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UAL Economic Recovery Plan

BigLar22

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From UAL -MEC...

"Last Thursday, April 25, UAL-MEC Captain Paul Whiteford met with senior management at the request of UAL CEO Jack Creighton to kick off discussions regarding a plan of economic recovery for United Airlines. Captain Whiteford informed Mr. Creighton that, in addition to discussions regarding any economic relief, certain issues would have to be resolved to the satisfaction of the UAL-MEC. These issues include, but are not limited to, scope, outstanding grievances, and continued contractual abrogations.

Captain Whiteford stated, “The Company has approached ALPA and made a case that an economic recovery plan may be necessary for the corporation. The pilots are willing to enter discussions to determine United’s needs in order to protect the viability of the airline and thus protect the careers of the United Airlines pilots. However, as I have stated repeatedly, the United pilots will consider participating in an economic recovery plan only if there is equitable participation from stakeholders, management, employee groups, and vendors.”

Captain Whiteford emphasized that any proposed plan would be contingent on approval of the UAL-MEC. If accepted by the MEC, any proposal must then be ratified by the United ALPA membership."

I would like to hear some discussion (from both non-furloughed and furloughed ALPA members) as to whether the union should vote for a "recovery plan" without a stipulation with regard to recalling all furloughed pilots. It is my understanding that one of the purposes of union is to look out for the well being of all pilots(probationary or not). I would hope that the MEC would make its priority getting all pilots back on the payroll while preserving the airline and all of it's employees.

I doubt that if the 9000+ remaining pilots agree to concessions it would kill the company to recall those making the lower salaries.


Thanks for your constructive comments
 

wafu39

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I agree with you. Did all the UAL pilots out there see the pilot proposal that is being floated around regarding U30-2 ?

What I would really like to see in return for concessions is an agreement to give furloughed (all) pilots pay longevity when they return to work. I think that Delta has this in their contract, but I guess we never thought that UAL would furlough. It would certainly be nice to return to a level of pay that would allow a pilot to pay off the debt that many are accruing while on furlough.

Its going to take more than pay concessions to fix the problem. We need new ideas and the U30-2 plan looks good to me. I heard that is is going to be voted on at the LEC level.
 

F/O

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U30-2

No, haven't heard anything about it but how does it differ from the original shuttle?

Another thing to consider is if it costs the company anything to implement it, i.e. training costs, they probably wont go for it. The latest I heard was they aren't spending a penny on anything that is not absolutely critical to running the operation right now.
 

TRBojet

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Shuttle, too?

There was a mass email sent out by a furloughed UAL pilot about the U30-2. Supposedly, it would be a "seperate" operation from mainline (as the original U30 was), but be staffed with both voluntary active employees as well as furloughed employess (ie. pilots) and it would fly the remaining 737s along with new 70 and 100 seats RJs. All the employees would be on the United seniority list. They said it would be operated like other low-cost carriers (ie. Southwest, Frontier..) as far as pay, work rules, scheduling, etc. Sounds like Shuttle #1 except for the smaller airplanes. I, for one, would be in full support of such a venture as it would get all our furloughed brotherens back. Additionally, all the mainline 737s that got scheduled into the new Shuttle would be replaced with additional new aircraft (Airbus, presumably) so that the # of mainline aircraft would not be decreased. Sounds like a great idea if HQ would approve the initial funding. If you didn't receive the original announcement, email or PM me about the source of the email.

Tom
 

UALU30

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It's like I've got to post on this one.

F/O:

If you don't have access to the UAL Compuserve ALPA forum, send me a message and I'll contact the Sysop to get you on board. Very good info over there on everything, including U30-2. Not to mention we have 24 fully paid for -200s in the desert to start the operation.

Frats
 

Boz

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U30-2 is a brilliant plan, I am very pleased to see that UAL pilots are the brains behind this great idea. Lets just hope it recieves the attention it deserves from management. U30-2 is better than anything that Management and ALPA has come up with.

I just hope that UAL will gather quickly to discuss this plan and take the neccessary steps forward to making it a reality.
 

HvyjetFO

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call your Reps!

U30-2 is a great idea. It focuses on how to generate new revenue for UAL while solving the problem of illegal furloughs and use of RJs. We need to show support of this. It is my understanding that the MEC has not shown much support for this idea, so we need to let as many people know what a great idea this is.

