Bk End Is Drawing Closer....financing Announced

[Bulscu]

goodluck

 

[Busdrvr]

Pedantic and pathetic. :down:

[post="310437"][/post]​

Be more specific please. Which word do I need to explain to you? Which concept? My post was a response to the repeated babblings of a few ignorant schlimazels who relentlessly attack anything United with no regard for reality and in a small way a rebuttle to another poster's remark that "With all due respect, you don't have any idea what my credentials are. You might be surprised with the credentials I have if you knew." So I put the response in terms that if he were even moderately schooled in valuation techniques beyond a third rate MBA or Community College "Fundamentals of Finance for the Dairy Queen Manager" course, he'd understand.
If that strikes a little to close to home for you, my apologies. But in future, if you lack the intellect to craft a response on the merits of the argument, please post on Yahoo instead.

 

[767jetz]

goodluck

[post="310458"][/post]​

I just don't get your cryptic responses.

Don't you have anything worthwhile to say? All we ever get is one word answers and silly smiley faces.

If you are not able to articulate a coherent sentence, why bother even posting. You make yourself look like the courtjester who stands in the corner with a stupid look on his face giggling hysterically. Quite insane actually.

 

[Bulscu]

I just don't get your cryptic responses.

Don't you have anything worthwhile to say? All we ever get is one word answers and silly smiley faces.

If you are not able to articulate a coherent sentence, why bother even posting. You make yourself look like the courtjester who stands in the corner with a stupid look on his face giggling hysterically. Quite insane actually.

[post="310541"][/post]​

:blink:

 

[767jetz]

:blink:

[post="310613"][/post]​

Hey, to each his/her own.

Just realize that we are all laughing at you.

(actually, its probably more like we feel sorry for you. )

 

[Bulscu]

Hey, to each his/her own.

Just realize that we are all laughing at you.

(actually, its probably more like we feel sorry for you. )

[post="310615"][/post]​

:blink: .................

 

[novaqt]

Just noticed that the time zone where Bulscu is located is 6:52 pm. Two hours from the east coast. This puts him in Denver. Could Fishy have changed his name. I wonder if all Frontier employees are as juvenile as this dude is?

 

[767jetz]

I wonder if all Frontier employees are as juvenile as this dude is?

[post="310654"][/post]​

What makes you think she's a dude?

 

[C54Capt]

Regarding UA's emergence from BK, does anyone have any theories to how this might effect Frontier or Northwest? Certainly won't be pretty but what would be a likely scenario should UA turn the screws on NW and/or Frontier. Hard to imagine things getting any worse at NWA but the harsh reality is that from an employee perspective the real storm has yet to arrive.

cheers

bigsky

[post="310253"][/post]​

MHO, United will target Northwest, Independence, and Frontier in this order, with different levels of intensity depending on competitive advantage. If NWA gets its house in order in a timely manner, UAL will then back off the Pacific assault and keep their powder dry to finish off Indy Air. If NWA succumbs to labor turmoil and cannot get its costs in line, UAL will be prime to take over the Pacific. Once objective #2 is complete, they will be able to focus the same effort in Denver. The fight will be much longer and tougher but in the end they may be able to buy Frontier and park it or less likely integrate it, acheiving unchallenged dominance at both major hubs DEN and IAD. How bout them apples Bigsky?

 

[Bear96]

... If NWA gets its house in order in a timely manner, UAL will then back off the Pacific assault and keep their powder dry to finish off Indy Air. ...

[post="310724"][/post]​

I hope UA doesn't bother to expend too much in the way of energy or resources finshing off Indy. Indy is about to do that all by itself.

 

[RowUnderDCA]

You have it backwards WT. No one was willing to give US Airways or America West debt financing. They were forced to seek equity investment to raise capital in order to reorganize. These equity investors then have strict control over the direction of the company. Management is often replaced. Companies lose control of their destiny and are subject to the whims of who provided the money, up to and including selling it off. Look what Frank Lorenzo did to TWA.

Tilton said all along that he was not interested in equity investors. It is better for the employees and the company. You don't go to loan sharks for money when you have the backing of the largest financial institutions in the world.

[post="310337"][/post]​

Aren't the owners of a company supposed to have control over it? Isn't that what a bankruptcy process is all about-- an orderly transition from owners that bet and lost, to owners willing to invest in a new business plan, while getting the creditors as much as they could have gotten or more than liquidation.

Seriously, I'm not being sarcastic, but as a layman, it doesn't impress me more that UAL is 'going to banks'

 

[dc3fanatic]

Aren't the owners of a company supposed to have control over it? Isn't that what a bankruptcy process is all about-- an orderly transition from owners that bet and lost, to owners willing to invest in a new business plan, while getting the creditors as much as they could have gotten or more than liquidation.

