iwillflytheworld

Welcome to FT! ^ .

Unlike other posters, I strongly disagree with your analysis, at least for the short/medium term. Exploiting newly discovered fields, offshore drilling and promoting alternative fuels, even if successful (and that's a huge if in all cases) will take several to many years. Many more than UA or any other airline can afford to wait.

Some of your points are actually laughable. In 5) you say that the price will increase, therefore the price will decrease. In 8) you quote a very popular but entirely unsubstantiated conservative talking point.

In any case, I don't want this to become an OMNI discussion especially as the OP is not OMNI-enabled, but I wanted to point out that the airlines' future will be decided in the next year or two, so promises of further drilling or biofuels 5 years down the road are quite irrelevant as far as UAUA is concerned.

JetAway

UA needs a near-term solution and developing new oil resources is not one of them. UA's Q2 Report will be our crystal ball into the company's future. As for liquidation, what does UA have to sell that others want, besides the Pacific routes? Not more aircraft in a time of industry constriction. I don't see how liquidation will help UA's creditors.

jhayes_1780

While I would agree the post BK UA of 2006-(early)2008 is NOT sustainable. I would take a wait and see approach if the 737-less, fare raising, ala carte' revenue, cost cutting UA might be sustainable

giggy

UA already leaked 2q info last week over 500m loss

roadkit

With all due respect to the UA employees on FT, this is a legitimate subject for discussion.

UA's value has dropped 85% in the last year. CS complaints are rampant (at least on FT).

Whether US is going to survive is a very real issue. And unless they have been hiding in an overhead bin, the UA employees here have been probably more aware of it than anyone else on FT.

So maybe a "UA Deathwatch" thread is in poor taste, but a discussion about the airlines potential fate is worth having.

tom911

When UA was in chapter 11 before, didn't they have a specific group of banks underwrite their recovery (wasn't the term "debtor in possession" where they had first claim on UA assets as a condition of underwriting)? My worry, and it's spread across several U.S. carriers, is if the banking industry is going to step forward here to underwrite a chapter 11 next time around for any carrier. It may very well be a risk, with the price of oil, that they won't want to touch.

Tom at Olympic Trials in Omaha

JetAway

giggy-Where was this Q2 info "leaked?" I haven't seen those (awful) numbers reported anywhere.

giggy

i agree, why throw good money after bad. jpm would rather buy a bank at a discount and get a profit down the line.

marketwatch a lot is paper writeoffs but they lost 500m q1 when oil was 100

JetAway

giggy-I searched MarketWatch & couldn't find the Q2 info you referred to.

Axey

Couldn't agree more ^ The airliners.net-ization of FT aside, a multi-paragraph post on Flyertalk of how the entire oil market must be wrong is quite hilarious. Clearly, the fact that these easily discovered "facts" aren't priced into the oil market should be reason enough to discount them.

seadoc

Certain things are indeed indisputable in regards to UA's financial woes.
But if they go into chapter 7 (which if happened would be after US falls)--who will be left standing? DL, NW and AA are all struggling mightily.
So, for those of you looking elsewhere--where would you go? I am in SEA and the other prospects are not great. I am PM on DL and things are not so great over there. Alaska is doing ok but they have very limited routes ex-SEA.

TechOps

I say oil will hit $100 before it hits $200, and United will survive.

giggy

you can also find it on united.com/ir they had 3.2B coh at end of q1 and "expect" 2.7-2.8B coh endof q2 for the optimists.....these clowns are losing 5-6 million dollars a day and when 3q capacity cuts kick in their rev will be dramatically less, burn your miles they are toast.

giggy

so short oil everyone thats tried that got burned. If oil hits 130 the street looks at that price as a BUYING op, and they will push it right back to 140 within days

BobKinkaid

[QUOTE=iwillflytheworld;9985512]Welcome to FT! ^ .

Thanks

Unlike other posters, I strongly disagree with your analysis, at least for the short/medium term. Exploiting newly discovered fields, offshore drilling and promoting alternative fuels, even if successful (and that's a huge if in all cases) will take several to many years. Many more than UA or any other airline can afford to wait.

First off, it's not all my analysis; I started by writing thus:

"I've had conversations with people over the last two weeks who think oil may actually go down...."

So, what I wrote is somewhat of a composite of a number of conversations I've had over the past few weeks, perhaps even longer. I've presented some ideas, as presented to me. They may or not be valid hypotheses. But, they are derived from discussions with people very much in the know.

Secondly, while newly discovered fields, offshore drilling (including in the US) and alternative fuels are but only some of the components in the mix. Some will take more time, others less. There are MANY fields that have been in development for some time that are coming on-line or will be shortly.

I see some of the other points made, in particular, those related to geopolitical issues as much more likely to be realized in the short term. Insecurity in the marketplace translates to a confidence issue, which means the market is scared, which means prices go up (or down), in large part, due to perceptions. And, perceptions change much more quickly than large-scale infrastructure projects.


Some of your points are actually laughable. In 5) you say that the price will increase, therefore the price will decrease.

Ummm, nope. What I said was this:

5) The EU countries, especially the Brits, just love their carbon credit scheme and the exchequer is just wallowing in new-found tax funds, through "environmental" taxes. But, that's going to raise prices even higher, reducing demand further.


In 8) you quote a very popular but entirely unsubstantiated conservative talking point.


Because it's popular doesn't make it any less valid.

And, it is substantiated enough, that many, if not most in business believe this to be the case. The reasoning, as I see it, appears to be that markets are driven by confidence. Confidence means security. Security can take many forms, but ultimately it distills down to people/markets/business/other countries asking the question will the US have the military strength to defend itself and its allies in times of stress, conflict and threatening of everyone's mutual interests. Of equal and crucial importance is will the US have the political willingness, resolve and tenacity to enter into a conflict, if it has to or will it equivocate, "dialogue with" or otherwise hedge around tough questions, without directly addressing them.

Ultimately, who ends up in the White House is a BIG deal, because markets are based on perception, which are in turn, are based on confidence, which is part of what drives market prices, including and especially oil.

In synopsis (and more relevant to the original oil price discussion), can you imagine what would happen to the energy markets if a presidential candidate was elected that the market and our allies would be jittery about?

Considering those points, as intangible as they may seem, is highly relevant to the future of not only legacy airlines, but business in general.

We could get into an adjacent discussion about foreign currency, interest rates, sovereign funds and how they play into this, as well, but I have to get some work done today!