United Airlines, Chapter 11 status
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>>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/busin...nws-ual22.html
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/busin...nws-ual22.html
Last edited by Airbubba; 23rd Sep 2002 at 20:05.
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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!
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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.
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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.
There is no escape from the jaws of institutional creditors without bankruptcy protection.
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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.
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.
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>>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/busine...business%2Dhed
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/busine...business%2Dhed
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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!
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!
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>>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.
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.
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>>(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...
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...
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.
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.
Last edited by Ignition Override; 26th Sep 2002 at 14:18.
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>>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
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
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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.
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.
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>>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...
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...
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>>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/ContentSe...=1033849024639
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/ContentSe...=1033849024639
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).
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).
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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.
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.
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United faces the music
Reported in the Basler Zeitung 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 they have asked for 1.8 Billion $ credit Guarantee from the ATSB on Wednesday !
In a further article they have asked for 1.8 Billion $ credit Guarantee from the ATSB on Wednesday !
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Pilot Salaries at UAL
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.
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.