Should your taxes pay for Ted?

[skykid]

Right, cash up to 2.6 billion! 600 million and change is restricted.

 

[spinup]

Ty,

Third- why should the government give guarantees to the airlines that have failed business models, so that they can keep capacity artificially high and prices artificially low, by flying routes and selling tickets at prices they can;t make money at.

I don't think you fully understand what is going on in today’s market. We don't have a capacity problem, we have a revenue problem. Pulling back UAL flying will solve nothing as someone will surely fill the gap. Example, AA pulls flights from STL, SWA adds. All you are doing is substituting carriers. Sure, for a short time supply will go down and prices will rise, but we will eventually be back where we are today. All legacy carriers have removed capacity from the market place, while most All LCC's have consistently added capacity further depressing revenue. So lets all stop with the "too much capacity" rhetoric, its tired and ironic that a LCC guy throws this around.

You bash Ted, and then you say UAL needs a new model. Which is it? By most estimates LCC capacity will continue to grow an additional 20% in the years to come. UAL wants some of this capacity and is willing to pursue it aggressively, to do otherwise would be negligent on their part.

Clearly the LCC's are concerned about the competition Ted brings to their door step, as is blatantly evident in the WSJ article titled Air Amtrak. LCC's have leveraged additional capacity thru this down turn, yet throw a tantrum when the tables are turned. To put that kind of fear into the LCC's, Ted must be doing something right.

The ATSB loan is black and white, either you meet its requirements or you don't. UAL is working to meet the requirements set forth by the ATSB and exceeds the matched dollars required by 10%, something no other applicant has done. Furthermore, the ATSB is not about codelling competition, it’s narrowly difined to specific in-house need.

 

[Ty Webb]

Spin-up:

Your analysis is way too subjective to really be taken seriously.

No one is concerned that Ted might be a long-term problem for anyone but UAL. What LCC's are concerned about is the fact that if the Government subsidizes UAL's continued losses, it allows them to offer flghts at prices that are below their cost.

You don;t just have a "revenue problem", you have a "failed business model problem". Your LCC competitors are making money at these prices, but UAL is losing an astounding $5 million a day in the same environment.

That's not a business, that's a charity, and the loan guarantee is just more good money after bad.

 

[spinup]

Ty,

No one is concerned that Ted might be a long-term problem for anyone but UAL. What LCC's are concerned about is the fact that if the Government subsidizes UAL's continued losses, it allows them to offer flghts at prices that are below their cost.

And this has been determined by LCC managers on the outside looking in, please. How magnanimous of the competition to have such concerns for UAL's long term validity. When the ATSB subsidized other applicants, they too had continued losses. As to offering prices that are below the LCC's costs, this seems to be a one way street. It's ok when the LCC's squeeze legacy carriers (SWA in PHL), but not the other way around. The LCC's are keeping ticket prices low making it difficult for legacy carriers to maintain market presence without loosing money. Yet, cry foul when they perceive the same tactic on the other side of the fence.

You don;t just have a "revenue problem", you have a "failed business model problem".

All legacy carriers have changed or are changing their business model to more closely match the present pricing environment. So I agree a business model problem exists for all of the legacy carriers, not just UAL. However, it's careless to compare the business model of the late 90's to the one that will be in place upon leaving CH11; this is the one that concerns the ATSB. Neither you nor I know its complete form, as it hasn't been fully revealed publicly. Those who have seen it, elected to loan UAL 400 million dollars of unsecured cash upon exit, that speaks far louder than the uninformed.

 

[Ty Webb]

Seems to me that the LCC "managers", as you put it (I think you mean "leadership"), are a hell of a lot more in touch with what is going on in the marketplace than the "legacy" leadership. Look the facts- the "brand within a brand" doesn't work. It didn;t work for CAL, UsAir, Delta, Delta again, or United in the past, and it won;t work in the future, yet UAL is devoting scarce resources to it, based on a stupid idea that they paid $10 million to McKinsey to come up with. Incidentally, the other two airlines McKinsey and Company had been peddling their high-priced nonsense to both went under (both of them European carriers, do a search if you want the details).

As to offering prices that are below the LCC's costs, this seems to be a one way street. It's ok when the LCC's squeeze legacy carriers (SWA in PHL), but not the other way around. The LCC's are keeping ticket prices low making it difficult for legacy carriers to maintain market presence without loosing money. Yet, cry foul when they perceive the same tactic on the other side of the fence.


You, like UAL fail to recognize one simple fact- the LCC's are selling tickets at prices they can make money at! What we are "crying foul" about is that you want a government subsidy to enable you keep dumping seats at prices that are below your costs to hold "market share"! What "market share"? If you can't make money at it, it's not your market.


Neither you nor I know its complete form, as it hasn't been fully revealed publicly. Those who have seen it, elected to loan UAL 400 million dollars of unsecured cash upon exit, that speaks far louder than the uninformed.


