What Will This Mean For Future Of Usairways

[usairways_vote_NO]

I just heard that the loan guarantee has been rejected and will not be reconsidered

I heard it on CNBC but haven't seen news report

http://biz.yahoo.com/rf/040628/airlines_united_loan_1.html
Reuters
U.S. rejects latest United bid for loan backing
Monday June 28, 9:27 am ET

 

[flyguy121]

United Loses Bid for Loan Guarantee
By JEANNINE AVERSA, AP

WASHINGTON (AP) - United Airlines on Monday lost a bid to secure a federal loan guarantee, a fresh setback to the carrier's efforts to emerge from bankruptcy.

The Air Transportation Stabilization Board said that after studying the airline's latest application, submitted last week, it would not change the panel's June 17 decision to reject United's request for a $1.6 billion federal loan guarantee.

"All members of the board join in the decision to deny United's request for reconsideration, and the board's June 17 decision stands," the board said in a letter Monday to United Airlines' chief financial officer, Frederic Brace.

 

[usairways_vote_NO]

Statement from United Airlines
Monday June 28, 10:26 am ET


CHICAGO, June 28 /PRNewswire-FirstCall/ -- The ATSB has informed us of their final decision not to provide a loan guarantee. While we disagree with their decision, we are gratified by the ATSB's public recognition of our progress and are already moving forward to secure the exit financing we need to take United out of bankruptcy. The message from the ATSB is that we can get the exit financing we need on our own.
Throughout this process, we have been in constant communication with our lenders, and they continue to be tremendously supportive of us. We expected that a significant portion of the exit financing would be debt-based - with or without the ATSB guarantee. That will continue to be the case, and we are now holding discussions with our lenders and others to determine what an appropriate overall capital structure might be. The discussions we are having will enable us to fill that out, so we can continue moving forward toward our exit from Chapter 11.

The work we have done over the past 18 months has created a solid, highly competitive business platform that we expect will attract the capital necessary to exit.

United's (OTC Bulletin Board: UALAQ - News) employees continue to deliver excellent operating performance and the great service our customers have come to expect. At the same time, there is still more work to do given the highly competitive and evolving industry environment. We will continue to take the actions necessary to further reduce costs and improve revenue while remaining firmly focused on providing a superior travel experience to all of our customers.

 

[PHL]

What does it mean? Well, at about $1.27(as of this moment) a share, down .13(or about 10%!) so far today, it's not being viewed as good thing by many.

Without the ATSB loan, they must now secure other financing, or reduce the costs more. It's black and white. Where are the cost reductions coming from? Big fleet, Big labor. Take your pick, or mix and match.

People said Pan Am, TWA and Eastern would never go away. They were staples and icons of the free market aviation system this country created. But economics doesn't care how much prestige and sentimental value you have. It's dollars and cents.

So what does the loan denial mean? Well, my educated guess is that if UAL doesn't come up with the $$$, chapter 7 won't be far behind. There are plenty of vultures ready to swoop in and pick up the scraps.

 

[usairways_vote_NO]

I think you misunderstood question. The topic asks what does it mean for USAirways. Wait maybe you were posting about that.

 

[funguy2]

For the moment, I think this is a non-issue for US Airways.

If, after a few months, there seems to be no interest from an equity investor, then there may be a material consequence to US Airways. In the meantime, US Airways has its own survival to worry about.

What does this mean for the industry... Probably no end to the fare slashing, as BK (and near BK) airlines generally offer fire-sale prices just to get cash in the door.

 

[mweiss]

Under other circumstances, I might consider this to be potentially good for US. However, US doesn't have the assets to apply toward picking up UA pieces. AA does, and to a lesser extent DL and NW do. I doubt CO could pull together the cash to do much about it.

I'd imagine AA would be thrilled to pick up ORD, if the government would permit it. perhaps DL would make another attempt to grow in the West by getting DEN. Or perhaps CO would go back there if they can get the cash.

Regardless, I think the upshot is that the other legacies would grow and further box US into a corner.

 

[jimntx]

Does US Airways have the time to wait and see if UAL survives?

