I doubt anything either talking suit had to say when pandering to Congress will have anything to do with the Arbitrator's decision, but I went ahead and posted what Tilton had to say during the hearings at the bottom. They might actually look at some financials, though. Does it really matter? We both sucked and wouldn't be able to effectively compete with DAL on an economy of scale. Have a cookie.



UNITED, THEY FALL (INTO DEBT)

By JOSH KOSMAN

Last Updated: 3:51 PM, June 30, 2009

United Airlines is having its own version of the trip from hell.

The airline, reeling from a decline in customers and running short on cash, is paying a steep 17 percent interest on $175 million in debt it issued, leading analysts to bet the company is just a few steps from the grave.

Indeed, that interest rate represents a full 6 percentage points above where rival airlines have paid in recent debt raisings, and is more than double what it paid nine years ago when it sold $186.4 million in debt at a yield of slightly more than 8 percent, according to Bloomberg data.

United Airlines parent UAL was planning to sell the debt at a 12.75 percent interest, but was forced to sweeten things due to both a lack of investor interest and management desperation, said analyst Roger King of CreditSights.

Others have noted that the steep interest rate reflects a lack of desirable assets to use as collateral.

UAL is considered the laggard among the big airlines, even as the airlines' overall passenger demand is off 10 percent compared with last summer. Also, the company has just $2.5 billion of cash on hand, compared with Delta, which has $7 billion.

To be sure, it's a difficult time for all airlines. However, UAL has some unique challenges.

When it was in bankruptcy from 2002 through 2006, it focused on attracting premium customers -- a move that now leaves it vulnerable given there's less business travel and more consumers are favoring price over luxury when it comes to travel.

Making matters worse, UAL may have near-term liquidity issues, and could begin to get squeezed by credit-card companies that fret they'd have to refund customers who bought tickets out of their own pockets if UAL collapses. King said UAL is now in talks with American Express about reaching a new arrangement to address this threat.

Last week, the airline announced it would lay off another 600 flight attendants in the fall. King said the company has basically already made about all the cuts it can.



US CREDIT-UAL debt pricing may indicate liquidity fears



Mon Jun 29, 2009 4:42pm EDT

By Karen Brettell

NEW YORK, June 29 (Reuters) - Bond investors are demanding

a high yield to take on even the secured debt of UAL Corp

UAUA.O as declining travel demand continues to hurt revenues

at the company, the parent of United Airlines, and raises the

risk its liquidity could come under stress.

United Airlines on Friday sold $175 million in senior notes

backed by its U.S. aircraft spare parts. The notes were priced

at 90 cents on the dollar to earn a yield of 17 percent,

according to Thomson Reuters data.

"The pricing indicates lack of investor interest and

management desperation," CreditSights analysts Roger King,

Aidas Baublys and Brian Studioso said in a report on Monday.

"Whether it was due to banker exuberance or company

desperation is unclear, but this type of issuance is frequently

just a few steps from the grave. It signifies that sources of

liquidity are up against a limit while investors have yet to

perceive any rising tide of seasonal demand," they said.

UAL denies that the pricing of the debt sale was out of

line with general market conditions.

"The transaction was oversubscribed with terms that reflect

the transaction structure, the nature of the collateral used

and the tight credit market," said UAL spokesperson Jean

Medina, in Chicago.

The sale "will further boost our liquidity as we continue

to take the right actions in response to the difficult

environment, adjusting capacity and reducing our cost

structure," she added. "We continue to take actions to raise

liquidity, having raised more than $500 million in the first

quarter alone."

LIQUIDITY CONCERNS

Concerns that UAL's liquidity could come under pressure

have increased as the outlook for travel demand remains bleak

and the risk of a renewed surge in fuel prices remains a risk.

Credit default swaps on UAL's debt are reflecting a high

bankruptcy concern at 59 percent the sum insured as an upfront

cost, or $5.9 million to insure $10 million for five years, in

addition to annual payments of $500,000, according to data by

Markit.

Fitch Ratings this month cut UAL's issuer credit rating two

notches to CCC, eight steps below investment grade and a deeply

speculative grade.

United could report substantially negative free cash flow

for the final three quarters of 2009, and the airline has $655

million of debt and capital leases maturing in the last three

quarters of the year, Fitch said.

"Even if revenue trends stabilize late in the year, the

airline faces over $1 billion in scheduled debt and capital

lease principal payments next year, raising the probability of

a deepening liquidity crisis," Fitch added.

Management has indicated that an estimated $1.7 billion in

remaining unencumbered assets could be used to improve

liquidity in the future, though much of these assets are older

aircraft and engines that may not be easily monetized, Fitch

said.

"United may have difficulty raising a large amount of new

capital over the near term as credit market conditions remain

very tight," Fitch said.

Meanwhile the ability of bondholders to obtain the parts

backing the recent debt sale in the event of bankruptcy may be

challenged, CreditSights said.

"The history of aircraft parts collateral in bankruptcy has

been spotty," and bondholders in a past case involving the

now-defunct TWA airline were wiped out when a bankruptcy judge

did not want to deal with commingled inventory, the analysts

said.

"Given the inherent limitations of spare parts collateral,

bondholders are betting their principal investment that the

issuer will not default over the next three years. That does

not seem to be a good bet right now," CreditSights said.

(Editing by James Dalgleish)



Aviation Week September 6, 2010 issue:



In regards to the UAL-CAL merger:



~~~



In separate testimony, United Chairman Glenn Tilton also “warns of catastrophe should the merger fail.



United's domestic passenger share decreased from approximately 15% in 1998 to approximately 11% at the end of the third quarter of 2009. United's global revenue ranking fell from second to sixth over the same period. If United remains a stand-alone entity, the company expects its ability to sustain sufficient profitability and to return a reasonable return on capital base across the economic cycle to continue to be at risk.