Ual Lobby‘s For Industry Consolidation

[USA320Pilot]

Ohcaptainron & UAL06:

The issue is one of exit financing, however, another option would be for RSA to provide the court with its own POR in early March. This POR could provide exit financing, however, it could require United to reject certain leases and then be folded into US Airways -- with US Airways the survivor.

There are a number of options here, but first United has to deal with its underfunded pension (which could include a termination/DC Plan substitute), Dulles/ACA/Mesa resolution, EETC resolution/aircraft lease rejections, & resolution to the UCT airport municipal bond litigation -- since United stopped making payments at these key airports in April.

With analysts forecasting United will lose between $400 to $500 million (plus bankruptcy costs) in the fourth quarter, it's far from certain what could happen.

Regardless, there are a number of variables here that could effect the final outcome, but it appears we are moving toward a merger to dramatically lower unit costs by using bankruptcy business tools to reject United assets and possibly the Pittsburgh hub.

Ohcaptainron, B) by the way, how come in your first post in this thread your comments were in direct conflict with Glenn Tilton's, which were provided to the news media within 24 hours of your post? Ohcaptainron, how could you be so wrong or did Tilton not tell the truth the news media?

Regards,

Chip

 

[Fly]

Question? How much is United's BK stock worth? How much is U's non BK stock worth?

 

[ual06]

Chip you did not answer my questions. i.e...

"When did U go back into Chapter 11? "

and

"What interest?? Where in the world has "US Airways' chairman of the board David Bronner and RSA ever been included in any exit plan ??

Yes, I do understand. You ignore questions you have no answer for or does not fit your vision.

 

[Cosmo]

With analysts forecasting United will lose between $400 to $500 million (plus bankruptcy costs) in the fourth quarter, it's far from certain what could happen.

Chip:

I commented on this subject in another thread, so I've copied my comment below:

If the Denver Posts comments today (that United's planes are booked more fully and at higher fares than last year, analysts predict a fourth-quarter loss in the range of $400 million to $500 million," not including bankruptcy costs) come true, than United could be in deep, deep trouble by the first week in March when the POR must be filed, where the airline could lose about $1 billion in Q4 and Q1, not including bankruptcy costs.

Chip:

Are these the same analytical geniuses that predicted United's 3rd quarter financial results? According to an article about United in Friday's Wall Street Journal (authored by Susan Carey, one of your favorite jounalists), United's actual results before special items were much better than the analysts predicted. As the article stated, "Without those [special] items, ... the loss for the quarter would have been $37 million, or 36 cents a share. Analysts polled by Thomson First Call were looking for a loss of $1.52 a share, excluding [special] items."

So in other words, these Wall Street "analysts" missed predicting United's actual 3rd quarter net loss (excluding special items) by a factor of more than 4-to-1. What makes you think that their 4th quarter prediction is any more accurate?

 

[USA320Pilot]

UAL06:

UAL06, I did not read all of your post.

UAL06 asks: "When did U go back into Chapter 11?"

Chip answers: I do not believe they did.

UAL06 asks: "What interest?? Where in the world has "US Airways' chairman of the board David Bronner and RSA ever been included in any exit plan?"

Chip answers: I understand that Bronner could be willing to participate in United's emergence, provided the company successfully meets its significant challenges.

With analysts forecasting United will lose between $400 to $500 million (plus bankruptcy costs) in the fourth quarter, it's far from certain what could happen.

There are a number of variables here that could effect the final outcome, but it appears we are moving toward a merger to dramatically lower unit costs by using bankruptcy business tools to reject United assets and possibly the Pittsburgh hub.

Time will tell, but I suspect US Airways’ offer to keep Pittsburgh flying at current levels until October 4 is a delay tactic to allow US Airways more time to see what happens with its business partner.

At this point, it’s unclear who could be the survivor and an argument can be made supporting either airline, but the key will be the desire of the exit financier.

What will Bronner do?

One option could be for RSA to provide the court with its own POR in early March. This POR could provide United with exit financing, however, it could require United to reject certain leases and then be folded into US Airways -- with US Airways the survivor or he could provide a POR where bankrupt United would be the survivor.

Regardless, with industry fundamentals revenue deteriorating the key is to cut out costs and the best way to do it is through bankruptcy, lease/agreement rejections, and mergers to create economies of scale. Why?

As Jeffrey Stanley, manager of economic analysis and regulatory affairs at United, speaking at The Future of the Airline Industry conference at Washington University in St. Louis said, "A series of events changed the competitive landscape of the airline industry, including the Sept. 11, 2001 attacks, a sluggish economy and the outbreak of severe acute respiratory syndrome, or SARS, Stanley said. Those factors have helped the growth of low-cost carriers," he said.

"If things stay the way the are now, there will be several Chapter 7 (bankruptcy liquidations) down the road, and that's not good for anyone," he said. The most feasible solution to the situation is consolidation in the domestic airline industry, he said.

