Hobby expansion passes; Southwest wins fight with United

[Andy]

I asked you about UA's position on eliminating jobs well before SWA could have had ANY effect on them. How can you defend UA and blame SWA when it's crystal clear that Smisek was just looking for an excuse to dump hard working employees and routes?

I can only assume that you didn't read my post about United shifting flights to DEN. While I expect United to keep IAH a major hub, some of that flying is going to shift to DEN due to a committment to increase DEN ASMs by a minimum of 4.5% by 2016. The jobs aren't lost, they're just moving to DEN.
Keep in mind that current United projections for 2012 call for a .5 to 1.5% decrease in ASMs compared to 2011. This is similar to Delta's ASM projections; I don't know what SWA, AMR, and other players are doing with respect to ASMs. Given that they've programmed an overall decrease in flying, the additional DEN flying has to come from other hubs. This is a strategic opportunity for United to shift the flying to DEN under the cover of being rebuffed by the city of Houston.
IMHO, in a couple of years, you'll see United extract concessions out of Houston to complete terminal B expansion plans. I'm sure that the expansion plans will be shuttered short term after they complete phase one. http://www.fly2houston.com/0/3917910/0/83280D83281/

You guys need to stop reading this stuff at face value. It's like playing checkers against an opponent who's playing chess.

 

[SKC]

Andy, UA's public stance has been that Houston will lose 1300 jobs. Whether it be jobs going to DEN or Denmark is irrelevant based upon their notion that SWA is at fault.

 

[Flopgut]

So....the 1300 employees losing their jobs are due to the 787 performance issues? That's a lot of employees being let go for one flight per day.

Well, that flight was pretty strategic and we were going to build the operation around it. That was going to be in Houston, now it's not. It does take a lot of people. This isn't really any different than if the Council ruled in United's favor. You were going to go somewhere else as well, right? SAT? We're just suppose to stay?

Thing is about these employees, we've already displaced a lot of people. The ones this hammer is going to fall on are hourly people who can not leave Houston. They've been there a long time, they love Houston, it's home. It's really a shame. Frankly, the mayor should have made certain SWA would offer these people a job. But, SWA wouldn't really honor that sort of agreement.

 

[Flopgut]

Andy, UA's public stance has been that Houston will lose 1300 jobs. Whether it be jobs going to DEN or Denmark is irrelevant based upon their notion that SWA is at fault.

So it's ok to say you'll take the jobs to SAT? You refuse to create jobs in Houston without wrecking some first? Nice.

 

[SWA Bubba]

I can only assume that you didn't read my post about United shifting flights to DEN. While I expect United to keep IAH a major hub, some of that flying is going to shift to DEN due to a committment to increase DEN ASMs by a minimum of 4.5% by 2016. The jobs aren't lost, they're just moving to DEN.
Keep in mind that current United projections for 2012 call for a .5 to 1.5% decrease in ASMs compared to 2011. This is similar to Delta's ASM projections; I don't know what SWA, AMR, and other players are doing with respect to ASMs. Given that they've programmed an overall decrease in flying, the additional DEN flying has to come from other hubs. This is a strategic opportunity for United to shift the flying to DEN under the cover of being rebuffed by the city of Houston.
IMHO, in a couple of years, you'll see United extract concessions out of Houston to complete terminal B expansion plans. I'm sure that the expansion plans will be shuttered short term after they complete phase one. http://www.fly2houston.com/0/3917910/0/83280D83281/

You guys need to stop reading this stuff at face value. It's like playing checkers against an opponent who's playing chess.

I read the article, it was actually very interesting. However, I think the point is, that the increased flying in DEN (due to that airports debt-forgiveness deal in excahnge for increased United ASMs) was gonna' happen regardless of what happened in Houston. I think Mr. Smisek's wording to put the blame on Southwest was just a case of "that'll teach you." If the Houston city council had voted the other way, he'd have a different press relief to explain the same shift in flying over to DEN.

