UAL Progress/Mood ?

[P3-Adub]

Not getting much other than what is said in the news, any active pilots willing to describe the climate and usual cockpit opinions ? Such as, general opinion with ERP II ( economic recovery plan ) ? company's actual plans for the "option for 600 more furloughs ? When might this happen ? How are bookings looking for the holidays ? Seeing many early retirements with the latest plans ? Any more talk of Shuttle 2 ?

I would have voted YES if I was able to vote. I just hope the other employee groups can see the light.

Thanks for any info.

 

[GuppyPuppy]

Hi P3-

Not sure if I will be of much help, but here goes...

Mood. I would say the mood is concerned. The future is uncertain at this point and I believe most are anxious to find out where this company is heading. A positive side effect of our current situation is that employees seem to be more amicable towards our customers. It is truly unfortunate that it takes the threat of bankruptcy, or worse, to get front line employees to treat customers fairly, respectfully and kindly. Personally I would like to see some direction from our upper ranks...OK it has to start from the top, so Glenn I hope this message gets to you...anyway I think that he needs to steer this company back towards being known as "The Friendly Skies". Why hasn't this been part of our advertising over the last several years? Why on earth we ever paid the folks who came up with the "Rising" campaign I'll never know!

I was at TK getting re-qualified in October when Tilton came for a visit. He said that closing the Shuttle was a mistake and that it will come back in one form or another. While this statement drew applause, after thinking about it, I don't know what "one form or another" actually means. Does it mean RJ's? No rumours on how U2 will operate.

As far as ERP2...I think you have seen it. I hope the cost savings are enough. I will probably vote for it, but I've been debating the arguments back in forth in my head. If I vote for it, the company can have carte blanche to furlough 1,444 pilots (an additional 600 and I would be included in that tally). If this agreement gets voted down, I think we may be out of time to negotiate a new agreement and I'd be out of a job anyway. So, I believe that as tight as the situation is right now, I must vote for the agreement. I would have like to have seen more effort to entice the senior folks to retire early. I think it is the same agreement that went into effect a year ago.

I sure hope we get some good news in regard to the IAM in the next couple of days. It would be terrible if UA were to declare bankruptcy and blame it on the IAM.

Part of me thinks that UA should become the biggest low-cost carrier out there. Not an easy task, but think about it. Thirty-five years ago the big retailers were Sears, Montgomery Ward, JC Penney, etc... Now the biggest and most powerful retailer is WalMart. Southwest is the WalMart of the airline industry...profits for nearly 30 years straight. It is my opinion that UA must adapt or suffer. I'm betting UA will adapt and am glad to see a no-nonsense guy like Tilton at the helm.

Cheers!

GP

 

[P3-Adub]

Thank you !

I too would vote in favor if I was able to, leave of absence does not allow a vote. Being close to the bottom of the next 600 myself, this presnts a problem however like you mentioned, to wait and see what happens in BK could be much worse. So, I am hoping for a affirmative vote by the majority and strong leadership from Mr. Tilton. Call it self sacrafice or self preservation, at least there will be a better chance of there being a healthy UAL to return to. I like what Mr. Tilton is doing so far.

Shuttle 2 would be welcome in my book too, if the flying public wants no frills service for dirt cheap, then UAL should be able to do it just like Delta and the rest that will soon join in. The difference is that the full service carriers will still offer some business class or first class service along with the cattle car approach. Jetblue certainly offers a little more however like said in the Forbes article, there will come a time in the not too distant future that they will have their own challenges. The only thing that I would suggest to Mr. Tilton is that we don't do it half way, there was not that much that needed fixed with U30 to start with, we just did not expand it to other narrow guage fleets and to include the entire country. I believe it will take that and then some. After all, like I have said so many times on this board, for $99.00, we should give $99.00 service. At least for those 30 out of 100 seats that go at those prices, why does the public not understand this ??? If the public truely believes that you can make a profit at those fares, then a campaign needs to begin to educate the public what the costs are, Southwest or not. I bet Southwest is trying to figure out how to keep the good reports coming with these lousy economic conditions.