Regards,

Chip

 

[USA320Pilot]

Cosmo:

Are you always argumentative? Regardless of what I say you dispute my comments.

However, it now appears there will be a merger where an investor is willing to fund the transaction -- with major cost carve outs of the combined business entity -- provided United can successfully meet its challenges and not liquidate.

Regards,

Chip

 

[ohcaptainron]

Chip I re-read the post, my bad, I said late fall I meant late spring 04, otherwise the content and characterization of Mr. Tiltons remarks are right on.
UAL DOES NOT NEED US AIWAYS to lower THIER costs, infact our costs would rise dramatically. Lowering all costs is what UAL and Mr. Tilton are about at this point in time. That dog won't hunt. Since you only seem to believe your un-named sources
I think they are having some fun with your emotions, Gee, what should we tell Chip today? Give it a break whatever creditabilty you may have seems to diminish with each post. Good luck to all of us.

 

[USA320Pilot]

Ron:

Right... B)

Chip

 

[ClueByFour]

With analysts forecasting United will lose between $400 to $500 million (plus bankruptcy costs) in the fourth quarter, it's far from certain what could happen.

What will Bronner do?

To address the first quoted paragraph: are these the same analysts who overestimated UA's Q3 loss by a factor of magnitude?

To address the second: absolutely nothing. You will note (whether you choose to believe this or not) that Bronner basically got an entire airline and to the head of the US creditors list and control of the BOD for basically what he was set to lose on the EETC paper he was going to get stuck with in the event of a US liquidation or a Texas Pacific takeover. Outside of some comments that were made specifically to whipsaw US employees and spread some FUD he has shown zero inclination to spend money on playing airline any further--indeed, he forced a second round of concessions upon the US unions (including the loss of the ALPA pension). He has shown no inclination to further invest money in US operationally. I guess I'd say that one comment over a year ago does not mean that the man is going to spend millions of further dollars.

The other factor at work here is this: Glen Tilton, unlike Austin Dave, has had some degree of sucess outside the airline business. This is very good, if for no other reason that he won't do something as stupid as take exit funding from a pump and dump specialist like Bronner.

 

[Fly]

The will be NO MERGER!

No matter how much you wish you could fly the 47, it's not happening. Our employees will Ch 7 this airline before we allow this merger. Our troubles began with talking of a merger and I can assure you we would rather let the airline go first. Don't believe it? Watch! One only has to read this board to see all the trouble U employees have over there with management. Why would we want more? We have enough of our own. At least we get along with our management and supervisors, we pull on the same end of the rope......we don't see that happening on your side of the woods.

 

[FlyingHippie]

Fly, I've been laughing at your notes. First, the anti AFA notes, then this "we work together at United." Give me a break, you guys didn't cooperate with Wolf or Goodwin. Believe me, the last thing most of us want, except Chipster, is a merger with United. You guys have your problems, we have ours. We've been through three mergers, don't need another one, especially two companies with attitude problems.

 

[Fly]

Agreed! You stay there, we'll stay here.

 

[Cosmo]

Cosmo:

Are you always argumentative? Regardless of what I say you dispute my comments.

However, it now appears there will be a merger where an investor is willing to fund the transaction -- with major cost carve outs of the combined business entity -- provided United can successfully meet its challenges and not liquidate.

Chip:

I only dispute your reliance on questionable assumptions (like the predictive ability of the analysts that were woefully inaccurate regarding United's 3rd quarter financial results), your selective use of people's comments (some of which have become extremely dated), your refusal to admit that you made a mistake (like when you knowingly and repeatedly misrepresented United's so-called "real" 2nd quarter financial results), and your continued penchant for making statements (like the one in the second quoted paragraph) without any supporting evidence whatsoever, apart from your "secret sources." I'm simply reacting to your comments that, by all appearances, seem to be generated by the airline equivalent of fantasy football (IMHO, of course)!

If that fits your definition of argumentative, well, so be it. But you claim to be making thought-provoking comments, so why are you now complaining when your comments provoke thoughts that might not agree with yours? To paraphrase, if you can't stand the heat, don't make the heat-generating comments!

 

[Doc]

All of you amaze me! If you don’t like Chips comments why are you in U’s forum complaining, and for the life of me I can’t understand why any of U’s or UAL’s employees would complain of a merger if would help make and strong airline and you have to admit that in the situation that these two companies are in WOW what a power house it would be if it could be done…. This one company could compete on any level and wouldn’t it be great to see LUV and these LCC’s get a run for their money. I’m tired of seeing $39.00 to $69.00 one way fares its all done on the backs of there lower paid work force sooner or later its going to happen its just a matter of time the word is getting smaller and there is only so much room time to consolidate and make some noise..................

 

[Flufdriver]

Great point Doc...some people just don't see the "Big Picture"...their EGOS get in their way. I personally would rather MERGE and get strong and COMPETE then be out of work. At this point I don't care what the name is on the side of the airplane as long as everyone in treated fairly!!!