US/UA merger?

[UAL777flyer]

Whether anyone agrees or not, the prospect of a merger of UA/US or some other deeper relationship is certainly possible, and therefore, relevant discussion. As someone else has noted, the mere fact that it has generated over 270 replies indicates there is interest in the subject. I think that so long as the thread stays on topic, it should remain open.

Argento,

You bring up a dead-on accurate point, in my opinion, about the possibility for UA to go into bankruptcy with not much cash-on-hand due to labor BOD reps refusing to vote in favor of a voluntary Ch.11 filing until all cash is virtually gone. Such a scenario would devastate this company's attempt to reorganize successfully. And I feel that it plays into your fragmentation theory in a very plausible way.

I've said it before along with many others, but the best thing for United's interests is to change the governance of the company by removing labor's BOD seats. UA has a very short window with which to hammer out voluntary concession agreements with its unions. That window is arguably only a few weeks. My opinion is that if UA is going to declare Ch.11, they will do by the end of October. Doing it any later would be dangerous from a cash perspective. The question then becomes: if the company and the unions are unable to hammer out agreements in that time frame, will the IAM and ALPA union reps block a bankruptcy filing until the last possible moment, thereby putting UA into a precarious situation that could ultimately lead to fragmentation of some or all of the company? My guess says that ALPA would not do that. Out of all the unions, they are the most informed. They spend their dues money wisely on getting accurate information and analysis. They already know how bad the situation is. But the IAM? As usual, they are the key. With another AMFA election looming imminent, it's hard to predict how they will go. In the end, they did what was necessary at US. While they didn't issue a blanket endorsement of the T/A second vote, they made clear to the members what could happen if they voted no. I would hope they realize that the situation at UA could be much worse. In the short-term, UA and US need each other. The codeshare that was negotiated will bring much-needed revenue to both companies. But predicting which way labor will go is always difficult because of the obvious ego, pride and politics that always plays a role.

The bottom line is that UA has an opportunity to do what is necessary to avoid a bankruptcy filing. But will the unions give what is necessary to secure an ATSB loan guarantee in an expeditious negoatiation process or will negotiations drag on until UA has no choice but to file Ch.11 (provided the BOD approves it, which goes back to the previous point above)? We're talking about securing the necessary voluntary agreements with ALL unions in the course of a couple of weeks. That is truly a tall order. I hope I'm wrong, but I continue to believe that the unions won't all give what's necessary and UA will be forced to file for Ch.11 in the coming weeks.

 

[JFK Fleet Service]

[blockquote]
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[STRONG]Originally posted by isthisok:[/STRONG][/P]


[SPAN class=BodyFont]Check this out...............
UA files for Chapter 11 without concessions.
UA contracts are abrogated.
UA is history.
UA/US merge out of bankruptcy as US under new contracts in affect (abrogated IAM-M and CWA).
Big sticking point for original merger was seniority. US is more senior so they offer early retirements to get rid of senior people so seniority is not a big issue. Also in newly signed US contracts if their is a merger there is a snap back to old contract wages top make everybody happy.
Bottom line UA is history!
US is the new combo!
Believe it! It is written................



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[/blockquote]


Wish lists written on cocktail napkins don't count.

 

[ITRADE]

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On 9/30/2002 10:41:07 AM JFK Fleet Service wrote:


Wish lists written on cocktail napkins don't count.

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[/blockquote]

Ya know, the Superbowl trophy was conceived on a cocktail napkin...

 

[ITRADE]

That's right.

What was it? A triangle forming DAL, HOU and AUS?

 

[JFK Fleet Service]

What else could generate 271 replies?

 

[BillLumbergh]

[P][STRONG]Originally posted by isthisok:[/STRONG][/P]
[P][SPAN class=BodyFont]Check this out...............[BR]UA files for Chapter 11 without concessions.[BR]UA contracts are abrogated.[BR]UA is history.[BR]UA/US merge out of bankruptcy as US under new contracts in affect (abrogated IAM-M and CWA).[BR]Big sticking point for original merger was seniority. US is more senior so they offer early retirements to get rid of senior people so seniority is not a big issue. Also in newly signed US contracts if their is a merger there is a snap back to old contract wages top make everybody happy.[BR]Bottom line UA is history![BR]US is the new combo![BR]Believe it! It is written................ [BR][BR][BR][BR]

 

[KCFlyer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 9/30/2002 10:55:03 AM ITRADE wrote:
[P]
[BLOCKQUOTE][BR]----------------[BR]On 9/30/2002 10:41:07 AM JFK Fleet Service wrote: [BR][BR][BR]Wish lists written on cocktail napkins don't count.[BR] [BR]----------------[BR][/BLOCKQUOTE][BR][BR]Ya know, the Superbowl trophy was conceived on a cocktail napkin...
[P][/P]
[P]----------------[/P]
[P]So was Southwest...[/P][/BLOCKQUOTE]
[P][/P]

 

[chexfan]

[blockquote]
On 9/30/2002 1102 AM ITRADE wrote:

What was it? A triangle forming DAL, HOU and AUS?
[/blockquote]Not AUS, SAT.

 

[trvlr64]

Bill.........close it all together..........it's dull and boring, YAWN !!

Why speculate about a possible merger when no ones really knows. This is looking like a bad episode of the X-Files. Conspiracy everywhere you look. Jibs at postings/posters who don't agree with the post before them.

Time for something new to talk about.

