UA is going to rely on gov''t loans to exit bankruptcy??

Sidebar
whatkindoffreshhell

whatkindoffreshhell

Veteran
Aug 20, 2002
1,423
90
Valhalla
www.usaviation.com
CFO Jake Brace is quoted at length in today''s WSJ about an early BK exit. Then at the end of the article is a jarring quote by an un-named UA official (has to be Jake) who stated a government-backed loan is the far greatest likelihood for exit financing.

You''ve got to be kidding Jake!

Let''s put aside the simple absurdity of Brace still having a job at UA.

Does anyone honestly believe that UA can obtain those federal loan guarantees? UA just received another $300 mil gift from the taxpayers. Where do you draw the line?

Perhaps the fat lady was just enjoying an intermission break...
 
Jake exceeds expectations of emerging from bankruptcy, so where is the thanks? Why are do you search for ways to bash him? You just can''t win in this business.
 
If you read the article again you will see that the $300 million he is talking about IS the money that ALL airlines received from the government (not a loan guarantee). No where does he mention loan guarantees....read it again. Looks like UAL will be emerging soon without the loan guarantee and without having to take the horrible concessions that AMR employees got stuck with.









​
 
----------------
On 5/21/2003 2:50:41 PM Fly wrote:




If you read the article again you will see that the $300 million he is talking about IS the money that ALL airlines received from the government (not a loan guarantee).  No where does he mention loan guarantees....read it again.  Looks like UAL will be emerging soon without the loan guarantee and without having to take the horrible concessions that AMR employees got stuck with. 









​

----------------​

Okay, I re-read the article again. Buried at the end you''ll read the "person familiar" with UA''s situation clearly stated that the airline expects to go back to the feds and re-open the loan guarantee application.

The $300 mil already received is not part of their plan here folks. According to this ''person who knows'' UA believes that they''ve achieved the necessary cost savings to win loan guarantee approval from the feds this time.

Has anyone read or heard about any other source (i.e. TPG, GE or even a Bronner-type outfit) willing to provide BK exit financing? Nope, didn''t think so. UA must secure this type of funding to exit BK and so far nobody has stepped up to the plate.

Brace obviously does not possess the required credibility for the financial community. He''s counting on the feds to save UA.
 
If UAL can secure the federal loan guarantee, plenty of banks/lenders would provide the money, since it would be guaranteed by the Stabilization Board (feds). Who loaned USAir the $900 million (guaranteed by the feds)?? As for equity, I'm sure someone will step up and provide several hundred million for fresh equity (won't they?).
9.gif
 
Last night at briefing we were told two things I want to pass on

1.The low cost carrier is shelved(dead).
2.UAL wants to try to exit BK as soon as before the end of the year.
3.There has been way more retirements than the company ever expected.
 
I think ualflynhi only meant that the LCC as a separate entity is dead. If this interpretation is correct, I don''t foresee much, if any, of a change in United''s current capacity as the carrier comes out of bankruptcy, although it would still be a significant drop compared to the carrier''s pre-9/11 flying.

ualflynhi, please let us know which interpretation of your comment is correct. Inquiring minds want to know! Thanks.
 
If the LCC is dead, that is the best news out of management over the last several years. It means UAL will focus on profitable routes only. And that means a significant reduction in service. That is good news for everybody.
 
All we were told was that the LCC is for the time being
"shelved"which when I inquired further that most likely
it will never see the light of day.I took that to mean
as a seperate entity.Tilton has said that the shuttle
will come back in some form or another so I think they
will resurrect the old shuttle,but maybe not call by its
old name.
Also we were told they ramp will use 3 people for pushbacks,
and our new maintenance boss wants mechanics to meet and work
every aircraft on every trip.So I dont think in our station
we will lose that many to layoffs.The company has at least in
the aircraft maintenance dept. experienced huge retirements.Thinking
ahead they may not be in so big of a rush to layoff as many as previously
thought.Most of us here started out in overhaul in SFO and UAL needs
experienced techs.We are adding 162 flights in June and I am happy
about that.For me 13% paycut and switching to a HMO for 35.00 a month
has not been to high price to pay to aviod the unemployment line.
Sure I'd like 50.00 per hour but I am okay.
 
