United Airlines, Chapter 11 status

[Airbubba]

Some of the union folks seem to think it's a bluff to force concessions but it's looking more real by the hour...

_________________________________________________

From the Wall Street Journal:


UAL Warns It May File
For Bankruptcy Protection

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP


United Airlines parent UAL Corp. warned it may file for bankruptcy protection this fall because it has insufficient access to capital markets to repay $875 million in debt due in the fourth quarter. The airline also plans a new round of cost cuts.

"Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," said Jack Creighton, chairman and chief executive.

UAL said it is changing its business plan and will update its loan application with the Air Transportation Stabilization Board to include significantly broader, deeper and longer-term costs savings.

As part of its intensified cost-saving efforts, UAL plans to present new proposals to employee representatives and other shareholders in the coming days.

UAL said it has given itself 30 days to conclude discussions with stakeholders, making the necessary changes "urgent, significant and immediate."

"Revenue isn't coming back the way the industry expected. Demand isn't returning, fares remain low, and the industry is grappling with how to respond," Mr. Creighton said in a statement.

United's announcement comes after US Airway Group Inc., the seventh-largest U.S. airline, became the first major carrier to file for bankruptcy protection since the Sept. 11 terrorist attacks.

Like US Airways, United was losing money before Sept. 11. Beginning last fall, United, the second-largest U.S. carrier, reduced its schedule, furloughed employees, retired fleets and cut capital spending substantially. The airline also has eliminated base commissions.

In addition, United has sought a $1.8 billion federal loan guarantee, though the request has encountered some opposition from regulators. The guarantees are considered crucial for the airline to raise new capital before some of its debt payments are due.

Some of United's competitors are lobbying the government against granting the guarantee on the ground that it would fail to address the real problem: United's industry-leading labor costs. They contend that what United needs isn't more cash but cost-cutting of the sort that is hard to achieve outside bankruptcy court. A government bailout would allow United to keep paying exorbitant labor rates, rivals say, and consequently pressure would remain on them to match those rates. United workers own 55% of the company.

Updated August 14, 2002 4:56 p.m. EDT

_______________________________________________

From the Chicago Tribune:

United issues Chap. 11 warning

By Stephen Rynkiewicz
Tribune staff reporter
Published August 14, 2002, 4:08 PM CDT

United Airlines today said it must take "urgent, significant and immediate" steps to restructure the company, possibly including a Chapter 11 bankruptcy filing.

Jack Creighton, chairman and chief executive, said United is facing a cash crisis, with $875 million in debt payments due in the fourth quarter.

He said executives "are preparing for the potential of a Chapter 11 bankruptcy filing this fall, due to our fourth quarter debt payments. Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline."

Creighton said United will talk with creditors and employees over the next 30 days. The Elk Grove Township-based carrier has been hoping to secure wage concessions from its unions in its previous efforts to pull out of the industry's post-Sept. 11 slump.

The wage concessions have been a contingency in $1.8 billion in federal loan guarantees United is seeking. The airline now says it will revise its application to call for "significantly broader, deeper and longer-term cost savings."

"The world has changed," Creighton said. "Revenue isn't coming back the way the industry expected. Demand isn't returning, fares remain low, and the industry is grappling with how to respond."

[Electric Sky]

Bad news for all involved. With US Airways filing for bankruptcy this week it seems the full effect of Sept 11th on US airlines is only just hitting home.

Hope both carriers make it through.

ES ;)

[Lost_luggage34]

'Tis truly sad if it were to happen.

Having flown as a PAX with UA many times and previous to that with Pan Am, it would be a great loss to the industry.

Let's hope they can ride the storm and continue operations.

[LGW Vulture]

Chapter 11 is not the be all and end all!!

US Airways already know they have a knight in shining armour in the form of Texas Pacific Corp.....

UAL know that its just a matter of time until they can get rid of unwanted, un-needed manpower and get back to the global alliance leading partner scenario they are so much used to!!

When the financial markets return to aviation, then the likes of UAL can pull every trick in the book to look like they're the most successful operation that ever flew the skies....

I'm not cynical....just practical.........!!!

To fly is to be proud.... to not fly is just too much to handle...

[411A]

The airline industries' first large scale ESOP looks like it will fall apart.
Can you imagine, the pilots (amoung others) are in charge..."hey Bubba, we done need a raise, lets vote ourselves a whopper, we deserve it, by golly..."
Now it looks like only a very short trip to the poor house.:rolleyes:

[GlueBall]

And the U.S. taxpayers do not take kindly to subsidizing the bloated UAL pilot salaries ($300,000 B777 Capt) with a multi billion dollar government bailout.

The greedy employe-owners of UAL have dipped too deep into the cookie jar.

[West Coast]

411
ESOP is over bud.

[doubleu-anker]

Well, what the hell did you exspect?

The pilots demanded, and were given a 25% pay increase. Have they now offered to take a pay drop now that UAL are facing hard times? Of course not.

Well I hope they make the most of it because it won't last.

[Koja]

From what I have read the pilots have agreed to a 10% cut to help out. They are the only union that has agreed to some concession. The pilot union is a little ticked off that the other unions do not want to help out.
It is all about money and greed. There is enough for all but some tend to keep more then the others. This is my personal opinion.

[giza]

this sounds familiar, airline in trouble after pilot 25% pay rise.
I don`t want to be a prophet of doom, but I don`t think this is the right time for BA pilots to request that sort of rise

All staff have been offered 2% I believe

[Arkroyal]

411A and giza, I could sympathise with your view, if at the same time the people at the top could refrain from the trough.

The idea that it's the pilots' pay which brings things crashing down is utter balls. It's poor management.

[Semaphore Sam]

411A & Glueball:
I agree;pilots went overboard, and they better offer much more than 10% back, DOUBLEQUICK (they won't).

But, just watch senior management, CEO, etc, bail out with $15 Million 'Golden Parachutes' before company goes bust, and 'little people' are walking streets whilst these a$$holes worry about funding furniture for their 17 mansions (a la Ken Ley). Watch them strip the company of assets. "Where are the shareholders?". Screwed again by The Board & Senior Execs; old, sad story. Of course, first call on assets belongs to lawyers & senior execs; who else but?

[giza]

point taken !

[bean_counter]

**I'm not a pilot so don't read any further if you don't think I should be allowed to post here**

pilots gain 25% and offer 10% back - nice !

other unionised groups also gain after the pilots deal, but offer nothing back at all - even worse !

I thought all non-union in UAL (and in every other 'big' carrier in trouble) had already had their reductions "volunteered"

either way it really doesn't matter, there's no way they can sort this inside their 30 day time limit

the damage was done a long time ago - by a combination of
1. greedy unions (not just the pilots)
2. poor/weak/misguided/incompetent management
3. senior execs who are rewarded regardless of performance

its a recipe for disaster

I think UAL will find it much harder than US Air to get out of this mess. From what I read US can shrink down onto a good high demand base of N.E.USA shuttle - probably worth investing in that. But there will be a shortage of investors willing to prop up such a big network carrier with its track record of pouring money away at record rates, lets not forget UAL were on course to lose USD 1 billion plus long before 9/11.

[Psr777]

Forgive what may be an uneducated comment but..........

I recall that when the flight crew were given the pay rise, which apparently made them the best paid in the industry (or is that Delta?), it was agreed by the management team.

If UAL are now in such financial dire straights, why are the mangement team who agreed the pay rise not being brought to bear over it?

Surely any manager who over estimates profits/losses, causes problems, doesn't deliver etc should be "persuaded to leave", not that this will help the financial problems they are facing but maybe will help with the city's attitude towards UAL.

I would have thought that most flight crew would love to be on the salary of UAL flight crew, especially as it had been sanctioned by the board. Someone messed up big time, only the news are reporting it as a direct result of the pilot community, which I think is unfair.

Surely cheeseboards dont cost that much !!! :D :D

[BOING]

What the posters who talk of greedy UAL pilots forget is that UAL management agreed to the pilot contract after they had backed themselves into a corner over the US Air merger.

The UAL pilots were promised a "fair contract, on time" by UAL management at the termination of the ESOP. I think it was supposed to be settled by May 2000. Instead, UAL delayed this contract settlement. Eventually, Goodwin was forced to agree to a large pay and benefits increase to get the pilots on-board for the US Air merger. He bribed them and they took him to the cleaners as a result.

If UAL management had played honestly they would have been able to settle with the pilots for an almost pre-arranged contract which WOULD HAVE BEEN CHEAPER than the one they were eventually compelled to approve.

UAL MANAGEMENT UNDER GOODWIN AND DUTTA SHOT THEMSELVES IN THE FOOT. The pilots merely took advantage of their stupidity.

Now look at the managers who are still in position behind the scenes, BABU DUTTA and BRACE who was Goodwins protege. The UAL pilots have already experienced the gross lack of honesty and management ability of these people. Why should they throw good money after bad? UAL might be better off with a court appointed CEO. At least that way there might be some fresh ideas about how to run the company rather than the present, "Give us money so we can give away more cheap tickets"!!!

[Ignition Override]

The last three posters, Psr777, Bean_Counter and Boing seem to have described the general circumstances really well, instead of a number of Ppruners out there who enjoy describing pilot contracts in a manner which implies simple greed (with little or no comparison to airline peers), usually depicts the details of certain negotiated contracts, while intentionally avoiding any facts about the general situation, or negotiating environment. Anyone can make a distorted cheapshot, designed to appeal to the unenlightened masses.

Studying the environment is one reason why Wellington's troops finally beat Napolean's seasoned forces above the subtle, hidden reverse slope at Waterloo, with the help of Von Blucher's Prussians.

[Airbubba]

>>If UAL are now in such financial dire straights, why are the mangement team who agreed the pay rise not being brought to bear over it?<<

CEO Goodwin was canned for writing a letter that said 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."

Everybody knows that's not true...

______________________________________________


UAL, United Airlines' Parent, Ousts CEO James Goodwin

-- Board member John Creighton appointed to replace him --

CHICAGO (CBS.MW) -- Under continued pressure from United Airlines' unions, UAL
announced Sunday the resignation of embattled CEO James F. Goodwin. Board
member John W. Creighton was appointed as chairman and chief executive officer.

United parent UAL's board, on which unions hold two seats, voted unanimously
for Creighton, who said his immediate goal is to "restore United's financial
stability."

The employee-owned airline's machinists and pilots unions said Sunday that
Goodwin's replacement was the first step in restoring the airline's
profitability.

Goodwin's ouster comes as UAL shares hover at their 52-week low and while the
carrier's machinists union and flight attendants called for his resignation.
See full story.

-- 'Doomsday' letter --

Rhetoric had been heating up between United Airlines' machinists union, which
recently called Goodwin an "alarmist" whose so-called doomsday letter to
employees two weeks ago "shot" his credibility.

UAL's stock dropped sharply following the release of the letter, which said 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.

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.

Creighton's assurances Sunday of a turnaround for United were clearly at odds
with Goodwin's earlier warnings of looming financial disaster.

"Let me speak for myself, not for James Goodwin," Creighton told reporters.
"There's nothing wrong with United... that can't be turned around" working with
the employees and using the company's assets such as good hubs and route
network.

Creighton said the airline plans to "work hand-in-hand" with the company's
labor unions.

"'I intend to serve until we are confident that the company is on the road to
financial stability and has the leadership in place to ensure a thriving
United," he said.

Shares of United fell 32 cents to $13.93 on Friday.

Goodwin said in a statement, "It is the right time for a new leader to guide
the organization through the challenges that lie ahead. I wish my friends at
United a future filled with every opportunity and continued success."

The company, badly beaten up on Wall Street with layoffs and mounting financial
losses following the Sept. 11 terrorist attacks, will report its financial
results Nov. 1.

Creighton has served as a director of UAL since 1998. From 1991 to 1997, he
served as president and chief executive officer of Weyerhaeuser. He has been a
director of Unocal since 1995.

In recent weeks, UAL has ended its dividend, replaced its chief financial
officer, and reduced its capacity.

The carrier and the IAM are about to finally sit down again to negotiate a
contract for 45,000 members of the union, which has operated without a pact for
two years. The latest round of talks has been stalled since terrorists hijacked
two United Airlines jetliners, crashing one into the World Trade Center and the
other at a rural site in Pennsylvania Sept. 11.

UAL said in a recent filing with the Securities and Exchange Commission that
the $390 million it received from the federal government's bailout plan was not
enough to balance the lost revenues. UAL expects to receive about $800 million
-- still insufficient to cover losses, the carrier said.

# # #

CBS.MarketWatch.com
October 28, 2001

[BOING]

On the other hand, Chreighton said he did not take the job to oversee a bankruptcy.

If UAL had implemented some sort of business plan post Sept 11th as America West did, or if UAL had not lost the focus on its core business under Goodwin whilst courting US Air, it would be in a better position than it is in now.

It was quite obvious to everyone that Goodwins mismanagement was an albatross around the neck of UAL. He had to go, it was just the total lack of tact in his letter that was the last straw. This had relatively little to do with union pressure, Wall Street was also ready for his departure.

So presently UAL has a CEO who wants to leave but nobody will volunteer for the job because of the mess they would have to deal with ( and, just between you and me, the strings attached to the position by various other "interested" parties). The CEO who said that as a Board Member he had not known what Goodwin was up to with US Air! The CEO who was supposed to be a "turn-round" expert. The CEO whose idea of a turn-round is to keep the same bunch of failed managers in their jobs with the company following the same failed business plan. The same bunch of managers that every potential investor in the USA knows are a bunch of failures.

Could UAL's problem in getting loans possible be due to the fact that every US investor knows they would be wasting money by lending it to this bunch of failures? Could the employees resistance to more concessions be anything to do with the fact that they saw this bunch of failures waste all of the concessions they made during the ESOP? Could the employees be thinking that turning up the heat on Chreighton and Co. to get them booted out is worth the gamble of bankruptcy?

By the way, where are the Board of Directors? Hiding with their heads in the sand as Chreighton did over the US Air fiasco?

[wes_wall]

Capacity vs revenue is the bottom line. Organized labor is but one piece of the problem at UAL, albeit, a fairly substantial one, but it is not the primary problem. it does not take a financial genus to calculate the problem, but it does take more of a financial genus to successfully overcome and prevent the
problem. It takes very little time to begin letting blood when you fly big airplanes around the world with light loads. Just from an operational stand point, given landing and uplift charges, fuel cost, soft as well as hard time crew expense, deprecation,
international labor agreements, and the numbers grow, and grow, and grow. To that add administration, real estate, marketing and all the other baggage that tags along, and you begin to recognized the enormity of the problem. Pick up any P&L report from any airline, and see if any of you can tell me what it costs to fly any airplane one mile. You cannot do it, and unfortunately, neither can management, thus the problem, as costs vary wildly according to allocation of resources.

Aviation has the most perishable product that any industry has. Once that airplane has left the gate, any UNSOLD seat or cubic foot of cargo space is gone forever. It cannot be sold at a later date at a reduced rate. Even produce has a longer shelf life. So, when ever you begin to throw darts at the “beancounters” you may wish to cut them a little slack. They have weather to fly around also.

And, I almost forgot, one other thing that costs money. You remember that thing about “an army of one?”

[jskiffington]

UAL's pilots union has offered to take a pay cut (10%, as I recall). MX still is holding out though.

That being said, to the posted who said that pilot's were grossly overpaid. How many people in the world can take a 500,000 lb hunk of metal, fly it through the air for 7 hours, and put it down on a 150 ft wide piece of asphalt on the other side of the country or the the Atlantic? Not too many...

Doctors get paid a lot because it requires a lot of skill. So do engineers. So do pilots...

[GlueBall]

There would be no debate if UAL, its managers and its employe-owners, including its overpaid senior pilots who are pocketing $300,000+ annual salaries....if the company wouldn't be asking for a government bailout!

As it is, I am a citizen taxpayer who is not in favor of subsidizing the bloated salaries of employe-owners and executives of a nearly bankrupt private airline.

How dare do UAL management and its employe-owners authorize lavish stock options for themselves, and "golden parachutes" for its executives, and former execs like Goodwin who had pocketed $6.3 million in "severence pay",...and then ask taxpayers for a $1.8 Billion dollar bailout. Nuts.

To be sure, life will go on after UAL. :(

[BOING]

Get your facts right Glueball.

What UAL is asking for is LOAN GUARANTEEES not a cash handout. Two very different things. While you may still have misgivings about even loan guaranteees , which would mean the government was left responsible if/when UAL finally fails, there is no cash out of your taxpayer pocket in the first instance.


With UAL's present business methods they do not deserve loan guarantees because it has been amply demonstrated that the company does not have an effective business plan to cope with the present market realities. The loan board is quite correct in expecting some fresh thinking before the guarantees are approved.

However, focussing purely on cost reductions to turn the company round is a mirage. Income must be generated. The present UAL management frittered away the competitive advantage they were presented by the employee pay concessions made during the ESOP years. There is no indication that the same managers will not waste the concessions they are now seeking.

At present the whole UA business plan is based on employee concessions to sell tickets more cheaply. What this means is any concessions the employeees may make would be poured down the drain following previous practices. Not until UA management admits that income generation is as important as cost reductions will the company have any credibility with its employees, Wall Street or the Loan Board.

By the way, you seem to have a problem with people getting paid what they negotiated by contract under fair and honest conditions. Before you mouth off about grossly overpaid pilots consider that these pay rates were approved by the company management team after open negotiations. Supply and demand. No pilot found it necessary to lie to the IRS, start a bogus off-shore holding company or cheat on the books to get their payrate. Save your bile for the managers who agreed to the pay rates and the lying, cheating business managers who stole many millions for doing nothing rather than the pilots who negotiated an open contract. I assure you, no pilot in UAL gets a "golden parachute" and no pilot thought that Goodwin's bribe to leave and shut-up was a good idea.

Pay rates are determined by supply and demand. If an airline thought they could fire all of its pilots during contract negotiations and replace them with new hires without hurting business they would do so, in a heartbeat. Pay rates are established, like it or not, by the tensions and perceived gains and losses for both sides exposed during contract negotiations.

If a company decides it is willing to pay $300,000 for a 777 Captain during negotiations it sounds pretty weak, and a reflection on their ability, to turn round later and say they made a mistake. If changed conditions require a genuine consideration of costs then negotiate down in the same way you negotiated up. The backdoor threat of bankruptcy just demonstrates how bankrupt UAL management is for ideas as well as cash.

[GlueBall]

When you say that "management" had approved the current high salaried contracts in "fair negotiations" aren't you saying in fact that the 53% employe-owners have selfsatisfied themselves by voting themselves the biggest industry pay? Think about it. UAL has a numbers problem when 49% of its operating revenues are eaten up by payroll!

The fact is that UAL's numbers are so bad that it can't get a loan on Wall Street, that's why the company is knocking on Uncle Sam's door. Since 9/11 management had sat on their hands while UAL's stock had melted into junk status. Not to mention wasted Millions on Avolar.

[411A]

Suspect that UAL will fold and fade away within one year...unless the situation is turned around, pronto. This means MASSIVE salary reductions for pilots, mechanics, cabin crew...AND senior execs. IF this this does NOT transpire, goodbye UAL. And it will not be missed by all that many. A weak sister cannot survive forever.
Looks like DAL will rake in the business.

[BOING]

GlueBall. If you are going to make comments verify your facts. In no way did the UAL pilots "vote themselves a pay raise". In fact, the pilots were in severe confrontations with UAL management over the management's failure to fulfil the "on time" part of their promises about the year 2000 contract.

If the pilots could have voted themselves a pay raise, or in any way influenced the pace of contract negotiations, they surely would have done so as soon as possible. They would have used their supposed power to have a contract in place in MAY 2000 when the ESOP expired. Instead, because of UAL management's lying and stupidity the UAL pilots made the summer of 2000 a nasty time for the aviation industry.

Your contention that the UAL pilots voted themselves a pay raise does not reflect the facts or the history of the situation. The UAL pilots got a fat contract purely because Goodwin had got himself into a deep hole over the US Air merger and he needed to bribe the pilots to get their support for his plan.

The pilot negotiators knew Goodwin was in trouble and took him to the cleaners. Is that not how our great free enterprise system works? Is UAL management not trying the reversal of this tactic now they think that they have the upper hand? Methinks you are you one of the people who thinks free enterprise only applies to management.

411A. You are wrong about UAL fading within a year. If UAL declares Chapter 11 they will continue to fly 90 % of their present routes under the protection of the bankruptcy court. This will, of course, involve large pay cuts for the workforce which will, I am sure, cheer you up greatly. Unfortunately for the rest of the aviation industry Chapter 11 at UAL will give UAL a temporary operating advantage over the other airlines. UAL management as now structured will use this cost advantage to keep ticket prices low. UAL could drag on for a considerable time based on bankruptcy court protection and lowered costs.The damage done to the other major carriers by this further period of enforced low fares will be enormous. It could be enough to force another major carrier into bankruptcy. Then the whole house of cards will fall down.

I assure you that although a bankruptcy at UAL seems like a great emotional success to people like you the effect on the airline industry will be horrific. Do not take my word for it. Look at the article on the subject in todays Wall Street Journal.

[411A]

If nothing else BOING, it will indeed force other carriers to severely reduce costs, which for most, is LONG overdue.
Surely hope that the big paychecks and perks for senior managements will be reined in, together with reductions in the "overstuffed" pilot salaries.
Who knows, perhaps make room for a new start-up or two.

[Ignition Override]

JSkiffington: You put it in a nutshell, although you mentioned only when things somehow go perfectly. The amateur pilots out there might have trouble with factoring whether the Flight Release plan of twenty five minutes contingency fuel (no alternate or extra/tanker) for two hours through bumpy skies to a busy airport hub is adequate; whether the Captain should refuse a two-engine plane (with an inoperative APU which must be replaced-I refused one this week, and appreciated the FO's quick input) when the radar summary in front of the Dispatcher (during the second phone call) suddenly gets worse, with a planned return flight in the dark; what to do on an instrument takeoff with an engine fire light and very loud bell, and less than required visibility to return for a Cat 1 ILS, or a "Slat Assymetry" caution light stays on, not to mention a thousand other things.

A former Eastern pilot at dinner described some of the scabs who were hired by Eastern, and it was an interesting story. Those pilots do whatever mgmt tells them to do, no matter whether it includes falsified maintenance logbooks (I have an article as proof). How about the Continental "fuel bonus (money)" program a number of years ago, in which Captains were paid extra to be released with as little fuel as possible? We had better not go into what was reported to "Aviation Week".

My FO said that several years ago he had a compressor stall (in a 737) at a thousand feet when departing Midway and his fO was brand new-his plane suddenly yawed (jerked) to one side-we can rest assured that any experienced Private Pilot could have handled this with a simple simulator course at Flight Safety. Not even the dynamite new computer sim game, "IL-2 Sturmovik", includes the many realistic variables.

[tsgas]

ignition override

Those former pilots of EAL will go down in US aviation history as the greatest loosers of post Airline Deregulation. They stabed Frank Borman in the back then went to bed with Frank Lorenzo only to believe in Duffy (who was a Delta capt that make a ton of money when EAL went under). The pilots destroyed the future of 45,000 employees and a great airline to defend the $50,000. a year IAM ramp Rats. Great stuff and now you want UAL to follow in their footsteps?

