Feds say no to United bailout for third and 'final' time
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Feds say no to United bailout for third and 'final' time
Feds say no to United, again
U.S. panel rejects request for $1.1B in federal loan guarantees; says carrier is out of chances.
June 28, 2004: 9:27 AM EDT
NEW YORK (CNN/Money) - A panel has rejected a third request for federal loan guarantees from bankrupt United Airlines, saying Monday it will not entertain any more requests for help from the nation's troubled No. 2 airline.
United, a unit of UAL Corp. (UALAQ: Research, Estimates), had cut back its request for a loan guarantee to $1.1 billion, but the Air Transportation Stabilization Board, which earlier this month rejected a request for $1.6 billion in guarantees, said its three members had unanimously decided to reject the request.
"Board concluded that granting the loan guarantee is not a necessary part of maintaining a safe, efficient, and viable commercial aviation system in the United States," said the letter sent to UAL. "Moreover, the Board believes that airline credit markets have been improving since late 2001 and 2002, ... increasing the likelihood of United succeeding without a loan guarantee."
Spokesmen for United, which had argued it needed the loan guarantee to arrange financing it needed to emerge from bankruptcy, were not immediately available for comment.
U.S. panel rejects request for $1.1B in federal loan guarantees; says carrier is out of chances.
June 28, 2004: 9:27 AM EDT
NEW YORK (CNN/Money) - A panel has rejected a third request for federal loan guarantees from bankrupt United Airlines, saying Monday it will not entertain any more requests for help from the nation's troubled No. 2 airline.
United, a unit of UAL Corp. (UALAQ: Research, Estimates), had cut back its request for a loan guarantee to $1.1 billion, but the Air Transportation Stabilization Board, which earlier this month rejected a request for $1.6 billion in guarantees, said its three members had unanimously decided to reject the request.
"Board concluded that granting the loan guarantee is not a necessary part of maintaining a safe, efficient, and viable commercial aviation system in the United States," said the letter sent to UAL. "Moreover, the Board believes that airline credit markets have been improving since late 2001 and 2002, ... increasing the likelihood of United succeeding without a loan guarantee."
Spokesmen for United, which had argued it needed the loan guarantee to arrange financing it needed to emerge from bankruptcy, were not immediately available for comment.
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Very good news...
Now just maybe those at UAL will wake up to the very hard truth.
The gravy train is gone, time for more belt tightening to keep costs in check while hoping to restore revenue.
If management (and their still high paid pilots) don't wake up now, UAL will go bye-bye.
The gravy train is gone, time for more belt tightening to keep costs in check while hoping to restore revenue.
If management (and their still high paid pilots) don't wake up now, UAL will go bye-bye.
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@ 411A
This belt tightening you're talking about is killing off the whole aviation sector, the job I chose and love ain't the same anymore by a long shot and it's a big shame.
Pilots deserve their money and I say again deserve the money they get paid because of high responsibilities and always putting their life on the line (not withstanding how safe airliners may be these days). Low cost has given lots of guys a shot/break but it's put the flair of this profession in a whole different light.
So dont f***** it's a good thing, cos it ain't.
I hope for United they can make things happen with sensible cost savings etc. BA has done it so I believe can any international carrier (read: intercontinental carrier)
Safe flying!
This belt tightening you're talking about is killing off the whole aviation sector, the job I chose and love ain't the same anymore by a long shot and it's a big shame.
Pilots deserve their money and I say again deserve the money they get paid because of high responsibilities and always putting their life on the line (not withstanding how safe airliners may be these days). Low cost has given lots of guys a shot/break but it's put the flair of this profession in a whole different light.
So dont f***** it's a good thing, cos it ain't.
I hope for United they can make things happen with sensible cost savings etc. BA has done it so I believe can any international carrier (read: intercontinental carrier)
Safe flying!
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Hmmm. Remind me of the pay of a senior 744 Captain in United? A BA Captain of similar experience and seniority would earn about the same as a relatively junior United 737 co-pilot. Still think United have done all they can to reduce costs?
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A senior (i.e. all) UAL 744 or 777 captain makes about $203 an hour plus a few dollars of international pay if applicable. A whale or 777 FO makes around $139 an hour. Lousy pay for the U.S. but great pay by some expat standards for example.
Under many British style pay schemes (e.g. EK) captain pay longevity is measured from date you upgraded to captain. In almost all U.S. pay systems it is measured from original date of hire so all 744 and 777 UAL captains presumably have at least eleven years of service and would be paid at the highest rate.
