UAL bonds firm on monthly profit; Loral paper mixed; Goodyear recovering

By Carlise Newman

Chicago, Sept. 24 - UAL Corp. paper firmed Wednesday after the bankrupt airline reported a profit in the month of August, and various other airlines followed the lead.

UAL posted August net income of $68 million, excluding $114 million in costs related to its reorganization. The airline said it had an operating profit for the month of $105 million.

The parent of United Airlines said it continued to generate positive cash flow in August and met the requirements of its debtor-in-possession financing for the seventh straight month.

UAL's 9¾% notes due 2021 were seen at 18 bid, 20 offered, a rise of 2 points from Friday, when they were last seen trading, a trader said.

"We saw the bonds last at about 15, 16 bid or so and they'd been at that level for a while," he said. "The news gets a little bit better every time there is some and the paper rises just a little.

As part of the debtor-in-possession financing agreements under its bankruptcy filing, UAL's lenders required the company to achieve a cumulative EBITDAR loss of no more than $219 million between Dec. 1 and Aug. 31.

United ended August with a cash balance of $2.4 billion, including $698 million in restricted cash and up slightly from $2.3 billion at the start of the month.

The trader said Delta Airlines Inc.'s bonds were up 2 points, led by the 8.30% notes due 2029 at 69 bid Monday, and saw American Airlines parent AMR Corp.'s 9.73% notes due 2014 up 2 points at 61½ bid, 63¼ offered.

Many airlines, including Delta and American, have put fares on sale after the summer vacation season ended.

Loral Space & Communications Inc. debt was "all over the place" Wednesday. The bonds had been sinking of late after news that its ailing Telstar 4 communications satellite was a complete loss.

The satellite was insured for $141 million. Loral had agreed to sell the satellite along with five others to another operator, Intelsat, for $1 billion, but said on Monday that losing the satellite would reduce the amount Intelsat pays. The size of the reduction will depend on how much insurance it can recover, but it still expects the Intelsat deal to go ahead in a timely manner.

The New York-based satellite operator's 10% notes due 2006 were up 4 points to 60 bid, traders said, while the 10% issue due in 2007 was down "several points" to 40 bid. Loral's 9½% notes due 2006 were unchanged at 25 bid.

"The anticipation of how much the deal will be now has been weighing on Loral. Once the information is out there, it should stabilize," he said.

Elsewhere Goodyear Tire & Rubber Co. debt rose 2 points after a few sessions of losing. The company said on Monday its new labor agreement with the United Steelworkers of America will save a total of $1 billion over the next three years.

Goodyear estimated it will have direct savings of $450 million from changes in its pension and medical plans, plus another $700 million in "avoided costs" for wages and retiree medical benefits.

Goodyear's 7 7/8% notes due 2011 were unchanged at 80 bid, 82¾ offered, a trader said.

"It was pretty quiet today. Not much movement in anything, so most of the popular names of late either moved minimally or not at all," he added.

Meanwhile, Global Crossing Inc. bonds continued to firm Wednesday. Last week the President agreed to permit the company to sell a majority stake to Singapore Technologies Telemedia. STT has agreed to pay $250 million for the stake in Global Crossing.

Global Crossing bonds were seen at 8½ bid, 9 7/8 offered, a rise of ½ of a point.

"Actually I can't believe the bonds keep going. Until the deal is done, I'd expect the bonds to hang around levels from last week. But there's more confidence in the company these days," a trader said.

Elsewhere WorldCom Inc., which filed a reorganization plan in early September, saw its senior notes trade unchanged at 33¼ bid.

Revlon Cosmetics Inc.'s 8 5/8% notes due 2008 were up 3 points to 55 bid, a trader said, although there was no news on the struggling cosmetics company.

And Adelphia Communications Corp.'s 9 7/8% notes due 2007 were quoted up ½ point to 68½ bid.

(Paul Deckelman contributed to this report.)

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