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]
Mar 10, 2021, 11:12 pm
#1216
FlyerTalk Evangelist
Join Date: Oct 1999
Posts: 11,468
With latest $1.9 T spending bill passed by the US Congress, what subsidies can UA expect from it?
Mar 10, 2021, 11:39 pm
#1217
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
Found a newer reference President Biden to sign bill providing $14bn to airlines
The bill, itself a much broader pandemic-relief package, would set aside $14 billion in funds that would extend the US government’s “Payroll Support Program” for airlines. It includes another $1 billion for staff at contractors to airlines,
UA, per se, does not receiving any of this but it means employees will not be furloughed as previously announced.
Last edited by WineCountryUA; Mar 10, 2021 at 11:45 pm Reason: repaired link
Mar 15, 2021, 9:01 am
#1218
Join Date: Jan 2005
Location: New York, NY
Programs: UA, AA, DL, Hertz, Avis, National, Hyatt, Hilton, SPG, Marriott
Posts: 9,455
UA "core" cash burn positive
Today during an otherwise unremarkable appearance at the (virtual) JPMC Industrials conference, Scott Kirby revealed that the company's core operation is now cash burn positive. The subsequent SEC disclosure defines "core cash flow" as such:
So, it excludes service on the mountain of debt UA accumulated over the past year to ensure viability going forward. Nevertheless this is a welcome development and bodes well for the company, which is fundamentally an "airline" and needs to find a way to generate positive cash flow by flying people and cargo in airplanes for money. Shares in UAL have responded favorably.
Core cash flow as referenced above is defined in the same manner as core cash burn, except that the result is positive. Core cash burn is defined as: Net cash from operations, less investing and financing activities. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, issuance of new stock, net proceeds from the sale of short-term and other investments, changes in certain restricted cash balances, debt principal payments, timing of certain payments, capital expenditures (net of flight equipment purchase deposit returns), investments in the recovery and severance payments are not included in this figure.
So, it excludes service on the mountain of debt UA accumulated over the past year to ensure viability going forward. Nevertheless this is a welcome development and bodes well for the company, which is fundamentally an "airline" and needs to find a way to generate positive cash flow by flying people and cargo in airplanes for money. Shares in UAL have responded favorably.
Mar 15, 2021, 9:43 am
#1219
FlyerTalk Evangelist
Join Date: Mar 2014
Location: 4éme
Posts: 12,045
Today during an otherwise unremarkable appearance at the (virtual) JPMC Industrials conference, Scott Kirby revealed that the company's core operation is now cash burn positive. The subsequent SEC disclosure defines "core cash flow" as such:
Mar 15, 2021, 9:47 am
#1221
Suspended
Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,262
2022, although very modest and that is with all the standard caveats regarding the market.
Not sure everyone will like what that means for a measured return of service, pricing and fare rules.
Not sure everyone will like what that means for a measured return of service, pricing and fare rules.
Mar 15, 2021, 9:48 am
#1222
Join Date: Dec 2018
Programs: $9 Fare Club
Posts: 1,485
Today during an otherwise unremarkable appearance at the (virtual) JPMC Industrials conference, Scott Kirby revealed that the company's core operation is now cash burn positive. The subsequent SEC disclosure defines "core cash flow" as such:
So, it excludes service on the mountain of debt UA accumulated over the past year to ensure viability going forward. Nevertheless this is a welcome development and bodes well for the company, which is fundamentally an "airline" and needs to find a way to generate positive cash flow by flying people and cargo in airplanes for money. Shares in UAL have responded favorably.
So, it excludes service on the mountain of debt UA accumulated over the past year to ensure viability going forward. Nevertheless this is a welcome development and bodes well for the company, which is fundamentally an "airline" and needs to find a way to generate positive cash flow by flying people and cargo in airplanes for money. Shares in UAL have responded favorably.
Mar 15, 2021, 10:20 am
#1223
Join Date: Jan 2005
Location: New York, NY
Programs: UA, AA, DL, Hertz, Avis, National, Hyatt, Hilton, SPG, Marriott
Posts: 9,455
I guess I mistakenly read that as not including investing/financing activities, but to the extent I misunderstand it and the cash burn positive figure includes debt service, then all the more impressive.
Mar 15, 2021, 11:49 am
#1224
Join Date: May 2013
Posts: 3,361
Kirby was pretty clear change fees are gone for good. More about empowering & helping employees than direct benefit to customers.
Mar 15, 2021, 1:29 pm
#1225
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
transcript by seekingalpha -- requires free account signup
Best to use a throwaway email for these
Mar 15, 2021, 11:36 pm
#1226
FlyerTalk Evangelist
Join Date: Oct 1999
Posts: 11,468
Welcome news in this case!
Mar 16, 2021, 12:06 pm
#1227
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
Let's stick to thread title subject, loyalty programs are clearly of interest to FT but getting too far off topic.
Moved that discussion to UA's MileagePlus as a loyalty program post-COVID, will it change?
Let's keep this thread on UA's future viability due to impacts of COVID.
WineCountryUA
UA coModerator
Moved that discussion to UA's MileagePlus as a loyalty program post-COVID, will it change?
Let's keep this thread on UA's future viability due to impacts of COVID.