[BOING]

Yes 411A, it will force airlines to reduce costs. Just look beyond the end of next week though. Read the WSJ article I referred to.

The implications of a "death spiral" by the airline industry are enormous. Say UAL goes bankrupt, they continue flying under court protection and avoid paying several major creditors. Pricing pressures are forced on the other majors who cut ticket prices to keep their passengers. Eventually, another major, say American cries enough and also files for bankruptcy. This airline also gets court protection from its creditors. Now the companies who supplied services to two major airlines are not being paid so they start laying off workers. The remaining airlines now face two competitors who are desperately cutting ticket prices to maintain cash flow. How long is it going to be before the other airlines are in an untenable position? What start up airline is going to find backers to enter a market where this bloodbath is taking place? It would be cheaper to buy one of the majors than finance a start up. This is not a doomsday scenario. Several elements of this idea have already been discussed in public.

Boeing takes a hit, General Electric and Pratt and Whitney take a hit. Finance companies get leased aircraft returned that they cannot get rid of. The implications for the national economy in this situation cannot be ignored. Remember, election time is coming up. What about the Civil Reserve Air Fleet? The nations ability to wage its war on terrorism could be effected by major airline failures.

I know you would love to see the major airlines in trouble and in particular their employees laid off. Better just be careful what you wish for.

"He who sows the wind shall reap the whirlwind"

[411A]

BOING

If one or two weak major carriers fold it would certainly not be necessarally bad (except for their respective employees of course) because it would leave the stronger survivors in a much better position. Once the dust had settled, ticket prices would rise once again. Has happened before. If managements allow their companies to throw cash away in record amounts, bankruptcy cannot be far behind. Leasing companies are already offering aircraft at record low prices, good news for new carriers who have a solid business plan. Why would/should anyone suggest the UAL (for example) be bailed out with federal loan guarantees, when their management has done such a lousy job.
OTOH, if those loan guarantees are offered, perhaps the present management should be booted out completely, and new brought in...certainly they could do a much better job. Failure should never ever be rewarded, especially with public funding, loan guarantees or otherwise.

[Ignition Override]

Tsgas: I forgot to mention the reason for my reminding folks of the Eastern situation. JSkiffington pointed out some interesting things about our unique training and experience, and it was my intention to portray just a little more, along with a tiny part of what can happen to flight safety during and after a strike: these events are well-documented. Eastern guys will tell you (we have many of them-none were hired by Delta) what a shame that ALPA was run by that "Dilbert" Duffy at that time.

I only read about United in the newspapers, and can't offer any well-informed recommendations or comments. Isn't it quite interesting that our federal government seems to have the role of "backroom" negotiator, in the sense that if unions don't all give up XX percentage of salaries, then the airline does not qualify for a certain type of federal loan? So much for GOP's classic platform stance regarding the "laissez-faire" system of economics: it applies except when labor can be kicked around, for whatever reason. Let's hope that United mgmt and all labor groups there can put together a deal whereby they don't need to file Chapter 11, unless that is in their best interest, as seems to be the case at USAirways. It looks like certain segments of our government presume to use an airline loan as a reward for what THEY see as enough contract concessions, does it not?

Under Chapter 11, don't unions have little influence with a Bankruptcy Judge regarding salary and work rules? Good luck to all the employees at United.

Excuse me while I go fly the 'IL-2 Sturmovik' simulator game-it lets me do so many things which I can't do in the real airplane at work (max desired bank angle 25*, takeoff power 5 minutes max., no attacks on enemy bombers permitted).

[Airbubba]

Here's another analysis of the current industry situation from today's MCO paper:


CHANGE IN THE AIR
Airlines on the edge

By Tim Barker | Sentinel Staff Writer

Posted August 18, 2002


It seems incredible, looking back to the 1990s, that the airline industry would find itself today at death's door, its financial lifeblood escaping through wounds too numerous to count.

Just two years ago, the industry was coming off the most profitable streak in its 64-year history, racking up six straight years of multibillion-dollar profits. It's best year ever was 1999, with $5.4 billion in profits -- or nearly double the industry's entire earnings since 1938.

So why, now, are there almost daily stories about this or that airline slashing routes, discarding workers, pleading for government handouts or threatening bankruptcy?

The answer is not Sept. 11.

Undoubtedly, the terrorist strikes have hurt the industry, helping it to $7 billion in losses last year. For some of the weakest carriers, the attacks may be the hammer that drives the last nail into place.

But the industry was on its way to this dismal place long before hijackers struck -- thanks to bloated labor costs, high debt, rising fuel costs, the country's fast-approaching recession and competition from discount carriers.

Quite simply, this is an industry that has not paid heed to the lessons of its roller-coaster past. And, some experts say, it may need to fundamentally change the way it does business.

"This is a cycle that's been repeated for 30 years," said Richard Gritta, a University of Portland finance professor and airline expert. "It's like a yo-yo. Up and down. Up and down. You'd think they'd get a clue."

The industry has been thrashing about since Sept. 11, trying to get a handle on its costs in the face of a fall-off in demand that failed to reverse itself as fast as once hoped. Those financial woes erupted anew last week with a bankruptcy filing by US Airways, layoffs by American Airlines and dire warnings from United Airlines.

In a sense, the industry's problems are directly related to its successes of the mid- to late '90s.

During those boom years, the industry found itself blessed by low interest rates, a red-hot economy, low fuel prices and labor concessions gained during the more turbulent early part of the decade.

Eyes turned toward expansion. More routes were added. Unions demanded, and got, increasingly generous contracts. New planes were ordered.

The problem, Gritta said, is that the latest expansion wave was funded by billions of dollars in loans. For a cyclical industry -- one in which revenues are known to fluctuate wildly from year to year -- high fixed costs can be a killer.

Indeed, those loans have caught up with several of the major carriers, including United Airlines, which warned last week that it may seek bankruptcy protection. The nation's second-largest carrier is facing $900 million in debt payments this year. The company has $2 billion in cash but is losing millions every day.

Already, US Airways has fled into bankruptcy court, joining a trio of smaller carriers, Midway, Vanguard and Sun Country.

But aside from the crushing debt, many of the top carriers also are burdened by the labor deals they negotiated during the last boom cycle -- when each successive deal topped another airline's deal.

"You don't have to be a mathematician to realize that something has to give," said Terry Trippler, a Minneapolis-based airline expert.

Cutting those labor costs will be critical for airlines, which have few options available. Fuel costs, for example, are well outside their control.

United has made it clear -- giving a 30-day deadline -- that it needs to cut the pay of its pilots, machinists and flight attendants if it hopes to stave off bankruptcy. The company also is seeking concessions from creditors and suppliers.

"The changes we need to make are urgent, significant and immediate," Jack Creighton, United's chief executive officer, said in prepared statement.

The Chicago-based carrier, which lost $2.1 billion last year and expects to lose $1 billion this year, may have a hard time persuading workers to give in. It is not clear exactly what the company is seeking, but it needs a good showing to convince regulators that it is worthy of the $1.8 billion in federal loan guarantees being sought through last year's $15 billion airline bailout package.

The workers do, however, have a strong incentive to avoid bankruptcy, considering that they own 55 percent of United's stock. Typically, bankruptcy erases existing shares, making them worthless, and puts new shares -- and control of the company -- in the hands of creditors. That would leave the workers empty-handed.

But that might not be such a bad thing, said Aaron Gellman, a Northwestern University professor.

"It would get rid of the unions' control over the airline," Gellman said. "United would be a lot stronger if it shucks the power of the unions."

Airline workers have a different take on the labor issue.

Since Sept. 11, they have borne the brunt of the industry's cost-cutting, with some 100,000 workers laid off in the months following the attacks.

Unions for many carriers, including US Air, already have agreed to concessions aimed at keeping their employers, as well as their own jobs, afloat.

But they are well aware of the industry's up and down cycles -- they were, for example, asked for massive concessions in the early '90s. Al Aitken, of the Allied Pilots Association, which represents 14,000 American Airlines pilots, said employees are sensitive to the positions of their companies.

"But it seems to me like this is a pattern. This is what we do every time there is a major labor contract," Aitken said. "The company tends to try and paint the most dismal picture it possibly can."

Aitken and others say the industry's problems go much deeper than simply slashing labor costs.

They are part of a chorus of voices calling for drastic overhauls of everything from ticket pricing to route structures.

In the eyes of some observers, the roots of the industry's troubles can be traced back to 1978 and the end of the government's 40-year role in airline regulation. Until that time, the government controlled fares, routes and the number of airlines allowed to fly between states.

When regulation ended, there were just 10 major airlines operating around the country, including United, American, Eastern, Braniff and PanAm -- primarily an international carrier.

But with the locks off the door, a host of small carriers -- including some that had been limited to intrastate flights only -- jumped into the fray, applying pressure on wages, fares and routes.

Several top carriers, including Braniff and Eastern, were too slow to adapt to a world without a government safety net. For those carriers, deregulation would spell disaster and demise.

"It was like an adolescent being away from home for the first time. They didn't know what to do," said Harry Lawrence, a professor at Embry Riddle Aeronautical University and an expert on airline deregulation.

It was out of this deregulation storm that today's hub-and-spoke system emerged. The system -- which takes all passengers to a large airport, such as Atlanta or Chicago, and then dispatches them to their final destinations -- was designed to keep costs down while moving as many passengers as possible.

But such a model may be on its way out, or at least due for a revamping.

Making a strong case for a departure from pure hub-and-spoke systems have been the successes of Southwest and youngster Jet Blue. Both have snubbed the traditional model in favor of a simple point-to-point system. The fact that Southwest was the only major carrier to make money last year may force its competitors to give serious thought to how the Dallas-based airline does business.

The company benefits from cheaper labor costs, as well as the simplicity of its fleet. By flying only one type of airplane, the Boeing 737, the carrier keeps its maintenance and training costs lower.

A key industry measure -- cost per available seat mile, or what it costs to take one passenger one mile -- helps illustrate the challenge faced by other carriers in tight economic times.

In the latest quarter, Southwest reported a seat mile cost of 7.5 cents, compared with United at 11.3 cents, American at 10.8 cents and Delta at 10.1 cents. Orlando-based AirTran Airways reported a cost of 8.5 cents. Earlier this week, American became the first major carrier to move away from the traditional model, announcing plans to dramatically alter its hub system.

The airline will use fewer planes at its hubs, spreading flights throughout the day, a move that will increase delays for passengers, but also cut labor costs and allow for the retirement of unneeded planes. The airline expects to save $1 billion a year.

"We must get our costs down in order to compete and must focus on the products our customers want and are willing to pay for," Donald Carty, American's chairman, said in a statement.

Orlando International's dominant carrier and the nation's third largest, Delta, also is making moves to combat incursions by low-cost carriers. The company is developing a new discount carrier to fend off, in particular, Orlando-based AirTran, which has been chipping away at Delta's market share along the East Coast.

Still, there are limits to what the larger carriers can accomplish and how far they can depart from the traditional hub-and-spoke model.

The Uniteds, Americans and Deltas do not enjoy the freedom of smaller carriers such as Southwest that focus more narrowly on specific regions. The larger carriers, for example, need to have fleets capable of handling everything from short instate hops to coast-to-coast excursions to international jaunts. But the biggest question to be answered during this latest industry crisis is whether it will emerge stronger and more resilient.

"Absolutely," said Gellman, the Northwestern professor.

Or whether it is doomed to repeat the past.

"It may be that this is finally dawning on them," said Gritta, from Portland. "But I'll believe it when I see it."


http://www.orlandosentinel.com/business/orl-asecairlines18081802aug18.story

Yet another analysis from the New York Times:



http://www.nytimes.com/2002/08/18/business/18AIR.html?pagewanted=print&position=top

[411A]

Soon as we get the maintenance done Capt U, why do you ask? Need a job perhaps?:rolleyes:

Back on subject...
Of course, there is the other side of the coin. If one or two major carriers fold, this would, in the long run, be bad news for passengers, as generally much higher ticket prices would follow.
But I wonder for how long? Market share is the name of the game for the big boys, they need as much as possible.
There is in actual fact really no way that the variations in pricing can be controlled, as existing (and a few new entrants) jocky for the available business. In the long run, many more flights are going to be shifted to regionals, with their lower overall costs, and there is not much that pilots (at the majors) can do about it, ALPA included.

[BOING]

I missed the date of the article in WSJ but an analyst recently stated that he thought the RJ boom was already reaching its limits if it was not already there. The problem is airport capacity.

Point to point operation would likely to be unaffected but major airports could have a serious capacity problem during bad weather. We have already seen that SFO tried to put a limit on the minimum number of seats on aircraft flying into that field. They failed last time around but the idea has been planted in the heads of several airport operator.

The critical test will probably come in Chicago or La Guardia. Both tend to suffer severe ground congestion as well as critical landing slot availability. Chicago recently lost the use of several of its ground holding areas which could be the straw which breaks the camel's back. The problem may arise due to Chicago reducing landing slots during bad weather or the airlines may finally be forced to realise that RJ's are not the most cost effective way of using available landing slots. Of course, the airlines will try to employ larger RJ's rather than use the aircraft they already own to solve the problem.

It will be an interesting winter if we get a real Chicago season.

411A. I seem to have managed to convince you that the loss of major carriers is not a totally great prospect (reference ultimate ticket prices). The best all round solution is to have as many weak airlines in the business as possible with all of them fighting each other ferociously to keep ticket prices down. As soon as one or two carriers come out on top the passenger is dead meat! This is however a totally unstable situation.

On the other hand, I do not buy your idea that pricing cannot be controlled. Indeed, I see it as vitally necessary in the nation's best interests. For example, why not impose a federally mandated maximum/minimum pricing structure based on stage length. This would force the high cost carriers to control their overall costs. It would ensure a minimum ticket cost which would allow the high cost carriers to compete with minimal profit margins but would create higher margins for the lower cost carriers.

Under this system no one would go out of business. Jobs would be retained. The economy would not be harmed. Carriers would be rewarded in proportion to their efficiency. Importantly, the passengers would get their choice of carrier and would not be blackmailed into high ticket prices because competition would be maintained.

If you want to use my idea I will not tell anyone it was not yours, OK.

[411A]

BOING

Don't think your idea will fly. Most don't want to return to the bad 'ole days of the CAB regulating fares and traffic rights. Those airlines that now and in the future control costs will survive, the others will surely fall by the wayside.
As it should be, IMHO.

[BOING]

No regulation on traffic rights. Fly where you think you can make money.

Ticket prices are not strictly regulated. A "band" of ticket prices is specified. First benefit is that the slimy mess of present ticket prices goes. No conditions on purchase. No advanced/last minute differential. Since the airlines can fly when and how they want and charge any ticket price within the "band" if you think about it the system would soon be self regulating. The trend would be towards stability instead of chaos.

Any airline that cannot discipline itself to stay within the maximum ticket price on most of its routes will go out of business. However, the carrier still has the flexibility to deliberately take a loss on a certain route, for example, to provide feed to a hub and to a route where it can make money. This carrier also has the flexibility to charge a higher than minimum price for valuable services such as good connecting flights. For example, a passenger might want to pay a little extra for a flight to avoid a five hour ground wait to make an international connection.

"Predatory pricing" to force another carrier out of business would be a thing of the past, taken care of by the minimum legal ticket price. Passengers are protected from excessive ticket prices, due to there being only one carrier on a route, by the maximum ticket price. A carrier can charge a higher price for travel in peak periods or drop the price to the minimum during a slack time.

You will not like this idea until you think about it for a while but give it a try. Let's face it . Anything is better than the chaos the airline industry is facing now. Nobody wants to see full regulation return. However, the US airline industry has shown itself incapable of self discipline. My "band" proposal involves far less government interference than we presently see in many other business and industries.

I bet you passengers would love the idea. Any comments from passengers.

[gofer]

As SLF can but agree that, some form or free-form regulation has a high probability of success.

I personally could see it as being - each airport has a take-off and landing charge - that is based say on a 50% load factor of PAX seats (forget freight for the present). Add to that a climb charge and a descent charge and a direct line miles charge (that would equate also to any loyalty program unit).

That's basically without profit - so add say 5%, 10%, 15% or whatever covers the needs for that (but here its got to be same for all).

Then build a factor from the legal minimum seat pitch (set that at say 34"), so as to have a conversion to better seat pitch and the 'upper classes'.

That's the lowest fare for a sector at a given pitch - now give it an inflation factor of say 25% to the upper fare.

If you then charge more for landings and take-off's for the ecologically worse machines - you will get 3 things happen...

[list=1]
The gas guzzlers and loud equipment will be improved or junked - getting more modern and thus possibly safer equipment
The fleets will be modernised - and thus will drive the manufacturers
The PAX will have better than cattle-class conditions and less risk of bankrupcy
[/list=1]
Prices will stay within the fork and will still be flexible. The only other solution would be to return to gvt. imposed RPM, which probably would be based on similar logic. :rolleyes:

[GlueBall]

I don't think that American, Continental, Delta, Southwest, Jet Blue, AirTran, Spirit are in a chaos situation. Just because some larger carriers are mismanaged and driven into bankruptcy is no excuse to bring back pre 1978 government regulation and government subsidies in any shape or form. This is not a glamour industry, it's a business. And in the largest free market capitalist system, competition is a fact of life. The opportunity to make a Billion dollars, or to lose two Billion dollars is a undeniable right.

Our aerial transportation system did not enter a state of chaos after the passing of Braniff, Eastern and Pan Am.

Passengers are interested only in getting from point A to point B at the best price and at the least inconvenience. They are not interested in what livery the airplane is, or whether they are seated on a Boeing or on a Bus. There is no brand loyalty and nobody will lose more than five minutes sleep upon the passing of a major carrier. Sad but true.

[Celtic Emerald]

Since I was at one time going to join this airline I have been following these developments with interest. Apart from reading about crap management, bad policies & greedy pilots I read to my horror that a 10% reduction in employees salaries across the board was what was needed to follow the example of the eh benevolent pilots. :rolleyes:

Now I don't know what everyone else in the company outside the position I applied for & got is being paid but I can guarantee you that if they reduced the pathetic salary I was offered by 10% I'd be better of & no doubt better paid working as a lavatory cleaner, infact even without the 10% reduction I'd probably have been better off working as a lavatory cleaner anyway :rolleyes:

For such a meagre sum I would have had the privilege of working the most unsociable shift patterns imaginable & working weekends for an equally pathetic Sunday bonus.

Oh of course I had the juicy incentive of free travel all over the world. Lost it's shine when I heard from one former very disgruntled employee that her & her friend had spent two days sleeping on the floor of Heathrow airport waiting on standby. Not realistic for someone who lives in Dublin, hardly one of their touted hubs (UAL doesn't fly from there), nor worth it, travel is stressful & cheap enough these days without having to put up with such c rap.

UAL may have a problem because of high labour costs (it doesn't take a crystal ball to see why, greedy selfish pilots & management for starters who put themselves before the good of the company) but it is certainly not the people who are at the bottom rung of the ladder who are part of this equation & to suggest that they should take a pay reduction adds insult to injury. Infact I'm amazed that anyone would work for the
cr ap money they offer. :mad:

Needless to say I turned down the job :)

Emerald

[InitRef]

About the max-min prices - it sounds too much to me like a return to regulation - UNLESS the price band was really wide and in that case it becomes no different than todays mess.

If its the former (and lets say we agree that it is not really regulation) its clear that a) the $2400 transcon fare will not be the maximum - the majors are hurting because nobody is willing to pay that b) the backpacker $200 transcon is also a thing of the past.

One scenario: Capacity reduction - big-time - for the majors. No point flying those 767 transcons because you don't have that many bums (literally) in the back, also no need for the big F/C cabins - its being filled with upgrades anyway. So fly an A320 JFK-SFO with 12 First seats.
Similar thing for the shorter routes - mainline flying of EMB-170/CRJ-900/700 can become commonplace.
>>Implicit reduction of labor cost by reduction of MTOW.

Alternative scenario: If everybody thinks that having frequency is not important, a schedule cutback will follow - now 767-300's will fly LGA-ORD 5 times a day instead 733/A320/757 15 times/day.
How many furloughed and how many aircraft parked?

I argue that the first scenario will happen - slowly but surely and without any govt intervention (until the next economic boom - and then we will back to where we were 3 years ago)

[giza]

Fears have grown that United Airlines will be unable to escape bankruptcy, after staff at the US's second biggest carrier rejected a cost-cutting rescue package.

United urged its staff, which own 55% of the carrier, to back cuts totalling $1.5bn a year in the firm's wage bill. In all, United wants to cut $9bn in costs over six years.

But the proposal failed to impress two big unions, raising fears that United bosses would be unable to meet a 15 September deadline they have set themselves to negotiate a deal with employees.

The impasse raised fears in Wall Street that United would be forced to follow through with a threat made two weeks ago that it would file for bankruptcy unless it won agreements to slash its outgoings.

"Barring significant progress in the coming weeks that we simply do not believe is forthcoming, we continue to believe UAL has a 75-80% or greater risk of filing for [bankruptcy] protection," James Higgins, an analyst at Credit Suisse First Boston, said.

[FL390]

From the BBC:

news.bbc.co.uk/1/hi/business/2225331.stm (http://news.bbc.co.uk/1/hi/business/2225331.stm)

[akerosid]

Not being well read on the US bankruptcy code, I am wondering if they can file for bankruptcy if it still has saleable assets?

Its creditors, no doubt spurred on by the likes of DL/AA, might say, "look, force them to sell their Pacific/Atlantic network". Would a US bankruptcy court have the power to order sale of assets? I think so. And even if the likes of DL, AA, NW etc are cash strapped, the prospect of getting their hands on such a network would certainly be something they'd relish.

Also, as far as the US bilaterals are concerned, is there anything that requires US airlines to meet financial stability standards? Could a bankrupt airline be required to surrender its international network?

[ironbutt57]

hope it gets fixed....hope U can spell better 2morrow:D ;)

[FS2002]

Probably one of the most significant posts since this forum started.....

[Maxfli]

Chapter 11 in the US is closer to what is called examinership in Europe, though it is technically filing for bankruptcy it is not winding up, all it is seeking is protection from its creditors while continuing to trade.

[AlanM]

So are my UAL flights from LAX to OGG in danger in October??

EEeekkkk!

[Airbubba]

Doesn't look like the bailout loan will come in time, the unions are still in denial:


United's Flight Attendants Balk
At Pay Cut, Demand New CEO

Associated Press


CHICAGO -- United Airlines flight attendants on Friday lambasted the carrier's plan to slash labor costs by 15% as exorbitant and joined other unions in urging the company to name a new CEO to hasten financial recovery efforts.

The union representing United's 26,000 flight attendants followed the influential pilots' union in criticizing the airline's proposal to knock $1.5 billion off annual labor costs for the next six years as part of a restructuring.

But unlike the pilots, the flight attendants did not rule out agreeing to concessions -- particularly if the airline moves quickly to replace interim CEO Jack Creighton with a permanent chief executive.

"United management wants its employees to invest $9 billion of our hard-earned money in an airline with no plan and no leader," said Greg Davidowitch, president of the United master executive council within the Association of Flight Attendants. "While we will continue to meet with the company, there will be no concession talks under these circumstances."

