UAL on Deathwatch
411A-it's refreshing to see people acknowledge the abuse of Chap 11, such as with old CO in '83, in order to void all labor contracts, despite negotiations having begun.
You hit the nail on the head regarding attitudes, and one of our 744 Captains who might already have retired, was on our jumpseat (commuting home)about a year ago, and described this situation which happened on his first flight over to Narita. Edited for brevity!
Anyway, that is only a drop in the bucket, regarding cabin "attitude" at my company (but seems to be apparent mostly on widebody crews), based on many chats with our widebody pilots-it would be interesting to find out what attitudes would be present if we were in Chapter 11. But I'm not saying that the only problems are 'back there'.
You hit the nail on the head regarding attitudes, and one of our 744 Captains who might already have retired, was on our jumpseat (commuting home)about a year ago, and described this situation which happened on his first flight over to Narita. Edited for brevity!
Anyway, that is only a drop in the bucket, regarding cabin "attitude" at my company (but seems to be apparent mostly on widebody crews), based on many chats with our widebody pilots-it would be interesting to find out what attitudes would be present if we were in Chapter 11. But I'm not saying that the only problems are 'back there'.
Last edited by Ignition Override; 10th Mar 2003 at 17:02.
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Ign Override,
Had a similar situation with a chief hostie some years ago, complained to management...and she was ah.....terminated.
A small victory.
Let there be no mistake, service sells....and the overseas airlines have been aware for a LONG time.
Had a similar situation with a chief hostie some years ago, complained to management...and she was ah.....terminated.
A small victory.
Let there be no mistake, service sells....and the overseas airlines have been aware for a LONG time.
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Quotes from OldAge84:
In short, by gutting their inflight and airport service, as well as the frequent flyer plans, the airlines in general have beaten the customer loyalty out of the business traveler. I fly whatever is the quickest and easiest and least expensive and don't care anymore what color the plane is or if I get miles. This truly can't help the airlines bring up their revenues and margins.
I won't fly Northwest unless they are the last airline running, as the last reservations agent I dealt with was so rude to me it just about ruined my day.
On a recent roundtrip on Southwest, on both legs, one fairly crowded, the other fairly empty- the cabin crew couldn't have been nicer or more…
- - - - - -
I think OldAge84 and 411A have zeroed in on a major problem in the industry. The four P’s of marketing are product, place, price, promotion. Price is only one of the four “levers” a company can pull. It seems at this point customer service has slipped so much that price is the only lever left to pull. People generally do not buy only on price, if they did we all would be driving Yugo’s. It seems like airlines are a commodity, almost all are the same, all are un-differentiated, just like buying a gallon of gasoline. If airlines can boost their customer service and get rid of attitudes perhaps the travelers would be more inclined to fly or flock to the airline that offered better service (product).
Quote from Wino:
Southwest also didn't lay off or slash wages or benefits, so its easier to smile. (Infact they have just given out more raises even though they are likely to lose money this quarter)
- - - - - -
I could be wrong but it’s my understanding the pay scale at SW is well below other major airlines. A 20% pay hike from $100k is still well below $180k but that 20% still looks good. I once worked for an air taxi firm and we had a term for it, it was called “subsidizing the company”, so there is a tradeoff, take low wages and have a job or go for the gold and risk a furlough. I also heard that pilots have been called in to move baggage, I don’t now if this is SOP or just part of Herb Kelleher’s corporate tales. SW is different from most airlines and that’s why they are successful, it’s called product differentiation.
I recommend that you get a copy of Herb’s book, “NUTS!”, as it contains lot of business wisdom and may serve as a guide for anyone thinking about improving their airline or selecting a model for a startup airline.
In short, by gutting their inflight and airport service, as well as the frequent flyer plans, the airlines in general have beaten the customer loyalty out of the business traveler. I fly whatever is the quickest and easiest and least expensive and don't care anymore what color the plane is or if I get miles. This truly can't help the airlines bring up their revenues and margins.
I won't fly Northwest unless they are the last airline running, as the last reservations agent I dealt with was so rude to me it just about ruined my day.
On a recent roundtrip on Southwest, on both legs, one fairly crowded, the other fairly empty- the cabin crew couldn't have been nicer or more…
- - - - - -
I think OldAge84 and 411A have zeroed in on a major problem in the industry. The four P’s of marketing are product, place, price, promotion. Price is only one of the four “levers” a company can pull. It seems at this point customer service has slipped so much that price is the only lever left to pull. People generally do not buy only on price, if they did we all would be driving Yugo’s. It seems like airlines are a commodity, almost all are the same, all are un-differentiated, just like buying a gallon of gasoline. If airlines can boost their customer service and get rid of attitudes perhaps the travelers would be more inclined to fly or flock to the airline that offered better service (product).
Quote from Wino:
Southwest also didn't lay off or slash wages or benefits, so its easier to smile. (Infact they have just given out more raises even though they are likely to lose money this quarter)
- - - - - -
I could be wrong but it’s my understanding the pay scale at SW is well below other major airlines. A 20% pay hike from $100k is still well below $180k but that 20% still looks good. I once worked for an air taxi firm and we had a term for it, it was called “subsidizing the company”, so there is a tradeoff, take low wages and have a job or go for the gold and risk a furlough. I also heard that pilots have been called in to move baggage, I don’t now if this is SOP or just part of Herb Kelleher’s corporate tales. SW is different from most airlines and that’s why they are successful, it’s called product differentiation.
I recommend that you get a copy of Herb’s book, “NUTS!”, as it contains lot of business wisdom and may serve as a guide for anyone thinking about improving their airline or selecting a model for a startup airline.
Union Goon
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Actually you are quite wrong.
Southwest pays quite well, and now excedes most of the other majors in class and craft. There 737 pilots do a lot better than AA's 737 pilots and its only going to get worse for the AA pilots as the drums beat for concessions around the industry.
No it is not true that pilots are called into move baggage, they do sometimes help cross the seatbelts if they have time inorder to board the aircraft quicker. Pilots moving baggage would bring on very expensive disabilty and sick claims for back injuries. That's one of those myths that doesn't make economic sense.
What southwest pilots do is FLY. ALOT, which is all any airline pilot ever wants to do. It is very common for a UAL NWA AA DAL pilot to fly 1 hour to the hub, sit for 3 hours fly an hour out sit for an hour fly another hour sit for 4 hours fly an hour and go to the hotel. That is the major's idea of "efficient" A southwest pilot day is fly an hour, 20 minute turn fly an hour 20 min turn fly an hour 20 min turn fly an hour 20 min turn, till they have flow 6 or 7 hours in a 10 hour period, as opposed the the AA pilot flying 5 hours or less in a 14 hour period. The DAL/AA/NWA pilot goes to work for 14 hours and gets 5 hours of pay (this is on duty time, not including hotels and whatnot) and the Southwest pilot goes to work for 10 hours and gets 7 hours of pay (at an hourly rate that is now equal to the AA/NWA etc pilot.)
That is not the fault of the pilot. That is the fault of the managment of the airline. When you use your resources so inefficently you could fly the airplanes for free and lose money.
That is how you use your resouces efficiently. Using a 100 dollar per hour pilot to load bags is not an efficient use of resources no matter how nice it sounds. He should be FLYING, which is what southwest has them do.
Cheers
Wino
Southwest pays quite well, and now excedes most of the other majors in class and craft. There 737 pilots do a lot better than AA's 737 pilots and its only going to get worse for the AA pilots as the drums beat for concessions around the industry.
No it is not true that pilots are called into move baggage, they do sometimes help cross the seatbelts if they have time inorder to board the aircraft quicker. Pilots moving baggage would bring on very expensive disabilty and sick claims for back injuries. That's one of those myths that doesn't make economic sense.
What southwest pilots do is FLY. ALOT, which is all any airline pilot ever wants to do. It is very common for a UAL NWA AA DAL pilot to fly 1 hour to the hub, sit for 3 hours fly an hour out sit for an hour fly another hour sit for 4 hours fly an hour and go to the hotel. That is the major's idea of "efficient" A southwest pilot day is fly an hour, 20 minute turn fly an hour 20 min turn fly an hour 20 min turn fly an hour 20 min turn, till they have flow 6 or 7 hours in a 10 hour period, as opposed the the AA pilot flying 5 hours or less in a 14 hour period. The DAL/AA/NWA pilot goes to work for 14 hours and gets 5 hours of pay (this is on duty time, not including hotels and whatnot) and the Southwest pilot goes to work for 10 hours and gets 7 hours of pay (at an hourly rate that is now equal to the AA/NWA etc pilot.)
That is not the fault of the pilot. That is the fault of the managment of the airline. When you use your resources so inefficently you could fly the airplanes for free and lose money.
That is how you use your resouces efficiently. Using a 100 dollar per hour pilot to load bags is not an efficient use of resources no matter how nice it sounds. He should be FLYING, which is what southwest has them do.
Cheers
Wino
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Wino,
Thanks for the correction notice. Sometimes I am wrong or receive incorrect info.
You indicated that pilots spend a lot of downtime at hubs, does the aircraft have downtime too or does another crew fly it? If this is the case why doesn’t the original crew fly it ?
Thanks,
ATPMBA
Thanks for the correction notice. Sometimes I am wrong or receive incorrect info.
You indicated that pilots spend a lot of downtime at hubs, does the aircraft have downtime too or does another crew fly it? If this is the case why doesn’t the original crew fly it ?
Thanks,
ATPMBA
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ATPMBA---Usually the crew sits and the plane continues. Everybody HATES these 3/4-hour 'practice layovers' and would rather be flying. But, because of the direction of flights leaving the hub EB/WB, usually crews wait for a flight departing to the direction from which they came. Most major US carriers have'nt figured out this inefficient, unproductive waste of crewmembers.
They'd better.
They'd better.
Evertonian
Jet careens off tarmac at Melbourne
March 7 2003
A United Airlines passenger jet taxiing to the terminal after landing at Melbourne Airport careened off the tarmac shortly after 11am today. No passengers were hurt in the incident.
The aircraft, flight 815, experienced mechanical problems with its steering which caused it to veer off the taxi route, an airport spokeswoman said.
