Ua Reorganization Plan

FWAAA said:
Busdrvr is correct. You appear to be confusing pump prices with wholesale futures prices.

Wholesale gasoline futures hit a peak of $2.92/gallon on Aug 31, and last week dropped below $2/gallon. Actually, Busdrvr understated the magnitude of the drop.
http://www.bloomberg.com/news/markets/energy.html

Wholesale gasoline futures have dropped like a rock since Labor Day. Too bad JetA hasn't tracked alongside; Jet fuel is still very expensive.
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Umm, no. Busdrvr said that they had dropped 70 cents in the past week or 2. So I looked up wholesale unleaded on the NYMEX for the past two weeks. Prices ranged between 1.80 and 2.10.

The 2.92 quote was a very short term spike and had very little impact on actual prices paid. Otherwise, gas would be closer to $4.
 
It is not meaningful to compare gasoline and jet fuel prices. In reality, jet fuel prices have been running over $100 barrel due to the crack spread going over $40/bbl. The spread is easing but there are no signs that the underlying price of oil is significantly declining or will in the near future. Given that other petroleum products are more profitable to produce than jet fuel, the spread is not likely to return to previous levels until demand for just about every other product returns to previous levels which it might do my late February since a hard winter is predicted for the US NE. Airlines then have about 5 months of reasonable prices before the next hurricane season disrupts supplies again; remember, forecasters say we are in a period of increased hurricane activity that could last for several more years and no new refineries will be built in the US by next summer or probably even the next one.


Also, mergers among legacy carriers are fairly unlikely for at least another year. Even though UA may be stepping out of BK, no one is in a position to be bought other than CO which doesn’t appear ready to give up its independence. Only if DL (the only other likely acquisition candidate for UA) fails to successfully reorganize would UA have an opportunity to buy them. Otherwise, DL’s creditors have much more to gain by letting them continue the path of reorganization than to be acquired; bankruptcy law gives the debtors considerable opportunity to propose a plan of reorganization and extensions are quite common, as UA is fully aware.

For calendar 2004, UA’s yields were up 11-13% for their three int’l reporting units but were down 4% on their domestic system. Load factors were up about 2% on the domestic and Atlantic systems and approx. 4% on the Pacific and Latin systems. Domestic and Atlantic had about 5% more capacity, Pacific had 15% more capacity, and Latin had 15% less capacity. On the domestic and Latin systems, UA’s RASM increase was driven more by traffic growth or capacity reductions than revenue growth on stable capacity. For 2004, UA got approx. 2/3 of its revenue from the domestic system.
 
If the state of the industry continues down the path it is currently headed down, it would not be far fetched to see UAL do a BK 2.

It is common for a company to ring out whatever they can in BK 1, then get another bite of the apple outside of CH 11, but not hesitate with BK 2 when the need arises.

I do not wish this on anyone having lived through this at US Airways...but, with NWA & DAL using the courts to quickly achieve deep cuts, UAL's cost advantage gets watered down significantly.

Good luck to us all :-(

Segue said:
Seriously doubt that. The legacy carriers all have some serous pain to go through to get to where they can compete in this market. The point of Mr. Roach's comments is that there is still a lot of inefficiency in United left to cut out.
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Deleted by Moderator said:
And now Mr Roach is an expert because he started a carrier that has done so well they needed to merge with another airline to survive?
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Actually AWA was profitable, we'll see what happens with their merger. If anything USAir will be the boat anchor on them. They were probably better off on their own.
 
On your own? Have you seen how big LUV is away from PHX and LAS?

Borescope, the truth of the matter is that Mr. Parker is no amateur. His expertise along with GE Capital and others are trying to put together a network to create a paradigm that currently does not exist; creating an airline that is both low cost and full service. LUV is low cost. U and AWA are full service. U also offers a Star Alliance link. Building a LARGE LCC quickly is the only answer.

In all honesty, this may not work, but what is the alternative? AWA alone would not make it past '08. Just count the cities served and total A/C over at LUV. That's why UAL, NW, and Delta are in BK. This is no accident. They must emerge as an LCC as well, and probably larger through mergers.

Be patient, be informed and be positive.
 
On your own? Have you seen how big LUV is away from PHX and LAS?

Borescope, the truth of the matter is that Mr. Parker is no amateur. His expertise along with GE Capital and others are trying to put together a network to create a paradigm that currently does not exist; creating an airline that is both low cost and full service. LUV is low cost. U and AWA are full service. U also offers a Star Alliance link. Building a LARGE LCC quickly is the only answer.

In all honesty, this may not work, but what is the alternative? AWA alone would not make it past '08. Just count the cities served and total A/C over at LUV. That's why UAL, NW, and Delta are in BK. This is no accident. They must emerge as an LCC as well, and probably larger through mergers.

Be patient, be informed and be positive.

'''Borescope, the truth of the matter is that Mr. Parker is no amateur. His expertise along with GE Capital and others are trying to put together a network to create a paradigm that currently does not exist; creating an airline that is both low cost and full service. LUV is low cost. U and AWA are full service. U also offers a Star Alliance link. Building a LARGE LCC quickly is the only answer.'''

HA HA....The paradigm has already been created....standby,

GE presides over the remnants first, the main body comes last....in 2006.... :shock:
 
Unfortunately, America West would have never survived on their own. They simply lacked the critical mass that will be necessary to compete in an industry with ever-increasing Jet A prices. Even combined together, HP/US still is too small to succeed long-term. Over-time, the new US Airways will merge again. The only questions are "when" and "with whom"?