Is the end of UAL finally here?

[bluefin]

Any one else read the article stating that they want to sell off their entire maintenance division? Kinda goes with the other article saying if the airline was broken up that stock would be worth around $80 a share. I try to find what I read and post it here.

 

[F9 Driver]

www.chicagotribune.com/business/chi-thu_unitedaug23,0,3679316.story
chicagotribune.com

TRIBUNE EXCLUSIVE

United may shed repair unit

Could raise millions in potential spin-off

By Julie Johnsson
Tribune staff reporter
August 23, 2007
http://ad.doubleclick.net/jump/trb....bunecom;pos=1;sz=300x250;tile=1;ord=28973229?
United Airlines is exploring spinning off much of its maintenance division, including its massive repair base at San Francisco International Airport.

Chicago-based United earlier this year hired McKinsey and Co. to draw up strategic options for its maintenance, repair and overhaul operations, which employ about 5,500 mechanics and handle much of the airline's routine repair work as well as maintenance for about 150 other carriers.

"We are contemplating bringing in third parties who can invest in the maintenance, repair and overhaul business," said United spokeswoman Jean Medina. "This will enable us to continue to provide the highest quality maintenance to United and our customers. We are working cooperatively with our labor groups to ensure that any arrangement would be for the long term with a partner that creates value for our customers, investors and employees."

United executives are said to favor pursuing a joint venture that would allow the airline to retain a minority stake in the maintenance operations while handing over control to an outside investor such as a hedge fund, third-party contractor or even another airline.

Any such change in ownership structure would require union approval, sources said.

Entering into such a joint venture could help United raise hundreds of millions of dollars from outside investors and avoid costly infrastructure investments needed to keep its San Francisco operations current, sources say. The San Francisco maintenance facility dates to the 1950s.

Since emerging from bankruptcy in early 2006, United has continued to trim costs and explore new ways to wring more money out of its franchise. The moves are intended to strengthen United's finances as a slowing economy threatens the recovery of the airline industry, and to improve its standing with investors.

Off-loading the airline's largest maintenance base, where more than 3,000 mechanics work, could also potentially lessen the clout held by a labor group that has not shied from confrontation in the past.

United officials, including Chief Operating Officer Peter McDonald, notified the mechanics union of the strategic shift at a meeting Aug. 10. The two sides are discussing the details of the strategy and its implications in San Francisco this week.

While the mechanics contract is not due to be revisited until early 2010, the two sides are embroiled in a dispute over the degree to which United has shipped maintenance work to third-party vendors. The Aircraft Mechanics Fraternal Association said this year that the carrier had greatly exceeded its contractual limits on outsourcing, a charge the airline denied. An arbitrator is set to review the matter next month.

A spinoff would affect about 2,800 United employees, most of them based in the Bay Area, sources say. It would not affect workers in San Francisco, O'Hare or elsewhere who perform line maintenance, the term for overnight tweaks and repairs needed to keep jetliners airworthy.

However, some of United's approximately 700 mechanics at O'Hare International Airport could lose their jobs as a consequence. Union rules allow senior workers whose base is shuttered to assume jobs held by junior workers in other cities.

About 200 of the 1,200 United mechanics working in Indianapolis took jobs in other cities when the carrier closed that maintenance center in 2003.

United's maneuver apparently ends its recent strategy of trying to turn its maintenance unit, branded United Services, into a profit center. And it signals that United CEO Glenn Tilton will continue to pursue smaller deals while advocating for broader industry consolidation.

United Services generated $280 million in revenue last year, about 75 percent of which came through maintenance and repairs. Investment bank Bear Stearns & Co., in a July 17 research report, estimated that the division could have an equity value of anywhere from $60 million to $600 million and noted that recent deals in its sector pointed to a valuation of about $330 million.

The report estimated that United could generate billions of dollars, and nearly double its stock price, by unloading such assets as its frequent-flier program, real estate and some international routes.

Before its descent into bankruptcy in 2002, United boasted one of the largest and best-equipped maintenance forces in the business. The carrier built an $800 million, state-of-the-art maintenance center in Indianapolis in the 1990s and employed more than 15,000 mechanics at its turn-of-the-century peak. United jettisoned the Indianapolis facility in 2003.

 

[Amish RakeFight]

What a sad shame this industry has become.

 

[Palomino]

The report estimated that United could generate billions of dollars, and nearly double its stock price, by unloading such assets as its frequent-flier program, real estate and some international routes.

...so why would anyone fly this 'airline' when it stops being an airline?

how is Tilton still in charge of things there? disgraceful.