OK, enough for now. I'll keep my fingers crossed for now. Thanks for the reply.

 

[rjcap]

P3,

why does the public not understand this ???

The public has been very pleased with Southwest, Jetblue, and Airtran. They don't need to be "educated," on why they should pay more money to travel.

 

[GuppyPuppy]

"The only thing that I would suggest to Mr. Tilton is that we don't do it half way, there was not that much that needed fixed with U30 to start with, we just did not expand it to other narrow guage fleets and to include the entire country. I believe it will take that and then some."

- from P3-Adub

Agreed. I've always had a credo that you never do anything half-@$$. You always do it full-@$$!

Cheers!

GP

 

[furlough-boy]

Things are not looking too bright!

After a year on the street, it looks like the light at the end of the tunnel might be the oncoming train! Anyone know which 49 aircraft are getting parked? Good luck. See ya back at UAL in 2010!

United Plans Strong Financial Turnaround
Sunday November 17, 1:14 pm ET


CHICAGO--(BUSINESS WIRE)--Nov. 17, 2002--UAL Corporation (NYSE:UAL - News), the holding company whose primary subsidiary is United Airlines, today announced that as part of its financial recovery plan submitted to the Air Transportation Stabilization Board (ATSB), the company plans to generate a full-year operating profit in 2004. Additionally, the airline plans to begin repaying any loans guaranteed by the ATSB in 2005 and to completely pay them off by 2007.
“We believe that the plan we submitted to the ATSB makes a compelling case for loan guarantees,” said Glenn Tilton, United's chairman, president and chief executive officer. “Our plan is intended to restore United's financial health, and it gives us the ability to repay ATSB-guaranteed loans. The plan aligns our costs and revenues, while building a platform for future growth.”

The key to the turnaround is $2.5 billion in annual profit improvements, which is composed of $1.1 billion in annual labor cost savings and $1.4 billion in annual non-labor cost savings and revenue enhancements that include:

An unprecedented agreement among United's employee groups to contribute $5.8 billion in employee cost savings over a five-and-one-half year period, beginning December 1, 2002;
Implementing a new code-sharing agreement with US Airways that is estimated to generate revenues of more than $200 million per year once the benefits of the agreement are fully realized;
Implementing a new revenue-sharing agreement with Star Alliance partner Lufthansa that is expected to enhance United's revenues by approximately $90 million per year once the benefits of the agreement are fully realized; and
Adding 109 regional jets in conjunction with our United Express partners by April of 2004, resulting in a fleet total of 236 United Express regional jets.
In addition, in order to get costs and revenues in line, United is taking the following actions:

Reducing system capacity in 2003 by approximately 6% from 2002 levels. This will decrease the size of the airline by 23% from pre-9/11 levels. This number includes United's previously announced U.S. domestic and international station closings;
Retiring an additional 49 aircraft, for a total fleet retirement of 139 airplanes from pre-9/11 levels;
Deferring all scheduled aircraft deliveries through 2005. This includes 25 aircraft which will be deferred to 2007-2009. The company expects to receive approximately one aircraft per month between 2006 and 2009;
Continuing to reduce the total number of employees at the company –- total employees in 2004 are expected to be 74,000 versus more than 100,000 pre-9/11;
Lowering capital spending from an annual average of $2.4 billion over the last seven years to $450 million in 2003 and $400 million in 2004; and
Obtaining new capital and deferrals from vendors, lessors and other business partners totaling more than $1.5 billion

 

[Boz]

Speculation on the 49 additional aircraft to be parked was brought up at the recent council meeting. A number of 737-500s were mentioned as probably being grounded when certain maintenance work comes up. The time frame being sooner rather than later. Also 767-200s and more 747-400s mentioned. It was not clear just what would be parked in storage and what was going to be parked for good or sold off.

