Wednesday, September 30, 2009

You've got to raise money, to lose money (UAUA)

UAL, (UAUA) the current name of the parent of United Airlines while not currently in bankruptcy, is raising both debt and equity.

While they sure seem to be liquid, with $1.3billion in cash on the balance sheet, it's best to be safe and take advantage of investor enthusiasm while it lasts:

“United is joining the long conga line of airlines taking advantage of the improved market perceptions for airline fundamentals to raise additional liquidity for what is still likely to be a challenging winter,” said Douglas Runte, managing director for Piper Jaffray & Co. in New York. “United has little remaining in the way of attractive unencumbered aircraft or other hard assets to borrow against.”

Shares are down about 6% in the aftermarket, as people fret over how well these two capital raises will be received. A look at the company's financial data shows why bankers, lawyers, and temporary management are the only people who've ever made money(over the longer-term) in airline stocks.

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