United’s rhapsody of blues- A Tribune Special Report, Part 1

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CHICAGO TRIBUNE
First of four parts
Published July 13, 2003
Jake Brace suspected the worst as soon as the flight attendant handed him a thin strip of fax paper.

The lanky United Airlines executive sipped a Diet Pepsi as he sat crammed into coach, his own discomfort a reflection of the precarious financial position that even forced the carrier''s bosses to fly on the cheap.
The brief message, beamed directly to the same machine that alerted pilots to the Sept. 11 hijackings, spoke volumes to Brace. Please ask UAL CFO to call Dan Montgomery ASAP.
http://www.chicagotribune.com/news/special...ay1-story.story
 
Today CBS MarketWatch reported, "In the second quarter, the Amex Airline Index almost doubled during a three-month period that could see losses of as much as $1.8 billion. Among the largest publicly traded airlines, some of the widest losses, will come from the parent of No. 1 carrier American Airlines, AMR Corp. at $2.68 a share, with a range of estimates from $1.60 to $3.96, according to Reuters Research estimates. AMR is the first of the majors to turn its results, expected Wednesday. Northwest Airlines is targeted to lose $2.71 a share, with a range of $2.06 to $3.50. But it is bankrupt UAL Corp., parent of United Airlines, that appears to have lost the most with a $5.03 consensus estimate."

Best regards,

Chip
 
CBS.MW said: "But it is bankrupt UAL Corp., parent of United Airlines, that appears to have lost the most with a $5.03 consensus estimate."

Chip asks: Can somebody tell me what is not fact about this statement? Moroever, the First Call Consensus estimate if for United to lose more than twice as much as every other publicly traded major airline. Is this true or false?

Best regards,

Chip
 
Personnaly I do not know what the big deal is about this anyway. Shares to me mean stocks, and the stocks at UA have already been said to be worthless. So what is the big deal?
 
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On 7/15/2003 12:49:04 AM Chip Munn wrote:

CBS.MW said: "But it is bankrupt UAL Corp., parent of United Airlines, that appears to have lost the most with a $5.03 consensus estimate."

Chip asks: Can somebody tell me what is not fact about this statement? Moroever [sic], the First Call Consensus estimate if [sic] for United to lose more than twice as much as every other publicly traded major airline. Is this true or false?
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You''re really getting desperate, aren''t you, Chip? In this short posting, you''re wrong on at least three counts (and that''s not considering the misspellings).

#1. While it is a "fact" that CBS MarketWatch did indeed make the above quote, the UAL estimated loss of $5.03 per share is just that, an estimate. It won''t be a "fact" until UAL announces its quarterly result.

One could argue that this is simply a matter of semantics, and usually I would agree. But since this is how you seem to want to play the game, I can play that way, too.

#2. While UAL is projected to lose more than any other airline (at least among those that were mentioned), your arithmetic capabilities failed you when you claimed that UAL''s estimated loss of $5.03 was "more than twice as much" as AMR''s projected loss of $2.68 or NWA''s projected loss of $2.71. If the AMR and NWA projected losses are doubled, they equal $5.36 and $5.42, respectively. Do the math! And I know that it''s not much of a difference, but it''s enough to make your "more than twice as much" statement wrong.

#3. While gloating about UAL''s large projected loss on a per-share basis, you neglected to consider that the number of outstanding shares might be different from one carrier to the next. In UAL''s case, there are just under 100 million shares outstanding, resulting in a projected loss of about $500 million. In AMR''s case, there are roughly 156 million shares outstanding, giving a projected loss of about $419 million. If the above projections prove to be correct, UAL will still have a significantly larger absolute dollar loss than AMR, but the disparity is not nearly as big as you would like everyone to believe that it is. And it''s certainly not anywhere near twice as much as AMR''s projected loss!

Face it, Chip, YOU ARE WRONG!!! And that''s a "FACT!" Let''s see if you''re capable of admitting it. And if you can''t or won''t admit it, then what little credibility you still have on this board will instantly evaporate.
 
