Bronner Not Interested In Ual

[BoeingBoy]

From a Forbe's article:

Most analysts, however, suspect that United's latest application will be rejected, leading to a loss of big bank loans and forcing Chief Executive Glenn Tilton to search for up to $2 billion in private capital.

Such an amount narrows the number of possible lenders. Two of the most-often mentioned, David Bonderman's Texas Pacific Group and David Bronner's Retirement Systems of Alabama, are likely out.

A source close to Texas Pacific Group says there is little current interest in a United investment.

Bronner, who heads the pension fund that injected $240 million into US Airways (nasdaq: UAIR - news - people ) to get that carrier out of bankruptcy in March 2003, says he's staying out of this one as well.

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The entire article is here


Jim

 

[700UW]

Oh no the spin master is gonna have a nervous breakdown.

 

[ktflyhome]

700: Now that is Funny!!!

 

[savyinvestor]

There never was a UCT except in someone's imagination! Savy

 

[jwp767]

This sounds like the ideal scenario for Carl Icahn to step into.......and he sure knew how to "fix" the pension problem at TWA.....

 

[USA320Pilot]

I believe it's pretty clear the reason(s) that management from both companies discussed the UCT and the ICT are no longer valid primarily due to the industry's deteriorating fundamentals.

As David Bronner told Forbes, "I'm not sure who would want to play now. They're a great airline (United), but they have to get costs under control. Especially the pensions; you're talking billions there."

News media reports surfaced today that United will seek $2.0 billion in loans, with $900 million at risk and $1.1 billion in guaranteed funds. The company intends to seek $600 million in additional cost reductions and $500 million in either equity investment or new subordinated debt, but has not articulated how this will occur.

Meanwhile, the term was reduced to five years from seven and the company must maintain $1.5 billion in unrestricted cash at all times.

Another reason an equity investor is less likely to invest in United is that according to the Forbes article "the six legacy carriers are saddled with more than $20 billion in pension deficits. United's tab of $6.2 billion is the largest. In addition to demanding board seats and a large amount of control in the airline, an outside investor's primary cost-cutting concern will be the unwieldy pension-deficit bills, which will cost United more than $4 billion over the next five years," Forbes said.

The new proposal provided to the ATSB could place enormous economic pressure on the airline going forward, but could be a last ditch attempt to prevent a equity plan investment where the financier gains 51% control of the company.

I believe it's difficult to handicap how the United loan guarantee application will finally be reconciled considering Peter Fitzgerald and Dennis Hastert's actions, however, we should know sooner than later.

Yes Bronner is not interested in being United's equity investor and he is likely not interested in more airline investments at this time, but if US Airways has a competitive cost structure and United is denied the loan guarantee, who knows what could happen in the future.

But, first things first, US Airways must have a competitive cost structure and whether its own ATSB problems because the Arlington-based carrier's own survival is on doubt.

Separately, what I find interesting is that Forbes said "source close to Texas Pacific Group says there is little current interest in a United investment." What I would like to know is how come?

Respectfully,

USA320Pilot

 

[to much time to quit]

What I would like to know is how come?

Respectfully,

USA320Pilot

Thats exactly what I keep asking myself. How Come? I keep wasting my time even quickly reading thru anything that you post!

 

[USA320Pilot]

RSA and TPG will only invest in a market where they believe they can get a positive ROR. It's clear that these two venture capitalists believe United is a bad investment, at this time.

Last week Bruce Lakefield to ALPA that RSA believes US Airways has been a bad investment, with the security valued at $7.34 upon the company's exit from bankruptcy and today the stock closed up 7 cents at $2.23.

Regards,

USA320Pilot

 

[USA320Pilot]

Just one more point...

Today the Wall Street Journal reported, "if the government ultimately turns UAL down a third time, the carrier will be forced to overhaul its business plan, cut its expenses further and hunt for a much larger, costlier financing package in the open market. The company isn't in any immediate danger of liquidation, having adequate cash. It also is flying into the busiest travel season of the year. But its unrestricted cash, which stood at nearly $1.9 billion on March 31, is expected to fall to under $800 million by year end, according to Jim Higgins, an analyst for Credit Suisse Equity Research. 'A comfortable level ... would be at least three times that amount,' he said in a research note," the newspaper reported.

Respectfully,

USA320Pilot

 

[BoeingBoy]

is expected to fall to under $800 million by year end, according to Jim Higgins, an analyst for Credit Suisse Equity Research. 'A comfortable level ... would be at least three times that amount,' he said in a research note," the newspaper reported.

Doesn't bode well for us. While at the end of the 1st quarter we had over $900 million shown as unrestricted, the ATSB requires us to maintain $700 million. While accounting rules don't call that $700 million "restricted", in real life it might as well be - we can't spend it.

Jim

 

[Dea Certe]

Here's an innovative thought: Perhaps if labor relations were handled less ham-fisted and the company took to heart and put into place the efficiencies offered by labor, there might be a better return on the investment.

Just my .02

Dea

 

[JAMAKE1]

Can someone please educate me on what UCT and ICT mean? :huh:

 

[usairways_vote_NO]

And as for the few times things were predicted came to pass, I would submit that a stopped clock is right twice a day and even blind squirrels find acorns now and then.

I respectfully submit I posted about the above found nut previously but alas I wasn't the first.

Sigh

 

[whatkindoffreshhell]

Thats exactly what I keep asking myself. How Come? I keep wasting my time even quickly reading thru anything that you post!

Because TPG is currently preoccupied with salvaging their investment in Burger King.

Now what will I do with all those 'UCT' baseball caps I had printed???

 

[usairways_vote_NO]

Separately, what I find interesting is that Forbes said "source close to Texas Pacific Group says there is little current interest in a United investment." What I would like to know is how come?

What with your sources you don't know?

USA320Pilot says in next post: RSA and TPG will only invest in a market where they believe they can get a positive ROR. It's clear that these two venture capitalists believe United is a bad investment, at this time.

Vote _NO says: Whew had me scared there for a minute.

USA320Pilot says: Last week Bruce Lakefield to ALPA that RSA believes US Airways has been a bad investment, with the security valued at $7.34 upon the company's exit from bankruptcy and today the stock closed up 7 cents at $2.23

Vote _NO says: In most books a 70% drop in an investment would be considered a bad investment but thanks for the heads up. Heck didn't Buffett actually end up making a little in USAirways but called it his worst investment?