How can we stay out of BK?

A

atabuy

Senior
Oct 13, 2002
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Anyone have any suggestions on ways to keep out of BK?
I think this is inevitable if we don''t do something, and I see nothing good if we don''t.
This whole thing was about borrowing money. The gov. is only backing the loan. Since the gov. won''t back this loan, would it be possible for all the employees to do it.
If every employee co-signed for 25,000 Ual would have the money needed to work the plan they have put into place.
Or every employee could co-sign by income they receive. Just so the total is 2 billion.
Maybe employees would want to invest some money instead of co-signing.
Is the company worth this to everyone.
I think for all concerned BK will reduce a lot more employees than if we ran the business plan we have now with some more adjustments to it.
We would have to cut employees down to esential personel and layoff the remainder until we get stronger.
If the gov. did not want to take a risk on us then we will get the money back through unemployment. We can lay off everyone for 6 months or a year if eligible, and give them severance and they can return the unemployment checks to Ual. At least this gives us a chance to wait out this recession a little longer and give us some potential with the stock we will lose in BK.
Any ideas?
 
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To add to what I have suggested, might it be posible to lend Ual one weeek of our wages in December also to keep enough cash on hand.

Another suggestion I have is to go to the graduated plan I had proposed a while ago. I don't know what percentage it would be for everyone, but it could make the difference again between us controlling our future, and someone coming in who only has one interest. The bottom line.
We could voluntarily change some work rules to become more efficient.
The graduated reduction could also be considered a loan to Ual and it might be posible to keep more employees working.
I know there were some objections to it, but after what some of the pilots said they are giving up, it might be the fair way to go.

One more thing. Union leaders would not be involved with these negotiations. A coalition of employees and legal council could set this up with the company.
All negotiations would be open so employees know what is going on.
 
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To add to what I have suggested, might it be posible to lend Ual one weeek of our wages in December also to keep enough cash on hand.

Another suggestion I have is to go to the graduated plan I had proposed a while ago. I don't know what percentage it would be for everyone, but it could make the difference again between us controlling our future, and someone coming in who only has one interest. The bottom line.
We could voluntarily change some work rules to become more efficient.
The graduated reduction could also be considered a loan to Ual and it might be posible to keep more employees working.
I know there were some objections to it, but after what some of the pilots said they are giving up, it might be the fair way to go.

One more thing. Union leaders would not be involved with these negotiations. A coalition of employees and legal council could set this up with the company.
All negotiations would be open so employees know what is going on.
 
I don't think you can at this point. Three months ago, perhaps.

Without a filing now, you could work for free, and the company would probably still run out of cash... The various debt payments are going to wipe out the remaining cash faster than anything.
 
I don't think you can at this point. Three months ago, perhaps.

Without a filing now, you could work for free, and the company would probably still run out of cash... The various debt payments are going to wipe out the remaining cash faster than anything.
 
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/5/2002 5:04:47 AM atabuy wrote:
[P]To add to what I have suggested, might it be posible to lend Ual one weeek of our wages in December also to keep enough cash on hand.[BR][BR]Another suggestion I have is to go to the graduated plan I had proposed a while ago. I don't know what percentage it would be for everyone, but it could make the difference again between us controlling our future, and someone coming in who only has one interest. The bottom line.[BR]We could voluntarily change some work rules to become more efficient.[BR]The graduated reduction could also be considered a loan to Ual and it might be posible to keep more employees working. [BR]I know there were some objections to it, but after what some of the pilots said they are giving up, it might be the fair way to go.[BR][BR]One more thing. Union leaders would not be involved with these negotiations. A coalition of employees and legal council could set this up with the company.[BR]All negotiations would be open so employees know what is going on.[BR][/P]----------------[/BLOCKQUOTE]
[P]I have bad news for you. You will be doing that, except you wil be giving UAL the equivalent of a week's pay out of every month (or equivalent concessions) for the next 5 years. UAL base revenues is about $20B annually. Labor cost is about 40% of revenue, making it $8B annually. If all employees foregoed a week's wages it would "save" UAL about $150M. No chump change, but not enough for it to dig out of its hole.[/P]
 
