Just read an article that says Airtran is trying to lobby against UAL getting the loan guaratee. All I gotta say about that one is mind your own business. Talk about a cheap shot. Don't worry Airtran...you will get what's coming to you and NO it ain't gonna be good.
Airtran At It Again!
- Thread starter boeing787
- Start date
IMHO, the problem is as follows.
The ATSB was set-up to help airlines recover from the effects of 9/11. That's all well and good, but that was almost three years ago; United's current problems are about 1% 9/11-related and 99% due to bad business decisions. If UA were to get the loan, it would have an unearned (notice I didn't say unfair) advantage over the airlines that either didn't apply and/or wouldn't qualify anyways (e.g. those that made better decisions during the "good" years).
Worse, flush with cash from the loan, UA would no doubt follow the "struggling airline playbook" and drop fares to fill seats, which wouldn't help anyone in the long run.
The ATSB was set-up to help airlines recover from the effects of 9/11. That's all well and good, but that was almost three years ago; United's current problems are about 1% 9/11-related and 99% due to bad business decisions. If UA were to get the loan, it would have an unearned (notice I didn't say unfair) advantage over the airlines that either didn't apply and/or wouldn't qualify anyways (e.g. those that made better decisions during the "good" years).
Worse, flush with cash from the loan, UA would no doubt follow the "struggling airline playbook" and drop fares to fill seats, which wouldn't help anyone in the long run.
Well said NWA_DC10. UA still needs to get it ducks in row and come with a sound business plan. Instead, they are still on that conquest to take over the world and are venturing into uncharted waters by starting new, risky, untested routes to places like Ho Chi Minh City. Give me a break!!!
cheers
bigsky
cheers
bigsky
"United's current problems are about 1% 9/11-related and 99% due to bad business decisions."
Hmmm, a 25% drop in traffic ovenight that still hasn't fully recovered. Sure...... Two wars that are a result of 911.... OK, I get your point..... 🙄
"Worse, flush with cash from the loan, UA would no doubt follow the "struggling airline playbook" and drop fares to fill seats, which wouldn't help anyone in the long run."
Lets evamine the relative merit of this statement. UAL isrunning load factors in the 80's (HIGH 80's for TED). That's structurally "full". Which seats do you expect thenm to discount from current levels? The "Blue room"? GMAFB!! Oh, and just so you know, The current plan is for UAL to cut capacity EVEN MORE to drive up yields.
"If UA were to get the loan, it would have an unearned (notice I didn't say unfair) advantage over the airlines that either didn't apply and/or wouldn't qualify anyways (e.g. those that made better decisions during the "good" years)."
"unearned".... YGTBSM. Was AWA's loan "earned"? FRNT'S? Yet they got it and used it to attack UAL. But you got the rocks to critisize UAL's application as being "unearned"? EVERY other airline could have applied. They didn't because they didn't like the terms, pure and simple. But again, your "1%" statement is pure bunk. UAL HAD access to capital BEFORE 911. They had enough to make a 4 BILLION bid on U. That ENDED on 9/11/2001, and hasn't come back. I guess you'd say that was just a coincidense 🙄 <_< :angry:
Hmmm, a 25% drop in traffic ovenight that still hasn't fully recovered. Sure...... Two wars that are a result of 911.... OK, I get your point..... 🙄
"Worse, flush with cash from the loan, UA would no doubt follow the "struggling airline playbook" and drop fares to fill seats, which wouldn't help anyone in the long run."
Lets evamine the relative merit of this statement. UAL isrunning load factors in the 80's (HIGH 80's for TED). That's structurally "full". Which seats do you expect thenm to discount from current levels? The "Blue room"? GMAFB!! Oh, and just so you know, The current plan is for UAL to cut capacity EVEN MORE to drive up yields.
"If UA were to get the loan, it would have an unearned (notice I didn't say unfair) advantage over the airlines that either didn't apply and/or wouldn't qualify anyways (e.g. those that made better decisions during the "good" years)."