BOZ

 

[brucek]

I hear in the news tonight that 9,000 will be laid off in the near future (UA). Also a 6% route reduction. I have plans to fly to NZAA with them in December, hoping that they're still flying that route!

 

[looseca]

Found this on the Drudge page. For what it's worth... - probably not much...

Administration Insiders Believe Feds Will Reject UNITED AIRLINES Loan Application
Mon Nov 18 2002 10:01:51 ET

UAL Corp., parent of United Airlines, is fighting an uphill battle to get a $1.8 billion federal loan guarantee that the airline says is essential if it is to avoid filing for protection of the bankruptcy courts before the end of the year, the WALL STREET JOURNAL reported on Monday.

"The staff of the Air Transportation Stabilization Board is scrutinizing the company's business plan skeptically, and the betting among Bush administration insiders familiar with the board's thinking is that the board, which has three voting members, eventually will reject the application or set conditions so onerous that UAL will reject them."

MORE "The board, however, has yet to make even a tentative decision," the JOURNAL claims.

UAL "had hoped to get the green light for the loan guarantee soon so it could raise $2 billion in fresh capital and stay out of bankruptcy court. But the company is burning through more than $7 million in cash a day, and it faces a $375 million debt repayment on Dec. 2. United said in a recent federal filing that without the loan guarantee, and the cost reductions that it has to make to get the guarantee, it doesn't expect to be able to have sufficient liquidity to support its obligations through year end.

"It recently succeeded in postponing $500 million in additional debt coming due in the next few weeks."

Developing...

 

[P3-Adub]

Rjcap

Sure passengers are pleased, they are paying 1985 rates for travel, who wouldn't ?

My point is that the fare wars create a false expectation in what it really costs to travel. I would suggest that Southwest and Jetblue do not make money on a planeload of $89.00 fares, these are the "loss leaders" to attract the masses, compete in new markets, fill otherwise empty seats, and so forth. I believe that you are a smart guy and can realize that a Southwest 737-300 filled to 65% capacity on a 2 hour flight does not make money ? Simply put, at even $100.00 per ticket, the 70 occupied seats generate $7,000.00 or so in revenue, not even coming close to covering actual costs. So, in reality, there are some folks paying the $600.00 fare just like AMR, DAL, and UAL. Not the screaming deal that you say is making them profits. The flying public believes that you can make money in the airline business at $89.00 fares just like you do. I bet you cannot even make money at those fares on a full 50 seat RJ ?

This is my only point, the expectation has been lowered to the point that everyone will have trouble until the economy recovers. Even when all of the big carriers restructure and reduce their cost structure, people will complain that they are paying too much based on what the new expectation is. There will also be a lot of people on the street with the cost reduction efforts.

In the end, costs continue to rise, insurance rates have skyrocketed, security, while absolutely necessary, is a huge cost burden, fare wars chip away at profitability, and the people want to pay even less for air travel.

I am glad that you enjoy flying an RJ, from the looks of it it could be some time before the major airlines of this country recover and start to grow again. All of the growth is in the RJs because they are less expensive to operate. Definitely not the prestigious career it once was, the career earning potential has been drastically reduced. Wasn't all that long ago that the majority of airline pilots goals were to make it to a major, now all we seem to do is try to justify where we are or what we already have. Big changes are in store and time will tell the real story.

I am not slamming you or anyone at Southwest or Jetblue, I just think the public is unrealistic in what it costs to operate an airline. Jetblue is always used in comparisons however they are brand new and they do not have the 10-20 year employees that would like to see a larger salary with their longevity. Maybe that is the answer, have airlines only last for 10 years or so ? Is it not your expectation too that you will earn more and have greater opportunities the longer you work for a company ? The new contract at Southwest does not look all that bad, they are rewarding their employees for success and seniority. At some point someone will say they make too much ! A fine balancing point that can sometimes make a big difference in the bottom line.

Anyway, good luck to you Rjcap ! Hopefully all of your career goals are met !

Take care.





