Originally Posted by
J.Edward
It should also be noted that UA's continued catorigaztion of "special merger changes" into this year raised eye-brows (IIRC Jamie Baker (?) asked point blank when the charges would be over on the Q1 CC) as people questioned if the charge should be considered "special" considering the ongoing history of it.
Glad to see UA finally having a good quarter - hopefully they can keep up the momentum! ^
Thanks for the lengthy discussion, which hopefully helps some people to understand these issues. I raised the issue in passing of UAL still taking $28M in special charges this quarter (and you note the question asked in 4Q 2013) and I find that rather odd. Given the amounts are not material, I wonder why they keep doing this?
This all said, I might briefly raise on issue, which is the difference between a one time cash expense and a one time write off/accounting change. For example, reporting a charge of $250M for a new labor contract payment is a real cash expense, so are a lot of the merger related charges. On the other hand, the write downs of 747s (Delta this quarter) or of 757/762/erj-135s (done by UAL in the last two years) likely don't impact the actual cash position of the airline.
Put another way the "one time" rule for specials does not fully account for the differences between one time accounting charges and one time cash expenditures.