4 other 767s appears to be part of the deal. The price UA will pay hasn't been disclosed, and the whole deal is subject to court approval. I guess this is sort of good for UA, as they do get to hold on to some 767s needed for their international routes, and they do seem to have enough cash in hand to complete this deal.
Hoya Saxa!!
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:31 am

are the returns in addition to the other 5? are they losing 9 or 4?
Of all the things to worry about... the Wookie has no pants.
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:32 am

Ok, let me get this straight. United is going to return 4 767s and then buy 4 767s. That doesn't do anything to solve the problem of the 4 already returned. However, could UA possibly be returning 4 A model 767s and buying 4 ERs to replace the ER's just lost? This would make more sense, as they could keep up the international flying (money-making) and cut domestic 767 routes (most likely money-losing).
 
baw716
Posts: 1459
Joined: Thu Nov 20, 2003 7:02 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:44 am

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

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

Now I am really confused.

My brain hurts. They guys are just crazy.

Somebody help me?????

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
hoya
Posts: 452
Joined: Wed Jun 23, 2004 2:25 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:46 am

From my understanding, based on posts in this forum and the FT article, there were 8 767s that UA and the creditors were negotiating about. 4 767s are going to be returned to the lessors, hence the cancellation of the ORD-EZE flight. The other 4, UA and the creditors apparently were unable to renegotiate new lease rates. I guess the compromise was made that UA would buy those remaining 4 767s from the lessors. This prevented a further loss of 767s that UA desperately needs for its international routes. These 4 aircraft that UA plans to buy already fly for UA, so they are not new. It's just that now the planes will be owned by UA, and not the lessors.
Hoya Saxa!!
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:47 am

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

"What, it costs too much? Well, then, buy too much of it!"
 
User avatar
ERJ170
Posts: 5470
Joined: Thu Apr 15, 2004 11:15 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:48 am

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

So they have enough money to buy 4 767 but not enough to pay their pension payments? I don't think so...
Aiming High and going far..
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:57 am

If they can get funding for 4 planes at a lower cost than leasing 8 planes, but can't afford to lose 8 (or more) routes, it makes sense.
Of all the things to worry about... the Wookie has no pants.
 
User avatar
clickhappy
Posts: 9042
Joined: Thu Sep 13, 2001 12:10 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 3:19 am

and of course the loans for the new planes will be guaranteed by the worth of the planes themselves.
 
commavia
Posts: 9651
Joined: Mon Apr 25, 2005 2:30 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 3:20 am

I'm a bit confused, so just to be clear: UA is still going to have a net loss of 4 767s that were returned last week?
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 4:15 am

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

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

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

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

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

As a result, the possible intl route cancellations and ripple down effects (intl route upgauges and frequency reductions) I hinted at earlier probably won't happen.
no wire hangers!
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 4:17 am

Thanks. makes it clear. Is it possible that they were able to come to terms to buy one of the already returned ones? Considering it's still in UA colors and trim, wouldn't be that out of line.
Of all the things to worry about... the Wookie has no pants.
 
N1120A
Posts: 26467
Joined: Sun Dec 14, 2003 5:40 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 4:25 am

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

The main problem was not A market vs. B market, as all of UA's 763s, to my knowledge, are B-market. The issue was that the reposessed aircraft are 3-class, international configuration aircraft. I am betting they are buying the 3-class jets and returning 2-class domestic birds
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 4:26 am

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

N
 
hoya
Posts: 452
Joined: Wed Jun 23, 2004 2:25 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 9:27 am

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

Anyway, how long does it take(or will it take) for UA to reconfigure the domestic 767s into the international standard? Is it actually still possible to do that even if they have been 'crippled'? And how costly with that be?
Hoya Saxa!!
 
StevenUhl777
Posts: 3281
Joined: Sun Jul 08, 2001 11:02 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 10:19 am

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

That's great news...potentially. If so, does that mean that maybe ORD-EZE is back on? UA did publically announce that it was suspended as a result of these "returns".
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
trevd
Posts: 332
Joined: Sat Jun 05, 2004 1:51 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 10:56 am

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

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

There are 767-300 non-ER's and 767-300ER's. Simple.
 
lorm
Posts: 377
Joined: Sun Jun 06, 2004 4:31 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:00 pm

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

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

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

So what is the ratio of 62kbt and 56klbt equiped aircraft? He also said something to the effect that in didn't matter what seat config, they were in, domestic or international, that the fleet was varied.
-Mike
Brick Windows
 
777ER
Crew
Posts: 9855
Joined: Fri Dec 19, 2003 5:04 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:44 pm

I don't find this confusing. 4x B767s will be returned but then UA will buy 4x B767s
Head Forum Moderator
moderators@airliners.net
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 2:57 pm

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

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

Now those intl 3-class 763s flying domestic only are gone, but the other 2 "at risk" routes for cancellation are no longer "at risk".
no wire hangers!
 
