UAL Seeks Lower Fees

[Mayday911]

United seeks lower fees from Regional airline partners
Dateline: Thursday February 20, 2003

United Airlines intends to use the Chapter 11 bankruptcy process to renegotiate its fee-per-departure service agreements with Regional airlines operating in the United Express feeder program to achieve substantial savings--up to 28% below current costs.

According to the airline's Plan for Transformation presented to its creditors committee at the end of Jan., United Express carriers Atlantic Coast Airlines, SkyWest and Air Wisconsin charge a premium over market rates. In the plan document, United said it is paying one partner $3,571 per departure on a 500-mi. stage length basis, another is receiving $3,132 and the third is getting $2,960. United added that it has received bids of $2,732 and $2,565 from airlines interested in providing the service.
One current United codeshare partner, ACA, has filed suit seeking to require the Major to declare by Feb. 28 whether it intends to honor the existing contract (ATWOnline, Jan. 3).

I wonder which of the bottom feeders are bidding that low. And so it starts!!

Mayday.

 

[Rottweiller]

Chautauqua and MESA. It's common knowledge.

 

[ACABlueridge]

Now maybe some can see how Chautauquas and Mesas bottom of the barrell are hurting ALL of us in the industry. All United has to do is redistribute their flying to another carrier. Their flying is shifted and pilots make LESS.

Looks like is is going to be a race to the bottom.

MESA guys/gals please vote NO!!

 

[FlyDeltasJets]

ironic

 

[Sleepyhead]

Maybe now some of you guys will realize we are all in this together. What effects one airline will eventually effect the others.

 

[IADBLRJ41]

HERE WE GO

Very well put!! I cannot believe what this industry has turned into. Who would have ever thought that a regional would be out bid by a low feeder like MESA.. It truly shows that airline management does not care about the future it is all short term goals and fat pocketbooks. So what is next for the UAX feeders=PAY CUTS!!!!

My 2cents

IADBLR

 

[ACABlueridge]

So what is next for UEX feeders=pay cuts?

Believe me, if management thought they could get them they certainly would try. Who knows what lies ahead though, after all it is a race to the bottom.

 

[Capt RJ]

Its bad enough that UAL's probability of survival is nil to none, but now they have to screw the lonely pilots at the bottom of the food chain. Co*k Suckers

 

[AAPilot]

Capt RJ, Just curious if this is just your opinion or you have facts to back up your statement?

 

[Capt RJ]

AA Pilot

Not quite sure the facts that your looking for, but if in regards to UAL survival chances-just read todays Dow Jones report, if its about screwing the regional pilots by pitting them against each other-just read the story that started this thread. How would you like it if AMR went into bankrupcy and all of the sudden decided to save money with "cheaper" crews, because Ch 11 gave the an out of your contract. We all need to stick together or we'll all get a bad deal in the end.

 

[IADBLRJ41]

AA Pilot I agree with CRJCA

If management had a dream come true AA wages would be like the wages of a CRJ CA. Honestly, I would have a really hard time in 10 yrs to jump to a major with 10+ yrs of senority. MY dream would be to fly a 777 or 767 but with what has happened to all the furloughed drivers is really sad. I really think this downturn is here to stay for a long while. I am just crossing my fingers that with all of this record change I am not given the big F ticket. What choice does it give you when you are on the street. I am still haunted by the stat on the furloughed UAL guys that 20% are actually flying and the rest are working odd jobs. (USA TODAY) At what point will this all settle down??? THat is the $$$ question anyone have the answer??



Tailwinds..

 

[boiler]

First off, I do not fly for Chautauqua or mesa and do not support or oppose them. But I have to ask do you really think they are able to bid that much lower because they are paying their crews that much less? I mean their bids are $1006 to $395 less than the current runs are being paid. For arguments sake, lets say that their captains make $25 less per hour and their FOs make $10 less per hour. On a 1.5 hour flight, that adds up to $52.50. Hey, let's even say that their benefits are much worse too! Ok, so we'll increase that $52.50 to $100 less in total pay and benefits for that 1.5 hour flight.

So, where is the extra $300-$900 in savings coming from? Assuming that they are not bidding to take a loss, this shows that ACA, AWAC, and Skywest are either making big profits or are run very inefficiently. I won't even guess which it is.