Here's hoping.
Hvy
 

ABfly17s

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UAL Recovery Plan

wafu39:

Sect 7-E: Recall from furlough, states:

A pilot furloughed due to reduction in force who returns to duty as provided in Par. 7-D of this Section shall be allowed, for seniority purposes, all time accrued prior to such furlough as well as all time within the period of furlough.

I read this as we will get paid for the time we are on furlough, seeing as our pay is linked to seniority. Is this not true?
 

wafu39

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PAY LONGEVITY

ABfly17s

I was told by a capt. before being furloughed that we only acrue seniority towards retirement while on furlough and not pay. I hope he was wrong!

Does anyone have the definitive answer?
 

F/O

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It is correct that when you are recalled you will go back to the pay rate for the same year you were on when you got furloughed. In other words, the time with the company you accrue on furlough does NOT apply to the yearly pay rates.
 

Guppydriver

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Guys,

Section 3A-1 states that pay is based on longevity not seniority.
Section 3A-2 states that a pilot will not accrue longevity while on furlough.

Let's hope part of the upcoming negotiations focuses on getting us longevity while we are on the street.

Guppy
 

publisher

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Salvation

The salvation of this carrier is at stake here and needs substantial reduction and changes in pay structure at all levels and jobs across the board.

If every employee group uses granting those reductions to impose some other long lost issue on the company, there may not be a company to come back to.

This is not the reopening of full negotiations but strickly we are not making it at this rate, what is a fair an equitable give back.
 

EAP

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Fair and equitable givebacks...

Now, now. Don't just regergitate the same old deadhorse line. Getting huge concessions as a definitive solution only put a fresh bandage dressing on an infected, festering wound. Yup, some sort of concessions will have to be made, but it doesn't end or start there. It's gonna require a more creative approach than that.

It starts at decisive management with excellent leadership, something that has been sorely missed lately. Surely, it will take a dedicated employee group to allow leadership to lead. I hope we are up to the task. Frankly, I've worked at more creative and synergistic places, but I think most UAL employees have far more than enough skills, brains and motivation to come together for a well lead plan. I think U30 part deu could be a very creative and innovative part of an overall recovery. I'm ready to kick some butt and be a part of a winning team again.
 

wafu39

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hey publisher,
I think you just dont get it !
you do not turn a company around just by reducing employee payroll.
You do it by improving service and increasing revenue.
If you take the cost of the USAir deal and Avolar, how many pilot salaries do you think that would cover?

I don't think you are speaking from the same experience as the rest of us.
 

furloughed

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<<I don't think you are speaking from the same experience as the rest of us.>>
Publisher does not speak from the same experience of the rest of us. He speaks from the perspective of being a business owner. Publisher why would any employee at UAL want to give money back to a management which has so throughly ruined our airline over the past two years. If a good inovative management team is put in place with a clear vision that is stated to the employees then you would see cooperation. Until then forget it. Its the management stupid. Here is some good reading I have pulled off another site in case there is any doubt.

>>The latest issue of Barons Business weekly magazine has the ratings of 500 USA companies MANAGEMENT TEAMS,not p/e,stock ratings,divedends,but the scores of the ablities of these companies managers to effectively run a major corporation based upon much research.UAL scored all "F"s and one "D" in all areas(5 total areas) and was rated #494 out of 500 management teams.So are we stupid enough AGAIN to GIVE away our hard earned cash to only see it wasted AGAIN. We simply have almost all the idiots still in place here,and one new CEO who voted for the USAir deal,has ZERO airline experience,relies upon Dutta for plans, and has retained all but 2 guys(they left with parachutes) who got us into bad past business decisions (Wall Street is aware of this fact)and endless amounts of cash from us will make zero positive changes except to ratchet down ALL pilot incomes in the USA once again.And these people have stated many times"give us the cash and we will come up with a plan"!Kind of like buying a house but the realtor wont allow you to know where it will be located,what the mortgage rate will be,etc,etc,same old bs as the RJ versus Wide body vote!What a bunch of liars we have running this airline!!!Past performance repeated often IS a good indicator of whats to come... >>

<<Re:>>"UAL scored all "F"s and one "D" in all areas(5 total areas) and was rated #494 out of 500 management teams."<<

It appears that Dutta's profound lack of commitment to making UAL the number one airline in the industry, as heard by me and a roomfull of other pilots 16 months ago at WHQ, was a self prophecy and has now in fact been realized.

