I mean, UA isn’t really going to go out of business, is it? It seems to me that there’s a pretty good chance that the gov’t may pull a Chrysler and bail their asses out if it really came down to it.
So should I sink a few hundred bucks that way, or is there a very real possibility that they’re going to pull an Enron and be dead and gone a month from now?
I would not be surprised if they did go out of business. When the airlines were deregulated (by Ted Kennedy of all people, I still can’t get over that.) the unspoken idea was that the big airlines would quickly go out of business and be taken over by the Southwest airlines of the world.
That has not happened.
A big reason why is the government always coming along to bail out these aged behemoths. This may very well be the death-nell of the big airline companies.
It is very, very likely that they are going to declare bankruptcy very soon. I wouldn’t buy it and the market shows I listen to have recommended staying away from it as well.
It’s official - they’re going into Chapter 11 with $1.5 billion in financing to keep them flying while they restructure.
No idea on the future of the stock, but it’s at 82 cents/share right now and thus even a move of a few cents one way or the other can amount to a big loss or gain - you could take your chances with some fun money.
According to CBS News Chicago, as super_head said, the stock is currently at $.82, but they said it was likely to drop to almost nothing in the next day or two. Buy at your own risk right now.
So does deregulation mean that the government (even the big biz friendly Bush administration) is not likely to bail out United? Or, as Muad’Dib said, has the government been helping out the big airlines all along (even before 9/11)?
"So does deregulation mean that the government (even the big biz friendly Bush administration) is not likely to bail out United? "
I bet a few select know the truth & are waiting for the right moment to maybe buy it before a bailout so they make a ton of dough.
Reminds me kind of like Oprah. King World each year renews her contract (Or did when I read about this). This is the theory:She would say shes not sure she wants to continue her show next year. Her stock drops & she buys that stock. She then makes a new contract for the next year, her stock rises. She makes money
AKA “Insider trading”. (i.e. using non-public information)
As to the UAL stock, even if the company restructures and gets funding and comes out of bankruptcy, part of a restructuring plan often involves setting previous shareholders’ equity (stock prices) to $0, effectively “canceling” the current (previous) stock, so that your investment would be worth $0 even if the company itself survived. (Sometimes part of the restructuring plan includes trading old stock for new at some fractional amount.)
I wrote my Masters dissertation on bankruptcy investing and it’s not for the faint of heart or those that don’t want, or know how, to spend many hours sifiting through all the documents.
Jonathan Chance wrote"
He’s 100% right in saying it’s a gamble. Your chances are about the same as taking $1,000 and going to Vegas. But, you never know, if you can afford to lose it and the idea of GAMBLING appeals to you, jump right in.
Just today, Dec 10, I saw an article in the L.A. Times about how UAL stock is considered a BAD buy. Although it spiked a bit (maybe somewhat because of people filling their short positions in its way down), you’re last in line to get paid anything if they do actually just quit and sell off the gate licenses and planes. There are plenty more powerful people ahead of you, and you’re just done, period.
Shareholders are the last to make money. You’re basically shutting your eyes and throwing the dice. Pro’s buying in have done their homework on the probability of a payout or have some sort of information edge.
If you can afford to lose it is generally a bad way to make an investment decision
I’ve followed the market as an amateur sometime-investor for a while now, and I have a question:
What are some examples of a chapter-11 filing company’s common stockholders recieving anything after restructuring? Just how often does this occur?
I ask this because I’ve never seen a single company file chapter 11 with common stockholders recovering anything. Surely it has happened in the past, though, however rare.
I am a bankruptcy professional. My firm represents the official committee of unsecured creditors for several of the largest bankruptcies in the courts today, and with luck, we will also be representing the UAL committee.
I cannot think of a single major corporate bankruptcy in which the shareholders received anything. The current trend in bankrupcty law, in which restructuring companies can make progressively more and more priority payments to “critical vendors” and other superpriority parties will make it yet more difficult for shareholders to collect.
In one of my cases, an equity committee was actually formed, and has been little more than a minor nuisance and a strain on the chapter 11 debtor-in-possession’s resources.
With respect to the investing question, well, I wouldn’t touch UAL stock with hazmat suit on. A little investigation reveals an extremely complicated and faulty business model. I wouldn’t suggest buying and riding, but if you want to day trade over a few pennies, knock yourself out.