UAL and Possible Hub Closures...

[Heavy Set]

Found this on Yahoo Finance today. Yikes!!!!!! That would impact A LOT of people....


UAL Mulls Hub Closures in Reorganization
Monday February 24, 7:55 pm ET
By Erik Ahlberg


CHICAGO -- An executive for UAL Corp. (NYSE:UAL - News) said Monday that the airline is mulling the closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan.


Senior Vice President Gregory T. Taylor said in court testimony that UAL, parent of United Airlines, was asked by its board of directors to consider the hub closures as an alternative. The board also asked the company to look into the possible sale of the airline's Pacific operations, he said.

Separately, the judge overseeing UAL's bankruptcy case here denied Atlantic Coast Airlines Holdings Inc.'s (ACAI) motion to force UAL to assume or reject a contract between the two companies.

Atlantic Coast, of Dulles, Va., provides regional airline service for UAL under the United Express brand. United Express generates about 85% of Atlantic Coast's revenue.

Among other things, the contract calls for Atlantic Coast to add 47 regional jets and retire 30 older turboprop planes by April 2004 at a total cost of $940 million.

Attorneys for Atlantic Coast said that such capital spending, particularly without any assurances from United, put an undue financial burden on the company.

But attorneys for UAL said that the company shouldn't have to make any decisions about the Atlantic Coast contract because of the evolving nature of the reorganization plan.

In his ruling, Judge Eugene R. Wedoff said that United's need to keep its reorganization free of any early obligations was greater than Atlantic Coast's need to have answers about the contract. He said that Atlantic Coast still has a number of options, including negotiating new terms with the planes' manufacturer, Bombardier Inc. (BBD.B)

In court testimony, Atlantic Coast Chief Financial Officer Richard J. Surratt said the uncertainty surrounding UAL could make it difficult to obtain outside financing for the new planes.

Though the company has one of the best balance sheets in the industry with $ 189 million in cash and $44 million in deposits, that position could be threatened by the burden of the upgrades, he said.

He declined to comment on the judge's ruling after the hearing.

UAL's Taylor said UAL's reorganization plan is still very much in the formative stages. The company continues to evaluate several options in addition to the creation of a new, low-cost airline, he said.

 

[46Driver]

Yeah, the second part of that message affects a lot of us even more.....

 

[General Lee]

Who will go after what if it comes to that? I have heard Continental would like to go to DEN (even though they have no borrowing power and just did that "spare parts" loan), and maybe Delta going for LAX, along with AA. Maybe this will drive Skywest into flying on its own in LA- with 737's or 717's? Who knows? I think IAD will be taken by Airtran or Jetblue. That might hurt ACA.

Bye Bye--General Lee

 

[46Driver]

I know we did spend $1M to buy back the ACJet operating certificate from Delta so I guess we are going to be codesharing for somebody else if United goes under. Who knows, maybe our 100+ CRJ's will go to AirTran since we are already set up there....

 

[pilot141]

Strictly adding to the rumor mill and nothing else....

A CO guy in the reserve unit had Bethune on one of his flights (DEN-IAH, big surprise). Apparently Bethune told him that the city of Denver asked CO if they could provide 300 departures a DAY out of DEN. Bethune said no way, not right now, but........

Once again, no speculation, just fodder for the mill.....

 

[Mil-BushPilot]

There's a company called, I think, Southwest Airlines, that I bet would like to crack the Colorado market.

 

[KC-10 Driver]

If I'm not mistaken, SWA served Denver for a while, but pulled out. Anyone know for sure?

 

[Lonestar]

From the book "NUTS!"

"Don't Follow The Crowds-

Southwest avoids congested airports where it's very difficult to land a plane and get back in the air quickly. The company's view is: Why work incredibly hard to streamline your system so that you can turn a plane in fifteen minutes, only to sit waiting forty-five minutes on the taxiway for your turn to takeoff? It just doesn't make since. Southwest learned this the hard way in Denver. When congestion at Stapleton Airport caused excessive delays across it's entire system, the company decided to terminate service in the mile-high city."

 

[General Lee]

Also, there probably isn't enough room at ATL for 100 or so more RJ's. I see a couple Air Whisky CRJ's sitting at the end of terminal D, but there really isn't a lot more space, unless they park at remote pads. Sorry----but maybe at a new IAD base for Airtran.


Bye Bye---General Lee

 

[46Driver]

I was thinking of 100+ RJ's at IAD since ACA is already in place there and AirTran already does a few connection out of Baltimore. Who knows, this whole industry is a zoo right now....

 

[tredding@swa]

SWA also

punted SFO for all of the same reasons as printed above..... who knows, perhaps folks will drive to COS to get a cheap ticket???

 

[rice]

LoneStar & Tred

I thought the reason that SWA has avoided DEN was do to the high costs associated with that airport, not operational issues. It is my understanding that DIA has one of the best ooperational records of any major airport in the country (UAL's "Summer of Love" not withstanding) over the last few years. Comparing DIA to Stapleton is beyond "apples & oranges", more like spears vs. missles.
Can't tell you how much the local populous would love to see SWA back in DEN. Lots of friends have said they'd make the drive to COS for those great SWA fares.

