United Airlines seeks $1.8 billion in federal loan help

Associated Press / SFGate

[RCW2001]

DAVE CARPENTER, AP Business Writer
Monday, June 24, 2002
©2002 Associated Press

URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2002/06/24/national1426EDT0652.DTL

(06-24) 11:26 PDT CHICAGO (AP) --

United asked the government for $1.8 billion in federal loan assistance Monday, making it the biggest airline yet to seek help under a program set up after Sept. 11 to prop up the ailing industry.

The nation's No. 2 airline has lost about $1 billion since the terrorist attacks. It is the third major airline to seek federal loan guarantees under the program, behind America West and US Airways.

United said it asked the Air Transportation Stabilization Board to guarantee $1.8 billion of a $2 billion private loan.

United chairman and chief executive Jack Creighton called United "the perfect candidate" for the program, since it was a target of the attacks.

Creighton had said United would apply if it got wage concessions from its employees. It has since ordered pay cuts for its 11,000 management and salaried employees, estimated at $430 million over three years, and reached a tentative pay-cut agreement with its 9,200 pilots worth $520 million over three years.

Federal approval of its application is not assured. Not only have United's mechanics and flight attendants not agreed to cuts, but the airline has come under fire within the industry for seeking government help when it was trouble even before Sept. 11.

Stock in United's parent, UAL Corp., fell 44 cents to $11.51 in afternoon trading on the New York Stock Exchange.

©2002 Associated Press  

[OldFriend]

Not only is United not passenger friendly.......they certainly didn't care when business was slowing down PRIOR to 9/11....they continued to charge outrageous rates to their business customers....hurting the bottom line of the very people they needed.

[billbears]

Perhaps one of the more important functions of federal government is to foster trade and stimulate industry. The business of America is business, and when the corner-stone corporations that have made America great require a little financial push, thank God America can afford to help.

Really? Could you point that out to me in the Constitution, Mr Clay? The fact of the matter it USED to be against every state constitution AND the US Constitution to do what you are suggesting.. Matter of fact many of the state sponsored businesses tend to fail or either go bankrupt. Take Union Pacific. Think something like that couldn't be done without federal money? Don't tell the boys at Northern Pacific that did it without one red cent and stayed buoyant for far longer than Union Pacific. Thanks abe!! < /sarcasm>

[VOA]

Let them go out of business. It will just allow for more expansion by Southwest and Jet Blue.
That would be great.

Works for me.
If it hadn't been for the Southwest and Jet Blue-types, we'd still be worrying
about Saturday night layovers.

[Boonie Rat]

A simple NO will do. The "government" has no mandate to bail out inefficient, unprofitable, or poorly managed businesses. If they can't compete profitably, they should fail.

Boonie Rat

MACV SOCOM, PhuBai/Hue '65-'66

[VOA]

if elected officials in Washington followed your advice, there would be no Chrysler Motors today...

Of late, there is no Chrysler, only Daimler/Chrysler.
But, the deal made to save Chrysler is probably one time that such subsidies worked out.

If we could clone Lee Iacocca, I'd be more enthusiastic about such deals.

Americans should not think twice about economic packages for struggling corporations.

Following this tact is the surest way to make sure we join those low-unemployment meccas...
Japan and Germany.

These deals should be thought about REALLY long and hard.

If investment banks won't lend their $$$ to an ailing, poorly run company, why should
I loan my tax dollars to these losers?

(But, I await good arguments for why UAL and AA aren't just labor-union and executive
compensation gold mines that I'd never see a return of investment from via my tax dollars.
Let Southwest, JetBlue and the like take over the vacuum.)

[Political Junkie Too]

Doesn't anybody remember this story from October 2, 2001, Amid job cuts, United buying luxury jets?

Excerpt:

While United Airlines was telling Congress two weeks ago that it might go bankrupt without a bailout, its parent, the UAL Corp., was wiring $11.25 million to a French airplane manufacturer as a down payment on an order for 30 business jets.

The luxury jets, built by Dassault Aviation at a cost of about $20 million each, are part of a new business for UAL, that of selling shares of business aircraft to corporations, celebrities and other wealthy individuals.

-PJ

[Political Junkie Too]

A follow-up from March 23, 2002: United plans to call back 1,300 workers Tough times force UAL Corp. to cancel luxury jet program.

-PJ

[freeeee]

Don't like how airline security treats you?

Won't fly until pilots are armed?

Decided to drive instead?

No matter. Who cares what you think? The airlines certainly don't. Why should they try to earn your business, when they can just get Uncle Sugar to take your money by force?

This way, they don't even have to go through all the trouble of flying you somewhere.

