United Expects Friday To Be The Day

[Andy]

Are you proud that your pension got dumped on the tax payers?

G4G5, since you've never had a pension plan, this appears to be hard for you to understand. We at United are extremely unhappy at the loss of our pensions. Many of us feel that we've let down our retirees by not doing more to keep the pensions. I don't know, maybe it's possible that we may have been able to pull it off if we had gone lower on pilot wages and made more work rule changes.

As for your assertion that the pensions were dumped on the taxpayers, you are once again factually challenged. The PBGC does not get any funds from the government.
Go to this link and read it: http://www.pbgc.gov/workers-retirees/about-pbgc/content/page13163.html

 

[ualdriver]

Your plan for fuel increases has not paned out. The fuel increases that you refer to are ONLY happening on routes where UAL competes with other legacy carriers. Show me where SWA has matched a UAL fare increase?
OK.......http://www.dfw.com/mld/dfw/news/13748884.htm FYI, this isn't the first time SWA has gone along with fare increases and it won't be the last. Granted it's not the $5 each way that are implemented by the majors, but if you're point is that SWA has gone along with any, you're wrong. And they'll be "going along" with more in the future. Don't believe me? Just wait and see. Further, there are MANY markets that SWA doesn't fly to that UAL does, so assuming that just because SWA doesn't go along with a fare increase that they're not going through is simply wrong. Watch unit revenue, watch yields- They're going up for UAL at a rate faster than the rest of the industry. That's one "indicator" (of many) of the price increases that are going through.
It's not happening.
Um, yes it is. See above.
If you are relying on fare increases that are only happening in a limited number of markets, it's going to that quites sometime before that trickles back to your bottom line. You also run the risk of increased LCC competition. You keep looking for an increase in fares to save you, as you raise the price of a particular route segment you now make it more attractive for increase LCC competition.
Ok, so now you're saying that even if we get fare increases in place, we're screwed anyway? Are we going back to the argument that since we'll never match SWA's costs that we may as well fold up the tent? AMR/CAL/DAL/NWA too?
Think Billings-DEN will be a profitable route for JetBlue? There are many "thin" routes that UAL can fly that SWA or JetBlue or AirTran won't touch. Have you heard the uproar in your USA Today articles about how small to medium cities are losing air service or its being drastically reduced and costing them more? If fares are so high in these small to middle sized cities, why doesn't SWA jump in? Because they'll lose their a$$ with their point to point business model. If it's one spoke on a hub, however, some of the cities can make sense. The LCC’s won’t be everywhere.

You keep looking for those fare increases and I will keep trying to figure what a Kia has to do with UAL.
Again, way over your head. Don’t’ bother.


The one with the lowest costs wins.
This ties to the Kia example, and you're wrong. If you define "win" as staying in business......wrong. There have been MANY carriers with average CASM's lower than UAL, DAL, NWA, etc., that have gone belly up. If this statement (that you keep repeating) was really true, then JetBlue will take over the U.S. market and everyone else is doomed to fail. If you really believe this, then there's not much point in debating anything from a business standpoint as we already know who the "winner" will be long term. Just dump all of your money in the airline, car producer, retailer, etc., with the lowest cost and you'll be a billionaire.

That's why I ask about NWA. It's two fold. First off you are exiting CH11 to compete with a carrier in CH11 on your Pacific routes. That's tough enough. Secondly it is my opinion and many others that when they do exit CH11 their costs will be lower. Making it even more difficult. AMR and CAL do not feel the same kind of financial pressure from a CH11 DAL and NWA.


Defintiely don't agree with that. Your anti-UAL bias is really showing here. You're implying that we're going to have all kinds of problems dealing with a Chapter 11 company on our Pacific routes, but NWA didn't have the same problems while we were in bankruptcy? Really? So if you're going to stick to that argument, who's going to have it worst when it's all said and done? The company that had to compete with an airline that was in Chapter 11 for over 3 years or the one that will have to deal with a Chapter 11 airline in bankruptcy for what most assuredly will be a shorter time? It's kind of irrelevant because it's a poor point to make, but it's your logic.

NWA just enters bankruptcy and you're going to predict that their costs are going to be SIGNIFICANTLY lower? Really? Well, let's see. The two largest costs that an airline has are fuel and labor. Just those two items account for approximately 40-45% of an airline's total costs. Is NWA buying some oil rigs and refineries for some discount fuel that only they will have access to? Do you think the NWA unions are going to go along with labor costs significantly less than what their competitors already have? With the "airline economy" improving day after day, do you think their creditors are going to be willing to give up MORE than UAL's when the industry was struggling with bird flu, rapidly increasing crude oil prices, Katrina, etc? Where are these "big" savings you imply going to come from? If they can't make it up with fuel and labor (and I don't think they will), it's going to have to come from somewhere else. Where? Aircraft mainteance? Aircraft rent? Landing fees and other rent? Depreciation and Amortization? Regional affiliate costs? Other costs? Where? Pick a number off their annual report or recent 10Q and let me know where they're going to seriously undercut everyone else, including UAL.

