United Loan Guarantee Denied!

[bigbeerbelly]

United Airlines Denied $1.6 Bln U.S. Loan Guarantee (Update3)
June 17 (Bloomberg) -- UAL Corp.'s United Airlines failed to win a $1.6 billion U.S. government loan guarantee to finance an exit from bankruptcy, which may force the world's second-largest carrier to seek other financing or more cost reductions.

United failed to meet requirements of an airline aid law and can succeed without a guarantee as credit markets have improved, the board of three U.S. agencies said in a statement. Two of the agencies said they would reconsider the application, and the Chicago-based airline requested a review.

UAL is seeking to reduce annual expenses by $5 billion, about half through worker pay and benefit concessions, to stem losses, and requested U.S. backing for a $2 billion loan from J.P. Morgan Chase & Co. and Citigroup Inc. UAL has had $8.6 billion in net losses since 2000, it's last profitable year. The company has said it had an operating profit in March and May.

``It's a substantial setback but it's not the end of the story for them,'' said Standard & Poor's analyst Philip Baggaley. ``They have been at least thinking about alternatives and now they'll have to pursue those, probably seeking some form of equity investment, a secured credit facility and possibly some other forms of long-term capital.''

The Air Transportation Stabilization Board rejected United's request for a $1.8 billion guarantee in December 2002, and the airline filed the industry's largest bankruptcy five days later. The board has rejected applications from nine carriers and awarded six loan guarantees. A law enacted after the Sept. 11 attacks made $10 billion in guarantees available to help carriers recover from a drop in air travel.

United `Perplexed'

United said in a statement it was ``perplexed'' about a ``premature'' decision, saying the carrier was in the midst of a process to make its application acceptable.

``We do not believe that the board was made fully aware of the important modifications United was willing to bring to the table,'' United said. ``We are respectfully petitioning the ATSB for reconsideration.''

Treasury Undersecretary Brian Roseboro and Federal Reserve Governor Edward Gramlich opposed the request, and Transportation Department Undersecretary Jeff Shane voted to defer a decision one week, the board's statement said.

``Should United submit an improved application in the coming days, Treasury is open to reconsidering it,'' the Treasury Department said in a statement. The Transportation Department is willing to consider the application ``in the event that United submits a request for reconsideration,'' the agency's statement said.

Loan `Unnecessary'

``A majority of the board believes that the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make a loan guarantee unnecessary,'' Executive Director Michael Kestenbaum said in a letter to United's Chief Financial Officer Frederic Brace.

U.S. House Speaker Dennis Hastert, a Republican from Illinois, the home state of United, said he ``hoped'' the board would reconsider the decision.

The decision won't result in United's liquidation, said Dorothy Robyn, a Brattle Group consultant in Washington and a former adviser on aviation issues during the Clinton administration.

``This will force United Airlines to go back to labor and go back to creditors and get deeper concessions, which is exactly what should happen,'' Robyn said. ``Despite having been through bankruptcy, United Airlines labor costs and other costs are still substantially higher than those of low-fare airlines that are their major competitors.

``The board may well have thought that United hadn't used this crisis to get their costs as low as they need to be,'' Robyn said.

Pilots

The decision surprised United's Airlines Pilots Association, said spokesman Steve Derebey. He didn't comment on whether pilots, the highest paid employees at any airline, would be willing to offer additional concessions.

``We'll be working, obviously, with the company in the coming weeks to find out what their plan is,'' Derebey said. The pilots union said in a statement that the rejection is ``slap in the face to each United pilot.'' The union will be ``more determined to ensure'' United exits the bankruptcy process.

Under terms of the United request, the U.S. would have repaid 80 percent of the loan if the airline defaulted. J.P. Morgan Chase and Citigroup tentatively agreed to provide UAL with a $2 billion loan, including a collective $400 million that wouldn't be backed by the U.S. guarantee.

United probably will remain in bankruptcy court proceedings longer, redouble its efforts to reduce costs to attract new market capital, and, perhaps, shrink a bit, said UBS Securities analyst Samuel Buttrick in a June 10 report.

Opponents

Rivals opposed the application. The loan program wasn't meant to boost business plans likely to fail, AirTran Holdings Inc. Chief Executive Joe Leonard told a congressional panel June 3. Airlines with a reasonable chance of repaying loans can get them from private markets, America West Holdings Corp. Chief Executive Douglas Parker told the panel the same day.

