Missed Dip Covanants

Bizman

Advanced
Jan 20, 2003
165
0
Just saw on the ALPA web site that the LEC chairman stated that UAL will miss the DIP covanants from Dec to Feb. It was in the Sept issue of DC-11. Will this throw a wrench into the exit financing?
 
Yup, it's over. Let's all throw in the towel and go home.

737

P.S. Lighten up Francis. It's gonna be alright. :lol:
 
Bizman,

I just searched the ALPA web site and found no reference to the info you quoted. Can you be more specific, or provide a link? I'm not sure how any ALPA rep could make a statement like that without the company first making it public. Sounds more like a person stating a personal opinion rather than a fact. But I could be wrong. I'd like to read it myself.
 
I'm sure that you would hear something from UAL corporate before you would hear anything from UAL ALPA, but what do I know.

Bigbus,

As always, thanks for your support. It really gives me a warm fuzzy about U employees to know that you care so much.
 
I don't see how UA missing DIP covenants over the coming winter will really surprise anyone. How the financiers will react is still not clear, but weren't there news stories last week indicating that they were working with UA to renegotiate some of the terms of the loans? I think there were even some discussions on this board about them but I don't have the time to search.
 
Note of warning to the board. If you cant post something constructive pertaining to the thread being discussed then do not post here. Any posts on this thread that do not add to the discussion will be removed and warnings/suspensions will be given.
 
If UAL does miss the project target of the DIP, what kind of affect will it have on them as well as their partner codeshar USAIR?
 
I've got to find out where that LEC chairman got his crystal ball...
He is stating (in September 2003) that from Dec2003 to Feb2004 UAL will miss the DIP covenants. Well, I suppose that [/I]could happen. But then of course we met ourDIP covenants during worse times, we are picking up the rest of the flying that we dropped during the SARS epidemic, we are increasing our Caribbean and Central America flying and we are recalling 350 flight attendants from voluntary fulough....
 
The problem is that the DIP covenants are becoming more restrictive, and require UAL to make a profit, which they obviously will not. Notice that all the other majors are saying flying will be increasing by 10% next year. This almost insures that no one will make a profit.
 
Falco said:
The problem is that the DIP covenants are becoming more restrictive, and require UAL to make a profit, which they obviously will not. Notice that all the other majors are saying flying will be increasing by 10% next year. This almost insures that no one will make a profit.
That could be part of the plan. Increase capacity, so that no one, especially UAL, makes a profit. No one else has to meet DIP requirements, so short term it will hurt UAL the most.
 
bigbusdrvr said:
[deleted by moderator]
I don't know how steep the DIP covenants are, but with Tilton claiming cash flow possitive now I would find it hard to believe having trouble with the debtors or banks for exit financing. Congratulations UAL, a job well done!! :D
 
Bizman said:
Just saw on the ALPA web site that the LEC chairman stated that UAL will miss the DIP covanants from Dec to Feb. It was in the Sept issue of DC-11. Will this throw a wrench into the exit financing?
I'm still waiting for someone to verify this information in the first place. I've seen or heard nothing about UAL missing DIP covenants, which makes this whole thread pointless. :down:
 
Falco said:
The problem is that the DIP covenants are becoming more restrictive, and require UAL to make a profit, which they obviously will not. Notice that all the other majors are saying flying will be increasing by 10% next year. This almost insures that no one will make a profit.
The DIP covenants require UAL to EBITDAR positive, NOT profitable. EBITDAR stands for Earnings BEFORE Interest, Taxes, Depreciation, Amortization and Rent.

I don't know what UAL's Dec 02-Sep 03 EBITDAR position is (I have yet to see anywhere in the press UAL's exact EBITDAR position), but UAL has been EBITDAR positive for the last several months.

Just for "contribute," (if you don't know who this is, read some other threads on this board) this is from UAL's quarterly statement: "The Company said it also expects to meet the EBITDAR requirements for its DIP agreements in October."
To find this quote, go to this press release: http://biz.yahoo.com/prnews/031030/cgth046_1.html
Find the paragraph with the header: September Monthly Operating Report

DIP covenants started in Dec 2002 and DIP targets are based on Dec 2002- current month. However, once we hit Dec, they are based on a 12 rolling target, which means that the Dec 2003 covenants cover the Jan-Dec 2003 timeframe. The Dec 2003-Feb 2004
 
According to Standard and Poor's, United had an operating loss of $120m for September. This is only going to get worse later in the year. UAL is far from out of the woods as their main plan seems to be getting an ATSB loan. I hope they have a Plan B.