Cosmo:

I agree that the EPS is for earnings per share and is defined as the profit or loss divided by the outstanding shares, but I believe UA lost about $450 million in the first two months of Q2. It will be interesting to see the quarterly announcement on August 1, its effect on the DIP financing, and forward looking guidance.
By the way, what's your opinion on the merits of the New York Times announcing UA's pensions are underfunded by $7.5 billion versus $6.3 billion, their arithmetic, and how this news will effect UA's restructuring, without a legislative solution?
As far as typing mistakes, I often times do not have time to use spell check or proof read my posts, therefore, I apologize for the errors.
Best regards,
Chip
 
Chip:

Despite your best efforts to "spin" the 2nd quarter 2003 Reuters Research (not First Call) estimates of various airlines'' financial results into yet another example of how UA''s losses will be "more than twice as much as every other publicly traded major airline", you were presented with facts that showed otherwise.

So what''s your response to some inconvenient facts that don''t meet your preconceived notions about UA''s future? You change the subject, of course. You just can''t seem to bring yourself to admit that you were wrong, and I''m not talking about the typos.

To put it charitably, you were caught distorting the truth. And to do so where it was so easy to verify that your claims were not factual (and, indeed, involve only relatively minor points) brings into dramatic clarity the extent to which your anti-UA crusade knows no bounds. The charade that you are simply a neutral observer regarding UA''s future (and its impact on US) has now been finally put to rest. IMHO, you no longer have any credibility to claim otherwise!
 
CHIP!
A VERY INTERESTING ARTICLE! Although it is not the whole article, and just cut and pasted, I thought that you would find this most interesting.

Wednesday, July 16, 2003 5:31AM EDT

Changing flight plans
Airlines hope regional jets can lift them above the clouds of economic gloom
By DUDLEY PRICE, Staff Writer

In fact, pilots have long resisted the regional jets -- and union rules prohibited some pilots from flying them. Now more flexible union contracts are allowing for expansion. And airlines can''t get the regional jets fast enough.
In May, US Airways, which has cut its fleet of large jetliners 33 percent since 2001, placed an order for 170 regional jets worth $4.3 billion.
 
Cosmo:

Let's just wait to see the August 1 results and agree to disagree. By the way, I understand September bookings are way off for the industry and there are other interesting reports within CCY regarding UA. Regardless, the fall should be interesting especially since NW just filed a $2.5 billion shelf agreement for general corporate purposes.

Best regards,

Chip
 
Novaqt:

Novaqt said: "Please stop SHOUTING! Are you getting desparate now???"

Chip answers: Nov, it is my understanding shouting is using caps. Where did I do that?

Best regards,

Chip
 
Trolly:

I fully understand US'' RJ order and the competitive low cost response with the EMB-170/175. US vice president of corporate development told the MEC that this aircraft will immediately produce a profit and will have a break even load factor of 50%. The aircraft will be able to compete with LCC''s and produce earnings. By the way, what does your post have to do the the Chicago Tribune article?

Best regards,

Chip
 
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On 7/16/2003 12:01:09 PM Chip Munn wrote:

Let''s just wait to see the August 1 results and agree to disagree.
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Agreed (especially since I will be away on vacation for most of the next three weeks) .

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On 7/16/2003 12:01:09 PM Chip Munn wrote:

By the way, I understand September bookings are way off for the industry and there are other interesting reports within CCY regarding UA.
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Do you honestly believe that the folks in CCY have anything more than the most rudimentary understanding of UA''s current operating results and the detailed components of its still-developing business plan? Moreover, even if some US executives actually did have more knowledge about UA and its business plan, what could you possibly tell us that would convince any of us that those US executives would tell you anything of consequence? And I don''t believe saying that you''ve got "secret" sources will do the trick any more, assuming that it ever did for anyone reading your posts!

BTW, I see that you still cannot admit that you were wrong in distorting the meaning of the numbers contained in the CBS MarketWatch story, that you quoted in your first post in this thread, to put the estimates of UA''s 2nd quarter results in the worst possible light. I guess that it is just another typical action in your continuing anti-UA crusade.
 
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