BruceK,

I don't think that the schedule reductions are coming until after the first of the year. I believe that the Pacific routes have been pretty full and I don't see them cutting back there even after the first of the year.

Have a great flight !

 

[pilotyip]

Productivity Gap

From a Unisys report United has low pilot productivity and is major part of their cost problems, pilots are paid for an average of 900 hours per year , but actual block hours flown are 427, cost per cockpit hour $800, SWA actual flown block hours are over 800, cost per cockpit hour $400. To become a true low cost carrier how does United increase its pilot productivity by 100%?

 

[rjcap]

P3,

I would suggest that Southwest and Jetblue do not make money on a planeload of $89.00 fares, these are the "loss leaders" to attract the masses, compete in new markets, fill otherwise empty seats, and so forth.

Prove it !!

In the end, costs continue to rise, insurance rates have skyrocketed, security, while absolutely necessary, is a huge cost burden, fare wars chip away at profitability

And the LCC's -- Southwest, Airtran and Jetblue continue to operate and profit.

I am glad that you enjoy flying an RJ, from the looks of it it could be some time before the major airlines of this country recover and start to grow again.

You assume that I need to be employed by a Major to enjoy my job. All I want is a better contract. I'll keep my seniority and the left seat of the CRJ 70 for now.

I am not slamming you or anyone at Southwest or Jetblue, I just think the public is unrealistic in what it costs to operate an airline.

the traveling public is just fine. they will pay for a combination of service and convenience that they deem sufficient. If that meens SW and Jblue then so be it. It is not for you or me to dictate what is realistic expectations.

Good luck to you.

 

[brucek]

Thanks P3

Thanks for the info on the trans-Pac flight, yes I'm looking forward to flying from ther shortest day to the longest

Your post had some interesting points too. I'm in finance- what is occuring in the airline industry is akin to deflation (as termed in the larger economic sense), which is a (seemingly) uncontrollable downwards spiral in the cost of services (read "revenues"). Just like the kind that we pilots are taught to dread, this requires some special action. I hope that the industry finds a level footing. I read in a recent aviation magazine that the industry is so much in over-capacity (supply) vs demand, that an airline the size of Continental could disappear completely and we'd still be at overcapacity. Not good news, and there's nothing out there in the economy that says it's going to change anytime soon.


That said, I do hear the stories here and empathize with anyone that's out of work. Could be me tomorrow...


Bruce.

 

[dhampton]

P3,

Your comment about Southwest and JBLU being loss leaders with a plane load of $89 passengers is inaccurate with regard to SWA.

According to their 2000 annual report, the average fare paid was $85.87 and the average load factor was 70.5%. Average length of haul was 663 miles or about two hours. With these figures the company managed 625.2 million dollars profit or about $10 per passenger carried.

 

[FastCargo]

Profits...

dhampton said

>According to their 2000 annual report, the average fare paid >was $85.87 and the average load factor was 70.5%. Average >length of haul was 663 miles or about two hours. With these >figures the company managed 625.2 million dollars profit or >about $10 per passenger carried


Wow! What were the figures for 2001? No wonder they're nicknamed "The Borg" by other airlines...Resistance is Futile....

FastCargo

 

[pilotyip]

Cost

It cost a lot more to run a major cockpit, where they are paid for over 900 hours and fly hard hours under 500. SWA pilots average hard hours over 800, JetBlue over 900 . Somebody has to paid, so you have charghe more for your tickets, or have load factors in the 90's to break even.

 

[P3-Adub]

Not quite.

Just got off of the Southwest Website and a round trip flight from Oakland to Columbus is around $600.00 if taxes and other fees are included, same for a trip to Detroit. Now these are no restriction flights so you could get a less expensive ticket, I just wanted to point out that they DO charge more than what people think. People are beginning to expect $89.00 fares for these flights including some pilots on these boards. Take a look for yourselves. The stated SWA 2000 numbers absolutely contain fares that are in line with other carriers while offering the CHEAP tickets too, this is why they call it an average. Everyone does this. Does anyone believe that Southwest's costs are higher today than in 2000 ? Will the new contract affect those numbers in any way ? Congrats if they continue to make profits, I truely hope they do.