United expects fuel costs to be $750 million higher than forecast for this year on rising fuel prices. UAL is aiming to cut $300 million in costs other than labor expense and boost revenue by $300 million. The airline recently cut $300 million in costs over six years by reducing retiree benefits.

UAL had expected to exit Chapter 11 protection by the middle of this year. Now, the company has said it's planning to emerge sometime in the second half of the year.



To contact the reporter of this story:
John Hughes in Washington at [email protected]

To contact the editor responsible for this story:
Steve Geimann at [email protected]
Last Updated: June 17, 2004 20:49 EDT

[Airbubba]

A brief analysis from earlier in the day:

United Airlines CEO coaxing carrier back from brink

June 17, 2004 — When Glenn Tilton took over at United Airlines in 2002, skepticism abounded that a career oilman could learn the airline business fast enough to pull United out of its dangerous dive.

Industry experts questioned how Tilton could persuade employees to agree to drastic wage and benefit cuts and improve United's performance to reshape it into a cost-competitive airline.

United's emergence from bankruptcy still isn't assured after a more than 18-month stay in Chapter Eleven.

Whether Tilton ultimately succeeds as United's chief executive officer may hinge on an imminent government decision on its application for a federal loan guarantee. If it's rejected, United would likely need a cash infusion and may switch leadership.

Tilton is in Washington today for eleventh-hour talks about United's application. A decision could come this week.

http://abclocal.go.com/wls/news/061704_ap_ns_united.html

[411A]

"Slap in the face for the pilots at United..."

What they need is a reality check...the 'big bucks' days are over, period.
Gee, what a surprise..:{

[Shore Guy]

The free pass days are gone....

The free enterprise system is at work.....

The problems of the "legacy carriers" were just accelerated, but not created, by 9/11.

[Tandemrotor]

"Airlines with a reasonable chance of repaying loans can get them from private markets, America West Holdings Corp. Chief Executive Douglas Parker told the panel"

Is there anything else to say?

[Pirate]

I hate to add to the misery in the US but it looks like Delta is in big trouble too if they can't cut costs significantly - article in the financial pages of yesterday's "Daily Telegraph".

[Oilhead]

Quoted....

"Airlines with a reasonable chance of repaying loans can get them from private markets, America West Holdings Corp. Chief Executive Douglas Parker told the panel"

Now let's look at the US Treasury web site -

On December 7, 2001 America West Airlines submitted an amended application for Federal loan guarantees.

On December 28, 2001, the ATSB gave a conditional approval to America West Airlines for its application.

On January 18, 2002, America West Airlines closed on a $429 million loan supported by a Federal loan guarantee.....

[srjumbo]

Well at least if one of the US majors goes under 123.45 might just be a bit more peaceful!

[Airbubba]

I don't think anyone but the unions and the New York Times are surprised that United didn't get the bailout loan once again.

After the failed experiment with employee ownership, it looks like the next phase is creditor ownership or liquidation.

Another Once Great Airline has gone through the transformation from "the world can't do without us" to "buddy can you spare a dime". It is a humbling experience and a personal one for many of us.

I can remember the heady days of 2000 when the planes were full and the UAL employees could care less if you rode with them or not. Pac Rim cabin service was delivered with a sneer if you were lucky enough to get any. I've avoided United for personal travel since then but I am told things are somewhat better after the reality check of bankruptcy.

Oddly enough, the propective political saviour of UAL bailout "loan" guarantee (there is real doubt if they could ever pay it back, UAL's current debt would take 35 years to repay at projected revenue levels according to one analysis) is a Republican, Dennis Hastert, Speaker of the U.S. House of Representatives.

UAL has been given 30 days to come up with another plan to exit bankruptcy without the ATSB guarantee and Rep. Hastert has made calls today pressuring the ATSB to allow an unprecedented third application for the government bailout.

It ain't over till it's over...

[maxalt]

I'd just like to remind the detractors (like srjumbo) that if either (or both) United and Delta go under, or their pilots unions are broken by this crisis, then the whole worldwide pilot body will suffer the consequences.

I don't work for either company, but both of their unions (in particular Uniteds) are shining lights in the battle to preserve pilot pay and conditions. Their example is one for evey pilots union to follow. To see other pilots gloating on their possible downfall is sickening.
Are you pilots or managers? If you want to improve your own situation, don't try dragging everone down to your level. Thats the job of management, not pilots. With attitudes like yours (srjumbo) we'll all be earning taxi drivers wages soon and managers (even wannabes) like 411A will be happy as Larry that you screwed yourself!!

