UAL and thier plans

[everyonedoa360]

In my opinion, UAL management is doing the complete opposite of what they should be doing! Bringing back the "shuttle" and looking to bring back MESA into the picture are two terrible ideas. There should be RJ's going up and down the west coast every 30 minutes and UAL should be working on SFO-LONG trips and improving their service.

On top of that, since all the main carries are dropping service, maybe someone should start to give some service, like Midwest Express. Start treating passengers like they deserved to be treated and you might just get some more passengers.

The only reason I'm even wasting my time in posting this is in hopes that UAL management might read this board to get a clue on how to run a business.

 

[A4Forever]

Dear 360: United is not going to reinstate the Shuttle. My understanding is that UAL will split into 2 seperate divisions. The first, comprised of 737s and Airbuses will operate as a low cost carrier, competing with the likes of JB, SW ect. This division will act as a feed, along with the UAL code shares, to the "New" mainline division. The main line will fly larger planes on longer routes. Let me know if UAL management listens to you. It might be a "first!"

 

[jinxy]

Where did you hear Mesa was going to fly for United?

 

[pilotyip]

United help

doa306 you should apply for the CEO's position at UAL if you have the answers they are seeking help in that area. However I think in the histroy of pilot managed airlines, there are alot of failures. UAL has a productivity issue in relation to the LLC's and until they address that issue they are going to have problems, UAL needs to keep flying its present schedule and either cut pay 30% or get rid of 30% of thier pilot workforce. As reported before the UAL pilot flies an average of 427 hrs per year and gets over 900 hrs pay. at JB an A-320 crew cost per hour is $400 and at UAL it is $960/hr

 

[banned username 1]

It ain't rocket science. Give the consumer what they'll settle for at a price they'll settle for and be paid wages that your peers will settle for: you'll be successful. Focus on your core business and shoot anybody that has a bright idea that distracts you from that core business at BOD meetings.

If by chance you can exceed the expectations of what your market is willing to settle for in price, service, etc.- you'll build market share.

The market has decided what it will bear on both sides of the fence. On the labor cost side, the story hasn't been nearly played out industry-wide, at ANY carrier. Time will tell.

UAL78

 

[Marko Ramius]

A4forever

I believe you are correct that UA intends to operate the new Shuttle product as a completely separate company, but they haven't confirmed it yet. However, you are wrong about the mission of the new Shuttle. Turning the Shuttle into a hub feeder is part of what killed it the first time. As Bob Crandall said, you can't carry leisure passengers through a hub. OK, you can do it physically, but not profitably! This is part of the reason for DL shaping their new subsidary outside of the hubs. The new UA shuttle is aimed to be a point to point product aimed at passengers that are either bypassing UA or are costing UA too much money to fly through the hubs. The hubs capacity will likely be pared down with a combination of fewer mainline flights in larger aircraft and RJ's that will restrict the number of seats thru the hubs to limit those seats to the higher yield pax. To that end, I don't think all of the 320's will goto Shuttle right away, although most of the -300's probably will. The reason the 320 has to be included in the Shuttle is because it's far more versatile operationally than the 737-300/500 and also since UA is moving to a long term AB narrowbody plan using the A320 on the shuttle is a move towards that end.

 

[General Lee]

Apparently the VP's at Delta are interested in UAL's Pacific routes and Heathrow----and they have the borrowing power to do it. From what I hear UAL is losing so much money and the banks have given them so little room to manuever, a fire sale may happen quickly. Hey, bankers couldn't care less if UAL has to sell their crown jewels, they just want a return on their money. Business is business, and I feel sorry for the UAL people. Their management should have seen this coming and started a plan earlier.

Bye bye---General Lee

 

[banned username 1]

DAL03? HMMM....Somehow it just doesn't have the feel.
That one's a new one from off the radar screen. We'll see.

UAL78

 

[P3-Adub]

Who wouldn't be interested in these routes ? Not exactly the exciting news that you make it out to be General. I cannot see the judge telling UAL to sell off their profitable routes, how about you guys taking say, ORD-LNK ??? Now there is a route with a ton of passenger ! Maybe you could put another RJ on it ? If you happen to be right, well then I will maybe I can sell my furlough letter as airline memorbilia (sp) some day ???

Hey 78,

Hear anything more about the airline within an airline ? Could be good, could be bad ???

 

[SWA/FO]

Hey,

Would a sale of routes (like that) come with the pilots? Or would it just be the routes + airplanes?

Didn't Pan Am sell their stuff to DAL?

 

[A4Forever]

Like P-3 says, UAL isn't likely to sell any of the profitable routes. LHR is so slot restricted and British haven't been too generous in awarding new entrants that I think UAL will hold on to every thing there or at worst, let a star alliance partner sublet them. There are some of the West-Pac routes that might go. Been retired for 2 yrs now so don't kow which ones aren't doing well.

 

[Lumber Yak]

General Lee is right. UAL might not have a choice in the end - its creditors would try to maximize their collateral interests and sell-off the "assets" - including desirable routes. Note that Delta is NOT selling its MD-11s (as rumored here on Flightinfo) but is instead storing them. The thought is that Delta might use them again if United's Asian routes become available...

In the end, UAL's creditors could call the loans if ANY of the covenants are busted. Let's hope for UAL employees' sake that war with Iraq is not prolonged - that could hurt their chances of employment with big loan repayments and strict loan covenants looming.... Yikes!

Good luck to all involved

 

[A4Forever]

Yak. The story I get is that UAL's assets are not as valuable today as they once were, which is understandable. Given that, the creditors stand a much better chance of recovering their investment if UAL operates. Selling of the most proftiable of the assets would weaken the carriers ability to survive. Of course this is all speculation. Only time will tell. One thing for sure is that the present economy does not need an additional 70000 UAl employees out of work, not to mention the thousands of auxilliary jobs which would be lost.

 

[General Lee]

I am not trying to be insensitive, etc. I am telling you what the leaders of Delta are looking at. United does not control it's assets anymore, the banks do. Yes, that sucks. Bankers are only interested in one thing, MORE MONEY. According to the Wall Streett Journal, United received a $2.9 Billion loan right after 9-11, and has burned through all of that money. Now, the bankers are giving them a total of $1.5 billion loan, but only giving them initially $800 million to survive on---and that is at 15-20% interest. To get the other $700 million, they have to reach certain revenue triggers, which would be hard to reach in good times. The banks aren't trying to be nice. We are also in the slow season, and a war with Iraq is looming, with higher gas prices on the way. So, United is under some pressure. Could they sell their prized assets for some relief? Yup. They might not be worth as much, but the bankers know how much they want. And, Delta has mentioned that they are interested in some of it, just like other airlines. But, other airlines, like Continental, have no borrowing power. Delta does. Ofcourse, if they do attempt to buy something, their Force Mejeur Clause would be over-----but there are other things in the works also. Look, everything that has happened in this industry lately sucks, and even Delta has 1015 furloughs, with a possibility of more on the way. I honestly hope everyone survives, and even United could survive as a whole, but without some things like LHR slots or Pacific routes. United isn't defined by some of it's routes.

Also, if Delta or another carrier buys the Pacific routes etc, it is doubtful that they would buy the airplanes along with it----or the people. With all the furloughs out there, any airline would have to bring them back first. Also, airplane leases are a lot cheaper these days, so finding cheap 777's wouldn't be a problem.

Bye Bye----General Lee

 

[A4Forever]

General.. The banks don't control anything until sometime in FEB ( can't remember the exact date) when UAL has a deadline to present a plan to the DIP folks. If the banks do control things today, why isn't UAL selling stuff now? Give the company a break! If the creditors don't approve the reorganization plan, THEN the bankrupcy judge can order assets to be sold. Got about a month and a half. Delta and the other prospective purchasers will have to wait. ( retired UAL. Received MEC update today) PS and where in the world did you get that 15-20% intrest stuff?????

 

[P3-Adub]

2.9 Billion ???

I knew that we had about 4 billion that was being burned through pretty fast however I don't recall United getting a 2.9 billion loan right after 9/11 ??? Could it be that the news got it wrong once again ? I know some of the folks here bite at every tidbit of news that comes across as gospel, especially when it is of the negative variety about another carrier other than their own. I too am guilty of this as I get a lift when I hear something positive about UAL. Considering how often the media screws up facts about this industry, it makes one wonder how dependable and acurate other news is ??? Just this morning, the Rocky Mountain News' story about pilot unions & contract negotiations shows an A320 and states that " the captain prepares his 737 for departure", they cannot even get the correct plane named for the shot. Point of this reply is that the story can be slanted any way the author wants it to. Freedom of speech, a wonderful thing !

I think that if UAL had gotten a 2.9 Billion loan right after 9/11 the situation would not be near as dire as it is today. Remember, they could not get loans and that was the reason for the push for the Federal Loan gaurantee in the first place.

The big lady is waiting outside the door but she aint singing yet !

 

[pilot141]

A4 and P-3;

My understanding of DIP financing is that the new debtors (ie the banks that lend the money) actually own parts of the company as collateral on their loans. The initial $800 million was divided among four banks, and they each took something that they thought would be worthwhile. One bank took the reservation system, another took European slots, etc. These are hard assets that the banks can hold against loaning a bankrupt company money.
The actual terms of the DIP financing a VERY strict, from what I have seen. UAL is REQUIRED to post an operating profit by the end of Feb, and must continue to post a profit every quarter unitil late 2004, when they are REQUIRED to have posted $1.6 Billion in net profit. The losses that they are incurring every day now count against this total, so they not only must overcome these losses but also make enough money to erase them and THEN make $1.6 billion.
This is not a good situation, and it is a shame that everyone at UAL is paying for the mistakes of a few very poor management decisions.
If UAL does not meet its DIP covenants, the banks can declare the company in default on its loans and immediately reposses the assets pledged as collateral. This would mean, in effect, liquidation for the company.
I will make no predictions, other than that it will be very interesting to watch what happens at UAL. I hope all of my friends still have jobs in 2003, but I will not place money on that.