"All passengers on board were fine and in no danger," she said.
Passengers were asked to disembark from the flight which arrived from Sydney and were taken to the terminal.
Usual press sensationalism here, posted FYI only.
March 7 2003
A United Airlines passenger jet taxiing to the terminal after landing at Melbourne Airport careened off the tarmac shortly after 11am today. No passengers were hurt in the incident.
The aircraft, flight 815, experienced mechanical problems with its steering which caused it to veer off the taxi route, an airport spokeswoman said.
"All passengers on board were fine and in no danger," she said.
Passengers were asked to disembark from the flight which arrived from Sydney and were taken to the terminal.
Usual press sensationalism here, posted FYI only.
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Wino.
w.r.t the November 2002 edition of MONEY magazine, pages 78/79. A picture of a married couple, Mr. and Mrs. airline pilot, both captains with SWA. The associated financial profile gives a combined salary of US $280K which the math wizards will work out at $140K each. A good company, but the remuneration isn't par for the course.
w.r.t the November 2002 edition of MONEY magazine, pages 78/79. A picture of a married couple, Mr. and Mrs. airline pilot, both captains with SWA. The associated financial profile gives a combined salary of US $280K which the math wizards will work out at $140K each. A good company, but the remuneration isn't par for the course.
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>>The associated financial profile gives a combined salary of US $280K which the math wizards will work out at $140K each. A good company, but the remuneration isn't par for the course.<<
We have to remember that the pay is low by U.S. standards. 744 captains make less in many countries.
We have to remember that the pay is low by U.S. standards. 744 captains make less in many countries.
Wino: yep, and as you, Airbubba and many others know, now and then even our narrowbody crews spend two or so hours at one of our two large hubs, but just as often, many times we are doing a very quick turnaround at a smaller spoke airport, then back at a hub, very busy pulling our bags through a large terminal, no time to eat, in order to check the six feet of flight papers at the next gate (for the laymen here, we scan the flight release/flight plan info and then catch, buried in a very big, mostly disorganized JUMBLE of information: NOTAMs about shortened runways, inop ILS glideslopes, runway braking action 'problems' , see if the planned fuel.... and on certain days, if we bust our butt on four or five legs, we might get paid for five-six intense hours of work.
And this is MUCH more intense, fast-paced work (with very limited minimum fuel on the dispatch release) than what widebody crews experience, except during the descent in a two-man cockpit into Europe with visibility quickly decreasing. But, I would rather be a hard-working narrowbody pilot: I feel more like a pilot...
There seems to always be some irony in an airline's stated goal nowadays to have flightcrews become much more p r o d u c t i v e, when it is ALSO committed to the hub-and-spoke networks, as it stated years ago; is this not an inherent contradiction, especially when most of this fleet's crews (and passengers) must often change airplanes at hubs with very little time built in for this, and so many planes on the same taxiways at times? Southwest certainly did not quickly develop its network-it has been creating it, very carefully, for about twenty five years or so.
And this is MUCH more intense, fast-paced work (with very limited minimum fuel on the dispatch release) than what widebody crews experience, except during the descent in a two-man cockpit into Europe with visibility quickly decreasing. But, I would rather be a hard-working narrowbody pilot: I feel more like a pilot...
There seems to always be some irony in an airline's stated goal nowadays to have flightcrews become much more p r o d u c t i v e, when it is ALSO committed to the hub-and-spoke networks, as it stated years ago; is this not an inherent contradiction, especially when most of this fleet's crews (and passengers) must often change airplanes at hubs with very little time built in for this, and so many planes on the same taxiways at times? Southwest certainly did not quickly develop its network-it has been creating it, very carefully, for about twenty five years or so.
Last edited by Ignition Override; 12th Mar 2003 at 04:05.
Union Goon
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XL5
As you may or may not know I am married to a fedex pilot. The intracies of two airline pilots living together are that they will never make as much as their peers if they want to see each other and their children. They will drop trips for a loss of pay to make time for each other or they will not have a marriage for long.
Especially when you are both captain's and can't buddy bid each other.
Just saying how much they made doesn't tell the story because you don't know how much they worked. Furthermore the SWA pilots have had extensives raises since that article was published and they would have been looking back a year as well at earnings.
Cheers
Wino
As you may or may not know I am married to a fedex pilot. The intracies of two airline pilots living together are that they will never make as much as their peers if they want to see each other and their children. They will drop trips for a loss of pay to make time for each other or they will not have a marriage for long.
Especially when you are both captain's and can't buddy bid each other.
Just saying how much they made doesn't tell the story because you don't know how much they worked. Furthermore the SWA pilots have had extensives raises since that article was published and they would have been looking back a year as well at earnings.
Cheers
Wino
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From the "trust me" department of UAL ALPA...
The UAL MEC is now claiming to have some supersecret plan to save the company. It is so secret that if it leaks out the competition will find out about it and use it to their advantage.
From a special message by the MEC Chairman:
" ...It also is crucial for our competitors to not have access to our plan. With other airlines in bankruptcy, or on the verge of filing, it would be a tremendous disadvantage to us to show our cards at such a critical juncture...
...Going public with details of our proposal would place us at an extreme disadvantage and could produce far-reaching consequences for our pilots. It's a risk I'm not willing to take..."
We'll see, hope they can pull something off.
The UAL MEC is now claiming to have some supersecret plan to save the company. It is so secret that if it leaks out the competition will find out about it and use it to their advantage.
From a special message by the MEC Chairman:
" ...It also is crucial for our competitors to not have access to our plan. With other airlines in bankruptcy, or on the verge of filing, it would be a tremendous disadvantage to us to show our cards at such a critical juncture...
...Going public with details of our proposal would place us at an extreme disadvantage and could produce far-reaching consequences for our pilots. It's a risk I'm not willing to take..."
We'll see, hope they can pull something off.
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I know! Their plan is to bring in Steve Bonderman and he promises to save the airline and give ALPA their BOD seats back.
I hear Duane Woerth"less" is endorsing the plan.
And if they're reeeel nice, Steve won't cut their pay more than another 20%.TC
P.S.--In the words of Carl Icahn--"Hey! You f***ed up. You trusted me!".
I hear Duane Woerth"less" is endorsing the plan.
And if they're reeeel nice, Steve won't cut their pay more than another 20%.TC
P.S.--In the words of Carl Icahn--"Hey! You f***ed up. You trusted me!".
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http://news.bbc.co.uk/1/hi/business/2852095.stm
United Airlines has failed to reach a deal with its employees' unions, making it increasingly likely that the group will miss a key deadline in its bankruptcy filing.
Credit rating group Standard & Poor's said war fears and higher fuel prices could hurt the airline to the point where it would not be able to meet its second set of bankruptcy covenants.
If that happened, its lenders could ask for an immediate re-payment of the $700m they are owed - forcing the airline to shut down altogether.
United Airlines has failed to reach a deal with its employees' unions, making it increasingly likely that the group will miss a key deadline in its bankruptcy filing.
Credit rating group Standard & Poor's said war fears and higher fuel prices could hurt the airline to the point where it would not be able to meet its second set of bankruptcy covenants.
If that happened, its lenders could ask for an immediate re-payment of the $700m they are owed - forcing the airline to shut down altogether.
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Interesting comments at http://www.airportplanning.com/apcommentary.htm about Uniteds recent Cash Positive statements..... ummm.... talk about spinning the story - united are getting good at it!
The Growing Shortage At United: Credibility
"While we have seen only the press reports, those figures do not come even close to adding up."
-CSFB Analyst James Higgins, CBS News, March 13,2003, regarding United CFO's claim of being cash-positive in January.
It's becoming sort of the reverse of crying wolf.
Last week, United's CFO got the airline some great press, announcing that United was cash-positive to the tune of $1 million a day in January. Great news. The media headlines trumpeted this achievement, taking the CFO's statement at face value. But there was a lot of skepticism in the industry, given the track record of weird data coming from United's executive offices.
Two days later, Credit Suisse First Boston came out seriously questioning United's claim: "Our only surmise is that United is not making payments on many items...we can think of no way that monthly cash flow could have been even close to positive ... such decisions not to pay are unsustainable."
What's also unsustainable how long this stuff will be taken seriously. Getting called on for playing word games by financial institutions like CSFB does not reflect well on United's senior management. Nor can it build confidence in the carrier's overall direction.
This comes fast on the heels of another sunshine story that left the industry underwhelmed. Two weeks ago United's senior management grandly announced that its new, substantially-lower business fares were "revenue positive" - i.e., the decline in unit revenues was being more than off-set by increases in the number of passengers. Other airlines - which have seen just the opposite - scratched their heads. Bluntly, nobody believed it. Then, just days later, United announced the lay-off of 900 more flight attendants because of lower passenger traffic. First, they tell the world their grand fare scheme is generating more passengers. Then they pink-slip hundreds of employees for low passenger loads.
As they say down on the farm, that cow don't moo. CSFB is right. Something here doesn't seem to add up.
United is not running out of money. It's much worse. It's senior management is running out of credibility. The track record is getting pretty clear. In November there was the laughable, embarrassing ATSB filing, with numbers that were zip codes away from reality. Then there was the flood of obviously advisor-scripted babble about "reconstituting margins" and "transformational models" and describing some passenger segments as "price-driven occasionalists," all of which seemed to indicate more smoke than substance in the front offices.
To get out of bankruptcy, United will need the full confidence of creditors, financial institutions and the flying public.
It seems to be going in the opposite direction.
The Growing Shortage At United: Credibility
"While we have seen only the press reports, those figures do not come even close to adding up."
-CSFB Analyst James Higgins, CBS News, March 13,2003, regarding United CFO's claim of being cash-positive in January.
It's becoming sort of the reverse of crying wolf.
Last week, United's CFO got the airline some great press, announcing that United was cash-positive to the tune of $1 million a day in January. Great news. The media headlines trumpeted this achievement, taking the CFO's statement at face value. But there was a lot of skepticism in the industry, given the track record of weird data coming from United's executive offices.
Two days later, Credit Suisse First Boston came out seriously questioning United's claim: "Our only surmise is that United is not making payments on many items...we can think of no way that monthly cash flow could have been even close to positive ... such decisions not to pay are unsustainable."