 

[usairways_vote_NO]

Does US Airways have the time to wait and see if UAL survives?

In a word... NO

Guess that makes this thread moot.

 

[usairways_vote_NO]

Under other circumstances, I might consider this to be potentially good for US. However, US doesn't have the assets to apply toward picking up UA pieces. AA does, and to a lesser extent DL and NW do. I doubt CO could pull together the cash to do much about it.

If Bronner did think USAirways had any chance of a future why wouldn't he find a way to cherry pick UAL's assets for the good of USAirways. Wouldn't it be better for USAirways to see those assets getting in their hands instead of other airlines?

Wouldn't it look good to the employees seeing some stepping up to the plate?

Wishful thinking but fun . :unsure:

borrowed pic from 700UW

 

[gogogadget]

I think Bronner is very very nervous right now. He has to feel he made a bad investment decision and a hasty one when he invested in U. Would explain why he definately has no investment interest in UAL. It would be better if UAL went away in his eyes because it would mean a definate boon to Usairways when trying to fill in the gaps as everyone else does. The ATSB seems to be of the mindset that change will come via LCC's and "IF" Ugets its costs down to the likes of Amway I mean America West then they have effectively created the change they would like to see in the industry.

Think about it. Everyone is now ranting about LCC's and service. The large traditional carriers would be whittled down to 2 big players and then the rest of the field would become a large contingent of regional players.

Bronner wins if UAL goes away. The industry overall loses because the cries of we cant are louder than the cries of we can. <_<

 

[Fly]

Don't forget.......big airlines take FOREVER to die. If you think United is going to disappear quicker than USAirways, you're delusional. It will be a loooooooong ride! Besides, United and USAirways have thousands of employees and the entire airline industry to morally and financially destroy before they are finished. Funniest part is that the other legacy carriers are about to get screwed over because this industry is "follow the leader".......when United loses their pension (which is next week's announcement) the other carriers will be more than happy to slash theirs too.

 

[usairways_vote_NO]

I think Bronner is very very nervous right now. He has to feel he made a bad investment decision and a hasty one when he invested in U. Would explain why he definately has no investment interest in UAL. It would be better if UAL went away in his eyes because it would mean a definate boon to Usairways when trying to fill in the gaps as everyone else does.
Bronner wins if UAL goes away. The industry overall loses because the cries of we cant are louder than the cries of we can. <_<

Bronner has said at times he would like assets of UAL hasn't he?

What he did say recently was no equity investment.

I with the load factor as they are now and status quo on expansion (no money) I do not see any advantage for USAirways if UAL goes away unless ticket prices rise.

You might even see ticket prices go down to attract UAL customers.

 

[usairways_vote_NO]

Don't forget.......big airlines take FOREVER to die. If you think United is going to disappear quicker than USAirways, you're delusional.

Of course you are absolutely right. This thread is a fantasy for sure but hey a certain pilot paints his own fantasies all the time. He might even join in here for a big laugh.

 

[funguy2]

Don't forget.......big airlines take FOREVER to die. If you think United is going to disappear quicker than USAirways, you're delusional. It will be a loooooooong ride! Besides, United and USAirways have thousands of employees and the entire airline industry to morally and financially destroy before they are finished. Funniest part is that the other legacy carriers are about to get screwed over because this industry is "follow the leader".......when United loses their pension (which is next week's announcement) the other carriers will be more than happy to slash theirs too.

Fly:

You are right... Airlines take a long time to die... And I think UAL will come out of BK with an equity backer... UAL's assets are too valuable not to. UAL's assets have been well leveraged over the years to its advantage, as well (i.e. beating CO out of DEN, forcing AA to downsize ORD, surviving (this far) LCC's at SFO and IAD).

UAIR, on the other hand, had less viable hubs, and focus cities at BOS, LGA, and DCA which have not been fully leveraged (i.e. using LGA slots to ILM on RJs instead of to ORD on 733's). I think UAIR has to solve its problems assuming UAL is around, because UAIR cannot afford to try and "out-live" UAL.