Financing For Aircraft

[ualdriver]

60% load factors? What in the WORLD are you talking about? What precedent are you referring to where the legacy air carriers are going to see 20%+ load factor drops after Labor Day? It certainly didn't happen last year. Maybe you're referring the load factor drops Delta will experience when they announce a possible entrance into Chapter 11 (if they can)?

I was curious, World. When are you going to go on the Delta thread and tell the Delta employees about all of the "incredible pain" that they're about to endure if they enter bankruptcy within 2 months? And please, just as you did here, use the phrase "incredible pain" when writing your description. When are you going to tell the Delta employees that they are having difficulty finding DIP financing for a possible entrance into bankruptcy in the first place as almost all of Delta's assets are already pledged as collateral elsewhere? You had no problem doing it over here on the UAL thread (even though you were wrong), so you had better get over to that thread and let them know about these things. They're going to want to know just like we did over here!

Either our little oligopoly is going to have to start pricing their tickets to cover their expenses (i.e. Jet A) or some airlines and/or lots of airplanes are going to go away. I suspect that if DAL and/or NWA enter bankruptcy, we'll find the source of diminshed capacity.......

 

[whlinder]

FlyI just lost another 100 million, so I don't see how they can possibly survive the winter. That will take some capacity out of the system, at a UA hub no less. Their demise will definitely help DL, US, FL & the other east coast players, but it will benefit UA more than anyone.

 

[BigRed1]

This is good news. Finally another step closer to ending this mess. Saving 850 million per year is quite impressive. Now for that pesky price of oil!

--------------------------------------------------------------------------------------
United Largely Completes Aircraft Lease Restructuring in Major Agreement With Public Debt Group
Tuesday August 9, 5:10 pm ET
Agreement, Subject to Bankruptcy Court Approval, Provides for $300 Million Annual Savings in Aircraft Fleet Costs
Assures United's Continued Use of 105 Aircraft Consistent With United's Business Plan


CHICAGO, Aug. 9 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin Board: UALAQ - News) announced today that the Company has largely completed its aircraft restructuring effort, saving United approximately $300 million annually. The contractual savings associated with the agreement- in-principle reached with the Public Debt Group (PDG), which is subject to approval from the U.S. Bankruptcy Court, when coupled with previous restructurings, will result in the company reducing its fleet costs by approximately $850 million in average annual savings through contractual changes and strategic fleet reductions since entering Chapter 11. This agreement leaves only one transaction left to be restructured, covering 14 aircraft, which is also in process.
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"This agreement, if approved by the Bankruptcy Court, overcomes one of the last remaining hurdles in United's restructuring and upcoming emergence from Chapter 11," said Jake Brace, Chief Financial Officer. "Coupled with the pending restructuring of the 14 aircraft whose junior notes we have purchased and whose senior notes we intend to purchase, this agreement would resolve all outstanding aircraft lease issues and provide substantial savings in aircraft fleet costs needed to support United's business plan. By significantly lowering our aircraft costs while preserving our global network, we can continue to provide our customers with superior service and reliability."

The agreement with the PDG enables the restructuring of financings covering 105 aircraft remaining in United's fleet, and resolves all potential claims associated with these aircraft. In addition to significantly reducing aircraft fleet costs for United, the agreement would secure United's long-term use of those aircraft previously under negotiation with the PDG. Those PDG transactions that no longer have aircraft in United's fleet have also agreed, subject to Bankruptcy Court approval, to a resolution of their administrative claims against the Company.

The Company intends to file a motion requesting approval of the PDG agreement with the Bankruptcy Court in the next couple of weeks, to be scheduled for a hearing in early to mid-September

 

[csrgal]

NO NO NO --- fishy said UAL doesn't have a plan. The statement must be a lie cuz he is under the desk during all the discussions.

 

[UnitedChicago]

This is great news! Obviously we'll never know if they would have achieved higher savings if they would have gone with the original deal last year or completed this step sooner in the process. But no one can say this is still an issue and only 4 planes had to be returned in this ugly process.

Oh - and it gives me great pleasrue to point out that these remarks by WorldTraveler...

This also says that UA's business plan is not going to deliver what it said it would because it was built around substantially more reductions in aircraft costs.  There are also supposedly many more aircraft which have leases which are in limbo.