 

[ThreeGreens]

http://www.chicagotribune.com/business/chi-thu_unitedaug23,0,3679316.story
Chicago-based United earlier this year hired McKinsey and Co. to draw up strategic options for its maintenance, repair and overhaul operations, which employ about 5,500 mechanics and handle much of the airline's routine repair work as well as maintenance for about 150 other carriers.

McKinsey are the same smart strategic planners that designed the Swissair business plan in the late 90's, and brought them to bankruptcy.
Way to go !!!

 

[DTW320]

Entering into such a joint venture could help United raise hundreds of millions of dollars from outside investors

Now why would UAL want to raise a bunch of cash now? Hmmmmmmmm............

 

[Diesel-9]

CAL + (NWA Golden Share)

 

[skiandsurf]

The San Francisco Mayor, Gavin, and the Governator, must be real happy now. They fought long and hard to bring in hundreds of low paying jobs (Virgin America) and now they might lose 3000 good paying jobs (UAL MX SFO).

Does anyone remember the huge MX facility in IND that UAL had. I had a couple of friends move their families out there, only to lose those jobs.

Why does anyone want to work for ANY airline? Oh yeah, the free travel benefits.

 

[Draginass]

The UAL execs are stuffing their pockets while moving to morph UAL into a "virtual airline."

 

[scangadah]

The San Francisco Mayor, Gavin, and the Governator, must be real happy now. They fought long and hard to bring in hundreds of low paying jobs (Virgin America) and now they might lose 3000 good paying jobs (UAL MX SFO).

Does anyone remember the huge MX facility in IND that UAL had. I had a couple of friends move their families out there, only to lose those jobs.

Why does anyone want to work for ANY airline? Oh yeah, the free travel benefits.

WOW, four flights a day pushed them over the edge huh? Must have been in worse shape than we thought.

 

[Jetjockey]

WOW, four flights a day pushed them over the edge huh? Must have been in worse shape than we thought.

Did you say something scangadah? I was distracted by your avatar. No one will hear a word you are saying with an avatar like that.

 

[Frac Cap]

Wow!!

 

[contrail67]

Same type of thing NWA did. Hope there is something to protect the mechanics in their contract....

 

[AC560]

Hope there is something to protect the mechanics in their contract....

Cause it won't be their fellow workers protecting them....

 

[Marko Ramius]

Short term memory?

Same type of thing NWA did. Hope there is something to protect the mechanics in their contract....

Yes it is, so why it such an earth shattering event for some that UA is looking at doing the same? I guess you could say it may be interesting from the standpoint that UA's mechanics will likely have even less support from the other employee groups than NW's did-if that is even possible. After all these are the guys who allowed the Usair deal to get legs and the ones who went to work in 1985 when the pilots and FA's didn't. Don't think that is a tunnel that AMFA wishes to roll down. AMFA's do it yourself vs. uniting with other groups who they basically feel are inferior has struck out big time thus far, will they do an about face here?

Btw. The title of this thread is leading at best, an ugly bit of wishful thinking at worst. I love how we interpret news differently based on where our personal 'market' feeling presently is about individual carriers.

 

[Flopgut]

This could be good for the mechs. They will be merchandising a lot of talent and experience. Who's going to fix Virgin's airplanes for instance? Of course they may fly them down to San Salvador and have them half-a$$ fixed (outside on the ramp) like JBL. But eventually the planes are going to need some quality heavy mx work.

 

[eaglefly]

AMR turned it's Tulsa facility into a contract maintenance center. Contracting outside business, that is.

It's been very successful and profitable. Many carriers here and abroad are using AMR as a maintenance source getting both high quality and a competitive price.

To bad the clumsy bloated crooks at UAL can't figure out how to leave the mens room crap stall.

UAL is getting more pathetic by the minute..........

 

[Rez O. Lewshun]

What a sad shame this industry has become.

It is all part of the economy that you are a part of.....

I'm sure you are a particapting consumer in another industry, as we all are, that is readically changing the work force in that sector...

Why should the airline business be any different? They want thier cheap tickets and they want them now..

 

[Flopgut]

It is all part of the economy that you are a part of.....

I'm sure you are a particapting consumer in another industry, as we all are, that is readically changing the work force in that sector...

Why should the airline business be any different? They want thier cheap tickets and they want them now..

What?!

Where in this economy are you seeing anything close to what is going on in ours? Where else, in the history of mankind, is there another industry that has simultaneously grown more safe and less expensive than airline travel? You seen any other business have to give their customers a Bill of Rights because CONGRESS mandated it?! Fcuk no! Our profession has been uniquely and repeatedly, limited and harmed, so our consumers could go to the airport and fly somewhere cheaper than staying at home!