NorthstarBoy
Posts: 1416
Joined: Tue Jun 07, 2005 12:53 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 3:33 pm

It almost sounds like a stalling tactic on United's part. United must know, on some level, that eventually they may have to give up the aircraft, but by putting a good faith offer on the table to purchase the aircraft in question, United can stave off the creditors' repossession action at least until the end of the summer season, at which point United can either pony up the money and actually purchase the aircraft (creditors are happy, they get some of the money owed them, united is also happy, they don't lose valuable equipment needed for higher yield international routes) or they can give up the aircraft, having used them all summer on higher yield international routes (concievably united is still happy because they get to keep using the aircraft in question while the finance people fight it out), with the understanding that they won't need them during the winter season, and the further understanding that they're going to have to do some equipment reshuffling in time for next year's summer season.

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

Scott
Yes, I'd like to see airbus go under so Boeing can have their customers!
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 4:24 pm

Quoting NorthstarBoy (Reply 20):

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

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

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

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

If all their lessors start playing hardball, it won't be just one route that will be cut!
 
zvezda
Posts: 8891
Joined: Sat Aug 28, 2004 8:48 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 6:02 pm

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

Airplanes are needed; ponzi schemes are not.
 
N1120A
Posts: 26467
Joined: Sun Dec 14, 2003 5:40 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 6:08 pm

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

No, an A market aircraft is one that has higher density and flys on shorter hauls. The A333 and 772A are perfect examples. So are both the 762 and 763. B market aircraft fly on longer, but not ultra long hauls, and generally in a lighter configuration. The 763ER is one of these aircraft. The C market is ultra-long hauls. Hence A, B and C market also apply to Airbus planes
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
zvezda
Posts: 8891
Joined: Sat Aug 28, 2004 8:48 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 6:38 pm

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

I recall first seeing the terms of art A-market, B-market, and C-market in Jane's All the World's Aircraft in the early 1990s in the article on the B777, then in development. If I recall correctly, there was little if any explanation and I inferred from the context that readers were expected to have familiarity with the terms.
 
User avatar
kc135topboom
Posts: 10997
Joined: Sun Jan 30, 2005 2:26 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 6:51 pm

Let me get this straight. UA didn't pay the leases on these airplanes, because they didn't think they had too (until they lost the appeal). Then they just wanted to return them. Now they are buying them!!!  confused 

Is this the next move? UA cannot afford to pay the promised retirement plans. So they turned it over to the Government. Now they can afford to buy airplanes, again. UA builds new retirement plan for all employees!!!  crazy 

Yeah, right.  footinmouth 

Quoting Hoya (Reply 14):
Wow, surprised not to see the UA bashing crowd on this thread.

I'm here.

This airline just gets more weird everyday.  expressionless 
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 7:50 pm

Chapter 11 is some kind of bizzarro world. However it starts making some sense if you assume that rule #1 at UA is to preserve cash whatever way possible for as long possible.
 
Planesmart
Posts: 1717
Joined: Sun Dec 05, 2004 3:18 am

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 8:24 pm

Quoting KC135TopBoom (Reply 25):
Let me get this straight. UA didn't pay the leases on these airplanes, because they didn't think they had too (until they lost the appeal). Then they just wanted to return them. Now they are buying them!!!

Their financiers are advancing $'s so UA can buy UA configured aircraft to continue generating revenue.

Advancing $'s for UA to pay pensions may create staff goodwill, but does nothing for the financiers exposure or UA's revenue-generating ability.
 
access-air
Posts: 1576
Joined: Thu Sep 21, 2000 5:30 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 9:32 pm

Maybe actually buying planes instead of leasing them is the better solution to EVERY airline's problems.....Its lieke paying high rent on an over priced Apartment that you will never own...same Principal with these airlines....
Either you buy the airplanes outright or do with what you have until you can afford it...Heaven knows that you cant go charging "internet-Cheapie" Air fares and still expect to pay airplane leases....Had airlines not gotten all caught up in this leasing game I think they would all be in better shape....In the end EVERYONE LOSES!!!