We could argue all day long that Mesa and CHQ don't pay their pilots very well, but from a financial standpoint it comes down to simple economics. It sounds as though Mesa and CHQ could pay their pilots as well as the other regionals and still clearly undercut the others fees.

So how is the bankruptcy judge going to look at this? If these other bids are true, it's almost clear as day...If ACA, AWAC, and Skywest want to keep their contracts, the fees will have to go down some. If the fees are not lowered, they risk losing business to Mesa or CHQ.

Is this good for pilots in general? No it isn't. Is this good for the airline industry? For United, absolutely. For ACA, AWAC, and Skywest, no. But we have to remember, the law of supply and demand usually prevails, and ultimately, it is the major airline that calls the shots.

 

[azpilot]

Soon you may have even more to worry about since United is very close to going under entirely. So that would mean no flying for anyone. I heard a rumor that Great Lakes was going to take over all the flying. Just kidding. I agree that the lower pilot pay at Mesa does not add up to the entire lower bid.

Good luck to everyone....

 

[easy spirit]

.........On a 1.5 hour flight, that adds up to $52.50. Hey, let's even say that their benefits are much worse too! Ok, so we'll increase that $52.50 to $100 less in total pay and benefits for that 1.5 hour flight.

So, where is the extra $300-$900 in savings coming from? Assuming that they are not bidding to take a loss, this shows that ACA, AWAC, and Skywest are either making big profits or are run very inefficiently. I won't even guess which it is.

.........

100 (less pay)X 10 (avg hrs util) X 75 (RJs) X 365 (days in yr) = $21,900,000 in annual savings!!!
Thats HUGE for a company (Mesa) that LOST $600,000 (0.02 cents per share) in it's latest fiscal quarter.

Pitting the regionals against each other is just bad news for UAL or any other major. We are such a drop in the bucket for them. We are not going to make or break them!

Regionals will be enticed to bid something they will not be able to back up and will either lose the business later or go out of business themselves!!

 

[rightrudder]

It would be interesting to know what type of aircraft is being used to fly that 500 mile stage length. Is is an EMB120, or a BAE 146? Is it a CRJ? These three airlines each fly different aircraft with different markets and number of seats.

On another note, wouldn't it be ironic if Mesa and Chat got some of the 70 seat flying for UAL. Then you might see USAir pilots flying United Routes in RJ's.

 

[Dieterly]

Again, ironic.

 

[A4Forever]

Ladies anad Gentlemen.. From my prespective as a retired UAL guy, let me say that the future doesn't look very promising. Mgmt's proposed changes to the UAL pilot's contract include everything from eliminating night (back side of the clock)pay, overwater pay, a reduction in expenses back to 1985 levels and elimination of downtown layovers and on and on. Probably approaching a 40% reduction in pay and benefits if the bankruptcy judge buys off on all of this, in which case I could foresee major changes to all pilot contracts. Mgmt will force the cuts or declare bankruptcy inorder to abrogate the contracts. Hold on for what may become a bumpy ride for everyone.

 

[easy spirit]

A4Forever,
Have you ever seen things this bad in your career?
Do you think somewhere down the road things will imporve (pay/benefits) or do you think these are fundamental changes that will stick with UAL and the industry forever (lower pay/benefits)? Low cost providers to rule the earth??

I heard those LA Rapid Transit Bus Drivers make good money!
Maybe I should drive trains instead. You don't hear about Union Pacifics's or Burlington's constant trials and tribulations. The media leave them alone!

 

[A4Forever]

Spirit... UAL, as have the other carriers, has gone thru periods of tuburlence during the past 35 years. In my humble opinion, a combination of events has brought us to what UAL faces today. 1. High labor costs: AA gets this $$, Delta wants that +$, then UAL wants to top Delta by $$$. I guess everyone thought it was a never ending spiral. The "Goose that laid the Golden Egg". Well, sombody shot the goose! Ups and downs in the economy, then WHAMO, 9-11. 2. UAL management: Giving into the labor demands without the business plan to support it. Failed attempts at questionable ventures: US AIR merger and Avolar. 3. The high cost of doing business: Fuel, facilities, ect. It all plays a part. If UAL does go down the tubes, there will be a lot of finger pointing and enough blame to be shared by lots of folks. Wages will rise, abet slowly. JB, SWA, Airtran will experience the same problems as they grow. Somewhere down the road, another LCC will emerge to challange them. Then it will most likely start all over again.