Boeing has just about dispensed with Airbus as a competitor. FDX and UPS are huge, successful multinational companies. Fractionals are amazing companies and uniquely American. Our economy supports a space program and the world's most advanced military. However, somehow US legacy carriers struggle. Hmmm. Either we're dereglated, or we're not!

UAL should be twice the size it is.

Too many people in ALPA think like you do.

 

[ivauir]

UAL should be twice the size it is.

.

Not to start a flame was here amigo, but how do you figure?

UAL has been broken for a long time, but government intervention kept them (and others) on life support. Leaving the weaker players in the market saturates the market and drives down prices.

IMO this is what has harmed our industry and our profession.

 

[AA717driver]

Are hedge funds becoming the Icahn's and Lorenzo's of the '00's? TC

 

[Nado]

Flopgut, JBL hasn't sent a plane down south for over a year, I think more like 2+ years.

There was a little matter of not having a hangar to do the maintenance in as a brand new startup airline.

 

[AAPilot]

AMR turned it's Tulsa facility into a contract maintenance center. Contracting outside business, that is.

It's been very successful and profitable. Many carriers here and abroad are using AMR as a maintenance source getting both high quality and a competitive price.

To bad the clumsy bloated crooks at UAL can't figure out how to leave the mens room crap stall.

UAL is getting more pathetic by the minute..........

good point eagle////its just a matter of time for the once proud ual...

 

[Flopgut]

Not to start a flame was here amigo, but how do you figure?

UAL has been broken for a long time, but government intervention kept them (and others) on life support. Leaving the weaker players in the market saturates the market and drives down prices.

IMO this is what has harmed our industry and our profession.

One might go back further, but go back as far as when UAL wanted to buy America West. That probably should have been allowed, but DOT stopped it. Then you have USAir, not formally halted, but basically the same effect (except that the threat of intervention ran the price up) costing UAL dearly. UAL needed to grow in this manner, and in a truly free market there should have been no problem. Then look at the ATSB. UAL deserved a loan, instead they got turned down twice resulting in the airline taking action almost singuliarly against labor and not fixing the real corporate problems.

UAL was a DOW component and a great company that should have been allowed to complete some transactions. Not allowing a large, successful [then] company the free market ability to grow is what has weakened our profession for most of us IMHO.

UAL would be twice as big if it weren't for deregulation. It would be bigger than AA now if they could have bought America West (that was a biggie...it would have spared them the USAir expense). That's my guess anyway.

 

[Flopgut]

Flopgut, JBL hasn't sent a plane down south for over a year, I think more like 2+ years.

There was a little matter of not having a hangar to do the maintenance in as a brand new startup airline.

I've heard at least two jetBlue aircraft on CENAMAR this year. Maybe it was two new EMBs coming from the factory.

Nevertheless, it would have been fun to see Peter Greenberg leave AA's TUL MX facility and go show everybody where jetBlue was getting their planes fixed.

You've got to tip your hat to these companies that still do heavy mx. I'll be the first to admit my company comes up short on this.

 

[AA717driver]

One might go back further, but go back as far as when UAL wanted to buy America West...
...UAL would be twice as big if it weren't for deregulation. It would be bigger than AA now if they could have bought America West (that was a biggie...it would have spared them the USAir expense). That's my guess anyway.

UAL (Stephen "don't call me Steve" Wolf) wanted to buy AWA to create an alter-ego LCC and do away with UAL domestic. At the time, International was where the big yields were and domestic was only dragging down the bottom line.

UAL ALPA stopped that move (Operation Root Beer), not the government. That was back when ALPA actually drew 'lines in the sand' and meant it.

If it weren't for deregulation, TWA would STILL be the largest airline in the world. Oh well...TC

 

[Flopgut]

I'm talking about year 2000 time frame. When Wolf was at USAir. UAL/America West was stopped by the DOT.

 

[hoover]

The UAL execs are stuffing their pockets while moving to morph UAL into a "virtual airline."

It sure seems like it. If you outsource everything that an airline is (flying, mx, ground support) what do you have left?

 

[hoover]

Since emerging from bankruptcy in early 2006, United has continued to trim costs and explore new ways to wring more money out of its franchise. The moves are intended to strengthen United's finances as a slowing economy threatens the recovery of the airline industry, and to improve its standing with investors.

Except the obvious one: RAISE TICKET PRICES YOU FUKCING MORONS!

None of thse "new ways" is going to have any lasting effect because UAL management has yet to attack the basic problem. They aren't charging enough to cover the cost of producing the product.

For the last I don't know how many years they have been trying to cut costs rather than increase revenue. As yet it hasn't worked, but they keep right on trying. Isn't one definition of insanity to do the same thing over and over again but expect different results?

 

[Trigger]

And they're real too.......