My point is that the expectation is going south and costs are going up. Costs will be reduced at the majors or they will not survive, productivity will need to increase as well if they are to compete with the lower cost business models.

Rjcap,

I think it is great you are flying the CRJ700, I never said that it would not be a nice career. Please don't take any of these posts as arrogant or hostile, just conversation seeking other opinions. Healthy debate. Better contracts cost money and reduce profits unless you raise ticket prices do they not ? If we do not believe that our profession is a worthy one that deserves a reasonable wage, then the slide will continue. This is not the "we are to be compared with doctors" opinion either.

I do find it hard to believe that 50 million dollar 737s, 40 million dollar A320s, and 18 million dollar CRJ700s (all estimates by the way) can operate for so little on the previous described 2 hour segments. Any idea of the age and average cost for a Southwest 737 ? A 737-300 burns roughly 5000 lbs and hour or 750 gallons, if fuels is $1.00 a gallon, then you have $1500.00 to cover in fuel alone for that 2 hour flight. Throw in insurance, maintenance, pilots, flight attendants, dispatchers, training, perdiem, uniforms, capitol expense, customer service, marketing, landing fees, and a whole list of other expenses to arrive at a hefty hourly cost.
If you only generate $7000.00 on that 2 hour leg then I would say that there cannot be much profit left in it. Is there something I am missing here ? I am not arguing with the 2000 SWA report, how does the 2001 report look, I do know they made a profit.

When you look at what is involved in the overall picture with the airline business, hard to believe that you can make money at $89.00???????????????????????????? Any idea what a Greyhound bus drives gets paid ?

 

[Slug]

walk up fare

The walk up fare is $299. No questions asked. Yes that does make it roughly $600 round trip.

What is the walkup fare for UAL, AAL, or DAL?

 

[sideshow]

P3-Adub
If the public truely believes that you can make a profit at those fares, then a campaign needs to begin to educate the public what the costs are, Southwest or not.

If we do not believe that our profession is a worthy one that deserves a reasonable wage, then the slide will continue.

I think it can be said that the public doesn't care whether the airlines make a profit or not, so I'm not sure what you should educate them about. It's capitalism and competition.

United has the highest cost per available seat mile (ASM) in the industry. And with 900 hours being paid for 472 hours worked it's not that hard to see why the pilots add significantly to that cost. Not all of it, but a substantial amount. I'm curious, well not really, why the pilot group at United couldn't figure out a way to keep more pilots and get the hours paid closer to hours flown. But of course the guys at the top are more willing to take the pay cut and still not fly that much vs. less of a paycut and fly more hours. But those are the spoils of the union setup.

If anyone caught Kudlow and Kramer on cable last night they had Mr. Bethune on from Continental. It was an interesting segment about United and Mr. Bethune's view that they should NOT be given the loan gaurantees due to the fact that they are facing financial problems not because of 9/11 but because they have failed to compete in the open market.

Larry Kudlow made a point that from his perspective the Unions at United have put such a burden on them that bankruptcy is their only option.

I'ts wonderful to have a great contract and United management has done their share to cost the company billions, but 900 hours paid for 472 hours flown. That's just wrong. Period.

 

[Slug]

good one

Yep, EMB dude, a very good analogy.


It is a little disturbing that a major airline pilot who has been around a while believes that the public needs to be educated on what it costs to run an airline. IMHO the public couldn't give one rat's patutey about the inputs to the cost side of the ticket equation. They only care about the cost. And if someone can do it cheaper, then that is where the majority of sensible people will go. SWA and JBlue will sell their tickets to make an overall profit in the long run.

As for the productivity of a pilot force here are some easily obtainable tidbits.

UAL - 9200 pilots ------------- 1800 flights per day

SWA - 4400 pilots -------------- 2700 flights per day



Slug