WineCountryUA
UA coModerator
Last edited by WineCountryUA; Mar 16, 2021 at 12:18 pm
Apr 12, 2021, 10:47 am
#1228
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
The road to recovery is still difficult but with some improving trends from (latest UA 8-K report), next earnings release on 19 April 2021
As of March 31, 2021, United Airlines Holdings, Inc. ("UAL") and United Airlines, Inc., a wholly-owned subsidiary of UAL ("United," and together with UAL, the "Company") had $21 billion in available liquidity. Total available liquidity includes cash and cash equivalents, short-term investments and $1 billion available under the Company’s revolving credit facility, as well as $7 billion available under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) loan program.
For the first quarter of 2021, the Company expects to report total revenues of $3.2 billion, a decrease of (66%) versus the first quarter of 2019 and at the favorable end of our previous guidance of a decrease of (65%) to (70%) versus the first quarter of 2019. In March 2021, the Company observed a forward acceleration in customer demand for travel and new bookings, resulting in positive average daily core cash flow (as defined below) for the month of March 2021 and expected positive average daily core cash flow moving forward. Average daily core cash flow (or core cash burn) for the first quarter of 2021 is expected to be approximately negative $9 million per day, an improvement of about $10 million per day compared to the negative average daily core cash flow (or core cash burn) reported for the fourth quarter of 2020.
For the first quarter of 2021, the Company expects to report total revenues of $3.2 billion, a decrease of (66%) versus the first quarter of 2019 and at the favorable end of our previous guidance of a decrease of (65%) to (70%) versus the first quarter of 2019. In March 2021, the Company observed a forward acceleration in customer demand for travel and new bookings, resulting in positive average daily core cash flow (as defined below) for the month of March 2021 and expected positive average daily core cash flow moving forward. Average daily core cash flow (or core cash burn) for the first quarter of 2021 is expected to be approximately negative $9 million per day, an improvement of about $10 million per day compared to the negative average daily core cash flow (or core cash burn) reported for the fourth quarter of 2020.
n April 12, 2021 United announced that it intends to commence a private offering to eligible purchasers of $5.5 billion in aggregate principal amount of two series of notes, the senior secured notes due 2026 and the senior secured notes due 2029 (together, the “Notes”), subject to market and other conditions. The Notes will be guaranteed on an unsecured basis by UAL. United also announced it intends to enter into a new $3.5 billion senior secured term loan B facility due 2028 (the “Term Loan Facility”) and a new $1.75 billion senior secured revolving credit facility due 2025 (together with the Term Loan Facility, the “New Loan Facilities”) concurrently with the closing of the offering of the Notes.
United intends to use the net proceeds from the offering of the Notes and borrowings under the Term Loan Facility (i) to repay in full the $1.4 billion aggregate principal amount outstanding under the term loan facility United entered into on March 29, 2017, the $1.0 billion aggregate principal amount outstanding under the revolving credit facility United entered into on March 29, 2017 and the $520 million aggregate principal amount outstanding under the CARES Act term loan facility United entered into on September 28, 2020, (ii) to pay fees and expenses relating to the offering of the Notes and (iii) for United’s general corporate purposes. The final terms and amounts of the Notes and the New Loan Facilities are subject to market and other conditions, and may be materially different than expectations. While United intends to offer the Notes and enter into each of the New Loan Facilities, United may close on one or more of such transactions without closing on all three.
United intends to use the net proceeds from the offering of the Notes and borrowings under the Term Loan Facility (i) to repay in full the $1.4 billion aggregate principal amount outstanding under the term loan facility United entered into on March 29, 2017, the $1.0 billion aggregate principal amount outstanding under the revolving credit facility United entered into on March 29, 2017 and the $520 million aggregate principal amount outstanding under the CARES Act term loan facility United entered into on September 28, 2020, (ii) to pay fees and expenses relating to the offering of the Notes and (iii) for United’s general corporate purposes. The final terms and amounts of the Notes and the New Loan Facilities are subject to market and other conditions, and may be materially different than expectations. While United intends to offer the Notes and enter into each of the New Loan Facilities, United may close on one or more of such transactions without closing on all three.
Apr 12, 2021, 1:24 pm
#1229
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Wow! What an impressive turnaround. They're paying back the small govt loan and raising nearly $6 billion in unsecured debt at the same time.
The upcoming earnings release will be good in terms of forward-bookings, but that news is built into the stock price.
It's the earnings release right after July 4th that'll be a blockbuster. UA's cash intake during April, May, June, for travel later this year and next, will stun the market.
In the last month, I've burned through thousands in ETCs and have started giving UA new cash again. Many friends and colleagues are doing the same.
The upcoming earnings release will be good in terms of forward-bookings, but that news is built into the stock price.
It's the earnings release right after July 4th that'll be a blockbuster. UA's cash intake during April, May, June, for travel later this year and next, will stun the market.
In the last month, I've burned through thousands in ETCs and have started giving UA new cash again. Many friends and colleagues are doing the same.
Apr 12, 2021, 3:11 pm
#1230
FlyerTalk Evangelist
Join Date: Jun 2010
Location: TOA
Programs: HH Diamond, Marriott LTPP/Platinum Premier, Hyatt Lame-ist, UA !K
Posts: 20,061
Still negative daily cash flow.
David
David