Under many British style pay schemes (e.g. EK) captain pay longevity is measured from date you upgraded to captain. In almost all U.S. pay systems it is measured from original date of hire so all 744 and 777 UAL captains presumably have at least eleven years of service and would be paid at the highest rate.
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Mr. Digitalis
What a bitter post! Please tell us all what you think United (and any other airline, including BA) pilots should paid.
By the way, you may want to move to Virgin, I think with the latest pay increase negotiated by BALPA they are catching you up or even passed you - keep an eye on that rear view mirror!
One downside at Virgin........being deserted by your company when really bad things happen to you down route. They only know how to handle good news at Muppet Control.
OH
What a bitter post! Please tell us all what you think United (and any other airline, including BA) pilots should paid.
By the way, you may want to move to Virgin, I think with the latest pay increase negotiated by BALPA they are catching you up or even passed you - keep an eye on that rear view mirror!
One downside at Virgin........being deserted by your company when really bad things happen to you down route. They only know how to handle good news at Muppet Control.
OH
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Sorry, it wasn't meant to be bitter - and perhaps my facts aren't quite correct - but my impression was that the pay at United was still considerably better than any European major, and not just for aircrew. I inferred from this that United's costs were not as low as they could be - and not as low as they are in Europe - though the cuts required for United's survival may be further than the unions will accept.
I apologise if my style was clumsy or offensive - and I don't work for BA!
I apologise if my style was clumsy or offensive - and I don't work for BA!
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Well the very top of the BA pay scales ( 24 year Captains on 747 ) gets paid $210000 PA ( based on today's exchange rates ) plus expenses, how this compares to United i cant exactly say but i suspect it is less,the ludicrous spending spree that occurred with the US majors immediately pre 9/11 has a lot to answer for! 
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UAL denial
United is now the 2nd lowest paid US Major. AA is the lowest. Check out airlinepay.com and check out the hourly rates and guarantees. I think a B767 Ca at Airborne Express makes about $320/hr. Not Bad!
Digitalis posted
"A BA Captain of similar experience and seniority would earn about the same as a relatively junior United 737 co-pilot"
And then
"perhaps my facts aren't quite correct"
I'd say so. Somewhere around a $90,000 difference
To use your example, a junior 737/320 FO at UA is pulling down $35/hr to start. In today's terms a junior FO has been with the company 5 years, makes $92/hr and likely came from a number of years in the military or at a regional making lousy pay. He wasn't hired in some ab initio training program or sponsorship after university as is common outside the US. I don't know if this is a path BA uses or not, if however it does it further emphasizes the differences from the US model and that of other countries. You can't simply say you make too much because you compare wallet size. If you started only making a decent wage in your mid to late 30's able only then to properly fund a retirement and other considerations you might think otherwise.
I don't doubt additional pay, work rules and most likely the A fund will be given back in the near future to help in the cause. That doesn't mean they are now overpaid.
A little bit of research was called for before posting on something as touchy as ones pay and by extension continued viability of the company.
"A BA Captain of similar experience and seniority would earn about the same as a relatively junior United 737 co-pilot"
And then
"perhaps my facts aren't quite correct"
I'd say so. Somewhere around a $90,000 difference
To use your example, a junior 737/320 FO at UA is pulling down $35/hr to start. In today's terms a junior FO has been with the company 5 years, makes $92/hr and likely came from a number of years in the military or at a regional making lousy pay. He wasn't hired in some ab initio training program or sponsorship after university as is common outside the US. I don't know if this is a path BA uses or not, if however it does it further emphasizes the differences from the US model and that of other countries. You can't simply say you make too much because you compare wallet size. If you started only making a decent wage in your mid to late 30's able only then to properly fund a retirement and other considerations you might think otherwise.
I don't doubt additional pay, work rules and most likely the A fund will be given back in the near future to help in the cause. That doesn't mean they are now overpaid.
A little bit of research was called for before posting on something as touchy as ones pay and by extension continued viability of the company.
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All very well, West Coast, but the scenario UAL faces is rather grave, and if the company folds, Eastern Air Lines style, nobody there wins.
A job...or NO job, that's about what it amounts to, like it or not, and many certainly will not.
A job...or NO job, that's about what it amounts to, like it or not, and many certainly will not.
Maybe giving away all of one's retirement, with only a few more years to work, would please those who work as either bankruptcy judge, or manage the banking/credit institutions. Much of it is lost when an airline's files Chapter 11. The bankers loan money to airlines at "commercial rates", to quote the ATSB. I wonder how much profit these banks bring in, on average? At USAirways, much of their pilot retirement was dissolved, behind their backs (!!), AFTER the filing was already planned to exclude any losses of retirement.