Mr. Creighton, a board member of United parent UAL Corp. who was forced into short-term CEO duty last October, turns 70 on Sunday and the airline has been moving toward wrapping up its four-month search for a successor.

He has set a Sept. 16 deadline for the unions to reach agreements on deep cuts needed to persuade the government to approve a federal loan guarantee. Otherwise, he says the airline faces a Chapter 11 bankruptcy filing because of debt payments totaling $875 million that come due in November and December.

Mr. Davidowitch said "the math doesn't add up" when United says it needs $9 billion in labor cuts in order to obtain a $1.8 billion loan guarantee.

United spokesman Joe Hopkins said the company had no comment.

The world's No. 2 carrier has said the labor-related reductions -- in double-digit wage cuts, canceled raises and other changes -- would provide the bulk of $2.5 billion in annual savings it has targeted to stay out of the red and out of bankruptcy. It says the cutbacks would better align costs with anticipated future revenues.

Updated August 30, 2002 9:48 p.m. EDT

[BOING]

You never know! Got a feeling this week could be significant. By the way, how about the internet rumours of Bill Clinton for CEO at UAL. The only man in the world who could out-Kheller (SP?) the infamous Herb at SouthWest.

[PaperTiger]

Glenn Tilton will be named chairman and chief executive officer as soon as Monday when the UAL board is scheduled to meet in Chicago, the Wall Street Journal reported Saturday on its Web site.

[Airbubba]

UAL Board Supports Tilton
For Top Job at the Carrier

By SUSAN CAREY and JOANN S. LUBLIN
Staff Reporters of THE WALL STREET JOURNAL


NEW YORK -- The difficult, months-long search for a chief executive for UAL Corp. is wrapping up now that Glenn Tilton, vice chairman of ChevronTexaco Corp., has won the unanimous support of the UAL board to take the jobs of chairman, president and CEO of the troubled, employee-owned carrier, The Wall Street Journal has learned.

Directors on UAL's search committee agreed on Mr. Tilton, a long-time oil executive, at a meeting earlier this week, and advised the full board of their recommendation the next day, according to people familiar with the situation. Mr. Tilton hasn't been formally endorsed yet, but that step could come as soon as Monday, when UAL has scheduled a board meeting in Chicago.

"Tilton became the overwhelming choice in the last several days," because directors felt "he has great leadership skills," said a person close to the situation. Mr. Tilton, 54 years old, edged out John Walker, a UAL director who is the CEO of Weirton Steel Corp., according to these individuals.

The choice, which had narrowed to the two men, was muddied briefly when Gerald Greenwald, UAL's former chairman and CEO, approached directors with a plan to help the carrier avoid a possible bankruptcy-court filing this fall. But his plan failed to win support.

Mr. Tilton couldn't be reached. Mr. Walker didn't return telephone calls. Mr. Greenwald declined to comment.

Mr. Tilton, who is expected to take the reigns at the Chicago-based airline within a week or two, has no airline experience. It is expected that Jack Creighton, UAL's interim chairman and CEO, will step down shortly, along with Rono Dutta, UAL's president, and Andy Studdert, the chief operating officer, knowledgeable individuals said.

UAL, which has posted losses of nearly $3 billion in the past 18 months and has threatened to filed for Chapter 11 this fall if it can't get its costs down dramatically and win a government loan guarantee, has been looking for a new CEO since May. That's when Mr. Creighton, a retired paper company executive who was plucked from the UAL board for the top jobs on an interim basis last October, said he wanted to step down. The search was conducted by recruiting firm Russell Reynolds Associates Inc.

Mr. Tilton, who joined Texaco as a sales trainee in 1970, worked his way up the corporate ladder, becoming president of Texaco Europe in 1992, president of Texaco USA in 1994, and CEO of Texaco in February 2001. He assumed his current post in October, upon the merger of Chevron and Texaco. At the moment, he also is interim chairman of Dynegy Inc., the beleaguered energy trader in which ChevronTexaco has a minority stake.

Updated August 31, 2002 2:05 p.m. EDT

[GalleyWench]

Airbubba, With respect AFA ( Association of Flight Attendants) do not have their head in the sand about concessions. AFA has indicated at EVERY occasion that they are happy to come to the table to discuss concessions as long as UA brings a business plan with them that indicated that they do indeed have plans other than employee concessions to save the company. Please remember the AFA- 25% of the work force is not a part of ESOP and their wages are 6% of UAL budget. We could work for free and only save the company 2 days of cash burn at its current rate. As the only union with *NON* industry leading pay AFAs stance is that they are willing to make concessions but they should be less than those who have seen their pay shoot up by 25% in the last 2 years.

[GlueBall]

Galley Wench: Don't go out buying a new car any time soon; the slow travel season is starting...and the recession isn't over yet.:(

[BOING]

I think, Airbubba, your comment applies to the whole US air industry so I would not go out and buy a new pick-up truck if I were you.

If UAL gets a new CEO who is halfway capable its turnaround could be dramatic. It has the best US and international route system of the US carriers, it has a young very efficient aircraft fleet and, despite the economy, it has good load factors (around 81%). If the new CEO gets half of the concessions Creighton asked for UAL will probably not need ATSB financing in the long term. That would be a bonus. The reduced costs from the concessions, translated into ticket prices, is sure to put great pressure on the other US carriers. In six months American and possibly Delta will be pushing their employees for equal concessions.

I still do not think we have seen the last of the strange twists that will take place in the UAL story.

[arcniz]

Putting in a new CEO is certainly a way to clean the slate of old animosities with specific union reps and regulators.

The reported fact that Mr. Tilton "has no airline experience", but is a "long time oil industry executive" suggests that he has a lot of mutual friends in touch with the current U.S. president and Vice President, both of whom are from the 'oil patch', the petroleum industry, especially that part in Texas - Oklahoma. That's a pretty exclusive club, where everybody knows everybody else and a person's word is his bond. So Tilton is likely connected in a way that will credibly facilitate the sought after Federal bailout if 'reasonable' terms can be reached with UAL employees.

A good sign for UAL shareholders, and probably for all concerned.

[Ignition Override]

I believe that United still has flt. attendants based in London (-"calling"...).


Let's don't forget the McCain/Trent Lott bill, hoping for baseball-style arbitration (without the Nat. Board of Mediation), written partly by the former POW who claimed that US airline pilots are not patriotic. How many of the present pilot force flew or fly now in Southeast or Central Asia, Desert Storm, Bosnia, Panama, Grenada...This fall, or later, the outcome of this bill will have a major impact on your airline career, either good or very bad.


So many industry "experts" who are quoted in our US rags often seem to be in academia. Have any of these so-called experts ever worked in the industry, or only in consulting firms or on an ivory-bedecked campus while protected by their clouds of pipe smoke and fortifications (Maginot lines) of large heaps of research papers (and grants) ?
One of our pilots has a father-in-law who is a university "expert", and the gentleman apparently thinks that he knows all about our workplace environment, but has no real idea of what decisions are involved with our cockpit jobs (in the industry-but our academic knowledge must be quite faulty) and the stress of rapid decisions when unanticipated holding is required right now for unplanned weather, with no alternate fuel planned in the dispatch fuel. The know-it-alls believe that the jobs consists of simple programming steps.

These are the wiseguys who are quoted on a daily basis in the US media. If some of them have all the answers, they might be invited to interview for various airline management jobs. Or many have been afraid to apply.

And the original Braniff airlines? Maybe the newspapers select quotes from academia, not wanting quotes from Mr. John Nance, an airline pilot (former Lockheed C-141 pilot), attorney, and safety investigator. Read about why Nance's first edition of "Splash of Colours", the Braniff Airlines story, was required to 'disappear' as part of the 'deal'; how he used documentation to depict how (former CEO) Robert Crandall's software drones at American "allegedly" programmed false bookings into their Sabre computer system for many Braniff flights-"allegedly" preventing many actual ticket sales, thereby "allegedly" crippling certain revenue potential for Braniff. Crandall was able to give inducements, if untraceable, to the Airport Authority and other local politicians. Read about the Wright Amendment, which requires Southwest (operating from Dallas Love) to takeoff from Texas and the SW jets must land in any adjoinging state, before continuing further from Texas-preventing Dallas Love from competing with DFW Airport on longer flights. This protection began many years ago. I did use the word allegedly in the correct places, this time.


Good luck United employees and stockholders.

[Celtic Emerald]

It wasn't the customer service agents or the FA's who got this company into the sorry mess it is so why should they have to pay the price & take salary cuts. I'm familiar with the salary of customer service agents working for UAL in Ireland & I wouldn't be at alll surprised if knocking 10% off their meagre salary would put their salary below the legal minimum wage.

It's pilots & above all the beancounters that are responsible for much of this sorry mess using their position & bargaining power to milk the company for all it's worth till there's been nothing left to milk. 10% off their massive salaries is nothing compared to 10% off the grossly underpaid & underappreciated employees way down the rung of the ladder. And who has the more difficult job. While I appreciate that pilots have alot of responsibility & pressure from the constant performance & medical checks lets face it, most of the time they just have to sit on their ass in the cockpit maintaining situational awareness (fancy name for keeping an eye on the instruments) they are shielded by their reinforced, locked cockpit doors from difficult pax's. It's the FA's who are on their feet & on show all the time running up & down the aisle tending to the pax's whims, having to smile & look dandy no matter how sh*t they feel. It's the customer service agents who have to deal with irate, difficult, angry pax venting their spleen, not the pilots. :mad:

Why is it that some airlines i.e. the low cost ones have thrived since September 11 while airlines like UAL who fleece the business pax are floundering. It's because aviation has changed, people are no longer willing to be financially screwed for a few pathetic perks, the future of aviation is in the low cost model, it's about time UAL started to realise this & stopped blaming all their troubles on September 11. It's also time to stop a noble profession being destroyed by greed & selfishness & the bottom line being the pursuit of the big green buck regardless of the good of their fellow less fortunate employees or the good of the company cause at the rate their going there won't be any company left. :mad:

Emerald

[Airbubba]

>>It's the FA's who are on their feet & on show all the time running up & down the aisle tending to the pax's whims, having to smile & look dandy no matter how sh*t they feel. <<

Sounds like you haven't flown on United lately...

[1013]

Have read about United Airlines and their financial woes and the threat of Chapter 11 which apparently wasnt all attributable to 9/11.
They were apparently in trouble prior to this.
I have also heard that American airlines isnt doing that flash at the moment either.

Any specualtion on how they would perform under Chapter 11 and how many airlines in US history have emerged from CH11 bankruptcy proctection in their same shape and form??
Or would United possibly emerge a shadow of its former self?

Also would the US government bail them out or would they be sacrificed in order to save the other US Airlines.
Any punters??

[Airbubba]

>>Any specualtion on how they would perform under Chapter 11 and how many airlines in US history have emerged from CH11 bankruptcy proctection in their same shape and form??
Or would United possibly emerge a shadow of its former self?<<



Well, here's some fresh analysis from today's Chicago Sun-Times:

UAL's next destination: bankruptcy, analysts say

September 22, 2002

BY TAMMY WILLIAMSON BUSINESS REPORTER

A year ago, former UAL Corp. chief Jim Goodwin warned that United Airlines could "perish."

Goodwin's prophesy--followed shortly by his resignation--increasingly looks like reality. Financial experts are convinced that bankruptcy is likely as the world's second-largest airline struggles to pay its bills.

But although experts say UAL can survive a bankruptcy, and surface as a profitable airline, the carrier has far bigger problems that ultimately may prove fatal. The airline, with its bloated costs and declining revenue, must figure out how to compete in a world of discount airlines that run more cheaply and charge passengers less...

http://www.suntimes.com/output/business/cst-nws-ual22.html

[Notso Fantastic]

Airbubba- this thread was started by you on August 14. I recall there was one running before that- I emailed Pprune admin out of concern that the alleged 'hard fact' of United going under could expose this bulletin board to legal action under UK law- it was not quoted as a rumour but a fact. We're back to quotes of a year ago. There is nothing new here is there? We all know it is likely or a possibility, but hard facts seem very thin on the ground!

[Globaliser]

The last that I heard, the loan board (can't remember its full name off the top of my head) had granted the new CEO a two week extension from 16 to 30 September. The former date was the basis for the speculation that UA might have been going into Chapter 11 by mid-September. I guess we will have to wait and see what next week brings.

[GlueBall]

With 46% of revenues eaten up by a bloated payroll, employe owned UAL is one self satisfied glamor company arriving at the end of the rainbow.

There is no escape from the jaws of institutional creditors without bankruptcy protection.

[BOING]

There is no advantage in UAL entering bankruptcy for any of the players involved.

A new CEO hardly takes over a company to take it into immediate chapter 11, looks bad on his resume.

The employees know Chapter 11 will be worse than workable concessions.

Creditors know they are out of luck if UAL is protected by the bankruptct court.

Competitor airlines do not want to face a UAL which can induce a fare war based on lower labour costs.

Interestingly the only group which really welcomes UAL bankruptcy and the loss of union power is the present US government itself. Destruction and reconstruction of the last outstanding industry with strong unions is something the Bush administration is drooling over. Note several items of legislation that are in preparation which effect airline contract negotiations. Post 9/11 virtually none of the financial aid promises made by the Bush administration have actuually been funded.

[Airbubba]

>>The employees know Chapter 11 will be worse than workable concessions. <<

Yes, but whether they will do anything about it in time seems doubtful. The finger pointing continues in meetings in Rosemont as we speak.

>>Post 9/11 virtually none of the financial aid promises made by the Bush administration have actuually been funded.<<

Maybe so, the airlines are already going back to the trough for another bailout:

Iraq War Concerns American Airlines
By BRAD FOSS
AP Business Writer

September 25, 2002, 12:21 PM CDT

NEW YORK -- The chief executive of American Airlines said Wednesday that a war in Iraq would be a devastating blow to the already-distressed industry, warning that more bankruptcies were likely without additional financial assistance from the federal government.

Don Carty, speaking at a breakfast with Wall Street analysts and reporters, said the potential dropoff in travel from a war in Iraq would be like an "economic anvil dropped on the industry."

"The whole industry in Chapter 11 isn't something the country would tolerate," said Carty, who had joined other airline executives in Washington a day earlier to lobby Congress for help...

http://www.chicagotribune.com/business/sns-ap-airlines-american0925sep25,0,214129.story?coll=chi%2Dbusiness%2Dhed

[BOING]

Is one billion dollars a year enough for you Airbubba?

UAL is "considering" the offer. I would be very surprised if UAL accepted this offer without "cosmetic" further demands to show they are still in charge. The truth is the employees and management are both on the same leaking boat. They either bale together or sink. UAL will avoid bankruptcy because it is good for no-one. UAL creditors will reschedule debts rather than face losing everything in bankruptcy. UAL will then be very tough competition.

Within three months, new war or not, American will be forcing pay concessions on its employees to match United to be closely followed by Delta. At that point the low cost carriers will become irrelevant. The low cost carriers will be unable to significantly cut costs further. Their limited route structures will act against them. Then, Bye Bye unless the economy improves.

You see, you cannot have it all ways. The low cost carriers only have an advantage while their costs are RELATIVELY LOW. Once they force the majors to reduce costs to compete they have removed the reason for their own success. By definition, they do not have room to cut costs significantly. So finish.

By the way, if the US invades Iraq who will move the troops? Boy George is going to be glad the major airlines have not gone away just yet!

[Airbubba]

>>By the way, if the US invades Iraq who will move the troops? Boy George is going to be glad the major airlines have not gone away just yet!<<

Yep, Pan Am moved the largest number of troops in the CRAF program for the Gulf War, I guess you're right perfessor... The government won't let UAL go out of business.

[BOING]

I did not say he would not want them to go away. Just that he would not want then to go away until after his war is over. (And, of course, there was the little matter of Pan Am 103).

[Airbubba]

>>(And, of course, there was the little matter of Pan Am 103).

That was before the Gulf War, just as the 911 attacks preceded the coming conflict, looks like deja vu all over again. Like I said, not to worry...

[Ignition Override]

BOING: You might have enlightened those out there who still naively feel that the GOP consists of just the "good guys". The GOP will do anything possible to throw away any labor contracts, whether in the airline industry or in any other US industry. Anyone who still prefers to be in the Dark Ages, might not know (or wants to be reminded) that George Bush's Sr's family (maybe the Reagans admired the scum also), has been friends of Frank Lorenzo's familiy for many years, and Lorenzo put Continental Airlines into Chapter 11, in order to void all labor contracts there-despite the fact that the unions were glad to discuss pay cuts. Such a harsh corporate tactic, not to help the airline but to figuratively punch its employees in the face, was probably a first in recent US history.

Lorenzo's brutal actions never produced a succesful airline, neither at Continental nor Eastern. Some of these smooth-talking types with MBAs from the "finer business schools" often understand or comprehend nothing except financial, legal tricks, and care not one bit about the people who are stuck with the companies which have been butchered, whose assets are stripped away in the gory corporate "meat wagon". Since US deregulation, we have experienced many cases of "Hermann Goering" Luftwaffe management styles: Continental, Eastern, Mesa under Risley, Express One under Brady....while the Republican Party smirks so smugly in the background, with the collaboration of our FAA (check the FAA Western Region's "policy" of closing eyes and ears during the '83 CO strike)

Thanks for another reminder BOING: The McCain/Lott bill will attempt, if the GOP achieves a majority in the Senate and/or the House (I wonder how many millions of airline money go into the GOP politicians' PAC campaign funds, via the ATA lobby group, while most airlines are bleeding many more millions in red ink each month?!), to require outside arbitration for future airline contracts, instead of upper mgmts being required to bargain "in good faith". The age 60 rule legislation is a drop in the bucket compared to the truly gloomy overall results if this bill passes. Commuters' familys will enjoy the prospect of maybe eight days at home per month, not including travel time, no deadhead credit, duty or trip rig to give incentive to trip design, self-funded health insurance and a 30% pay cut possible, even with a growing economy, and this is just a small part of what our GOP would love to stick to all of us. Would commuting even be possible? Your spouse might say 'adios' to a good career, and your kids 'bye' to good schools. Remember-arbitration done by people outside our industry, and very unfamiliar with our lifestyle and the unique facets of our contracts .

If Senators Lott and McCain presume to truly understand what is best for the US airline industry, then I will refer to them as Senators (brain) CLott and Cocaine. Their arrogance is amazing to behold.

Let's all pause sometime and contemplate the very possible end to mgmts' requirement to "negotiate in good faith".

When Northwest Airlines' Upper Mgmt elected to walk out of contracts talk years ago, without walking back into the hotel, which showed their clear preference for a pilot strike, they had assumed that a Presidential Executive Board would be appointed, to settle the dispute: and let's not forget that such a stunt was in the 'good old days....'

Over a year ago, Senator Cocaine labeled US airline pilots as being unpatriotic. Any military veterans out there?

It is time for an aggressive frontal assault on these Senate Chamber primadonnas.

[Airbubba]

>>Is one billion dollars a year enough for you Airbubba?

UAL is "considering" the offer. I would be very surprised if UAL accepted this offer without "cosmetic" further demands to show they are still in charge. The truth is the employees and management are both on the same leaking boat. They either bale together or sink. UAL will avoid bankruptcy because it is good for no-one. UAL creditors will reschedule debts rather than face losing everything in bankruptcy. UAL will then be very tough competition. <<




With $300 million due on November 17, there is not much room left for rhetoric and bickering before the creditors start calling the shots. Like you, I'd love to see a last minute save, but I don't think it's gonna happen...

_________________________________________________


Labor solidarity unravels at UAL

Machinists want to negotiate concessions independently

By Susan Carey
THE WALL STREET JOURNAL

CHICAGO, Oct. 10 — Rare labor solidarity at United Airlines appeared to splinter Wednesday after the Machinists union said it “withdrew” from a pan-union coalition that last month offered $5 billion in potential pay and benefit cuts to help the airline stave off a bankruptcy-court filing...

http://www.msnbc.com/news/819581.asp

[BOING]

USA Today, I think.

Pentagon realises that some of the larger CRAF aircraft are parked in the desert, without engines, without nav. gear, without required deep maintenence checks. Seems as though some airline manager decided he needed to save money by cutting back his fleet. If the aircraft have been in the desert long there are probably no crews left to fly them either.

[Airbubba]

>>Seems as though some airline manager decided he needed to save money by cutting back his fleet.<<

Yep, UAL is already trying to sell 744's in a soft market, some less than five years old:

http://www.ualservices.com/html/aircraft_avail.html

Look for more aircraft to pop up on this page in the coming weeks as UAL, or the bankruptcy court tries to stop the bleeding...

[AA717driver]

Can they sue Goodwin for breech of fiduciary duty? At least he made Ferris look good!TC

[Airbubba]

>>Can they sue Goodwin for breech of fiduciary duty? At least he made Ferris look good!TC<<

Well, it now looks like Goodwin should be given a medal for telling it like it was. Of course, we all know it was just scare tactics by an evil management leader, right? Time for the unions to eat crow and try to keep the ship afloat in the latest OGA (Once Great Airline) saga.

From today's Financial Times:

United seems headed for bankruptcy
By Caroline Daniel in Chicago

Published: October 15 2002 20:58 | Last Updated: October 15 2002 20:58

A year ago this week Jim Goodwin, the former chief executive of United Airlines, wrote a letter to employees warning that "we are in nothing less than a fight for our life".

"Clearly this bleeding has to be stopped - and soon - or United will perish sometime next year," he said. The thanks he got for this letter was to be marched swiftly out of the company.

The message outraged union leaders, who dubbed it the "Chicken Little letter" for its alarmist tone, and caused UAL's stock price to drop 10 per cent to about $17 at the time.

Looking back, Mr Goodwin could be forgiven for feeling an element of Schadenfreude. While wrong about the timing of United's meltdown, the rest of his critique has proved spot on. United's shares have since plunged to $1.72, valuing the 76-year-old company at $98m, one-fourteenth the size of Jet Blue, an airline start-up founded three years ago.

Unfortunately for United, some employees, who hold 55 per cent of the company, remain unwilling to embrace financial reality. Last week, after a period of lengthy talks on wage cuts as part of a coalition of United's unions, the International Association of Machinists broke away and said it would negotiate any deal separately...

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1033849024639

[Ignition Override]

Too bad that US airlines can't all raise many coach fares without being charged with collusion etc.

Maybe Congress should decide that it is time to re-regulate the airlines? Is this still very unlikely?

Good luck United and especially USAirways employees. Does JetBlue require any new-hire pilot to resign with any company which has laid him/her off? A smart FO who I flew with in Sept went back to the Air Force for five years of active duty (will begin with a huge re-enlistment bonus, and finish with a solid twenty years).

[BOING]

Ferris was a very good airline manager and would have been the grand old man of airline executives now if he had not decided he needed to copy Frank Lorenzo.

His mistake was to copy Lorenzo in a very transparent way which he could not carry through. The 85 strike destroyed al of his credability.

It is certainly a shame this very able man convinced himself he had to cheat to win when all the cards were running in his favour.