"unearned".... YGTBSM. Was AWA's loan "earned"? FRNT'S? Yet they got it and used it to attack UAL. But you got the rocks to critisize UAL's application as being "unearned"? EVERY other airline could have applied. They didn't because they didn't like the terms, pure and simple. But again, your "1%" statement is pure bunk. UAL HAD access to capital BEFORE 911. They had enough to make a 4 BILLION bid on U. That ENDED on 9/11/2001, and hasn't come back. I guess you'd say that was just a coincidense 🙄 <_< :angry:
LOL (again 😉 ) as if Ho Chi Minh City is a risk! If United didn't take it, someone else would have fallen all over themselves trying to get it. danh từ United (which is Get Down...not to be confused with bị đánh ngã which is Go Down) 
hp_fa
Veteran
- Joined
- Feb 19, 2004
- Messages
- 3,290
- Reaction score
- 178
HP was to sign an aircraft and financing deal on 9/12/2001. That deal fell apart the previous day. HP gave up about 30% of it's stock, in the form of warrants, for the ATSB loan. It had been recovering nicely from it's problems of the mid-to-late 90's.
One other thing, how has HP attacked UA? By deciding to fly transcon? I didn't know it was a UA monopoly.
One other thing, how has HP attacked UA? By deciding to fly transcon? I didn't know it was a UA monopoly.
Using that logic, where's AA's loan? DL, NW? Hell, why doesn't every airline apply?
If I understand you correctly, you seem to be implying that UA needs the loan because airlines’ access to capital dried-up after 9/11. Perhaps, but why then has NW (another “legacy†carrier) been able to able to do at least two successful debt offerings at (evidently) reasonable terms since 9/11?
UA’s entire pre-bankruptcy business plan appeared to be built around getting the ATSB loan (yet another bad decision). Thankfully, the government said “show us that you have a clue as to how you’ll repay the loan, and we’ll give it to you.†Evidently, the ATSB still isn’t satisfied that UA has a viable business plan going forward.
Now, you may argue that Citibank and others have committed to providing if (and that’s a very large “ifâ€) UA gets the ATSB loan, but I think you need to dig a little deeper.
Citibank and others have millions, if not billions, of dollars tied-up in aircraft on lease to UA. If UA goes under, there’s not much of a market for those planes (the 757 is not exactly the darling of the used jet market these days), so Citibank figures that it’s better to get a reduced lease payment than none at all. Thus, it’s in their best interest to keep UA as a going concern, but has very little to do with any confidence in the company’s strategy.
"Using that logic, where's AA's loan? DL, NW? Hell, why doesn't every airline apply?"
Because every airline didn't want to give the government 30% of it's equity, undergo painful "restructuring" and open the books in any way for the government. And I don't blame them. The government loan guarentee is NOT a "good deal".
"Perhaps, but why then has NW (another “legacy†carrier) been able to able to do at least two successful debt offerings at (evidently) reasonable terms since 9/11?"
Two things, first, NWA was seen a a huge "winner" from the UAL situation (PAC), and I'd hardly call NWA's debt offering reasonable rates. Correct me if I'm wrong, bt I believe one of the offerings was an exchange for massive debt due in 2005 (500 million) and was to pay OVER 10% PLUS a bonus (IE 1000 dollar debt would bget a 1100 bond...), so the effective interest rate was EVEN HIGHER.
"If UA goes under, there’s not much of a market for those planes (the 757 is not exactly the darling of the used jet market these days)"
Small part of the fleet. The biggest numbers are the 320's and 777's, hardly disliked jets. UAL's biggest savings were with the 747-400's, but if NWA had wanted to, they could have gone after some of the 21 leased jets....
"HP was to sign an aircraft and financing deal on 9/12/2001. That deal fell apart the previous day. HP gave up about 30% of it's stock, in the form of warrants, for the ATSB loan. It had been recovering nicely from it's problems of the mid-to-late 90's."
Had AWA (who had declared BK in the past) truely had a good business plan prior to 911, then there would have been loads of cash waiting for them. Truth is, despite some of the lowest wages in the industry, they still had difficulty making money and abismal operating statistics. Every day was like the summer of luv for AWA. Let's be frank, AWA WOULD have gone BK if not for the loan, and may have liquidated. Would an AWA BK, which was prevented BY THE GOVERNMENT, have benefited UAL, who has a majority of it's domestic business in the west? Would slower growth at FRNT (without government backing) have benefited UAL in DEN? Would an ATA BK (without government backing) in CHI have benefited UAL? Talk about excess capacity, if the government had let all those johnny come lately's that got loans, perish, we wouldn't be discussing the merits of a UAL loan, they wouldn't need one.
Because every airline didn't want to give the government 30% of it's equity, undergo painful "restructuring" and open the books in any way for the government. And I don't blame them. The government loan guarentee is NOT a "good deal".