[cactusbusdrvr]

Hey Oilhead - America West gave the US government warrants for stock in exchange for the ATSB loans. If the government cashed in right now they would make a profit of about 200%. Not bad for the taxpayers, is it?

What did AWA get in return? A government imposed cap on labor costs for the lowest paid, most productive major airline flight crew, a chance to implement some major business fare reductions that boosted yields, and a return to profitability within a year of gaining the loans.

UAL pilots gained perhaps the peak contract in aviation history (although I've heard that Cathay in the old days might have been the best as far as pay and perks) but no one forced management to sign the contract. The reality is that that contract was developed and signed when they were able to make great profits from their international routes. Times have changed and we have all paid the price. But United (and UsAir) pilots have stepped up to the plate and given back more than enough to restructure. The sad truth is that we pay the most when management screws up. UAL pilots could work for free and they would still lose money.

[jmc-man]

This sums up what is so wrong about American aviation.

Since 9/11 Assorted American Airlines have had huge level's of subsidies to enable them to stay in Business.

British Airlines have had NO level of support and yet have to compete head to head with their American Competitors on Transatlantic routes. Even the installation of reinforced doors and video surveillance had to be paid for by the UK airlines themselves.

Level Playing Field......


Yeah...right

[bigbeerbelly]

British Airlines have had NO level of support and yet have to compete head to head with their American Competitors on Transatlantic routes.

Is that right? ...I don't see Continental Airlines flying into Heathrow, why is that?

BBB

[FunkyMunky]

Continental may not fly into Heathrow but I think it's one of only a couple of airlines operating transatlantic from Edinburgh and Glasgow. Perhaps they see another possible market (we Scottish fools? :D)

[piton]

Continental do fly to Gatwick which is probably less remote than Newark...

and even if they didn't have landing rights in London at all what has that got to do with the subsidies/loans the US has given it's airlines?

[bigbeerbelly]

and even if they didn't have landing rights in London at all what has that got to do with the subsidies/loans the US has given it's airlines?

by not allowing other carriers to operate into and out of one of the busiest airports in the world, the British government is in fact subsidizing BA.

BBB

[pipersg]

by not allowing other carriers to operate into and out of one of the busiest airports in the world, the British government is in fact subsidizing BA.

US carriers operating from London to US:

Delta
Northwest
Continental
American
United

UK carriers operating from London to US:

BA
Virgin Atlantic

........ and BMI still aren't allowed to operate transatlantic from London.

Have a word with yourself BBB!

[Wino]

BZZZZZZZZZT
try again.

Northwest
Delta
Continental

NOT allowed at Heathrow

Other UK airlines operating translatic services to the USA

JMC
Monarch
and a few others


BMI can operate translantic from LONDON EXACTLY the same as Northwest Delta and Continental can.

[bigbeerbelly]

Have a word with yourself BBB!

I have no idea what that means, but I bet it isn't good. Can you supply some flight numbers to back up your post for Continental, Delta, Northwest to LHR? I know UAL and AA fly to LHR and that is politics.

BBB

[GlueBall]

"I'd just like to remind the detractors (like srjumbo) that if either (or both) United and Delta go under, or their pilots unions are broken by this crisis, then the whole worldwide pilot body will suffer the consequences..."
-----------------------------------------------------------------------
Pan Am, a former American "institution" went under, along with Braniff and Eastern Airlines...EAL in 1980 was the free world's largest pax carrier (35 million)....and "the whole worldwide pilot body" did not lose union representation and pilots' wages did not decline.

What are you saying maxalt? ...That outfits like UAL or DAL deserve taxpayer loan guarantees because they can't qualify for loans on Wall Street?

Give us a break, maxalt! I coudn't care less if a UAL captain or a DAL captain make $280,000 per year...as long as the American taxpayer isn't involved in guaranteeing the money.
:ooh:

[stilton]

From the Newark airport you can be at Penn station in Manhattan
within 30-40 minutes after landing, either by bus or the brand new monorail link to the Newark station where you change to another <brand new> train into the city.

Certainly no more trouble or time than the train to Victoria from LGW, or the slog to or from JFK, Piton.

I can personally recommend the train, hope you have the chance to try it sometime.

[Wino]

Newark is actually the closest airport to Manhattan.

JFK is much more remote than Newark.


Cheers
Wino

[pipersg]

Wino and Bigbeerbelly:

Who said anything about LHR? If you read my post correctly you would see that it said London and not Heathrow.

