Mar 20, 2020, 9:29 pm
Last edit by: WineCountryUA
Please do not modify or remove
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
UA's Viability / Financial Future due to the COVID-19 Era [Consolidated]
Jul 17, 2020, 11:03 am
#976
Join Date: Jul 2005
Posts: 2,324
AA has now, surprisingly, gotten into bed with the 2 best non big 4 airlines in the USA. I wonder if this move will have an impact on the future viability of UA. If you count AA, AS and B6 as one then they pretty much cover everywhere better than UA, except for Asia which is dead for the foreseeable future. I always thought AA would be the most likely to go belly up first but perhaps their moves have strengthened them a bit. With DL’s better financial metrics it’s looking like UA may be the first to take the plunge into Covid related BK.
Jul 17, 2020, 1:02 pm
#977
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Join Date: Sep 2002
Location: LAX/TPE
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I would say, at least for US airlines, it needs to be an absolute requirement that before any additional subsidies are paid by taxpayers, all shareholder equity must be terminated via Ch11, and going forward, the taxpayer assumes full equity ownership of the affected airlines using taxpayer funds to keep them viable until the situation stabilizes in 24-36 months, after which the airline can emerge from bankruptcy, and then re-issue new shares with 100% of the proceeds paid to the US Treasury.
Jul 17, 2020, 1:48 pm
#978
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
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Let's stay focused on UA situation and not wander into future bailout conditions nor into a fundamental restructuring of the airline industry -- those are OMNI subjects and are not UA specific.
WineCountryUA
UA coModerator
WineCountryUA
UA coModerator
Jul 21, 2020, 10:12 am
#979
Suspended
Join Date: Feb 2009
Programs: DL, UA, AA, VS
Posts: 5,226
General article on unlikelihood of business travel rebounding any time soon.
https://www.bloomberg.com/news/artic...urce=applenews
So what does UA do, reduce premium cabins?
Stop all Polaris conversion work?
Raise prices for J fares?
Lower prices for J fares?
If it does take several years for business travel to approach 2019 levels again, do the airlines just drastically reduce premium cabin capacity?
https://www.bloomberg.com/news/artic...urce=applenews
So what does UA do, reduce premium cabins?
Stop all Polaris conversion work?
Raise prices for J fares?
Lower prices for J fares?
If it does take several years for business travel to approach 2019 levels again, do the airlines just drastically reduce premium cabin capacity?
Jul 21, 2020, 10:55 am
#980
Join Date: Sep 2006
Location: HNL
Programs: UA GS4MM, MR LT Plat, Hilton Gold
Posts: 6,447
I still think the entire industry files bankruptcy - and all the airlines look to the courts to try to slash any lease agreements, labor contracts, future obligations, etc.....
Jul 21, 2020, 12:43 pm
#981
FlyerTalk Evangelist
Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,708
General article on unlikelihood of business travel rebounding any time soon.
https://www.bloomberg.com/news/artic...urce=applenews
So what does UA do, reduce premium cabins?
Stop all Polaris conversion work?
Raise prices for J fares?
Lower prices for J fares?
If it does take several years for business travel to approach 2019 levels again, do the airlines just drastically reduce premium cabin capacity?
https://www.bloomberg.com/news/artic...urce=applenews
So what does UA do, reduce premium cabins?
Stop all Polaris conversion work?
Raise prices for J fares?
Lower prices for J fares?
If it does take several years for business travel to approach 2019 levels again, do the airlines just drastically reduce premium cabin capacity?
Jul 21, 2020, 1:13 pm
#982
Join Date: Feb 2008
Programs: 6 year GS, now 2MM Jeff-ugee, *wood LTPlt, SkyPeso PLT
Posts: 6,526
Once government aid stops, they'll probably simply have to reduce capacity, period, until that drives fares up enough to be sustainable. If the dire predictions about business travel not coming back are correct, the whole industry will have to rebalance to a new normal and will be much smaller. They are not going to be able to fly half-empty planes around indefinitely, or survive by filling them only with super-cheap fares.
