UAL06, Bear96, Busdrvr, 767jetz, Ohcaptainron, Falco, Supercruiser, & other UA posters:
In my opinion, I believe the UA employees may be in denial and you might want to focus on some of my warnings. In a recent UA thread I was chastised when I said that UA’s revenue was lagging its peers. However, AVMARK Consulting recently released network carrier and WN Yield RPM and as I predicted, before the information was made public, UA is dead last in revenue. How can that be and how could I have known this before the information was made public?
Here's the report:
Airline – Yield RPM
US – 13.05
AA – 11.86
CO – 11.57
WN – 11.54
DL – 11.33
NW – 10.76
UA – 10.54
Source: AVMARK, Inc.
Furthermore, let’s look at some other facts:
1. The unsecured creditors committee has filed a motion against UA to obtain the McKinsey & Co. reports and analysis for the restructuring business plan. Unless there was a reason to hide something, why would UA not willingly provide this information to the key parties who have to vote on the POR?
2. Six key airports, LAX, SFO, DEN, ORD (all part of the UCT); as well as VHP and NYC airports jointly filed a motion against UA to force the airline to pay its debts or if monies were not transferred, the airports could serve eviction notices.
3. UA entered bankruptcy in early December and for the first 60-days did not have to pay aircraft lease expense. Shortly thereafter, the Company reached interim wage concessions from all unions, which basically became the new contract wage rates, and during the first four months of this year the carrier lost more money than any airline in the world, when it did not have to pay all of its bills.
4. In my opinion, UA’s biggest short-term challenge is the airline must be cash flow positive in October, which appears unlikely. In fact, UAL chief financial officer Jake Brace indicated this acute problem in the June 4 WSJ article when he said that the airline could still miss some of its financial targets by late summer. Interestingly, on May 30 the Associated Press reported while officials of the airline express confidence that United also will meet its lenders' May 31 benchmark, it must make dramatic improvement to get back to positive cash-flow by the end of October as required.
5. Also noteworthy, speaking at the Star Alliance news conference at the National Press Club on May 31, UA chief executive officer Glenn Tilton said, "United's chief problem now is not filling plane seats, but low revenue."
6. On June 11, Busdrvr wrote on this message board, “Chip, If the revenue picture (I've checked, it is improving and the companies emphasis is now on revenue generation now that the turnip is bled out) does not improve adequately enough for UAL to meet it's numbers or get close enough for a waiver from the DIP's (like Mr Alabama gave you), then I think any practical objective view would see NWA, CAL and AMR in BK by then and U doing a repeat trip (one bill just doesn't go as far these days). Given the published numbers, UAL's performance is on track to be better than all the other hub and spoke airlines. I don't think the DIPs would walk away from the best performer.â€
7. On June 12 NW reported its May Pacific RPM’s fell 26 percent on a 13 percent reduction in capacity. NW’s chief U.S. Pacific competitor -- UA -- said its May Pacific RPM’s plummeted by 47 percent with a 40 percent reduction in capacity. Also noteworthy, UA’s May load factor rose to 77.2% from 73.2%, but its systemwide RPM’s dropped 13.8% in April – the highest drop in the industry. What should be concerning is that UA is carrying significantly more passengers and earning much less money. In fact, the Chicago-based airline’s April RPM drop was the highest in the industry and lags its peers. Again, who first broke this news on this message board before it was made public?
8. Busdrver, on June 11 you wrote “the revenue picture (I've checked, it is improving and the companies emphasis is now on revenue generation now that the turnip is bled out)â€, but on the very next day UA reported a huge revenue drop that is the worst in the industry. Furthermore, AVMARK consulting just released a report indicating UA was dead last in Yield RPM. As a UA employee who checked on UA revenue, can you tell me how you “checked†on UA’s revenue numbers to dispute my claim, when your company publicly released dismal revenue numbers less than 24 hours after your post?
9. Finally, US entered bankruptcy with conditional loan guarantee approval, exit financing, and an equity plan sponsor. However, after more than six months in bankruptcy UA said it’s now beginning the process to find exit financing. Why has nobody stepped up to the plate, at this point, to lend UA money, when US had all of these financial agreements complete before filing for its formal organization? If UA were definitely going to be solvent and it had such a strong franchise, doesn’t it make sense people would be willing to lend the airline money, like they did with US?
In conclusion, can any UA employee tell me where one point, just one point listed above, is inaccurate?
Best regards,
Chip