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/5/2002 5:04:47 AM atabuy wrote:
[P]To add to what I have suggested, might it be posible to lend Ual one weeek of our wages in December also to keep enough cash on hand.[BR][BR]Another suggestion I have is to go to the graduated plan I had proposed a while ago. I don't know what percentage it would be for everyone, but it could make the difference again between us controlling our future, and someone coming in who only has one interest. The bottom line.[BR]We could voluntarily change some work rules to become more efficient.[BR]The graduated reduction could also be considered a loan to Ual and it might be posible to keep more employees working. [BR]I know there were some objections to it, but after what some of the pilots said they are giving up, it might be the fair way to go.[BR][BR]One more thing. Union leaders would not be involved with these negotiations. A coalition of employees and legal council could set this up with the company.[BR]All negotiations would be open so employees know what is going on.[BR][/P]----------------[/BLOCKQUOTE]
[P]I have bad news for you. You will be doing that, except you wil be giving UAL the equivalent of a week's pay out of every month (or equivalent concessions) for the next 5 years. UAL base revenues is about $20B annually. Labor cost is about 40% of revenue, making it $8B annually. If all employees foregoed a week's wages it would "save" UAL about $150M. No chump change, but not enough for it to dig out of its hole.[/P]
 
You are missing the point. UAL costs are too high for the revenue coming in. If you loan UAL money, it only will postpone bankruptcy. This is the reason the ATSB would not "loan" UAL the money. Thus, UAL will have to restructure. Now it looks as if that restructuring will occur in CH 11. Management has failed in its duty to restructure outside of bankruptcy. Now management and the employees will lose control of the situation. A judge and whomever provides financing while UAL is a debtor, will call ALL of the shots. So save your money.
 
You are missing the point. UAL costs are too high for the revenue coming in. If you loan UAL money, it only will postpone bankruptcy. This is the reason the ATSB would not "loan" UAL the money. Thus, UAL will have to restructure. Now it looks as if that restructuring will occur in CH 11. Management has failed in its duty to restructure outside of bankruptcy. Now management and the employees will lose control of the situation. A judge and whomever provides financing while UAL is a debtor, will call ALL of the shots. So save your money.
 
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[blockquote]
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On 12/5/2002 10:01:37 AM AirplaneFan wrote:

I have bad news for you. You will be doing that, except you wil be giving UAL the equivalent of a week's pay out of every month (or equivalent concessions) for the next 5 years. UAL base revenues is about $20B annually. Labor cost is about 40% of revenue, making it $8B annually. If all employees foregoed a week's wages it would "save" UAL about $150M. No chump change, but not enough for it to dig out of its hole.[/P]
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Thanks for that info. I could not find the labor costs.

So here is our choice. Work about 4 days a month for free and loan Ual the money. This should keep us solvent for awhile and in control of the company. Now if Ual should go into BK we would have a large say in how we restructure the company.
Just a thought.
 
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[blockquote]
----------------
On 12/5/2002 10:01:37 AM AirplaneFan wrote:

I have bad news for you. You will be doing that, except you wil be giving UAL the equivalent of a week's pay out of every month (or equivalent concessions) for the next 5 years. UAL base revenues is about $20B annually. Labor cost is about 40% of revenue, making it $8B annually. If all employees foregoed a week's wages it would "save" UAL about $150M. No chump change, but not enough for it to dig out of its hole.[/P]
----------------
[/blockquote]
Thanks for that info. I could not find the labor costs.

So here is our choice. Work about 4 days a month for free and loan Ual the money. This should keep us solvent for awhile and in control of the company. Now if Ual should go into BK we would have a large say in how we restructure the company.
Just a thought.
 
First, I want to say that I feel for you people. But I now know firsthand that C-11 is NOT the end of the world, and depending upon how management, the DIP financer, and the judge handle the UAL proceedings (which definitely will be filed by next Thursday) this could be a blessing in disguise for UAL employees. So hang in there, keep doing what you do, and keep the faith.

That having been said, the scenarios proposed will never... and cannot happen. Autofixer is right... the cost vs. revenue ratio is a real problem.

Why would UAL want to get any deeper into bed with its employees? By all industry analyst accounts, this is UAL's biggest problem. I will go so far as to say that is probably the primary reason the ATSB rejected the UAL application. The application did nothing to address the harsh reality that until the employees no longer have control of the airline, the cost/revenue ratio will continue to be problematic.