[gofer]

Reported in the Basler Zeitung (http://www.baz.ch/news/index.cfm?objectID=8E6F39F0-2DC3-45B7-A38534FA7BD9D0F0) today (sorry for the German source) that 1.5% of United's staff (1250) will be let go and that 3 booking centers will be closed so as to save 100Mio $ per annum.

In a further article (http://www.baz.ch/news/index.cfm?ObjectID=3ADE6112-5699-4DB0-85163085480AF200&Key=Wirtschaft&KeyID=02FAED07-AC4E-423C-90C2AC226F4B680D) they have asked for 1.8 Billion $ credit Guarantee from the ATSB on Wednesday !

:(

[BGQ]

Pilot salaries inflated or not are not the reason UAL is in trouble. Typically total pilot costs (everything included such as training, allowances uniforms admin etc) in airlines work out around 17% of labour costs. A 25% rise for pilots doesn't add much to overall airline costs if you discount the flow on affects to other workers.

In the end it's a management decision. They all are.

The pilots in UAL could work for nothing and the airline would still be in trouble.

[411A]

Ah yes, but UAL pilots started the ball rolling with much higher negotiated salaries...now must pay the piper.
Where oh where is Lorenzo when he is needed most...?;)
The BIG shakeout continues...:rolleyes:

[Cpt. Underpants]

411A, you mean that asset-stripper, pillager of airlines and doyen of the Wall St corporate raiders, Frank?

You MUST be kidding.

Probably being gang-raped by a bunch of Guatemalan Banditos...

[411A]

Well Underpants, UAL has tried everything else...:D

[Airbubba]

Pretty late in the game but maybe enough reality has set in to get the other unions onboard as well...

_______________________________________________


United Stock Soars on Pilots Deal

By THE ASSOCIATED PRESS


Filed at 11:56 a.m. ET November 4, 2002


CHICAGO (AP) -- United Airlines' stock jumped Monday after a $2.2 billion cost-slashing agreement with pilots boosted its efforts to cut labor expenses by 15 percent to stay out of bankruptcy court.

Increased investor optimism sent shares in UAL Corp., United's parent company, up 33 percent, or 85 cents a share, to $3.41 in morning trading on the New York Stock Exchange. While reaching its highest level since September, the stock remains down about 90 percent since before last year's terrorist attacks.

United has warned it may file for Chapter 11 bankruptcy-court protection if it doesn't get an infusion of cash soon. It still needs to reach agreements on cuts involving machinists, flight attendants and salaried employees as part of an overhaul to make it more competitive and return it to profitability after 2 1/2 years of losses. Without them, it has scant chance of receiving the $1.8 billion federal loan guarantee it says is needed to avoid a bankruptcy filing.

While spokesmen for the other unions were mum on the status of continuing negotiations, chief executive Glenn Tilton voiced optimism about the outcome.

"We expect that others will follow in their tentative agreements here shortly, and perhaps this week,'' he said in his weekly taped message to employees.

The pilots' deal announced Friday night is, Tilton said, "solid evidence that we are making significant progress toward cutting costs in order to avoid a court-supervised restructuring.''

The tentative five-year agreement, which is being submitted to a vote of United's 8,800 pilots, calls for an 18 percent pay cut over the next two years along with unspecified changes in work rules and job reductions. Pay reportedly would begin increasing again in 2005, by 4.6 percent annually, returning to 2002 levels by 2008.

The deal follows an agreement by United's union leaders last month to support a total of $5.8 billion in labor concessions over 5 1/2 years. Specific allocations were left up to the individual unions, which hold a majority stake in the company, and the weekend agreements involving the pilots and the much smaller meteorologists union were the first to be done.

With the pilots' agreement in hand, United is mounting an intensive lobbying campaign to try to secure the loan guarantee from the Air Transportation Stabilization Board.

Tilton said United employees, partners and allies from around the world have sent more than 30,000 letters to Washington in support of the federal loan guarantee.

"The grassroots campaign in support of what it is that we are trying to do -- to restructure United to reposition its competitiveness out of court -- is certainly gaining momentum,'' he said.

In addition, he said, a United management team will travel to Washington this week to present the airline's case directly to the federal panel.

[saudipc-9]

411A,
I'm with you on this one, that higher negotiated salaries are the reason that during a economic downturn the airlines find themselves in financial dire. US Airways. UAL, Delta and American all have this problem. $24'000 US a month to fly a jet IS inflated and we have priced ourselves out of a job. I would rather get paid half that and have a heathly company which will secure my future and pension, than make 24G for a few years and find myself out without a job.
Having said that, a dependency on the business traveller also leaves the airlines open for the financial crunch.
A change of attitude from both management and personnel is required in the airline business. This and a change of financial strategy willensure a fair and healthy future for everyone.

[GlueBall]

Bail out loans underwritten by taxpayers are a fraud! If UAL can't get loans on Wall Street, then the company should be forced into bankruptcy. It's totally anti capitalist in the most capitalist country for a government to subsidize the survival of a private company whose business is nonessential to national security. To be sure, there would be life after UAL.

[james707]

Its to little to late and the cuts do not go deep enough the federales will never go for the loan, the pay cuts would have to be minimum 20 percent !

[ironbutt57]

where is lorenzo when he is needed most? get real.411A the industry needs more folks like the man at southwes, or jetblue...employees are a part of the solution people like lorenzo fail to realize this and dump all over them....so where is lorenzo? who cares...:mad: :mad: :mad: :confused:

[Airbubba]

More from the classic OGA script of rollercoaster reprieves:

United Restructures Debt Obligations

By DAVE CARPENTER
AP Business Writer
Published November 5, 2002, 4:58 PM CST

CHICAGO -- United Airlines won a reprieve Tuesday from $500 million in looming debt repayments that threatened to push it into bankruptcy, announcing that a German lender has agreed to restructure the debt and take payment later.

Stock in the ailing carrier surged 30 percent in response to the midafternoon announcement.

By putting off payments due in November and December, the deal with German development bank Kreditanstalt fur Wiederaufbau removes one of the biggest immediate financial threats facing cash-crunched United. Once the agreement in principle is made final, the debt will come due in 2007, United said.

...United, which is losing money at the rate of more than $7 million a day, isn't out of danger yet in its bid to avoid bankruptcy.

The Elk Grove Village, Ill.-based carrier still faces a Dec. 2 deadline for the repayment of $375 million in aircraft-backed loans, as well as a $70 million payment to the machinists union for retroactive wages due Dec. 15.

It also needs agreements soon with the machinists and flight attendants in order to reach the targeted total of $5.8 billion in labor cutbacks. The reductions are the key plank of its application for a $1.8 billion federal loan guarantee, which it says is needed to avoid a Chapter 11 bankruptcy filing.

"They just bought some time," Denver-based airline consultant Michael Boyd said. "But that's still not enough. At some point they're not going to have enough cash to operate.

"United's biggest issue is getting more people on airplanes, and they're not focusing on that," Boyd said. "Until we see some changes there, they're just bailing faster on the Titanic."...

[Lartington]

I heard on the news tonight that the Machinists and other unions
have turned down a pay and benefits cut pushing the company closer to filling for bankrupcy. The share price also fell.

[Lartington]

For more info checkout http://money.cnn.com/2002/11/29/news/companies/ual/index.htm

[bluskis]

I am just happy I sold my UAL shares just before the employees got involved in the direction of the company.

[ironbutt57]

The success of any company rests on the employees as well as management...when management lose the plot, and fail to realize the important contribution employees make to the big plan, then the company is doomed...that's why SWAL is making money, and others are loosing...:mad:

[flappless]

BBC are reporting that the 'mechanics' have agreed a pay cut. Anyone know anymore ?

See http://news.bbc.co.uk/1/hi/business/2533761.stm

I hope so

[redtail]

< flappless -

BBC are reporting that the 'mechanics' have agreed a pay cut. Anyone know anymore ?

I hope so >

The union representing the mechanics has a history of having a passing vote on the second try. (Unless Jimmy Carter is present, no one believes it is legit)

"Yo Vinny, go to the trunk of the blue Buick Regal in the parking lot and get three ballot boxes out".

[XL5]

You redtail types are such cynics, probably due to the Wx in the great white north and the fact that winter is almost here. Undoubtedly exciting times for us UAL share holders though, a daily plus or minus 30% roller coaster ride depending on the rumor of the hour. Don't know whether to buy, sell or hold on to what I've got with eyes tightly closed. Answers on a post card please.

[non sched]

Bankruptcy likely within a week. Article link is below.

http://biz.yahoo.com/rf/021204/markets_afterthebell_ual_1.html:( :( :(

Sorry. That link doesn't work. Here's the article

Reuters
UPDATE - INSTANT VIEW-UAL denied financial support
Wednesday December 4, 6:04 pm ET


NEW YORK, Dec 4 (Reuters) - The federal government on Wednesday rejected an application by United Airlines for a $1.8 billion loan guarantee that the company said was crucial for avoiding bankruptcy.

The following is immediate reaction from industry sources.

SASHA KAMPER, SENIOR FIXED-INCOME ANALYST, PRINCIPAL GLOBAL INVESTORS.

"The loan board did not think the proposed labor cuts were sufficient, and believed the business plan is inadequate. United will now be forced to file for bankruptcy to get its costs down. I would expect a bankruptcy filing within the next week."

"Unsecured bondholders will likely recover little or nothing in a bankruptcy. Holders of paper secured by aircraft will fare differently depending on the collateral backing those deals and the loan-to-value at which that paper was first written." Kamper said.

GEORGE HAMLIN, AVIATION INDUSTRY CONSULTANT, GLOBAL AVIATION ASSOCIATES:

"It's not completely surprising. (Bankruptcy looms) unless a white knight heretofore unknown emerges quickly.

"The (mechanics) vote is still important in the sense that United has got to get its economics straight. But if you follow the trend, then it's probably not going to get approved.

"I think what the ATSB has said is that this is a vote of no-confidence," said Hamlin.

"I have a gut feeling it's going to take considerably more than they've put on the table thus far. This is the downside of having industry-leading contracts.

"I think we'll also see, fairly quickly, further capacity reductions. And that is something that's within the company's prerogative to do.

"They need to determine what it is that they're going to be when they come out of bankruptcy," Hamlin said.

AN INDUSTRY ANALYST WHO WISHED TO REMAIN UNNAMED:

"It's over. They are going to file for chapter 11 certainly and try to reorganize."

[GlueBall]

Welcome to the free World of capitalism, where any company can make lots of money and lose lots of money.

Thankfully, the Government did not upset this financial equilibrium by committing taxpayer dollars to employe owned UAL.

[dusk2dawn]

United Loan Guarantee Denial Not Final (http://marketwatch.nytimes.com/custom/nyt-com/html-story.asp?guid={E250C9AD-01BF-4C3F-A031-7793F4F65632}&siteid=NYT&dist=NYT)

[Globaliser]

non sched: http://biz.yahoo.com/rf/021204/mark...ell_ual_1.html:(

Sorry. That link doesn't work. Here's the article One of your colons got stuck in the link - http://biz.yahoo.com/rf/021204/markets_afterthebell_ual_1.html should work.

[boofhead]

Sure UAL is in trouble because of bad management, but the bottom line is always mostly affected by the number of bums in seats. Sep 11 did a lot of damage, but the major reduction in passengers flying (down around 20% since the WTC attack) is due to the ham-fisted and stupid airport security policies of the federal government since that time. Potential passengers are being turned away from flying because of the hassles, inconvenience and delays. And it is about to get worse, with the new checked baggage rules.
A more intelligent approach could allow for increased and practical security without alienating those who pay the salaries of those who work in the industry, and allow for the survival of UAL and the other airlines that are threatened with financial disaster.
But intelligence and government are two words that do not go together.

[t3953]

http://news.bbc.co.uk/2/hi/business/2545065.stm


Looks like despite a lot of hard work from all sides, this lumbering Giant is finally on its way out.

[Rollingthunder]

United Airlines appears headed for the largest bankruptcy filing in airline industry history.

The best chance the world's second-biggest carrier had to avoid a Chapter 11 filing vanished Wednesday when a government
board rejected its bid for $1.8 billion in federal loan guarantees.

Chief executive Glenn Tilton tried to reassure passengers and United's 83,000 employees, saying the airline won't shut down.
"Whatever course we chart, it should be emphatically clear that United will continue to fly," he said, without offering specifics.

But barring an unlikely turn of events, that course will almost certainly take it to federal bankruptcy court as soon as this week.

Cash-starved United has said for months that without government backing, it couldn't get the $2 billion private loan it needs to avoid
bankruptcy. It faces $920 million in debt payments due next week, which would wipe out most of its fast-dwindling cash.

Investors and Wall Street see it as increasingly inevitable, driving the stock of United parent UAL Corp. down 56 percent in
after-hours trading to $1.37 per share the lowest level in decades.

Further sealing United's fate, its mechanics canceled a vote scheduled Thursday on $700 million in wage cuts the carrier said it
needed immediately to stay out of bankruptcy. Union leaders said the panel's decision had rendered the vote moot.

ABC

[Roadtrip]

Not so fast. I predict UAL will reorganize and survive. They've suffered from some shockingly incompetent managment under Mr. Goodwin and his previous dunderheads.

That is spoken from someone who works for a competitor and would stand to gain substancially if UAL was to go out of business.

UAL will survive.

[Panman]

If they fold, what happens to their valuable Heathrow Slots? I presume Continental/Delta may be rubbing their hands.

[Airbubba]

>>If they fold, what happens to their valuable Heathrow Slots? I presume Continental/Delta may be rubbing their hands.<<

Just as United rubbed their hands to get the LHR slots from Pan Am a decade ago. United campaigned vigorously against aid for Pan Am. "Let the market work" they said...

Of course, they will now claim the government should rush in with a bailout because UAL is just too big to go out of business. Right.

United used to be a helluva airline... but times change I suppose.

[Ignition Override]

Oh well.

Isn't it nice how the press simply loves the huge problems at United, along with some Ppruners, who can always try to blame the unions for ian airline's troubles, no matter how many causes?

Were there not so much dirty laundry there, they would be forced to find it elsewhere, just like the song by Don Henley (former Eagles).

[ETOPS]

UK media is widely reporting that UAL will file today (Monday 9th) and that initially there will be little or no effect on services. As it is still early morning in New York any announcement may come after the NYSE opens......

[JetsetSid]

Sky is reporting on its breaking news. UA has filed for C11.

[ETOPS]

From The BBC


United Airlines (UAL), the world's second largest carrier, has filed for bankruptcy protection in a US court, marking the air travel sector's biggest corporate collapse to date.
The move is designed to give the airline temporary protection from its creditors while it puts together a restructuring plan.

The cash-strapped airline had been expected to file for bankruptcy ever since last-ditch attempts to secure an emergency loan from the government fell through last week.

UAL had been seeking a loan worth $1.8bn (£1.15bn) from the Air Transport Stabilisation Board (ATSB), set up to help US airlines in the wake of September 11.

Eleventh hour

The company has reportedly landed a deal with its lenders, including CIT Group, JP Morgan Chase, Citibank and Bank One, which will provide the $1.5bn required to keep the company flying while a restructuring takes place.

UAL is 55% owned by staff, with representatives of its pilots and mechanics occupying seats on its board.


United staff have been asked to accept pay cuts


"We think that bankruptcy filing is probably the best thing that could happen to UAL," said analysts at Deutsche Bank Securities earlier on Monday.

UAL has been seeking wage and benefit concessions from its staff in a bid to reduce its costs and mounting debt pile.

Rising debts

UAL lost $2.1bn last year and is expected to lose $2.5bn this year.

It has $920m in debt repayments due in the next week.

Last week, the group's shares lost over two-thirds of their value following news of the loan rejection, ending the week at just 93 cents.

United Airlines' is the second collapse in the US airline sector this year after US Airways filed for bankruptcy protection in August.

[JetsetSid]

Mon December 9, 2002 07:51 AM ET

By Kathy Fieweger
CHICAGO (Reuters) - United Airlines filed for bankruptcy on Monday after a weak economy, high costs and low air fares left the world's No. 2 airline with too much debt and not enough cash.

United, a unit of UAL Corp. UAL.N , will continue to fly worldwide as it attempts to reorganize under protection from the U.S. Bankruptcy Court in the Northern District of Illinois.

United, with about 83,000 employees, had two of its Boeing BA.N jets commandeered in the devastating attacks on New York and Washington on Sept. 11, 2001. Since then it has posted nearly $4 billion in losses, with no end in sight to the red ink.

The bankruptcy is the largest ever in the global aviation industry, which remains mired in a historic money-losing downturn since Sept. 11.

Another big U.S. airline, Arlington, Virginia-based US Airways Group UAWGQ.OB , filed for bankruptcy in August, and several smaller carriers have shut down altogether.

GOVERNMENT SAID NO

For United, which has a history of labor troubles and some of the highest wage costs in the industry, the downturn has proved too difficult to navigate. The U.S. government last week rejected the airline's bid for federal loan guarantees, which had been its last hope for securing fresh capital.

Sources familiar with the situation said the government's rejection, which angered unions and some politicians, came despite a last-minute offer of an additional $500 million in annual wage concessions by a group of unions.

Leaders of United's key unions agreed to a total of $5.2 billion in wage cuts over 5-1/2 years, but rank-and-file mechanics rejected their $700 million portion the night before Thanksgiving, dealing the bailout plan a blow.

United is 55 percent employee-owned, and the pilots and machinists each have a seat on the company's board after a 1994 employee stock ownership plan was put in place. A simple majority vote from the board was required to approve a bankruptcy filing. Bankruptcy usually leaves a company's common stock worthless.

UAL shares were trading at 55 cents in pre-open dealings on Monday, down from a Friday close at 93 cents on the New York Stock Exchange.

FINANCING IN PLACE

United has arranged with a group of banks for $1.5 billion in financing to see it through bankruptcy. At the final hour, GE Capital GE.N pulled out of the group of lenders and was replaced by CIT Group CIT.N , sources said.

The other three lenders are JP Morgan Chase JPM.N , Citibank C.N and Bank One ONE.N , they said. Bank One, based in Chicago, will take the heaviest exposure at $600 million. Of its share, half or $300 million is a separate credit line. The remaining $1.2 billion of the financing is divided equally among the four institutions.

Banks and others are willing to lend United the money in bankruptcy because these particular credit lines get paid back first.

United, based in the Chicago suburb of Elk Grove Village, Illinois, has hired two high-profile public relations firms to help it present the bankruptcy in the best possible light and encourage travelers to continue to use the airline.

[Iron City]

This morning's Washington Post business section front page says United will file today and already has things prepackaged and will continue operating as debtor in possession.

Practical effect for the customers over the short term is very little other than the schedule changes and service changes to economize a little. Look what happened after the USAIR chapter 11.

Used to be a great airline. Still pretty good but it is a very competative industry and after traffic loads went down from early last year it is only a matter of time unless changes are made with high cost structures.

[OneWorld22]

Terrible news, for everyone at United, employees and management alike. Yes Chapter 11 will mean United will fly as usual with protection from it's creditors, but there's no future in operating like that.

You then think of airports like Denver, O'Hare, Dulles, SFO, LAX, all major United hubs. I know people will say that if they did then cease to operate, other carriers would move in to take up the slack. But look at St. Louis after TWA, it's lost traffic in a huge way.

This is not good.........
Best of luck to everyone involved at United.

[Airbubba]

>>Practical effect for the customers over the short term is very little other than the schedule changes and service changes to economize a little. Look what happened after the USAIR chapter 11. <<

Here's what's happening now at US Airways, the DIP lender is threatening to pull the plug and turn out the lights. A similar game of hardball will probably occur in the coming weeks at UAL:

_______________________________________

December 7, 2002

US Air's Chief Lender Threatens the Ultimate

By MICHELINE MAYNARD
The New York Times

The chief executive of the primary lender to US Airways said yesterday that he would liquidate the airline if unions refused to provide $200 million in additional wage and benefit concessions.

In an interview, David G. Bronner, head of the Retirement Systems of Alabama, said that he did not expect to have to follow through on his ultimatum and predicted that the discussions between the airline and its employees would result in an agreement by next week.

The concessions would be the second round in US Airways' efforts to draft a reorganization plan under Chapter 11 protection from its creditors. US Airways has said it hopes to submit its proposal to a federal bankruptcy court by Dec. 20. Before that, it would like to receive final approval for $900 million in loan guarantees from the government, which gave it provisional approval last summer.

To do so, the airline has asked union members for further cuts in pay and benefits. If they do not comply, Mr. Bronner said in the interview, the airline would go out of business and be liquidated in bankruptcy court. "What's their alternative?" he asked rhetorically. "If they don't want to do this, we'll Chapter 7 it."

Referring to the debtor-in-possession financing that the Alabama pension system is providing the airline during its time under bankruptcy protection, Mr. Bronner said that without concessions, "we'll pull the D.I.P. financing and they're gone."...


http://www.nytimes.com/2002/12/07/business/07WAYS.html?position=top&ei=5062&en=487a1766a7d1536a&ex=1039842000&partner=GOOGLE&pagewanted=print&position=top

[norodnik]

UAL going down

just shows what happens when the Unions take control of a business. Well, the fat lady is singing and everyone blames the management.

Whilst the management is not blameless, its the staff that carry the can. For years they have collected wages above industry norms and have, frankly, provided appalling levels of customer service.

Please, no bleeding hearts. I was forced to fly United for years and dreaded every moment. BA may have its gripes, but I can honestly say that BA is head and shoulders above any Long Haul American carrier.

UAL, you've had your day. You took more than you gave and now its time to say farewell. Life goes on, but maybe the employees in their next job will think about the people who pay the bills.

[NW guy]

Please, no bleeding hearts. I was forced to fly United for years and dreaded every moment.


There is the problem. You didn't dread it because of the wages at UAL. It's about customer service. United has had the worst for years.

[lomapaseo]

I racked up 600,000 miles on UAL, 550,000 on TWA, 1,800,000 on Delta, etc.etc. and I didn't notice anything about Customer Service other than people trying to please their customers.

I don't object to personal gripes about a spat or two, or even collective gripes about management and unions. but piling on is not credible in my opinion.

[whatshouldiuse]

All;

With UAl going into Chapter 11 today, and the stock price sitting at 0.93c down from $60+ in the late nineties, the following is an excerpt from the UAL bulletin board on Yahoo..

"Unions -- Day of Reckoning has Come
by: just_a_tek (46/M/Ft. Worth, TX) 12/09/02 05:12 pm
Msg: 27620 of 27623

Robert Crandall on CNBC about an hour ago:

The only way AMR, DAL, UAL, CAL, etc will survive is to throw out the existing labor contracts and rewrite new ones that are on par with the ones at Southwest and Jet Blue. He said simply cutting a few percent in wages here and there wont get it, and I believe he is right. They asked Crandall why he didn't take this drastic move when he was at AMR, and he said the airline could not afford a strike then because it would be run out of business.

I completely agree with Crandall. All you arrogant overpaid and underworked pilots, mechanics, ramp workers, flight attendents, etc are finally going to have to face the music. The party is over. Either accept radical paycuts (because the times they are a changin')and new work rules or your airline will be liquidated and you will be out a job. There will be no other airlines to work for because there will be an over supply of already laid off airline workers.