[post="286739"][/post]​

...are simply incorrect. I read that this deal was reached on Saturday 8/6, which would lead me to believe the business plan delivered to the creditors the previous weekend would have included fleet costs similar to the final deal just reached. In addition, all those deals in limbo are now, well not in limbo.

Just a nice reminder to us all that opinion is not fact and no one is privy to business plans, negotiations, etc.

Have a great day!

 

[ualdriver]

If the above is true, that caught me by surpirse. I thought for sure we'd be arguing with that group of lessors until the very end. That is very good news. All we need now is for crude oil to drop back down to 25 bucks a barrel and we're all set

 

[The Gopher]

Just so everyone is aware, the 747 that was returned will be back in schedule soon. Not sure if we bought it or leased it, but it's back.

And $850 Million annual savings... thank God it's not labor savings this time.

$65/bbl oil? Also consider that UAL has one of the most sophisticated fuel-purchasing organizations in the industry. We may not be hedged like SWA, but we are between 20-30% hedged for 2005 and 2006. Northwest and Delta are ZERO, no one will give them contracts.

 

[mrfish3726]

United has lost more than $2.5 billion this year and over $7 billion since entering bankruptcy. It hasn't made a profit in more than five years.

 

[Fly]

On PAPER Fish!

Depreciation costs, BK costs, lawyers, etc. UAL actually had an operating profit last quarter.

 

[The Gopher]

On PAPER Fish!

Depreciation costs, BK costs, lawyers, etc. UAL actually had an operating profit last quarter.

[post="287143"][/post]​

All of which are non-cash items. Most of that debt will be cancelled as we exit. That's what CH 11 allows you to do. Look it up.

 

[SVQLBA]

And $850 Million annual savings... thank God it's not labor savings this time.

[post="287094"][/post]​

But note that UAL didn't say how much of that was from simply flying fewer aircraft now, and how many came from actual reductions in rent/EETC payments.

 

[767jetz]

United has lost more than $2.5 billion this year and over $7 billion since entering bankruptcy. It hasn't made a profit in more than five years.

[post="287118"][/post]​

Poor, poor Fishy. Desperately trying to spead his doom and gloom, hoping against hope that the reality of UA emerging and stomping his sorry butt is just a bad dream.

Sorry Fishy... Try all you want, but the sun is shining right through your clouds of darkness!

 

[767jetz]

Given the strength of world airlines relative to US airlines, US airlines will have to pony up the cash or lose the aircraft. This also says that UA's business plan is not going to deliver what it said it would because it was built around substantially more reductions in aircraft costs. There are also supposedly many more aircraft which have leases which are in limbo.

[post="286739"][/post]​

And then this...

Logic says that the airline that are already in bankruptcy are the most vulnerable; airlines like DL or NW that are uncompetitive in their costs, balance sheet, or revenue; and those that are near the top of the legacy industry are strongest - but still very vulnerable. There is absolutely no justification for keeping the current number of airlines or aircraft flying once Labor Day comes and loads for all carriers drop to or below 60% and if fuel stays about $60/bbl.

[post="286894"][/post]​

So, WorldTraveler...

I guess you will now eat some crow, huh?

With UA resolving (FINALLY! ) the 1110 process and clearing the path for emergence as a strong, viable company, and Delta on the verge of bankruptcy... I guess you will now advocate throwing Delta under the bus as the weakest airline facing YEARS of BK turmoil.

 

[mrfish3726]

Fly says, "Depreciation costs, BK costs, lawyers, etc. UAL actually had an operating profit last quarter."


As you pointed out FLY, ONLY ON PAPER!

 

[Busdrvr]

Fly says, "Depreciation costs, BK costs, lawyers, etc. UAL actually had an operating profit last quarter."
As you pointed out FLY, ONLY ON PAPER!

[post="287791"][/post]​

In fact UAL had a substantial positive cash flow for the Q. That ain't just 'paper'. Meanwhile, without the costs of BK, FRNT had a worse operating Q than UAL. I wonder what will happen to FRNT without any fuel hedges.... Maybe they can lay off some of the unskilled, unlicensed mech help