Originally Posted by
LondonElite
That’s going to be a painful call to deliver, and listen to. My UAL holdings are not looking so hot at the moment.
On the contrary, you're looking good. Takeaways fall into two buckets: 'facts' and 'implied':
Facts:
1. The shareholder dilution looks to be ~15%. Warrants to the government and the recent $1B they raised. That's it! Not bad given demand basically evaporated for their services.
2. Looks like they've factored in the MAX progress and delivery payments into their operating assumptions this year. That's a big part of their ~$2.5B in CAPEX.
3. Any new birds they take delivery of will be financed (and not purchased). That explains why they sold 16 MAXs to the Chinese.
4. Burn from operations, when only counting 'needed' employees, is ~$15M/day (very healthy)
5. Cash position is very strong (between $9.5B and $14B depending on whether they take the 2nd govt loan)
Implications:
6. The implication of #2 is a lot of inefficient birds will be retired.
7. Oscar will not extend his term as CEO. (Would have been a required disclosure if he was extending)
8. Oscar has now publically implied three times, and with conviction every time, that all employees not involved in profitable/necessary operations will be furloughed or laid-off on Oct. 1.
I don't know how many employees are needed to run the skeleton operation they're running today. My guess is it's 10,000 of the 100,000 employees. That means 90,000 could be furloughed on Oct 1. The only silver lining is UA's cash position is so strong, the employees will likely be furloughed vs laid-off. That's a big deal as furloughed employees retain health benefits. I feel for the employee base and hope the recovery is swift!
Originally Posted by
EWR764
Notable is that UA expects to be burning cash at a rate of $40 to 45m per day throughout the quarter...
Careful with this number. It excludes the $30M/day the government is paying UA to pay employees that aren't working.
So United's true operating burn is more like $10-$15M/day.