Let's not forget how valuable some airline assets are when/if an airline suffers breakup, depending on the world marketplace-and what is left of your retirement (already at about half its original value due to a previous Chap 11) might be dissolved, in order to satisfy certain creditors.
How do we portray blood-stained fangs?
Let's not forget how valuable some airline assets are when/if an airline suffers breakup, depending on the world marketplace-and what is left of your retirement (already at about half its original value due to a previous Chap 11) might be dissolved, in order to satisfy certain creditors.
How do we portray blood-stained fangs?
Last edited by Ignition Override; 30th Jun 2004 at 05:17.
411A
As my text says, they will likely have to give more back. That doesn't mean they are overpaid. The janitor cleaning the UA bathrooms will have to give some back also in an attempt to keep the company solvent. Does that mean he is overpaid because he gave back a little more? I standby for another cute reply in which you infer they are overpaid until they are pulling down minimum wage.
There is a difference between being overpaid and giving back to save the company. They seem to be one in the same in your mind.
As my text says, they will likely have to give more back. That doesn't mean they are overpaid. The janitor cleaning the UA bathrooms will have to give some back also in an attempt to keep the company solvent. Does that mean he is overpaid because he gave back a little more? I standby for another cute reply in which you infer they are overpaid until they are pulling down minimum wage.
There is a difference between being overpaid and giving back to save the company. They seem to be one in the same in your mind.
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Surely there must be a sound business model design for the profitable operation of an Airline.
Names aside, there are other airlines that are making profit, what makes this airline different today? Is this still the fall-out of 9/11? Is this airline managed worse than others? Is there any course like “Running an Airline 101” that explains the basics of running a profitable airline?
I understand that making the airline profitable might cost some pilots their jobs, and that is never nice, but surely that is better than watching the airline cruise down Bankruptcy Boulevard and having all those pilots lose their jobs?
Just asking
Invictus
Names aside, there are other airlines that are making profit, what makes this airline different today? Is this still the fall-out of 9/11? Is this airline managed worse than others? Is there any course like “Running an Airline 101” that explains the basics of running a profitable airline?
I understand that making the airline profitable might cost some pilots their jobs, and that is never nice, but surely that is better than watching the airline cruise down Bankruptcy Boulevard and having all those pilots lose their jobs?
Just asking
Invictus
If United is so deep in the sierra hotel one tango , how come the whole fleet is getting a new colour scheme ? ..... Yes I know it's done with scheduled checks but even so the desugn will have cost a packet .
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Here's the problem...
The way the company is run, it's debt load it's overall costs are simply too big for the availible revenues
....that's it.... nothing more complecated than that.
Of course the mangement has run around crying foul and said it's because of this, that or the other.
The reality is that the company has failed to adapt to the market - yields for example, in real terms, are half what they were 20 years ago. This is nothing new, if you look at ATA data you'll see that yield has been in decline since records began in 1927. In fact, you could say that the only constant in the airline business is that yields will decline.
I suspect that a convincing arguement could be made that any management (or union) that failed to spot that coming and adapt the company to the changes in the market is derelict in it's duty to it's shareholders (or members).
The bottom line is the airline is up the pungent creek - I believe the figures for May were a losses in the order of $90+m (albeit with an operating profit of $9m).
That's just not sustainable. The reality is that the time for evolution has past it's revolution time... either that or "say good night Gracie".
.....anyway just a thought
The way the company is run, it's debt load it's overall costs are simply too big for the availible revenues
....that's it.... nothing more complecated than that.
Of course the mangement has run around crying foul and said it's because of this, that or the other.
The reality is that the company has failed to adapt to the market - yields for example, in real terms, are half what they were 20 years ago. This is nothing new, if you look at ATA data you'll see that yield has been in decline since records began in 1927. In fact, you could say that the only constant in the airline business is that yields will decline.
I suspect that a convincing arguement could be made that any management (or union) that failed to spot that coming and adapt the company to the changes in the market is derelict in it's duty to it's shareholders (or members).
The bottom line is the airline is up the pungent creek - I believe the figures for May were a losses in the order of $90+m (albeit with an operating profit of $9m).
That's just not sustainable. The reality is that the time for evolution has past it's revolution time... either that or "say good night Gracie".
.....anyway just a thought
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West Coast I apologised once; I'm not doing it again. United's pilots still appear well paid by most standards, though I have no idea what wages are like for other worker groups within the airline - or the executives. The fact remains that United's bills are bigger than its ability to pay. Borrowing more is only going to defer the inevitable unless the bills can be made smaller, and pay is one of the few expenses that the airline has any hope of controlling.