[chemainus]

Look it's just a hand out and a moot question all rolled into one. The biggies like UAL are just going to let the parent starve, bailout or no bailout , pay hundreds of millions to the brass, screw you by letting the stock go to zero and then resell it in smaller pieces which you will suck up calling it a HOT IPO for new regional carriers. You will buy the stock twice. Hope you like the tax deduction.

[George Frm Br00klyn Park]

"Rodney... do you realize that if elected officials in Washington followed your advice, there would be no Chrysler Motors today?"

Guys, Besides, today Chrysler is a German corporation. Peace and love, George.

[CecilRhodesGhost]

The fact remains that thanks to US Govt. assistance, the thousands of Chrysler shareholders were saved, and after the rescue were able to craft an agreement with another automaker. This is a happy ending in my eyes. Thanks to US financial assistance, the investment banks that could have taken a beating (had Chrysler been allowed to fall) instead were able to profit. This profit in turn was able to be re-cycled into the US economy... a win-win.

[eno_]

Lucent will be out of business by the end of the year. Yup. Bell Labs. Maker of the 5ESS central office switch. The former mighty Western Electric division of AT&T. Bail them out, too? Amtrak, too? What about Martha Stewart? how many of America's women will not know how to make really elaborate Fourth of July decorations if Martha is hauled off to the pokey?

If I were an ibanker doing a deal like this, I would see a sizeable fee, and if the deal went especially well, some upside on the sale of the company later. Where's my slice of the DaimlerChrysler deal? I must have missed that check.

[jocko12]

WHAT HAPPENED TO THE 15 BILLON BAIL OUT MONEY. NO MORE $!!!!

[Coop]

Oh so Chicago deserves special status?

Why, yes it does. It has two baseball teams; therefore, it deserves special status.

Gee, this simple line of thinking is fun.

[jammer]

Exactly. Southwest and Delta treat passengers as customers. Others, including UAL, American, and especially Northwest, treat them as inconveniences. To hell with them.

[gjpino]

You call the Cubs a baseball team?

[George Frm Br00klyn Park]

"the thousands of Chrysler shareholders were saved"

CRG, So, "main" street bailing out gamblers is good? What about the "free" market. and "free" trade? Though, I do agree that the Chrysler loan was a good thing in that the loan was repaid, it was the exception to "the rule". Earlier bailouts for steel production, and shipbuilding did NO good, except to line the pockets of investors, management,and their money handlers at the expense of mostly non-investors.

Let the gamblers pay their own bills. ESPECIALLY financial institutions who make BAD loans. They are boondoggles at best, and being paid for their "mistakes" does not give an incentive to rectify money losing policy. Let the market work. Allow competition to remain a viable option rather than allowing godgov to maintain its privileged select corporations in socialism. A LINK you might find interesting. Peace and love, George.

[CecilRhodesGhost]

Thanks for the link. There are always going to be critics of outreach groups such as CFR, or educational efforts such as the Rhodes Scholarship Program. I for one can say that, while not perfect, there is a new world out there... not exactly the old capitalism (pre-Enron) but also not certainly Marx/USSR ideals either. There is a level of public and private partnerships, which when balanced perfectly, can create a new way (a third way) of good government and healthy profits. The same people who complain about Congressional assistance to industry also likely visit websites about Skull and Bones, CFR, etc. and harbour some deep distrust of leadership.

Sh*t rolls downhill, not uphill. The big dogs eat before the little dogs, as they say in the American swamps. Investment banks are crucial to stability, and long-term growth for the world. The former jazz musician operating the Fed in USA is to be trusted more than crackpots who are against corporate cultures.

[eno_]

Well, look how well the vaunted Japanese model of state/crony/capitalism worked. Yup, there's a model to emulate. Ever consider that some of our "big dogs" are just a less efficient way to turn dog food into dog crap? Especially airlines: Their assets, their people, the runways, etc. would still be there if AMR went bust. Other airlines would almost instantaneously pick up the routes and planes and pilots and crew and do everything AMR did (hopefully with less of a bad attitude toward the customer). Bailing out AMR is an almost pure and perfect transfer of wealth from taxpayers to AMR shareholders. What on Earth is to like about that??

[George Frm Br00klyn Park]

"The former jazz musician operating the Fed in USA is to be trusted more than crackpots who are against corporate cultures."

CRG, Nope. The "third way" you mention, was also a ploy by Hitler in his effort for world control.Under Blair and Clinton, and the other globalists, it hasn't changed much. It's still socialism with a fascist flair. The same "Public Private Partnerships" between godgov and their favored corporations. Competition is NOT allowed. Peace and love, George.