 

[MLBWINGBORN]

If UAL leaves Denver i cant even begin to think of any reasons why SWA wouldnt consider moving into that market..

With UAL having left the state of CO with a huge bill i would think that they would find any suiters attractive and in particular SWA..

Just to add fire to the fuel ive heard that there were many reasons for our pulling out of DEN..The two main reasons were high costs and politics..

I would suspect that the political climate has changed dramaticly due to both the treatment of the DEN area passengers as well as the apparent demise of their"home town airline".

With Boeing hurting for new aircraft sales and our cash on hand just waiting for the right market to open its just amazing to think what we could do as an airline with DEN or COS in our system without the political overhead..

Mike

 

[up frnt]

MLBWINGBORN,

I do not know if you know this but the "home town airline" is doing just fine. Frontier is losing some money but we have enough in the bank to last us awhile (a year to eighteen months).

Is it a political fight? Yes, UAL is pulling a lot of strings but the "True Hometown Airline" is giving UAL our best "Spirit of the West" fight and doing fine. Only time will tell and UAL doen't have that much time.

By the way a few ex-UAL pilots are now back at Frontier seeing no hope to return to UAL.

 

[MLBWINGBORN]

Sorry..
I was refering to United as being in some folks eyes as being the"home town airline" of the Denver area..

I meant in no way to slight your place of employment..
And yes..I can only guess what UAL would try to do to anyone poseing a threat to their survival..

Mike

 

[Rottweiller]

Creditors want IAD hub closed

Creditors Call for United To Drop Dulles as Hub

Dulles International Airport is the smallest of United Airlines' five hubs based on the number of flights the operation handles.

By Keith L. Alexander
Washington Post Staff Writer
Tuesday, February 25, 2003; Page E01


The committee representing some of United Airlines' largest creditors suggested that the carrier consider eliminating Dulles International Airport as a hub to cut costs, a United executive said yesterday during a bankruptcy hearing.

In court testimony in Chicago, Greg Taylor, United's senior vice president of planning, acknowledged that the airline had been advised to consider closing "certain" hubs, including Dulles, during its bankruptcy reorganization.

United spokeswoman Chris Nardella said later that although the airline has to "take into consideration" some of the creditors committee's suggestions, the carrier currently has "no intentions of closing any of its hubs."

United "continues to explore various restructuring alternatives," she said. "We want to maintain and emerge with all five domestic hubs."

Eliminating a hub would reduce the number of flights and employees at an airport but not all operations.

United, the world's second-largest airline, uses Dulles to funnel connecting flights on the East Coast and abroad. The airline, a unit of UAL Corp., also has hubs at San Francisco, Los Angeles, Denver and Chicago, where it is based.

Aviation analysts have said that Dulles, the smallest of the hubs based on the number of flights, was also one of the weakest. It could see the biggest drop in passenger traffic if the United States goes to war with Iraq, they said.

Yesterday's hearing focused on the future of the Chicago-based carrier and Dulles-based Atlantic Coast Airlines, which is United's largest regional jet operator. During its reorganization, United could drop or maintain its current affiliation contract with Atlantic Coast. But under bankruptcy law, United does not have to make a decision for months into its 16-month planned reorganization.

Atlantic Coast asked U.S. Bankruptcy Court Judge Eugene R. Wedoff to force United to make a decision sooner than that. Wedoff did not rule on Atlantic's request yesterday, instead giving United additional time to gather information.

United lost more than $3.21 billion last year and is struggling to restructure and emerge from bankruptcy court protection by summer. The carrier has been seeking to reduce labor and aircraft costs and to develop a plan for a separate low-cost airline unit.

Also yesterday, United named Sean Donohue, a former senior vice president of its North America sales operations, as vice president of its low-cost airline. United's low-cost operation has been opposed by several of the airline's labor groups, including its pilots union.



© 2003 The Washington Post Company

 

[General Lee]

This is getting crazy. What will ACA do if UAL leaves IAD? Will they go it alone there? Maybe they could find somebody else? I think Skywest might be sweating it out now in DEN and LAX. Maybe Delta (with it's cash postition) will pick up some slack in LAX? I don't know---this will be interesting.

Bye Bye----General Lee

 

[shagadelic]

I personally asked Herb the Colorado Springs question in new-hire training in our "Breakfast with Herb". He said we would definitely go there someday, but right now (2 1/2 yrs ago) there was lower hanging fruit (meaning the east coast). He said look for it in the 3-5 year time frame (pre 9-11 talk). Colleen and Parker listed COS as one of few top cities in an interview with Forbes after they took over the reigns. But again, that was pre 9/11.

Should United go Ch 7, I think COS or DIA would be pretty low hanging fruit. I just don't see how we could avoid what would be such an enormously underserved market.

From what I understand, we pulled out of Stapleton the day before they jacked up landing fees. We are big on that. El Paso jacked theirs up a while back, and we cut flights there by half and pumped up ABQ. DIA doesn't have congestion problems at all, but they do have high landing fees. Maybe SWA could nogotiate something, I don't know.