UAL news....We aint dead yet.

[General Lee]

Duckman,

I don't know the normal attrition rate for the Majors, but at Delta we MIGHT have a large exodus around May 1st. Apparently, there MIGHT be up to 600 retirements on May 1st alone at Delta. I have heard the big hang up is the April 15th check. Apparently if the pilot waits until after April 15th----the banked Vacation time can be added to the FAE, thus boosting their retirement. A lot of the senior guys can see that we probably will be taking some pay cuts, and their retirement is based off of their best 3 CONSECUTIVE years, not their LAST 3 years. So, they might have already HAD their best three years, and now they might bail. Some people might ask if that would hurt the Delta retirement funding? The answer is no---it is 82% funded, and it could take a large hit. There have been reports about how underfunded our retirement program is----by $4.4 Billion etc. Well, that is really dependant on stock price. If the Stock Market rises only 10% total, that underfunded portion would be wiped out. We need this War to get over fast and the economy to go up again.

Bye Bye----General Lee

 

[Swass]

Not dead yet, one foot in the grave

http://www.msnbc.com/news/887082.asp?0cm=c30

Looks like some more bad news.

 

[duckman]

Interesting General Lee

Wow...interesting General...makes good sense (cents?) that those senior pilots would call it quits and retire if pay drops and hours start to increase. That would also really help the furloughees as well, eh?

"Opinions are like hemorrhoids" right? "Sooner or later every ___hole has one."
So my hemorrhoid is that of all the Big 4 (United, American, Northwest, Delta) Delta has alway been and will continue to be in the best shape of the 4. Delta will be around long after others are dead and buried...if that happens. They've just done a better job of employee/management relations and fiscal caution.
With that said, I can't see them continuing with their present pilot contract, and may end up with a contract that is actually less $$ than the one before you started working the "match United" contract. Whatayathink??

 

[120% Torque]

Monday Hot Flash - March 17, 2003
News, Issues, & Reviews

Item: The Growing Shortage At United: Credibility

"While we have seen only the press reports, those figures do not come even close to adding up."
-CSFB Analyst James Higgins, CBS News, March 13,2003, regarding United CFO's claim of being cash-positive in January.

It's becoming sort of the reverse of crying wolf.

Last week, United's CFO got the airline some great press, announcing that United was cash-positive to the tune of $1 million a day in January. Great news. The media headlines trumpeted this achievement, taking the CFO's statement at face value. But there was a lot of skepticism in the industry, given the track record of weird data coming from United's executive offices.

Two days later, Credit Suisse First Boston came out seriously questioning United's claim: "Our only surmise is that United is not making payments on many items...we can think of no way that monthly cash flow could have been even close to positive ... such decisions not to pay are unsustainable."

What's also unsustainable how long this stuff will be taken seriously. Getting accused of playing word games by financial institutions like CSFB is not a good sign for United's senior management. Nor can it build confidence in the carrier's overall direction.

This comes fast on the heels of another sunshine story that left the industry underwhelmed. Two weeks ago United's senior management grandly announced that its new, substantially-lower business fares were "revenue positive" - i.e., the decline in unit revenues was being more than off-set by increases in the number of passengers. Other airlines - which have seen just the opposite - scratched their heads. Bluntly,a lot of folks didn't believe it. Then, just days later, United announced the lay-off of 900 more flight attendants because of lower passenger traffic. First, they tell the world their grand fare scheme is generating more passengers. Then they pink-slip hundreds of employees for low passenger loads.

As they say down on the farm, that cow don't moo. CSFB is right. Something here doesn't seem to add up.

United is not running out of money. It's much worse. It's senior management is running out of credibility. The track record is getting pretty clear. In November there was the embarrassing ATSB filing, with numbers that were zip codes away from reality. Then there was the flood of obviously advisor-scripted babble about "reconstituting margins" and "transformational models" and describing some passenger segments as "price-driven occasionalists," all of which seemed to indicate more smoke than substance in the front offices.

