<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by gleff:
Pan Am didn't have the cash to make payroll. They had to sell the only routes they could in order to raise cash. UA has plenty of cash -- both on hand and with their new debter-in-possession financing.
Pan Am sold the Pacific Routes but were trying to sell the whole thing, and UA strung them along.
The current model is for UA to recover and rebuild. That will mean cutting unprofitable routes and maintaining profitable ones.
I doubt they're looking at massive asset-sales. At least, not yet.
If they fail to turn the company around and make a profit, then it will come time to liquidate in order to satisfy creditors. But that's a long way off.</font>
UA has less than 2 months worth of cash, as their on-hand cash is down to <$1B and their burn rate has increased. The DIP financing will be contingency on the court and creditors approving UA's plan.
It's a pretty big assumption to claim that the creditors will go along with what UA want. They're not out to reconstruct UA - they're out to gain maximum benefits. If the creditors think they are more likely recoup their investment by crippling UA, they will do it.
From a strict business perspective, UA is not worth reconstructing because of the history of employee animosity. You'd need brand new management and new employee attitude - neither which is forthcoming. Strictly by the numbers, UA should be in Ch. 7 liquidation and not Ch. 11. Same goes for USAir.