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American Morning
Minding your Business: United Likely to File for Bankruptcy
Aired December 05, 2002 - 08:45 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: In the meantime, minding our business today with Andy Serwer, want to jump off here. Before we get talking about the markets and United Airlines, you've been talking with some McDonald's executives over the past couple of weeks and months about their concerns. How many thousands of McDonald's are there?
ANDY SERWER, EDITOR AT LARGE, "FORTUNE": There are thousands.
HEMMER: In places all over the world?
SERWER: Thousands and thousands, all over the world. It is a global company. When I talked to them, I remember a McDonald's executive holding up a front page of a newspaper, saying, Every single international story impacts us. Currency devalued in Latin America impacts us. Contaminated food in Europe, that impacts us. Anti- American demonstrations in Southeast Asia, that impacts us.
Because there is no more sign of America than a McDonald's or a Coca-Cola bottling plant. A lot of times when people are demonstrating against America, they attack these facilities, because these say America more than almost anything. The U.S. embassy can be very discrete, a McDonald's is that big golden arches out there that says America.
HEMMER: The brand names are so strong, too.
Just checking the wires here, Andy, for more news. Don't have it. But while we wait for that, markets today, what are you seeing?
SERWER: Well, the markets are going to be down today. Yesterday, the Dow was down about five points, Nasdaq down about 18. You can see there kind of an off day. Could have been worse. We recovered a little bit.
The big news, though, Bill, is out of Chicago. United Airlines, late yesterday, the Air Transportation Stabilization Board rejecting United's request for $1.8 billion in loan guarantees.
This almost makes bankruptcy a certainty for this big carrier. Some say the company really botched these negotiations. There has been a lot of management turmoil at the company for the past couple of years.
At first, they were saying they needed to cut 900 million, then 9 billion, then 5 billion. And regulators are saying, Come on, you guys have to have your act together. What is it? You guys don't have this situation under control. Obviously, the unions are very concerned. There are tens and thousands of jobs at stake, and then the big question is, whether the consumer on this. What happens? This is one of the largest airlines in the world, and people are very concerned about their flights.
HEMMER: Yes, quickly. The airline says they are going to fight it and fight it hard.
SERWER: Yes.
HEMMER: Their strategy, then, is solid, or how do you see it?
SERWER: Well, I think they are going to have to file for bankruptcy. They can go back to the government and request another loan package, but I think we are going to see bankruptcy here. The thing is, for consumers to know is that flights will probably continue unabated for the next couple of months. It is not until the spring until things get kind of complicated. Frequent flyer programs probably solid. Your reservations on United flights are probably fine.
HEMMER: Good to know.
SERWER: But it can become a death spiral because people get concerned, and United has a big, big business with other companies. For instance, TIME Incorporated here is a customer, Black & Decker is a customer. Will they renegotiate with this airline, Bill, to do three and four year contracts, knowing that it is going to go into bankruptcy.
HEMMER: Wide open questions. Well done. Thank you, Andy. Talk to you next hour.
SERWER: OK. We'll talk to you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Bankruptcy>
Aired December 5, 2002 - 08:45 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: In the meantime, minding our business today with Andy Serwer, want to jump off here. Before we get talking about the markets and United Airlines, you've been talking with some McDonald's executives over the past couple of weeks and months about their concerns. How many thousands of McDonald's are there?
ANDY SERWER, EDITOR AT LARGE, "FORTUNE": There are thousands.
HEMMER: In places all over the world?
SERWER: Thousands and thousands, all over the world. It is a global company. When I talked to them, I remember a McDonald's executive holding up a front page of a newspaper, saying, Every single international story impacts us. Currency devalued in Latin America impacts us. Contaminated food in Europe, that impacts us. Anti- American demonstrations in Southeast Asia, that impacts us.
Because there is no more sign of America than a McDonald's or a Coca-Cola bottling plant. A lot of times when people are demonstrating against America, they attack these facilities, because these say America more than almost anything. The U.S. embassy can be very discrete, a McDonald's is that big golden arches out there that says America.
HEMMER: The brand names are so strong, too.
Just checking the wires here, Andy, for more news. Don't have it. But while we wait for that, markets today, what are you seeing?
SERWER: Well, the markets are going to be down today. Yesterday, the Dow was down about five points, Nasdaq down about 18. You can see there kind of an off day. Could have been worse. We recovered a little bit.
The big news, though, Bill, is out of Chicago. United Airlines, late yesterday, the Air Transportation Stabilization Board rejecting United's request for $1.8 billion in loan guarantees.
This almost makes bankruptcy a certainty for this big carrier. Some say the company really botched these negotiations. There has been a lot of management turmoil at the company for the past couple of years.
At first, they were saying they needed to cut 900 million, then 9 billion, then 5 billion. And regulators are saying, Come on, you guys have to have your act together. What is it? You guys don't have this situation under control. Obviously, the unions are very concerned. There are tens and thousands of jobs at stake, and then the big question is, whether the consumer on this. What happens? This is one of the largest airlines in the world, and people are very concerned about their flights.
HEMMER: Yes, quickly. The airline says they are going to fight it and fight it hard.
SERWER: Yes.
HEMMER: Their strategy, then, is solid, or how do you see it?
SERWER: Well, I think they are going to have to file for bankruptcy. They can go back to the government and request another loan package, but I think we are going to see bankruptcy here. The thing is, for consumers to know is that flights will probably continue unabated for the next couple of months. It is not until the spring until things get kind of complicated. Frequent flyer programs probably solid. Your reservations on United flights are probably fine.
HEMMER: Good to know.
SERWER: But it can become a death spiral because people get concerned, and United has a big, big business with other companies. For instance, TIME Incorporated here is a customer, Black & Decker is a customer. Will they renegotiate with this airline, Bill, to do three and four year contracts, knowing that it is going to go into bankruptcy.
HEMMER: Wide open questions. Well done. Thank you, Andy. Talk to you next hour.
SERWER: OK. We'll talk to you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Bankruptcy>
