Whats the Plan UAL


Sep 16, 2002
hope this hasnt been posted before,but here goes.
What is UAL''s survival plan?
By Sandra Jones

When UAL Corp. appears before U.S. Bankruptcy Court Chief Judge Eugene Wedoff in Chicago next week, the airline company will have to present a solid business plan and establish financial credibility as it attempts to reorganize.
UAL’s United Airlines—the world’s second-largest air carrier—has struggled for a year with little success to convince lenders, its unions and the federal airline bailout authority that it has a viable plan for survival.

Now, the bankruptcy judge overseeing United’s reorganization has taken the airline to task for being too vague in explaining how it reaches essential financial conclusions.
In UAL’s first public appearance in Bankruptcy Court on Dec. 30, Judge Wedoff chastised the company’s managers for failing to “engage in even the roughest†financial analysis as it starts to make its case.
“Frankly, the judge said to management in so many words, ‘Get real,’ †says bankruptcy expert William Brandt, president and CEO at Development Specialists Inc., a Chicago-based corporate restructuring firm. “It appears that they don’t have a good handle on the numbers. This whole case will turn on financial credibility.â€
The Elk Grove Township-based airline, which filed for Chapter 11 bankruptcy protection on Dec. 9, has been criticized repeatedly for a business plan that is either unrealistic or short on specifics.
Analysts lay much of the blame on UAL Chairman and CEO Glenn Tilton, an oilman with no airline industry experience who was hired in September to save United. While Mr. Tilton has been praised for initially easing the carrier’s contentious labor relations, the former ChevronTexaco Corp. vice-chairman has failed to surround himself with advisers needed to build a credible financial plan, analysts say.
“Nobody believed their numbers, including the (Air Transportation Stabilization Board)†says Raymond Neidl, an airline analyst at New York-based Blaylock & Partners L.P. “The time for fun and games is past. This company is in deep trouble. They have one shot, and if it doesn’t work, the ball game is over.â€
Complete coverage of this story appears in the Jan. 6 issue of Crain’s.
I agree that time is fast running out and that the numbers used for the ATSB loan were very fuzzy. I also agree that Brace has very little credibility left.

However...I do think that this article is stretching a little bit and implies that nothing is being done at WHQ.

Their two examples were the ATSB fuzzy numbers and the State Street bank proceeding were Brace provided little tangible info. While I agree that both cases UA is at fault, I hardly think that these two examples should lead one to the conclusion that no one is doing anything and no business plan is being created.

Hacker is working hard on one I'm sure. I know some don't like Hacker, but he's the best UA is going to get in a short time frame. I like him. Another fact to keep in mind is that he was away from UA during the U and Contract 2000 debacles.

It's funny timing that this story comes out and highlights potential blunders by Brace and the NYT article came out last night and was somewhat complimentry to Hacker.

Pretty soon I think we may see pressure from the DIP providers to dump Brace. It's interesting that the recent reorg - naming Hacker as chief strategist - put Brace in charge of the BK process. That may be the first step in pushing Brace out. Surely the business plan that Hacker is working on includes all of the financial details and assumptions.

Anyway...I think Brace is a lame duck.
Given the rejection by the ATSB over the fuzzy math, or perhaps no math at all, one might think Management learned something. To get similar criticism from a Federal Bankruptcy Judge implies they did not. Scary!!!
All of this plays right into the hands of the IAM, which does not bode well for UAL's future.