What's also unsustainable how long this stuff will be taken seriously. Getting called on for playing word games by financial institutions like CSFB does not reflect well on United's senior management. Nor can it build confidence in the carrier's overall direction.
This comes fast on the heels of another sunshine story that left the industry underwhelmed. Two weeks ago United's senior management grandly announced that its new, substantially-lower business fares were "revenue positive" - i.e., the decline in unit revenues was being more than off-set by increases in the number of passengers. Other airlines - which have seen just the opposite - scratched their heads. Bluntly, nobody believed it. Then, just days later, United announced the lay-off of 900 more flight attendants because of lower passenger traffic. First, they tell the world their grand fare scheme is generating more passengers. Then they pink-slip hundreds of employees for low passenger loads.
As they say down on the farm, that cow don't moo. CSFB is right. Something here doesn't seem to add up.
United is not running out of money. It's much worse. It's senior management is running out of credibility. The track record is getting pretty clear. In November there was the laughable, embarrassing ATSB filing, with numbers that were zip codes away from reality. Then there was the flood of obviously advisor-scripted babble about "reconstituting margins" and "transformational models" and describing some passenger segments as "price-driven occasionalists," all of which seemed to indicate more smoke than substance in the front offices.
To get out of bankruptcy, United will need the full confidence of creditors, financial institutions and the flying public.
It seems to be going in the opposite direction.
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As predicted, with a history lesson in the article:
United Asks to Void Union Contracts
By MICHELINE MAYNARD
United Airlines asked a federal bankruptcy court judge yesterday to set aside its labor agreements as it seeks deep wage and benefit cuts for its employees.
The motion, filed in Chicago by United's parent, the UAL Corporation, proposed a series of agreements that would permanently reduce wages and benefits by $2.56 billion a year and make changes in schedules for flight crews; pension plans; job security; and various clauses that govern staffing levels and job duties. UAL also wants to create a low-fare airline.
If Judge Eugene Wedoff of United States Bankruptcy Court permits United to revoke its contracts, it will be the first time a major airline has used the bankruptcy code to cancel its labor agreements and impose new work rules since Frank Lorenzo did so in 1983 at Continental Airlines.
The court filing came on the final day that United, which filed in December for bankruptcy protection, was permitted under bankruptcy law to make the request. Otherwise, it would have lost the ability to apply what could be a critical tool as it seeks to reorganize.
Although the action was expected, it had extraordinary significance in the case of United, whose employees owned 55 percent of the airline before it filed for bankruptcy. In addition, United's labor unions held three seats on its board and had the right to veto the selection of a chief executive. Those rights were terminated two weeks ago when employee ownership fell below 20 percent.
The changes United is seeking would permit it to create a low-fare airline, which would take over about 30 percent of its operations. The unions strongly oppose such an airline.
United also said it would place greater emphasis on the use of regional jets, contract out functions now performed by airline employees and expand code-sharing agreements with other airlines.
"We have a plan to fundamentally transform United's business in a way that is durable and sustainable, and we have made solid progress in reducing costs," Glenn F. Tilton, the chief executive of UAL, said. "It strikes a balance in achieving our near-term goal of successfully emerging from bankruptcy with our longer-term commitment to create a resilient, profitable enterprise that can be the industry leader once again."
Industry analysts said they expected negotiations between United and its unions, under way in earnest over the last few weeks, to continue. But United's unions face two deadlines. Yesterday, Mr. Tilton said that the threat of war in Iraq had caused United's bookings to drop significantly. If it cannot reach agreement with its unions within 30 days, he said, the airline will be forced to impose across-the-board cutbacks of at least 9 percent on all 72,500 employees. If war occurs, Mr. Tilton said, the airline is prepared to cut capacity by whatever level is necessary. Last week, in a recording to employees, Mr. Tilton placed that figure at 10 percent to 12 percent.
Another deadline looms on May 1, when United must meet terms of $1.5 billion in debtor-in-possession financing that it obtained when it filed for bankruptcy. Mr. Tilton vowed that the airline would negotiate "around the clock" to reach agreements with its unions by then.
"However, all of us will have to accept changes that are broad and deep, and those changes require that we take an entirely new approach to competing and succeeding in this changed industry," Mr. Tilton said.
United's pilots were said to be "extremely dismayed" by the court filing. "Our contract is the product of 52 years of good-faith collective bargaining conducted under federal labor law," said Paul Whiteford, chairman of the Air Line Pilots Association's master executive council at United and one of the union members on the airline's board. "To seek to wipe out this contract by the stroke of a judge's pen is disheartening,"
Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass., said that the abrogation of a contract is "like the voiding of a sacred oath."
"It's asking for cooperation under threat," he said. "It's going to greatly embitter relations between labor and management."
In addition to the pilots' union contract, United sought to cancel contracts with the Association of Flight Attendants; the International Association of Machinists and Aerospace Workers, which represents mechanics and other airport workers; and the Professional Airline Flight Control Association, representing traffic controllers.
United said the union that represents meteorologists would be exempt from its motion. It reached agreement this weekend with that union, the Transport Workers Union, on a new contract with the concessions it sought. United said meteorologists would vote on the plan by Friday.
Mr. Whiteford, who vehemently opposes the low-fare airline proposal, described the airline's plan as "an overreach," but he said it would be in the labor unions' best interests to reach a negotiated settlement rather than see new contract provisions imposed in court.
The airline industry has one glaring example of the chaos that can occur if that happens. In 1983, amid a nasty dispute with Continental Airlines' unions over his bid for wage and benefit cuts, Mr. Lorenzo filed for Chapter 11 bankruptcy protection and shut down the company for three days, then reopened it with just one-third the number of employees, who were paid 50 percent less.
Continental's unions subsequently went on strike, but Mr. Lorenzo persuaded a bankruptcy court to throw out Continental's contracts and replace them with new ones paying the sharply lower rates. Ultimately, the federal bankruptcy code was changed to make it much harder for airlines to cancel their contracts.
US Airways, which filed for bankruptcy last summer, filed a motion like United's but did not impose new contracts. Instead, it kept negotiating with its unions, and the airline obtained multiple sets of concessions before its restructuring plan was complete. Yesterday, US Airways' creditors' committee endorsed the plan. The airline hopes to emerge from bankruptcy on March 31.
http://www.nytimes.com/2003/03/18/business/18AIR.html
United Asks to Void Union Contracts
By MICHELINE MAYNARD
United Airlines asked a federal bankruptcy court judge yesterday to set aside its labor agreements as it seeks deep wage and benefit cuts for its employees.
The motion, filed in Chicago by United's parent, the UAL Corporation, proposed a series of agreements that would permanently reduce wages and benefits by $2.56 billion a year and make changes in schedules for flight crews; pension plans; job security; and various clauses that govern staffing levels and job duties. UAL also wants to create a low-fare airline.
If Judge Eugene Wedoff of United States Bankruptcy Court permits United to revoke its contracts, it will be the first time a major airline has used the bankruptcy code to cancel its labor agreements and impose new work rules since Frank Lorenzo did so in 1983 at Continental Airlines.
The court filing came on the final day that United, which filed in December for bankruptcy protection, was permitted under bankruptcy law to make the request. Otherwise, it would have lost the ability to apply what could be a critical tool as it seeks to reorganize.
Although the action was expected, it had extraordinary significance in the case of United, whose employees owned 55 percent of the airline before it filed for bankruptcy. In addition, United's labor unions held three seats on its board and had the right to veto the selection of a chief executive. Those rights were terminated two weeks ago when employee ownership fell below 20 percent.
The changes United is seeking would permit it to create a low-fare airline, which would take over about 30 percent of its operations. The unions strongly oppose such an airline.
United also said it would place greater emphasis on the use of regional jets, contract out functions now performed by airline employees and expand code-sharing agreements with other airlines.
"We have a plan to fundamentally transform United's business in a way that is durable and sustainable, and we have made solid progress in reducing costs," Glenn F. Tilton, the chief executive of UAL, said. "It strikes a balance in achieving our near-term goal of successfully emerging from bankruptcy with our longer-term commitment to create a resilient, profitable enterprise that can be the industry leader once again."
Industry analysts said they expected negotiations between United and its unions, under way in earnest over the last few weeks, to continue. But United's unions face two deadlines. Yesterday, Mr. Tilton said that the threat of war in Iraq had caused United's bookings to drop significantly. If it cannot reach agreement with its unions within 30 days, he said, the airline will be forced to impose across-the-board cutbacks of at least 9 percent on all 72,500 employees. If war occurs, Mr. Tilton said, the airline is prepared to cut capacity by whatever level is necessary. Last week, in a recording to employees, Mr. Tilton placed that figure at 10 percent to 12 percent.
Another deadline looms on May 1, when United must meet terms of $1.5 billion in debtor-in-possession financing that it obtained when it filed for bankruptcy. Mr. Tilton vowed that the airline would negotiate "around the clock" to reach agreements with its unions by then.
"However, all of us will have to accept changes that are broad and deep, and those changes require that we take an entirely new approach to competing and succeeding in this changed industry," Mr. Tilton said.
United's pilots were said to be "extremely dismayed" by the court filing. "Our contract is the product of 52 years of good-faith collective bargaining conducted under federal labor law," said Paul Whiteford, chairman of the Air Line Pilots Association's master executive council at United and one of the union members on the airline's board. "To seek to wipe out this contract by the stroke of a judge's pen is disheartening,"
Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass., said that the abrogation of a contract is "like the voiding of a sacred oath."
"It's asking for cooperation under threat," he said. "It's going to greatly embitter relations between labor and management."
In addition to the pilots' union contract, United sought to cancel contracts with the Association of Flight Attendants; the International Association of Machinists and Aerospace Workers, which represents mechanics and other airport workers; and the Professional Airline Flight Control Association, representing traffic controllers.
United said the union that represents meteorologists would be exempt from its motion. It reached agreement this weekend with that union, the Transport Workers Union, on a new contract with the concessions it sought. United said meteorologists would vote on the plan by Friday.
Mr. Whiteford, who vehemently opposes the low-fare airline proposal, described the airline's plan as "an overreach," but he said it would be in the labor unions' best interests to reach a negotiated settlement rather than see new contract provisions imposed in court.
The airline industry has one glaring example of the chaos that can occur if that happens. In 1983, amid a nasty dispute with Continental Airlines' unions over his bid for wage and benefit cuts, Mr. Lorenzo filed for Chapter 11 bankruptcy protection and shut down the company for three days, then reopened it with just one-third the number of employees, who were paid 50 percent less.
Continental's unions subsequently went on strike, but Mr. Lorenzo persuaded a bankruptcy court to throw out Continental's contracts and replace them with new ones paying the sharply lower rates. Ultimately, the federal bankruptcy code was changed to make it much harder for airlines to cancel their contracts.
US Airways, which filed for bankruptcy last summer, filed a motion like United's but did not impose new contracts. Instead, it kept negotiating with its unions, and the airline obtained multiple sets of concessions before its restructuring plan was complete. Yesterday, US Airways' creditors' committee endorsed the plan. The airline hopes to emerge from bankruptcy on March 31.
http://www.nytimes.com/2003/03/18/business/18AIR.html
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CHICAGO (Reuters) - Bankrupt United Airlines forecast a first-quarter operating loss of $877 million and said for the first time publicly that liquidation is a "distinct possibility."
In the last week alone, UAL Corp's UAL.N United's domestic bookings are down and international bookings have dropped 40 percent due to the impending Iraq conflict.
In papers filed with the bankruptcy court on Monday, United outlined a dire set of circumstances in months ahead as the Iraq war appears imminent.
The projections contrasted with recent announcements from the world's second-largest airline that daily cash flow was positive in January and it was beating the first set of financial requirements set by bankruptcy lenders.
United said in the court document it might cease operations altogether without labor cost reductions from major unions.
Elk Grove Village, Illinois-based United said initiatives so far to cut costs will not return it to profitability. UAL lost a record $3.2 billion in 2002, about a quarter of the $11 billion in net losses by all top eight U.S. carriers combined.
"With war-related jitters increasing and fewer people purchasing tickets, United's near-term revenue forecast through June 2003 has deteriorated by $298 million from projections made just weeks ago," the company said. "At the same time, the cost of fuel, United's second-largest operating expense, has gone in the opposite direction."
"In the wake of the deadlines that have recently been set for Iraq to disarm, United's bookings have begun to drop substantially," it said. "Domestic bookings have recently declined ... the drop in international bookings has been more dramatic."
SOARING FUEL COSTS
Unhedged on its jet fuel purchases for the entire year, United now says it expects the price for fuel in 2003 will be 19 percent higher than it projected in December, when it filed for bankruptcy.
As a result of the higher costs and lower revenues, United will violate its debtor-in-possession financing covenants starting in May 2003, even with temporary wage cuts that are saving $70 million monthly.
"Liquidation is a distinct possibility if United does not receive its proposed labor cost reductions," the airline said. "The consequences of liquidation for all United stakeholders would be catastrophic. In particular, liquidation would mean that all of United's employees would lose their jobs."
In the wake of the Sept. 11, 2001, attacks, United cut about 20 percent of its workforce and 20 percent of its flight schedule, reduced other expenses and tried to restructure its financial obligations.
But those efforts could not offset weak revenue, and after the U.S. government denied an application for $1.8 billion in backing of private-sector loans, the airline filed the largest aviation bankruptcy in history on Dec. 9.
REJECTING CONTRACTS
After winning temporary wage cuts from its unions, United is now seeking to throw out its collective bargaining agreements altogether. Weeks of talks yielded no deal on $2.56 billion annually of longer-term concessions the airline wants.
United said it is not alone in its troubles, noting Continental Airlines CAL.N also recently forecast rough times ahead in transAtlantic travel.
"Other carriers, such as Delta DAL.N , Japan Airlines 9205.T and others, have also felt the conflict's effect on bookings," it said. "The difference between United and its competitors is that, because the company is in Chapter 11, United must disclose its Iraq contingency plans."
United said it has already met with a representative of its DIP lenders to ask for a relaxation of the loan covenants. Four institutions put up $1.5 billion in financing for United -- J.P. Morgan Chase & Co Inc. JPM.N , Citigroup Inc. C.N , CIT Group Inc. CIT.N and Bank One Corp. ONE.N .
But the DIP lenders said they needed hard data from United on the effects of the war, which they assumed would not be available until after it started. More meetings are scheduled for this week.
UAL shares, which traded at more than $100 each in the late 1990s, fell 1 percent on the New York Stock Exchange to 85 cents. Shares of its biggest competitors, AMR Corp. AMR.N and Delta, were higher.
In the last week alone, UAL Corp's UAL.N United's domestic bookings are down and international bookings have dropped 40 percent due to the impending Iraq conflict.
In papers filed with the bankruptcy court on Monday, United outlined a dire set of circumstances in months ahead as the Iraq war appears imminent.
The projections contrasted with recent announcements from the world's second-largest airline that daily cash flow was positive in January and it was beating the first set of financial requirements set by bankruptcy lenders.
United said in the court document it might cease operations altogether without labor cost reductions from major unions.