Yes sir boys and girls you played the game and milked it for as long as you could. And things have been good for you. I don't have a problem with that. But I can't tell you how much pleasure it gives me to know that even for you guys there eventually comes a day of reckoning. I love it! I really do. I can't tell you how happy I am that even you guys are finally going to have to make a choice:

Work for 60% of what your making now (what your really worth) or work at McDonalds. haha. I love it!!!!!!! Even you guys aren't invincible like you think you are! haha"


Not a pretty sight to say the least. All text from Yahoo inserted into double apostrophies.


Andy

[Rollingthunder]

"Now that [United is] in Chapter 11, the industry restructuring
that we've all been waiting for and that is really badly needed
will finally happen," said Darryl Jenkins, a professor of
aviation economics at George Washington University.

Bankruptcy makes it easier for United to force its unions to
take pay cuts, which opens the door for other airlines to do
the same.

Unions are likely to fight attempts to cut wages and benefits,
but ultimately they may have no choice but to give in, analysts
said.

"Unless their union members have, in terms of their jobs, a
death wish, they will listen," said Aaron Gellman, professor of
management and strategy at Northwestern University's
Transportation Center.

ABC
Slippery slope, or what?

[Ignition Override]

How many of these so-called academic "industry experts" (other than Mr. Levine, who was with NWA), who are always quoted by our media, have ever worked in private industry, but specifically, for an airline?

Their cure-alls for the industry are always, for them, safe proclamations as they peer out from their "embattled" ivory towers while under siege from the Student Frisbee Competition on the campus green, or a low-flying squadron of feathery attack pigeons, bloated with blackberries.

What a bold and risky position to hold on the high ground during industrial warfare, for those with no airline experience.

I've also noticed how often 'Schadenfreude' (joy at others' harm) seems to be the prime motivator for some Ppruners' comments.

[GeofJ]

Lomapaseo - if you have travelled all of those miles and have not noticed the steady deterioration of service than you must really not have been paying attention. I have travelled on UAL, AA, US, DL, NW over the last 10-12 years although not in the multi million mile capacity and have seen service go from decent to intolerable. What is killing the big airlines is charging people like me who do not have control of their schedules several thousand dollars for a seat when the adjacent is occupied by some leisure traveller who paid $200 for his seat. In addition to this affront they don't even attempt to provide any value for the additional money - in fact the quality of the experience has continually gone down as the fares have gone up! It was telling that the UAL spokesman at O'Hare stated today that now that they have filed Ch 11 their customer service hass no where to go but up - finally a true statement from the management types - but a sad commentary on the state of most big carriers

[Avius]

whatshouldiuse,

You sound like a wannabe, who never made it into aviation. After reading your statement, we all know the reason.

[fartsock]

Nothing against the girls and guys who drive for united but the reailityis that when a QF 747 (classic) takes off from Akl for LA the F/O's hourly rate is less than a UAL F/A.

Let alone what the QF F/A's are being paid.

Note to potential 'heros' though - aust pilot wages are abmismal, don't bother coming down.

rgs

FS

[Possum 15]

Hey Andy MATE, did you buy at $60 +???

[kinsman]

What a complete P----!

[TDK mk2]

Kinsman, Possum and Avius:

If you read whatshouldiuse's post it says that the following was from the UAL bulletin board and then at the end makes it clear at the end that the text in quotations was all from the bulletin board.

Are you people pilots? If so I hope you check the facts before you shoot from the hip when you are flying...

[Possum 15]

TDK Mk2, that's obvious. The not so obvious is whether the post was for our edification, education or just plain enjoyment.

[lomapaseo]

Lomapaseo - if you have travelled all of those miles and have not noticed the steady deterioration of service than you must really not have been paying attention.

It's useless to argue against another person's experiences. You have yours and I have mine.

However, I do accept your facts and your personal opinions even though I don't agree with your opinion.

[TDK mk2]

I don't agree with the way the writer of the comments of the quotation in whatshouldiuse's post were written. However, as a turboprop pilot flying for a franchise of a flag carrying airline, earning roughly half that of my mainline counterparts I might be inclined to agree with the sentiment of the statements. Having said that I would fight tooth and nail to protect those terms and conditions if I were in their shoes, who wouldn't?

[Iron City]

For Ignition Override:

The only one of those experts I have talked to personally is Aaron Gellman and he is very knowledgable and very smart and has forgotten more about the airline business than most everybody (management, labor, regulators etc) else has learned.

I may not always agree with him but it is worthwhile to listen to him because whether he gets paid tomorrow or not does not depend on an airline job, a journo job, a stck market "analist" job, or a government appointment/job. What he says is his real "no S' opinion based on many years experience and analysis.

[Wino]

Whoshouldiuse,

During the last contract go around at AMR when Crandal was still in controll, the APA (That is the union that represents that American pilots) offered crandal the Southwest pilot's contract word for word, including the reduction in retirement and whatnot that it would entail.

Crandall said he couldn't afford it and we signed the current contract that we are operating instead.

Crandall is just trying to jawbone wages down further, without actually analyzing the wages.

Cheers
Wino

[whatshouldiuse]

Hey Folks;

I was merely trying to represent the view of the Stockholders in UAL. Obviously, I didn't convey that message clearly enough.

If you want to see something really nasty, envisage somebody evaluating if UAL Flight Attendants lost 5lb each, how much the fuel savings would be over a year.....This is on the Yahoo UAL board by the way :-)

and no Possum..don't buy stocks. Too many crooks or is that Kooks involved. Much prefer to sit back and observe..and remain a working stiff who is poor but happy.

Andy

[AA717driver]

Wino--Crandall is just getting in a shot he couldn't while he was still CEO. He couldn't live with the SWA contract because AA couldn't operate that effeciently.

The airline would collapse if there wasn't at least one 3 hour sit at a hub each day of the pairing.;) TC

[Ignition Override]

Folks: when stockholders invest a large chunk of money in airline stock, they are knowingly and voluntarily(!) risking their money in a very unpredictable industry.

But in many cases (maybe hundreds or more), these folks won't lose their jobs when an airline has a major loss of revenue. The risk to airline employees is often much worse that to many stockholders, therefore I certainly disagree with any comments that stockholders(unless they are also airline employees) have the most to lose (in terms of a home, a child's education, or both) in a serious downturn and/or Chapter 11 filing.

One of the bigger questions is, how can s-o-m-e of the all-knowing "experts" assume that an airline could transform itself, almost overnight, into a 'Southwest-style operation', with multiple linear route structures, in contrast to the fortress hubs whereby most crews begin/finish trips from a few large airports etc? Southwest's routes were created over a span of twenty five years plus, and this was a result of very careful planning.

Unless I missed something in the early 80s, the employees were not the creators of these hub-and-spoke systems. Did present or previous upper mgmts not spend jillions of dollars to build and strengthen these hubs? Maybe US airline employees are also responsible for OPEC's decision recently to raise the price on oil...

Possibly a gift of fifty F-15 Es plus a free extra AWACS to the Israeli Self-Defense Force, as a planned result of any significant future increases, might be a deterrent for good old OPEC.

[FDXmech]

I recommend reading www.aviationplanning.com, the Boyd Group's website, for some insightful perspectives.

[Tan]

I received the following as a e-mail today...rather interesting slant on this issue.


Labor Relationships May Realign United

CHICAGO (AP) - While United Airlines seeks protection from its creditors,
it also will need to secure the cooperation of its unions in order to emerge
successfully from Chapter 11 bankruptcy.

But relations between United and the 83,000 employees who own 55 percent of
the company have not always been easy. Two years ago, pilots and mechanics
caused thousands of flight delays and cancellations during stalled labor
negotiations. And two weeks ago, as the company desperately was trying to
avoid bankruptcy, mechanics rejected a plan to contribute $700 million in
wage concessions.

On Monday, everybody involved was saying the right thing about cooperation,
using the word "United'' as an attitude as well as an airline - but the
question remains: Will they work together?

"They better,'' said Aaron J. Gellman, a professor at Northwestern
University's Transportation Center. "Because if they don't, they run the
risk of going into Chapter 7, liquidation. If that happens, everybody
loses.''

Joseph Schwieterman, an aviation industry expert and economics professor at
DePaul University in Chicago, agreed. "The parallels with Eastern Airlines
are almost scary,'' he said, referring to the struggle between labor and
management more than a decade ago that helped drive that airline out of
business. "All United employees should read the history of Eastern
Airlines.''

One thing that may be history is an employee-owned United - something the
airline has long touted. CEO Glenn Tilton would not say whether he wants
the company's employee stock ownership program dissolved. "I think we're just
going to have to take that situation and manage it, deal with it
constructively as we go through the case,'' he said.

But Schwieterman said he believes the bankruptcy filing effectively brings
an end to the days of an employee-owned airline. "I think the idea of
employee ownership will have merely symbolic value,'' he said. "The real
money will probably belong to banks and others with deeper pockets.''

It is clear that labor costs will have to be cut. Nobody, though, is saying
how much.

United, while not getting specific, is suggesting that employees will have
to take a big hit. In its bankruptcy court filing, the company said the
only way to turn the airline around will be to "reduce their labor and other
costs dramatically.''

Gellman said the pilots in particular have to be prepared to slash their
costs. "My guess is they have to give much more than the $2.2 billion they
offered,'' he said.

Unions point to their recent proposals as evidence they are willing to cut
costs.

"Since the (terrorist attacks of Sept. 11, 2001) we have worked with the
company, along with other unions at United, to produce an unprecedented
labor cost reduction package and out-of-court restructuring program for
United,'' said Paul Whiteford, chairman of the United unit of the Air Line
Pilots Association.

But it is also clear that the unions don't think their costs are to blame
for United's troubles. "Labor costs aren't the problem at United and other
carriers,'' said Jeff Zack of the Association of Flight Attendants. Poor
management decisions, including the attempted merger with US Airways, cost
them billions, he said.

Schwieterman said the unions that have wielded so much power in their
dealings with the company, might have finally met their match.
"Now they are facing a much more formidable rival, or adversary,'' he
said.
"The courts.''

*********

[GalleyWench]

Fartsock, A few FACTS to refute your claims about UA cabin crew pay. Averagy salary: USD 32,000. Average seniority: 12 years. To be making 32,000 after being employed for a company for that long- coming armed with (generally) a university degree and a vast majority of us with a second language is not (pre- bankruptcy) overpaid. Current financial situations of course require pay cuts (deep) which I for one will swallow to remain in a job which I love.

[GlueBall]

Juggernaut UAL with newly disclosed losses of $22+ Million per day is beyond the point of rescue. The company will run out of cash in two months. It's the end. Banks and institutional investors are pouring "debtor in possesion funds" into a bottomless pit. The company is in a deep stall, soon to be gone.:(

[whatshouldiuse]

GalleyWench;

You said it all.

Average salary is 32K and yet senior pilots make over 250K a year.

No wonder with such a discreprancy the airline didn't survive.

Andy

[FDXmech]

Michael Boyd, of the Boyd Group www.aviationplanning.com has this to say.

"Weak Management Is More Expensive Than High Labor Rates. It's a failure of senior management that has engineered United into this quagmire, yet some people still blame labor for this circus."

and goes on...

"Actually, regardless of whether the IAM, the AFA, and ALPA were paid lavishly or with company scrip,the airline would still today be looking down the ugly barrel of bankruptcy. An airline needs tightly-focused management, and that's not exactly what's been going on at the top rungs at United over the past three years."

[Ignition Override]

Galley Wench and FDX Mechanic: You all have enlightened us with interesting perspectives, not to mention the oft-quoted analyst Mr. Boyd.

Very interesting website, FDX Mechanic. I suspect that a very thoughtful silence will come from some of the cheap-shot Pprune types for a while, who feel that anyone wearing a three-piece suit (or expensive dress) who works for an airline is above reproach, as with many of the "perfumed princes" of the Middle Ages and their frequently arrogant scorn for the peasant masses.

[maxrpm]

A company like UAL does not have to seek Chapter 11 protection without severe failures from top management. Even if the industry leading pay for some of the employee groups was one of the many problems, it was still top managment who signed these contracts.

Top managment itself is choosen by the stock holders. Which rises questions for the UAL case.

The employees hold the maiority of the stock.
Is there a different voting process agreed among UAL shareholders which denies the stock maijority to select top managment?
If not, what made the employees of UAL choose a weak management in turbulent times?

[I. M. Esperto]

I recieved this today:

Friends . . . I thought you would like to know a couple things about timing over the next two months. When United obtained a Debtor in Possession (DIP) loan source of $1.5 billion and went bankrupt a few rules came into play that are time intensive. The most important item to get the money from the lender and please the Judge is have a contract with concessions before the middle of December. (before Christmas) The pilots and flight attendants have already told Tilton they want to work with him. The talk is the pilots will have to increase the concessions given last month by about 50 percent, total concessions something under 30%



If a labor group does not agree to these major concessions . . . that fact . . . will trigger a paragraph in the bankruptcy that gives them another 45 days. I believe it is called paragraph 1013. That would be in February 2003. If any group has not come to some agreement by then the judge can do what ever he wants to the labor group. That rule was used on the IAM at US Air. If the total concessions does not satisfy the DIP they can deny the company money and possibly force the company into liquidation.



From what I am hearing these items should be accomplished in time, regretfully so, but will be done.



There are some Web sites you may want keep track of for more information.



All the legal stuff for the bankruptcy can be seen at: http://www.pd-ual.com



The ALPA web site is: http://www.alpa.org



The flight attendants web site is: http://www.afanet.org



The mechanics web site is: http://www.iam141m.org



The group putting together a company to fight for pension rights is: http://www.ualpilotpenson.com



The Retired United Pilots Association (RUPA) http://www.rupa.org



Doug Wilsman has an excellent article about the federal pension guarantee board on the RUPA web site.





This should keep you busy for awhile. If there is anything I can do for you or anyone else in our United family please let me know.



Fraternally Yours,





Cliff

[411A]

Recently, Southern Air entered Chapter 11 to force lower aircraft lease rates that otherwise could not be obtained from the aeroplane leassor directly.
Federal bankruptcy judges have very wide latitude with regard to terms for lease rates, labor rates, etc for companies in bankruptcy, so expect that the bankruptcy judge will eventually force all UAL unions to accept lower wages, whether they like it or not, and they certainly will not.

The parallels between UAL and Eastern Air Lines (IAM especially) are interesting, except that UAL does not have Frank Lorenzo running the show...and who knows, perhaps if they did...might be in a better financial position now. To bite the (financial, wage) bullet earlier on definately has its benefits.

[I. M. Esperto]

At one time, Lorenzo was a TWA middle management type, in accounting.

[GlueBall]

With recent revelations that UAL is now losing $22+ Million per day, it doesn't take an abacus to conclude that this financial juggernaut is in a deep stall. Banks and institutional investors already are balking at pouring more money into the bottomless pit of Debtor in Possession Funds.

The company is outtatime and will be outta cash in February.

[AA717driver]

On another website, a numbers type pilot at my airline posted a couple of the marks UAL has to hit to keep getting DIP money.

In Feb. the company has to make about a $1B turnaround in earnings before depreciation, taxes...etc. By the fall, they must make approx. a $2B turnaround.

The bar is set very high.

I wonder if those who are providing DIP money are just secured creditors who wanted to make sure they were first in line when the payouts started. That would be contemptable.TC

[Airbubba]

>>I wonder if those who are providing DIP money are just secured creditors who wanted to make sure they were first in line when the payouts started.<<

Maybe you just broke the code... It is starting to look like liquidation is definitely in the playbook as the latest round of games begin.

_____________________________________


United Lobbies Its Unions
For Further Concessions

Airline Says Savings Must Reach $2.4 Billion
To Tap Financing and Preserve Operations

By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL


CHICAGO -- UAL Corp.'s United Airlines, which filed for bankruptcy-court protection a week ago and must meet stringent financial conditions imposed by its interim lenders, told its unions Friday it needs to secure agreements on $2.4 billion in annual labor concessions by mid-February, according to one union. That figure significantly eclipses the $1 billion in annual savings the unions earlier agreed to provide in the hope of winning a government bailout and avoiding Chapter 11.

The nation's No. 2 airline told its unions that without arranging those savings quickly, it won't be able to tap the second tranche of a $1.5 billion debtor-in-possession financing package that is allowing it to continue to operate. Without a sharp reversal in its daily cash-burn rate and the achievement of positive cumulative cash flow by next spring, its lenders could find UAL in default and sell the collateral backing the loan, which would push UAL into liquidation...

[GlueBall]

Altogether the airline as a going concern is already out of cash and beyond the point of no return. Every emergency measure that's now hastily being enacted is too little too late. Tilton is not an airline guru; he's a gentleman, a nice guy. The job's over his head. In order to turn off the spigot that's pis$ing $22+ Million a day into the wind, he should be having a garage sale right now: All Pacific routes, all South American routes. Immediate 40% downsizing would give UAL some hope of survival.

[I. M. Esperto]

It's tough, and I wish the Gubbmint would help them out.

They give away countless billions to foreign nations with little hope of any return, just for the political gains it will make among some group or another, and turn their backs on an eccential industry eploying some 81,000 tax paying Americans.

[bean_counter]

UAL were well on their way to losing USD 2 BILLION before 9/11
as the economic slowdown in the US blew big holes in their revenue plan.

The Gov is wisely thinking of the other millions of tax-payers and keeping their cash for a more worthy cause.

Chap 11 seems to be a more than fair way of allowing a company time to save itself. Let the market decide.

[Hand Solo]

Its very hard on the United employees, but billions of dollars of federal aid to United is hardly going to help Continental, Delta et al or their employees. United has been a badly managed airline for a long time and pouring in government cash won't change that, it'll just skew the market long enough to drag the well run airlines down with it.

[DUCKMAN052001]

United was a poorly run airline by management. The other thing that hurt UAL was the unions raping the hand that feed it. we can go on and on about what caused the filling, but look at one of the biggest things that hurt them. "SCOPE CLAUSE" A thing that has hurt them has pulled Continental out of the brink and put them into a position of a well ran airline. The pilot union at AU killed the idea several years ago, only to be handed the fact that this is what would save them in the long run. CO found the RJ, so did DL. If you look at the rout structure of DL and CO, you would see that they let the commuter partners do most of the flying under 90 minutes to 2 hours and they took care of the long haul markets. UA went with over saturation and the ego that we fly all our routes. Expect to see more flying from the express units.;)

[Airbubba]

>>If a labor group does not agree to these major concessions . . . that fact . . . will trigger a paragraph in the bankruptcy that gives them another 45 days. I believe it is called paragraph 1013. That would be in February 2003.<<

Looks like Section 1113 may be coming much sooner than we thought:


_____________________________________________


UAL warns unions on concessions

Dec. 26 deadline, or airline will ask to void contracts

By James P. Miller and Thomas A. Corfman
[ORD] Tribune staff reporters
Published December 18, 2002

United Airlines warned unionized workers Tuesday that if they don't agree to wage concessions by the day after Christmas, the carrier will ask the U.S. Bankruptcy Court to nullify existing labor contracts and impose lower pay scales.

Late last week, only days after United's parent UAL Corp. filed for bankruptcy protection, the carrier outlined to its major unions a revised business plan calling for labor costs to be slashed by $2.4 billion a year, or more than double what the company previously had requested.

Union executives have expressed dismay over the scale of the givebacks United is seeking. As union execs were reviewing the company's revised business plan, UAL established an aggressive deadline to resolve the matter.

While taking pains to say that it remains committed to achieving "consensual agreements" with its unionized employees, UAL said that if the workers haven't signed off on pay cuts by Dec. 26, the company will make what's known as a Section 1113 filing with Bankruptcy Judge Eugene R. Wedoff.

That section of the Bankruptcy Code permits employers to reject labor agreements. Although rarely used, the rule "is always in the back pocket of the debtor company," said bankruptcy lawyer John R. Weiss, a partner in the Chicago firm of Katten Muchin Zavis Rosenman...


http://www.chicagotribune.com/business/chi-0212180369dec18,1,5277066.story?coll=chi%2Dbusiness%2Dhed

[boofhead]

So much for the "land of the free and home of the brave." It should be called the "land of the lost rights without so much as a whimper and the home of the scared out of their wits." Not that the US is alone in stupidity, or in doing bin Laden's work for him.

Sure UA is badly managed, and needs to be sorted out, but now it is in Chapter 11, it can reduce fares and compete with a significant advantage, such that AA and other airlines in the US will be pushed to the brink as well.
I am amazed that no-one has talked about the real reason for the failure of UA - the idiotic Homeland Security and government takeover of people's rights and freedoms. Sure there are some who are afraid to fly because they fear terrorists and blame Sep 11. But most are put off by the insane security procedures in force at the airports, together with the added hours required to make a trip that was simple and easy before. I heard Hannity of Fox TV, making like an extreme xenophobe on his show yesterday, when pressed to justify the treatmenrt given to those Iranian men who showed up at Immigration as directed, only to find themselves in jail, subject to deportation, crying that the US had the right to do "whatever necessary" to protect the American Public. Never mind that the US constitution was written to preserve the rights of "all men" (Which meant all persons when it was written), including those who are in the country as visitors or immigrants. Hannity appeared to be terrified, and would do anything for the appearance of safety, no matter how ineffectual. His mate, O'Reilly, also of Fox TV, said when asked if he was going to fly to visit family during the holidays, that he would not, because of the hassles at the airport. A great example.

Now the burden of inspection of checked baggage has been added, despite no history of risk, leading to real problems with theft, loss and damage, not to say the hassles this gives the travelling public. And this is not the end of it; there will be more stupidity in the name of "security" added before long.

Air traffic in the US, and the number of passengers travelling, has slipped by around 20% since Sep 11. It is my opinion that this is mainly due to the insanity of the authorities, who have no concept of balancing risks against the damage to the airlines. And when the airlines fail, so too do the rental car companies, catering,services, hotels and the many other businesses that rely on people travelling by air. And of course those directly employed by the airlines, who have a passion for aviation, and had planned to complete rewarding careers with them. All at risk now, while those responsible have added to their size and influence, building empires based on fear. Those organisations are, of course, funded by the taxpayer. Put it another way, they obtain their sustenance from the government mammary gland (there is a better way to put it but the PC clowns would not like to see it in print).

Why do so many accept what they must know is idiocy elevated to a level rarely seen before and allow seemingly anything to be done to remove their rights and freedoms? Are they truly so afraid? When the British were under constant attack during the Blitz, and the German public also, they became more determined, not less. Do the Americans (and the present day English, Australians and so on) have less backbone, and if so, why? Are we accustomed now to such an easy life that we will take no risks at all, but are willing to give total control to a bunch of politicians? Politicians who have never shown honesty or backbone themselves I might add.

If we allow our futures to be destroyed in this way, with the example of UA in the news every day to show us what is in store, perhaps we deserve everything that happens to us.

[seacue]

Re: United and Scope clause .... I'm sure my numbers aren't exact, but last I heard, of the roughly 350 "United" departures from IAD each day, about 250 are United Express operated by Atlantic Coast Airlines.

[Wino]

Duckman,

There is nothing stopping United from flying anyjet they want anywhere they want. The only restriction is that they use the united pilots. As no payscale had been aggreed to yet they would have to set a rate for the aircraft.