Gatwick is just as convenient as Heathrow for travellers beginning or ending their journey in the UK or most of Europe.

Flight numbers:

NW31+32 LGW-DTW
DL59 LGW-ATL
CO67 LGW-CLE
CO29 LGW-EWR

How, then can the British Government be accused of sponsoring BA when these airlines are allowed and encouraged to fly into our capital city. Hardly a comparison to Chapter 11 methinks!

[Tandemrotor]

Whether the American carriers fly to Heathrow, Gatwick, Birmingham, Manchester, or Scunthorpe, the prices they are able to charge (thanks to the US government slush fund) are, shall we say, extremely 'competitive'!

Probably the only time you will see the words "US carriers" and "competitive" in the same sentence!

Incidentally, you may wish to compare the proportion of BA flights operating from LHR, with the proportion of flights operated by the US carriers from their 'home' bases!

Cheers

[West Coast]

I do wonder where all you Euro types were when many Euro (including BA) airlines were alive and well only due to their respective governments propping them up.

Funny how none of you address this. Was fairly recent so I know you all remember it, but prefer not to bring it up. I wouldn't expect anything less from the Brits here on the prune during a Yank slagging.

[Carnage Matey!]

Well I think I was still in school when BA was last propped up by the UK government. Was it 1986 they were privatised? Now how many times since then have American majors benefitted from Chapter 11 protection?

[Wino]

Most airlines that go chapter 11 liquidate contrary to popular belief.

PANAM GONE
TWA GONE
BRANIFF GONE
MIDWAY GONE
EASTERN GONE

The odds on surving chapter 11 are not actually very good.

So you are whining about competing with US airlines
American Never chapter 11
Delta Never Chapt11 (yet)
Northwest Never chapter 11


As opposed to BA?Bailed out and privatised in 86. Subsidzed by a government regulated near monopoly at heathrow.
Airfrance Been to the trough a bunch of times
ALitalia still at the trough
Olympic been to the trough too many times to count

The list goes on and on.


Cheers
Wino

[Globaliser]

Wino: As opposed to BA? Bailed out and privatised in 86. Subsidzed by a government regulated near monopoly at Heathrow.Other European governments' attitude to "their" national airlines is as sickening as the US' to theirs.

But BA's "near monopoly" at LHR? That's BA's biggest (and now probably only true) hub. Last time I looked, BA's share of LHR movements and traffic was way down any list of "airline's share at its own hubs".

LHR being pretty much full, seems to me that fair's fair on LHR-USA: two of yours, two of ours. For some reason, people who are choosing on the basis of a level playing field seem to prefer flying on ours.

It's no wonder that the US is so keen to tip it so that there are (a) lots more US carriers at LHR who can (b) offer (under the DoT's own protectionist stance) routes and fares that UK carriers won't be allowed to.

[bmibaby.com]

There are only two scheduled airlines of British nationality that operate flights between the London & United States, which are British Airways and Virgin Atlantic.

All airlines can apply to operate flights from London Gatwick, which is less slot restricted, and has similar facilities and just as good transport links for passengers as they can get from LHR.

Even if we gave the rights to NWA, Continental & US Airways - they'd be waiting a helluva long time before any slots become available, as there is a queue of airlines already wanting to increase frequencies or even start flights. This is no different to the way Virgin & Malev have been treated at O'Hare - a major AAL & UAL hub.

The point I think my Euro colleagues are trying to make is, that the EU prohibits government subsidies, and so no airlines were given any, except some governments agreed to cover the costs of their flag carriers when they were forced to ground flights on the few days after 9/11.

I know Alitalia & Olympic are both recieving some form of government support, but this doesnt compare to the way European airlines have to compete against heavily subsidised American airlines (who only could stay on their feet following subsidies from the government and the post office up until the 70s, and who still get subsidies now)

[srjumbo]

The US authorities have always looked after their own. Just look at the way professional foreign aircrew are treated by US immigration, TSA etc and if we ever ask an American controller to repeat anything (after being ignored in the first instance) the reply is usually said in a sarcastic voice. The politeness shown by British / Irish controllers to US pilots when they (frequently) cannot read back an enroute clearance or even a simple instruction is admirable!
Look at the Concorde saga. Because it wasn't built in the US the restrictions were crippling. If it HAD been built stateside then what a different story that would be.
The US authorities are now considering implementing new regulations on four engine aircraft similar to the ETOPS regulations. Why? Because Boeing now have competition from Airbus and the US authorities want to make it more challenging for four engine operators, in other words not to buy the A380! The Concorde scenario repeating itself? In my view yes.
Subsidised, overpaid and over here and quite frankly not very good. Didn't another NWA aircraft land at the wrong airport this week? That happened a few years ago to a NWA DC10 flight 252!
In summary, the US authorities try to make it easy for the cowboys but difficult for the professionals!

