January Post-pay Cuts

[enilria]

My understanding is that January is the first monthly result post-paycuts. Given Continental's report of a sizeable loss and United's December loss of over $200 million, does anyone care to guess what January's loss will be?

I'm betting its easily north of $125m.

The next obvious question is what will be the solution to the continued losses post-paycuts? You can thank oil prices and Delta's Simplifares for wiping away a sizeable portion of the paycut value.

 

[Busdrvr]

My understanding is that January is the first monthly result post-paycuts. Given Continental's report of a sizeable loss and United's December loss of over $200 million, does anyone care to guess what January's loss will be?

I'm betting its easily north of $125m.

The next obvious question is what will be the solution to the continued losses post-paycuts? You can thank oil prices and Delta's Simplifares for wiping away a sizeable portion of the paycut value.

[post="247401"][/post]​

You don't have to be profitable every month to have a business that will turn an annual profit. I'll bet at the jet ski rental shop in Dec, or the snow ski in july, business is a little "off".

 

[enilria]

You don't have to be profitable every month to have a business that will turn an annual profit. I'll bet at the jet ski rental shop in Dec, or the snow ski in july, business is a little "off".

[post="247479"][/post]​

Clearly that's the case, but I think it's the size of the losses that make them problematic. If UA lost $50m in January I'd have no doubt they would make money in a better month like March...but with a loss of more than $100m in one month I think it will be hard to make money outside of maybe three months during the year. 3 slim profits and 9 huge losses product a pretty poor result. I'm guessing that's where we are now.

Also, keep in mind that UA only reports operating results in Ch11. Typically net results are far worse than operating results as the net line adds in interest expense which UA will be paying to their DIP financers.

 

[Busdrvr]

Clearly that's the case, but I think it's the size of the losses that make them problematic. If UA lost $50m in January I'd have no doubt they would make money in a better month like March...but with a loss of more than $100m in one month I think it will be hard to make money outside of maybe three months during the year. 3 slim profits and 9 huge losses product a pretty poor result. I'm guessing that's where we are now.

Also, keep in mind that UA only reports operating results in Ch11. Typically net results are far worse than operating results as the net line adds in interest expense which UA will be paying to their DIP financers.

[post="247571"][/post]​

All True. Jan is AFAIK one of the worst of the year traditionally.

Net worse than "operating"? sure, but a look at the numbers shows UAL paying considerably less in interest than it's equals. Another thing to note is this may be to the point of being a race, No one can keep sustaining the current loses. somethings got to give. I'd argue UAL has been hit much harder from folks trying to kill them than other airlines have. The Unisys report posted on the Luv board shows yields in ORD substantially lower in ORD than DFW. Once survival is "sure", others will likely "back off". And by then Flyi will be a historical footnote......

 

[enilria]

All True. Jan is AFAIK one of the worst of the year traditionally.

Net worse than "operating"? sure, but a look at the numbers shows UAL paying considerably less in interest than it's equals. Another thing to note is this may be to the point of being a race, No one can keep sustaining the current loses. somethings got to give. I'd argue UAL has been hit much harder from folks trying to kill them than other airlines have. The Unisys report posted on the Luv board shows yields in ORD substantially lower in ORD than DFW. Once survival is "sure", others will likely "back off". And by then Flyi will be a historical footnote......

[post="247583"][/post]​

UAL is paying very little interest now because all pre-petition debts are no longer collecting interest. That will end when UA takes on $2-4billion in new exit financing debt. With the cash position now down to only about $1b unrestricted they need cash soon...very soon. They already drew down the financing they arranged in 4Q just to get through the quarter.

 

[uafa21]

True a company does not need to make a profit every month to be profitable, but it sure helps.

With fuel prices high and revenue weak I'll bet this company does not make a profit this year, although with our pay cuts we should. If we don't then Tilrton, Brace and the management crew need to be replaced.

 

[enilria]

True a company does not need to make a profit every month to be profitable, but it sure helps.

