This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

United Airlines Gets No Respect

United's pilots view the order as "a ruse," says Jay Heppner, spokesman for the United chapter of the Air Line Pilots Association. He says the intent is to raise capital and provide leverage in contract talks.

"This is akin to putting something on eBay with a minimum price, and then nobody bids your minimum price," Heppner says. Additionally, linking aircraft orders to concessions in contract talks is a common technique in the airline industry, he says. United has begun talks with its pilots regarding a contract that becomes amendable at the start of 2010.

In a letter to employees to discussing the RFP, Tilton said United wants to replace its widebody fleet and potentially its 757 fleet. He specified these conditions: "In addition to earning a return on investment , any aircraft order must be financed in a way that strengthens our balance sheet over the long term and does not impact our cash position," Tilton wrote.

Clearly, United enters the aircraft market at an advantageous time. Orders at Airbus and Boeing have slowed precipitously during the past year.

Aviation consultant Robert Mann says the potential order is particularly important because it sends a message to employees that United is not planning to shrink indefinitely, but he said the failure to fully explain the financing diminishes the gesture's value.

"I would have thought that would have been part and parcel of the announcement " he says. "The question is do they have the internal cash flows to support a good chunk of this. After all, the credit markets are terrible, the revenue environment is terrible, and United hasn't produced free cash flows at a rate to cover existing expenses , let alone to invest in new airplanes.

I'm sure they can do it," Mann says. "So I don't think it's a matter of not having a business case, but rather of not showing the business case."

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BA $150.85 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs