United Airlines, Chapter 11 status
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>>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."
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."
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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..................
"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..................
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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?
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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
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
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>>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/drm...359784,00.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...
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/drm...359784,00.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...
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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?
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?
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>>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...
Yep, history has shown that the IAM isn't noted for self preservation instincts...
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Gloom & Doom
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.
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.
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"Summer of Love"
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!"
TC
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!"
TC
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.
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.
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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
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
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>>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...
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...
Last edited by Airbubba; 29th Jan 2003 at 21:38.
I had an arsehole transplant but the arsehole rejected me, which is why I write such rubbish
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The economic fallout
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
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
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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?
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Bubbette;
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
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
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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??
"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??
