Loan

[boeing787]

USA320pilot writes:

That's not what senior management has told some in ALPA and myself. In fact, it's understood that United is not going to get the loan guarantee again, without major cost cuts.

However, there is a move within US Airways to pull out of the United and Star alliances and cut a deal with Northwest, who made overtures to Morgan Stanley.

Prior to US Airways agreeing to a deal with United on the code share program, Northwest and US Airways had a verbal agreement for the two to develope an alliance, but Siegel pulled out at the last minute. In fact, I was told the Northwest alliance papers were on Siegel's desk in CCY. Northwest understands how a merger with US Airways could kill off United for good and they just may make a move on the Arlington-based airline.

Regards,

USA320Pilot

Someone is drinking too much of the cool-aid. Unbelieveable.

 

[UnitedChicago]

Why do you guys keep giving him a soap box? To post a whole new thread over here about it is so annoying. Finally that "future of UAL" thread drops off to be replaced by what i'm sure will be just a lovely topic that has been repeated over and over and over.

Remember the whole "PIT negotiations being held hostage"? This is as absurd. Those who waste time responding to these impossibles are just encouraging him.

How many times do you need to learn that?

 

[Bear96]

This is GOOD news.

Maybe he will turn to beating the NW angle to death and leave us alone.

Let the NW folk play babysitter for a while.

 

[TravelDude]

Why do you guys keep giving him a soap box? To post a whole new thread over here about it is so annoying. Finally that "future of UAL" thread drops off to be replaced by what i'm sure will be just a lovely topic that has been repeated over and over and over.

Could not agree with you more! Thanks for posting!

 

[boeing787]

Hey guys I apologize for putting this DELETED BY MODERATOR over here. I will ignore him from now on. My bad.

 

[767jetz]

This is GOOD news.

Maybe he will turn to beating the NW angle to death and leave us alone.

Let the NW folk play babysitter for a while.

 

[Just Plane Crazy]

With or without US UA is going to survive. It is all about the employees at UA. I just don't think of all the ones that are seen every day by the PAX. It is about all of them from the loest to the highest. All of them have to pull together and make it happen. NW and all others can't do as much damage as the employees from the inside.

Why worry if US is going to take a last step into an Alliance or if there is going to be a merger. The important issue is how is UA going to pull out of the situation they are in.

Getting the loan hangs on how UA can save money. Cost saving starts at the top. All employess with sallaries over 100K should start first. The higher the sallary the more they should cut it back. This includes all the management, cockpit crews etc. let the people on the lwoer end of the pay scale relax a little. Every ones job at UA and the survival of UA should be more important than a lot of things. Even it is a smaler and leaner UA. Emerging stronger with potential to grow back is a better way than to follow PanAm, Eastern or TWA (see CO)

 

[iflyjetz]

Humorous stuff. DELETED BY MODERATOR certainly has an active imagination. So now he sees UAIR fitting into an alliance with NW/CO/DAL, eh? Not much overlap between UAIR and CO or DAL, is there? What color is the sky in his world?

 

[SmoothRide]

I think we've beat this topic to death. Time to move on. Release your seatbelts and get out!!

 

[TravelDude]

I think we've beat this topic to death. Time to move on. Release your seatbelts and get out!!

Ha Ha

I running out, pushing the elderly and small children out of my way

 

[avek00]

With or without US UA is going to survive. It is all about the employees at UA. I just don't think of all the ones that are seen every day by the PAX. It is about all of them from the loest to the highest. All of them have to pull together and make it happen. NW and all others can't do as much damage as the employees from the inside.

Why worry if US is going to take a last step into an Alliance or if there is going to be a merger. The important issue is how is UA going to pull out of the situation they are in.