 

[ualdriver]

I come back from a two day trip and you still don't get it.
Well, you're going to come back from many trips and still not "get" lots of things like the un-importance of $50bbl oil in a pre-bankruptcy exit plan and you'll still think that the low cost producer always wins along with many other gems you've come up with. You also made comments about UAL's future "bond ratings" and I showed you were the interest rate we're paying just went down in contradiction to your beliefs.


THE BOND RATING IS WRONG!!!!I even put it in red for you. Here it once again:
http://www.newratings.com/analyst_news/article_1175205.html
The bond ratings can be found everywhere. Millions of links on Google. If I got the actually rating wrong.....oopps! However, if we're talking interest rates and what our competitors are paying, I think you'll see that our annual interest expenses will be competitive with or less than that of our peers. That's my point.



The loan is based upon a few important things that you fail to mention. According to UAL's latest 10Q SEC filing. The exit financing requires a minimum of $750 million unrestricted cash or you default. So $750 will be sitting in a bank and not accessible. Secondly the $3+ billion will need to be repaid in 6 years! That's not including the interest payment of approx 9%.

Actually, not true. You're thinking "house or car payment" repayment schedule. It's true that the principle has to be paid back....eventually. What really happens is that UAL will make the interest payments until the end of the term. THEN the principle is due. However, the principle will be refinanced (assuming UAL is still credit-worthy) and the cycle will repeat itself, with hopefully UAL (or whatever airline you want to use in this example) paying some or all of the principle in the interim. And before you jump on your high horse about how much that costs UAL, EVERY airline with debt is on the same schedule, or vastly similar. Which has been my point all along. UAL is heavily in debt (like its competitors) and pay high interest rates relative to their peers in other industries (like its competitors).




UAL had to put up excessive collateral in order to secure such financing. That's the B+ rating that you refer to. You can get anyone to lend you money if you put up excessive collateral and offer to pay high interest rates. What happened Tony Soprano didn't have the $3 billion?

Not sure about the "excessive collateral" part. Collateral, yes. "Excessive" collateral? Provide the link for that one with the specific amount we had to pay over the 3B in order to secure the loan? And even if we did, it probably won't matter much. If we default again, it will be gave over whether we put up 3B in assets or 30B in assets.




You are talking about having to make incredibly high revenue numbers in order to just pay back the loan, I am not even talking about making profits.


The "beauty" of airlines are that they are big time cash-flow machines. Over 17B in revenue is expected to flow through UAL in 2006 alone. So again, reference what I wrote above. Figure UAL will pay around 500M a year in interest expenses going forward from what I've been able to gather. Before you get all wrapped around the axle about 500M/year interest payments, keep in mind that an airline like AMR paid around 800M/year in intest payments for all of 2004, and probably won't be far off that mark for 2005 (when their 2005 annual report comes out).


Airlines don't all pay the same interest rates. It a variable dependent upon your bond rating. If your credit rating is 700+ and your neighbor just came out of Ch11, are you going to pay the same interest rate? Look at AMR's cash on hand.
And look at how much annual interest they're paying to keep it on hand! You can't look at one without looking at the other.




How many airports can SWA fly out of LUV? How long has it taken them to get that far? Jetblue taking over or even threating in EWR? Look at the dominance that AMR has in MIA and DFW, that CAL has in EWR and HOU. Where does UAL have any hub with similar dominance?

UAL doesn't have any fortress hubs. Again, you're arguing that if you don't have a fortress hub, you're done? Before you argued that higher fares will just lead to increased LCC competition. So, using your logic, won't these fortress hubs just attract LCC competition anyway and eventually just trash unit revenue? Which argument are you going to stick to? The one about fortress hubs being the key to success due to the higher unit revenues an airline can enjoy from such a hub or the one about higher fares attracting LCC competition which will ultimately hurt your airline and lead to lower fares? I don't care which point you want to defend- just pick one.


A "network unmatched by anyone else"? How is you Latin American presence, when compared to CAL or AMR?
Not as good. How is their Pacific presence compared to NWA and UAL? How are CAL's and AMR's Heathrow flights looking? You're picking bits and pieces and I'm talking a network as a whole. UAL is unmatched in that respect.


Your Northeast presence? New York, Boston, Florida, Texas some of the largest markets in the country, you have a minimal presence when compares to the competition and Ch11 has not improved this one bit.
Again, see above.


You now have to compete with CAl(low costs) and a CH11 Delta(lowering costs) to Europe.
You can't talk unit costs unless you talk unit revenue. Yet again, you're hung up on the fact that a competitor (might) have a lower cost and therefore he wins. Simply not true.