[kala87]

Lighten up fellas. For the record, UAL is one of the best carriers I have ever flown with, both in J class and in the back. I've had a number of trips with them on LHR - IAD, LHR - ORD, and IAD - MEX since they went into Chapter 11. Service at every level and especially the food were miles better than BA. They deserve to pull through.

As for subsidies, aren't we forgetting that demand for air travel collapsed much more severely in the US after 9/11 than in Europe, and is still weaker. If 9/11 had happened in London (God forbid), can we assume that the UK government would have watched BA go under? I think not.

[bmibaby.com]

kala87, you seem to forget that for British Airways, their most profitable market before (and no doubt as the market is recovering after) 9/11.

The decline of traffic on trans-atlantic routes was a devastating blow for British Airways, although it looks like things are improving

[Airbubba]

Federal Help for United Appears to Be Less Likely

By MICHELINE MAYNARD

Published: June 22, 2004

The chances of United Airlines being able to reverse the rejection of its request for $1.6 billion in federal loan guarantees dimmed yesterday, though the airline has yet to submit a third version of its application.

The likelihood of another defeat grew after the Treasury Department came out in support of its representative on the Air Transportation Stabilization Board, Under Secretary Brian C. Roseboro.

Last Thursday, Mr. Roseboro and Federal Reserve Governor Edward M. Gramlich voted against United's application. The board's third member, Jeffrey N. Shane of the Transportation Department, abstained, saying that United, a unit of the UAL Corporation, should be allowed to provide additional information in support of its request.

After the vote, the Treasury and Transportation departments said the airline would be given time to try again despite the "no" votes of its representatives.

Other airlines have also been given the opportunity to re-apply after a rejection, notably Spirit Airlines, which did not ultimately receive a loan guarantee. But United is the only carrier to be given three chances. The original deadline for new applications passed two years ago.

The offer of another opportunity came after an appeal to John W. Snow, the Treasury Secretary, by House Speaker J. Dennis Hastert, Republican of Illinois, United's home state.

A senior White House aide also called Mr. Snow to express concern at the rejection, a department official said on Friday.

Over the weekend there was speculation that Mr. Roseboro might be replaced on the board by another official who would agree to vote in United's favor. The issue was discussed at a meeting of Treasury officials yesterday, people with knowledge of the discussions said, but no decision was made...

http://www.nytimes.com/2004/06/22/business/22air.html?ex=1088481600&en=fdd9d0787c1fd6d4&ei=5062&partner=GOOGLE

___________________________________________

From the New York Times Op-Ed page:

June 22, 2004

The United Bailout, Act III

Last Thursday the federal government wisely turned down United Airlines' second application for a loan guarantee, this time for $1.6 billion. The bankrupt carrier's problems are unrelated to the Sept. 11 terror attacks, so there is no reason for it to benefit from an emergency program that was meant to ensure the viability of commercial aviation, not stack the deck against competition.

Unfortunately, United's attempts to force a taxpayer bailout didn't end there. Within hours of the decision taken by the Air Transportation Stabilization Board, the Treasury Department invited the airline to try again this week. This inappropriate move raises questions about the integrity of the entire process. The Treasury's representative on the three-man board, Brian Roseboro, has already voted against the loan application, along with the Federal Reserve Board's representative.

Other airlines, wary about competing against a federally subsidized carrier, are now left to wonder whether the government will reverse itself under election-year pressures. House Speaker Dennis Hastert of Illinois has reportedly been lobbying Treasury Secretary John Snow on behalf of United, which is based in Chicago.