Stop Blaming Labor. This is one big reason United's labor unions are not rushing to agree to management's concessions. They have to ask, concessions to achieve what? They see shifting numbers, unclear direction, and what is unquestionably a fuzzy plan to simply start a parallel airline, with everybody at the bottom of the wage ladder. Regardless of how much management is paying its "advisors" and how aggressively its public relations department tries to get the media to write sunshine stories about management's great expertise and its heroic efforts, things seem to be getting increasingly cloudy at United.

There Is A Better Model. United's situation remains in stark contrast to that of US Airways. That carrier has so far progressed through - and hopefully, out of - a tough bankruptcy. They had a plan. They had employee support. They didn't rely on trendy crackpot panaceas like starting surrogate airlines. No leaked PowerPoint extravaganzas touting terms that seemed to come out of an Airline 101 class at some rural junior college. And unlike United, US Airways' numbers, data, and plan were believable to both the ATSB and outside investors.

To get out of bankruptcy, United will need the full confidence of employees, creditors, financial institutions and the flying public.

They need to work a whole lot harder in that direction.

 

[General Lee]

Duckman,

Well, I also think that our pay rates are a little "high" now compared to the rest of the industry, and there probably should be some sort of small adjustment, like a 10-15% cut. But, we still would be the highest paid, and some of that pay cut could go to helping Delta buy some assets---like UAL's Asian routes. (along with some of their planes) With more widebodies (used to fly the Asian routes)---comes more upgrades and higher pay eventually. Then we should make sure that all of our furloughed pilots return ASAP, and then---if the economy does rise as expected eventually---start hiring again. (This might take a couple of years atleast) We would then welcome a lot of ASA pilots and probably others mixed in.

I also think Delta will be around after all of this is over, and hopefully we will grow and pay off all of our debt as quickly as possible. This is all speculation---ofcourse. Let's hope for a short War!!!


Bye Bye--General Lee

 

[duckman]

Delta the survivor.

Duckman,

But, we still would be the highest paid, and some of that pay cut could go to helping Delta buy some assets---like UAL's Asian routes. (along with some of their planes) With more widebodies (used to fly the Asian routes)---comes more upgrades and higher pay eventually. Then we should make sure that all of our furloughed pilots return ASAP, and then---if the economy does rise as expected eventually---start hiring again. (This might take a couple of years atleast) We would then welcome a lot of ASA pilots and probably others mixed in.

I also think Delta will be around after all of this is over, and hopefully we will grow and pay off all of our debt as quickly as possible. This is all speculation---ofcourse. Let's hope for a short War!!!


Bye Bye--General Lee

100% agree General...My worthless opinion has always been that within the big 4, Delta will be the one coming out of this whole thing bigger stronger faster (sounds like the ole 6 Mil Man eh?) after the dust settles. Your future is the safest of them all. Right now I think everyone (airline industry, wallstreet, govt) agress that there is just too much capacity. Either the current carriers are going to have to make big cuts and restructure their busness model...demand must bounce back dramatically (ya right) or some carriers will have to just go away. If some go away, it will be better for the remaining survivors and your "little high" will once again be "within operating limits"!!! We'll see...huh??

 

[CRJ puppy]

I've been watching this thread for some time now. Just can't resist...

The title shoud read:

"UAL...we ain't dead yet...BUT WE SURE ARE DAM'N CLOSE!"

 

[120% Torque]

Separately Thursday, United CEO Tilton took issue with the widespread attention given to United's statement in a bankruptcy filing this week that liquidation is a "distinct possibility" if it doesn't soon achieve the $2.56 billion in annual labor cost reductions it's seeking.

"We have absolutely no intention whatsoever of failing, and we have every intention of doing a lot more than simply surviving," he said in a recorded message to employees.

 

[COpilot]

Extar330S,

Where are you? You have not made a post on this thread for 8days. Are the extra cuts getting hard on you? Hang in there UA management is so much more forthright than our Gordon. They will never let you down or screw you.

By the way you comments are wrong! We can, and will most likely use Chap.11 by fall. Along with AA and others, so lets just see which Magagement team navigates the court system the best.

God, this is a great industry. Arguing over who will survive the collapse of the Air Transport Industry of the Unitied States.

 

[Extra300S]

Hey Mr. CAL....

Um...it's Extra300S

Only the model airplane guys fly 330's since Lycoming dropped the idea of a pumped up AEIO-540 dubbed the AEIO-580.


Don't really have a comment as to who, what, when, where any airline will end up later this year, I just DRIVE da bus.

Good luck to us all......

"I love the sound of an MT Prop at 3200 RPM on a downline"

EA-300S

 

[Extra300S]

A UAL pilot's point of view....and yes like A-holes everyone has one and some of them stink, but here you go......

1. Expect a lot of "doom and gloom news" from upper management released via press very soon now.

2. UAL is lobbying congress and whitehouse for new goverment "war loan"..and making evrybody feel that is is going to liquidate is all part of the plan.

3. THEN...you, just when you are convinced UAL will not make it....you will see mysteriously and suddenly see mangement talk of a "take it or leave it"contract offer.

4. The offer will be very poor. Expect the talk of an airline within an airline to stop...but payscales will be hit another 9-15%...B fund wiped out/pensions cut in half or worse.

Titlon knows all to well that with fuel prices rapidly dropiing, and uncertaintied associated with IRAQ-War on the decline...that NOW is his best time to rap us up for a long long term contract. Whiteford has very naively played write into his hands by failing to secure independent finnacing of our own. His membership, lacking any real direction or communication from its leaders, is hoplessly scared and divided. Tilton smells blood and is ready to wrap this up....wrap this up for a long long time.

ALPA should now dig in..and attempt to drag this contract out as long as possible...by attepting to secure outside finnancing/petition of the court. Time is now on our side.

The more time that goes by, the better the economy, and the better our negotiating leverage. Expect road shows and "sign or persih" speaches by your amatuer MEC reps.

Do not be in a rush to sign anything. The fun is about to start in earnest...and they will try to convince you the world is comming to an end. Remember, UAL loads and yields are improving..even in war time. They have drastically cut their overhead. And their sheilding of credit claims by the court has left them at a great advantage over AMR/Delta. It should be fairly easy to stall the jeudge and the lenders if we are willing to make them blink first. They will not risk gutting this golden goose now just to get a few more percentage points.

Whatever YOU ratify...it will be for a long long time. This economy is about to rapidly improve and will do so as soon as all the oil fields in IRAQ have their valves opened wide open...and the speculation ends. We must buy time.

 

[hawkerpilot]

Tic Toc

Pan Am was not exempt and they were the grand daddy of them all so why does everyone think that UAL is somehow going to make it? The only reason UAL is still alive is because the upper management has not finished packing their golden parachutes yet.

It is only a matter of time and the ones who realize this sooner than the others will be able to get in line first for the jobs that are out there.......

 

[120% Torque]

This was written by a former United CFO:

The State Of United


March 25, 2003

Wall Street Journal
By Michael J. Riley

With fears of domestic terrorism on the rise again, U.S. airlines are reeling from declining sales as passengers postpone optional travel. Over the past year, United Airlines has been among the hardest hit. But its dual strategy of slashing labor costs and creating a new discount airline within itself as a way to emerge from bankruptcy won't make it the viable entity needed to compete in today's uncertain travel market.

After filing for bankruptcy protection in December and losing $3.2 billion in 2002, United wants to save $2.6 billion a year by chopping back drastically on pay and benefits for pilots, flight attendants and mechanics. It is asking a federal bankruptcy judge to void its labor contracts unless workers agree to the deep cuts on top of big ones given voluntarily in January. United also wants to create a low-cost carrier to compete with successful discount airlines, something it has tried and failed before.

I served as chief financial officer of United in 1985 and 1986 and have been following it and the other airlines ever since. For the past 16 years, United's management has focused almost exclusively on reducing wages while all other elements of a reasonable business strategy were ignored. To be sure, United's labor costs, at nearly 50% of its revenues in 2002, are high and cutting them is necessary for survival. But the single-minded focus on that goal is myopic -- and doomed.