You are betting a lot on something major happening. What happens if nothing happens? Right now your biggest Pacific competition can now do the very same things in Ch11 that you claim help give you the advantage.


Actually, I'm not "betting" on anything. I try to make reasonable assumptions based on fact, historical assumptions, and try to develop a picture going forward. Using those guidelines, I'm not thrilled about UAL's future (or any legacy for that matter), however, its for vastly different reasons than you quote in your postings.
Who says anyone is going anywhere? You are obviously very pro UAL and want to keep the rose colored glasses on, so be it. I don't wish anyone at UAL ill will. My whole point to this is why come out of ch11 now after 37 months? You seem to feel that UAL is ready and I don't. You have faith in Tilton, I don't. So be it.


I never said I had faith in Tilton or anyone else for that matter. I'm neither pro-UAL or anti-UAL. I look at numbers, particulary SEC filed financial reports and the information that my union can legally provide me, and the info I get internally from the company and make assumptions that may or may not turn out to be true. It's just very annoying when guys like you make ridiculous statements (like 50bbl oil) or contradicting statements (see above) to bash UAL as if interest rates, high oil prices, etc., all happen in a vacuum and ONLY affect UAL.

 

[ualdriver]

GuppyWN,
I am not sure where you got this but it's the exact stuff that I was going round and round about with UALDriver.

The debt load, mortaged to the hilt, route structure and oil price.

It amazes me that guys can argue that Tilton has done a good job and that UAL is ready to leave CH11.

Oh yes, I forgot. No other airline has to deal with high debt. Just UAL. No other airline is "mortgaged to the hilt." Just UAL. No other airline has to deal with high oil prices. Just UAL. Route structure? Unmatched by its competitors. If I had to pick one airline with the best route structure in the industry, I'd choose UAL hands down.

 

[gkrangers]

Out of BK yet ?

 

[ualdriver]

Are you proud that your pension got dumped on the tax payers?

Actually, it got dumped on the PBGC. UAL, like other pension paying companies, were forced to pay an insurance premium to cover financial catastrophe- just like you pay a premium for your house or car. If the PBGC did not charge enough in premiums to cover the assets it insured, then it sounds like the taxpayers should have a beef with the PBGC.



Forbes places the value for UAL at over $10 billion. I would have much rather seen UAL liquidated and that $10 billion given to the PBGC to distribute to the UAL employees.

That's not how it would have happened. Whether the company liquidated or continued as an ongoing entity, everyone would have lost the vast majority of their pensions. The PBGC still would have received pennies on the dollar to distribute to its insured.


No instead we now have a trend that companies like IBM, Verizon and soon to be countless others will be following. The dumping of the American pension system.

If you're even implying IN THE SLIGHTEST that UAL dumping its pensions was the reason others are following- you're absolutely wrong. Instead of looking at the "micro" for the reason (I know you love to bash UAL but....)- take a look at the macro. Perhaps UAL's (or IBM's or Verizon or whoever) competitors NOT paying a pension is what lead to the downfall of defined benefit plans as we knew them? It's kind of hard to compete with a JetBlue or an Airtran who never paid their employees a defined benefit pension plan when we were paying one. They aren't cheap.

 

[Andy]

If the PBGC did not charge enough in premiums to cover the assets it insured, then it sounds like the taxpayers should have a beef with the PBGC.

The PBGC premiums are set by Congress. So if the government has to cover any PBGC shortfalls, the politicians need to look in the mirror.

 

[G4G5]

G4G5, since you've never had a pension plan, this appears to be hard for you to understand. We at United are extremely unhappy at the loss of our pensions. Many of us feel that we've let down our retirees by not doing more to keep the pensions. I don't know, maybe it's possible that we may have been able to pull it off if we had gone lower on pilot wages and made more work rule changes.

As for your assertion that the pensions were dumped on the taxpayers, you are once again factually challenged. The PBGC does not get any funds from the government.
Go to this link and read it: http://www.pbgc.gov/workers-retirees/about-pbgc/content/page13163.html

I have read the page you refer to. I understand what you are saying. Let me ask you this the PBGC is underfunded by $23.3 billion (2004 number, 2005 has not been posted but you know it's going to be more, no thanks to Tilton). Where do you think Congress will go when they have to bail out the PBGC? Does the savings and loan scandal ring a bell. I am guessing the Tax payer will have to bail out the PBGC. What's your guess?

http://www.pbgc.gov/workers-retirees/about-pbgc/content/page13170.html
Refers to two methods of pension default, Standard and Distress. With a Standard Termination UAL would have been forced to FULLY fund their employees pensions prior to the PBGC accepting the takeover.

