Analyst questions United cost update

Hatu

Veteran
Aug 20, 2002
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CHICAGO (CBS.MW) -- Credit Suisse First Boston on Thursday took issue with United Airlines'' creditors update that indicated the bankrupt carrier generated cash flow of $1 million a day in January.
The company''s top finance executive, Jake Brace, also said the No. 2 airline carrier is ahead of plan with the terms set by its lenders. A United spokesman confirmed the reported statement on Wednesday.
While we have seen only the press reports, those figures do not come even close to adding up, wrote CSFB analyst James Higgins in a Thursday research report.
In recent action, shares of parent UAL Corp. (UAL: news, chart, profile) fell 5 cents to 86 cents as sector advanced.
In that same period, the No. 2 airline disclosed recently in an SEC filing earlier this month that it lost $382.13 million in January with operating revenue of $1.18 billion. Operating expenses for the month totaled $1.51 billion, according to the document.
Our only surmise is that UAL is not making payments on many items that flow through the income statement. Other than that, we can think of no way that monthly cash flow could have been even close to positive, and of course, such decisions not to pay are unsustainable, he wrote.
Aside from labor costs, fuel costs are a near-term issue for the industry. In United''s case, it is not protected from rising fuel prices with fuel hedges, which is common practice in the industry. Aviation gas prices have more than doubled from a year ago to about $1.30 a gallon, according to the latest information from Deutsche Bank.
Those pressures will be influenced almost certainly by Iraq''s fate. In that climate, United filed on Tuesday for a 180-day extension to submit its bankruptcy plan as union members and management remain at odds over fundamental differences on how to restructure the carrier
http://www.marketwatch.com/news/yhoo/story...34D505C76A2C%7D
 

Bear96

Veteran
Aug 20, 2002
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[blockquote]
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On 3/14/2003 9:27:09 AM magsau wrote:

CSFB has been a negative squawk on UAL for quite some time...
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[/blockquote]

So mags can you point us to someone in the investment / financial world who has been POSITIVE on UA for a while?

My point being... How can you NOT be negative on UA; and have those who have been negative on UA been proven wrong? No, even if they are allegedly "supporters" of AA somehow.

I believe in the earliest bankruptcy hearings, Judge Wedoff too questioned many of UA's numbers.

I would NOT be putting my own credibility on the line for Brace et al.
 

magsau

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Aug 20, 2002
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CSFB has been a negative squawk on UAL for quite some time. The analyst at CSFB is a former AA employee and CSFB holds a large stake of AMR. This is bitter pills that they are having to swallow right now as their beloved AA is facing drAAmAAtic chAAnges AAnd AA trip to the BK ring.
 
Aug 20, 2002
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Valhalla
www.usaviation.com
[blockquote]
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On 3/13/2003 12:47:35 PM Hatu wrote:


"Our only surmise is that UAL is not making payments on many items that flow through the income statement. Other than that, we can think of no way that monthly cash flow could have been even close to positive, and of course, such decisions not to pay are unsustainable," he wrote.

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[/blockquote]

Unsustainable indeed! If you're a creditor of a BK entity and you discover a book-cooking episode how would you react?

Credibility folks. Siegel's got it. Brace doesn't.
 

Cosmo

Veteran
Aug 20, 2002
840
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The Standard & Poors (S&P) rating agency seems to understand why UA was slightly cash positive in January, even if the CSFB analyst couldn't figure it out. See this [A href="http://biz.yahoo.com/rf/030314/airlines_ual_s_p_1.html"]Reuters article[/A] that came out earlier today.
 

ual06

Senior
Aug 30, 2002
331
0
It was a beautiful day here in Denver. I sat outside and watched a bird build a new nest. Dumb birds? Perhaps they don't care about the past. They do plan for tomorrow.
 

kcabpilot

Senior
Aug 22, 2002
271
0
Ahhh, the EBITDAR. Why didn't I think of that. Of course! It fully explains how you can lose twelve million dollars a day and still make a one million dollar profit.

stupid, stupid me
 

casual rat

Senior
Aug 25, 2002
413
3
[blockquote]
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On 3/14/2003 8:21:31 PM ual06 wrote:

It was a beautiful day here in Denver. I sat outside and watched a bird build a new nest. Dumb birds? Perhaps they don't care about the past. They do plan for tomorrow.
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[/blockquote]

It's scary to think that birds have more of a clue than UAL execs do...At least they're trying to build upon something they have(the birds that is)...Why can't we build on our strengths instead of copying something we're not?
 

Guest
I came to the UA board to give my thoughts and hopeful wishes that you and your fellow employees at UA would come out of this BK. And then I read some of the messages hoping for the demise of AA. Well I for one would never hope for the downfall of a company that would cause thousands of jobs for fellow airline employees. I am sad to admit we have plenty of those at AA and you have plenty at UA. We should all work together and bring both companies back strong. I hope you and yours fair well and come back strong.
 

ualflynhi

Advanced
Nov 19, 2002
109
0
A77IGW,do you think there is enough demand for all
the capacity there is?If there isnt then something
has to give.Its not right to wish anothers company
harm,but imho there isnt enough demand for all the
airlines seat capacity there is right now.
 

Guest
I think there is too much capacity. And the LCC are killing us. We need to find a happy medium and pray we all come back.
 

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