The key phrase here is "one lawmaker believes" which implys "OPINION". Nothing's for sure until the decision come down. This lawmakers is under just as many mushrooms as the rest of us. The only difference is he made some "stated opinion" and got his name in the paper. Maybe good exposure for his reelection.Fly said:
Will United Get The Loan
- Thread starter Fly
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Should UAL get the loan guarantee? In my opinion, they should not get it. UAL's problems, largely, are systemic. Some of these problems are being addressed via bankruptcy, which is in the right direction.
Should US Airways have received the loan guarantees? In my opinion, no. The loan guarantees for US Airways only allowed a failing business to continue in its failing ways. Things there may be changing their now, but only because US Airways is facing another BK filing. While US Airways may have been denied access to capital markets, IMO it was because of their failing business model, not 9/11/01.
Should America West have received the loan guarantees? I believe yes, because it was my understanding that they had a financing agreement about to be signed in order to fix the problems they were in on 9/10. When 9/11 occured, the financing was pulled. That was the exact purpose of the legislation.
Will UAL get the ATSB loan guarantee? I believe the answer is Yes... For two reasons... 1. It is an election year. 2. The argument of not supporting a failing business plan was eliminated when US Airways got their guarantee.
However, I almost wonder if the gov't will deny the request just to try and prove other financing is available... Certainly there hasn't been any public proclamations that TPG or someone else would be willing to loan UAL some cash. Maybe they deny again to try and force the company to find other financing, and if it is not there, then they approve. That would be interesting.
Should US Airways have received the loan guarantees? In my opinion, no. The loan guarantees for US Airways only allowed a failing business to continue in its failing ways. Things there may be changing their now, but only because US Airways is facing another BK filing. While US Airways may have been denied access to capital markets, IMO it was because of their failing business model, not 9/11/01.
Should America West have received the loan guarantees? I believe yes, because it was my understanding that they had a financing agreement about to be signed in order to fix the problems they were in on 9/10. When 9/11 occured, the financing was pulled. That was the exact purpose of the legislation.
Will UAL get the ATSB loan guarantee? I believe the answer is Yes... For two reasons... 1. It is an election year. 2. The argument of not supporting a failing business plan was eliminated when US Airways got their guarantee.
However, I almost wonder if the gov't will deny the request just to try and prove other financing is available... Certainly there hasn't been any public proclamations that TPG or someone else would be willing to loan UAL some cash. Maybe they deny again to try and force the company to find other financing, and if it is not there, then they approve. That would be interesting.
I never said who took a harder hit... What I said was that AWA had access to capital markets on 9/10/01 which disappeared by 9/12/01 by the direct result of the terrorist attack. UAL's access to capital markets/financing/etc, disappeared over time as this business was mismanaged, prior to and following 9/11/01.Fly said:
By the way, while a "cost" can never be placed human life, I am sure UAL's collected some cash from their insurance companies for the value of the lost aircraft and the federal gov't took away any liability for damage done on the ground. Therefore, the "direct cost" of the incident was largely taken on by insurance companies and the American people via our federal government, not by UAL Corp. UAL was obviously not prepared to deal with a major traffic/revenue slump, regardless of the reason it occurred. If you recall, Yields for the major airlines began tumbling by double-digit percentages in May 2001, months before the attacks.
Lastly, if you are implying that "downed" aircraft are the basis for ATSB loans, then why didn't AMR/AA need one? Oh, wait a minute, they actually had a better managed business... Damn, I hate when that happens.
Why would Tilton try to get anything but the best deal? That is what I think is going on here. Have we seen UAL try to issue bonds where they could not find a buyer for months and months like ATAH did? No we haven't. Why? Somebody might buy them.avek00 said:
Tilton is just trying to get the best deal for the company he runs. Who would do any different? Do you use credit cards with a 14.99% interest rate when you have access to credit cards with a 6.99% rate? I know I don't. I refinanced my house twice in recent years, bringing my mortgage rate from around 7.5% to around 5.5% because why pay more for the ability to borrow money than you have to? This is all Tilton is doing, and its prudent.
The ATSB loan was established for airlines hurt by 9/11. OBVIOUSLY you would have to be stupid to think that America West was hurt more than United. I don't recall that the loan was established only for those airlines that lost access to capital markets but instead was established for ANY airline that was directly impacted by the events of 9/11. AGAIN, tell me who was MORE affected. UNITED! (Why didn't American apply? There are many downfalls to this loan, a piece of the stock being one, so they didn't bite) Hopefully the next terrorist attack will grab 2 airplanes from America West, then maybe United will be able to get a loan and not America West (makes sense, right? :blink: )
Let's see - the ATSB is basically single-handedly holding up UA's return to solvency, which jeopardizes the company's future (as literally ANYTHING can happen [e.g., asset bid or alternative POR] while a company is bankrupt). Seems like a good reason to me to take a private-sector alternative if one exists.funguy2 said:
Fly:Fly said:
Why don't you check out the ATSB Website
If you click on "Loan Guarantees", you will see the following:
You'll note the section about credit being not reasonably available? Well, that appears to have been the case for AWA. Is that the case now for UAL? Maybe. Is that completely because of 9/11/01? I don't think so. Maybe some of UAL's losses have to do with unions which seek to choke the goose who laid the golden egg, as one of UAL's labor union leaders was quoted as saying a few years back. Maybe some of UAL's losses stem from investments in failed business ventures like Avolar and Shuttle by United.