"Perhaps, but why then has NW (another “legacy†carrier) been able to able to do at least two successful debt offerings at (evidently) reasonable terms since 9/11?"
Two things, first, NWA was seen a a huge "winner" from the UAL situation (PAC), and I'd hardly call NWA's debt offering reasonable rates. Correct me if I'm wrong, bt I believe one of the offerings was an exchange for massive debt due in 2005 (500 million) and was to pay OVER 10% PLUS a bonus (IE 1000 dollar debt would bget a 1100 bond...), so the effective interest rate was EVEN HIGHER.
"If UA goes under, there’s not much of a market for those planes (the 757 is not exactly the darling of the used jet market these days)"
Small part of the fleet. The biggest numbers are the 320's and 777's, hardly disliked jets. UAL's biggest savings were with the 747-400's, but if NWA had wanted to, they could have gone after some of the 21 leased jets....
"HP was to sign an aircraft and financing deal on 9/12/2001. That deal fell apart the previous day. HP gave up about 30% of it's stock, in the form of warrants, for the ATSB loan. It had been recovering nicely from it's problems of the mid-to-late 90's."
Had AWA (who had declared BK in the past) truely had a good business plan prior to 911, then there would have been loads of cash waiting for them. Truth is, despite some of the lowest wages in the industry, they still had difficulty making money and abismal operating statistics. Every day was like the summer of luv for AWA. Let's be frank, AWA WOULD have gone BK if not for the loan, and may have liquidated. Would an AWA BK, which was prevented BY THE GOVERNMENT, have benefited UAL, who has a majority of it's domestic business in the west? Would slower growth at FRNT (without government backing) have benefited UAL in DEN? Would an ATA BK (without government backing) in CHI have benefited UAL? Talk about excess capacity, if the government had let all those johnny come lately's that got loans, perish, we wouldn't be discussing the merits of a UAL loan, they wouldn't need one.
What!! You say there's no risk in setting up shop in a place like Vietnam. I am sure the good folks in Ho Chi Minh City will probably want all the money up front for things like leases on gates, fuel, landing fees, maintanance, ground services, counter space, crew hotel. Don't forget other costs like advertising and training. Might be a good move for a company with deep pockets or at least not in Chap. 11, but not a good move for UA right now. Oh wait never mind they are getting a big loan soon.
cheers
bigsky
hp_fa
Veteran
- Joined
- Feb 19, 2004
- Messages
- 3,290
- Reaction score
- 178
AWA would have gone BK without the loan only because of 9/11. Had 9/11 not occurred there would have been a signed deal on 9/12. 9/11 was the sole reason for the deal not to be closed.
The prior AWA BK was in the early 90's. Not exactly current events.
The prior AWA BK was in the early 90's. Not exactly current events.
Where did you get this information? Can you quote a source? Regardless, it proves that network airlines (at least the ones Wall Street believes will survive the current downturn) continued to have access to capital post-9/11.
Last I checked, UA had 96 757s, out of a total fleet of 532 aircraft; I hardly think that qualifies as a "small part of the fleet."
And, yes, NW could have gone after some of UA 747-400s. But they didn't for the same reason they're placing A330-200s in the Pacific; the 747-400 is simply too large for most routes...too bad UA didn't figure this out until long after they'd bought so many of the things (yet another bad decision; how many are we at now? Anyone counting?).
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
Politics are about the hardest thing to predict and the ATSB process is political; UAL found that out the last time.
Regardless of whether UAL gets the ATSB loan, they will pay a high price for it - such as the amount of equity they will have to give up, accelerated repayment terms, etc. The government is fully aware that the US really doesn't need UAL and the question is really how will the industry fall out if UAL does fail. UA's domestic traffic can be easily redistributed among existing players - including many LCC's. The international routes have a great deal of value - the question is who has the money to buy them right now. Even if the ATSB makes the loan to UAL, they want to know who will buy their equity in UAL because the federal government is not interesting in owning airlines.
Regardless of whether UAL gets the ATSB loan, they will pay a high price for it - such as the amount of equity they will have to give up, accelerated repayment terms, etc. The government is fully aware that the US really doesn't need UAL and the question is really how will the industry fall out if UAL does fail. UA's domestic traffic can be easily redistributed among existing players - including many LCC's. The international routes have a great deal of value - the question is who has the money to buy them right now. Even if the ATSB makes the loan to UAL, they want to know who will buy their equity in UAL because the federal government is not interesting in owning airlines.