Most Major airline contracts are based around a weightxspeed formula. If you simply used that formula you woud find that a 50 seater would pay less at the mainline than it does at commair (which is why the pilots were willing to allow that flying to farmed out in certain circumstances)

However, with pilots on the street now, they should be allowed to do that flying.

You are simply buying into management propoganda. United can fly any aircraft anywhere they want at anytime if they used their own pilots. The same thing goes for other majors as well.

Cheers
Wino

[Tan]

boofhead

IMHO you're right on. That was a very informative and well thought out post...:)

[InitRef]

Of course the added security has led to a decline in air travel, but its not just because of the TSA window dressing.

A good portion of the decline has to be attributed to Americans afraid to fly immediately after Sep 11, and also the airlines who immediately cut large amounts of capacity. In any case, this was largely the discretionary travel/vacationer/low fare pax - not that important for a high-cost airline like UA (before the union-haters jump in - I am just pointing out the reality of an airline like UA that has an extensive route network, necessarily needs different aircraft types, and has lower efficiency due to hub structure)

Still - most business travel is not now being conducted via train/car etc - except for routes which are around an hour or less in duration (where the TSA hassle factor has greater effect) - but also because these routes are usually RJ's anyway (and unlike UA mainline does not have Econ Plus and Biz/First seating that appeals to the freq flyer)

The real reason United is hurting is because business travellers are not travelling enough, and not buying high-fare tickets as in the past - period.

UA always got more business travel revenue than most other US majors, and the general economic slump has hit them harder. They need to decide if they want to struggle being an everything for everybody airline, or decide to abdicate the low-fare market to SW, etc or shrink and focus on the business traveller.

[arcniz]

Bofhead writes:
Now the burden of inspection of checked baggage has been added, despite no history of risk, leading to real problems with theft, loss and damage, not to say the hassles this gives the travelling public. And this is not the end of it; there will be more stupidity in the name of "security" added before long.

I understand the frustration, but your logic is somewhat perverse.

Firstly, the 'history of risk' regarding checked baggage is well established - with an unhappy trail that goes back many decades.

Secondly, your 'history of risk' argument supports the premise that obvious vulnerabilities should not be acted upon until some fresh disaster has demonstrated their relevance. If aviation were operated that way up to now, we'd all still be walking - and glad of it.

Aviation does not have an open-ended franchise for growth and prosperity. Some marvel that it has held up as well as the recent record shows, given that a large majority of trips - even those for business - are highly discretionary.

Public interest and trust in aviation are demonstrated by the still historically high levels of air travel as we experience the unfortunate coincidence of a global economc downturn, increase of high-profile terrorism and dramatic recent improvements in electronic communications that can be used by nearly everyone, everywhere, to reduce or supplant travel.

Whether you regard it as theatre or substance, I personally believe many travelers (and also many airline people) appreciate the perceived incremental gain in their own safety and security which results from heightened inspection protocols.

Yes, it's a nuisance, but so is all the noise and up and down and kerosene that go with the process. We're going through some rough weather - for which special procedures make sense to most of the fare-payers.

[boofhead]

I don't remember the last airplane bombing, with checked baggage being the method used to plant a bomb, at least since Pan AM over Lockerbie. Maybe you can refresh me. And an easy fix is available, with strengthened containers. But you never hear about legislation to force airlines to use those, do you. Unlike many, I know when I am being lied to, and it has been a long time since any politician told the truth.
I fly often as crew and as pax, and I myself am offended by the way I am assumed to be a criminal. It goes beyond "Like a criminal", it is as if I WAS one. Seeing little girls and women being wanded and having to take off shoes does not inspire confidence. If it is so dangerous when flying that people like that are a threat, then it must be very dangerous indeed.
Of course that is total b.s., since even the WTC events were a once-off and an aberration, and flying is no more dangerous than it was before 9/11. And just like then, the real danger is pilot error, which the stupidity we are going through now does nothing to correct.
Perception is all, and the effort to show the public that something is being done to make flying safe again does the opposite. It puts fear in people's minds and creates chaos at the airports while doing so, turning away people who otherwise would have been happy to fly.
Bums in seats are what is needed to make flying profitable, and if the effort to improve security drives people away from flying then it is counter-productive. Killing the patient in order to save him.
We need a balanced approach, but there is too much money and power being shifted into the hands of the authorities around the world, and especially in the US, for any rational approach to have a chance.

[ironbutt57]

Wino...union goon is right...your union and it's brotherhood are a one-way street...what about all the air wisconsin pilots that got screwed when united took away the milwaulkee hub that air willy spent decades building....you took their flying...did they get jobs offered to them....think not...but when your little nest begins to fall you somehow think that the regional pilots and airlines owe you jobs...who the hell do you think you are? I hope they liquidate ual and you can all go pound sand...the regionals will re-brand and the real pilots will remain employed, but you self-serving greedy bastards will get your just desserts...for decades commuter pilots banged around in crap airplanes on crap money trying to feed their families, and gain the hours to get a real job...now that the regionals are maturing into that(equipment-wise) anyway, you vote in your selfish scope clauses that once again dampen the career of regional pilots, then when the wheels come off your wagon, you want to run back...and take those jobs you "permitted" away...go home and take a long hard look in a mirror...at the wretched person you and most like you have become....and I hope the next time a major airline goes on strike...the regional pilots remember the treatment they have recieved from their major airline "union brothers", and trample the likes of you crossing the picket line...:mad: :mad: :mad:

[Airbubba]

ALPA is now offering a 29% pay cut at UAL while the mechanics still want "full pay until the last day". Sadly, this may be yet another corporate meltdown where the employees could work for free and the company would still run out of money, credit and ideas soon.
_________________________________________________


UAL machinists reject cuts
All other unions OK lower wages

By Thomas A. Corfman and John Schmeltzer
Chicago Tribune staff reporters
Published December 28, 2002

Threatened with a bankruptcy court challenge to their current contracts, all but one of United Airlines' unions have agreed to steep temporary wage cuts as the troubled carrier moves ahead with billions of dollars in proposed cost-cutting.

The sole holdout is United's defiant machinists union. A bargaining unit of that union voted down a 7 percent pay cut nearly two weeks before United's parent, UAL Corp., filed for Chapter 11 protection from creditors this month. United now seeks a 13 percent wage reduction from its 37,000 mechanics, ramp workers, customer service employees and gate agents.

The cuts are part of a plan to save an annual average of $2.4 billion over the next five years, more than double the savings that management sought before its bankruptcy...

...The Airline Pilots Association's negotiating committee has agreed to a 29 percent cut, according to the motion filed Friday by Kirkland & Ellis, United's bankruptcy attorneys. The pilots had previously agreed to an 18 percent cut...

...The temporary wage cuts proposed by United, including the reductions to be imposed on the mechanics, would save the company more than $70 million a month, the motion stated.

Yet the savings would be a fraction of the $10 million to $15 million in daily losses that United said it expected in January.

Meanwhile, the machinists union may hope the coming court battle gives them some badly needed leverage...



http://www.chicagotribune.com/business/chi-0212280158dec28,1,4097416.story?coll=chi%2Dnews%2Dhed

[tsgas]

Something that has been overlooked in why there are fewer high paying pax,is the colaspe of the stock market.This is the third year of declines in the DOW.So United as well as all the other high cost operators can no longer count on the Daddy Big Bucks created in the hey days of the 90's with the dot com's.People are investing big time in houses and new cars.Sales in the department stores in the U.S. are at a 30 year low.
So even though security at the airports have become a pain in the butt and airline service is a joke,people are making the choice of spending there limited dollars on homes and autos.This trend should continue as long as the economy is weak and interest rates are low.IMHO

[Dan Winterland]

Boofhead, Europe has had these security measures for years - Britain, France, Germany, Spain and Italy all have their own home grown terrorists and we have been living with the security consequences and got used to them. The USA is now having to get used to them as a fact of travelling life - and it appears the travelling public are staying away as a result.

The main differences that I see between the US and Europe airline security is down to the people carry out those checks. Whereas in Europe, an intelligent assessment of the pax/crew is carried out before screening, the US screener will select people at random and check the least likely suspects. Kids and flight deck alike! When I flew for a British long haul carrier, I was checked EVERY time I went through Boston Logan - while in uniform! Not only is it perplexing for the passengers, it's a waste of effort.

[Airbubba]

>>Whereas in Europe, an intelligent assessment of the pax/crew is carried out before screening, the US screener will select people at random and check the least likely suspects. Kids and flight deck alike!<<

Yep, we try to avoid "profiling" in the U.S. in our attempt to be sensitive to "minorities" (anyone but a non-Hispanic male of European ancestry in our system). Like most of these deals, the original intent is good but the application is taken to extremes by politicians, "civil rights advocates" and bureaucrats. Thus, much of the security probably misses the intended target and pax are chased away just when an airline recovery is most needed.

[boofhead]

I don’t know what infuriates me more about the world of aviation post 9/11; the futility of what the authorities are doing or the sheep-like behaviour of the travelling public. One guy tried to set his shoes on fire and it did not work, so the authorities think that this is now the method of choice of all terrorists, rather than that they would think “this does not work, let’s try something else!” So we, who in the minds of the airport security personnel are all terrorists, have to take off our shoes. Why? To prove we are not as stupid as they are?

When the airplane takes off it is on its own. The crew and passengers are totally responsible for their own safety; nothing that has been done by the airport security or Homeland Security or FBI etc makes any difference. (Unless you consider a missile up the tail-pipe from an F16 is “help.”). Flying is not any more or less safe since 9/11; the biggest risk is still Pilot Error. What happened on 9/11 worked because it was unexpected, and the crew were following the current “cooperation” procedures in handling the hijackings. Now we all know better, and there is not a pilot out there who will give up his seat to a hijacker or allow an entry to the flight deck. No cabin crew or passenger will allow this to happen either. In the last year there have been several examples of this new self-determination. Safety is in our own hands, and nothing that is being done on the ground has any relevance to this. It is flatly impossible for airport security to prevent criminals and terrorists from getting on board and they know it. You should know it too.

The only positive step taken so far is the fitting of stronger flight deck doors, although the old ones work almost as well, so long as they are kept shut. Mandating explosives-proof baggage containers would be a good step, but the authorities will not do that. Bette, they think, to make flying safer by reducing the number of passengers and airplanes, and this is best done by making flying so uncomfortable that people will stay away from the airports. The latest figures show that the number of passengers flying domestically in the US is the same as it was in the month after 9/11, and some 12.8% less than it was in Nov 2000. Such a severe and continued drop is disaster to the airlines, and to all of us who use or are employed by them, directly or indirectly.

Watch the security staff who are doing the manual inspections of passenger baggage, when that baggage has been rejected by the CTX machines (25%?). They obviously have no idea of what a bomb is, if that is what they are concerned about. They poke and fiddle with the passenger’s belongings, lifting and shifting, totally unaware of things like anti-handling devices that would set off any explosives and blow them, and all the passengers waiting in the area, to an early demise. It is so ridiculous that it should be criminal. The authorities who set up this farce know that it is a sham and does not make flying any safer, yet they say “let us take over your rights and freedoms and we will guarantee you security.” Every time there is an incident in the air, the whole lot of the security staff at that airport should be fired, along with the supervisors in Washington, London or Sydney or wherever. But of course that will never happen, since the only reason this bloated establishment exists is for the promotion of government power.

Sure there was a need to do something after 9/11, if only to reassure the travelling public. But what was done should have been a considered response, and appropriate. What is now being done is such an over-reaction as to be suitable for a Steven King story. We all should be speaking out against it, and doing what we can to change it. If we don’t, there will be no aviation for us to protect and enjoy.

[Airbubba]

More details of the latest UAL ALPA Interim Relief Letter of Agreement are available. As advertised, it is a 29% pay cut almost across the board (exceptions include the "A" plan based on original book rates).

A twelve year 744 captain will make only $226.48 an hour and a 757 or 767 captain with the same seniority will be dropped to $172.21 an hour. These rates do not include International Override or Night Incentive Pay, reduced to about $4.65 and $8.73 per hour respectively for a captain. So far, work rules are untouched but will certainly be negotiated downward if the company can somehow avoid liquidation in the coming weeks.

Suddenly, most of the unions have got religion and want to rush to cut pay after taking a good look at the sharks circling at the bankruptcy court.

[Ignition Override]

I am curious about national mobilization requirements.

If we quickly needed many planes to fly troops to a conflict, for example with the CRAF (Civilian Reserve Air Fleet), how many widebody planes from United, or American or Delta would be used? How profitable is this, i.e. per hundred hours or so, compared to the present anemic civilian ticket prices, if any? How about cargo airlines?

How fast can passenger planes, which have been in the desert for about a year (Mojave, CA, or Marana Air Park, AZ) or less, be prepared for flight? Once ready, their dispatch rates might be better than with the old Air Force C-141s and C-5s.

Can BRITISH planes be chartered to carry troops? This MIGHT get the attention of Pprune Towers' supervisors!

[saudipc-9]

A twelve year 747 Captain will ONLY make 226.48 an hour!!
That's still $17'000 a month, which kick's the cr@p out of the average monthly wage in the US.

[Ignition Override]

Good luck United.

[GlueBall]

CEO Tilton is behind the power curve. Too little too late. UAL is in a deep stall. Still losing $17+ Million per day.
Deptor In Possession requirements specify that between 01 Dec 2002 and 28 Jan 2003 UAL can lose no more than $964 Million Dollars. But during the entire month of December UAL (losing $22 Million per day) already had squandered $682 Million; so you don't need an abacus to do the math. The collective payroll savings, estimated at $76 Million per month fall far short of meeting the deadline. The only slim hope for continuing operations next month would be to make immediate asset and route sales, otherwise the banks will pull the plug.

[whatshouldiuse]

SaudiPc-9;

I think you could be mssing the big picture. For $226:48 an hour, please bear in mind most piots who make this money only work 80 to 90 hours a week. So if you slash that to an hourly wage, that's about $113:00 an hour. I am currently making $60:00 an hour to keep a major utility company up and running.

Having said that, I don't have 250+ lives in my hands at any different moment. If I screw up, all I have is a lot of cold peoplee who yell and complain....must like on an airline.

Like all pilots, I drive for and expect nothing less than excellance. And I expect the pilots to get paid likewise. They have too much responsibility to look at it any other way.

Andy

[dispatcherdoug]

As a former UAL employee, I'm sorry to see them in the predicament that they are in. I place the blame on the UAL Board of Directors for allowing Goodwin to rape the airline,

rape them by putting forth the US Airways merger - I was working the ORD B767 pilot crew desk the day the UA/US Merger was announced, working across from people who worked 20+ years at UAL, and just saw their retirements disappear - the UAL stock tanked 20+ bucks that day, and never recovered, never.

raped UAL by even suggesting Avolar. Lord only knows how much $ was burned by that stupidity.

raped UAL by even suggesting, IN THE MIDDLE OF THE MOST CONTENTIOUS contract negotiations, the US/UA merger - lord only knows how much longer the UA/ALPA negotiations were extended by the merger announcement.

I wish my former colleages the best, but the cynic in me says that history will again repeat itself. The parallels between UAL and EAL are downright scary - only thing thats missing is Frank Lorenzo. We have a militant machinists union, and a world-class airline this close from Ch 7 liquidation

[tsgas]

Dispatcherdoug if you're going bring up the histroy of "why EAL went under" you have to go back to before the Frank Lorenzo days. The gentleman that was in charge was Col.Frank Borman and olny after the "nite of the long knives" was EAL forced to shut down or deal with Frank Lorenzo.Frank Lorenzo ran CAL which is still in business because his employess worked with him. At EAL however the IAM and ALPA teemed up together to get Lorenzo.Lorenzo won by milking EAL with management fees and stealing the best assets from EAL and transferring them to CAL.The pilots have Capt.Duffy from DAL to thank for loosing their jobs. The moral of the story is "not to let your emotions cloud your judgement".UAL management and the employees can share in the blame or they can work together for their future. Name calling should of been left at the playground ,a long time ago. imho

[Ignition Override]

Tsgas Let' read about what type of straight-forward guy Mr. Lorenzo was: this should be educational for all of us.

Filing for Chapter 11 bankruptcy, in order to avoid complying with any contract language, and also in order to skip further negotiations with unions, which would have offered pay concessions, should be included. Will you also include how many Dept. of Transportation judges ruled in his favor, just before leaving government service for lucrative jobs with his holding company, or affiliates? How about the FAA's Western Region, which due to the political philosophy at the FAA, allegedly suppresed troublesome documentation on Continental's flight operations, in order not to embarass the Reagan Administration?

But never mind history, let's read the "New Age" version.

[tsgas]

Ign O/R I agree with you about what a slime bucket Lorenzo was but you miss the point by being just a little narrow minded.Hank Duffy destroyed the pilot jobs at EAL ,no matter how you try to deny the TRUTH.Frank Borman was a gentleman and had the ALPA pilots not stabbed him in the back,EAL would not of been sold to Lorenzo.Col.Borman warned the pilots and they called his bluff.So if you support the union blindly and deny the TRUTH then that that is your choice.I was there and it was not a pretty site.I also made money on the union's stupidy because I bought CAL shares knowing full well that Lorenzo was going to rape EAL.I advanced my aviation after the fall of EAL but most former emptoyees lost big time.Those that don't learn from history are doomed to repeat the same mistakes.

[411A]

Hmmm, some may well be too young to remember (or choose to forget) that Continental after Robert Six passed away (and even before) was ALWAYS the weakest US trunk carrier...indeed UAL (strange as it seems now) cleaned their clock on the LAX-DEN-ORD route....CAL's most profitable.
Lorenzo recognised this and asked for wage concessions...which ALPA promptly rejected.
The rest is history...so to speak.

[Ignition Override]

Tsgas: I appreciate your tactful response, and the acknowledgement that Lorenzo was a 'slime bucket'. I had no idea that you were there, and my comments were not intended to imply that I had any experience as an insider. Despite what has been said about ALPA (whether caused by Duffy's agenda or not) and no matter what major blunders were made by national or the Eastern MEC, old Lorenzo's main goals were always to destroy any unions (and indirectly, airlines, in order to enrich himself), even if they were trying to negotiate and offer some pay concessions. Lorenzo decided to strip valuable assets from Eastern and lease them back at very high rates, from what many of us have always read in the aviation press.

After he 'built' Continental, so to speak, by tearing up all of the labor contracts through his filing of Chapter 11, why was Continental then not a strong carrier? Based on the ever-popular theory that airline labor costs are always the main obstacle (or scapegoat) on the road to any airline's financial health, can anyone explain this, knowing that CO's labor costs were very low after Chap 11? Among the dozens of US jet and turboprop airlines which were created under Deregulation and then folded, almost all had very modest labor costs, from the beginning to the end. FAPA (later Air, Inc) did Salary Surveys years ago.

Come on gang-if someone wants to build an airline, does this person sell off whatever assets (i.e. Soda computer res. systems) he/she feels like and pocket huge chunks of operating cash, through vehicles such as Jet Capital, Texas Air Corp. etc?

[AA717driver]

History is repeating itself at UAL and USAir. This time the courts are the ones tearing up the union contracts. Sec. 1113 has provided companies with the opportunity to shove contracts across the table at the unions and slash pay, retirement and benefits.

The next time the airlines are in the growth mode and pilots and mechs. are in short supply, management shouldn't be surprised when the unions bust their balls to get back much of what is being taken in this swing of the pendulum.

Rest assured that none of the Senior management at the airlines will ultimately lose a penny of compensation over this.(They may take token cuts and not get stock options NOW but they will eventually get repaid in full...they always do.)

The road to the Hamptons is paved in pink slips.TC

[robrobinette]

To avoid liquidation by its debtors-in-possession, United must turn a profit for the first quarter of 03. It's not gonna happen. This is from the 16 Dec AvWeek:

United's DIP Loans
Require Profit in 2003
DAVID BOND/WASHINGTON

The $1.5-billion debtor-in-possession financing agreements intended to get United Airlines through 18 months of Chapter 11 bankruptcy protection set high hurdles for--and impose a brisk pace on--the airline's restructuring attempts.

Bank One, providing an initial term loan of $300 million, and JPMorgan Chase, Citicorp USA, CIT Group/Business Credit and Bank One, sharing equally in a $400-million loan and an $800-million revolving credit facility, have imposed covenants that require United to operate profitably within three months. The carrier must maintain in-the-black operations through the rest of 2003 and end the year with $575 million in before-tax earnings (see tables).

Other covenants limit capital spending to $110 million per quarter during the first half of 2003, $116 million in the third quarter, $142 million in the fourth quarter, and $100 million per quarter in the first half of 2004; and require the carrier to keep at least $200 million in cash and cash equivalents at all times. And United must try again to secure a federal loan guarantee, this time for its Chapter 11 exit financing.

FAILURE TO LIVE UP to these and two dozen other covenants could trigger default on the financing. This in turn would allow the lenders to foreclose on United's collateral for the debt, which comprises much of its unencumbered aircraft and other assets. As described by United in its bankruptcy filing, foreclosure would "spell the end."

Moreover, access to financing is limited initially to $800 million--the $300-million Bank One loan, the $400-million four-party loan and $100 million of the revolver. For access to the remaining $700 million, United must achieve positive cumulative earnings, scheduled next October, and develop plans for $300 million in additional cost reductions. Lack of access to the $700 million would prevent United from meeting financial targets, again leading to default.

United began debtor-in-possession (DIP) financing talks late in September, even as it pursued Air Transportation Stabilization Board (ATSB) approval of a $1.8-billion loan guarantee, because it knew it would have to declare bankruptcy if the ATSB turned it down. It negotiated eventually with the four lenders and with GE Capital, which at one point submitted a draft proposal for $2 billion in bankruptcy financing, but on less favorable terms.

Todd Snyder, a managing director of UAL financial consultant Rothschild Inc., said in an affidavit that the lenders questioned the revenue projections in United's business plan throughout the negotiations. "Similar to the ATSB, the DIP lenders considered United's internal financial projections to be far too rosy," Snyder told the court. This led to a "club" facility in which each lender limited its risk by taking only a quarter of the $1.2 billion. Bank One's extra $300 million reflects its affiliation with First USA Bank, which co-brands United's frequent-flier credit card. First USA buys miles and distributes them to cardmembers' accounts for credit card purchases, a "significant source of revenue to United." Because of this relationship, Bank One was willing to provide the larger loan.

This double-DIP approach depended on approval of both facilities, Snyder said. Bank One wouldn't have made the initial loan without the second facility's back-end financing, because Bank One knew United would need much more money later on. And the three additional lenders "refused to provide a significant back-end loan without Bank One's substantial initial loan."

In the end, United adjusted its business plan for the DIP lenders in ways it wouldn't for the ATSB. "Like the ATSB, the DIP lenders did not believe that the business plan [presented to the ATSB] had a reasonable chance of succeeding," United told the court. "According to the DIP lenders, regardless of the size of the DIP loan, [United's] cost structure precluded [it] from achieving profitability. [United] then went back to the DIP lenders with a revised business plan that contained significant cost reductions." This plan will require concessions early in bankruptcy from labor and other stakeholders that go well beyond what failed two weeks ago to satisfy the ATSB.