In addition, you have to think of the risk of "loaning" money to an entity which is on the brink of bankruptcy. At filing, your investment becomes worthless. If you were to "cosign" a loan for UAL, as soon as bankruptcy is filed, you are on the hook for that money, i.e, the bank who loans the money will come after each and every one of you. Plus the bank would have to approve each and every cosigner just as if they were the primary debtor. In other words, credit reports and other financial information would need to be gathered on each employee, and undoubtedly many of them would be rejected. So the "creditworthy" employees would have to step up to the plate and make up for the deficiencies. What bank is going to want to go through this administrative nightmare.

The sad fact is this... UAL will need to file bankruptcy, lay off some people, and probably shed some routes. The ESOP will go down. But hopefully UAL and U will come out of this situation as lean, mean, flying machines with complementary networks, effective cost structures, and significant revenue sources.

My prayers are with us all.
 
First, I want to say that I feel for you people. But I now know firsthand that C-11 is NOT the end of the world, and depending upon how management, the DIP financer, and the judge handle the UAL proceedings (which definitely will be filed by next Thursday) this could be a blessing in disguise for UAL employees. So hang in there, keep doing what you do, and keep the faith.

That having been said, the scenarios proposed will never... and cannot happen. Autofixer is right... the cost vs. revenue ratio is a real problem.

Why would UAL want to get any deeper into bed with its employees? By all industry analyst accounts, this is UAL's biggest problem. I will go so far as to say that is probably the primary reason the ATSB rejected the UAL application. The application did nothing to address the harsh reality that until the employees no longer have control of the airline, the cost/revenue ratio will continue to be problematic.

In addition, you have to think of the risk of "loaning" money to an entity which is on the brink of bankruptcy. At filing, your investment becomes worthless. If you were to "cosign" a loan for UAL, as soon as bankruptcy is filed, you are on the hook for that money, i.e, the bank who loans the money will come after each and every one of you. Plus the bank would have to approve each and every cosigner just as if they were the primary debtor. In other words, credit reports and other financial information would need to be gathered on each employee, and undoubtedly many of them would be rejected. So the "creditworthy" employees would have to step up to the plate and make up for the deficiencies. What bank is going to want to go through this administrative nightmare.

The sad fact is this... UAL will need to file bankruptcy, lay off some people, and probably shed some routes. The ESOP will go down. But hopefully UAL and U will come out of this situation as lean, mean, flying machines with complementary networks, effective cost structures, and significant revenue sources.

My prayers are with us all.
 
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  • #14
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On 12/5/2002 11:13:16 AM autofixer wrote:

You are missing the point. UAL costs are too high for the revenue coming in. If you loan UAL money, it only will postpone bankruptcy. This is the reason the ATSB would not "loan" UAL the money. Thus, UAL will have to restructure. Now it looks as if that restructuring will occur in CH 11. Management has failed in its duty to restructure outside of bankruptcy. Now management and the employees will lose control of the situation. A judge and whomever provides financing while UAL is a debtor, will call ALL of the shots. So save your money.
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You missed my point, and it is probably a moot one now.
If the employee concessions are considered a loan, instead of just giving up money, if Bk happened, employees would have a say in Bk because Ual owes the employees money. They would be a creditor and part of helping redefine there furure, instead of someone else who has no stake in the outcome, except to make money from it.
Too bad we will never know what would have happened with a senario like this.

I would never let the union be my negotiator again.
 
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[blockquote]
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On 12/5/2002 11:13:16 AM autofixer wrote:

You are missing the point. UAL costs are too high for the revenue coming in. If you loan UAL money, it only will postpone bankruptcy. This is the reason the ATSB would not "loan" UAL the money. Thus, UAL will have to restructure. Now it looks as if that restructuring will occur in CH 11. Management has failed in its duty to restructure outside of bankruptcy. Now management and the employees will lose control of the situation. A judge and whomever provides financing while UAL is a debtor, will call ALL of the shots. So save your money.
----------------
[/blockquote]
You missed my point, and it is probably a moot one now.
If the employee concessions are considered a loan, instead of just giving up money, if Bk happened, employees would have a say in Bk because Ual owes the employees money. They would be a creditor and part of helping redefine there furure, instead of someone else who has no stake in the outcome, except to make money from it.
Too bad we will never know what would have happened with a senario like this.

I would never let the union be my negotiator again.
 
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