The distress termination requires, "PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds"

No one wanted to see this happen, not the UAL, IBM, Verizon, USAir, yada yada employees. This stinks and it's part of the reason why Tilton gets under my skin. I lived through it, my old man had 24 years at Pan Am. Here's the kicker if UAL goes ch7 , then your current PBGC payouts get reduced even further, because you didn't reach retirement age (do a Google search under PAN AM PBGC pensions)

My point is with UAL assets valued by Forbes at over $10 billion, I feel that the courts should have made UAL use their assets to fully fund the pensions that their employees earned.

PS I have had pension plans, I spent 5 years at IBM, 3 years at AA, my current employeer also has a plan

 

[FlyUnited]

So did AA fire you for drinking on the job or for hitting on the Captain?

 

[G4G5]

So did AA fire you for drinking on the job or for hitting on the Captain?

Furloughed, glad to see you have a back up career if thinks don't go so well. You should be fine.

 

[FlyUnited]

Of course I'll be fine. Heck, you people had me unemployed years ago...yet here I am, still pluggin away.

 

[Andy]

The distress termination requires, "PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds"

My point is with UAL assets valued by Forbes at over $10 billion, I feel that the courts should have made UAL use their assets to fully fund the pensions that their employees earned.

PS I have had pension plans, I spent 5 years at IBM, 3 years at AA, my current employeer also has a plan

You highlighted using plan assets. You do understand that they are referring to the assets in the retirement plan, not company assets, right? You also know that it's the PBGC's responsibility to make sure that companies keep pension plans funded to minimum levels (do not confuse this with fully funded; that's entirely different).

Forbes valued UAL assets at over $10 Bil. Great. Is that before or after all debts are paid? Is that fully valued or at chap 7 liquidation prices?

Nice resume; sounds like you've spent a lot of time job hopping. Your current employer has a pension plan? When do you expect your employer to discontinue the plan?

 

[32LT10]

Furloughed, glad to see you have a back up career if thinks don't go so well. You should be fine.

Could not ahve happend to a nicer guy. How far down the list are you? Hope they call you back the day before you hit retirement and rub the salt a bit deeper in your festering wound.

As for your question about if UAL employees are proud about the PBGC? If it Pi$$es you off then I am darn proud. If UAL survives just to irritate you for the rest of your miserable life then I am proud.

Have you seen the premarket specualtion on the UAUA stock?

Enjoy your life in purgatory.

 

[G4G5]

Could not ahve happend to a nicer guy.

How far down the list are you? Hope they call you back the day before you hit retirement and rub the salt a bit deeper in your festering wound.

I am actually not that far down the list, somewhere in first 10% to get a call back but I will AHVE to check. No rush on the call back, the APA negotiated a sweet deal. I can turn it down until the last guy gets called and then still defer for another 3 years. Leaving me more then enough time to get a PENSION from my current employer. If you look at the rate of AA retirements all you will do is piss yourself off. Over 4,000 guys will retire before I will even have to think about a call back.
This may be a shock to you but I may not even go back. Some people do pull themselves up after a set back and even prosper. Do you even have a clue what a G4, G5 or Global Express captain can make. Let me throw some salt in your wounds, it's more then current UAL 777 747-400 pay rates international override and night differential. Their is life beyond your little world.

As for your question about if UAL employees are proud about the PBGC? If it Pi$$es you off then I am darn proud. If UAL survives just to irritate you for the rest of your miserable life then I am proud.

You lost you pension and you are proud of it, OK I bought the flame bait, their is no way you work for UAL.

Have you seen the premarket specualtion on the UAUA stock?
Tilton's strike price is $9 and in just six months he can sell his 20%. I hope it goes through the roof.

Enjoy your life in purgatory.

You have no idea how good a corporate pilots job can be, I pitty you and your 90+ hour months.

 

[AA717driver]

Wow! Good job, G4G5. You got 'em resorting to name calling. TC

 

[G4G5]

You highlighted using plan assets. You do understand that they are referring to the assets in the retirement plan, not company assets, right? You also know that it's the PBGC's responsibility to make sure that companies keep pension plans funded to minimum levels (do not confuse this with fully funded; that's entirely different).

Yes, I understand the pension system. How do you think the assets get into the pension plan? The company has to meet it's obligations (fully funded like IBM or partially funded like most airlines). All I am saying is it sure would have been nice if someone (the PBGC or the BK courts) actually made UAL meet their obligations, instead of tossing them onto the PBGC and eventually the general public.
This would have served a triple purpose. The first and foremost is the UAL employees would have got what they worked for. Secondly, it would have also sent a sign to the IBM's and Verizon's of the world, that the dumping of pensions onto the PBGC is not a way to improve your bottom line. Lastly, you can say what you want about who pays for the PBGC but companies can't continue to dump multi billions of financial burden onto the PBGC, without Congress running to the public for a bailout.

