The Future Is Now The Past

[Ukridge]

Well, I have been pretty far away from this forum (other than a quick question about aircraft numbering that I still do not understand) for a couple of months but as I sign on this afternoon I see that United seems to have its ship pretty well under control. Could it be that quite possibly the naysayers were wrong and that all the talk of "an imminent liquidation" that was certain in the future is now in the past?
Pretty rough go of it for you chaps to be sure, but what else is left? Is United now at that point where it is attractive to investment and may very well be marked as a survivor? Not sure how the "exit" is a magic wand that suddenly makes anything at all different, but the attraction of capital would certainly seem to ensure survivability for the time ahead.
Cheers

 

[Hopeful]

Sure, who wouldn't want to invest in a company that raped its employees.

Investing in airlines, espcially the legacy carriers, is a losing proposition because the same management who led them into financial ruins are still there and if they aren't, their proteges are at the helm.

I know, I know, half a loaf is better than no loaf.

 

[synchronicity]

Sure, who wouldn't want to invest in a company that raped its employees.

Investing in airlines, espcially the legacy carriers, is a losing proposition because the same management who led them into financial ruins are still there and if they aren't, their proteges are at the helm.

I know, I know, half a loaf is better than no loaf.

[post="274566"][/post]​

Personally, ain't no way in heck I'd invest my dollars in UAL. Labor-management relations are godawful and show no signs of improving, "management" continue to act in a generally arrogant and high-handed fashion towards all other parties (creditors as well as labor), I still don't see any creative plans for improving business other than "cut costs, hope fuel prices drop, and, oh, try something that's vaguely like Southwest, because they make money so maybe we can, too".

Wow, what visionaries.

I'm not a big fan of cyclical, highly leveraged industries with bad management and horrible employee relations, but that's just me. Maybe the airlines as a whole are cheap enough now to be a decent short to mid-term stock investment. But I'm not trying it.

-synchronicity, we get income from them, that's all the "investment" in the industry we need

 

[Ukridge]

Synchronicity

Well, I would have to tend to agree with you on certain points. I would not wish to hold the paper of an airline - certainly not as an individual. Nor, as I have mentioned many times do I believe that any of the operators have developed a better mousetrap - television or Internet alone in an aircraft does not for me reveal a paradign shift.
What my post was intended to ask (and on this it was not clear) was that the large financial houses seem to be ready to jump into the game at this point - that was all. Yes, it is obvious that the workers have taken a serious strapping and that alone did not reveal brilliance by the management team. It may have rather been a reality with which they had to deal, that it is all. My question then lies with the houses that are ostensibly ready to infuse a large amount of liquidity into the firm. Discomfort of all the parties aside, is this the point at which that move is made?
Cheers

 

[synchronicity]

I would not wish to hold the paper of an airline - certainly not as an individual. Nor, as I have mentioned many times do I believe that any of the operators have developed a better mousetrap

What my post was intended to ask (and on this it was not clear) was that the large financial houses seem to be ready to jump into the game at this point - that was all. ...My question then lies with the houses that are ostensibly ready to infuse a large amount of liquidity into the firm. Discomfort of all the parties aside, is this the point at which that move is made?
Cheers

[post="274583"][/post]​

Well, if we believe the news that's been reported previously, then apparently, as soon as IAM ratifies this "agreement in principle" (which will be an official tentative agreement on or before June 17, and likely voted on within a few weeks after that, so say mid-July at the latest), and as soon as the flap between UAL and AFA is over (should be sometime this month, I haven't been keeping up on the details on that one), there are several lenders ready to jump in and give UAL about 2 billion in financing, IIRC.

Dunno if any of that is conditional on UAL's resolution of any outstanding lease issues, but I expect by...oh, say, end of July, to give everyone plenty of time, you'll see an "official" announcement of financing. Which means UAL may very well be out of BK by Sept-Oct as they've previously stated.

Now, whether or not they can stay out is a different issue. 😛

-synchronicity

 

[WorldTraveler]

Part of whether UA stays out of bankruptcy (if it gets out perhaps by this fall) is to see what the competitive response will be. History shows that LCCs love to prey on weak legacies, esp. ones that show a propensity to run when attacked. UA still has the most valuable international franchise of all US airlines and has the potential to be a pretty strong competitive player. Because UA's domestic hubs are in such big markets, it makes them particularly vulnerable to LCCs.

Further, although UA has cut employee costs dramatically, the cuts are still not deep enough to cover the losses UA has sustained on an ongoing basis for the past two and 1/2 years that they have been in bankruptcy. Barring a dramatic drop in oil prices (which will help all carriers), I don't honestly see any significant cost cuts coming other than the recently "negotiated" employee cuts so it will be increasingly difficult to correct further losses. Management will try to convince us all that they are able to be viable but the numbers still are a long way from adding up.

 

[uafa21]

WT - I think Ua has cut cost and will be able to compete. Yes they still have some higher cost in relation to llc's but it is a different model.

Where I see Ua having a competetive edge now is against the other major carriers. Ua has shed itself of a lot of bond debt, salaries, lease rates, unsecured debt and has restructured. This will be a driving force for Ua operate, like it or not.

 

[NewHampshire Black Bears]

WT - I think Ua has cut cost and will be able to compete. Yes they still have some higher cost in relation to llc's but it is a different model.

Where I see Ua having a competetive edge now is against the other major carriers. Ua has shed itself of a lot of bond debt, salaries, lease rates, unsecured debt and has restructured. This will be a driving force for Ua operate, like it or not.

