US Airways to go after Uniteds assets?

T

TransatlanticFlyGuy

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Aug 30, 2002
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Philadelphia
Yeah, i know we still have the pension thing to deal with and the threat of war with Iraq, but to any of you feel that US will go after some of the assests of UA during their Chap 11 or god forbid Chap 7? Rumour has it that someone was in Philly saying the assets in DEN and SFO look good.Yeah, i know your now saying, where are we gonna get the money. I think the good ole man in Alabama has some deep pockets to help us get some of what UA may have to offer. In my opinion, i believe that was the primary reason liquidation at US was threatened. Bronner really wants US to go after the carcass of UA. I guess well all see in time. Any thoughts on this people?
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[P]
[BLOCKQUOTE][BR]----------------[BR]On 1/15/2003 12:11:43 AM TransatlanticFlyGuy wrote:
[P]Yeah, i know we still have the pension thing to deal with and the threat of war with Iraq, but to any of you feel that US will go after some of the assests of UA during their Chap 11 or god forbid Chap 7? Rumour has it that "someone" was in Philly saying the assets in DEN and SFO look good.Yeah, i know your now saying, "where are we gonna get the money". I think the good ole man in Alabama has some deep pockets to help us get some of what UA may have to offer. In my opinion, i believe that was the primary reason liquidation at US was threatened. Bronner really wants US to go after the carcass of UA. I guess well all see in time. Any thoughts on this people? [IMG src="http://www.usaviation.com/idealbb/images/smilies/1.gif"] [/P]----------------[/BLOCKQUOTE]
[P][/P] Yeah...go for DEN, leave SFO for the Mormans and/ or Texans. They both could use some[BR] high cost turf. [img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
 
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[BLOCKQUOTE][BR]----------------[BR]On 1/15/2003 12:58:27 AM LGA Fleet Service wrote:
[P][FONT size=1][BR]Who has better brand recognition in DEN? Continental or US Airways?[BR][BR][/FONT][/P]----------------[/BLOCKQUOTE]
[P][/P]Why CO of course, but that could change.
 
Doubt it. I wouldn't rule out the potential of a merge at some point...but UA is way too busy trying to keep things intact to think about selling off assets.
 
I certainly hope they get Denver AND SFO!!! Heck Reno is begging for flights in and out of here. I always book people on US connecting cities and then put them on US. Go for it
!!! Fly to Reno too!!!
 
I too feel that there are some dealings going on with UA. I have said all along that this has played a major role in the downsizing of the PIT Hub. We all know that if the planned merge had gone thru before that PIT would have been cut down if favor of ORD. This is the same as what we saw happen to DAY after the PI merger, only it is being done in advance...stay tuned something will be going down in the coming months. They got all the cuts they wanted and Bonner will come up with some cash to buy what is available. US& UA fit together too well to be overlooked.
 
UA is sinking faster than US and in my opinion the Chicago-based airline will have a longer time in bankrtupcy, thus it will be much more difficult to emerge.

UA has a significant problem with State Street Bank and Trust over the ability for the firm to sell ESOP shares. The potential exists for a change of control and major tax implications, which could cause a liquidation to occur. There are multiple news media reports of multiple LBO firms circling around WHQ and this is never good news. Just ask TWA when Carl Icahn took over.

The UA S.1113© Term Sheets are seeking draconian union cuts, much deeper than negotiated at US that will certainly have enormous union resistance as management attempts to gut labor contracts.

The company has a CEO with no airline experience, wants to turn virtually all of its short haul into a low cost subsidiary (which failed before), and said it will deliver its reorganization plan to the court by January 30. The 120-day exclusive period to file it POR expires on April 8 and at this point, it appears the company is not close to meeting this court imposed deadline.

UA has said with the recent employee W-2 cuts it will meet its stringent DIP financing revenue and cash flow targets until May 1 and then must have deeper stakeholder cuts by unions, creditors, financiers, and aircraft lessors, to meet it financial obligations. In my opinion, DIP financing requirements will be a difficult to meet and the airline may be forced to sell assets to continue operations, similar to Pan Am and TWA.

UA CEO Glenn Tilton has publicly said UA is discussing selling assets and UA and US management have held discussions this year on possible "interesting corporate combinations". Reports indicate US is interested in gates and LAX, SFO, DEN and gates and slots at ORD, along with appropriate aircraft.

Interestingly, US would be the best suitor for a UA asset sale and may be the key to UA emerging from bankruptcy because unlike any other airline, an asset sale to US would allow UA to keep revenue within the domestic/Star alliance whereas a sale to a competitor would jeopardize the DIP financing agreement.

In addition, an asset sale to US may be in the best interest of UA employees because if there was an employee transfer, UA employees would then fall under US contracts, which are better than the UA contract Term Sheets.

Chip
 
True, but no matter what U has to be out of bankruptcy first. The dumped-on creditors would have a field day in court if U were to commit funds to any sort of purchase while in bk, especially if it hasn't already been mentioned in the POR. I wouldn't expect any announcement concerning purchases, mergers, etc until after U emerges (unless it is announced in the POR which gets filed Friday the 16th. Hmm, interesting coincidence?). An alliance which could help revenue and profit could be announced anytime without problems.
 
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On 1/15/2003 10:37:39 AM diogenes wrote:

OBG,

I think your analysis is correct - U is frozen in place until emergence from BK.

Wouldn't UA be under the same constraints? No major asset moves until it's house is in order?

I would expect any U/UA asset transfers to occur after, or God forbid, in the event of failure of, Chapt.11.

Let's not count our chickens yet - U isn't out of the woods, either.


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[/blockquote]
No, UA's situation would be different. They would be selling assets to pay creditors, not buying them (something that could be construed as a risky business decision by a lawyer). All UA needs is permission from the court (probably in the form of some kind of POR) to sell the assets. U could (although I think a highly unlikely scenario) get this kind of thing approved in their POR, but I think that may raise an eyebrow by more than one creditor, and the judge as well. Once out of bk, all the decisions would be up to the board. Maybe this is why the big push to do something about the pilot's pension plan. It may be the only thing standing in the way of emerging even sooner than March 31st. Sounds like the PBGC is going to have a hard time with the idea of U liquidating the fund, but they also don't want to approve any "creative solutions". I guess we'll have to wait and see what they come up with. Who knows. There are powerful political forces at work, and the airlines aren't the only industry in this mess. If U is forced to liquidate it's retirement plans over this, it will snowball into a huge mess, with the government left to sort it out (there's a comforting thought!).
 
OBG,

I think your analysis is correct - U is frozen in place until emergence from BK.

Wouldn't UA be under the same constraints? No major asset moves until it's house is in order?

I would expect any U/UA asset transfers to occur after, or God forbid, in the event of failure of, Chapt.11.

Let's not count our chickens yet - U isn't out of the woods, either.
 
Thank you for clearing that up.

"may you live in interesting times"

Chinese curse (that U seems to have taken to heart
 
[blockquote]
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On 1/15/2003 10:03:06 AM chipmunn wrote:

UA CEO Glenn Tilton has publicly said UA is discussing selling assets and UA and US management have held discussions this year on possible "interesting corporate combinations". Reports indicate US is interested in gates and LAX, SFO, DEN and gates and slots at ORD, along with appropriate aircraft.

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[/blockquote]

Only 15 days into the new year, and we have: "interesting corporate combination"

I don't think US is in any condition to purchase anything (although stranger things have happenned).

Also, if UAL is selling assets such as SFO, DEN, etc. would it not be in the best interest of creditors that these assets go to the highest bidder?
 
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