United Airlines may fail

[RVR800]

"Before September 11 we were not in a comfortable financial state, with costs exceeding our revenue on a daily basis," Goodwin wrote. "Today, the situation is exacerbated with costs exceeding revenues at four times the pre-September 11 rate. Today, we are literally hemorrhaging money.

"Clearly this bleeding has to be stopped – and soon – or United will perish sometime next year."

Even with a $15 billion industry bailout, airline officials have speculated that bankruptcy was imminent for weaker carriers, although they did not name them.

"We're so far away from break-even that it's not even worth calculating," David Swierenga, chief economist at the Air Transport Association, said last month after the bailout had been approved.

[phd]

If this is a true reflection of the state of UAL then commercial aviation is in more poo than I had realised. bmi code-share on many routes with UAL and have close commercial links with this and other major Star Alliance partners and I had felt reasonably sure that by supporting each other these airlines would pull through the latest difficulties in time. However if company's as large and well established as UAL are talking seriously about insolvency then the situation is dire. Can anyone other ppruners thrown any more light on the real state of play within UAL?

[oncemorealoft]

Some analysts reckoned that as of 12 Sept, UA had about 7 weeks of cash left. They were by no means the worst off but certainly not the best (Southwest with about 40 weeks). The US Govt money will is much needed but will in reality cover cash spent in the first few weeks post 11th Sept.

[411A]

I find it hardly surprising that UAL, which led the industry with massive pay raises for its pilots, now find themselves nearly insolvent. What goes 'round comes around.
UAL is also parking massive numbers of aircraft, two more arrived at VCV yesterday. Many more carriers will have to downsize in order to survive in the present economic climate. The more senior pilots get the big bucks, the younger ones'.....out on the street. Good 'ole ALPA at work...again.
The numbers of UAL aircraft parked so far is 28, and the folks at VCV have been told to expect a total of 117. UAL is also leasing engines to raise cash.....not a good sign at all.

[ 17 October 2001: Message edited by: 411A ]

[N380UA]

fishbed, 411A
As it was mentioned during debates of Swissair's failure, it is not the salary of a single employee group that will cause a company to falter. Your right though, if even UAL is just about to go bust than we're in some deep …..

[LAVDUMPER]

UAL's management (aka Godwin) made a deal with the Devil and agreed with the pilots' back-breaking salary demands in order to gain their compliance for the proposed UAL-USairways deal. Godwin needed their help to facilitate the deal. In the process, he has screwed the airline - and he doesn't take any responsibility for that.

That guy should be FIRED QUICKLY and a restructuring plan should be hashed out quickly.

I heard that UAL's schedule may be reduced by 1/3 - that's a good start. Of course, the UAL pilots will likely get VERY UPSET should less-costly and lower-capacity commuter operations be used in place of higher-capacity aircraft in a down market...

C'mon - let's focus on saving the airline and adopt a long-term perspective... I'm tired of the constant squabbling.

[BOING]

The best way to improve United's position is to get new management. There is barely an employee in United that does not, literally, hate the present crowd. Here is a team that has bungled deals costing the company many millions of dollars. Yet, despite recent publicity grabbing pay cuts, they have already individually taken home millions of dollars this year while leading the company into economic problems well before Sep.11. They still plan to go ahead with an executive jet subsidiary regardless of the fact that it is these very executives who are not travelling now. By the way, present pilots and flight att. who are being layed off have virtually been told not to bother to apply for the jobs which will be created.

United is in trouble along with the other airlines. However, in relative terms, the company is in a strong position if it can develop an effective business plan that is not based on the old, tired, squeeze the emloyees to make a profit idea. The route structure is there, the efficient aircraft are there, experienced employees are there, fuel costs are down, the Gov. is willing to give financial help, United has cash reserves. It is only poor management which will prevent United rising to the top of the heap when the economy improves.

By the way 411 I have suffered your rantings against ALPA and pilots in general far too long. You are using our paychecks and working conditions as an excuse with which to make snide attacks on pilots in general at any opportunity. What are you, a failed pilot who is bitter because he could not make the grade? Did some pilots dislike your personality so much that they kept you out of the best professional group on Earth? Do you feel inferior because a twenty year old turbo-prop new hire co-pilot gets more respect than you do? Do you feel powerful sitting at your computer keyboard attacking pilots because they look on people like you as clerical help? The very fact that you have the insensitivity to continue to call pilots overpaid etc. so soon after SEPT.11th clearly demonstrates your rabid mindset and level of intelligence. Look forward to meeting you in person some day!