With fuel prices high and revenue weak I'll bet this company does not make a profit this year, although with our pay cuts we should. If we don't then Tilrton, Brace and the management crew need to be replaced.

[post="247689"][/post]​

Once again the point is not that every month needs to make money, but if you had their monthly history to look at I doubt there are years where they lost over $150m in January and were able to make money for the year.

 

[enilria]

My understanding is that January is the first monthly result post-paycuts. Given Continental's report of a sizeable loss and United's December loss of over $200 million, does anyone care to guess what January's loss will be?

I'm betting its easily north of $125m.

[post="247401"][/post]​

Tooting my own horn (you have to pay somebody else to do it), they lost $150m in January. I tend to think this is a VERY bad sign for those who hope there won't be even more pay cuts. To lose that much in one month and still have the pension issue unsolved (which surely would preceed another round of cuts) is worriesome.

 

[Busdrvr]

They already drew down the financing they arranged in 4Q just to get through the quarter.

[post="247609"][/post]​

Do you have a source for that?

 

[Busdrvr]

UAL is paying very little interest now because all pre-petition debts are no longer collecting interest. That will end when UA takes on $2-4billion in new exit financing debt.

[post="247609"][/post]​

Which will still be about 10-15 BILLION less in debt than the competition. And some of the debt will likely be convertible. 🙄

 

[Busdrvr]

Tooting my own horn (you have to pay somebody else to do it), they lost $150m in January. I tend to think this is a VERY bad sign for those who hope there won't be even more pay cuts. To lose that much in one month and still have the pension issue unsolved (which surely would preceed another round of cuts) is worriesome.

[post="251134"][/post]​

In case you haven't been paying attention

http://biz.yahoo.com/prnews/050207/lam081_1.html

http://biz.yahoo.com/prnews/050225/dcf051_1.html

http://biz.yahoo.com/rb/050211/airlines_co...l_losses_1.html



And all the paycuts were NOT in place for all of January....

There will be some Airline deaths at some of UAL's Hubs, but it won't be UAL.

 

[enilria]

Do you have a source for that?

[post="251208"][/post]​

The source is their 4Q summary release. It specifies that in the text.

 

[enilria]

In case you haven't been paying attention

http://biz.yahoo.com/prnews/050207/lam081_1.html

http://biz.yahoo.com/prnews/050225/dcf051_1.html

http://biz.yahoo.com/rb/050211/airlines_co...l_losses_1.html



And all the paycuts were NOT in place for all of January....

There will be some Airline deaths at some of UAL's Hubs, but it won't be UAL.

[post="251212"][/post]​

I have a source in UA financial planning who says all the pay cuts were included (some as accruals) in the January profitability. Do you have a source that he is wrong or are you just muddying the water?

As for your three links:

1) F9 doesn't report January profits, but they are certainly doing better than UA in terms of margin.
2) Continental lost $45m in January which is less than 1/3 of UA's operating loss and CO is much larger than 1/3 UA's size. Let me also add CO isn't in chapter 11, so UA is losing more after two years of restructuring than CO is before even entering.
3) If you are proposing that IAir is a suitable comparison to UA when they lost $1 for every $1 of revenue in the quarter, then I'll grant you UA is beating the worst performing airline of my lifetime.

 

[jimntx]

FWIW, I think you should forget comparisons to other airlines. Whether or not FLYI makes a profit or posts record-breaking losses has no bearing upon the fact that UAL had a net loss of $326 million (operating loss of $150 million) for the month of January alone. That's half of the total net loss for all of Q4, 2004 which definitely did not include all the latest paycuts.

This is not good. And, as an AA employee I would rather compete against a comparable airline at ORD than some jerry-rigged LCC "International" carrier that the FAA allows to move into ORD to "preserve competition."

I think that the AA/UAL dominance of ORD is one of the things keeping both of us going. Neither of us needs a SWA wannabe moving in there.

 

[coolflyingfool]

I just cannot believe that UAL is still losing money even after all the paycuts. I think someone is cooking the books. IF UAL does not make money by June, just shut it down. Just my thoughts....