Seriously, I'm not being sarcastic, but as a layman, it doesn't impress me more that UAL is 'going to banks'

[post="310751"][/post]​

Bankruptcy isn't necessarily impressive by itself. However, all companies that emerge have some sort of exit financing. All debt from banks is preferrable and desirable compared to other options.

 

[Deleted by Moderator]

RowUnderDCA Posted Today, 08:46 AM

You are joking, right???? Would you rather go to a loan shark if you were defaulting on your mortgage or a bank? US had no choice but to go to a "loan shark" but UAL has more options.

 

[767jetz]

Aren't the owners of a company supposed to have control over it? Isn't that what a bankruptcy process is all about-- an orderly transition from owners that bet and lost, to owners willing to invest in a new business plan, while getting the creditors as much as they could have gotten or more than liquidation.

Seriously, I'm not being sarcastic, but as a layman, it doesn't impress me more that UAL is 'going to banks'

[post="310751"][/post]​

Equity investors get control of the company for pennies on the dollar. The management who screwed the pooch is usually long since gone, and the management responsible for the turn around then gets replaced by people who will do the investors bidding. Often times these investors are in for the short term, will make a few bucks, and then sell their interest or sometimes even liquidate the company to cash in on the assets. They may also go on a shopping spree and try to force mergers or play one airline against another, like Lorenzzo did with Eastern and Continental, in order to extract more money from the workers and vendors.

Relying on a bank means that management who replaced the idiots must transform the company, (often trying multiple approaches) to the satisfaction of bank managers who answer to their share holders. The banks assess the risk until they believe there is a reasonable chance of getting a return on the loan. Once they determine the risk they assign an interest rate. The less risk they believe is involved, the better the interest rate. They are not interested in running the show themselves. They are not in the "airline-running" business, they are in the "money-lending" business. By granting the loan they are giving a vote of confidence in the management team and their POR. As a result the management team is more interested in the long term viability of the company than they are in making a quick buck and getting out.

It's interesting to note that the interest rate on UA's exit financing is actually lower than a recent loan granted to Southwest. Also, you don't see Southwest, American, or Continental running to equity investors (YET). Equity investors are considered a lower grade of financing and is never the preferred route. Otherwise banks would go out of business. These are investors who will accept a much higher risk than a bank will swallow, in return for a much bigger piece of the pie. Let's be clear on this... companies turn to equity investors when the banks won't talk to them.

 

[FWAAA]

Equity investors get control of the company for pennies on the dollar. The management who screwed the pooch is usually long since gone, and the management responsible for the turn around then gets replaced by people who will do the investors bidding. Often times these investors are in for the short term, will make a few bucks, and then sell their interest or sometimes even liquidate the company to cash in on the assets. They may also go on a shopping spree and try to force mergers or play one airline against another, like Lorenzzo did with Eastern and Continental, in order to extract more money from the workers and vendors.

Relying on a bank means that management who replaced the idiots must transform the company, (often trying multiple approaches) to the satisfaction of bank managers who answer to their share holders. The banks assess the risk until they believe there is a reasonable chance of getting a return on the loan. Once they determine the risk they assign an interest rate. The less risk they believe is involved, the better the interest rate. They are not interested in running the show themselves. They are not in the "airline-running" business, they are in the "money-lending" business. By granting the loan they are giving a vote of confidence in the management team and their POR. As a result the management team is more interested in the long term viability of the company than they are in making a quick buck and getting out.

It's interesting to note that the interest rate on UA's exit financing is actually lower than a recent loan granted to Southwest. Also, you don't see Southwest, American, or Continental running to equity investors (YET). Equity investors are considered a lower grade of financing and is never the preferred route. Otherwise banks would go out of business. These are investors who will accept a much higher risk than a bank will swallow, in return for a much bigger piece of the pie. Let's be clear on this... companies turn to equity investors when the banks won't talk to them.

[post="310792"][/post]​

Let's be serious. UAL choose all-debt financing over the alternative: Mostly debt financing with a very small equity investment. And the points you make about very small equity investments with large debt financing are all valid.

But let's not kid ourselves: If UAL could have found $3 billion of equity instead of debt, that would have been a godsend. As it is, the debt will carry almost $270 million of interest each year (at current rates) which is $270 million more than all-equity financing would have cost.

I agree that UAL is probably better served with its all-debt financing package than a 10% equity/90% debt financing package, since someone would have demanded lots of control in exchange for the $300 million of equity.

But had UAL had the option of $3 billion of equity, it would have made perfect sense to give that investor lots of control.

Problem is, nobody is stupid enough to trust UAL or any other bankrupt airline with $3 billion of equity right now. Given the options available to UAL, it chose a reasonable path.