United's Future

[TJoe]

Heres is the link:
http://search.ft.com/search/article.html?i...arch&state=Form

 

[Busdrvr]

Did you see the part where he said post BK CASM would be below 9.5?

"When you make adjustments for seating configuration, our regional carrier expenses and fuel trading subsidiary and stage length for 2004 and 2005 we have the lowest fully adjusted cost of any network carrier." There are more cost savings to come once restructuring is complete, pushing casm below 9.5 cents, he says."


and considering an operating revenue of 9.55 during the first quarter, it appears UAL would have been profitable during a VERY tough quarter that almost saw SWA lose money, and did see UAL primary LCC comp of ATA and FRNT both likely lose.

 

[Falco]

The question remains; Why can't United find the money from a private source if it is such a good company?

 

[Busdrvr]

"Why can't United find the money from a private source"

Size matters. Nobody wants to be on the hook for 2 billion.

 

[Fly]

No, the question is Why would they WANT to find an outside source if they could get this loan at this rate?

 

[Falco]

If United is going for the loan because of the good rate, then they will get turned down by the ATSB, as that is not the intent of the loan program. It is meant as a loan of last resort for those who can not attract capital on their own.

 

[Fly]

Precisely....do you think they would honestly go to the ATSB and ask for it but inform them that they have other options? NO They must say there are no other options because the ATSB has informed all applicants that this is a requirement.

 

[novaqt]

FALCO

You need to understand that United is not going to the ATSB for money. They want the ATSB to GUARANTEE the loan they are getting from JP Morgan and Citi Bank, etc. Its similar to when you military and veterans buy a house with your VA benefits. You go to a lender for the money and the VA GUARANTEEs your loan. With a government back loan, the interest rate is on better terms from the banks.

 

[Borescope]

Nobody wants to be on the hook for 2 billion.

So, why should the tax Payers?

 

[Borescope]

They must say there are no other options because the ATSB has informed all applicants that this is a requirement.

So, what you think is that if we don't get the loan (gaurentee), that we will have to take other drastic measures to exit BK? Selling assets, wage reductions, renegotiate leases etc. Seems to me if we had done such a good job of this in the first place, there would be plenty of companies willing to lone us the money at a rate thet we could live with. Brace and Tilton just haven't done the job necessary to secure that outside funding, thus the gov't is it right now. If we get turned down, hang on as there is going to be more cuts.

 

[Fly]

There will be more cuts, regardless. I believe that ALL the legacy carriers, to compete effectively, are going to have to end pension programs and make the retirements more like the LCC programs. People won't like it, but I believe there really is no other option. Besides, incentive programs (if properly implemented) encourage hard work and pride.

 

[Segue]

When UA finally gets out of bankruptcy, it will be so leveraged that it will be a risky investment for some time to come. I've heard estimates of D/E being as high as 160%.

 

[JetClipper]

The sad thing (at least as far as this forum goes) is that this article will just generate more of the same; those that think UAL shouldn't get the loan (at best) will pick out what they want, while everyone else will find things that support their viewpoints.

Let the mud-slinging begin!

 

[Fly]

You are correct about that Jet. I find it odd that so many people seem to get that happy, giddy feeling when they imagine United gone. We must be doing something right that they find themselves so enthralled with United. It will take a lot of work on the part of the employees but we will endure. B)

 

[boeing787]

The chips will fall where they will fall. I for one believe in Tilton and UAL. UAL will be around in present form for a long time.