Elk Grove Village, Illinois-based United said initiatives so far to cut costs will not return it to profitability. UAL lost a record $3.2 billion in 2002, about a quarter of the $11 billion in net losses by all top eight U.S. carriers combined.
"With war-related jitters increasing and fewer people purchasing tickets, United's near-term revenue forecast through June 2003 has deteriorated by $298 million from projections made just weeks ago," the company said. "At the same time, the cost of fuel, United's second-largest operating expense, has gone in the opposite direction."
"In the wake of the deadlines that have recently been set for Iraq to disarm, United's bookings have begun to drop substantially," it said. "Domestic bookings have recently declined ... the drop in international bookings has been more dramatic."
SOARING FUEL COSTS
Unhedged on its jet fuel purchases for the entire year, United now says it expects the price for fuel in 2003 will be 19 percent higher than it projected in December, when it filed for bankruptcy.
As a result of the higher costs and lower revenues, United will violate its debtor-in-possession financing covenants starting in May 2003, even with temporary wage cuts that are saving $70 million monthly.
"Liquidation is a distinct possibility if United does not receive its proposed labor cost reductions," the airline said. "The consequences of liquidation for all United stakeholders would be catastrophic. In particular, liquidation would mean that all of United's employees would lose their jobs."
In the wake of the Sept. 11, 2001, attacks, United cut about 20 percent of its workforce and 20 percent of its flight schedule, reduced other expenses and tried to restructure its financial obligations.
But those efforts could not offset weak revenue, and after the U.S. government denied an application for $1.8 billion in backing of private-sector loans, the airline filed the largest aviation bankruptcy in history on Dec. 9.
REJECTING CONTRACTS
After winning temporary wage cuts from its unions, United is now seeking to throw out its collective bargaining agreements altogether. Weeks of talks yielded no deal on $2.56 billion annually of longer-term concessions the airline wants.
United said it is not alone in its troubles, noting Continental Airlines CAL.N also recently forecast rough times ahead in transAtlantic travel.
"Other carriers, such as Delta DAL.N , Japan Airlines 9205.T and others, have also felt the conflict's effect on bookings," it said. "The difference between United and its competitors is that, because the company is in Chapter 11, United must disclose its Iraq contingency plans."
United said it has already met with a representative of its DIP lenders to ask for a relaxation of the loan covenants. Four institutions put up $1.5 billion in financing for United -- J.P. Morgan Chase & Co Inc. JPM.N , Citigroup Inc. C.N , CIT Group Inc. CIT.N and Bank One Corp. ONE.N .
But the DIP lenders said they needed hard data from United on the effects of the war, which they assumed would not be available until after it started. More meetings are scheduled for this week.
UAL shares, which traded at more than $100 each in the late 1990s, fell 1 percent on the New York Stock Exchange to 85 cents. Shares of its biggest competitors, AMR Corp. AMR.N and Delta, were higher.
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Unintended Consequences
If UAL does liquidate there will be unintended consequences that will affect the industry.
Has anyone thought of the regional jets that feed into UAL. If UAL is gone there nothing to feed into, a few passengers may fly, those who do not need a connection. I believe the current revenue stream for regional feeders is they are paid by the flight, not by the number of passengers onboard. Regionals may try to become point-to-point airlines, but they will miss the pay by flight and now have to get out and sell tickets to individuals, a real hard change to implement, with a lot of marketing and sales costs involved
Perhaps regionals can change their structure and develop useful point-to-point routes, even have agreements with other regionals to have a more complete route structure.
If UAL liquidates and the regionals cannot change fast enough then they to would end up following UAL’s footsteps.
It appears the airline that is going to survive needs a business model similar to Southwest and JetBlue. They use smaller aircraft of one model. I can see this will spell trouble for Boeing and possibly Airbus. Sales of B737 may hold up but the new airlines will not be needed B767, B747, B777 aircraft. Boeing could end up shutting down production lines for the larger aircraft. I’m sure there is more profit in a B747 sale than B737 sale. New aircraft sales could be depressed for years as there are many aircraft parked in the desert.
And off course this ripples down to the engine manufactures…
Has anyone thought of the regional jets that feed into UAL. If UAL is gone there nothing to feed into, a few passengers may fly, those who do not need a connection. I believe the current revenue stream for regional feeders is they are paid by the flight, not by the number of passengers onboard. Regionals may try to become point-to-point airlines, but they will miss the pay by flight and now have to get out and sell tickets to individuals, a real hard change to implement, with a lot of marketing and sales costs involved
Perhaps regionals can change their structure and develop useful point-to-point routes, even have agreements with other regionals to have a more complete route structure.
If UAL liquidates and the regionals cannot change fast enough then they to would end up following UAL’s footsteps.
It appears the airline that is going to survive needs a business model similar to Southwest and JetBlue. They use smaller aircraft of one model. I can see this will spell trouble for Boeing and possibly Airbus. Sales of B737 may hold up but the new airlines will not be needed B767, B747, B777 aircraft. Boeing could end up shutting down production lines for the larger aircraft. I’m sure there is more profit in a B747 sale than B737 sale. New aircraft sales could be depressed for years as there are many aircraft parked in the desert.
And off course this ripples down to the engine manufactures…