Bad news

767jetz:

Thanks for the kind words -- they are very much appreciated. But I''m just trying to make sure that this discussion looks at all of the facts, good or bad, about United''s journey through the bankruptcy process. And I believe that looking at the situation at other carriers, including (but not limited to) US Airways, helps to keep things in the proper perspective. (Disclaimer [once again!]: I am not an employee of United or any other airline.)

That said, I do think Chip has some valid points. United does need to increase its unit revenues, produce a viable business plan, and attract enough liquidity (whether it''s all debt, all equity or some combination of both) to sustain its operations on a long-term basis once the carrier has emerged from bankruptcy.

But where I do find fault with Chip''s view of United''s prospects is in his near total lack of recognition that United has made some significant progress in turning itself around, particularly in the area of operating costs where the carrier has achieved annual reductions of about $5 billion out of a pre-bankruptcy cost base of roughly $16-$17 billion per year (that''s a drop of about 30%, a notable achievement that was neither easy nor painless). IMHO, I believe that Chip''s continual "doom and gloom" postings about United together with his support of (and the implied United employee furlough threats contained within) an interesting/unique/whatever corporate transaction with US Airways, while ignoring many of the continuing problems at his own airline (just look at the US Airways board!) that itself has only relatively recently emerged from bankruptcy protection, is in rather poor taste.

So while Chip is certainly free (and as entitled as you, me or anyone else) to post whatever he desires on this board, I will not hesitate to challenge him, or anybody else, if I believe they have made a factual error, fallatious or gratuitous comparisons or arguments, or simply have an opinion with which I disagree. After all, I''m free to post whatever I please as well, whether it''s additional facts, opinions or an occasional question. And while I may not always be right (and I''ll admit it when I''m wrong), I strive to add as much as I can to what I hope will be a lively and spirited debate.
 
Cosmo & 767jetz:

Cosmo said: "I agree that RASM and yield increases are important and necessary achievements for UA, as are decreases in CASM. But at the end of the day, profitability and liquidity (or the lack thereof) will determine UA's likelihood of emerging from bankruptcy and seeing long-term success. And while I'm certainly willing to continue talking about this subject, perhaps this discussion should be put in abeyence for another month or so until the 2nd quarter 2003 SEC Form 10-Qs are available from UA and US (and other carriers), at which point we will know each carrier's RASM, yield, CASM, profitability and liquidity figures and can then have a more intelligent discussion about them."

767jetz said: "WOW, Cosmo! You sir, are on a roll! Excellent posts! I think you have Chip on the run, as evidenced by his lack of thoughtful response."

Chip responds: Cosmo, I agree. As I have repeatedly said I believe UA received a six-month reprieve with over $600 million in one time gains from the IRS refund and second federal bailout. I believe the crunch will come in October when the company must be cash flow positive per its DIP financing agreements. 767jetz, I am never on the run and I have made myself very clear. However, I do not have an interest in posting on the UA board and simply ventured to this site because I received an email telling me of Ukride’s threads discussing me. Regardless, I do not want to invest my time posting on the UA board and I have a number of higher priority desires.

Best regards,

Chip

P.S. By the way...

Profits Are Far Off for U.S. Airlines

Analyst: "The network airlines are still facing extreme challenges and are in precarious financial condition"


CHICAGO (Reuters) - U.S. airlines are poised to report another string of steep losses for the second quarter, and analysts expect most major carriers will not return to profitability until at least next year.
Complete Story: [url="http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3062232"]http://www.reuters.com/newsArticle.jhtml?t...storyID=3062232[/URL]
 
Chip responds: Cosmo, I agree. As I have repeatedly said I believe UA received a six-month reprieve with over $600 million in one time gains from the IRS refund and second federal bailout. I believe the crunch will come in October when the company must be cash flow positive per its DIP financing agreements. 767jetz, I am never on the run and I have made myself very clear. However, I do not have an interest in posting on the UA board and simply ventured to this site because I received an email telling me of Ukride’s threads discussing me. Regardless, I do not want to invest my time posting on the UA board and I have a number of higher priority desires.

