Originally Posted by
gettinbumped
You sort of contradict yourself here IMO. By bringing up the financial performance of UAL vs CAL in 2000-2010, you point out that UAL had a TERRIBLE time from 2001-2007. Then you acknowledge that UAL and CAL were in a dead heat financially in 2008-2009 (UAL outperformed CAL in 2010). But then you say the airlines were headed in different directions at the time of the merger. That logic seems to say that UAL had bottomed out in the middle of the decade and was on a decidedly UPWARD trgaectory, while CAL avoided the big curve but was relatively flat in comparison. From 2008-2010 saw dramatic upward trending of UAL's performance with a very bright looking future indeed. The financials back that up
Not sure your resurgence timeframe is correct either, according to this article.
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.