[411A]

Well there Boing, you sure do have a very large chip in your shoulder. I personally have done very well worldwide in airline flying.... ALPA has always padded the pockets of the senior guys at the expense of the juniors, and this will never change. The UAL guys started the ball rolling with the super-high salary increases, now these (junior) guys get to visit the unemployment line. They will never understand the BS from the MEC....and will have to learn the hard way.

[maxalt]

411A it's fact of life that 'the senior guy' makes more than the junior guy, and that goes for every walk of life where there are years of service increments or scales.
See, the logic is that you'll eventually become 'senior' too and can then be said to have earned your highly inflated salary.

Or would you prefer it worked the other way round? :rolleyes:

[whatshouldiuse]

Maxalt;


Now that you asked but I would like to see a different system, although you didn't ask me directly!

I'd like to see the best pilots kept on, graded on Performance and Ability not only in the plane but also in the Sim. Forget about age or seniority, it's what have you done for me lately and what are you capable of doing in the future?


What other industries apart from the airline industry and universities/schools grade performance on tenure as opposed to demonstrated ability?

[ 17 October 2001: Message edited by: whatshouldiuse ]

[ 17 October 2001: Message edited by: whatshouldiuse ]

[DownIn3Green]

Lavdumper...how right you are...a deal with the devil....but don't the pilots "own" UAL? Seems if I owned a business and it was about to go under I'd try to think of some way to turn it around...like let's say start with a (duh) paycut...

But maybe that's too simple of an answer...

By the way, 411A, I happen to agree with you on this one, and I stand ready to catch the flak, as I have done before on the ground and in flight...

[dallas dude]

Folks,

IMO, the simple fact is that Goodwin failed to get the UAL employees on board before announcing the UAL/US Air deal. This just gave Rick Dubinsky the opportunity to back up the ALPA pay truck to UAL's loading dock and reward a "non protagonist" attitude with a deserved payraise.

411A..UAL's upper echelon "earned" over $10 Million a PIECE for their stewardship. You really want to tell me they can justify that reward?

United WILL survive. Clearly, new management is needed (they've not had any for the past two years!). If UAL enters Chapter 11 it won't be the end of the World. What 411a and his kind fail to realize is that we need to leave this profession in a better state than we found it. 411a and guv (PrIcK) always lean toward blaming "greedy" employee goups. They've been wrong before (a time or two) and they're wrong YET AGAIN.

That's why they'll never ammount to anything.

[B772]

World Airline News Sept 28 reports the following.

Daily net cash burns. AA 12M, UA 11.7M
Sept 10 Cash position. AA 969M, UA 2553M

AA and UA face massive liabilities that dwarf their equity. UA employees are in for a double whammy if their is a bankruptcy filing, with massive layoffs and the ESOP equity wiped out.

UA have already taken 743 flights out of the daily schedule to try to stop the bleeding.

Does anybody know what life was like in 1929-1933 ?.

[BOING]

411, If you have done well out of flying aeroplanes it is because the unions and pilots you deride have negotiated rates for the the job which provided you with a comparable and decent salary. Do you think if all airline pilots were paid $1000 a month then you would have done so well during your working time as a pilot.

[MikeM727]

Time for a little reality check, 411A. Pilot's pay for the last 15-20 years has lagged behind inflation by well over 20%. The recent raises at UAL & DAL that you call "back-breaking" and "super-high" only bring pilots up to parity with inflation. Meanwhile, executive compensation has increased exponentially, at 7 times the rate of inflation. Those are the facts.

If you expect me to feel guilty for merely keeping up with inflation, you're sadly mistaken.

I'd suggest you check out the executive pay watch at www.aflcio.org, (http://www.aflcio.org,) and the June 25 2001 issue of Fortune magazine to learn more about the "great CEO pay heist."

[BenThere]

How about we furlough from the top of the seniority list? The company saves more money, everyone moves up, and the starving get to continue to eat spaghetti.

[411A]

Well BOING, there were no negotiated pay rates where I have worked for the last 25+ years, overseas tax-free salaries were offered to attract experience, and those airlines received the experience that they paid for, especially with regard to check & training. And I certainly would have to agree with others here when executive management salaries and bonus packages are mentioned. Considering the poor level of management that many airlines have received, these execs should work for nothing...because that is what many of them have put back into the companies they have "managed". Harding Lawrence (Braniff), Icahn (TWA), Borman (EAL), Conway (AmWest, National) and the list goes on...