Forbes valued UAL assets at over $10 Bil. Great. Is that before or after all debts are paid? Is that fully valued or at chap 7 liquidation prices?

UAL plans to exit bankruptcy with $17 billion in debt so I assume that the $10 billion dollar number is before the debt is paid off. Fully valued? Well, we can wait until tomorrow to see what the new market capitalization of UAUA will be. The number is irrelevant, Tilton just mortgaged ALL of UAL's valuable assets for a $3 billion dollar loan. If he can't manage to keep at least $750 million in cash or he can't manage to pay back the loan in 6 years, then the banks just got all the assets for $3 billion. The point is, I would rather have seen the value of the assets given to the UAL employees then to JP Morgan Chase.

I look at the past, their has not been an original thought in this industry for quite sometime. Just look to Pan Am, TWA or Eastern to see what happens if you can't meet the banks terms. Yard sale.

My point is moot, the pensions were dumped on the PBGC, the employees got screwed. IBM, Verizon and countless others will dump their defined benefit plans onto the PBGC and in all likelihood you and I will wind up bailing out the PBGC sometime, in our lifetimes. Oh yeah for those who want to here it, I was wrong, I actually thought for once maybe the courts or the government would do the right thing for the average working slob.

Nice resume; sounds like you've spent a lot of time job hopping.
You are kidding right? Let me take a wild guess and say that you currently have a job (that's one), you are furloughed from UAL (that's two) and while we have all heard of the UAL 300 hour wonders, I am guessing you had at least one job prior to UAL (that's three for you and counting)

Your current employer has a pension plan? When do you expect your employer to discontinue the plan?
That's one of the thorns in my paw, with Tilton. Yes, I have a pension and no I don't expect the plan to be discontinued (at least that's what the CEO told me when I had him on my jump-seat). Like I have told you before I watched my father lose 25 years of service at Pan Am. It's pathetic to see and I despise any CEO for doing it. Weather it be Tilton, Sidenberg (Verizon) Palmisano (IBM) Seigal (USAir) or any of the others ,my feeling is that you show up to work, do a good job, what you were promised should be their when you retire. It doesn't matter what industry.

It bothers me when I see workers get screwed and guys like Tilton make millions on stock options all in the same year. It really bugs me when people tell me he did a good job in doing it and he deserves what he gets just because the market dictates it.

Just my 2 cents. I don't think he's done a good job and who is the one telling you that UAL has done all they could do in CH11? Tilton or Brace? They are still exiting CH11 with more debt then AMR.

 

[level370]

G4G5 - If your so happy with your corporate gig and not interested in going back to AMR why are you so obsessed with United? Seems like a waste of time to me.

 

[G4G5]

G4G5 - If your so happy with your corporate gig and not interested in going back to AMR why are you so obsessed with United? Seems like a waste of time to me.

My wife says the samething but I grew up around the airlines. I have worked for DAL/AMR and NWA.

Like most aviation families this means I still have some direct family members that need their legacies to survies. My obsession is with all airlines, just ask the DAL guys, just last week the General was not happy with something I said or the JetBlue guys still think I am only out to get them. This week it's the UAL guys next week I am on a flight to the Bahama's and I could care less. All I do is try to speak the truth, that tends to piss people off because airline folks are so loyal to their carrier. I actually enjoy it when someone like Andy puts up a good argument. I never claim to know it all, in fact I have learned a lot from folks on this board.

On days like this when I have a couple of hours to kill, its therapy .Mom is at work, my daughter is stuck inside because it's raining and my little guys is taking a nap. This helps keep me stay normal while Barney sings "the wheels on the bus"

 

[WatchYourElbows]

So why the heck are you watching Barney videos at midnight??? Dude, the baby is asleep, go to bed.

 

[G4G5]

OK.......http://www.dfw.com/mld/dfw/news/13748884.htm FYI, this isn't the first time SWA has gone along with fare increases and it won't be the last. Granted it's not the $5 each way that are implemented by the majors, but if you're point is that SWA has gone along with any, you're wrong. And they'll be "going along" with more in the future. Don't believe me? Just wait and see. Further, there are MANY markets that SWA doesn't fly to that UAL does, so assuming that just because SWA doesn't go along with a fare increase that they're not going through is simply wrong. Watch unit revenue, watch yields- They're going up for UAL at a rate faster than the rest of the industry. That's one "indicator" (of many) of the price increases that are going through.

Read your own link, SWA will not be raising their fares in Denver nor will they be raising their $299 ticket price. What does that tell you? What is SWA trying to do in Denver and who has the pricing power?

Secondly SWA is not trying for a $10 across the board fare increase, like you refereed to. All they are doing is raising fares by $1, $2 or $3 based on segment lengths, where they don't compete directly with Legacies. That's not going to save UAL or even put a dent in fuel prices.