United bet of the "it will all magically disappear, we will be down to zero cases by spring" and as cases instead climb to 2-3x what they were in the spring, the bill for that bad bet is coming in the form of chapter 11. Just sorry that employees are once again going to take it on the chin for short sighted management.
Jul 21, 2020, 1:39 pm
#983
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
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Posts: 66,859
Jul 21, 2020, 1:42 pm
#984
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Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,708
No airline is going to be able to block out huge chunks of its inventory for social distancing for very long at current fares. Tough decisions are going to have to be made.
Jul 21, 2020, 1:52 pm
#985
Join Date: Jun 2014
Programs: UA MM
Posts: 4,130
The best thing that could happen for UA (and others) is for the government to mandate load factor maximum limits and then compensate the airlines for that. It will help make flying feel safer and more attractive to the public while providing the necessary cash to the airlines in return.
Jul 21, 2020, 1:58 pm
#986
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Location: TPA for now. Hopefully LIS for retirement
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The best thing that could happen for UA (and others) is for the government to mandate load factor maximum limits and then compensate the airlines for that. It will help make flying feel safer and more attractive to the public while providing the necessary cash to the airlines in return.
People who want to fly should pay the full cost of that choice. There is no constitutional right to cheap airfare.
Last edited by WineCountryUA; Jul 21, 2020 at 2:01 pm Reason: unneeded phrase removed
Jul 21, 2020, 2:27 pm
#987
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
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Posts: 66,859
UA Announces Q2 2020 Financial Results 21 July / Conference Call 22 July
United Airlines Took Industry-Leading Steps to Manage Historic Impact of COVID-19 in Q2
CHICAGO, July 21, 2020
-- United Airlines (UAL) today announced second quarter 2020 financial results, the most difficult financial quarter in its 94-year history, with a net loss of $1.6 billion, and an adjusted net loss¹ of $2.6 billion. Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year. The company's total liquidity as of the close of business on Monday, July 20, 2020 was approximately $15.2 billion. United now expects liquidity at the end of the third quarter to be over $18 billion.
Cash burn2 during the second quarter averaged $40 million a day, including $3 million of principal payments and severance expenses. The company currently is forecasting average daily cash burn to be approximately $25 million during the third quarter of 2020 including $6 million of principal repayments and severance expenses.
United believes it did the best job of matching actual capacity to demand among its largest network peers. The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.
...
CHICAGO, July 21, 2020
-- United Airlines (UAL) today announced second quarter 2020 financial results, the most difficult financial quarter in its 94-year history, with a net loss of $1.6 billion, and an adjusted net loss¹ of $2.6 billion. Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year. The company's total liquidity as of the close of business on Monday, July 20, 2020 was approximately $15.2 billion. United now expects liquidity at the end of the third quarter to be over $18 billion.
Cash burn2 during the second quarter averaged $40 million a day, including $3 million of principal payments and severance expenses. The company currently is forecasting average daily cash burn to be approximately $25 million during the third quarter of 2020 including $6 million of principal repayments and severance expenses.
United believes it did the best job of matching actual capacity to demand among its largest network peers. The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.
...
Jul 21, 2020, 2:52 pm
#988
Join Date: Jun 2014
Programs: UA MM
Posts: 4,130
I agree that would be a dream for both airlines and passengers, but why should the government pump even more money to the airlines and subsidize airline passengers like that? Not a good use of taxpayer money IMO.
People who want to fly should pay the full cost of that choice. There is no constitutional right to cheap airfare.
People who want to fly should pay the full cost of that choice. There is no constitutional right to cheap airfare.
I'm not suggesting the government simply "buy" 30% of the seats on every flight in the country just to leave them empty. Instead, I think they could work something out which would cost less than that. I also don't think this just becomes a sunk cost for the government. Improved public confidence (if it happens) helps support employment and reduce unemployment benefits burden, increases economic activity, etc.
Jul 21, 2020, 4:11 pm
#989
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Posts: 13,708
Improved public confidence (if it happens) helps support employment and reduce unemployment benefits burden, increases economic activity, etc.
Jul 22, 2020, 6:30 am
#990
Join Date: Jun 2014
Programs: UA MM
Posts: 4,130
I think there are a lot better ways to achieve those goals rather than payments to for-profit companies.