Service-providing companies succeed through fair pricing, wise capital spending, customer satisfaction, good employee morale and convenience. In short, they build and maintain a brand. United and many other of the major financially troubled air carriers have cheapened their brands over the years.

A large part of the problem is pricing -- United's marketing consists of a bewildering arrangement of fare changes akin to the experience of buying a used car in the 1980s -- United's prices are both too high and too low. Last summer, I needed to go from Washington, D.C., to southern Maine. With two days notice, I could fly United from Dulles airport to Portland for $1,750 or Southwest Airlines from Baltimore, Md., to Manchester, N.H., for $150. It was worth an extra half-hour or so at each end to save $1,600.

In addition, at successful and much-admired Southwest it is easy to step up to a full fare, refundable ticket. It typically costs no more than 50% extra. At United, it may cost six times more. One secret to business success is to get customers to step up from the lowest price offering and happily pay a bit more for better value. No such option exists at United.

Even so, United's passenger revenue per mile was below Southwest's in 2001, despite the fact that United filled more seats than Southwest. That is because United also often discounts what was once a premium service to the point where it loses money. In 2000, before Sept. 11 and recession, UAL had net income so small that it was essentially zero. With such pricing practices, United's management remains its own worst enemy.

Even if all wages and benefits had been cut 40%, United still would have had losses in 2002. It is true, of course, that United has a problem with high wage costs as a percentage of revenue. Yet, a captain on a 737 at Southwest makes more money than a captain on a 737 at United. Southwest pilots volunteer for overtime, have a stock plan that is worth something, and feel they are on a winning team.

Ease in booking flights, a feeling of fair-price treatment, adequate staff at check-in, reasonable and truthful communication about delays and consistent service from employees who care all lead to customer satisfaction. Low-cost carriers Southwest, JetBlue Airways and AirTran Airways have that figured that out. Why can't United and the other troubled airlines?

Creating a new cheap airline within an airline would be the death of United. It is a Kmart approach to fighting Wal-Mart. United isn't likely to catch up with the discounters. People will pay for comfort, service and convenience. United needs a strategy that charges fair prices for a good brand.

It is hard to tell if it is too late to save United and the other big troubled airlines. Customers need reasons to pay more for tickets than at JetBlue or Southwest. The paying-for-value concept must be re-established and consumer trust must be earned anew. United needs to build a brand that can command a price premium. And United and the others need to realize that wages are only part of the problem.



--------------------------------------------------------------------------------

Mr. Riley, head of Riley Associates LLC and an adjunct professor at George Mason University, is the former chief financial officer of United Airlines.

 

[120% Torque]

UAL calls Q1 a $900M loss
Carrier blames steeper drop on war; pact calls for 30% pilot wage cuts

By David Kesmodel, Rocky Mountain News
March 29, 2003

UAL Corp. said it expects to post a larger-than-projected operating loss of $900 million for the first quarter, in part because the nation's war with Iraq sparked a "significant" decline in revenue.

United Airlines' parent, which filed for bankruptcy Dec. 9, said its near-term revenue forecast has deteriorated sharply from prior estimates. This comes after passenger revenue fell 11 percent in February and 6 percent in January.

UAL made the disclosures Friday in its annual report to the Securities and Exchange Commission.

In a bankruptcy court filing March 17, UAL had projected a first-quarter operating loss of $877 million.

The Chicago-based carrier also said in Friday's report that its pilots' wages would be cut 30 percent under a tentative agreement on concessions reached Thursday with the Air Line Pilots Association. The agreement also would allow Denver International Airport's dominant airline to go forward with plans to launch a low-fare airline and to fly more regional jets.

UAL and the pilots union said the accord announced Thursday is designed to save the airline about $1.1 billion a year. It must be ratified by the carrier's 8,800 pilots in voting expected to conclude April 11.

UAL and the pilots union declined to comment further on the pact.

The airline's annual report Friday also shed more light on UAL's troubled pension fund.

The pension fund was underfunded by $6.3 billion at the end of 2002, up from $2.5 billion in underfunding at the end of 2001. UAL estimates its pension obligations at about $12.7 billion, yet its plan had assets of $6.3 billion on Dec. 31.

