UAL Sells Jets then Leases Them Back

Derg

New Arizona, Il Duce/Warlord
Staff member
Ick...

I remember when the brain-trust that was the Leo Mullin administration did this....

* UAL adds $150 mln in cash to balance sheet

* Has now raised most of $300 mln expected in Q4

NEW YORK, Dec 9 (Reuters) - UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz), parent of United Airlines, said on Tuesday it sold 15 Boeing (BA.N: Quote, Profile, Research, Stock Buzz) 757 aircraft and arranged to lease them back in a deal which adds about $150 million of cash to the company's balance sheet.

UAL sold the single-aisle planes to East Shore Aircraft, but will continue to operate and maintain the aircraft as normal.

United, the U.S. No. 3 airline, has now raised more than $250 million of the $300 million of additional liquidity it said it expected to raise in the current quarter, on top of the nearly $1.4 billion raised in the third quarter.

Airlines such as United are looking for ways to add cash to their balance sheets to protect them from volatile oil prices and a steep drop in travel demand expected next year. (Reporting by Bill Rigby; editing by Richard Chang)
 

Polar742

All the responsibility none of the authority
I wonder if that's related to the East Shore derivative Air Wis made up a few years ago to buy a chunk of USAirways....
 

Firebird2XC

Well-Known Member
Eagle just did this with the ATR's. I imagine it adds liquidity, and when the times comes to get rid of them, it's a done deal.

Word at Eagle is that they're using it to buy new places. I wonder what we're getting.

UAL- still kicking. I was seriously thinking they'd be toast this go 'round.
 

SoCalAprch

Well-Known Member
Eagle just did this with the ATR's. I imagine it adds liquidity, and when the times comes to get rid of them, it's a done deal.

Word at Eagle is that they're using it to buy new places. I wonder what we're getting.

UAL- still kicking. I was seriously thinking they'd be toast this go 'round.
Off topic a bit but I was riding in the Employee Van with a 15 year Eagle CA and she was saying that you guys are getting 190s. I don't know if she knew what she was talking about but either way she was definitely drinking the cool-aid.
 

killbilly

Vocals, Lyrics, Triangle, Washboard, Kittens
It's nothing more than refinancing them.

Standard business move really.
Leveraging assets in a credit/liquidity crunch?
Someone clear this issue up for me...

I thought the advantage to doing something like this was to write-off whatever depreciation they could on the sale, and going forward write off the lease as an operating expense, rather than have payments for the aircraft on the books as capital expenditures.

This is all done for tax reasons, no?
 

v1valarob

Well-Known Member
Less owned aircraft and more cash for when UA and CO finally realize DeltaWest will murder them unless they join forces.
 

Firebird2XC

Well-Known Member
Off topic a bit but I was riding in the Employee Van with a 15 year Eagle CA and she was saying that you guys are getting 190s. I don't know if she knew what she was talking about but either way she was definitely drinking the cool-aid.
That's one of the big rumors.

Well, I dunno about 190s, but 170s are apparently AMR's aim. APA scope limits the size of aircraft by seats and gross weight, I'm told. The gist of it is that the weight AMR wants the APA to give up is the max gross of the 170.

Currently we've got the green light to get that additional 25 CRJs... but the perceived plan is that AMR wants 170s or something similar. The 190s is just an add-on to that idea, I guess. With Eagle flying 70 seaters and AA's smallest jet at around 140 seats, we've got a gap in the fleet. The 190s would fill that gap.

Yeah, it's a buncha kool-aid. Rumor-mongering, maybe... but it's definitely one of the rumors swirling around these days. Wait for the APA/AMR contract deal to close, and then we'll have our answer.
 

Gonzo

Well-Known Member
Off topic a bit but I was riding in the Employee Van with a 15 year Eagle CA and she was saying that you guys are getting 190s. I don't know if she knew what she was talking about but either way she was definitely drinking the cool-aid.
If it was the only 15 year female CA out of CMH I can tell you she is not a cool-aid drinker. She knows a lot more then most line pilots.
 

N826AW

Snooki's Baby Daddy
Raising some cash and getting in that last minute tax deduction. Probably not a bad idea to it with older airplanes since UAL doesn't have to find a home for them at the end of the lease.
 

Gonzo

Well-Known Member
The only plus side if eagle gets 190s is that at least Mesa won't be the most hated regional operator any longer.
At $130 hr (that is the lowest most CA's I talk to are going to take to fly the 190) nobody is going to hate Eagle. That is more the USAir 190 and 737 rates, and only a few dollars less the UA 737/319 rates. Eagle also has better work rules.
 

falconvalley

Absentee Dad of the OOTSK, Runner, Cat Frustrator
It's great if you wanna raise some quick cash and wanna dump a plane in the future, but you need it for now.
 

georgetg

Well-Known Member
Someone clear this issue up for me...

I thought the advantage to doing something like this was to write-off whatever depreciation they could on the sale, and going forward write off the lease as an operating expense, rather than have payments for the aircraft on the books as capital expenditures.

This is all done for tax reasons, no?
All valid points if you have an operating profit!
Tilton will run this ship aground and makes Capt. Hazelwood look like a virtuoso ;-)



Cheers
George
 
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