Chip, you are a real "piece of work"! UA has met all its DIP obligations thus far and there is now no reason to believe UA will not meet its October obligations. The entire industry has revenue problems competing with low cost carriers, whose planes are full right now. Why don''t you lay off UA and concentrate your analytical skills on how the majors can fill their seats and make a profit doing so. The alliance between UA and US is progressing well and will prove to be very profitable for both airlines. UA is hiring again in order to serve its many customers again. The call volumes are shooting through the roof, just as they are at your airlines. Stop looking at the "trees for the forest" and begin looking at the "forest for the trees". You get so caught up in your negative analysis of UA that you completely miss what is really happening.

BTW, curb the arrogance. From a psychological standpoint, ARROGANCE is a cover for INSECURITY. Your continued bashing of UA only shows your underlying concern about US''s survival and its continued teeter tottering on the brink of survival itself. Perhaps, if you focused more on the POSITIVE, your whole life will change for the better. NO, I am not Dr. Phil!!!
 
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On 7/8/2003 4:20:02 PM Chip Munn wrote:


By the way, who first reported on this website, before the information was provided to UA MEC Chairman Paul Whiteford, that UA’s business plan would have about 6,000 active line pilots?

----------------​

Chip,

Having some insight and connection to the figures Capt. Forte made last week I can say that was a worse case scenario. (Which Capt. Forte also didn''t mention. Also, his message was the result of pressure from Capt. Whiteford demanding that UAL give those on the bubble of furlough at least some idea of where UAL may be a year out.)

This scenario is one that would only come about IF UAL wasn''t able to re-negotiate some leases to it''s favor on a number of 777''s/320''s. Let the record show that UAL has had incredible success in re-negotiating lease rates and to think that it won''t continue to do so is foolhardy.

Yes, while it is POSSIBLE that the lessor''s will want ALL their aircraft back, it''s highly unlikely. Not many lessor''s anywhere are taking back aircraft as there is currently little market for them right now. Even though some of these appear to be desirable aircraft, the airframe/engine combinations make them UNATTRACTIVE to other carriers.

Want to venture a guess how many of the world''s top 10 carriers operate 777 with Pratt''s on their wings? In addition to UAL, only Singapore! And right now they''re not looking to acquire additional 777''s. In a strange twist of fate, this has actually worked to UAL''s advantage.

A more likely scenario is UAL will end up with a higher number of aircraft than Capt. Forte''s scenario envisions. Currently UAL is returning to service 747-400''s and is estimating on operating upwards of 32-34 aircraft by year''s end. It''s my opinion that this is also a subtle signal to the lessor''s that UAL can and will go forward with it''s plan regardless of whether they want their A/C back or not. Basically calling their bluff. UAL has excess capacity in the form of 747-400''s and is capitalizing on it.

Another item, this business plan is extremely conservative. And for good reason. Should UAL wish to exit BK and qualify for ATSB assistance they have to be. UAL is no longer going to push a plan that the Board of Creditor''s can''t swallow or that is out of touch with what the economy allows.

Right now there are a number of very positive developments. Mostly on the North Atlantic and Domestic markets. At the same time, there are very positive signs that several segments of the Pacific are ramping up. Should that continue, UAL could very well find itself SHORT of lift capacity and hence an opportunity to increase revenues if it rids itself of the tools needed to generate said revenues. A very interesting place we find ourselves in.

That''s all for now. Fly safe everyone!

Cheers,
Z
 
Examining a Divided United Airlines in This Sunday''s Chicago Tribune

Four-Part Series Traces Decisions That Ultimately Led to Bankruptcy Court


CHICAGO (PRNewswire) - Stock that peaked at nearly $230 a share in 1996 has plummeted to pennies. Employment has plunged from 102,101 to 67,040. United Airlines executives would blame the sputtering economy and Osama bin Laden''s crew of terrorists for pushing their company to the brink of oblivion.