Getting the loan hangs on how UA can save money. Cost saving starts at the top. All employess with sallaries over 100K should start first. The higher the sallary the more they should cut it back. This includes all the management, cockpit crews etc. let the people on the lwoer end of the pay scale relax a little. Every ones job at UA and the survival of UA should be more important than a lot of things. Even it is a smaler and leaner UA. Emerging stronger with potential to grow back is a better way than to follow PanAm, Eastern or TWA (see CO)

1. While employees are no doubt important to United's future, I dare say that it is the actions of management that will determine United's course above all else, especially over the next 6-9 months. WHQ has to develop a business plan and POR that will pass muster with a continually skeptical ATSB and Wall Street, along with crafting meaningful solutions to a developing ORD operational crisis that could rival the 2000 SFH by the summer.

2. The future of US is VERY important to UA because, among other things, the company is counting on hundreds of millions of $$$ in codeshare revenues from the UA/US alliance as part of its financial projections to the ATSB. If the codeshare money disappears, then United's chances of passing stringent ATSB muster will get that much slimmer. Not to mention that as concerns over whether tax dollars will be used to "bail out" US' loan increase, so will the wariness of giving UA a similarly risky guarantee increase.

3. Getting the loan guarantee depends on much more than just saving a dime - the company has to show that 1) it has a credible, realistic plan to return to profitability (vice merely treading water and hoping for clearer skies), and 2) does not have access to the capital markets as a result of 9/11 fallout (this has been extremely tough to prove, as all of United's major competitors have managed to raise cash by selling debt or equity on Wall Street).

 

[767jetz]

3. Getting the loan guarantee depends on much more than just saving a dime - the company has to show that 1) it has a credible, realistic plan to return to profitability (vice merely treading water and hoping for clearer skies), and 2) does not have access to the capital markets as a result of 9/11 fallout (this has been extremely tough to prove, as all of United's major competitors have managed to raise cash by selling debt or equity on Wall Street).

OK Avek00,

I will start by saying that even though I don't agree with most of what you say, and I think that often you sound like you have an axe to grind with UA (particularly the pilots), you do make some valid points from time to time, and I do not put you in the same category as a certain USAir pilot.

That being said, I must ask why you keep beating the same drum of UA coming up with "realistic plan to return to profitablity?"

You have not seen UA's POR, nor do you know what assumptions they are using to project future profitablity. Therefore, what makes you think UA's plan is to just tread water hoping for clearer skies??

The two biggest financial institutions in North America (JP Morgan & CitiGroup) have intimate knowledge of UA's plan, and they have confidence in UA's ability to re-pay the loan and weather future downturns in the economy.

Restructuring UA properly is a very long and complicated process, and Tilton is rightfully taking the time to do it correctly. UA is working very closely with the ATSB to avoid problems with the final application. The ATSB has NOT revealed ANY information on UA's progress or the potential of approval/disapproval. Therefore, what makes you think the ATSB will not approve the loan?? Are you speculating, or perhaps hoping that it won't happen??

Don't you agree that the lower interest of an ATSB backed loan is better for UA than an un-guaranteed loan with a higher interest rate?

It's true that prior to bankruptcy, UA was shut out of the capital markets. However so much has changed since then. What makes you think that if the ATSB does not approve the loan guarantee, JP Morgan and CitiGroup won't lend UA the money anyway, just at a higher interest rate??

I agree that there are obstacles to clear before June 30th, however at this point they are managable and success is more promising. Exit financing, as explained above, will be available one way or another. The IAD/ACA issue is being addressed with other regional carriers being line lined up to fly the schedule along with additional flying by Ted/Mainline. Pension liability is still a big one, but progress is being made in Congress. Looks like provisions for airlines and steel companies will likely survive the final draft. (It is an election year) The biggest question is codeshare revenue from USAir. Certainly if US closes the doors, UA will have to make adjustments for the loss of revenue, but again I believe this is a managable situation.

The bottom line is that if the last few pieces of the puzzle fall into place, UA will emerge on schedule and be one of the most (if not THE most) competitive full service airline around.

 

[Just Plane Crazy]

I would like to bring up a subject that might is a hot topic with cargo airlines but it would make sence that no one is thinking of UA in this matter. The goverment is currently studying the current ownership rules regarding an airline. If they would change the rules, there would be at least two airlines that have the money and expertise to get UA out of trouble. LH and SQ, both of them are STAR members and both of them have a big interest to keep UA alive.

