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