fireman0174

Virtually every new market loses money in the beginning. With that huge lose for their last quarter ($500+ million?), it's not hard for me to understand why they would want to delay it's startup.

That may very well be the first time I've "supported" a UAL management decision here.

cessnapilot

in 1990 Standard & Poor's Corp. put airport revenue bonds from Cleveland, Houston and Denver -- all major Continental hubs -- the ratings were lowered due to Continental's bankruptcy. The city didn't get back all of their money... just like the state of Minnesota is taking a hit from nwa. Minnesota gave tax breaks and supported building a maint facility in Minnesota. That was funded by tax dollars, and nwa walked away from it in bankruptcy. Ultimately, this is a form of government assistance that carriers like AA haven't taken advantage of.

captjns

Lets not forget the city of Indianapolis' contribution to UAL when they built a MX facility with a jetway to boot, which was never used.

blastoff

Which is not to say municipalities haven't done the same types of things for other industries to keep business in town. The original poster was implying direct government subsidy as a result of CH. 11 that isn't given to anyone else. Well Chapter 11 has been used by a variety of Corporations...don't forget that its purpose is to make a company more valuable to its creditors if it is successfully re-structured than it would be in a Ch 7 Liquidation.

The best examples you can come up with is the government getting screwed as a creditor, which isn't the same thing.

Andy

$2.9B and $3B in unencumbered assets, yet going out of business by summer? Not likely.
Do some simple math. Let's say UAL borrows 50 cents on the dollar against assets - that'd be $1.5B. 2.9 + 1.5 = 4.4B.
Lets say that at $1B is the point where UAL's insolvent and going chap 7.
That would leave $3.4B starting 1 April to burn through. So lets say that we're talking about going out of business in 150 days to keep with your summer rumor. That'd be a daily cash burn rate in excess of $22M. Not likely; even during the worst times post-911, UAL was losing around $10M daily.
I'm not buying it.

cma2407

Oh, that's much better.





Hope they make it and this whole mess stabilizes.

JetPiedmont

You better pray for that loan, Andy! BTW, UAL went Chapt 11 with 2 billion in cash last time. Their unrestricted cash now is 2.4 billion. Are there banks willing, in this credit environment, to loan an airline losing over 8 million a day 50 cents on the dollar?

Andy

I don't worry about the fate of United or any other airline; there are far more important things in life to concern myself with.
Chapter 11 is a far different fate than chapter 7, as has been implied by this thread.
Very reminscent of 2003-2005; lotsa pilots licking their chops over United's route structure. Maybe this time you'll be right?

Where are you pulling out $2.4B? The standard metric is cash, equivalents and short term investments.
But if you're going to use the $2B number as the chap 11 number, which included $344M in restricted cash and $612M in short term investments, you should at least do the same for UAL's current position. You're making an apples to oranges comparison.
Now, let's do apples to apples:
30 Sep 2002 (United filed Dec 02): Cash = $1.1011B, Short term investments = $612M, restricted cash = $344M.
31 Mar 2008: Cash = $2.438B, short term investments = $486M, restricted cash = $348M.


But again, the topic of this thread was not United declaring chap 11; it was specifically about United going chap 7. So you've now changed the threshold to less than chap 7 and distorted the numbers to prove that United's minutes away from filing chap 11. Cool.

iahflyr

Better question is are they willing to let the most profitable frequent flier program (with 45 million members worth over 15 billion dollars) die out.

Of all the airlines to lend money to, I think UAL has one of the best shots of getting outside financing. You can always replace bad management. But your going to have a lot harder time growing an airline with so much going for it as United currently has. The frequent flier program is just one example.

I really want to see the 2nd quarter results before I make any decisions about legacy carriers and the possibility of Ch.11. I think every airline is going to have a real tough time come fall. If United goes into Ch.11 come fall, they won't be the only one there (not even the only legacy).

JetPiedmont

You were speculating that UAL would go Ch 7 with 1 billion, I was simply recalling UAL going Ch 11 w/2.0 billion as matter of fact, which was accurate by your own numbers. I also stated that UAL has 2.4 billion unrestricted cash at the end of Q1, which is accurate. I did nor attempt to distort or change your argument at all. You can make any argument about Ch 7 or UAL's condition you want. Allow me the same.

I too have many friends at UAL and do not wish to see them on the street. If I touched a nerve in you through my comments I appoligize.