More analysis in the media:
United bankruptcy a model for rivals
Delta, NWA may use its blueprint
September 17, 2005
BY DAVE CARPENTER
ASSOCIATED PRESS
CHICAGO -- Costly, contentious and twice as long as expected, United Airlines' bankruptcy restructuring seems an unlikely role model for Delta Air Lines Inc. and Northwest Airlines Corp. as they begin their overhauls in Chapter 11.
United has run up $7.5 billion in losses in a 33-month bankruptcy process bloated by legal and consulting fees, for a staggering total of $12.5 billion lost since 2000. Its forecast for a profit in 2006 is dismissed by some as too rosy since it anticipates a sharp drop in oil prices to $50 a barrel, from around $63 a barrel now.
Nonetheless, the makeover of the nation's second-largest carrier serves as a likely blueprint for its two ailing rivals, which are expected to try to copy much of what United has done.
Analysts say they have little choice but to follow the bankruptcy leader to keep up -- and stay in business.
"I think they looked at United and saw how United was able to shed pension liabilities. . .and shed a lot of contracts that were burdening them and prohibiting them from making a profit," said George Novak, an airline consultant for the Metis Group in Washington, D.C. "United is showing that you can use bankruptcy in an intelligent manner to restructure."...
http://www.freep.com/money/business/...e_20050917.htm
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For perspective, here is one contemporary analysis with dire predictions on the eve of UAL bankruptcy:
Bush administration drives United Airlines into bankruptcy
Government panel demands all-out attack on airline workers
By Kate Randall
7 December 2002
The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines’ request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry.
The three-member ATSB—with representatives appointed by the White House from the Federal Reserve, the Treasury Department and the Department of Transportation—rejected as inadequate United’s plan to impose $5.2 billion in concessions on its workforce. The board reportedly demanded that $9 billion be wrenched from United employees for the loan guarantees even to be considered.
The rejection of the loan package is expected to force United to file for protection from its creditors under Chapter 11 bankruptcy by the end of the weekend. This would be the eleventh airline bankruptcy since the industry was deregulated in 1978. It follows last August’s Chapter 11 filing by US Airways. That carrier had previously carried out massive cuts in wages, benefits and jobs and had obtained ATSB approval for $900 million in loan guarantees.
A United bankruptcy would be the largest in airline history. United is the second largest air carrier both in the US and globally, with 85,000 employees worldwide and service in more than 120 cities. The company lost close to $4 billion in the past two years and is now losing more than $7 million a day. It faces nearly $1 billion in deferred debt obligations in the next two weeks.
A Chapter 11 filing will allow United to petition bankruptcy judges to rip up existing labor agreements and impose sweeping concessions on its workforce, including changes in wages, scheduling and benefits for current employees, and cuts in health coverage and other benefits for retirees.
Competing airlines such as American, Continental and Delta lobbied the ATSB to deny the loan guarantees. They hope to capitalize on United’s bankruptcy by snatching up market share and taking over some of the airline’s choice routes, particularly its lucrative trans-Pacific flights. “At the end of the day, it’s good for our industry, and it’s good for the American people,” commented Gordon Bethune, chief executive of Continental Airlines.
The rival airlines will utilize the draconian concessions imposed on United workers via the bankruptcy court to push through similar attacks on their own workforces. Commentators are openly declaring that the new round of wage and benefits cuts and speedup measures at United will set the benchmark for the rest of the industry, and for the labor movement as a whole. The stage has been set for an assault on the working class similar to that inaugurated by the destruction in 1981 of the air traffic controllers’ union, PATCO, by the Reagan administration.
The airline industry is also expected to seize on the crisis at United to push for changes in federal law that would strengthen their hand in bargaining with their unionized workers...
http://www.wsws.org/articles/2002/dec2002/ua-d07.shtml