For United to avoid breaching the DIP covenants it will need cost savings "virtually immediately," the carrier told the court. The bankruptcy process will have to deal with its labor contracts, preferably through agreements with its unions but through the court itself, if necessary "as a decidedly last choice."

United's Marching Orders
To avoid losing its $1.5 billion in debtor-in-possession financing, United Airlines must keep its cumulative losses, dating from Dec. 1, 2002, within these totals:
$964 million on Feb. 28, 2003
$881 million on Mar. 31, 2003
$849 million on Apr. 30, 2003
$738 million on May 31, 2003
$585 million on June 30, 2003
$448 million on July 31, 2003
$219 million on Aug. 31, 2003
$98 million on Sept. 30, 2003
It must make cumulative profits, dating from Dec. 1, 2002, of at least
$46 million by Oct. 31, 2003
$112 million by Nov. 30, 2003
And it must make cumulative profits of at least
$575 million during the 12 months ending Dec. 31, 2003
$901 million during the 12 months ending Jan. 31, 2004
$1.084 billion during the 12 months ending Feb. 28, 2004
$1.196 billion during the 12 months ending Mar. 31, 2004
$1.297 billion during the 12 months ending Apr. 30, 2004
$1.383 billion during the 12 months ending May 31, 2004
All amounts are earnings before income taxes, depreciation, amortization and rents.
Source: UAL bankruptcy court filings

[vmommo]

Check out the following DAL stuff which is pretty interesting!


Subject: Delta Airlines Quarterly 3-day "Leadership Meeting" - with major Delta corporate leadership presentations




Delta Airlines Leadership Meeting--This past week all of the Chief Line Check Pilots, Base Chief Pilots, and some Fleet Captains attended the quarterly three day "leadership meeting".
(formerly known as the quarterly Chief Pilot Meeting) One of the big areas for Pilot Standards is that our boss Jim Graham as of 1 January 03 will report directly to the Director of Flight Operations and Pilot Standards will be moved under Flight Operations from Flight training and Standards.

Here is a recap of the major presenters at this past week's Leadership Meeting:





Joe Kolshak

* Pace and magnitude of Change in our industry is accelerating.

* UAL Bankruptcy

* 18-24 months before they emerge from bankruptcy.

* When they do emerge from bankruptcy they will be a much smaller carrier.

* Anticipate UAL network reductions in the 12 to 18 % range before they emerge from bankruptcy.

* UAL still burning $10 million a day from operations.

* UAL pension fund is under funded and in bad shape.

* UAL will probably park all their 747s

* Virgin Atlantic is not a likely white Knight to come to UALs rescue.

* Pacific operation and Heathrow slots are likely items that could be sold.

* DAL is most likely interested in some of the Pacific operation.

* Heathrow slots worth $500 Million but UAL will most likely ask $billion.

There is a high likelihood that the British will go to open skies at Heathrow in next 5 years making a high dollar purchase of Heathrow slots a possible bad investment.

* USAIR Bankruptcy

* Unless additional concessions are made by the employee groups and additional cost reductions are implemented by the airline it is increasingly likely that USAir will go into Chapter 7 liquidation.

* It is unlikely that USAir will sell its parts as a recovery strategy to emerge from Chapter 11 Bankruptcy.

* DAL Cash Burn

* We are burning $3-$4 million a day presently from operations

* We were cash positive until this quarter.

* We look to be cash positive again in early 03 and for the remainder of the year barring a catastrophic event.

* UAL Pilot Pensions

* UAL Pilots pensions at the very least have been drastically reduced.

* All of the UAL retirement ESOP plans are most likely worth zero.

* Pension Benefit Guarantee Corporation (PBGC) only guarantees a max of $28,000 annually for individuals retiring between 60-65 years of age and $44,000 annually for individuals retiring after 65 years of age.

* For pilots that have already retired the qualified portion of the annuity would probably be reduced by 50%.

* For those pilots that have not retired from UAL the PBGC safeguards could be their retirement from UAL.





Charlie Tutt

* What are we going to do on a day to day basis?

* We are not going to change from having a safe and secure operation.

* Continue to make the tough calls and they will be supported.

* Two things are fundamentally changing our industry.

* They are the Low Cost Carriers (LCCs) and the internet.

* Unit costs have to be reduced while still maintaining our critical mass.

* High cost legacy carriers (those mainline carriers in business before de-regulation) WILL NOT SURVIVE without adapting.

* USAir pilots have taken 25-30% pay cuts by position.

* UAL employee groups had three UAL Board of Director seats.

* Any two of these individuals could veto the hiring of a new CEO.

* Most likely scenario for these seats is that they will be eliminated during the bankruptcy proceedings.

* Delta is looking to cut costs by $billion in 03 and a cumulative $2.5 billion by 05. These cuts need to be permanent .(Do not look for snap backs)





David Watson (Director of Crew Resources)

* More furloughs will be announced in February.

* CRAF activation will most likely involved our 76s as we are the only supplier of med evac type aircraft and our 76s are the chosen ones.

* Several network initiatives are under way to use similar aircraft type primarily in certain regions to gain efficiencies.

* Low Cost Carrier (LCC) is still a work in progress.

* Will be crewed by mainline pilots out of existing bases.

* It is cost prohibitive to establish new 757 bases at this time.

* Our sick leave rate is up especially on the international F/O categories.

* Look for another advance entitlement/displacement to be posted in January or February.

* 777 & 76ER entitlements will be posted as well as more 727 & MD-11 displacements.

* Average regular line pilot flies on a 12 month average 52:19 monthly.

* Average reserve line pilot flies on a 12 month average 21:48 monthly.

* For September 02 those number were actually 54:00 hours for a regular line pilot and 27:00 hours for a reserve.





Mike Bell (Vice-President Schedule Development)

* Revenues are falling short of plan for the year.

* Yields are also below plan for the year.

* The present quarter is not a good quarter for us as we are still losing money.

* Delta is going after charter business as much as possible especially during this holiday season.

* MD-11 retirements to save $100 million annually after taking all factors into account including monthly lease payments and storage costs.

* Shuttle LFs are less than 50% using the 737-800s.

* Using the 737Gs beginning in early 03 will allow us to match capacity to demand on this segment of our operation.

* We use to be able to charge $200 per passenger on the shuttle.

* We now average $35-$45 per passenger.

* We are carrying about 40-50 people on average on each shuttle flight.

* Shuttle is not profitable today.

* We do have a wish list if USAir goes Chapter 7.

* Trans-Atlantic from PHL is one possibility.

* Facilities and Slots in the DCA & New York markets is another.

* Our wish list from UALs filing for Chapter 11 centers around their Pacific operation and their Heathrow slots.

* We are testing a premium coach product using some of our shuttle aircraft.

* These aircraft have all leather seating and 6 inch pitch seats.

* MD-11s leaving the fleet will save $100 Million annually.

* We presently are only flying 11 of our MD-11 in international service.

* We have 13 extra 76ERs that are flying domestic.

* At present our international fleet numbers 74 aircraft.

* 15 of those aircraft are MD-11s, 8 are 777s, and 51 are 76ERs.

* Mike Bell stated that the MD-11s are being STORED. Don't read too much into that but he did state that he thought the 73Gs returning to service just goes to show you that depending on the revenue environment anything is possible.

* DFW restructuring is under way.

* DFW loses money at present. Company is going to stick with it but fix it so it is profitable.

* That fix is to reduce the gauge both in terms of types and numbers of mainline departures flying into and out of DFW and increasing the number of RJs flying in this market to better match capacity to demand.

* Most of the loss (40%) in the DFW hub is attributed to the early and late bank of flight.

* We will be moving those banks to different times in the day to once again better match demand.

* We have had limited success in making pricing changes stick.

(Increasing fares)

* We can not unilaterally raise fares.

* We don't control the distribution channels.

* Internet is the main supplier of airline seats.

* When we make changes we try to do it approaching a weekend and see if it is matched on Monday morning. If not we have to retrench.

* We actively revenue manage every flight every day to accurately demand forecast so that if demand does not meet prediction we adjust pricing until it does.

* We overbook for see little actual oversell

* Our goal is to get every flight full while maximizing revenue.

* Every hub we fly today is unprofitable.

* On a market basis some markets are profitable. (About 20% of the markets we fly are profitable)

* All 21 767-400 aircraft are flying. we did have two until this fall in the desert.

* If the Iraqi situation escalates look for a reduction of about 10 international flights. No details on which city pairs.





John Salvaggio (President of the Low Cost Carrier)

* Aim of the LCC is to compete in an ever changing revenue environment.

* SWA and Jet Blue have changed the game.

* We used several focus groups to help identify what products we should offer.

* Our product on the LCC will have simplified fare structure and remove the hassle that fare searches produce.

* Fare structure will most likely be between $89-$199.

* Everything being done by the LCC will be looked at by Delta for possible implementation.

* Name of LCC is yet to be decided.

* Have already been selling tickets under the Delta Express label.

* Aircraft will be flown by Delta pilots that will work for Charlie Tutt.

* All seat on the LCC will be coach to start with.

* We get very little revenue for FC or even full fair coach seats.

(About 2% of our revenues)

* Our cost structure on the LCC will be lower than Jet Blue's.

* One goal is to keep the CASM on the LCC in the 7 cent range.

* John does not expect to be profitable the first year but would not be surprised if the operation did turn a profit in its first year.





Michele Burns (CFO)

* She feels it is 50/50 on whether or not USAir will go into Chapter 7.

* She feels USAir will not sell parts as a strategy for survival.

* UAL on the other hand according to Michele will most likely sell some parts as they reorganize.

* United States in Michele's opinion is too vast geographically to be served by point to point carriers. However, consolidation is needed as the US market does not need 6 or 7 Hub and Spoke carriers.

* Michele echoed the fact that Delta is facing unprecedented financial challenges.

* She sees little revenue recovery in the next year.

* The three areas of emphasis are cost containment/reduction, Liquidity, and matching capacity to demand.

* Airline industry capacity as measured in ASMs in the 3rd quarter of

02 compared to the 4th quarter of 00 is down 3.5%. Delta's capacity as measured in ASMs for the same period is down 4.4%.

* Delta's mainline capacity for this period is down 6.5% while our connection carrier capacity is up 34.4%%.

* Michele stated that RJs are producing system revenue and making segment profits that if not present would have resulted in an even greater ASM decrease than we experienced.

* Our revenues over this same period are down 14.9% and our RASM is down 2.4% YTD 2002.

* Our liquidity is at $2.6 Billion. AMRs is $2.8B, UALs is $1.3B, NWAC is $2.4B, CAL is $1.3 B, and LUV is $2.5B.

We do have borrowing power.CAL has NONE.

* Our outlook for 03 is not good but Michele's goal is to have the same amount of liquidity at the end of 03 hat we have going into 03.

* We are working with our suppliers and they are being more willing to partner with us to reduce costs or capital outlays without penalties.

We are Boeings largest customer and Boeing is cognizant of that fact.

* Our action plan is to match capacity to demand by utilizing the right aircraft on the right route at the right time.

* We must reduce costs by $1.5B in 03 and by a cumulative $2.5B by 05.

* We now manage for cost versus revenue generation.

* We will continue to leverage technology to expedite our customers through the airport and to their gates.

* We have the most Kiosks in the industry for self check-in.

* We are putting continued and increased emphasis on reservations call in center renewal.

[Airbubba]

>>* UAL Bankruptcy

* 18-24 months before they emerge from bankruptcy.

* When they do emerge from bankruptcy they will be a much smaller carrier.

* Anticipate UAL network reductions in the 12 to 18 % range before they emerge from bankruptcy.

* UAL still burning $10 million a day from operations.

* UAL pension fund is under funded and in bad shape.

* UAL will probably park all their 747s

* Virgin Atlantic is not a likely white Knight to come to UALs rescue.

* Pacific operation and Heathrow slots are likely items that could be sold.

* DAL is most likely interested in some of the Pacific operation.

* Heathrow slots worth $500 Million but UAL will most likely ask $billion. <<

Sounds pretty optimistic, how long ago was this meeting?

[I. M. Esperto]

The latest:

http://www.iht.com/cgi-bin/generic.cgi?template=articleprint.tmplh&ArticleId=82276

http://www.iht.com/cgi-bin/generic.cgi?template=articleprint.tmplh&ArticleId=82310

[Airbubba]

As UAL had hoped, the judge ordered the IAM to take temporary pay cuts to buy time for negotiating more permanent concessions. The numbers still look look bad but maybe this will let them make the first of several hurdles in the DIP financing package according to the article below:


Pay cuts ordered for UAL machinists

Judge rules to temporarily slash wages by 13 percent

CHICAGO, Jan. 10 — A U.S. bankruptcy judge on Friday ordered temporary 13 percent pay cuts for unionized machinists at United Airlines, buying the airline more time to negotiate broad concessions at its entire unionized work force.
A U.S. bankruptcy judge on Friday ordered temporary 13 percent pay cuts for unionized machinists at United Airlines, buying the airline more time to negotiate broad concessions from its entire unionized work force.
United, a unit of UAL Corp. and the world’s second-largest airline, filed for bankruptcy on Dec. 9.
Since then, four of the carrier’s five unions had agreed to temporary pay cuts to help the airline reorganize and meet specific financing requirements by lenders.
But the International Association of Machinists, representing about 37,000 workers, argued to the judge that the airline had not shown why the cuts were needed now.
In his ruling issued on Friday morning, U.S. Bankruptcy Judge Eugene Wedoff agreed with the airline that changes to the IAM’s collective bargaining agreements were “essential, at the present time, to continue United Air Lines Inc.’s business and to avoid irreparable damage to its estate.”

MUTED REACTION FROM UNION
In a message to members, the IAM had little reaction to the order other than to say it would advise rank-and-file workers of additional developments. The IAM said the temporary pay cuts will remain in effect until either a broader concession package is negotiated and approved by the court or until the court rejects the current collective bargaining agreements altogether and United imposes new terms.
“The reductions will be applied to each factor that makes up total hourly pay, including base rates and all individual premiums,” the IAM said.
Wedoff said to be fair to the other unions, which agreed to take pay cuts effective Jan. 1, the IAM union members’ pay will actually be cut by 14 percent from Friday until May 1. That would be equivalent to the 13 percent reduction retroactive to Jan. 1 that the company was seeking, he wrote.
Pilots’ pay is being cut the most, at 29 percent, and flight attendants’ salaries are being trimmed by 9 percent.
Smaller unions representing flight dispatchers and meteorologists are also taking 13 percent cuts.

United has about 80,000 employees, nearly 80 percent of whom are represented by labor unions.

SAVING $80 MILLION A MONTH
The airline, based in Elk Grove Village, Illinois, had some of the highest labor costs in the industry as it headed into bankruptcy. Already hurt by a slowdown in lucrative business travel, United saw its losses balloon after the Sept. 11, 2001, attacks on New York and Washington, and ultimately it was unable to keep enough cash to pay various debt obligations.
A source familiar with the matter told Reuters the magnitude of the pay cuts now secured from the unions represents the total amount of what was needed to meet requirements of loans known as debtor-in-possession financing.

The labor savings represent about $80 million per month in cash, he said. Now the airline has until May to make sweeping changes to work rules that unions follow, he said.
The institutions that have loaned United a total of $1.5 billion to keep flying in bankruptcy are J.P. Morgan Chase, Citigroup, Bank One and CIT Group.

[redtail]

Are court ordered pay cuts preferrable to a long term concessionary contract that lasts longer than the present situation? The IAM may have gotten its members a better deal by going this route.

[A-V-8R]

This is what UAL will ask the Bankruptcy Court for:


Section 1113(c) Proposal Term Sheet
ALPA

Objective Restructure the current Agreement to enable the transformation of United consistent with the announced business plan.
Effective Date
[______] The effective date of the new Agreement will be the first calendar day of the calendar month following the execution of the new collective bargaining agreement. [________, 2003]

Term
[Six years:____] The amendable date of the new Agreement will be ______, 2009.
Revise the duration clause to provide:
¡§This Agreement shall become effective [________, 2003] and shall continue in full force and effect until [_______, 2009] and shall renew itself yearly without change unless written notice of intended change is served in accordance with Section 6, Title I of the Railway Labor Act, by either party at least thirty (30) but not more than sixty (60) days prior to [_______, 2009] or any year thereafter.¡¨

Compensation

Discuss methods of reaching cost saving objectives through compensation adjustments including:
„h Eliminate the base hourly pay increases in Section 3-B scheduled for May 1, 2003 and May 1, 2004.
„h Eliminate the international override payments incentive in Section 3-B-1-d.
„h Eliminate the incentive pay for late night flying in Section 3-B-7-a.
„h Revise the junior manning assignment override pay in Section 3-B-7-c to 10%.
„h Revise base hourly pay rates in Section 3-B on the Effective Date by reducing it by 29%.
„h The new reduced base hourly pay rates will be increased by 1.5% each year effective on the anniversary of the Effective Date until [_________, 2008].
„h Revise minimum monthly guarantee in Section 3-B-4-a from 75 hours to 60 hours.

Scope and Job Security

Discuss the following business flexibility enhancements that can be used in transforming United consistent with the business plan:
Low Cost Carrier Competitive Solution Create a United Sub-brand that can be deployed in markets that are identified as ¡§low cost¡¨ markets and in which there is an inability to segment fares; the result to be a product that is competitive with Frontier, Jet Blue, Southwest, ATA, etc.

Furlough Protection

Eliminate furlough protection for all pilots as currently provided in Section 1-H-1 to allow the workforce to seek its proper level over the short and long term consistent with the business plan.

Number of Regional Jets and their deployment

Eliminate the restrictions in Section 1 on (i) the number of Small Jets; (ii) the operation of Small Jets; (iii) the relationship of Small Jets to the mainline fleet and number of mainline pilots; (iv) code sharing with carriers who fly over 70 seat RJs; (v) other feeder carrier limitations to enable small jets to be deployed in the appropriate markets consistent with the business plan.
Size of Regional Jets Revise Section 1-M-28 to seventy (70) seats in order to compete effectively in 70 seat markets consistent the business plan.


Number of Pilots

Eliminate Section 1-C-1-g minimum number of pilots related to SJs. Eliminate Section 1-H-2 absolute minimum number of pilots. Permit the number of pilots to be realized through the business plan.


Fleet Number

Eliminate Section 1-H-3 absolute number of aircraft. Eliminate Section 1-B-4-a restricting carriers to whom aircraft may be sold. Permit the number and type of aircraft to be realized through the business plan.

Number of Block Hours

Eliminate Section 1-H-4 absolute minimum number of block hours. Eliminate Section 1-C-3 minimum number of international block hours. Permit the number of block hours to be realized through the business plan.

Domestic Code Share Limitations Eliminate conditional language in Section 1-C-2-a and eliminate Sections 1-C-2-a (1), (2) and (3) and 1-C-2-b. Permit United to enter into domestic alliances as needed to respond to rapidly changing industry environment as indicated by the business plan.

International Code Share Limitations

Eliminate conditional language in Section 1-C-3 and eliminate Sections 1-C-3-a, b, c, d, and e; 1-C-5-a. Permit United to enter into international alliances as needed to respond to the rapidly changing industry as indicated by the business plan.
Route Transfer Eliminate Section 1-B-4-b to enable route transfer as needed in the business plan.
Cargo Eliminate Section 1-C-6 requiring Company to endeavor to ship all cargo on Company aircraft and preventing profit sharing on cargo with other carriers. Permit United to coordinate with other carriers to maximize revenue and respond to rapidly changing industry as indicated by the business plan.


Work Rules, Productivity and Efficiency

Discuss the following work rule changes that can be used in transforming United consistent with the business plan:


Hours Maximums


Revise monthly, actual and scheduled flight time limitations in Section 5-B-1 and 5-B-2; and Letter 91-2, L.1 and L.2 from 81/85 to 92 in all circumstances to permit more productivity. Eliminate bank provisions.

Duty Rig

Eliminate Section 5-G-3-a and related sections to remove scheduling restriction that penalizes certain IDs.
Trip Rig Revise Section 5-G-3-c and related sections to provide ratio of 1:4.5 to reduce penalty on certain IDs.
Minimum Day Eliminate Section 5-G-3-b and related sections to reduce penalty for certain IDs.

Days Off

Revise lineholders minimum days off to 10 days; revise reserves to 12 days of which 4 are moveable to increase productivity.
Atlantic Augmentation Eliminate Letter 01-14 and modify Letter 91-2 to affirmatively state that augmentation is not required on Atlantic operations under 8 hours.


QWL Letter


Revise Letter 00-20 to provide ¡§best efforts¡¨ to meet quality of life parameters.
Shuttle Letter Delete Letter 94-




Staffing


Discuss the following changes that can be used in transforming United consistent with the business plan:


International Relief Pilot


Create International Relief Pilot (IRP) applicable to two man crew aircraft to provide cruise pilot as augmented crew.


Manpower Formula


Eliminate manpower formula in Section 8-B. This provision is linked to the elimination of the minimum pilot provisions in Section 1.


Training Expense


Apply a 36-month freeze to each position award.


Preferential Bidding


Implement a preferential bidding system to replace line bidding as provided in Section 20. Amend/eliminate all provisions of the Agreement that are inconsistent with preferential bidding. Accordingly reduce the notice period for involuntary vacation leave from 45 days to 30 days.


Domicile Closing


Eliminate domicile closure language from US code share letter of agreement and permit any base to be closed where closure is warranted from a business plan perspective.


Training Staffing


Revise Section 1-B-3, Pilot Instructor Letter 98-1, 98-8, 89-2 to permit non-seniority list simulator instructors, sale of training center and greater flexibility in sale of simulator surplus time.


Benefits


Discuss the following benefit changes that can be used in transforming United consistent with the business plan:


Pilot Defined Benefit Plan


Revise multiplier in the Pilot Defined Benefit Plan as provided in Exhibit A.


Pilot Directed Account


Eliminate Company contribution to Pilot Directed Account as provided in Letter 00-18, B-2. Retain pilots¡¦ vested balances.


New 401(k)


Establish a 401(k) retirement account as set forth in Exhibit A.
Retiree Medical The employee contribution to the cost of retiree medical for pre and post Medicare retiree medical benefits may be modified consistent with Exhibit __.


Retiree Life Insurance


Revise Letter 00-19 and all other provisions of the Agreement as necessary to provide retiree life insurance as provided in Exhibit A.


Medical/Dental Plan Equality


Revise Letter 00-19, A and C and other provisions of the Agreement as necessary to replace all current medical and dental plans with a uniform plan (or plans) to be available to all Company employees as set forth in Exhibit A.


Medical/Dental Plan Contribution


Revise Letter 00-19, A and C and other provisions of the Agreement as necessary to provide that all employees shall contribute to the cost of coverage for all company-sponsored medical, dental plans as set forth in Exhibit A.
When an employee chooses a Medical HMO or Dental HMO option (if available), if the cost of the HMO or DHMO exceeds the cost the PPO, the employee share of the cost for the HMO or DHMO shall be equal to the employee share of the cost of the PPO option plus 100% of the additional cost.


Flexible Spending Account


Current program of Health and Dependent Care Accounts, with maximum annual contribution of $5,000 per account. Forfeitures to be used for plan administration.