Look, the ARS upped their stake in UsAirways, too, but in order to obtain more of an "equity stake" in that carrier, so that they would be first in line in the event of a liquidation. I suspect that is the same thing at UAL. Unfortunately, those last in line will be the shareholders and the employees.

Very sad . . . and I repeat what I said about going out on a LOA and finding a secure position while leaving one foot in the door, in the unlikely event that they manage to make it.

Good luck.

 

[bpapaDC8]

"Very sad . . . and I repeat what I said about going out on a LOA and finding a secure position while leaving one foot in the door, in the unlikely event that they manage to make it."

Ty, your post is as subjective as the next guys. Care to put your money where your mouth is.

The part I find interesting is where you say United is losing $5 million dollars a day despite repeated attempts by several posters to "educate" you on paper losses versus real losses.

bpapa

 

[Ty Webb]

I spent a number of years in the business world. I have written several business plans, and let's just say that I know the difference between a Balance Sheet and an Income Statement.

UAL doesn't need "paper losses". That was about two years ago. What they need now is a real plan, and they are running out of time.

 

[Extra300S]

Hey Ty

Kiss my A$$

UAL will make it!

 

[AnimalTale]

Im sorry. Im serious. Can somebody clarify this for me.

1)Is Ted SHUTTLE with Airbuses?

2)In bankrupcy, how can a company start another company?

3)Wont a LCC (Ted/Shuttle) and a Legacy Carrier (UAl) create a medium cost carrier when combined? Obviosly(SP), UAL is going to absorb Teds expenses and vice versa.

I am kinda clueless with behind the scene reorganizations. Can somebody HELP.

Thanks

 

[bpapaDC8]

Ty ,

No one is asking about Ty Webb's business plan for United. I am positive there is one but, we won't see until Glen Tilton et al decide to release it.


"Your LCC competitors are making money at these prices, but UAL is losing an astounding $5 million a day in the same environment."


Again, tell me how you came up with $5 million a day in losses and I'll drop the topic.

I'm still waiting on an answer about putting your money where your mouth is.

bpapa

 

[Ty Webb]

Bpap:

The info is all there, if you choose to see it. I am not going to take the time to re-hash it all here for your edification.

In the seven years I have been posting to this board, I have learned that some people aren;t worth the effort, and you fit that profile.

Good luck.

And Extra300, same to you, pal.

 

[bpapaDC8]

Ty,

I know the info for myself. I was curious to see how you arrived at such an incorrect number. I've been lurking and posting on these boards for 6 years and I find it fascinating that after asking you two questions I'm now not worth the effort.

I guess you're just too sensitive, Ty. Try not to make such blanket statements "in the unlikely event that they make it" unless you want to be called on it.


Good luck to you as well

bpapa

 

[Ty Webb]

Your beef is with Tilton, Arpey, Wolff, McKinsey, Keynes, and Darwin, not me.

 

[bpapaDC8]

Darwin,

Are you calling me an ape?

FWIW I don't have a beef with you Ty, on the contrary you seem to have a problem with someone asking you a legitimate question. What's your beef?

 

[spinup]

Ty,

Seems to me that the LCC "managers", as you put it (I think you mean "leadership"), are a hell of a lot more in touch with what is going on in the marketplace than the "legacy" leadership.

What are you talking about? LCC management (and as before I mean management as it implies a larger group) didn't plan this marketplace and thus shouldn't be patted on the back for the windfall occurring collaterally. Right place Right time. You offer far too much credit.

Look the facts- the "brand within a brand" doesn't work. It didn;t work for CAL, UsAir, Delta, Delta again, or United in the past, and it won;t work in the future, yet UAL is devoting scarce resources to it, based on a stupid idea that they paid $10 million to McKinsey to come up with.

You over and over again compare Ted to past ventures. Much like you compare past business models to future ones. Apples and oranges my friend. The jury is still out on Ted, but for now it's exceeding all expectations at UAL.

You, like UAL fail to recognize one simple fact- the LCC's are selling tickets at prices they can make money at! What we are "crying foul" about is that you want a government subsidy to enable you keep dumping seats at prices that are below your costs to hold "market share"! What "market share"? If you can't make money at it, it's not your market.

So you advocate shrinking to profitability. That surely hasn't worked for airlines in the past and wont work now. Your version of "market share" has been proven not to work in this industry time and time again. Further, you have know idea how and at what cost UAL will add capacity, or if they will. So don't claim insight.

The ATSB granted F9 money in which they have used to expand DEN at UAL's expense, and move into PHL to AAA's detriment. So it appears that the government has enabled them to continue "dumping seats" on the marketplace. Your view of predatory pricing is skewed to your meet your needs. You cannot tell me that Air Tran isn't preying on DAL's difficulties, because they clearly are. Bear in mind that competition goes both ways, like it or not.

As to your thoughts on UAL's future, you haven’t been on the mark yet, maybe that’s why you had to seek another career.