Access-Air
Remember, Wherever you go, there you are!!!!
 
ultrapig
Posts: 568
Joined: Fri Dec 12, 2003 11:38 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 10:01 pm

Ladies and Gentlemen:

UA is almost certainly using boorowed cash for the purchase of these planes and the lender will have a lien. Here is an example which might explain why they would have the cash to buy the planes but not to make pension contributions-

You might have a job fifty miles away. You have $1000. in the bank and can't afford to paint your house or take a vacation but your car is totalled and you ahve no isnruance. You could almost certainly borrow enough to buy a used car to take you to work while you MIGHT not be able to borrow to go on a vacation or paint your house.

Where or not an airline makes a profit is a mindboggling accounting calculation here is just one example-If your planes depreciate $2m a year and you have 100 your profit is $100m different than if they depreicate $1m a year-but you really don't knowhow fast they have depreciated until you try to sell them ten years down the road.
 
zvezda
Posts: 8891
Joined: Sat Aug 28, 2004 8:48 pm

RE: United Plans To Buy 4 767s From Creditors

Wed Jun 08, 2005 10:10 pm

Quoting KC135TopBoom (Reply 25):
Is this the next move? UA cannot afford to pay the promised retirement plans. So they turned it over to the Government. Now they can afford to buy airplanes, again. UA builds new retirement plan for all employees!!!  crazy 

Defined Benefit retirement programs are ponzi schemes. The replacement of UA's DB retirement program with a Defined Contribution program was necessary. No ponzi scheme can last forever.
 
AussieItaliano
Posts: 343
Joined: Sun Jan 30, 2005 12:27 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 1:05 am

Quoting UA744Flagship (Reply 19):
ORDEZE is definitely a goner, effective today

Do you know if this is going to be permanent or temporary until a solution can be worked out?
Third Runway - LHR, Second Runway - LGW, Build Them Both!!!
 
mm320cap
Posts: 161
Joined: Wed Jul 14, 2004 12:35 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 3:07 am

I said I was never posting on this forum again.... but it's kind of like crack, I suppose.

Here is the situation. 4 767-300ER's were returned to the lease holders at the end of last month. They are gone. Think of them no more. There were 4 more at "High Risk" of being repo'd. United was unable to secure market rates for this second group of aircraft. These are the 4 that are being bought. The idea is that United will buy them outright to keep them from being repo'd, and then turn right around and sell them to a leasing company who will be willing to lease them BACK to United at a more favorable rate.

This tactic was tried with the other 4 767's as well, but they weren't able to reach a sales agreement. This whole thing is a maneuver to try to keep from paying over market rates on these 767's while keeping them in the United inventory.

We have two "types" of 767-300's. The "Domestic" model, with the engine derated to 56k, and two class seating. (These were originally supposed to go to TWA). The second is the 767-300ER's, which is our "International" 3 class model. These engines are rated at 62k. What does it take to change the engine thrust rating? I have no idea...perhaps a mechanic can chime in here.

Hope this helps.
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 3:14 am

Quoting Mm320cap (Reply 32):
Here is the situation. 4 767-300ER's were returned to the lease holders at the end of last month. They are gone. Think of them no more. There were 4 more at "High Risk" of being repo'd. United was unable to secure market rates for this second group of aircraft. These are the 4 that are being bought.

According to someone in ops who maintains a fleet list, 5 were returned, and there are 3 staying. I don't have access to unimatic, so someone who does please confirm...

Quoting AussieItaliano (Reply 31):
Do you know if this is going to be permanent or temporary until a solution can be worked out?

I don't know if it is coming back in Dec like it was supposed to or not. I was under the impression it would not be coming back as planned.

[Edited 2005-06-08 20:15:42]
no wire hangers!
 
mm320cap
Posts: 161
Joined: Wed Jul 14, 2004 12:35 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 5:39 am

UA744Flagship,

I had initially heard 5 as well. 4 at the end of May and 1 at the beginning of June. Flight Ops and ALPA have both told us that only 4 ended up going back. I'll see if I can get a more definite answer, but I have not seen 5 in print anywhere after June 1st when the last airplane was supposed to be returned.
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 6:01 am

Quoting Mm320cap (Reply 34):
I'll see if I can get a more definite answer, but I have not seen 5 in print anywhere after June 1st when the last airplane was supposed to be returned.