You're right that this is a touchy subject but, as 411A says, better a job and some pay than no job and no pay. Once the airline has survived, then something can be done to restore things nearer to normality - and you can start to examine why it all went so wrong in the first place.
Incidentally, joining the airlines from the military or from commuters is not a practise restricted to the USA - it is common on this side of the Atlantic too. However, the pay rise experienced in the process is not large!
You're right that this is a touchy subject but, as 411A says, better a job and some pay than no job and no pay. Once the airline has survived, then something can be done to restore things nearer to normality - and you can start to examine why it all went so wrong in the first place.
Incidentally, joining the airlines from the military or from commuters is not a practise restricted to the USA - it is common on this side of the Atlantic too. However, the pay rise experienced in the process is not large!
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>>Check out airlinepay.com and check out the hourly rates and guarantees. I think a B767 Ca at Airborne Express makes about $320/hr. Not Bad!<<
I checked out www.airlinepilotpay.com. Twelve year ABX 767 Captains will make $234 an hour in August 2004. The other number you gave must be an urban legend like $500 an hour for the Cathay A scalers. See: http://www.airlinepilotpay.com/abx/abx.htm
Cargo operators FedEx and UPS are trying to minimize the concessions in their current contract talks but the U.S. pilot market is headed south big time.
The prospect of United exiting bankruptcy without a massive federal bailout suddenly looks rather bleak.
UAL unions prepare to grab their ankles and hold on for the ride as they take more pay and personnel cuts:
_________________________
United's unions fear more cuts after federal aid failure
By DAVE CARPENTER
The Associated Press
6/29/04 12:44 AM
CHICAGO (AP) -- Employees at United Airlines are bracing for the prospect of new concessions after the failure of the carrier's nearly two-year quest for federal assistance.
Further cuts in United's bankruptcy restructuring would be especially painful for a work force already hit by heavy wage and benefit reductions that have enabled the company to reduce annual labor costs by $2.5 billion annually.
Fair or not, experts say they may be inevitable as United scrambles to redo its finances after being rejected for a third and final time Monday in its attempt to secure a government loan guarantee.
Among the areas likeliest to be targeted by management to make the company more attractive to outside investors is employee pensions, particularly since United must make at least $4 billion in pension payments through 2008.
Speculation on cuts also extends to United's Asia routes and the size of its work force, which already is down to 62,500 from 100,000 before the 2001 terror attacks.
"They're going to have do some things that are very unpleasant, including getting rid of a few people," said industry consultant Darryl Jenkins, professor of airline management at Embry Riddle Aeronautical University in Daytona Beach, Fla.
"This won't be a happy year for employees," he said. "Not so much pay (cuts), but additional work rules, pilots' stock that they were going to get in exchange for concessions, and pensions -- they'll all be on the table now."
United isn't discussing specifics of its options publicly. But even before the Air Transportation Stabilization Board dismissed its loan-guarantee efforts for a final time Monday, CEO Glenn Tilton cautioned employees last week that more cuts would be needed to cope with increased competitive pressures and high fuel costs.
"In order to attract a new equity investor and providers of credit, the airline will very likely have to undertake further cost cuts and demand further reductions in its debt and lease obligations," Standard and Poor's analyst Philip Baggaley wrote in a research note Monday. United's ability to attract new investment, he said, will depend partly on its success in further restructuring.
United's solid progress in overhauling its costs and operations since 2002 has won plaudits from the ATSB and others, and there is thought to be an abundance of investment groups who would like to have a piece of the airline's unparalleled route structure under certain conditions.
Some of the names mentioned by industry experts as potential investors include Texas Pacific Group, a Fort Worth-based private equity firm which invested in Continental Airlines and America West Airlines during their bankruptcies; Cerberus Capital Management, which is sinking money into bankrupt Air Canada; and the so-called Chapman group of United bankruptcy creditors, which owns 175 of the carrier's aircraft.
Discussions have been underway in earnest since the ATSB rejected United's loan guarantee application on June 17 -- a decision it affirmed unanimously on Monday -- but it's not known how long a new financing package will take to put together.
"Somebody has to belly up to the bar and say they believe in United's business plan and come forward with the cash," said Douglas Baird, a bankruptcy professor at the University of Chicago Law School. "Talk is a lot easier than writing a check for $500 million or more."
Even if a new investor demands more cuts, uneasy unions signaled they won't accept them readily.