Here''s my perspective:

United just closed down TWO major maintenance facilities, layed off about 4000 mechanics and did not lose one single manager.

not one

The money has to come from somewhere and the government''s got more of it that anyone else these days.
 
----------------
On 5/23/2003 10:07:48 AM Falco wrote:

If the LCC is dead, that is the best news out of management over the last several years. It means UAL will focus on profitable routes only. And that means a significant reduction in service. That is good news for everybody.

----------------​


Actually, we were told by Glenn that the proposed cuts (which were approved almost entirely by the unions) would reasult in virtually ALL of our routes being profitable (with additional currently unserved city pairs being profitable), so it won''t be UAL doing the capacity cutting. With a hub and spoke airline, you can''t judge any particular route in a vacuum. We have "loss leaders" that we keep because the actually may make other routes profitable.
 
No one will lend or cosign on any UAL loan until the company radically alters the way it does business. As things stand now, UAL''s business is still broken; the company is just losing less money now due to the cost cuts extracted to date.
 
You read this and just have to laugh at UAL management.

United group demands data
Committee wants consultant files
By Andy Vuong, Denver Post Business Writer
United Airlines is not allowing its debt holders access to work done by the company''s primary strategic consultant, the carrier''s creditors committee charged in a bankruptcy court filing.

In the filing, released Tuesday, the group asks a bankruptcy court judge to reject the company''s request to extend its consulting agreement with McKinsey & Co.

United hired McKinsey shortly after the airline filed for bankruptcy protection in December to help develop a reorganization plan, among other things. The contract extension calls for McKinsey to continue to work on the plan and to review strategic alternatives proposed by key stakeholders.

Since United believes "McKinsey will play a vital role in its reorganization and proposes to pay $4 million for McKinsey to do so, then the committee should have access to McKinsey and the data and information it collects," the filing states.

United agreed to pay McKinsey $4 million for services through May and an additional $1.3 million for work in June and July.

McKinsey has offered to meet with the committee, but United has refused to allow the consulting giant to do so, according to the court documents.

United spokesman Jeff Green declined to comment.

The committee consists of representatives from United''s three largest unions and 10 unsecured creditors.

The group should have access to McKinsey''s work so it can help shape United''s reorganization plan, said Douglas Baird, a University of Chicago law professor who is following the airline''s bankruptcy case.

"There are serious issues about United''s business plan that need to be thought through carefully," Baird said.

Specifically, many analysts have criticized United''s plans to launch a low-cost carrier as part of its reorganization. The strategy has failed repeatedly in the past. In February, creditors asked United to look at alternatives, such as closing certain hubs.

From the beginning, analysts and creditors have questioned United''s decision to hire McKinsey, which has had mixed success in working with the airline industry. McKinsey was the key adviser to Swissair during the carrier''s collapse.

The committee objected to McKinsey''s initial hiring, but U.S. Bankruptcy Judge Eugene Wedoff approved the move.

Baird said United might be concerned about information getting leaked to the public. Shortly after the company presented a draft of its business plan to creditors in February, the information was widely distributed over the Internet

The committee said in its court filing that McKinsey''s contract with United doesn''t require the firm to file detailed reports of its work to get paid.

Wedoff is expected review the matter Friday.
 
So, let me get this straight. In January, UAL comes out with a gigantic flowery power point presentation talking about how their survival depends on the genesis of a low cost carrier, and now five months later they are "shelving" this plan? Hmmm. Does anyone in Elk Grove really manage this company? And about the "exit financing" question, the WSJ article clearly infers their plan relies on an ATSB loan like USAirways received. I personally doubt this carrier has even the smallest of chances of seeing 2004, but who knows? Look how long National lingered in bankruptcy before the courts finally killed their failed business plan.
 
Pre Chill,
do you think maybe UAL doesn''t want millions of dollars worth of confidential corporate strategy plastered on the internet? Do you think it''s possible that it would be if it was released to the CC? Like maybe the confidential PP show you allude to?
 
You must log in or register to reply here.

Latest posts

Top Bottom