Do a Google search. The last time SWA raised fares was August of 2005. Big deal.

Ok, so now you're saying that even if we get fare increases in place, we're screwed anyway? Are we going back to the argument that since we'll never match SWA's costs that we may as well fold up the tent? AMR/CAL/DAL/NWA too?
Their is room for the Legacies, AMR and CAL appear to be proving that. Do I think consolidation is inevitable, yes. Or are you saying that the US market can support 5 legacy carriers, 6 if you count USAir?


Think Billings-DEN will be a profitable route for JetBlue?
I just went to the UAL web site and looked up Billings-DEN. $295.10 for a round trip (one month from now) The flight out is on a Regional Jet. How much is UAL making on that seat? Not much. SWA's max fare is $299.00 If they can reach the break even point on a 737 then why not fly the market out of DEN? My guess is their break even load factor is less then yours.

There are many "thin" routes that UAL can fly that SWA or JetBlue or AirTran won't touch. Have you heard the uproar in your USA Today articles about how small to medium cities are losing air service or its being drastically reduced and costing them more? If fares are so high in these small to middle sized cities, why doesn't SWA jump in? Because they'll lose their a$$ with their point to point business model. If it's one spoke on a hub, however, some of the cities can make sense. The LCC’s won’t be everywhere.

Guess again. Do a google search on Airtran and Wichita ($2.5 million in subsidizes). What were Jetblues first routes? Rochester, Syracuse and Burlington, VT to JFK. Why because that was the deal Senator Schumer made with them do it and they are required to keep flying them. Their are plenty of markets that Airtran will enter for the right money or that Jetblue will enter with their ERJ190's. Unlike AMR, UAL has no regional feed to compete on these routes. If the LCC's aren't their the regionals, like Eagle, Mesa or Skywest will be.

In a post 9-11 world, the average distance that people are willing to drive is considerably. Do the research, people would rather drive hours vs going through the TSA hassles to catch a commuter flight.

The one with the lowest costs wins.
This ties to the Kia example, and you're wrong. If you define "win" as staying in business......wrong. There have been MANY carriers with average CASM's lower than UAL, DAL, NWA, etc., that have gone belly up. If this statement (that you keep repeating) was really true, then JetBlue will take over the U.S. market and everyone else is doomed to fail. If you really believe this, then there's not much point in debating anything from a business standpoint as we already know who the "winner" will be long term. Just dump all of your money in the airline, car producer, retailer, etc., with the lowest cost and you'll be a billionaire.

What is the only carrier to make money? How many billions have the legacies lost? The airline industry is a PRICE driven market. The lowest cost provider will win. This is post 9-11 airline economics. Companies like IBM don't let their people fly first class any more. Netjets has over 1,200 jets and climbing. That's not including Cessna shares, Flex jet and countless others. People don't like playing the TSA games and don't like the Greyhound bus service. In a post 9-11 economy the big domestic first class ticket purchasers are all flying corporate. The number 2 guy at my company wanted to go to Naples Fl. last week. The jet was not available, so he flew Jetblue to Fort Myers. When I asked him how it was, he answered, "fine" I can tolerate anything for two hours" Next, I asked him about first class. "not interested, domestically, it's not what it was and it's not worth paying just to get a bigger seat".

To stick with your analogy, Kia and Hundai are selling cars. They are taking market share from someone? Who? The auto industries version of the Legacies, Ford and GM. The BMW owners are flying corporate, FYI, my boss drives a BMW.

Definitely don't agree with that. Your anti-UAL bias is really showing here. You're implying that we're going to have all kinds of problems dealing with a Chapter 11 company on our Pacific routes, but NWA didn't have the same problems while we were in bankruptcy? Really? So if you're going to stick to that argument, who's going to have it worst when it's all said and done? The company that had to compete with an airline that was in Chapter 11 for over 3 years or the one that will have to deal with a Chapter 11 airline in bankruptcy for what most assuredly will be a shorter time? It's kind of irrelevant because it's a poor point to make, but it's your logic.

My point is two fold. First off you have done all the hard work, NWA only has to aim to achieve costs slightly lower then yours to win. Secondly, public perception has always been that UAL provided a Superior first class product to NWA. Now UAL's product is on par with NWA's and the big ticket flyer's are traveling on the Flag carriers, Singapore, Cathay, JAL, if they want a superior first class product. The IBM's of the world have cut back on first/business travel and will base their choices upon cost not service.