 

[Boz]

Capt RJ

Good Luck at the bottom of the food chain as you certainly are a bottom feeder. You remarks reek of the immature pilots that work at express carriers that are not old enough to even realize what the implications of a major airline going down will do to the industry.

Just be prepared to battle for the already slim jobs with more marketable pilots than ignorant ones like yourself.

 

[Russ]

Boz
I hope you are not passing judgement on regional pilots as a whole. If so, we need to talk.

 

[Capt RJ]

Hey Boz

Your ignorance shows quite clearly with the above comments you made. Do you really think your going to be any more marketable than the next guy? Because of the unfortunate position UAL is in now-should they liquidate You'll have no 121 job to fly at then. See how marketable you are when you haven't flown in 6 years because the airline industry has been flat. Oh beware of the "bottom feeding" regional pilots who will be very marketable on the next upswing. Bye Bye Boz Hope you enjoy Home Depot


Oh and as for the implications of a UAL liquidation-unfortunatly means survival for the rest of the group. Hey Boz I guess its hard to take one for the team.

 

[CatYaaak]

Capt RJ

Good Luck at the bottom of the food chain as you certainly are a bottom feeder. You remarks reek of the immature pilots that work at express carriers that are not old enough to even realize what the implications of a major airline going down will do to the industry.

Just be prepared to battle for the already slim jobs with more marketable pilots than ignorant ones like yourself.

Now if sharing a cockpit with THIS "mature" attitude isn't incentive enough to go fly for a major, I just don't know what is.

 

[Rottweiller]

So how is the bankruptcy judge going to look at this? If these other bids are true, it's almost clear as day...If ACA, AWAC, and Skywest want to keep their contracts, the fees will have to go down some. If the fees are not lowered, they risk losing business to Mesa or CHQ.

Is this good for pilots in general? No it isn't. Is this good for the airline industry? For United, absolutely. For ACA, AWAC, and Skywest, no. But we have to remember, the law of supply and demand usually prevails, and ultimately, it is the major airline that calls the shots.

AWAC already have 'lowered' their cost's for UAL. We are being paid our 2001 rates and have been since post 9/11 in order to help UAL out. ACA and Skywest have taken their annual raise. This is basis for the ACA suit, "if we are to keep taking A/C deliveries we need to know you will pay us our 2003 rates" (condensed version).

The sad part is that UAL are looking at who is going to be cheapest. Hopefully MESA will be out of the running as UAL were burnt by them years ago, but they (UAL) will only look at the bottom line. We shall see what happens.

 

[ACABlueridge]

Originally posted by boiler
.........On a 1.5 hour flight, that adds up to $52.50. Hey, let's even say that their benefits are much worse too! Ok, so we'll increase that $52.50 to $100 less in total pay and benefits for that 1.5 hour flight.

So, where is the extra $300-$900 in savings coming from? Assuming that they are not bidding to take a loss, this shows that ACA, AWAC, and Skywest are either making big profits or are run very inefficiently. I won't even guess which it is.


Well SOME of that $300-$900 comes from staffing. With Mesa Reserve guys only getting 8 days off and line holders 10 that is a lot less pilots needed on the payroll. Compared to the companies that give Reserve and line holders 11 days off.

I don't know the figures but you take there measly $1.15 perdiem compared to $1.60 others get it can add up to millions over a year.

Salaries alone don't allow them to underbid by that much, but you add up ALL of the costs MESA scimps on it may make a little more sense.

Didn't even get into 401K company match.

 

[46Driver]

The profit sharing checks have gone away (actually, management raised the standards so high that for all intents and purposes they are gone.) It may come down to taking a 10% or 20% paycut to fend off MESA and Chautaqua. Sad to say, but it beats the alternative - however, no jets for jobs period. Our 2 aces in the hole are that ACA owns the gates (I think) at IAD and that since UAL is time critical, nodoby could ramp up an operation to take our place if we are replaced by United. It is going to be an interesting few months....

