United Airlines

[NewHampshire Black Bears]

(This is a genuine question, that could also apply to AA as well.)

With DL......Now (by far) the Biggest US Airline(a position that UA and AA traded back and forth for many years),...............What..TODAY..is the financial health of UAL ?, (or for CO or LLC, for that matter)

Watching the economy which equates (I'm sure) to Less people flying, I'm curious as to what could happen if Jet-A starts rising, which I'm certain that it will at some point.

ALL Intelligent Opinions welcomed !!

 

[NewHampshire Black Bears]

WOW........................over a "170 Views", and not one response !

Where the heck is......COSMO, when I need him ??????

(trust me,............the Name COSMO, and INTELLIGENT, go "Hand in Hand") !!!

 

[Cosmo]

WOW........................over a "170 Views", and not one response !

Where the heck is......COSMO, when I need him ??????

(trust me,............the Name COSMO, and INTELLIGENT, go "Hand in Hand") !!!

Aw, shucks, you're making me blush!

More seriously, thanks for the compliment.

I can't spend a whole lot of time on this at the moment, but you might want to review a report issued this morning by Fitch Ratings that discussed the outlook for the U.S. airline industry (you can read the report here). Overall, it puts United a lot behind Southwest, a little behind American, Continental and Delta/Northwest, equal to JetBlue, and ahead of US Airways.

IMHO, the keys for United are: (1) maintaining its industry-leading capacity restraint; (2) continued moderation (though not necessarily further reductions) in the price of fuel; (3) continued RASM increases; and (4) all of that translating into positive cash flow. If United can do most or all of this, it should be OK. If not, well, 2009 could be a very difficult year.

 

[FWAAA]

Excellent post, IMO.

From what I've read, the major problem facing the legacies right now is the liquidity crunch caused by huge cash calls on their hedges gone bad. AA recently reported that it has had to give counterparties about half a billion dollars in cash collateral deposits, a complete reversal from a few months ago. UA has had to deposit about a billion dollars in cash with its hedge counterparties, and even WN is not immune to these cash calls.

So even though fuel is down substantially, the current challenge facing airlines is finding/keeping enough cash to avoid credit agreement defaults. If they can hang on, and unit revenue doesn't collapse to September, 2001 levels, then good times are ahead with oil at $42/bbl instead of $147/bbl.

On disciplined capacity cuts - I keep wondering if UA can resist keeping some of those 737s next year. Same with AA: will it really retire MD-80s as those new 738s are delivered? At $1.25/gal jetA, the legacies might be tempted to not park all those airplanes they announced earlier this year.

 

[NewHampshire Black Bears]

Very good article COSMO(I would have expected Nothing Better)

(Edited by Moderator: If you want to discuss the DL/NW pilot arbitration, go to the appropriate forum. This is not it.)

 

[FWAAA]

UA has announced that it expects to end 2008 with about $2 billion of unrestricted cash and that it is taking steps to raise new cash:

Liquidity

The company expects to end the fourth quarter with unrestricted cash, cash equivalents and
short-term investments of approximately $2.0 billion, restricted cash of approximately $0.3
billion, and posted fuel hedge collateral of approximately $0.9 billion. The fuel hedge collateral
deposit estimates are based on December 11th closing forward curve prices. Actual fuel hedge
collateral will be determined based on market prices prevailing at the end of the quarter. The
Company is currently pursuing certain additional liquidity initiatives that are expected to close in
the first few months of 2009.

http://media.corporate-ir.net/media_files/..._Update_Dec.pdf

Unit revenue is expected to be flat in the fourth quarter compared to last year's fourth quarter after taking into account the mileage plus accounting change. That's not real encouraging news, but fuel is getting cheaper.

From the media:

UAL Corp. ended September with about $2.93 billion in unrestricted cash. It has been raising money by selling airplanes as it cuts capacity, and by advance sales of frequent-flier miles to its credit card partner.

But it lost money in the third quarter on high fuel prices, and it's likely to be hurt in the fourth quarter by the recession and fuel hedges that stand to lose money. United did not predict its fourth-quarter profit or loss on Wednesday. Analysts surveyed by Thomson Reuters expect the carrier to lose $3.27 per share.

On Wednesday United said that besides its unrestricted cash of about $2 billion, it has posted $900 million in collateral on fuel hedges and has another $300 million in restricted cash.

The company did not detail its cash-raising plans, which it said are expected to close in the first few months of 2009. Last month United said it still had more than $2 billion in assets it owned free-and-clear, although that was down from $3 billion earlier this year.

http://biz.yahoo.com/ap/081217/ual_outlook.html?.v=1

 

[novaqt]

Oh what the heck, why not ask Congress for a bailout? We were refused before and had to go through bankruptcy. How come the auto industry rates and we do not? Let the auto industry restructure in Chap 11.

 

[novaqt]

Oh silly me. The White House gave them some money. Enough for Bush to turn industry over to Obama. The Dems got this country into this mess. Don't anyone EVER FORGET IT!!! Voting a neophyte into the White House was sheer stupidity on behalf of ACORN and paid for voter registration of college kids who haven't a clue, because they haven't experienced life yet; paid for street people; etc., etc, etc. The chaos surrounding Absentee voting also helped. We are now stuck with The Big "O" and the Clinton retreads. I thought Big "O" would stay clean during honeymoon period, but looks like Crook County, from which Big "O" hails from, will be providing us plenty of criminals. Stay tuned, this is going to be a big ride for the next 4 years. Dirty politics and politicians of the first order. Blagojevich was a former bookie. That should speak rheams about what will be disclosed. Maybe this is what the major media was hoping for all along...a come back with all the dirt and disclosures.

 

[767jetz]

Yeah... like McCain and Palin were the answer.

Gimme a break! 🙄

 

[Richard]

Back on subject please--

Politics in the Water Cooler--United Airlines' fiscal condition here.

Thank you.