When I heard Dutta announce that being the number one airline simply cost too much money to achieve and maintain, it was repulsive to me back then and is exponentially more repugnant today. I would argue that his fondness for mediocrity has done far more damage to our public relations not to mention undermining the work we do on the line each day.

They just refuse to get it.>>
 

F/O

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Ya know, I think I flew with that guy a few months back... ;)

Seriously though, Dutta and Studdart are the biggest pilot-haters at UAL. They need to go. They will get parachutes but hey what's another several million after they already blew hundreds of millions on US Air and Avolar???
 

Ualexpress

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In case anyone questions the ineptitude of this management here is an editorial written by a UAL pilot. Why anyone thinks that the employees of UAL should help fund this management team (excluding Creighton) is beyond me. Finding a new management team is the only answer at UAL, a process which has already begun.


Where is the Accountability???

During the ESOP, UAL was making money and expanding. We were the number one airline in the world. We had two year Captains and so many aircraft bids that unfilled. UAL had billions of dollars in the bank. In 1999, everything changed. Our management stopped focusing on United Airlines and started spending the money accumulated during the ESOP.

Dark clouds appeared on the horizon. We had videos sent to our homes from Jim Goodwin saying that UAL wanted to be an "employee airline." Did anything really change? Remember the "bonus" program UAL devised? Station managers received bonuses when flights departed on time. How is that for team effort? Everyone else is breaking their back and working as a team to get the flight out on time, and one person receives a bonus? Where was the motivation for everyone else involved?

Throughout 1999, promises were made but were soon broken. Management promised us an "on time, industry-leading contract on-time." Well April 2000 came and went and no contract as promised. It took management six months to finally agree to give us that contract. We soon found there was much bitterness from their side that came with it. We learned very quickly that the company would not honor parts of our new contract. The Aggressive Pickup is still not programmed correctly in accordance with our contract.

The airline industry is very cyclical. There are boom times and down times. My grandparents lived through the depression. What did they always tell me? "Save your money for a rainy day." That's right, save your money for the tough times ahead. Did our management follow that thinking? It appears they just spent money because they had it.

Fast forward to today. Look how the events of one day changed everything. UAL is now losing money everyday. We have union leaders telling us that UAL will run out of cash. How did UAL get into this financial situation? Where is the money for the "rainy days?" Where did the money go?

Over the past three years, we watched our management make pretty bad financial decisions. Many of these investments our management pursued ended up with no return for UAL as a corporation. No wonder our stock is so low.

These business ventures include:

1. Stock buyback program
2. Dividends on Common shares
3. Attempted US Air acquisition
4. Purchase of Internet companies
5. Avolar

Let's look at these one at a time:

1. Stock buyback - Back in 1999, UAL started buying back stock as high as $90/share. Over $800 million was spent to buy back stock to boost shareholder value and increase the stock price. Since then the stock has just fallen lower and lower - Rate of Return for UAL - Zero.

2. Dividends - In 2000, UAL decided to pay dividends to make the stock more attractive. If this theory was true, why aren't Utility stocks that yield from 10 to 20% in dividends just soaring through the roof? Don't believe me? Look at Torch Energy (TRU). Pays 14% yield with a pretty flat price average. Just like the stock buybacks, the stock price kept falling lower - Rate of Return for UAL - Zero.

3. US Air acquisition - In May 2000, UAL announced that they were going to purchase US Air. According to UAL's newsletter Our Times, Over 100 teams made up of UAL employees were set up to "ease the transition." Of those 100 teams, not one member was an UAL crewmember. The acquisition was cancelled last fall. The Wall Street Journal estimated UAL spent over $500 million in the failed venture. Rate of Return for UAL - Zero.

4. Internet Companies - In the late 1990's at the peak of the internet boom, UAL purchased millions of shares in internet companies at their price peaks. One company was www.Priceline.com at $30/share. According to the recent 10-K filing, UAL took a $38 million impairment loss in 2000. Another purchase was www.mypoints.com. Over $250 million were spent on some of these companies. Rate of Return for UAL - Still to be determined.

