egld0624
4th Jul 2004, 20:23
Barrons (Wall Street Journal) is reported as having an article this weekend which the Street Account highlights:
"Barron's 'The Trader' column wonders why anyone is buying UALAQ
The article says that airline bankruptcies are typically brutal on equity holders and creditors. Common stock holders usually get nothing. For reference, the company's unsecured debt trades at just 10 cents on the dollar and may be overpriced. For alternatives, investors may want to look at UAIR or DAL. UAIR is still solvent and has an equity value below UALAQ's. DAL could rally if the company gains concessions from its pilots and oil continues to ease in price. The unsecured bonds of DAL may be a less risky play, currently trading for about 46 cents on the dollar and yielding over 20%. If the company avoids bankruptcy in the next year the bonds will probably rally."
"Barron's 'The Trader' column wonders why anyone is buying UALAQ
The article says that airline bankruptcies are typically brutal on equity holders and creditors. Common stock holders usually get nothing. For reference, the company's unsecured debt trades at just 10 cents on the dollar and may be overpriced. For alternatives, investors may want to look at UAIR or DAL. UAIR is still solvent and has an equity value below UALAQ's. DAL could rally if the company gains concessions from its pilots and oil continues to ease in price. The unsecured bonds of DAL may be a less risky play, currently trading for about 46 cents on the dollar and yielding over 20%. If the company avoids bankruptcy in the next year the bonds will probably rally."