[post="274657"][/post]​

++++++++++++++++++++++++++++++++++++++++++++++++++++

Well I won't suggest that your incorrect, but I will say, "make a believer out of me ! How ?? When the Blood($$$$$) stops oozing out of the body, every 1-2-3 and 4th quarter.

One think is "gospel"
Jet-A, Like "petrol" for our cars, will NEVER go under $45 a barrel, or $2.00 a gal, for gas !!!

We've heard it over and over and over again. The 2 highest costs to a Company is,
1. LABOR
and
2. Fuel
And we all know this to be true. So that leaves Tilton with only 2 choices.

1. continue to "rape" the employees
or
2. shrink the airline (and we all know which choice he will make) !!
So whats the bottom line ?
"The bottom line is, WHAT'S YOUR BOTTOM LINE" ???? meaning the workers.

If a topped out Employee (hypothetically) gets cut to $11-12 p/r, with inadequate health ins., A "raped" pension plan, will you still go to work every day ???

At least if a pilot, who was making $175-$200-$225-$250K per year, gets cut to a "measily" $100K a year, he/she CAN "tough it out". Which means THEY won't be "withholding services" any time soon !!!!!

But ask yourself. At (hypothetically) $11.00 per hour($440 a week) are you gonna keep "taking it in the shorts" ?????

It's AS SIMPLE AS THAT !!!!!

NH/BB's

 

[casual rat]

One think is "gospel"
Jet-A, Like "petrol" for our cars, will NEVER go under $45 a barrel, or $2.00 a gal, for gas !!!

I just bought gas for $1.87 a gal.....anything's possible I'd guess...

 

[Ukridge]

Not having looked closely at it, but was not United cash flow positive for portions of Q1? Does this not bespeak that at least some of the firm's goals are being met? Would this not be one metric for a lending house to determine suitability for an infusion of cash?

 

[uafa21]

I was in OKC this past weekend, gas was $1.85 a gallon at some stations, however, oil is going back up again.

One problem that could happen with the major carriers is that the rest could file bk's like Ua and shed debt, pensions, wages, and other related cost. When that happens another complete round of fares could be cut causing a loss effect again. Who knows?

 

[SVQLBA]

Not having looked closely at it, but was not United cash flow positive for portions of Q1? Does this not bespeak that at least some of the firm's goals are being met? Would this not be one metric for a lending house to determine suitability for an infusion of cash?

[post="274824"][/post]​

They were indeed cash flow positive -- $160 M ish in Q1 and same again for April according to today's press release. IIRC However, remember 2 things. (1) UAL is not paying a lot of bills while in Ch. 11 (e.g., a lot of the fleet still do not have deals agreed with the lessors, hence why 4 were repossessed this week, but there are over 100 more without agreements). (2) Q2 and Q3 are when airlines need to be minting money and spinning on off lots of money to survive Q4 and Q1 -- not just making a few hundred million a month.

In the big picture scheme of things, the CASM gap between UAL (and the other legacies) and WN and B6 has barely budged despite all the time in Ch. 11

 

[WorldTraveler]

back to uafa21's original assertion that UA will have cost advantages over other network carriers, I beg to differ. UA has a lower paid workforce than everyone but US by a long shot but UA's unit costs (CASM) are still above the four solvent airlines. In fact, DL's costs are lower than UA. And those other four airlines are growing, not shrinking, overall capacity which reduces unit costs and increases efficiencies. The simple reality is that airlines do not shrink to profitability; haven't ever done it and I'm doubtful if UA will manage to do it for the first time now. Further, AA, CO, DL, and NW are not through cutting costs. If UA had devoted as much attention to improving the efficiency of their operations and cutting non-labor costs as they have focused on labor, UA might be a contender. Problem is, AA and DL esp. have a pretty big head start in that area and are not going to sit still to let UA catch up. AA and DL along with CO and NW recognize that getting to costs comparable w/ LCCs is where they need to be. DL has repeatedly said they will have costs within single digits of LCCs and they are on track to get them; that's a pretty lofty goal when compared to the other LCCs but I suspect they are right or they wouldn't keep making the statement.

I'm sure UA employees would like to think they have taken one for the team and they now are winning but the numbers tell another story. And, by the way, since Easter was in April this year vs March last year, most carriers reported better traffic results in April which will positively affect their 2nd quarter revenues.

Sorry, folks.

 

[Fly]

It must really scare you that your beloved Delta will probably being filing for bk in the near future and that United will be emerging about the same time frame. I notice you like to show up with digs for UAL but defend Delta's bonehead moves as if they were your own. Grow a pair pal, Delta and United are just businesses and you are NOTHING but a customer. Do you defend your favorite supermarket this way too? Strange.

Will you list out all the major's CASM amounts? And RASM's?

 

[ualdriver]

World-

Your CNBC/USA Today armchair analysis is absolutely inane and are based on no facts whatsoever. First you blow your '04 to '05 revenue forecasts when all you had to do was read them, then you tell us that UAL cannot find exit financing, then you tell us that airlines whose 'big' plans for survival basically hinged upon hoping UAL and US Air would liquidate are somehow now better positioned than a post bankruptcy UAL? (assuming we exit bankruptcy) And now you telling us that UAL's CASM is higher than our legacy brethern? What are you smoking World? Can I have some? Have you read DAL's or CAL's (for example) latest 10Q's?
Please, World, do post those CASM numbers for all to see for UAL and its competitors. What a joke.