NWA just enters bankruptcy and you're going to predict that their costs are going to be SIGNIFICANTLY lower? Really? Well, let's see. The two largest costs that an airline has are fuel and labor. Just those two items account for approximately 40-45% of an airline's total costs. Is NWA buying some oil rigs and refineries for some discount fuel that only they will have access to? Do you think the NWA unions are going to go along with labor costs significantly less than what their competitors already have? With the "airline economy" improving day after day, do you think their creditors are going to be willing to give up MORE than UAL's when the industry was struggling with bird flu, rapidly increasing crude oil prices, Katrina, etc? Where are these "big" savings you imply going to come from? If they can't make it up with fuel and labor (and I don't think they will), it's going to have to come from somewhere else. Where? Aircraft maintenance? Aircraft rent? Landing fees and other rent? Depreciation and Amortization? Regional affiliate costs? Other costs? Where? Pick a number off their annual report or recent 10Q and let me know where they're going to seriously undercut everyone else, including UAL.

Labor, NWA has just shut down their maintenance. They planning on farming that out China. Are you telling me that UAL will be able to easily void the IAM's new contract, once outside ch11? So NWA maint will be non Union and you expect to have equal costs? What about the FA's you are stuck with the contract that they have in place. NWA, plans on having foreign FA bases with Chinese nationals. Younger and cheaper for their pacific routes. Are you trying to tell me that your senior mama's can compete with that? How is Tilton going to match that, outside ch11? I am sure the FA or the IAM will just offer to let him have what ever he wants. All the NWA pilots have to do is match your wages and NWA is way ahead.

NWA operates a Tokyo A320 base to keep costs lower. They have dedicated cargo division. The lease rates on their older fleet will be fractions of UAL's. What leverage does a 747-200 owner have when -400's are sitting in the desert? NWA has substantial A330 and 787 aircraft on order, they just ordered a few 747-400's last week. Current NWA cost numbers reflect their ancient DC10 and 747-200 fleet. How many of those will still be around in 37 + months. What does UAL have on order? Still felling so superior?

 

[32LT10]

My wife says the samething but I grew up around the airlines. I have worked for DAL/AMR and NWA.

All I do is try to speak the truth, that tends to piss people off because airline folks are so loyal to their carrier. I actually enjoy it when someone like Andy puts up a good argument. I never claim to know it all, in fact I have learned a lot from folks on this board.

One large GIANT BS flag on you G4. You speak YOUR OPINION. Everyone has one and you have an opinon about the future of UAL versus what will happen. You are negative on UAL. Yet you seem to have no issues with AA. In my opinon that is very ironic.

As for you claim in not thinking you know it all. Just take a look at your obsessive long winded and self important post. I hope you like you G job. You probably find a good crowd to bash the airlines when you pop into the FBO. Most of the times I have been around that group they tend to spend all their time talking about how bad the airlines are. Sort of like the AAA b-ball team talking down the majors leaguers. Many are just frustrated wannabe's and you must fit in real nice. Funny thing is I have never sat in a crew lounge and had a fixated or drawn out discussion on the future/validity and any other type of conversation about the GA crowd. Glad we have you attention. When we achieve our goals I hope we also attract your attention and you angst.

Now make sure the coffee is hot and the boss has his papers. Perhaps you should be Jeeves instead G.

 

[G4G5]

Well, you're going to come back from many trips and still not "get" lots of things like the un-importance of $50bbl oil in a pre-bankruptcy exit plan and you'll still think that the low cost producer always wins along with many other gems you've come up with. You also made comments about UAL's future "bond ratings" and I showed you were the interest rate we're paying just went down in contradiction to your beliefs.

You didn't show me a thing? You couldn't even figure out what your bond rating was. Take a look at the links below, the second one leads you to the UAL 8K that shows the interest rates. Your current Bond rating is nothing spectacular, it's Stable, not the "best possible" as you suggested. How far is a just "Stable" rating from a bad rating, not far at all.


The bond ratings can be found everywhere. Millions of links on Google. If I got the actually rating wrong.....oopps! However, if we're talking interest rates and what our competitors are paying, I think you'll see that our annual interest expenses will be competitive with or less than that of our peers. That's my point.
You are wrong and that's my point. Take a look at the assets that UAL had to put up as collateral:
http://app.quotemedia.com/quotetools/showFiling.go?name=UAL%20CORP%20/DE/:%208-K,%20Sub-Doc%202,%20Page%2037&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frepo%3Dtenk%26ipage%3D3895033%26doc%3D2%26num%3D37
UAL had to put up $8.75 billion in collateral just to borrow $3 billion in cash. What happened Tony Soprano wanted $9 billion in collateral? You keep saying that other airlines are paying the same thing. No they are not, AMR and CAL did not have to put those kind of numbers, just to get access to cash.

The interest rate is another scam. You keep telling me it's the same as other are paying.
http://app.quotemedia.com/quotetools/showFiling.go?name=UAL%20CORP%20/DE/:%208-K,%20Sub-Doc%202,%20Page%205&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frepo%3Dtenk%26ipage%3D3895033%26doc%3D2%26num%3D5
Their is actually two loans averaging around 9% the rates stink. Not only that but the agreed term is 6 years. It also requires $750 mill in cash on hand at all times, so out of the $3 bill, $2.25 bill is actually what is available. Want to bet AMR got a better deal? The payback is on top of the approx $17 billion in debt UAL still has.