Randy Canale, a union district president representing United machinists, said the airline must refuse to use its workers as "human fertilizer" to satisfy lenders and politicians.
United pilots' union chief Mark Bathurst said pilots will work with management in searching for solutions, but he emphasized, "We fully expect that such solutions will be found without the company again turning to employees who already have provided significant financial relief for this airline."
Negotiations with unions over what cuts would be acceptable could take months. Because of that, industry consultant Robert Mann called it unlikely that United can emerge from bankruptcy any earlier than spring 2005.
http://www.mlive.com/newsflash/busin...lash-financial
I checked out www.airlinepilotpay.com. Twelve year ABX 767 Captains will make $234 an hour in August 2004. The other number you gave must be an urban legend like $500 an hour for the Cathay A scalers. See: http://www.airlinepilotpay.com/abx/abx.htm
Cargo operators FedEx and UPS are trying to minimize the concessions in their current contract talks but the U.S. pilot market is headed south big time.
The prospect of United exiting bankruptcy without a massive federal bailout suddenly looks rather bleak.
UAL unions prepare to grab their ankles and hold on for the ride as they take more pay and personnel cuts:
_________________________
United's unions fear more cuts after federal aid failure
By DAVE CARPENTER
The Associated Press
6/29/04 12:44 AM
CHICAGO (AP) -- Employees at United Airlines are bracing for the prospect of new concessions after the failure of the carrier's nearly two-year quest for federal assistance.
Further cuts in United's bankruptcy restructuring would be especially painful for a work force already hit by heavy wage and benefit reductions that have enabled the company to reduce annual labor costs by $2.5 billion annually.
Fair or not, experts say they may be inevitable as United scrambles to redo its finances after being rejected for a third and final time Monday in its attempt to secure a government loan guarantee.
Among the areas likeliest to be targeted by management to make the company more attractive to outside investors is employee pensions, particularly since United must make at least $4 billion in pension payments through 2008.
Speculation on cuts also extends to United's Asia routes and the size of its work force, which already is down to 62,500 from 100,000 before the 2001 terror attacks.
"They're going to have do some things that are very unpleasant, including getting rid of a few people," said industry consultant Darryl Jenkins, professor of airline management at Embry Riddle Aeronautical University in Daytona Beach, Fla.
"This won't be a happy year for employees," he said. "Not so much pay (cuts), but additional work rules, pilots' stock that they were going to get in exchange for concessions, and pensions -- they'll all be on the table now."
United isn't discussing specifics of its options publicly. But even before the Air Transportation Stabilization Board dismissed its loan-guarantee efforts for a final time Monday, CEO Glenn Tilton cautioned employees last week that more cuts would be needed to cope with increased competitive pressures and high fuel costs.
"In order to attract a new equity investor and providers of credit, the airline will very likely have to undertake further cost cuts and demand further reductions in its debt and lease obligations," Standard and Poor's analyst Philip Baggaley wrote in a research note Monday. United's ability to attract new investment, he said, will depend partly on its success in further restructuring.
United's solid progress in overhauling its costs and operations since 2002 has won plaudits from the ATSB and others, and there is thought to be an abundance of investment groups who would like to have a piece of the airline's unparalleled route structure under certain conditions.
Some of the names mentioned by industry experts as potential investors include Texas Pacific Group, a Fort Worth-based private equity firm which invested in Continental Airlines and America West Airlines during their bankruptcies; Cerberus Capital Management, which is sinking money into bankrupt Air Canada; and the so-called Chapman group of United bankruptcy creditors, which owns 175 of the carrier's aircraft.
Discussions have been underway in earnest since the ATSB rejected United's loan guarantee application on June 17 -- a decision it affirmed unanimously on Monday -- but it's not known how long a new financing package will take to put together.
"Somebody has to belly up to the bar and say they believe in United's business plan and come forward with the cash," said Douglas Baird, a bankruptcy professor at the University of Chicago Law School. "Talk is a lot easier than writing a check for $500 million or more."
Even if a new investor demands more cuts, uneasy unions signaled they won't accept them readily.
Randy Canale, a union district president representing United machinists, said the airline must refuse to use its workers as "human fertilizer" to satisfy lenders and politicians.
United pilots' union chief Mark Bathurst said pilots will work with management in searching for solutions, but he emphasized, "We fully expect that such solutions will be found without the company again turning to employees who already have provided significant financial relief for this airline."
Negotiations with unions over what cuts would be acceptable could take months. Because of that, industry consultant Robert Mann called it unlikely that United can emerge from bankruptcy any earlier than spring 2005.
http://www.mlive.com/newsflash/busin...lash-financial