United Airlines drops as much as 70% in bookings

Yeah but all the markets are hitting dangerously low

We won’t be back to normal if United runs out of cash, that is a real possibility being priced in right now.

Dangerous game investing in the stock exchange right now I wouldn’t risk it that’s just my view.

Wow, that’s so bad. It’s because people don’t want to contract it while travelling so they are staying in their hometown

Meh more like a few weeks after the media hype is dead 😏

If by some crazy thing UAL runs out of money the US will bail them out to keep surviving as the US has already announced.

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Then their share price approaches zero, and investors lose their money.

And if they reach that point which I highly doubt it will we need to worry. We’re already seeing airlines recover from Asia and began to fly more.

Yeah. They took out a $2 billion dollar loan today, due in full, in roughly a year. If they fail to meet those obligations I can see a credit rating downgrade. Let me go buy a credit default swap right fast.

Playing with fire I see, but I think they have the net assets to cover the loan with Sale and Leaseback transactions within a year if they are still short on cash (they will be). I don’t have access to the Bloomberg terminal right now, though I’m curious as to what the pricing on the CDS looks like.

United is only offering credit with the option to convert to cash in a year for cancellations right now. Every airline has a dire cash flow situation right now with no new bookings (no cash coming in), and millions of refund requests (cash going out). Interesting times ahead especially when United is seeing 20-30% load factors with cancellations factored in.

Well given the deteriorating financial market conditions, I can imagine the ask price is climbing. I’m actually practicing a trading strategy before I take it to the live markets.

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Given that all global carriers are facing bankruptcy risk, the risk would be quite high, but the question is if the government will intervene. If the government intervenes in the way that the airlines are proposing, the appropriate price for the CDS would be zero.

I wonder how many of the takers for the CDS are investors in United buying insurance just in case UAL stock goes to zero.

In that case, they’d be looking to buy put options on UAL. Let me pull up the option chain and see what they’re doing.

But then with the stock price changing so quickly, there really isn’t “cheap” insurance I guess.

As a point of reference, Cathay Pacific sold and leased back 6 777-300ERs in Feb20 for total proceeds of $703.8M USD (117.3 each).

United has about 2.6 Million of debt per “owned” aircraft. They can probably borrow more against them if it comes down to it. I’m more concerned about if financial institutions have the cash to allow them to borrow against their planes.

With the Federal Reserve having cut IR % to 0, I hope UA takes the chance to refinance their debt. Especially that $2b loan they took out.

united is the best!!! also wdym 2nd time

It is a great opportunity to refi their debt, I’m not sure if anyone is willing to take on that level of perceived risk at this point though.

Let’s take this to a private PM. We’ve gone way off topic.

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Closed this topic as it falls under the new forum rules in regards to COVID-19. Unfortunately, it’s predictable that bookings will drop for every airline. We won’t have a topic for every case.