S&P Midcap 400 Portfolio (^MID, MDY) Message Board

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Non-Tech : S&P Midcap 400 Portfolio (^MID, MDY)

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To: Londo who started this subject	12/26/2002 4:51:45 PM
From: Londo	of 181

UAL: biz.yahoo.com "The airline is expected to burn through between $20 million to $22 million a day in December, UAL attorneys have said. The cash burn rate is seen falling to between $10 million and $15 million a day in January." Not even Amazon.com in its worst days burned this much cash. Assuming the midline of each of these estimates, that's $651M burned for the month of December, and $387M burned for the month of January. That's one billion dollars in two months. That's an INSANE amount of money! Should anybody really be surprised that their bonds trade at 11 cents on the dollar on the NYSE? What's even more amazing is that their common stock continues to trade at a capitalization of $85M. The employee pension plan filed with the SEC for December 27th that they're planning on dumping 28M shares. When they get the court ruling that they're allowed to do so (which will end up terminating UAL's ability to use their tax credits), the common stock should end up trading at about 50 cents a share, if not worse, simply because that's an extra $1.4B in tax assets on the balance sheet they won't be able to use. Not that UAL was really in a position to use those tax assets anyway. I don't see any scenario at all where the common stock could possibly be worth anything. In the event that the airline gets bought out, the money will go directly to the debtholders. In the event that the airline liquidates, all the money will go to the debtholders. IN the event that the company wrings out concessions with their union, and cuts costs by 2 billion a year, they're still not going to have enough money to service their debt and they'll have to recapitalize, with their common shareholders getting nothing.

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