5. Avolar - In April 2001, UAL announced the start of its own business jet venture. We all knew it would fail because it required good management. One week after 9/11, UAL wired millions to France for more aircraft. Less than a year after its inception with over $100 million spent, the plug was pulled on Avolar and more money went down the drain. Rate of Return for UAL - Zero.

Is there a pattern to these bad investments? I conservatively estimate the total UAL spent well over a $2 billion with little or nothing gained in return. Did any of the above decisions make UAL a stronger company? The answer is NO. What was our return for these investments as a corporation for each of these items I listed above? The answer - Nothing. In other words, UAL is not a stronger company, but much weaker due to upper management's misguided actions.

I know the BOD votes on these major purchases. However, upper management supplies the information and research to the members. Even though these investments failed, they still received their bonuses. My question to management is: Why wasn't anyone accountable for the failure of these investments? Was anyone disciplined, demoted, or fired for these poor decisions? UAL's cash was burning a hole in management's pockets and they couldn't spend it fast enough. As an employee I want an answer of why they chose to squander away money gained during the ESOP off of our wages. I want to know why they are not held accountable for failed business decisions.

We have also been told that UAL cannot borrow money from banks. With UAL's track record, can you blame the banks? Can you imagine how strong our Balance Sheet would be today compared with other airlines if we had not squandered away billions of dollars? Now when UAL attempts to borrow money, we have to pay a higher interest rate because of our "junk bond" status. Is that how any of you invest your B Fund? Would you want any of them to run your B Fund?

As pilots and employees we are held accountable for our actions. I know as a Captain and employee at UAL, I am held accountable. If I miscalculate fuel and have to divert, I have to answer to someone. If I miss a trip, again, I have to answer to someone. Have you once heard anyone from upper management accept responsibility for their actions? With the example they set, we shouldn't be disciplined at all for our mistakes. What incentive is there for senior management to avoid these ill advised schemes in the future?

Some day UAL will be profitable again. Our future is looking better with increased flying this summer. I like what I have read about Mr. Creighton. Unlike Mr. Goodwin, Mr. Creighton appears to be listening and speaking to the employees. He has stated he will hold his upper management to a higher criterion, however, most of these people who made those poor decisions have been reassigned with new titles.

How are we supposed to trust them in the future? Our futures are on the line and we have pilots furloughed. Our management should be held accountable when investments go sour. Does this encourage good leadership from the top from the examples above?

We need to learn from our past and hold people accountable for their decisions. When promises are made, do we believe that they will be fulfilled? What other projects will they waste money on while UAL becomes weaker in the airline market? History does tend to repeat itself. It's time we held management accountable for their actions.
 

publisher

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Good post

Good post UALExpress as well as the rest of you. WAFU39, I assure you, I come from enough experience to get it just fine. There is no question that I have spend a good deal of time running businesses.

I cannot nor would I defend the record of UAL management of the last few years. Some decisions were mistakes, but others were only mistakes in the light of what happened.

Management makes their decisions trying to look forward and there have been a number of decisions that were made to look foolish in light of the economy sinking worse than thought exacerbated by the terrorist actions.

Avolar, as example, may or may not have been a reasonable investment. It was killed by the terrorists and we will never know how that would have worked out.

USAirways, power play that was questionable from start.

To bring them out of this malaise, I certainly understand that growing revenue is a major part of things. What I also know is that businesses are cutting substantial travel from their current and future budgets. That is not good for United.

I used to say that there would be a large collective sucking of air the first time Southwest airlines made a low pass over Hartsfield. Well the buzzards are circling Chicago as we speak.

You ask why should you help management. Well you are not helping them, you are helping yourself. You have acost structure here of leading labor contracts that are in an airline no longer the leader. The low cost guys are the leaders now.

You can ignore the pleadings of management if you want, the guy killed in the fallout will be you not them. Whoever you have running the place is who you got. If you put on the handcuffs, it will only help them make poor decisions because their flexibilty is gone.

My favorite quick management quote was from an American Airlines pilot some years ago. He said that Crandall was a real censored. Fortunately for him Crandall was there censored.

I really just wanted to point out that if the negotiations take a long time because everyone wants to reinvent the contracts, you are going to wake up on signing day to see your market long gone.
 
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