The New York Times article painted a bleak picture for United going forward, however, I believe John Tague, United's executive vice president for customers, provided inappropriate and maybe even cruel information to employees when he told reporters last week that the bankrupt company has "turned the corner" in its battle to boost revenues and staunch crippling losses. "The revenue turnaround has begun," he said . "We're seeing the company's financial situation gain a great deal of stability."
Meanwhile, during the company's Omnibus hearing on Friday, United's bankruptcy counsel James Sprayregen told the court "It remains to be seen whether the revenue recovery will be short-or long-lived."
Well, why is Sprayregen disputing Tague's comments to the judge, who ultimately would have to approve a Disclosure Statement, if one is presented?
As I have repeatedly have said, many industry observers worry about how airlines will fare once demand tapers off after the Labor Day holiday. Furthermore, how will this effects United's stringent October and November DIP financing requirements?
"It's hard to ferret-out what is a blip and what is a recovery," said Nicolas Owens, airline analysts, Morningstar Inc., a Chicago-based investment research firm. "It's more likely that (recent operating profit) is a blip."
Meanwhile, Michael Boyd, founder of the Boyd Group, Evergreen, Colo., an airline consulting firm commented, "This airline is rudderless. They need direction from the top or they're not going anyplace."
Boyd and other analysts openly speculate that United may be using temporary measures to boost profits but will eventually have to confront mounting leases and pensions.
Best regards,
Chip
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