[Bigmouth]

I´d like to see a few senior captains, who´ve put in their 25 or so years, who have their pension all set, voluntarily take early retirement and thereby save the jobs of five newhires who have new wives and young kids and a mortgage.

[Stagnation Point]

I agree wit Bigmouth, if your at the top and can afford to retire, there is no time like the present. I still have 20 years to go and have quite a few commitments that I would like to see through. I dont think Pilots are overpaid, I don't think were underpaid either, and Alpa/Balpa don't always do whats best for all. I think the employers should expect to get a fair days work out of a pilot for a fair days pay, there are a quite a few pilots around that expect a cushy life style and not have to work too hard for it. Where four crews per acft should be sufficient airlines have to hire 5 or 6 to get the same job done, thats what costs. Don't Know about the US but in merry old England it seems that most of the costs of employing someone don't come from the wages that they are paid but go to the government in taxes. Executives get paid far too much, but then again there life expectancy (employment wise) can be quite short. Though it never fails to amaze that some who can completly F*&k a company up one day can wlk into another executive position the next. The worst thing that ever happened to industry on a whole was that the bean counters got hold of them and would spend Pounds to save pence. To help things it would be better for the govt to make it more expensive to lay someone of than it is to hire them.

To get back to the thread I certainly hope UAL make it adn they certainly aren't too big to go down. Pan Am were retty big at one stage and it didn't save them.

Hang on were in for a bumpy ride.


Where in Afghanistan would like this 747 parked.

[GlueBall]

UAL management team out of control says Flight Attendant Union (AFA).Click It (http://biz.yahoo.com/prnews/011018/dcth039_1.html)

[Airbubba]

A management change in the works?

_________________________________________


United Airlines Grapples With Crisis

By Dave Carpenter
AP Business Writer
Wednesday, Oct. 24, 2001; 9:23 a.m. EDT

CHICAGO –– Officials of United Airlines' parent company headed into a meeting Wednesday amid the worst crisis in company history – and an uproar over a letter from United chief executive James Goodwin that sent the airline's stock plunging.

United officials declined to say whether the UAL Corp. board of directors was considering replacing Goodwin, despite widespread industry speculation.

Two unions representing United employees called for his resignation and the company's stock fell more than 20 percent last week after Goodwin said in a letter to employees that the airline was hemorrhaging cash and "will perish" sometime next year if it doesn't stem huge losses that have worsened dramatically since the Sept. 11 terrorist attacks.

United union leaders accused Goodwin of panicking customers and workers unjustifiably, and questioned his dire assertions. They claim his remarks were made to get contracted employees to agree to lower wages, gain negotiating leverage or get more government assistance.

United already was in deep trouble before the attacks, severely hurt by a downturn in business travel – upon which it depends more heavily than other airlines – and the highest costs of any major U.S. carrier.

Analysts expect United to report a quarterly loss of close to $1 billion or more when it releases third-quarter results on Nov 1. Included in that total will be a hefty charge for the costs of laying off about 20,000 of its 100,000 employees after the attacks. The airline also is trimming its daily schedule to 1,654 flights, down about 30 percent since the attacks, as of Oct. 31.

The Elk Grove Village, Ill.-based airline lost more than $700 million in the first half of the year – including as much as $116 million from the failed merger with US Airways, which Goodwin proposed last year. United was surpassed by American Airlines this year as the biggest U.S. airline.

UAL shares, which closed Tuesday at $15.50 on the New York Stock Exchange, have lost two-thirds of their value since January. They were at $73.50 before Goodwin's appointment on March 25, 1999.

Goodwin was the unexpected compromise choice to succeed retiring CEO Gerald Greenwald in 1999, getting the job after unions blocked the choice of Greenwald's hand-picked heir, United president John Edwardson.

It has been speculated that Greenwald – who headed UAL from 1994-99, a time of record profits and good labor-management relations – could return to replace Goodwin. Greenwald declined Monday through a spokeswoman to speak to a reporter.

[ 24 October 2001: Message edited by: Airbubba ]

[AOG-YYZ]

BenThere

Problem with that idea here in NA is that the Unemployment Office considers this to be a voluntary lay-off i.e. "you quit your job". Result? No unemployment payments. The CAW (Canadian Auto Workers) had negotiated a "reverse seniority lay-off clause" in there contract and fortunately only a small minority of Air Canada employees were caught in this catch 22 situation.