Bubba

 

[Flopgut]

Let's Houston down miserably?

You'd better create 10,000 jobs, sell tickets to Bogota for $130, and add 1.6 billion to Houston's economy. Every single day you don't do that, I will be sending an email to the Mayor and the City Council. You got 4 gates to do that. Good luck!

 

[SKC]

Well, that flight was pretty strategic and we were going to build the operation around it. That was going to be in Houston, now it's not. It does take a lot of people. This isn't really any different than if the Council ruled in United's favor. You were going to go somewhere else as well, right? SAT? We're just suppose to stay?

It's not talking about future jobs....Smisek said, [FONT=&quot]"[/FONT][FONT=&quot]We expect job loss will begin this fall and occur over time". It has nothing to do with future growth and just not hiring new employees. Those are CURRENT employees that he is referring to. You're way overstaffed if one future flight that was removed from the schedule causes you to be 1300 people heavy.

Had SWA opted for intl ops out of SAT instead of HOU, it wouldn't have changed our HOU operation a bit. SWA wouldn't have downsized, especially 10% as UA is. SWA wouldn't have cut 1300 positions.
[/FONT]

 

[SWA Bubba]

So it's ok to say you'll take the jobs to SAT? You refuse to create jobs in Houston without wrecking some first? Nice.

Absolutely not. We create jobs when we expand. It's not our responsibility (nor is it the city of Houston's) to ensure that a competitor doesn't shrink in the face of competition. Especially when a lot of people think it's a bluff, or flying that was shifting anyway.

As far as your other contention goes, if and when United lets people go in Houston, they're more than welcome to come work for us. You would not believe how many of our employees (of all types, ramp, customer service, etc.) used to work for other airlines. They've got airline knowledge, so that gives them somewhat of an advantage over other applicants off the street. Then they could work for a company that's never furloughed anyone. Ever.

Bubba

 

[Andy]

Andy, UA's public stance has been that Houston will lose 1300 jobs. Whether it be jobs going to DEN or Denmark is irrelevant based upon their notion that SWA is at fault.

Are you taking this statement at face value? It's all about current and future bargaining.

Personally, I see this as a win for United. They shift flying to DEN, which lowers their airport fees at DEN by $22M per year. Further, United mothballs an additional $800M in airport expansion plans in IAH.
What United management is currently doing is playing one hub's city council off against the other in order to extract concessions.
At the same time, United has been able to get SWA to spend an additional $100M on HOU improvements.

At the present time, United's ASMs are shrinking. Unfortunately. Part of that is the economy, part of that is merger issues.
Eventually, United will start growing ASMs again. When they do, they will be playing off LAX, DEN, IAH, and ORD city councils for concessions in exchange for additional flying. SFO is pretty maxed out and my guess is that no additional east coast capacity is needed.

I'd be looking for nonstops out of IAH to the northwest US/Canada to shift to DEN and IAH in turn feeding the DEN hub with that traffic.

I think Mr. Smisek's wording to put the blame on Southwest was just a case of "that'll teach you." If the Houston city council had voted the other way, he'd have a different press relief to explain the same shift in flying over to DEN.

Bubba

PRECISELY. If SWA's HOU expansion was not approved, United would simply blame the poor economy and 'right sizing all hubs'. No matter the outcome, United was going to draw down some IAH flying.

 

[SKC]

So it's ok to say you'll take the jobs to SAT? You refuse to create jobs in Houston without wrecking some first? Nice.

So, which is it?

Either the 1300 jobs are lost due to SWA (which isn't possible three years in advance), or the 1300 jobs are lost due to changes in UA mgmt's game plan of what flights are economically viable with the planned aircraft type (which SWA would have no influence over). You can't have it both ways.

Job loss is 100% squarely on UA mgmt, not SWA, not the city council.

Had SWA begun ops in SAT, jobs wouldn't have been cut by SWA in HOU. Jobs would have been added in SAT.