Although United is still tinkering with the financial details of its application, there is no plausible reason for the board to reverse itself. The board's June 17 letter to the airline stated that "a majority of the board determined that a guaranteed loan to United is not a necessary part of maintaining a safe, efficient and viable commercial aviation system," one of the program's criteria. That was well put. There is no legitimate reason for taxpayers to bail out the nation's second-largest airline. A political decision to intervene would wreak havoc on the entire industry, which is being reshaped by market forces. Republicans, of all people, should know that.


http://www.nytimes.com/2004/06/22/opinion/22TUE3.html?ei=5062&en=856083b9f79ccc2f&ex=1088481600&partner=GOOGLE&pagewanted=print&position=


________________________________________


United agrees to scale back aid request

By Caroline Daniel in Chicago

Published: June 22 2004 23:36 | Last Updated: June 22 2004 23:36


United Airlines on Tuesday finalised the terms of its new application to the federal body overseeing loan guarantees, agreeing to scale back its request for aid from $1.6bn to $1.1bn, to seek $500m in private equity and to embark on a new round of cost cutting.

The proposed terms, set out in a letter to the Airline Transportation Stabilization Board, which oversees the guarantees, are designed to support United's request for a reconsideration of its application. The airline has also agreed to maintain minimum cash balances of $1.5bn as a condition of the loan and is proposing to pay it off within five years, not seven, according to a person familiar with the talks.

The plan, which does not include a specific target on cost cuts, follows intense discussions between United executives and officials from the office of John Snow, Treasury secretary, and the Department of Transportation.

Last week the ATSB turned down United's application. It is unclear how soon the ATSB will respond to the letter.

The private equity concessions represent a climbdown for United, which has consistently avoided taking this route. One person involved in the bankruptcy said: "It almost doesn't matter now if the ATSB agrees a loan, as it is now clear that Glenn Tilton [chief executive of United] can't get away with a job half done. He is going to have to restructure further and cut costs."

The battle over the future of United now lies in the hands of private equity groups and what conditions they will demand in return, such as management changes, a new labour deal or terminating pension plans.

Finding a private equity investor is expected to take months, pushing United's exit from bankruptcy into next year.

Even if United's new request is turned down by the ATSB, the airline will have already begun a process of talking to private equity groups and allowing them to conduct due diligence, since the biggest detail that could change would be the size of the investment required from them, according to a person familiar with the bankruptcy.

One investment banker said potential investors could include Greenbriar Equity - whose managing partner, Gerald Greenwald, was a former chairman and chief executive of United - and Texas Pacific Group, which has the best track record of any private equity group for its airline investments.

Cerberus Capital Management and Oak Hill Capital Partners are also active in the sector, offering last week to invest $250m in Air Canada.

...The fact that United is going to have to seek further cost cuts, especially from labour, could also have a significant impact on the rest of the airline industry. It could put pressure on Delta's pilots to agree to concessions soon, in order to avert Delta executives using any renegotiated deal from United as a new benchmark.

Northwest, which is also seeking a labour deal, could also benefit. Jamie Baker, analyst at JP Morgan, said: "The threat that UAL could establish a new, lower network carrier pay structure is expected to accelerate pilot negotiations at those two carriers.

"Delta pilots can ill-afford to drag their feet on the current 30 per cent pay cut proposal, only to have United establish lower rates in the meantime."

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373195882&p=1012571727085

[411A]

UAL is in such desperate straights that a minimum 25-35% pay cut in all departments will be required, pilots and execs especially.

UAL should not get three cents from the Government, period.

Same goes for Delta.
NWA to follow.

Will the pilots put up with this?
They will have NO other choice, if they still want the job.
The gravy train has not only stopped, it has derailed as well.

And, about time, IMO.

[West Coast]

"The gravy train has not only stopped, it has derailed as well"

While further pay cuts may be inevitable, its not because they are over paid now. About 40% to 45% is how much of a pay cut the average UA guy took. Add in your notional upper end of 35%and you have someone who has taken a 80% pay cut. I don't argue it won't happen in an effort to reach solvency but quit harping on the pay rates for pilots. Anyway, a more likely target will be the A fund retirement plan.

[411A]

Don't think so.
If the company goes away, they all lose.
I can personally remember ex-Braniff pilots arriving in JED after having applied (and being accepted by SaudiArabian) in the mid-eighties, and they were still shell-shocked, after having been with Brannif for 25+ years and not having a red cent to show for it later.
No job.
No retirement.
Same for the ex-EAL guys later on.

Not a happy scenario.:uhoh:

[pilotusa]

A few misconceptions:

The closest airport to Manhattan, by far, is LaGuardia, but since it has no international arrivals facilities, it really doesn't factor into this particular argument.

