Setopbug

It never ceases to amaze me how out of touch with reality some of folks are. If you were a sCal person, the person that screwed you was Jim Brucia. Not ALPA. Not the company. Jim Brucia.

None of this crap matters anyway. We're United.

Probe

Oh please. Do tell.

jsled

We are where we are. No sense in *****ing/crying. Try to get an SLI overturned and you'll just help some lawyers keep their lavish lifestyle, that's about it. Meanwhile...tic toc. tic toc. Time keeps a rolling.

Probe

Whatever the question, or the problem, hiring a f$#@ing lawyer is rarely the correct answer.

Holding your breath till you turn purple yields the same result, and you get to keep your money.

Grumble

With what money? CAL didn't have the ability to pay for aircraft on order, and they think they would've been spending more on United? Post BK no less when UAL was sitting on close to $8b in cash? Do these analysts still have jobs?

Glenntilton

VUAL could have chose another airline to buy with all that cash. If they did, CAL would now be out of business unless American or some other invested decided to buy them.

untied

CAL was represented by CAL pilots, who were clearly outclassed by their UAL counterparts. That's how it works....each side is represented by their respective pilots.

The CAL side was given the same amount of money as the UAL side from ALPA national to keep it fair. They picked a lawyer who always disregards merger policy in his deliberations.....and subsequently LOSES every time. That's CAL's fault.

It also hurt that the idiot CAL leadership brought in Brucia. He fought hard to have longevity included in the merger policy, then suddenly decided he didn't want it for THIS merger!

The arbitrators saw right through that!

You can't make stupid arguments with a moron lawyer and then cry foul when your plan to staple 3,000 LUAL pilots (including some active Captains) falls apart.

The SLI will never be changed.

Grumble

UAL/CAL was a perfect fit though.

Lerxst

And yet this piece was written a mere 10 months before the merger was announced...

UNITED, THEY FALL (INTO DEBT)

By Josh Kosman

June 30, 2009 | 6:27am
United Airlines is having its own version of the trip from hell.
The airline, reeling from a decline in customers and running short on cash, is paying a steep 17 percent interest on $175 million in debt it issued, leading analysts to bet the company is just a few steps from the grave.
Indeed, that interest rate represents a full 6 percentage points above where rival airlines have paid in recent debt raisings, and is more than double what it paid nine years ago when it sold $186.4 million in debt at a yield of slightly more than 8 percent, according to Bloomberg data.
United Airlines parent UAL was planning to sell the debt at a 12.75 percent interest, but was forced to sweeten things due to both a lack of investor interest and management desperation, said analyst Roger King of CreditSights.
Others have noted that the steep interest rate reflects a lack of desirable assets to use as collateral.
UAL is considered the laggard among the big airlines, even as the airlines’ overall passenger demand is off 10 percent compared with last summer. Also, the company has just $2.5 billion of cash on hand, compared with Delta, which has $7 billion.
To be sure, it’s a difficult time for all airlines. However, UAL has some unique challenges.
When it was in bankruptcy from 2002 through 2006, it focused on attracting premium customers — a move that now leaves it vulnerable given there’s less business travel and more consumers are favoring price over luxury when it comes to travel.
Making matters worse, UAL may have near-term liquidity issues, and could begin to get squeezed by credit-card companies that fret they’d have to refund customers who bought tickets out of their own pockets if UAL collapses. King said UAL is now in talks with American Express about reaching a new arrangement to address this threat.
Last week, the airline announced it would lay off another 600 flight attendants in the fall. King said the company has basically already made about all the cuts it can.



Eischen said it best in the ISL Award Conclusion....

"The parties' documentary and testimonial evidence conclusively demonstrated
that each airline had major strengths and serious limitations. Overall, neither was
clearly superior to the other. After trying various strategies through the decade, each
independently realized that its long-term profitability, if not its very survival, required
merging with a partner whose strengths balanced its weaknesses. After feints in other
directions, they concluded that this merger was the best available option. It became a
marriage, if not quite of equals, at least of well-balanced partners who filled each other’s
gaps to form a new and stronger entity."

CousinEddie

Lerxst:

I wasn't surprised to see you bring up that article. That would have been my response also to these wild cash on hand figures being thrown around in prior posts. 2009 was an ugly and unusual year with the credit markets barely functioning in the wake of the financial crisis. UAL was also weighed down by Tilton's blown fuel hedges. I completely agree with the quote you included from Arbitrator Eischen.


July 1, 2009



To: United Pilots



From: MEC Communications



Re: UAL Finances



There have been myriad questions and rumors surrounding United’s finances in the last week. These have been fueled by United’s 2nd Quarter guidance issued through SEC Form 8-K filed June 17. This filing was less than a model of clarity. Additionally, United recently raised $175 million from secured notes. Combining these with articles from analysts who are not airline competent, and wrongfully inferring that the pricing of the new secured notes indicates that liquidity and investor interest are drying up for United Airlines, make a recipe for panic.



Regarding 2nd Quarter guidance, until the actual quarterly report is filed in late July, we will not have a clear picture of where United stands with respect to the other carriers. There are two important items that are clear, however. First, United expects to be in full compliance with its credit facility covenants in the second quarter. The third and fourth quarters were unmentioned. Second, though United’s cash reserve may drop below $2.4 billion, triggering a requirement to post reserves with American Express, it is probable that AmEx will renegotiate the terms rather than allow UAL to default. Last year, United had $382 million held back but reached a deal with Paymentech and JPMorgan Chase Bank to cut that amount to $25 million. United expects to end this quarter with $2.5 billion of unrestricted cash.



As of March 31, United had $1.7 billion of unencumbered assets, including aircraft, engines, spare parts and other. United has encumbered some spare parts in a $175 million secured senior 3-year note. The notes were discounted nearly 10%, with a 12.75% interest rate yielding 17.1% effective interest. People have compared this to Continental Airlines’ recent debt offering of $390 million, which featured around 50% loan-to-value (LTV) and around 10% interest over seven years. The difference is United secured its debt with aircraft parts while Continental used aircraft as collateral – 17 aircraft. Aircraft are a better debt and hence yield lower interest rates. United’s use of spare aircraft parts resulted in a higher interest rate. And, while on the high side, the rate is completely within normal debt rates for the asset class and credit worthiness of the borrower.



Finally, don’t believe everything written in newspapers or online. Readers should always consider the source. This week, an article was written by someone who has no standing in the airline analyst community and who convincingly demonstrated his lack of understanding of the airline industry. Be suspect. We are involved in Section 6 negotiations, and it is in the Company’s interest to instill stories of gloom and doom. Don’t believe them. Is United doing great? No, but it is far from being underwater.