July Profit Of $76 Million Before Special Items

[FWAAA]

http://biz.yahoo.com/prnews/050825/cgth037.html?.v=29

Not bad - RASM up 9% year over year in July.

Cash balance was up, driven by higher DIP financing levels.

New debt propsals received by UAL as well.

 

[WorldTraveler]

I'm shocked no one has replied.

This is BIG, BIG news. Congratulations to everyone at UA. You have done what many, many (me included) said would not be done. You have paid a hefty price to make it happen and there is clearly more work to do, but you are to be congratulated.

I think you have provided a great example for DL and NW to use in BK. See my latest diatribe under the Delta forum.

 

[767jetz]

I'm shocked no one has replied.

[post="292532"][/post]​

Why are you surprised? They only come over here when they can put a negative spin on something, or exploit any tidbit of negative news.

There's nothing to spin here. $3 Billion in all debt financing is a solid endorsement that no one can dispute. Some might even say we've "shunned" the critics with this "shocking" amount of money! (sorry, couldn't resist the jab at old you-know-who-320-pilot.)

Other's are tempted to say "I told you so." But success is the best revenge.

Thanks for coming here and being the first to acknowledge our progress.

 

[jimntx]

Well, before you break out the champagne and order up the marching band, keep in mind that the net loss was still over a quarter of a billion dollars.

Saying that you made a profit except for special items is stretching it a bit don't you think? Granted they are "one time" (though every quarter, it seems) expenses, but...

That's like saying that you made a profit if it weren't for the roof and the ruined furniture that had to be replaced after the hurricane blew through town. You still had to spend that money.

 

[JAMAKE1]

From Glenn Tilton's Message To Employees:

While we reported a net loss of 274 million dollars, when you exclude the largely non-cash reorganization expenses of 350 million dollars, the company reported a net profit of 76 million dollars for the month of July.

Once again, the important number to focus on is our underlying earnings -- the operating earnings -- which is the correct measure of the strength of the business. The non-cash items will be addressed in the normal bankruptcy process as we exit from Chapter 11.

 

[boxer]

From Glenn Tilton's Message To Employees:

While we reported a net loss of 274 million dollars, when you exclude the largely non-cash reorganization expenses of 350 million dollars, the company reported a net profit of 76 million dollars for the month of July.

Would someone kindly explain exactly what are non-cash reorganization expenses to an old retired wrench turner. Somewhere, sometime will cash change hands?

 

[TechBoy]

Well, before you break out the champagne and order up the marching band, keep in mind that the net loss was still over a quarter of a billion dollars.

Saying that you made a profit except for special items is stretching it a bit don't you think? Granted they are "one time" (though every quarter, it seems) expenses, but...

That's like saying that you made a profit if it weren't for the roof and the ruined furniture that had to be replaced after the hurricane blew through town. You still had to spend that money.

[post="292719"][/post]​

No, bad analogy. These are noncash expenses. Replacing the roof would take cash. Most of these charges of writedowns of long held assets. For instance, an asset could be on the books as worth $10m would be written off as a $10m loss, but the cash to pay for it would have been spent long, long ago.

These kinds of charges will continue to occur as long as they are in bankruptcy. Then when they emerge, they will record an enormous "profit" from writing off all of the cancelled debts. And that "profit" will be about as real as the current "charges."

 

[SVQLBA]

From Glenn Tilton's Message To Employees:

While we reported a net loss of 274 million dollars, when you exclude the largely non-cash reorganization expenses of 350 million dollars, the company reported a net profit of 76 million dollars for the month of July.

Would someone kindly explain exactly what are non-cash reorganization expenses to an old retired wrench turner. Somewhere, sometime will cash change hands?

[post="292834"][/post]​

With re-orgs, early retirements and other severance packages are usually part of the deal. The accounting standards for pensions and the like require the company to take a "charge", basically establishing a reserve to cover the increased cash payments that will go out in future (the difference between the employee's previous retirement package and the new one). No cash is going out the door at that point (hence it's a non-cash charge)-- in fact cash flow out may drop because you start paying the retirment benefits rather than wages. However, you have to take the charge on the accounts.

Not how a CPA would formally describe it, but that's the basic idea ...

 

[767jetz]

There are also large "non-cash" charges associated with the rejection of AC leases. Let's say you lease an airplane for "x" up front and "y" every month as your lease expense. Then you terminate that lease for better terms. Well you just lost "x" even though no cash changed hands, and you now have a new lease with better terms going forward.

 

[WorldTraveler]

jimntx,
in a sense the size of the non-cash reorg. expenses is an indication of a radical the balance sheet has been altered. UA's warning that more restructuring charges would come is an indication that they are doing everything possible to create a clean sheet of paper balance sheet with a healthy top line number.