EWR is NOT closer to Manhattan than JFK. This has been widely circulated for eons, and a MapQuest.com driving directions search showed that EWR to Grand Central Terminal - 27 minute & 17.63 miles. JFK to Grand Central Terminal - 25 minutes & 17.52 miles. Not a lot of difference, to be sure, but maybe we can just call it a tie. Add road traffic into the mix, and all bets are off. One advantage to JFK: NYC taxis are "flat-rated" (inbound ONLY) at $45 from JFK to any location in Manhattan. EWR no longer has a rail-service advantage to Manhattan. The JFK "AirTrain" now operates all JFK terminals to Jamaica Station ($5) where one can connect to the NYC Subway or the Long Island RR for transportation into Manhattan. Both airports also have express bus service to Manhattan.

The monorail connecting EWR to the Airport Rail Station is indeed brand new. The trains from that station into Penn Station NY are not necesarily new. In fact, many of the New Jersey Transit trains have quite a bit of mileage under their belts. However, they are all clean, well-lit, well-maintained, and professionally staffed. They make one stop before Manhattan at Newark, NJ Penn Station. The ride from the Airport Rail Station to Penn Station NY is about 25 minutes. (I ride those trains very often. I know from where I speak.)

The only United States carriers permitted to operate to/from Heathrow are American Airlines and United Airlines. Since LHR is a much more desirable London airport, the British government's restrictions imposed on US carriers on access to that airport is a de facto protection of British Airways.

[Carnage Matey!]

Well in that case it's also de facto protection for United and American Airlines as well. I think two UK airlines for two US airlines is a fair deal. Evidently you think two for five is a fairer deal.

[pilotusa]

Given the size of the populations of the two countrys and the disparate size of the domestic airline markets, two carriers each is hardly fair. What would be fair would be to limit BA to ONE major market premier airport in the US. Say, BA can operate the Chicago O'Hare, but in NYC it can only use EWR. Once restrictions like those are imposed on this side of the pond, the game becomes fairer and the howls of protest from London would start in earnest.

[Globaliser]

pilotusa: Given the size of the populations of the two countrys and the disparate size of the domestic airline markets, two carriers each is hardly fair.What's the size of the population of the USA logically got to do with the number of US carriers that operate an air route?

An analogy: Burger King was UK owned for a long time. This argument would have restricted the number of stores it operated in both the UK and the US, when compared to Macdonalds, to the same proportion as the populations of each country. What sort of rubbish is that?

(OK, OK, I know the answer is that both companies' food is total rubbish, but that's another argument altogether.)

[Carnage Matey!]

Say, BA can operate the Chicago O'Hare, but in NYC it can only use EWR. Once restrictions like those are imposed on this side of the pond, the game becomes fairer and the howls of protest from London would start in earnest.

Ok then, in that case perhaps United should operate to LHR but only from IAD, and American can operate to LHR but only from ORD, so we all kiss goodbye to direct airlinks. Rather than being fairer it sounds rather like "lets restrict BA to minor hubs so if you want to fly major hub to major hub it has to be on UA or AA and not BA or VS". US protectionism again!

[pipersg]

pilotusa: Given the size of the populations of the two countrys and the disparate size of the domestic airline markets, two carriers each is hardly fair. What would be fair would be to limit BA to ONE major market premier airport in the US. Say, BA can operate the Chicago O'Hare, but in NYC it can only use EWR. Once restrictions like those are imposed on this side of the pond, the game becomes fairer and the howls of protest from London would start in earnest.

I can't remember hearing such a lot of nonsense for quite some time. My point once again is that there is very little if any disadvantage to flying into LGW as opposed to LHR. The majority of people couldn't care less which of the two airports they fly into. Both have excellent domestic and european connecting services and equally good public transport links into Central London.

The size of the population of the two countries has absolutely no bearing on the situation, none. What is a consideration is the load factors on the routes concerned.
For example if British Airways were allowed to operate 5 flights a day from JFK to LHR and United were only allowed 2, then that shows a certain disparity. But even then, this is only a consideration if both airlines are using LHR as their main base. UAL have many more flights operating at JFK on a daily basis than BA do and vice versa at LHR.

I still fail to see how BA are being given preferential treatment by the UK Government. I sense a hint of jealousy in the wind at the fact that a British Airline has done so well post 9/11 where US operators have gone down the pan despite massive government subsidies!!!!

[West Coast]

Another long term memory fades in the UK...........

Dude, do you remember the UK government subsidy, as in owning BA. Perhaps if BA had tanked when it was on the ropes years ago the state of transatlantic travel would be better now. One less non competitive player right? Isn't that what your saying about UA? I just happen to be saying it about BA, and Air France Alitalia, etc.

