United Airlines, Chapter 11 status
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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?
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Join Date: Jun 2001
Location: Rockytop, Tennessee, USA
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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...
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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.
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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
_______________________________________
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
