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]
Feb 19, 2021, 8:08 pm
#1201
FlyerTalk Evangelist
Join Date: Oct 2001
Location: Austin, TX
Posts: 21,421
In an attempt to get the specific numbers -- which I abandoned -- I skimmed the first month or so of this thread. If anything, we were all too optimistic. The one thing I'd say I got right (and I'm not alone in this, to be clear) is that UA was Too Big To Fail™ and that the government would bail them out.
If it hadn't been for the bailouts, UA would have declared Chapter 11 already -- there's no question about it. You can point to alternative funding sources -- and, yes, they did get additional financing, sold stock, sold planes in a lease-back deal, mortgaged MileagePlus, etc. But all of those were in the context of Too Big To Fail. The Trump Administration had already signaled, very clearly, that these were not risky investments because taxpayer money would be used to prop up UA. UA's private bailout was only possible because investors were assured of a public bailout.
Feb 19, 2021, 10:30 pm
#1202
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Join Date: Sep 2002
Location: LAX/TPE
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What a great week for United.
1. UAL stock soars, leading a broader airline rally
2. New BOS-LHR service
3. Retaliated against Jetblue's EWR encroachment
4. $1B of taxis ordered
Looks like UA is positioned to thrive coming out of the Pandemic. As entertaining as this thread was over the past year, the final chapter is one where UA took a few dollars from the govt, but didn't end up needing any of it. Hopefully the loan will be paid back shortly, followed by the resumption of share buybacks!
1. UAL stock soars, leading a broader airline rally
2. New BOS-LHR service
3. Retaliated against Jetblue's EWR encroachment
4. $1B of taxis ordered
Looks like UA is positioned to thrive coming out of the Pandemic. As entertaining as this thread was over the past year, the final chapter is one where UA took a few dollars from the govt, but didn't end up needing any of it. Hopefully the loan will be paid back shortly, followed by the resumption of share buybacks!
The taxis are pie-in-the-sky technology that are years away, if ever, from actual commercial service. Many of us remember where the first "taxi" ended up - the failed helicopter service operated for Continental from Manhattan to EWR. I am not holding my breath for this service.
Last edited by WineCountryUA; Feb 19, 2021 at 11:48 pm Reason: Snark removed, disagree but civilly
Feb 20, 2021, 2:09 pm
#1203
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Feb 20, 2021, 2:52 pm
#1204
FlyerTalk Evangelist
Join Date: Oct 1999
Posts: 11,468
Add in the recent article by an expert from JohnsHopkins that forsees herd immunity within months and at least UAs leisure loads might enjoy a rebound.
Feb 20, 2021, 4:50 pm
#1205
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
Programs: UA Plat 1.997MM, Hyatt Discoverist, Marriott Plat/LT Gold, Hilton Silver, IHG Plat
Posts: 66,861
.... 2. TSA passenger numbers yesterday hit 43% of 2020 and 52% of 2019.
Not yet back to Dec 2020 highs
Feb 20, 2021, 4:58 pm
#1206
FlyerTalk Evangelist
Join Date: Aug 2017
Programs: AS 75K, DL Silver, UA Platinum, Hilton Gold, Hyatt Discoverist, Marriott Platinum + LT Gold
Posts: 10,517
Leisure loads have been strong for months, based on my observations of some 50 flown flights or so. Keep in mind Q1 has been a historically low quarter of the year, and overall loads have not fallen off a cliff, as some have predicted.
Feb 22, 2021, 6:10 pm
#1207
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Another spectacular day for UA equity holders!
With many countries (incl. US, UK, Israel, Chile) projected to reach majority vaccinated status by end of June, summer travel should be strong. The only UA speed bump I see is int'l travel amongst fully vaccinated countries. I can see a lot of demand between the US and UK/Israel/Chile, but I don't yet see a viable travel passport. It seems the only entity in the US with authoritative vaccination data, at the individual traveler level, is the CDC. I understand UA and every other airline want a vaccine passport, but I don't think helping the airlines is high on CDC's to-do list. Absent some breakthrough, I could see UA domestic outperforming UA int'l, and UA overall being at a disadvantage to domestic-only players like Southwest.
With many countries (incl. US, UK, Israel, Chile) projected to reach majority vaccinated status by end of June, summer travel should be strong. The only UA speed bump I see is int'l travel amongst fully vaccinated countries. I can see a lot of demand between the US and UK/Israel/Chile, but I don't yet see a viable travel passport. It seems the only entity in the US with authoritative vaccination data, at the individual traveler level, is the CDC. I understand UA and every other airline want a vaccine passport, but I don't think helping the airlines is high on CDC's to-do list. Absent some breakthrough, I could see UA domestic outperforming UA int'l, and UA overall being at a disadvantage to domestic-only players like Southwest.
