RE: UNITED TO AXE UP TO 9000 JOBS
Analyst sees United out of cash by mid-Jan:
At its current cash burn rates and assuming no federal loan guarantee is forthcoming, United Airlines will run out of cash by the middle of Jan., according to JP Morgan analyst Jamie Baker.
The estimate is based on a fourth-quarter daily cash burn rate of $9-$11 million combined with $1.08 billion in debt repayments due this quarter.
In a gloomy assessment of the airline’s odds of avoiding bankruptcy, Baker predicted that UAL’s recent tentative agreement with its pilots covering $2.2 billion in forward cost savings will not impress the Air Transportation Stabilization Board. “As near as we can tell, United appears to be making significant progress at mimicking the cost structure at American Airlines. This would be significant if American were a low-cost airline. It’s not,” he noted.
The analyst also suggested that United’s successful refinancing of a $500 million debt repayment that was due this month actually weakens its case for a loan guarantee, since by definition ATSB is supposed to be a lessor of last resort. “By refinancing $500 million, United has shown that alternative sources of capital are available,” he stated.
Source: ATW Online
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