The giant airline is struggling to meet terms of its bankruptcy financing as the war exacerbates the U.S. airline industry's worst-ever downturn.

The company is seeking to cut labor expenses by nearly $2.6 billion a year so that it can emerge from Chapter 11. It has requested bankruptcy-court approval to void contracts and impose terms if necessary.

The pilots' deal would start May 1 and run for six years. It comes after the airline's most powerful union took temporary 29 percent pay cuts in January.

The agreement "sounds impressive, but it's still not enough because the company has most of those cuts in place now and they're still losing hundreds of millions of dollars a month," said Standard & Poor's analyst Jim Corridore.

Last year, United pilots earned an average $136,000 a year and their pay ranged from $30,000 to $300,000, the union said.

The new low-fare carrier would pay pilots the same rates as does the main airline, according to a copy of the pilots' agreement obtained by Bloomberg News.

The low-cost unit would fly Boeing 737, Airbus A319 or A320 planes, the agreement said.

According to the SEC filing, UAL would contribute 9 percent of pilots' wages to their retirement plan. That would be down from 11 percent currently but is better for pilots than UAL's earlier proposal to stop contributing to the plan and have pilots instead partake in a 401(k) plan with lower UAL contributions.

The agreement also calls for the company, under the pilots' traditional pension plan, to pay retired pilots an annual benefit that is 1.35 percent of their final average annual earnings times their years of UAL service - down from 1.5 percent.

Separately, the Machinists, United's largest union, said Friday it made "significant progress at the bargaining table" this week in trying to reach new contract terms for United's baggage handlers, ticket agents and others.

IAM District 141 last week told members it gave United a proposal calling for $423 million in annual pay and other concessions - not far below the company's request for $445 million a year.

The IAM warned a concession agreement would mean more job cuts, as well as some full-time workers having to work part time.

United's flight attendants union also continues to negotiate with UAL. It said 107 Denver-based attendants will go on either voluntary or involuntary temporary leave starting Tuesday as part of more than 2,000 leaves by attendants.

 

[120% Torque]

Here's a couple comments from a financial message board:

Let's see: $367 Million net loss for February;...that's, ah...$13 Million PER DAY, eh?

Obviously UA had met its DIP requirements (losing no more than $964 Mil between Dec 1st and Feb 28th) only because of NOT paying all its bills and hoarding the necessary cash to meet the deadline. UAL, for example, hasn't payed its rent at many airports, including DEN and SFO which, are owed each in excess of $12 Million right now.

No doubt, the airline is a goner. Every day this losing financial juggernaut takes to the air, more investor money is being poored down the drain.

It's time to nail the doors shut on this basket case outfit and stop the hemorrhage.

----------------------------------------------------------------------

That six-month extention puts the company in the drivers seat until an October 31st DIP requirement to show $46mil profit. There's also a November requirement to show $112mil profit.

My feeling is that they are just buying time to stuff more money into their suitcases and prepare to run at our expense, but I could be wrong. Only the development and implementation of a super recovery plan, coupled with a quick resolution of the hostilities in Iraq and strong economic indicators could turn this ship around.

 

[Jack Schitt]

UAL Deathwatch:

http://www.chicagobusiness.com/cgi-bin/news.pl?id=8447

 

[hawkerpilot]

Let It Go

There comes a time when some things are better left to die so that what is left can become healthy. I think the case for UAL is long overdue....the company has been run into the ground by a bunch of idiots for to many years to recover. These same idiots keep trying to blame the economy, then 9/11, then Iraq and now SARS. Give me a break....they were in trouble a LONG time ago because of their poor management. World events just made it impossible for them to keep covering up their sins. I know alot of people are going to lose jobs but they just might be better off in the long run at a well run carrier that has a chance of surviving. That and the realization that $300,000 salaries for 15 days of work per month are rediculous as are the exorbitant salaries the management has taken.....I bet U would like to have the 400 million in bonus money it paid to two useless individuals in 1998.