United Airlines, Chapter 11 status
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UAL Warns of Possible Bankruptcy Filing
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."
_________________________________________________
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."
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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
Hope both carriers make it through.
ES
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'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.
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.
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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...
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...
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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.
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.
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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.
The greedy employe-owners of UAL have dipped too deep into the cookie jar.
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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.
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.
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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.
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.
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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
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
Just a numbered other
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.
The idea that it's the pilots' pay which brings things crashing down is utter balls. It's poor management.
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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$$holes worry about funding furniture for their 17 mansions (a la Ken Ley). Watch them strip the company of assets. "Where are the shareholders?". Screwed again by The Board & Senior Execs; old, sad story. Of course, first call on assets belongs to lawyers & senior execs; who else but?
I agree;pilots went overboard, and they better offer much more than 10% back, DOUBLEQUICK (they won't).
But, just watch senior management, CEO, etc, bail out with $15 Million 'Golden Parachutes' before company goes bust, and 'little people' are walking streets whilst these a$$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?
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**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.
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.
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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 !!!
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 !!!
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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"!!!
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"!!!
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.
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.
Last edited by Ignition Override; 16th Aug 2002 at 05:00.
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>>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
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
Last edited by Airbubba; 16th Aug 2002 at 05:37.
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Posts: n/a
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?
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?
Join Date: Jan 2002
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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?”
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?”