 

[chipmunn]

Argento:

Argento said: Busdrvr, I think you're so right that I have previously written that UAL labor's denial and intransigence in the face of an obvious financial disaster about to hit the great carrier is at the core of the UAL fragmentation theory. Ch.11 works best if it is entered early and with sufficient cash on hand; the mindset that you describe for the ALPA and IAM people on the UAL BOD is likely to contravene that very principle. If UAL stumbles into bankruptcy because its labor masters won't come to their senses until there is literally no cash left in the till to even cover the payroll, then fragmentation looms more likely than not.

Glenn Tilton said: We are on an extremely tight timetable, Tilton said. With the cooperation of everyone involved, however, we're making good progress.

Chip comments: There is reason to believe the non-union UA board members have concluded that a formal reorganization is the best corporate option, but up to this point the three union board members have convinced the others to temporarily hold off filing for court protection until labor relations and the negotiating committee's meet to access each others position. With DL's warning on Friday that its quarterly loss will be nearly twice as much as expected, driven primarily by the month of September, analysts believe the cash burn rate has intensified for all carriers.

This will likely move up the timetable to get meaningful wage cuts from all employee groups and creditors, vendors, and lessors to prevent a voluntary filing. From our experience at US, even with labor concessions UA may have to file because it took bankruptcy for US to get 16 of 18 lease company's to take a haircut, therefore, these company's may not be in any mood to take another cut unless forced to do so at a UA bankruptcy omnibus hearing.

Simply put, if the lease companies do not participate in a consensual restructuring, it may not matter what the employees do.

Chip

 

[UAL777flyer]

Chip,

Would just like to point out a small error on your part. UA only has 2 union seats on the BOD (ALPA and IAM), not 3. There is a seat on the BOD that represents the salaried and management employees. But we all know that those groups hold no leverage whatsover.

 

[Busdrvr]

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On 9/30/2002 106 PM UAL777flyer wrote:

Chip,

Would just like to point out a small error on your part. UA only has 2 union seats on the BOD (ALPA and IAM), not 3. There is a seat on the BOD that represents the salaried and management employees. But we all know that those groups hold no leverage whatsover.
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It's easier to support a theory when you use only part of the truth

 

[Busdrvr]

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On 9/30/2002 116 PM argentomaranello wrote:

In an earlier post (by BUSDRBR, I believe) some fanciful notions about UAL's current cash situation were juxtiposed over the anticipated "savings" implicit in the UAL labor coalition's announced joint target of $1B per year for the next five years. It has been said that, as of the end of Q2, UAL had about $2.5B of cash on hand plus another $3B in "unencumbered aircraft assets" suggesting that no real liquidity crisis was looming at the great carrier. UAL says it can't access the private capital markets in any event.

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[/blockquote]

I don't think I said our cash situation is good. I merely pointed out what the effect of having more than $1 billion in annual cash savings would have on the balance sheet and cash flow. UAL NEEDS A LOAN! there is no questioning that point. If UAL can get it's cash burn situation to a positive, or at least a lower cash burn than the rest of the industry, I think the capital markets would be opened up to some extent. NWA, AMR and DAL have all announced deeper than expected cuts in capacity. this will help the situation going forward. UAL finished 1997 1998 1999 with less than half a billion in cash. If you look at the numbers I presented, UAL would be the top Cash flow airline of the largest hub and spokes, based on second Q numbers. I'd also not be surprised to see the gov throw another bone or two in the comming months.

 

[argentomaranello]

In an earlier post (by BUSDRBR, I believe) some fanciful notions about UAL's current cash situation were juxtiposed over the anticipated savings implicit in the UAL labor coalition's announced joint target of $1B per year for the next five years. It has been said that, as of the end of Q2, UAL had about $2.5B of cash on hand plus another $3B in unencumbered aircraft assets suggesting that no real liquidity crisis was looming at the great carrier. However, recent SEC filings indicate that UAL is obligated to pay out nearly $1.2B in the next four months (mostly for debt coming due, but in part for the IAM catchup wages). That taken together with cumulative operating losses in both Q3 and Q4 (of at least $300M per quarter) coupled with the normal cash drawdown associated with the seasonal workoff of forward ticket sales (maybe another $400M) paints an ugly picture of a nearly cashless UAL by the end of the year. Of course all those unencumbered aircraft assets remain, right? WRONG. Calculation of what is exactly unencumbered in light of various cross-collateralization clauses in lease and EETC instruments (and in further consideration of the current state of the pre-owned aircraft market) is a dicey proposition at best. A good reference is AMR's recent expreience (announced last week) in hocking more of its fleet -- it had about the same amount of nominally unencumbered aircraft assets as UAL, and had not (yet) been shut out of the private capital markets, but it was only able to raise another $600M for its troubles. The lesson of the AMR saga is that UAL's unencumbered aircraft assets are likely worth (in new hard cash) no more than twenty percent of the trumpeted value; and of course, UAL says it can't access the private capital markets in any event.

The day when UAL might face an empty cash till when faced with the need to cover another payroll is closer than a lot of people thing. And so is the sad, totally needless bankruptcy fragmentation.

 

[Busdrvr]

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On 9/30/2002 2:18:18 PM UAL777flyer wrote:

Busdrver,

The only problem is, our cashburn is again ticking North. The summer was an abolute nightmare. So going into the Fall, it's reasonable to expect that until major cost savings go into effect, our cashburn will only get worse instead of better.
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[/blockquote]

Agreed! What would 3-4 million a day in cash savings do to it?