Thanks - I'll pass this on to the ops guy...
no wire hangers!
 
fly2lax
Posts: 17
Joined: Thu May 26, 2005 1:04 am

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 6:04 am

Aircraft 6348: Ferried May 31 SFO-MZJ Lease Return
Total Time: 56470:27 Total Cycles: 9199

Aircraft 6350: Ferried June 5 SFO-MZJ Lease Return
Total Time: 57435:14 Total Cycles: 9372

Aircraft 6354: Ferried June 1 SFO-MZJ Lease Return
Total Time: 56055:03 Total Cycles: 9254

Aircraft 6355: Ferried May 31 LAX-MZJ Lease Return
Total Time: 55236:03 Total Cycles: 9067

Aircraft 6356: Ferried May 31 IAD-MZJ Lease Return
Total Time: 55040:54 Total Cycles: 8967
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 6:31 am

Well looks like the ops guy was right then. I was skeptical of the report of only 4 going back - he is usually very on top of things. Unless we are bringing back one of the ones that was already ferried...
no wire hangers!
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: United Plans To Buy 4 767s From Creditors

Thu Jun 09, 2005 8:04 am

Quoting Mm320cap (Reply 32):

I said I was never posting on this forum again.... but it's kind of like crack, I suppose.

However, welcome back!
 
mm320cap
Posts: 161
Joined: Wed Jul 14, 2004 12:35 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 1:25 am

Very interesting!! Well, I guess that just goes to show you how much we are kept in the loop over in flight ops!! Thanks for the updated and accurate info! I'll pass it along.

Scotron11, Thanks. I'm just going to stay mostly a lurker. Its an interesting forum. Rarely, buried amongst a pile of dung, is a really valuable piece of information - like this thread for example. My own company didn't disclose the actual number of airplanes repo'd...
 
Paul
Posts: 514
Joined: Thu Feb 10, 2005 10:59 am

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 8:36 am

Pardon the pressumption but would the returned planes likely to have been the 767's with the older livery. I am scheduled on a a UA763 LHR- IAD -LHR and was wondering the likelyhood the equipment would have the newer livery?

if anyone can shed some light, it would be appreciated!

regards

Paul
Veni, vidi, vici.
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 9:57 am

Quoting Paul (Reply 40):
Pardon the pressumption but would the returned planes likely to have been the 767's with the older livery.

Yes - all the returned planes had the old livery. That would have been even more embarassing if they had been repainted - but those planes were known to be "at risk of return" all along, so good thing they purposefully avoided painting those.
no wire hangers!
 
NW747-400
Posts: 364
Joined: Tue Jun 08, 1999 4:42 am

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 11:42 am

Concerning engine thrust ratings...engines are flat rated by the use of ID plugs. An ID plug is just an electronic signal that "tells" the EEC or FACEC unit how much thrust to put out. The same 56,000lb thrust 763 can be changed to a 62,000lb thrust 763 by switching ID plugs in the engines...a highly illegal move but it can be done easily.
 
StevenUhl777
Posts: 3281
Joined: Sun Jul 08, 2001 11:02 am

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 12:02 pm

Quoting Mm320cap (Reply 32):
These are the 4 that are being bought. The idea is that United will buy them outright to keep them from being repo'd, and then turn right around and sell them to a leasing company who will be willing to lease them BACK to United at a more favorable rate

...and that's the problem...that's how we got into this situation in the first place! Isn't it like a dog chasing its tail?

Ok...so the 4 are bought back. They don't get repo'ed (or whatever the phrase de jour for this is) for now, and UA operates them. Sounds good to me. But, then UA sells them again to a lease company????? If things were to get a lot worse, then United would find itself in exactly the positon again!

I spoke with my Dad about this very issue. He was a mechanic for UA, and explained to me that years ago, United bought aircraft, and NEVER leased them. He said how the entire DC-10 fleet was purchased in CASH. If the economy was bad, airplanes got parked in the desert. When things improved, they came back. In the last five years, however, someone got the bright idea of doing lease backs, and when the unexpected happened, the leaseholders got jittery and wanted their planes back, and now they're gone for good. Foolish...foolish...foolish....