Complete Story: [url="http://biz.yahoo.com/prnews/030711/cgf038_1.html"]http://biz.yahoo.com/prnews/030711/cgf038_1.html[/URL]

Chip comments: I find it interesting the Chicago Tribune wrote in their press release, "United Airlines executives would blame the sputtering economy and Osama bin Laden''s crew of terrorists for pushing their company to the brink of oblivion. But a six-month investigation by Chicago Tribune reporters indicates otherwise." By the way, what does the Chicago Times mean when they say "pushing their company to the brink of oblivion?" What is oblivion and is the Times wrong too? I guess we will find out more on August 1.

Best regards,

Chip
 
Novaqt:

In a Reuters article titled 'U.S. airlines to post quarterly losses, profits far off", published on July 9, Ray Neidl, analyst at Blaylock & Partners said, "(Airlines) are very nervous about what will happen with traffic after Labor Day." But right now they're even more nervous about their pricing ability. I've seen no indication of any recovery in pricing," he said.
Novaqt, I have repeatedly said United's cost cuts, IRS tax refund, and second federal bailout gave the Chicago-based Company about a six-month reprieve in maintaining its DIP financing covenants. However, the company must be cash flow positive in October.
In addition, Reuters reported unit revenue was flat in June after increasing 2 percent in May year-over-year. J.P. Morgan analyst Jamie Baker said, "We see little evidence to suggest that the overall demand for air travel is increasing."
Lehman Brothers analyst Gary Chase said, "The network airlines are still facing extreme challenges and are in precarious financial condition."
Novaqt, we'll know more on August 1 and Niedl's comments about trafric after Labor Day and pricing are valid. I have repeatedly said that after the leisure travel fall off bookings look week industry wide and according to AVMARK United has the worst hub and spoke airline yield RPM.
Maybe these are some of the reasons United has not announced a detailed business plan and up to this point cannot get a loan guarantee, exit financing, or an equity plan sponsor.
Meanwhile, I believe Tilton does not want to execute a UCT, but it may be United's only way to survive. Especially since US Airways' chairman of the board, Dr. David Bronner, who controls over $25 billion, told the Charlotte Observer, United has a 50-50 chance of surviving a war. He said that if United were to sell assets, he would consider backing the purchase of some "if it would be beneficial to US Airways."
Best regards,
Chip
 
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  • Thread starter
  • #68
Zman777
Warning! I am sure the news that you posted reflects well upon the efforts that United is making to survive. Such tidings however, may stand you in danger of being labeled by one poster from the newest Star member as one who is in denial, sarcastic, or even a sophist. For such good news that you posted it is even possible that the heavy verbal appellations of "Luddite," or "Flat Earther" may be invoked. Many on this thread already wear such scars for merely asking questions or daring to counter blatantly dated assumptions and news. Now you step off into stormy seas by announcing the positive news that United may not have to jettison as many aircraft as one had assumed and that the Pacific region may be enjoying a uptick. Hmmm. It will be interesting to see what fate awaits you for looking on the bright side.

Ukridge
President Emeritus of the Flat Earth Sophist Society
 
Ukridge:

I believe that I am eminently qualified to join your Flat Earth Sophist Society. Can I join, please, please, please?
 
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  • #71
Cosmo, UAL06, Welcome to the club! Membership is open to any and all who have been accused of having closed and shuttered minds because they do not subscribe to the inevitablity of United's demise. Also welcome are those who have been judged as being in are in denial, those who have used purported sarcasm, those who do not place reliance on outdated and questionable news releases, and those who place emphasis on the rigourous examination of facts and not wishful thinking. Membership may also be gained by having a proclivity to letting reason and wit rule the argument and not font size. Dues are waived for members that have borne the brunt of verbal assualt from a poster in the employ of the newest Star member.
Members will of course recognize that Mr. Tilton has a free will and does not consult the Flat Earth Sophist Society before making decisions. Even less, he does not consult us concerning the timing of his announcements though a member should be well prepared to be asked why Mr. Tilton takes action only after certain Star members post news clippings.
Fair warning in that membership to the FESS may also entail dangers. Recently ZMAN777 posted some rather heartening news concerning staffing levels. We have yet to see what fate awaits him.
Until then, the earth is flat!
 

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