DIP Financing


Oct 21, 2002
I recently came across an article in reputable aviation magazine which detailed UA''s DIP financing. According to the article UA must meet specific profit targets.
Cumulative losses from 12/1/02 must be within certain targets. They are:
$964m on 2/28/03
$881m on 3/31/03
$849m on 4/30/03
$738m on 5/31/03
$585m on 6/30/03
$448m on 7/31/03
$219m on 8/31/03
$ 98m on 9/30/03
After 9/30/03, UA must make cumulative profits from 12/1/02 of:
$46m by 10/31/03
$112m by 11/30/03.
Other cumulative profit targets:
$575m during 12 months ending 12/31/03
$901m during 12 months ending 1/31/04
$1.084B during 12 months ending 2/28/04
$1.196B during 12 months ending 3/31/04
$1.297B during 12 months ending 4/30/04
$1.383B during 12 months ending 5/31/04.
These numbers are earnings before income taxes, depreciation, amortization and rents.
Failure to meet any one of these targets can trigger default on the financing leading to liquidation. It seems like UA must work very fast as some of these targets seem nearly impossible for any airline to make at this time, including Southwest!