Flagship744: Maybe you can explain this to me, but for the life of me, I don't get it.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 12:33 pm

Quoting StevenUhl777 (Reply 43):
Flagship744: Maybe you can explain this to me, but for the life of me, I don't get it.

You're in finance, no? Me, I'm not a finance type of guy. But I remember one of my professors explaining that capital leases (sale-leasebacks) became popular because:
- it frees up working capital
- the airline does not have to have as many depreciation/amortization charges
- with capital leases, airlines can still keep equity in their aircraft, even though they aren't the owners, as opposed to operating leases

Again, I'm a marketing guy, not a finance guy. So I don't know if I explained it correctly.
no wire hangers!
 
FA4UA
Posts: 777
Joined: Sat Nov 22, 2003 6:26 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 12:53 pm

Quoting UA744Flagship (Reply 44):
But I remember one of my professors explaining that capital leases (sale-leasebacks) became popular because:
- it frees up working capital
- the airline does not have to have as many depreciation/amortization charges
- with capital leases, airlines can still keep equity in their aircraft, even though they aren't the owners, as opposed to operating leases

exactly Hass, and I am a Finance guy. Additionally you reduce liabilities because worse case you can default on the agreement in bad times and the plane/property/asset is off your back. That's why lease rates include a risk premium for such a default. Of course this would have terrible affect on credit ratings, but at least the monkey is off the firm's back.

Many large companies do this with thier Office spaces during tough times to free up cash. Suprised WHQ hasn't been leased back??? maybe???

FA4UA
The debate continues... Starwood or Hyatt... which is better
 
StevenUhl777
Posts: 3281
Joined: Sun Jul 08, 2001 11:02 am

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 1:21 pm

744Flagship and FA4UA:

Thanks for the refresher on leases...while I am a "finance guy" that part of it was either forgotten or never sunk in to begin with. While there are benefits to it, as both of you have stated, given the difficult situation UA is in, to put these 4 aircraft potentially at risk at a later date of being taken back, that's what I'm having a tough time with. They announced ORD-EZE, but then had to suspend it indefinitely, as a result. Now, if Varig were to start that route and UA can make some codeshare cash on their flights, not a total loss. Additionally, if those aircraft that were returned were being used on money losing routes, then that helps United in the long run as well. But, if AA were to jump in and profit on the ORD-EZE route at UA's expense, that's salt in the wound.

Quoting FA4UA (Reply 45):
Suprised WHQ hasn't been leased back??? maybe???

Actually, it was, a few years ago. You'll remember the "retro" payments owed to the IAM-represented mechanics valued at $500mm, as a result in the delayed contract between 2000 and 2002. Well, the deal with the company was that the IAM held the title to WHQ, the DEN flight center, and I believe the crew hotel in HNL as well, for collateral. If UA defaulted on the retro., the IAM could sell those properties and then repay its members for what they were owed. UA repaid as agreed, and as of that point, got the titles back to those properties. Now, what's happened since then with those properties in terms of ownership, I don't know.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 11:02 pm

Wait... now I'm confused - it looks like we *did* purchase four at "market rates". But I'm guessing the 4th was the 763ER WFU earlier this year, and not one of the ones that went to the desert recently. I'll post back after I confirm...

1. United Reaches Agreement to Purchase Four 767
Aircraft at Market Rates
* Purchase of aircraft allows for continued
operations on lucrative international routes and
uninterrupted service.
* Negotiations continue with other aircraft
financiers to reach mutually beneficial
restructuring transactions.
no wire hangers!
 
DAYflyer
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 11:37 pm

How the hell can they do that? They dont have enough cash to buy toilet paper, let alone 4 767. Anyone that lends UAL money at this point is asking for trouble. On the other hand, when you are in Chapter 11, new creditors get paid first.
One Nation Under God
 
zvezda
Posts: 8891
Joined: Sat Aug 28, 2004 8:48 pm

RE: United Plans To Buy 4 767s From Creditors

Fri Jun 10, 2005 11:47 pm

Quoting DAYflyer (Reply 48):
How the hell can they do that? They dont have enough cash to buy toilet paper, let alone 4 767. Anyone that lends UAL money at this point is asking for trouble.

It's a safe bet that the aircraft are collateral.