[Ace Rimmer]

Guys, guys. Lets look at the facts over the last 10 or so years by and large the airline industry has been riding high on the hog with the result that inept management has gone largly unoticed. It's not just at UAL, BA, Swissair, Sabena, the list goes on and on. Many of these "leaders" have taken strong companies and turned them into houses of cards which is ok on a calm day but look out, the wind just started to blow.
What's the solution? I'd say some pretty hard decisions are going to need to be made, ones that are bound to pi55 off a lot of folks (esp pilot groups). First up, scope, in any other business you'd call it restraint of trade. Its gotta go, and it will one way or another. Trading off routes to regionals, guess what? It's going to happen.
Seniority system? A system which simply dosent exsist in most other professions. What about skill and ability? (not only that but it ties individuals to a particular company limiting their chance to develop careers). It's gotta go.
Think all the above is bollocks? OK fine, but you watch if these icons go (as well they might) their places will be taken by others...Mesa, Xair, VLM and so on and so on.. Matter of fact I might start one myself (OH NOOOOOO Guvnor moment)

[caulfield]

UAL must not and will not go under.The pay rises in the past were not disproportionate but we have a new ball game today.Pilots must take voluntary pay cuts and save this great airline.
I dont agree senior pilots should take early retirement..they have lives too.But they must take the biggest cuts its true.
whatshouldiuse..pilots should never be rated on ability.All airlines suffer from favoritism/nepotism..the seniority list protects those who arent on the christmas card list of management/training.

[FlyBri]

I think there may be a hidden agenda in all this airline failure talk in that the people that own and control the big carriers are using the september 11th events to "reshuffle the deck of playing cards visa vi bankruptcy
filings to abrogate contracts with all its
deleterious effects on wages and working conditions.for those real senior guys at the largest carriers who think they are impervious to whats coming , you better think again, those low seniority numbers may not protect you like it has in the past. The present condition of the airlines is analogous in some ways to the unsinkable ship the Titanic
we know the people in stearage went first and ultimately the first class passengers on the bow, all suffering the same fate. Alpa national has to get much more proactive in this enviroment,Contingency plans need to be developed NOW !!! :

[Airbubba]

"Pilots must take voluntary pay cuts and save this great airline."

Deja vu all over again... Any UAL folks want to comment?

[magnum]

No matter how big a pay cut, it wont matter anyway in a situation like this. Everyone who is performing a professional job should get paid accordingly. Whats the percentage of crew cost vs total cost anyway? Barely makes a difference what a pilot earns.
We just have to get paid for what we deliver. And while the computer geeks continue to collect the big bucks while we are fighting jet lag, cosmic radiation, routine checks, medicals and terrorist threats we have to take pay cuts? I dont think so.

[Ignition Override]

A member of our MEC (Master Exec. council) told me in person that even a 15% pay cut would make little difference in the overall financial picture at this US airline.

I would be willing to accept a a pay cut-especially if it prevents a number of furloughs. Apparently, our company has not seriously sought pay concessions, but pilots near retirement are offered a 55-hour month with full benefits and no retirement penalty, while we are all limited on some planes to 75 hours per month.

[DanJ]

Most of my pilot friends at that I've talked to don't seem to have a huge problem with a pay concession IF they know it will go towards saving the company. What they are afraid of, and myself as well (IAM member) is that these paycuts will be used to purchase bizjets and websites, as opposed to saving any jobs, or pulling us out of our financial troubles. I know that ALPA, IAM, and AFA have all asked to see the books, and so far UAL managment (if u can call it that) has declined to show them to anyone. They seem to lack any plan, or vision.

[SOHCAHTOA]

UAL will not go down the pan.
This is just another goodwin hamfisted try at trying to screw the employees, so he can make up for the squandered millions he wasted on his US Air deal and to help pay for his next f-up, the aquisition of a biz jet company.

As I said at the beginning, UAL will not go down, but only if we have a vote of no confidence and get somebody into that position who can do the job. (Greenwald ?)

And for those who champion the pay cut option. I think I would like to see the huge bonuses the top management awarded themselves given back first.

[BenThere]

Another idea -
Most of the majors' furlough anouncements are in the 10-15% range for pilots. My MEC has promoted, and gotten approved, an assessment of about 1% to cover our furloughed pilots' medical insurance. If, however, we raised the assessment to around 10%, we could easily provide furloughed pilots with about 60% of their pre-furlough income. This spreads the pain more equitably, secures loyalty, builds the brotherhood foundation - all of which to me are what ALPA should be about.

[ironbutt57]

hey ben there....bout time somebody comes up with a good idea....sure would be nice to have these assesments written into contracts;;the downside being once again employees are paying for bad management practices :) :) :)