[Ignition Override]

The basic topic was about United not receiving the loan guarantee.

An article in our "business" section stated that the Italian government will subsidize Alitalia, and the journos there guessed that the figure could be about 400,000,000 Euros. If so, I hope that tourism and the grape harvest is very.. eh, fruitful this year.
:)

Numerous countries have subsidized airlines. This may seem unfair for a so-called free market, until you spend many years with a company and your career and retirement is at risk. Of course, this could never happen to our companies.:uhoh:

[Globaliser]

West Coast: Dude, do you remember the UK government subsidy, as in owning BA. Perhaps if BA had tanked when it was on the ropes years ago the state of transatlantic travel would be better now. One less non competitive player right? Isn't that what your saying about UA? I just happen to be saying it about BA, and Air France Alitalia, etc.That is, in airline terms, ancient history. It was in an era when pretty much all airlines of all countries got real and intangible subsidies and government support of all types. Many airlines on both sides of the Atlantic probably would have died if they'd been run the way they were, but without government support.

Anyway, if we had no BA or VS now, and had to fly AA and UA trans-Atlantic ... I think I'd stay at home.

[Hawk]

ok ladies and gentlemen, we're on Page 2 and the thread is slightly running away. United Loan guarantee was the original topic.. keep it going.. and if you really want to move into restrictions and preferential treatments you can always start another thread.
cheers
Hawk :ok:

[Airbubba]

UAL cut their losses to only $3 million a day last month:

United Posts $93 Million Loss in May

By DAVE CARPENTER

AP Business Writer
Thursday, June 24, 2004; 4:35 PM

CHICAGO -- United Airlines said in a bankruptcy court filing Thursday that it posted a net loss of $93 million in May -- its efforts to return to profitability complicated by near-record jet fuel costs.

The nation's No. 2 carrier, which is seeking an additional $500 million in financing after trimming its request for federal assistance, pointed to a $9 million operating profit for the month as evidence its restructuring work is paying off.

"Our cost-reduction and revenue-generation efforts are delivering results and making United a stronger, more competitive airline as we continue to move forward," chief financial officer Jake Brace said.

But CEO Glenn Tilton cautioned employees in a separate message that more cuts will be needed to cope with increased competitive pressures and soaring fuel expenditures, reiterating that United will have to "dig deeper" on costs.

"We are going to have to maintain a relentless focus on cost improvement," Tilton said on a company hot line Wednesday evening, without specifically mentioning further concessions by workers. "United has to continue to meet the demands of a competitive marketplace, and cost reduction is going to continue to be a major part of everything that we do."

May results included a 7 percent increase in passenger revenue from the same month a year earlier and represented an improvement of $164 million over May 2003 operating costs. They also included $58 million in reorganization expenses, such as breaking aircraft leases as part of a fleet overhaul, United said.

Tilton confirmed the company asked the Air Transportation Stabilization Board on Tuesday to guarantee $1.1 billion of its $2 billion in conditional bank loans -- down from $1.6 billion previously and $1.8 billion in 2002. He did not indicate when United expects to hear from the federal panel on its third and presumably last bid to take advantage of the loan guarantee program.

He said employees' efforts have given the company a "strong and solid foundation upon which to build," citing United planes that are flying with an average of 90 percent of seats filled plus "terrific" summer bookings.

Employees have made $2.5 billion in annual concessions since United filed for Chapter 11 bankruptcy in December 2002, providing about half the company's estimated $5 billion in lowered expenses. Many fear their pensions will be targeted by any outside investor, particularly with United facing billions of dollars in pension obligations in coming years.

Meanwhile, Treasury Department investigators will look into whether any inappropriate political pressure was applied to the federal board.

Sen. Peter Fitzgerald, R-Ill., has asked the department's inspector general to investigate whether board member Brian Roseboro, who voted against United's request last week, was pressured to change his vote. Roseboro is an undersecretary at Treasury and the department's representative on the board.

Richard Delmar, counsel in Treasury's Office of Inspector General, told The Associated Press on Thursday that the office will conduct an examination into the matter.

"We are going to open a preliminary inquiry on the senator's questions," Delmar said. The office will be interviewing people and gathering information to assess whether anything improper occurred.

[OLNEY 1 BRAVO]

According to today's Financial Times, the ATSB has turned down United's third (and final) application.

If United are going to raise funds in the commercial market then more cost cutting will be needed.