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Money Talk, UAL Bankruptcy discussion

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enigma

good ol boy
Joined
Nov 26, 2001
Posts
2,279
EDIT: The point to this post was to denounce Mr. Rinkers anti-worker attitude, not defend the pay scales at UAL. I'll let the UAL guys do that. It just ticked me that Mr. Rinker is willing to give management a pass when it comes to assessing blame for the situation. (11:00EDT)

Did anyone else hear the Bob Rinker "Money Talk" program today?

As I drove around FLL looking for a decent neighborhood this evening, I was listening to "Money Talk" ( The most popular national financial advice show if I heard correctly).

The hot subject was UAL, and our industry in general. Mr. Rinker flat stated that UAL would be bankrupt within the month.

Then he ticked me off. His view, is that UAL can only survive by negotiating dramatic concessions from its unions. Even after a UAL pilot called and informed him that pilot/labor costs are not near the large percentage of costs per seat mile that he was implying and that the pilots WERE giving concessions, Mr. Rinker repeated his position that the only way to save UAL would be for the unions to accept major concessions. He admitted that the management was bad, and the business plan was bad even before 9/11, and then STILL blamed UAL's downfall on the unions.

I'm not that big a fan of my union, but I have no doubt that the ALPA is not the reason for UAL's hard times. UAL's problem was having a disengenuous management team that demanded concessions in bad times, and then failed to reciprocate when times were good.

Can anyone say BOHICA

8N
 
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Enigma,

I couldn't agree with you more. There is much more to the story than any idiot on the radio could ever comprehend.
While he may be right - United might be in BK within a month; it won't be for any of the reasons to which this A-Hole spoke.

Interesting times at UAL.....interesting times indeed!

DrvA320
 
I thought that we had already reached Bob's conclusion right here on the forum.

Haven't we decided that the reason that the RJ is proliferating (Comair) is that the labor costs, particularly the crew pay and benefits, are far less costly than for other (for example) planes that Delta owns? Also, the large carriers' mechanics have much higher pay that other A&P types, and all of the large carriers have work rules that keep more bodies on the property, and on the union roster.

Labor may not be UAL's largest cost, but it has be be a large cost. Bob may be technically incorrrect, but he is comparing the cost structure of UAL to Southwest, and it's easy to see a very obvious difference in costs between the two.

Other factors may not be as easy to change as the cost of labor, and when facing bankruptcy labor cost will be the number one target.
 
Sunday's Orlando paper

Yesterday's Orlando paper had several articles (via the front page, not the business page) regarding USAir(ways), et.al. It was all gloom and doom reports.
My skeptical side says it is the PR department of the airlines trying to get the message out their costs are too high.
You guys are closer to the airline business than I am so I don't know if it smoke and mirrors in attempts to get labor concessions or if they're truly hurting. "Film at eleven...."
 
My opinion

the flight attendants are locked in a 10 year contract. The mechanics strike threat a month ago was way over the top . As a holder of Ual stock I am sitting pat. Theres a lot of blame to go around didnt Wolf get 5 million even when the US air deal fell through??? Chas
 
Loans

First of all, without substantial labor concessions, the loans will not be approved from the stabilization board/ Therefore it makes no difference what the argument for or against is .

There are other benefits of bankruptcy that will have the effect of reducing cost. They can abandon aircraft leases for instance/

UAL needs to get the labor in line to even get their DIP finaincing to go chapeter 11
 
Timebuilder,

My post wasn't intended to debate the RJ issue, but you do bring up a good point. I'm thinking it over and will post later.

What I was reacting to, was Mr. Rinkers anti-worker approach to the issue. He did acknowledge that UAL's business plan was bad, and that they suffered from poor management when the pilot was on the phone; but as soon as the pilot was off the line, Mr. Rinker went right back to absolving the managers of any blame. He talked for a couple of minutes about why the unions were crippling the industry. (if that is so, how does SWA make any money?)

Maybe the UAL union members are making too much money, but why should management be given a pass?

Why is it that managers get to go home with millions, can you say ", Goodwin, Icahn, etc", and the workers get to take a paycut? BTW, it's crap like this that allows my pro-business mind to be a union member. I would be afraid of GOD's judgement if I treated my workers the way some business's do today.

more later on the RJ issue, regards
8N
 
High labor costs

Publisher is correct. The following is a clip from a Forbes article written by Robert McCoppinand Mike Comerford, Daily Herald Staff Writers, but there are many others out there you can look up, and they all say the same thing. The only people denying these statements are the labor groupes themselves.

"More importantly, he said, the Air Transportation Stabilization Board, which decides whether to give federal backing to loans for United, should crack down on United's labor costs."

"Specifically, Gellman said, as a condition of the loan guarantee, the board should require United to get pilot salaries back where they were before they got raises of up to 32 percent in 2000."

"Those salary increases raised the bar for the entire industry, Gellman said, when other unions demanded comparable raises."

"Industry analyst Mike Boyd, of The Boyd Group, said the airlines may have to defer some spending."

The article also states that Uniteds labor cost structure is roughly 40% of their total costs. The next highest cost is fuel, which is 15%. The IAM just received up to a 37% raise and 20% ownership in the company. The IAM and the AFA will not budge at this time, but with the threat of Chp 11, they are now going back to the table. The pilots have given back 10% but the article says that this way to little since they are the bulk of the labor cost.

My thinking is that United will most definitely go into Cpt 11, completely restructure, throw out most of the contracts, downsize, park older aircraft, defer deliveries, and lay off quite a few more people. I certainly hope for the best, but if the Unions don't follow the pilots lead on this, I am affraid that they are in for a rude awakening.
:rolleyes:
 
I'm the last guy to absolve management of their part in this. If it was up to me, they'd have their "golden parachutes" downgraded to "copper parachutes" for their poor workmanship.
 

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