Originally Posted by
EWR764
90k employees on furlough is a DRAMATIC overstatement from what will actually happen in October...
That's why I asked the question. I don't know how many employees it takes to run an airline with a minimal route structure. The big variable is how many point-to-point non stops UA brings back by Oct 1. Take one of their most popular routes EWR-SFO. They fly that 12-14x a day. Will it even be flying Oct 1? If so how many times? Maybe 1-2 per day... Barring a cure/vaccine, I think the staff reductions are significant.
Originally Posted by
EWR764
Are you sure about that? If UA's non-payroll-protected cash burn was only $10-15m/day (i.e., $10-15m on top of government grant) I think that would be pretty good news.
Yes, sure. $5B/165 days is $30M/day. Yes, it is good news.
Originally Posted by
EWR764
Notwithstanding the 20k employees who took various leaves of absence/buyouts, UA has indicated that the government grant does not cover 100% of its current payroll expense...
Correct, but it doesn't need to. It just needs to cover a large portion of it, which it does. The rest is covered by the loan (remember the govt aid is $3.5B grant + $1.5B loan). Additionally, because the money is solely going to employees, UA can loudly say the company got no benefit from the grant -- it was simply a pass-through to the employees. This is also why I don't think UA will ever draw down the 2nd loan from the govt. Notice what Boeing did today -- issued a $25B bond and publicly and loudly said, we don't need any govt help!