By the way, you may recall that all airlines received a payment for the closure of the Airspace. So why is it that all other airlines have already been "stablized" and yet only UAL still feels the effects of 9/11/01?
I think UAL will get the loan on the basis of politics, not the basis of law. Lots of things work this way...
I never said that ATSB is single-handedly holding up the UAL BK process. But the UAL BK process is not really the ATSB's problem.avek00 said:
I tend to be a little bit cynical... But I seem to recall that groups like TPG were reported as having an interest potentially investing in UAL as park of BK reorganization. However, UAL preferred to to go in a direction without equity investment.
Quite frankly, UAL has the right to try to get an ATSB loan. And, in fact, that may be the best result for the creditors of the company. Whether or not that is the best result for the American people is a different subject.
I tend to believe that UAL has been making progress in its BK. Furthermore, I believe that UAL is "going-concern," meaning it will emerge from BK. However, these things tend to occur with new capitalization, from a group like TPG or RSA, which is not happening here. If UAL truely is a going concern, then somebody (other than the federal gov't) should be interested in making money off it. However, that changes the control of the company, which is not in the current management's interests. You may recall that US Airways emerged from BK with a combination of new private financing and ATSB guarantees. Why can't UAL find some private financing for a portion of its BK emergence?
Lastly, I would tend to think that UAL cannot talk to TPG or other potential investors about emergence from BK because if they do, it proves that they are not locked out of capital markets, and therefore do not qualify for the ATSB guarantee. That's my "conspiracy theory." However, my "conspiracy theory" doesn't really matter, because I think they will get the loan.
What would be an appropriate alternative? I know, we could do it like the Salem Witch Trials. Burn em at the stake, if they don't die, they're a witch! 😛 ATSB set up the rules, United is following them. If they don't give them the loan, and United goes CH7, then you know they had nothing else available. I believe they'll get the loan too because they have met the requirements. And for those of you who say it's almost 3 years since 9/11, hey, the ATSB could have given them the loan back in 2002. 😉
I believe that UAL is not finding any financing because they are not looking. Hawaiian Airlines received bids in their BK from 13 different investor groups. There seems to be money out there for the airlines looking... Even bankrupt ones.Fly said:
Funnyguy,
Last time I check Delta is looking pretty scarey, ATA and Frontier both lost money, US Air is looking at BK again. American still has issues. So the industry really isn't "stabilized" just quite yet.
Also, the terrorist are still having an effect on the US airlines by the terrorist strikes in the Middle East. These oil prices are having a damning effect on everyone but Southwest and JetBlue.
As for Airtran, well their fares are cheap, but I am not totally sold on their product. I flew in their business class last week and they didn't even have limes for my rum and coke. Now that is no frills.
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"Lastly, I would tend to think that UAL cannot talk to TPG or other potential investors about emergence from BK because if they do, it proves that they are not locked out of capital markets, and therefore do not qualify for the ATSB guarantee. That's my "conspiracy theory." However, my "conspiracy theory" doesn't really matter, because I think they will get the loan. "
I agree with your final assessment (including your points below) but none of the other airlines have been "penalized" by the ATSB for seeking to obtain financing outside of the ATSB process. UAL has been comfortably relying on the gov't to fix its problems - much as Pan Am did in the decades before its death. I think the best thing the ATSB is conditionally approve UAL's application CONDITIONED on them obtaining equity financing at about four times the amount of the government backed loan. In other words, if UAL needs to have $500 million of the loan backed by the government, they should find about $2 billion of private equity. Given that UAL has such massive pension obligations in the next couple years, the last thing we as a country need to do is give UAL a $2B loan - most of which will end up funding pensions just months after the government adopted sweeping and preferential pension relief for all airlines but primarily with the benefit going to the legacies.
Remember, UAL has still got plenty of assets they could sell, something that no other airline that has entered bankruptcy has escaped doing. '
Ultimately, the statistics say that United will not be a long term survivor. There is something about fighting for survival on one's own that prepares a company for the realities of the marketplace. UAL hasn't even begun to face the next onslaught of LCC competition that will decimate IAD complements of Independence and SFO, likely complements of Virgin USA.
I agree with your final assessment (including your points below) but none of the other airlines have been "penalized" by the ATSB for seeking to obtain financing outside of the ATSB process. UAL has been comfortably relying on the gov't to fix its problems - much as Pan Am did in the decades before its death. I think the best thing the ATSB is conditionally approve UAL's application CONDITIONED on them obtaining equity financing at about four times the amount of the government backed loan. In other words, if UAL needs to have $500 million of the loan backed by the government, they should find about $2 billion of private equity. Given that UAL has such massive pension obligations in the next couple years, the last thing we as a country need to do is give UAL a $2B loan - most of which will end up funding pensions just months after the government adopted sweeping and preferential pension relief for all airlines but primarily with the benefit going to the legacies.
Remember, UAL has still got plenty of assets they could sell, something that no other airline that has entered bankruptcy has escaped doing. '
Ultimately, the statistics say that United will not be a long term survivor. There is something about fighting for survival on one's own that prepares a company for the realities of the marketplace. UAL hasn't even begun to face the next onslaught of LCC competition that will decimate IAD complements of Independence and SFO, likely complements of Virgin USA.
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