Return to Transcripts main page
American Morning
Market Update
Aired December 05, 2002 - 09:49 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: Watching the markets about an hour ago, Andy said the futures were up.
And are they still?
ANDY SERWER, "FORTUNE": Well, the markets are down. I mean we started off trading up this morning. The Dow quickly went to the negative side though, here. It's not bad, down about 7 or 8 points. A lot of stuff we're digesting. A big unexpected rate cut in Europe. Retail sales basically coming in as expected. Jobless claims, good news there for last week, but it's an unusual week because of Thanksgiving. Good news out of Merck, good news out of IBM, but very bad news out of United. You know, yesterday they got their big loan guaranty rejected by the federal government. The stock is not trading right now.
HEMMER: Hasn't opened.
SERWER: Hasn't opened. Yesterday the stock closed at $3 and change on the Instinet. There we go. This is what is truly startling here, Bill. This stock was over $70 two years ago, and in fact, 12 years ago, the stock was over $100. It's now down to 3, probably a buck.
J.P. Morgan coming out with a report this morning, saying the stock will go to 0, Not unexpected in a bankruptcy, because in a bankruptcy, the bond holders are first in line, they get their money first, then the shareholders. And the sad thing is this company is 55 percent owned by employees, so employees are the big losers here, probably, not just, you know, the big Wall Street people, the professional investors.
So a very fluid situation, apparently some more news coming out this morning, because they say the stock has halted pending more news coming out from the company.
And it's interesting. Of course, we've seen a lot of big airlines go bankrupt over the past couple years. Let's take a look at some of the biggest airline bankruptcies going back. If United went bankrupt, they would have $24 billion of assets. That would dwarf the next two, of course, US Airways, that happened recently. Continental, a very interesting situation, Bill, $7 billion of assets. That was back in 1990 and, of course, it took the company basically a decade to get itself back into shape. Gordon Bethune is the CEO there. And it is actually a very vital company at this point. But it takes years and years. For consumers, the United flights will keep flying, but things could get very dicey in the spring, as it really starts to cut back routes and reorganize.
HEMMER: At least in the near term, anyway, I think that's the best point you make. If you are traveling and if you use United, don't fret just yet.
SERWER: Yeah, don't fret just yet. But you have to wonder, you know, will you make reservation for your spring break trip going down to the Caribbean or something like that?
HEMMER: Thank you, Andy. I'll watch it, talk to you again tomorrow. You do the same, all right?
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired December 5, 2002 - 09:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Watching the markets about an hour ago, Andy said the futures were up.
And are they still?
ANDY SERWER, "FORTUNE": Well, the markets are down. I mean we started off trading up this morning. The Dow quickly went to the negative side though, here. It's not bad, down about 7 or 8 points. A lot of stuff we're digesting. A big unexpected rate cut in Europe. Retail sales basically coming in as expected. Jobless claims, good news there for last week, but it's an unusual week because of Thanksgiving. Good news out of Merck, good news out of IBM, but very bad news out of United. You know, yesterday they got their big loan guaranty rejected by the federal government. The stock is not trading right now.
HEMMER: Hasn't opened.
SERWER: Hasn't opened. Yesterday the stock closed at $3 and change on the Instinet. There we go. This is what is truly startling here, Bill. This stock was over $70 two years ago, and in fact, 12 years ago, the stock was over $100. It's now down to 3, probably a buck.
J.P. Morgan coming out with a report this morning, saying the stock will go to 0, Not unexpected in a bankruptcy, because in a bankruptcy, the bond holders are first in line, they get their money first, then the shareholders. And the sad thing is this company is 55 percent owned by employees, so employees are the big losers here, probably, not just, you know, the big Wall Street people, the professional investors.
So a very fluid situation, apparently some more news coming out this morning, because they say the stock has halted pending more news coming out from the company.
And it's interesting. Of course, we've seen a lot of big airlines go bankrupt over the past couple years. Let's take a look at some of the biggest airline bankruptcies going back. If United went bankrupt, they would have $24 billion of assets. That would dwarf the next two, of course, US Airways, that happened recently. Continental, a very interesting situation, Bill, $7 billion of assets. That was back in 1990 and, of course, it took the company basically a decade to get itself back into shape. Gordon Bethune is the CEO there. And it is actually a very vital company at this point. But it takes years and years. For consumers, the United flights will keep flying, but things could get very dicey in the spring, as it really starts to cut back routes and reorganize.
HEMMER: At least in the near term, anyway, I think that's the best point you make. If you are traveling and if you use United, don't fret just yet.
SERWER: Yeah, don't fret just yet. But you have to wonder, you know, will you make reservation for your spring break trip going down to the Caribbean or something like that?
HEMMER: Thank you, Andy. I'll watch it, talk to you again tomorrow. You do the same, all right?
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