Active Employee Life Insurance and AD&D, LTD


Revise Agreement as necessary to provide consistent with Exhibit A:
„h Company paid Life Insurance: One times annual base pay (max $200,000).
„h Contributory Life Insurance: Up to eight times annual base pay.
„h AD&D: Company-paid (none). Offer contributory coverage on same basis as current plan.
„h Revise pilot long-term disability plan as provided in Exhibit A.


Per Diem



Revise hourly per diem expense allowance in Section 4-A to $1.50 domestic and $1.75 international.


Vacation Accrual


Revise Section 11 to provide maximum 35 days of vacation accrual and pay.


Vacation Overlap


Eliminate the vacation overlap pay provision in Section 11-C-1 by paying 2.6 hours per vacation day.


Layover Hotels


Revise Section 5-G-1-c to eliminate the ¡§downtown or downtown-like¡¨ requirement for layovers equal to or greater than 13 hours and treat all layovers as field layovers.


First Class Deadhead


Revise Section 5-D-3 and 5-D-4 to eliminate booking pilots in first class on and off line. Revise corresponding international provisions in Section 2-B.


Paid Moves



Discuss reaching cost savings objectives through revision of Section 10-A to provide paid moves only when a pilot experiences an involuntary domicile transfer. Further, only provide paid move when pilot actually moves to his domicile.


Sick Leave


Revise Agreement to provide that sick leave accrual, sick leave pay and medical leaves of absence shall be as provided under ¡§Short Term Disability/Sick leave¡¨ in Exhibit A.


Occupational Sick Leave


Eliminate all current provisions providing for occupational sick leave or injury leave and/or pay. Occupational injuries shall be treated as sickness and sick leave, and pay during such sick leave shall be available as provided under ¡§Short Term Disability/Sick leave¡¨ in Exhibit A.


Furlough Pay


Revise Agreement as necessary to cap severance pay at a maximum of eight weeks.


Sick Leave Pay


Revise Section 13-A to provide that pilot will be paid only for the actual hours that are debited from the sick leave account.


Company-paid Union Time


Revise Letter of Agreement 91-30 dealing with Company-paid ALPA ID drops.


Force Majeure


[To be discussed]
Grievance Withdrawals ALPA to withdraw specified grievances with prejudice. List to be provided.
Success Sharing Establish an appropriate success sharing program to ensure that employees participate in United¡¦s successful transformation.


This is the future of US Airline Industry under George Bush.

[411A]

Yes, could be the future of the airline industry under dubbya,
HOWEVER, expect that nearly all financially straped airlines will do the same.
And why not?

Is UAL somehow unique?:rolleyes: (other than being in the biggest sinking boat...overpaid and underworked)

[Wino]

Everyone is crying about labor and how managment needs protection from the unions.

My question is who is going to protect the workers from spectacularly bad management of which United is the poster child?

Cheers
Wino

[Kaptin M]

Seems like a cyclical pattern doesn't it - in times of pilot excess, tighten the screws further.
Well if they want to pay less, then they must expect to GET less. If they want to increase the hours from 60 to 65 before overtime cuts in fine - I'll fly slower.

The PROBLEM within most airlines today are the legions of NON-REVENUE PRODUCING (NRP) office workers drawing a salary off each aircraft.

There are too many "managers" drawing wages for doing what? Justifying their 5 and 6 figure incomes because they have downgraded pilots' travel from First Class to EY, or found a night-stop hotel that's $15 per night cheaper.

It's time to put the broom through the NRP's. Get rid of the parasites, and the dead wood.

How many staff per aircraft does your airline carry?
But how many actually CONTRIBUTE to its INcome?

[Airbubba]

Yep, with all those work rules gone UAL would be no better than an ex-pat job (but with a 29% pay cut would still pay a lot more...).

Well, unless things get turned around soon, I don't think we'll have to worry about much of this opener anyway.

[West Coast]

Not a huge union guy, but Wino is correct. It was just a small number of years ago UA was making record profits. 911 and the economy are part of the new UA equation, but questionable management is also.

[Capt H Peacock]

Chapter 11 is a curious animal for those who live outside the USA. In other parts of the World, if a company is bust, it’s bust and goes into receivership. The receiver then decides on the best way of protecting the interests of the creditors, and that may well be to keep the company running as a going concern.

Given that Chapter 11 has as a possible outcome, UA continuing in its present form once revenues pick up again, it’s entirely feasible that we may see the airline fit and well again in the medium term. In other words, the authorities do not envisage that Chapter 11 as a mechanism for closing down a company, merely giving it ‘intensive care’ in the hope of a full recovery.

Assuming you hold contemporary American corporate governance in the same disdain as we do ours, one might be forgiven for thinking that the board of UA are ‘trying it on’. Certainly the document you describe looks like one-handed literature for airline execs to read in the privacy of the little boys room.

You might consider calling their bluff?

[A-V-8R]

No bluff to call I'm afraid....

The way it works is that this letter is part of a Motion filed by the Company with the Court.

We have X number of days to negotiate an agreement with the Company; if no agreement by the specified date, the company presents this with their justification of dollars saved to the Court and asks for it.

The Union can provide rebuttals, but in the end, if it is in the needs of the Company to stay in business, the Judge can approve or modify it as he sees fit.

One of the reasons I posted this, is that if we do emerge from bankruptcy, no Airline in the US will be able to compete with us.

As we once set the bar for the highest salaries in the US; within two years of that acheivement we will set the bar for the lowest salaries soon and working conditions unheard of before.

Just as an aside, with the pay cuts approved by the Union, we appear to save UAL about 7 million dollars a day.

Losses are currently thought to be five and a half million dollars a day, no one outside of the bean counters knows for sure.

This gives UAL an instant profit of 1 1/2 million a day right now.

That 20 million dollars a day lost so often quoted was the result of one time charges related to grounding the aircraft during the one particualar month.

American and Delta will have to file for bankruptcy to match UAL's cost savings.

Overpaid and underworked?

Looking at my logbook, I averaged 82 hard hours a month last year with four weeks of vacation. (19 years with UAL). I think this would be close to the average for 767 Int'l pilots holding a line in my domicile. Simply because this is what the lines are being built to.

I will admit that I almost exclusively fly international, which makes for more productive flying (because of less sits between shorter flights)

Overpaid is in the process of being corrected very soon....

[progolfer]

Kaptain M, couldn't agree with you more. I often wonder how airlines justify so many management types. Sending peices of paper to one another, then patting each other on the back and awarding each other massive pay rises doesn't seem to help profitability the way I see it.

[411A]

Kaptin M is most certainly correct about the non-revenue producing folks in many companies....a clean sweep is needed in an effort to remain competitive (or indeed alive).

But, as to flying slower...not a good idea, as flt ops management would find out it in short order. Not much you can hide from the quick access recorder.

[steamchicken]

Just feeling that rare sensation of agreeing with Wino....the importance of protecting the interests of the hard-working from the management's poor performance. Indeed.

[Reverend Doctor Doug]

Just a question to those in the know. Wasn't United largely owned by the employees, who also had a seat or two on the board?
If this is the case, isn't a bit harsh to be blaming management for the problems?

[GBXRE]

Not only did the employees own the majority of UAL, but they also vetoed any cost savings programmes that would have an adverse effect on their take-home pay and negotiated themselves massive pay increases. Most companies build up reserves for rainy days, but the employees saw reserves as available money that they could spend on themselves.

Bad idea!

[Ignition Override]

As for people on an airline's payroll, when Howard Hughes bought Air West Airlines many years ago, he was reported to have walked through the corporate offices, asking people what their job was. People who had troubling describing their function(s) were kicked out.

Is there no modern version of Howard Hughes? Incidentally, Hughes had been an experienced pilot and designer in his younger years. Many early entrepreuners reportedly had no backgrounds as accountants or lawyers-they were supposedly very interested in aviation.

[Airbubba]

>>Not only did the employees own the majority of UAL, but they also vetoed any cost savings programmes that would have an adverse effect on their take-home pay and negotiated themselves massive pay increases.<<

Well, maybe a miscalculation but as former UAL ALPA MEC Chairman Rick Dubinsky famously told former UAL CEO Goodwin:

"We don't want to kill the golden goose. We just want to choke it by the neck until it gives us every last egg."

[bean_counter]

From the Delta pilot's brief posted earlier in this thread:

"UAL employee groups had three UAL Board of Director seats.
Any two of these individuals could veto the hiring of a new CEO. "

If the unions have the power to select a CEO they certainly have the power to get company management to remove the non-revenue earning employees also described earlier in this thread - held responsible by some posters for the overwhelmingly bad state airlines find themselves in now, with United and US being the most extreme examples.

A couple of years ago the union goon's were praising United management for their decision to award industry leading contracts and now they're asking for protection from their management ?

Can't have it both ways - the management was union appointed and overseen.

This is a classic example of letting the lunatics run the asylum

They had a choice - run it sensibly and profitably or milk it till it drops. We're all watching the enevitable result.

What beats me is why any institution in its right mind would put up DIP Financing, unless of course it's to get first pickings over the carcass..................

[redtail]

What happens if UAL's labor cost saving doesn't lead to a corresponding operating cost decrease? How successful has US Airways been in decreasing their costs by concessions and bankruptcy?

[411A]

Actually Redtail, from reports in the aviation press, US Air has a much better chance than UAL...they bit the bullet big time (had NO other choice).

[Wino]

Bean counter,
owning an airline vs controlling an airline are 2 different things. Once they pick the ceo there is nothing to stop them from doing very stupid things.

The whole IDEA of the ESOP was that the employees would take an enourmous pay cut for 5 years to buy the airline, at the end of five years they would have a seamless contract with a cost of living adjustment, instead of the usual 2 years of insanity during the "negotiating process". Well, once they had the ceo wass picked he went off to business as usual and forgot that he was supposed to get along with the employees, so he engineered a buy out of USAIR that would make him rich while harming the employees, started avolar.... The employees couldn't stop it either.

In the mean time contracts were allowed to expire without the "seamless transition" that had been promised. So rather than a mild cost of living adjustment that would have been a couple of percent, GOODWIN so soured the relationship that it would take 26 percent to settle the problem. As goodwin was busy buring down the airline anyway (Usair, Avolar, and a host of other exceptionally stupid moves) what difference did it make? WHile the unions could veto a pick, they couldn't impeach one that was sitting.

Cheers
Wino

[Airbubba]

>>In the mean time contracts were allowed to expire without the "seamless transition" that had been promised. So rather than a mild cost of living adjustment that would have been a couple of percent, GOODWIN so soured the relationship that it would take 26 percent to settle the problem. <<

Here's the Rocky Mountain News' account of what happened next:

...April 12, 2000, the date the pilots' old contract became amendable, came and went without a deal, even though executives had promised a seamless transition to a new contract. It was the date on which pilots were expecting to get raises - after six years of receiving lower pay in exchange for a 25 percent stake in the airline.

Joe Hopkins, a spokesman for United, acknowledges that negotiating sessions were canceled but disputes that it happened often.

"Our negotiators worked very hard in the spring and summer of 2000 to close the gap between the company's proposal and the union's demands," he said.

Still, the pilots felt burned when April 12, 2000, passed without a deal.

"It all started going downhill on April 12," Palazzolo said.

'Summer of hell'

Feeling betrayed, the pilots began to refuse to work overtime. They grew more defiant in May, when United announced the US Airways merger. The pilots opposed the deal because many would lose seniority to US Airways pilots and because they saw it as a flawed strategy.

The pilots' slowdown prompted more than 20,000 flight cancellations in summer 2000, infuriating travelers in what would be dubbed "the summer of hell."

When the pilots demanded a rich contract, Jim Goodwin, United's chief executive at the time, relented, hoping it would fix the carrier's problems. He also seemed to be trying to buy the pilots' support for the merger, experts said.

But the pilots' deal - providing raises of up to 28.5 percent - led to industry-leading contracts for other United workers and better pay for employees at other carriers. The industry's costs rose at a time when the economy was starting to slide.

"It was a completely absurd payoff to labor for labor peace," said Seattle-based aviation consultant Scott Hamilton.

The double-whammy of the U.S. recession, which prompted steep declines in high-margin business travel, and the Sept. 11 attacks, which weakened travel demand, has battered United, leaving it with not enough revenue to cover costs...


http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_1359784,00.html

__________________________________________________

Anyway, as always, there is plenty of blame to go around. Asset sales and quite possibly liquidation are coming, white knights and sharks are circling the bankruptcy court as yet another once great airline wonders how the world can do without them...

[redtail]

411A posted "Actually Redtail, from reports in the aviation press, US Air has a much better chance than UAL...they bit the bullet big time (had NO other choice)."

Um, maybe not big enough, as US Airways had to go back for round two of concessions (and lay offs) from the employees. Two more rounds and they will reach the EAL line. At my station, the local US Airways employees are taking furlough rather than relocate in the system, as they feel it is pointless to spend the money to move for a company that will soon go out of business.

As for UAL, I am surprised and glad the IAM stood their ground and is trying to force UAL to have a business plan that makes economic sense, rather than just trying to band-aid their problems through cutting labor costs. What's going to happen when the bankruptcy judge decides that UAL has no other plan than running on inertia and listening to the press?

[Airbubba]

>>As for UAL, I am surprised and glad the IAM stood their ground and is trying to force UAL to have a business plan that makes economic sense, rather than just trying to band-aid their problems through cutting labor costs.<<

Yep, history has shown that the IAM isn't noted for self preservation instincts...

[GlueBall]

Irrespective of "Eleventh Hour" maneuvering; without an imminent magical rescue by a financial knight, UAL is spiralling into the grave. It's strictly a numbers game until February 28th when Debtor In Possession stipulations come full circle. That is, UAL may not exceed $964 Million in operating losses since the clock was started December 1st, 2002.

Besides the double digit recession, business right now is down as it usually is during the traditional weak Spring travel season. With current projected labor savings of $80 Million per month, the numbers still come up bright red.

If one can imagine that during the entire month of December UAL had lost an average of $22 Million per day and is today still losing an average of $15 Million per day then altogether the company has already trashed $877 Million....which leaves only $87 Million left to burn until the deadline.

It is as it was when Braniff, Eastern and PanAm....had simply run out of cash.
:(

[AA717driver]

One piece of the puzzle the Rocky Mountain News failed to include was the gross overscheduling of the airline during the summer of 2000. My friend was a 737 "Classic" Capt. at that time and he would frequently call and remark about the delays due to aircraft shortages.

Management forgot to schedule adequate down time for maintenance and built a schedule that relied on the pilots flying over 80 hours. The summer spiraled downward--aircraft wore out and bigger things broke and the pilots got tired of being called on their days off and extended.

What's Goodwin got to say for himself? "Waiter, another round of Margaritas, por favor!" :mad: TC

[Ignition Override]

AA717: Does anyone in PpruneLand (or any 'Outlanders') know about how much Goodwin's stock was worth when he cashed it all in, at least to the nearest $5 million? I believe that the British/Irish and Euro (no pun intended) types say milliard instead of million.

Aside from that, had Goodwin or 'his' Marketing VP types promoted very inexperienced managers into Fleet Planning and Crew Planning, not long before that bad summer? Was their contract language as complex and murky as with some others? Maybe their Contract Personnel were new?

May God help United and USAirways keep afloat.

[TyroPicard]

I don't often give French lessons, but here goes.....

Milliard = french for one thousand millions = US billion.
Million = french for million.
Million = english for million.
Billion = english for one million millions.

However, in business usage in UK, Billion means one thousand million, just like the US billion.

Hope that's cleared things up!

TP

[bean_counter]

Wino & Airbubba

Thanks for the extra background info which as you could tell from my post I wasn't aware of :(

BC

[Airbubba]

>>Billion = english for one million millions.

However, in business usage in UK, Billion means one thousand million, just like the US billion. <<


" A billion here, a billion there, and pretty soon you're talking real money" - attributed to the late Illinois Senator Everett M. Dirksen

The UAL bankruptcy court hearings are held in the, you guessed it, Dirksen Federal Building...

[whatshouldiuse]

will be enormous in the U.S if and when United go under. The jobs that will be lost in Chicago and Denver alone boggle the mind. Not just the UAL employees, but the pople who clean the planes, deliver the food, make the food , put fuel on-board and on and on.

In Denver alone, they account for close to 70% of all flights. And Denver is the 8th busiest airport in the U.S. So in addition to all companies who service United flights directly or indirectly, add the U.S Government to the list. Who would need all the TSA personnel if there are no passengers flying.

While I'm against government subsidies of any kind, with the U.S in a deep recession, letting United and US Air go down the tubes would be the equivalent of pouring oil onto the fire. This is one case where everybody loses...employees, shareholders, the U.S government and passengers.

It really is a no-win situation any way you look at it.

Andy

[Bubbette]

The US is not in a *deep* recession--that's just a myth put upon the US populace by much of the left wing media. Worker productivity is up, job losses are down, and personnel forecasts indicate that hiring should be up this year. I'm not saying those locations won't be hit by United closing--but won't something else spring up in its place?

[whatshouldiuse]

Believe me when it takes over a year to find a new job and it's in a different profession, that is my idea of a recession. Trust me when I say business conditions wouldn't significantly improve until the 4th quarter of 2003 at the earliest.

Job losses actually continue to increase as evidenced by the unemployment rate and the bottom is starting to fall out of the real estate market....look at Denver for proof. Buisnesses aren't spending money, they're making older equipment last longer. See the comments from Cisco yesterday!

The last thing we need right now is another major company, be it an Enron, a Worldcom or an airline laying off more people.

Andy

[Ignition Override]

Were there any positive developments for either United or USAirways this last week? I noticed little on the front pages of the Wall Street Journal.

[Tandemrotor]

Apologies if this has come up earlier in the thread, but have you heard about this?

"EU votes for tougher stance over US carriers"

"The European parliament has voted to back a bill imposing fines on subsidised airlines from both the US and other countries if European carriers suffer as a result. The measure would also restrict take off and landing rights.

It is a reaction against unfair competition - something that BA has railed against. The bill would act as a deterrent, but is also of symbolic significance - the US already has a similar measure in place.

A report from UK Member Nick Clegg was adopted by the EU Parliament on Tuesday and the EC is being urged to introduce the measures by April.

Andrew Cahn, BA's Director of Government and Industry Affairs, said:"This proposal highlights BA's argument that the US has been unreasonably subsidising its carriers."

I have to say some of the transatlantic fares I have seen advertised by US carriers for travel originating on this side of the Atlantic look distinctly like 'unfair competition' when no subsidies/chapter 11 protection, have been forthcoming to European carriers.

Fair argument??

[GBXRE]

Prior to 9/11, Warren Buffet was on the record as saying that this recesssion would last "at least seven years".

[Donkey Duke]

United will have a hard time posting any profits with an Iraq War and these high fuel prices. Without profits, the bankers may foreclose. It really is too bad. Who would have ver thought United could go Chap 11? How about Chap 7?

[Airbubba]

Here are excerpts from a couple of articles posted today on www.chicagotribune.com Like Delta, UAL is going to try the low cost alter ego operation to stay competitive. Some of the "experts" in the first article offer their assessments of how realistic these plans are. Sadly, these UAL proposals may be just rearranging the deck chairs...
_______________________________________

UAL plans more cuts in wages, workers
Tilton to push for creation of discount carrier


By John Schmeltzer
Tribune staff reporter
Published January 29, 2003

United Airlines plans to thin its pilot and flight attendant ranks by up to 25 percent and propose a two-tier pay structure in a bid to cut costs and emerge from bankruptcy as a tougher competitor, sources said.

Those proposals are among the most controversial elements of the reorganization plan that Glenn Tilton, United's chief executive, will present Thursday to the troubled airline's board of directors.

Other elements of Tilton's plan call for the creation of a discount "point-to-point" airline, similar to the Shuttle by United that the airline launched in 1994--and shuttered seven years later after massive losses--in an attempt to copy Southwest Airlines' successful operation.

Pilots and flight attendants working for the new discount carrier would be paid significantly less than those on regular United flights. Most of those flights would be aboard older Boeing 737 aircraft that United would otherwise consider parking in the California desert because of the downturn in passenger traffic.

The new discount carrier would operate, in part, from O'Hare International Airport. It is unclear what other cities the new airline would serve.

United's proposed discount service is similar to one being planned by Delta Air Lines, which will begin April 15. Initially, Delta will use its new carrier to fly between New York and Florida, before gradually expanding the service along the East Coast.

In addition, sources said, United's plan calls for contracting more of the carrier's regional routes to its commuter partners, which would be permitted to fly larger, 70-seat jets. United's three commuter carriers, Atlantic Coast Airlines, Air Wisconsin and SkyWest Airlines, operate planes bearing the United Express logo.

Due to the downsizing and additional flight contracting, United would need only about 6,000 pilots under the reorganization plan, down from the current 8,000. It also would require remaining pilots to increase their flight time to an average of 50 hours each month from the current average of 36 hours.

Only two years ago, the world's second-largest airline had 9,600 pilots.

...Ray Neidl, airline analyst for Blaylock & Partners in New York, said United must take dramatic steps if it is to emerge from bankruptcy as an aggressive competitor.

"The bottom line at the end of the day is this airline doesn't survive long-term unless it can get its cost-per-available-seat mile down to 9 cents," he said, noting that United spends more than 11 cents per available seat mile.

"It will take every trick in the world to get it that far, and it still will be very iffy [about whether they will survive]," Neidl said.

Michael Boyd, president of the Boyd Group, an airline consulting group based in Evergreen, Colo., dismissed the outline of the plan as being too little, too late.

"This is trendy lunacy. It will go very well in the [business] schools, but in the real world, it's glub, glub city," Boyd said, in reference to his concern that United may not survive.

...Joe Leonard, chairman and CEO of AirTran Airways, one of the nation's few profitable airlines, told Wall Street analysts that he would anticipate benefits from United's problems.

"At the best of circumstances, United is going to be a smaller carrier than they are today, and at the worst will be a much smaller carrier than they are," Leonard said.

He predicted the new discount carrier United is planning will meet the same fate as the airline's shuttle.

"This is a low-fare, high-cost airline that is doomed for failure," he said.


______________________________________

And, perhaps predictably, from ALPA:

United pilots blast low-fare plan

Bloomberg News
Published January 29, 2003, 3:32 PM CST

United Airlines pilots oppose a plan by the carrier’s parent, UAL Corp., to break off routes, aircraft and other assets to create a separate low-fare unit.

Pilot union leader Paul Whiteford also said in a statement that management of the world’s second-biggest carrier "refused to engage in any meaningful negotiations over our future" since UAL’s Chapter 11 bankruptcy filing on Dec. 9.

United has said that it wants to start a low-cost discount airline to compete with discount carriers such as Southwest Airlines Co. Such airline units typically have workforces with lower paid employees. UAL has also said it wants to reduce annual labor costs by $2.4 billion.

UAL’s costs and a drop in sales since the Sept. 11 attacks and the U.S. economic slowdown have resulted in almost $4 billion in losses over the past two years.

The company shut down its United Shuttle discount carrier on the West Coast after the Sept. 11 attacks reduced air travel demand.

United wasn’t immediately available to comment