Could it be that erveything is done so that UA will survive till this issue is resolved and they could get outside help without violating the law?

 

[avek00]

That being said, I must ask why you keep beating the same drum of UA coming up with "realistic plan to return to profitablity?"

You have not seen UA's POR, nor do you know what assumptions they are using to project future profitablity. Therefore, what makes you think UA's plan is to just tread water hoping for clearer skies??

The two biggest financial institutions in North America (JP Morgan & CitiGroup) have intimate knowledge of UA's plan, and they have confidence in UA's ability to re-pay the loan and weather future downturns in the economy.

Restructuring UA properly is a very long and complicated process, and Tilton is rightfully taking the time to do it correctly. UA is working very closely with the ATSB to avoid problems with the final application. The ATSB has NOT revealed ANY information on UA's progress or the potential of approval/disapproval. Therefore, what makes you think the ATSB will not approve the loan?? Are you speculating, or perhaps hoping that it won't happen??

Don't you agree that the lower interest of an ATSB backed loan is better for UA than an un-guaranteed loan with a higher interest rate?

It's true that prior to bankruptcy, UA was shut out of the capital markets. However so much has changed since then. What makes you think that if the ATSB does not approve the loan guarantee, JP Morgan and CitiGroup won't lend UA the money anyway, just at a higher interest rate??

I agree that there are obstacles to clear before June 30th, however at this point they are managable and success is more promising. Exit financing, as explained above, will be available one way or another. The IAD/ACA issue is being addressed with other regional carriers being line lined up to fly the schedule along with additional flying by Ted/Mainline. Pension liability is still a big one, but progress is being made in Congress. Looks like provisions for airlines and steel companies will likely survive the final draft. (It is an election year) The biggest question is codeshare revenue from USAir. Certainly if US closes the doors, UA will have to make adjustments for the loss of revenue, but again I believe this is a managable situation.

The bottom line is that if the last few pieces of the puzzle fall into place, UA will emerge on schedule and be one of the most (if not THE most) competitive full service airline around.

1. While I certainly hope that things have changed, IMHO, it's not unreasonable to believe that UA still has not come up with a viable business plan given the company's proven track record of creating plans with unrealistic financial projections.

2. Wall Street does NOT have much confidence in United's ability to become a viable enterprise - the fact that they want most of the loan ATSB guaranteed (vs. an unsecured loan on the "strength" of the United name) means that they believe an unacceptably high likelihood of default exists.

3. Given the onerous restrictions that come attached to an ATSB guarantee, barring some bizarre circumstances, an airline would almost always come out ahead taking a higher-interest loan on it own versus accepting the challenges of govt. back money. And given that the ATSB has already slammed the door on United twice, I have to believe that United would have quickly agreed to any halfway decent financial package that did not require ATSB approal.

4. Regardless of whether or not UA finally emerges, I'm willing to bet my bottom dollar that it sure won't be on June 30. The pension undefunding and ATSB issues alone will take several more months to work out, not to mention the time required for the airline to submit and receive creditor & court approval for a POR. I'm even willing to go so far as to say that the factors mentioned in a future UA release explaining the delay will be "continued work on obtaining ATSB approval" and "the need to obtain additional concessions from UAL stakeholders, especially labor."

5. The loss of several hundred million dollars in annual codeshare revenue is not something that could be easily managed, especially since the loss of US would undoubtedly make ATSB a hundred times more leery of setting itself up for a double whammy should UA fail as well.

 

[mweiss]

1. While I certainly hope that things have changed, IMHO, it's not unreasonable to believe that UA still has not come up with a viable business plan given the company's proven track record of creating plans with unrealistic financial projections.

avek00, it's no more unreasonable to believe that UA has come up with a viable business plan. They're under new management, and if Gordon was able to turn CO around under its conditions in 1994, it's possible for UA to be turned around in 2004.

BTW, can I suggest that you leave out the "H" when you say "IMO" in the future? Little of what you post comes across as "humble," so "IMHO" just puts a farcical tone on the whole post.