 

[easy spirit]

.......Our 2 aces in the hole are that ACA owns the gates (I think) at IAD.......It is going to be an interesting few months....

and rent control is a great thing. Lets see, we will take first months rent, last months, security deposits, first months for next year and the year after that, your newborn, your left arm... ha, I bet the under bidding didn't take that into account!!

Yes, it is going to be a VERY interesting next few months for everybody. Good luck to everyone!

 

[acaTerry]

This whole thing is really a cyclical event. Every 10 years or so the airline industry takes a crap for one reason or another.
Just ride it out and hope for the best. Some of you guys will do better than others depending on who you work for. For example, ACA will most likely make it OK. I've seen ACA at good times and bad. Man, at bad times I got HOT under the collar and let myself get a bad attitude. But in the end things got better. ACA management is too shrewd in business to let things fall apart. In the end, things will come out OK, as ACA is seeing. They just paid out their biggest profit sharing check ever. And most of the problems that were eating the pilot groups guts out are improving or have already been resolved somewhat.
On the other hand, the "catfish" airlines will do anything to undercut the other guy. We saw this years ago with Mesa and UAL. Mesa eventually lost the UAL deal and almost lost AWA as well. (No intent to pick on you guys at Mesa here). But when it all comes down, UAL would be smarter to go with AWAC, ACA and other "high-dollar" carrierrs because it is better for their image and recovery in the sense that a low bidder WILL treat employees like garbage. Unhappy employees = less effort. Less effort = unhappy customers. Unhappy customers = loss of business. Loss of business = less money. Less money = trapped until death.
Hey, it sucks to be in the middle of it all right now, but it will come back, it always has. Just not for everybody. Good luck everyone, sit tight.

 

[fam62c]

Here's a scenario for you.

I've been following this issue and I thought of something, although it's somewhat far-fetched. The bankruptcy judge can't force ACA, SKYW and AIRW to accept less money from UAL. All he can do is allow UAL to walk away from the contracts, which obviously will give UAL major leverage to attempt to force renegotiation on the part of the code-share carriers. What if the 3 carriers mentioned above refused to renegotiate and just walked away from the deals if UAL allowed them to? Each of these carriers has other partners and they have the planes to go out and pick off some lucrative O&D markets on their own if they had to.

UAL will obviously threaten to bring in lower cost carriers to code share if the 3 current providers won't budge, but if they lost ACA, AIRW and SKYW all at once there isn't enough spare RJ's on the planet to pick up the slack anytime soon. My guess is that a sudden stoppage of regional feed would be the final nail in the UAL coffin. Worse yet for UAL would be these 3 carriers out there operating totally unrestrained by scope clauses. These airlines could now operate as many of any type airplane they wanted to anywhere they wanted to fly them to. They could choose to operate former UAL city-pairs independently or sign agreements with other major airlines to funnel passengers to UAL's competitors instead of UAL. These 3 carriers may hold the life of UAL in their collective hands. Maybe it's even crossed their minds that if they could Kill UAL off once and for all the opportunities open to them at ORD, DEN, IAD, LAX, SFO would be incredible. There would be a lot of meat for other airlines to get fat from off the UAL carcass.

One thing about ACA, SKYW and AIRW is that they are not afraid to take advantage of opportunity. They may view UAL's shortsightedness as an opportunity rather than a danger. I for one will not shed any tears if UAL liquidates, although I will feel very bad for the employees who lose their jobs. UAL's death would be a godsend for all the other carriers right now and would instantly solve the industry overcapacity problem. Maybe the importance of RJ's in the modern airline industry will be proven once and for all. If I were UAL I would tread very lightly on this issue, they may not have anywhere the leverage they think they have over these 3 carriers. UAL may need them worse than they need UAL. The 800 pound gorilla is in the ICU and the prognosis is not good.

 

[SkywayFO]

There is a lot of thing that are going to go into this but a few are in ACA favor. The other companies ie. Sh*tTaco and Mesa, have to get the bank to give them money for planes and that isn't easy in todays market. And it will take some time to get geared up even if they could. The other thing is those gates we own in Dulles. If they only look at the bottom line we are screwed if they look viably options we will be ok. Just my 2 cents I guess we will know monday. By the way someone told me that Air Wiskey has a court date on the Judges calender today for the same thing as us. Anyone know anything about that?