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I predict a net loss of $800 million not including special items like writedowns. Including all special items, look for a net loss of $1.5 billion.
Additionally, I predict that the second Ch 11 filing will occur by December 1, 2008.
AA can't compete with their pensions still intact.
I'm inclined to agree with you that UA will have a terrible quarter. But the one piece of hard data that exists seems to contradict that idea. DL says that it will be profitable this quarter -- unclear on what basis though. If DL is making money, then I'm guessing that things are not as bad as they may seem. Which leads me to predict a loss in the $400-500m range excluding items. The writedowns are really immaterial when considering the ability to be an ongoing concern.I predict a net loss of $800 million not including special items like writedowns. Including all special items, look for a net loss of $1.5 billion.
Additionally, I predict that the second Ch 11 filing will occur by December 1, 2008.
I'm inclined to agree with you that UA will have a terrible quarter. But the one piece of hard data that exists seems to contradict that idea. DL says that it will be profitable this quarter -- unclear on what basis though. If DL is making money, then I'm guessing that things are not as bad as they may seem. Which leads me to predict a loss in the $400-500m range excluding items. The writedowns are really immaterial when considering the ability to be an ongoing concern.
Predicting Ch. 11 is much more difficult. It depends on how concentrated UA's losses are. If they are losing large amounts of money on 30-40% of their routes, then parking 100 planes will make a huge difference to their profitability. But if they're losing modest amounts across the majority of their network, then it won't change that much. Of course, none of us know whether the fall reductions in capacity in the industry will be enough to support higher average fares.
I will predict that UA will not go Ch. 11. If they go, it will be Ch. 7. But before it comes to that, I think that US will go. US is not reducing capacity as much as others and has dramatically less international flying to hedge declining domestic demand. With few unencumbered assets, US is the first likely candidate.
Why do all of you keep harping on the AA pensions as a financial problem to the company? The pension plans are currently 95% funded. I.E, the money is already in the hands of the pension plan trustees.
AMR gains practically nothing from dumping them on the PBGC other than avoiding future payments to them and some incidental admin expenses.
That's what the United employees thought also.
As far as gaining from the dumping of the pensions.........
When the plans suffer losses, the company has to fund those plans to bring them back up. If they go to get a loan for new aircraft or anything else, the bank is going to want some assurances that the money is going to be use for it's intended purpose and not on some frivolous item such as a pension (as the bank sees it).
I'd be willing to bet you that the first thing that goes is the pension fund in any BK.
If UA doesn't have some management change then they are headed for BK7.
What else would explain the fall from $41.14 on 2/1/08 a share to $3.86 on 7/3/08?