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United Continental Holdings, Inc. Message Board

  • TheDawgfool TheDawgfool Oct 23, 2002 7:41 PM Flag

    Re: ATSB to reject loan, heres why

    I believe the loan should be approved. Free capital markets need competition to work well. Delta, American and US Airways are not sufficient National competition for each other. United's survival would help. I think if they can weather the next few months, they have a good chance to make it and pay the loan back. This is not welfare or perhaps someone can point out the welfare recipient that paid their's back.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I cannot point out a welfare recipient that repaid. Nor do I care to,
      water under the bridge.

    • Most people still dont get it.

      Its NOT a LOAN.

      Its a LOAN GUARANTEE.

      The ATSB is not putting up any money here !

      Geez...

      • 4 Replies to moomoothinktank
      • Perhaps you can explain from a practical standpoint (ie whether you get money or not) what the difference between a loan and a guarantee is. Are you suggesting that UAL could get the guarantee but not get a loan. Why don't you visit someone else's thinktank. Yours is apparently not working. DUH!

      • They may not be putting any money up front but if UAL defalts the Government Guarantees that any loss the lender has they will reimbuse them from Government funds to compensate them for any loss incurred. Up to the amount of the original loan.

        Any one who has purchased a house with FHA financing has also had a governmet backed loan. The Government guarantees for an insurance premium paid by the Buyer of 1/2 % added on to their loan interest, plus aprox. 1% as an up front fee of the loan amount. If the Lender has to forclose the Government reimburses the Lender for all losses up to 20% of the loan amount.

      • If there truly were no "cost" involved, then why not do it for every business and every loan?

        The reason is because there really is a cost to guaranteeing a loan. If you don't think so, then go cosign a loan for someone whom you know won't pay it back.

        Is there a cost for THAT loan?

        Let's say the odds are 50-50 that UAL could pay back the a loan for $1B. Then the effective cost is $ 1/2B + interest and collection. I have no idea if those are the real odds, they're just an example.

        Can you recommend a better way to evaluate a loan guarantee?

        ysj

      • I was just thinking the same thing, Moomoo.

        I was also thinking that, heck, everything is so great with this big Union Group Hug that UAL doesn't even need that ole ATSB guarantee.
        Anybody will loan them the money now just based on good ole creditworthiness.....RIGHT?????

 
UAL
65.28+0.35(+0.54%)Dec 26 4:00 PMEST

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