Feb 25, 2021, 10:49 am
#1208
Moderator: United Airlines
Join Date: Jun 2007
Location: SFO
Programs: UA Plat 1.997MM, Hyatt Discoverist, Marriott Plat/LT Gold, Hilton Silver, IHG Plat
Posts: 66,861
UA is considering raising more cash (at today's stock price -- $1.9B) -- this could be read as:
pessimistic -- more protection for a longer negative cash burn
or as optimistic -- building a buffer for capital investment
pessimistic -- more protection for a longer negative cash burn
or as optimistic -- building a buffer for capital investment
Item 8.01 Other Events.
On February 25, 2021, United Airlines Holdings, Inc. (“UAL”) announced that its board of directors authorized UAL to issue and sell, from time to time,up to 37,000,000 shares of UAL common stock in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended. Sales under any such “at the market offerings” are subject to the entry into an equity distribution agreement with applicable managers, as well as market and other conditions, and there is no assurance that UAL will proceed with any such offering.
On February 25, 2021, United Airlines Holdings, Inc. (“UAL”) announced that its board of directors authorized UAL to issue and sell, from time to time,up to 37,000,000 shares of UAL common stock in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended. Sales under any such “at the market offerings” are subject to the entry into an equity distribution agreement with applicable managers, as well as market and other conditions, and there is no assurance that UAL will proceed with any such offering.
Feb 25, 2021, 12:36 pm
#1209
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
I think they're simply being opportunistic. UAL stock had surged nearly 40% in 20 days -- reaching nearly $60 from a pandemic low of $19. If that pace continues, I could see UA opportunistically raising cash at a lofty valuation. That said, I think the stock will level off for a while (as it's doing today) and UA will never sell these shares.
Remember, UA has access to the cheapest bank on planet earth -- all of us! In normal times, UA brings in ~$2B of cash a month for travel that won't take place for six months. They pay zero interest on that money. Even the federal government has to pay interest on issued treasure bills! What other high-ticket business takes in cash six months before providing the service?
Overall, another example of Kirby and team making sound operating decisions.
Remember, UA has access to the cheapest bank on planet earth -- all of us! In normal times, UA brings in ~$2B of cash a month for travel that won't take place for six months. They pay zero interest on that money. Even the federal government has to pay interest on issued treasure bills! What other high-ticket business takes in cash six months before providing the service?
Overall, another example of Kirby and team making sound operating decisions.
Feb 25, 2021, 2:33 pm
#1210
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Join Date: Sep 2002
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There is absolutely nothing to be optimistic about yet, and making billion dollar business decisions on the basis of hopes and wishes without any actual data to support such decisions is generally called incompetence.
Feb 25, 2021, 2:52 pm
#1211
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Feb 25, 2021, 3:27 pm
#1212
Join Date: May 2013
Posts: 3,361
I think they're simply being opportunistic. UAL stock had surged nearly 40% in 20 days -- reaching nearly $60 from a pandemic low of $19. If that pace continues, I could see UA opportunistically raising cash at a lofty valuation. That said, I think the stock will level off for a while (as it's doing today) and UA will never sell these shares.
Remember, UA has access to the cheapest bank on planet earth -- all of us! In normal times, UA brings in ~$2B of cash a month for travel that won't take place for six months. They pay zero interest on that money. Even the federal government has to pay interest on issued treasure bills! What other high-ticket business takes in cash six months before providing the service?
Overall, another example of Kirby and team making sound operating decisions.
Remember, UA has access to the cheapest bank on planet earth -- all of us! In normal times, UA brings in ~$2B of cash a month for travel that won't take place for six months. They pay zero interest on that money. Even the federal government has to pay interest on issued treasure bills! What other high-ticket business takes in cash six months before providing the service?
Overall, another example of Kirby and team making sound operating decisions.
Even if the incremental liquidity is not needed, there are long term benefits to using proceeds from equity offering to repay debt and strengthen balance sheet.
Feb 25, 2021, 3:45 pm
#1213
Join Date: Dec 2002
Location: SFO
Posts: 3,942
It's a very tiny % of business travel that actually needs people in the same room, don't see getting it back to pre-pandemic numbers anytime soon.
Feb 25, 2021, 4:32 pm
#1214
FlyerTalk Evangelist
Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,713
I am not doubting that there was a lot of business people used to travel for but no longer will since it is just as effective to do remotely. But in my situation (and no it is not sales), I have found the outcome for my employer is much better if I travel and meet people in the same room. So I see my work travel coming back pretty much 100%.
I know I am just one data point, but my situation cannot be unique.
(ETA: Just made a booking for a business trip in March for the first time this year immediately before posting this.)
Feb 25, 2021, 4:51 pm
#1215
FlyerTalk Evangelist
Join Date: Feb 2003
Posts: 10,234
I love the disconnect between the different opinions here! To some this move is a strategic business decision right up there with Jobs launching the iPod. To others it’s a definite indication of imminent doom for UA.
Personally, I think they are having a tough time and they need some money but they also know they will continue to get bailed out by the taxpayers when needed. UA will keep operating but it isn’t looking to expand or dominate the industry. Time will tell which view is right.
Personally, I think they are having a tough time and they need some money but they also know they will continue to get bailed out by the taxpayers when needed. UA will keep operating but it isn’t looking to expand or dominate the industry. Time will tell which view is right.