The loan is based upon a few important things that you fail to mention. According to UAL's latest 10Q SEC filing. The exit financing requires a minimum of $750 million unrestricted cash or you default. So $750 will be sitting in a bank and not accessible. Secondly the $3+ billion will need to be repaid in 6 years! That's not including the interest payment of approx 9%.

Actually, not true. You're thinking "house or car payment" repayment schedule. It's true that the principle has to be paid back....eventually. What really happens is that UAL will make the interest payments until the end of the term. THEN the principle is due. However, the principle will be refinanced (assuming UAL is still credit-worthy) and the cycle will repeat itself, with hopefully UAL (or whatever airline you want to use in this example) paying some or all of the principle in the interim. And before you jump on your high horse about how much that costs UAL, EVERY airline with debt is on the same schedule, or vastly similar. Which has been my point all along. UAL is heavily in debt (like its competitors) and pay high interest rates relative to their peers in other industries (like its competitors).

I agree with everything you have said except that I still believe that AMR and CAL have less debt and better terms.

Not sure about the "excessive collateral" part. Collateral, yes. "Excessive" collateral? Provide the link for that one with the specific amount we had to pay over the 3B in order to secure the loan? And even if we did, it probably won't matter much. If we default again, it will be gave over whether we put up 3B in assets or 30B in assets.

See above link.

UAL doesn't have any fortress hubs. Again, you're arguing that if you don't have a fortress hub, you're done? Before you argued that higher fares will just lead to increased LCC competition. So, using your logic, won't these fortress hubs just attract LCC competition anyway and eventually just trash unit revenue?
No because fortress hubs have higher costs and greater delays then what most LCC's are willing to put up with.

Which argument are you going to stick to? The one about fortress hubs being the key to success due to the higher unit revenues an airline can enjoy from such a hub or the one about higher fares attracting LCC competition which will ultimately hurt your airline and lead to lower fares? I don't care which point you want to defend- just pick one.

Just pick one, you don't get it. According to your logic it's either one or the other and that the two can never co-exist. How do you explain ATL? The domestic market is dead for the legacies. You need a International fortress hub to survive.

You can't talk unit costs unless you talk unit revenue. Yet again, you're hung up on the fact that a competitor (might) have a lower cost and therefore he wins. Simply not true.
So are you telling me that you make more money on a ticket to Europe then CAL? I would venture to say that they have higher revenues. While DAL's costs are higher they have a significantly larger European network, which is more then capable exceeding UAL revenues (per seat). The thing with revenue is, that most international ticket prices are with in a few dollars of each other. No airline has a tremendous amount of pricing power in the European market. That's why costs are always more important. Their is no pricing power. If UAL charges to much for LHR then AA, BA or VA will be their to keep them in check.

 

[32LT10]

I thought they locked up the unabomber? He now post in Blue type and says he flies. Sure Ted, sure.

Do the knots in your brow ever subside?

 

[G4G5]

One large GIANT BS flag on you G4. You speak YOUR OPINION. Everyone has one and you have an opinon about the future of UAL versus what will happen. You are negative on UAL. Yet you seem to have no issues with AA. In my opinon that is very ironic.

Feel free to ask me for a reference, and I will provide you with a link. I have no problem doing that to support my OPINION

As for you claim in not thinking you know it all. Just take a look at your obsessive long winded and self important post. I hope you like you G job. You probably find a good crowd to bash the airlines when you pop into the FBO. Most of the times I have been around that group they tend to spend all their time talking about how bad the airlines are. Sort of like the AAA b-ball team talking down the majors leaguers.
So you think UAL is the major leagues compared to a good corporate job at a place like GE, Pfizer, Coke, IBM, Ford. These places are AAA b-ball?

Many are just frustrated wannabe's and you must fit in real nice. Funny thing is I have never sat in a crew lounge and had a fixated or drawn out discussion on the future/validity and any other type of conversation about the GA crowd. Glad we have you attention. When we achieve our goals I hope we also attract your attention and you angst.

Now make sure the coffee is hot and the boss has his papers.
This shows how little you know about the corporate world. The super hot FA handles the paper and coffee and makes sure I get the jumbo shrimp cocktail.

Perhaps you should be Jeeves instead G.
I have no problem with being Jeeves. How do you like being Ralph Cramden driving the bus?

PS don't waste your time you just got added to my ignore list.

 

[AAflyer]

Make that two people who just added you to the ignore list.

You are by far one of the most unprofessional individuals I have had the opportunity to communicate with. Good Luck,

AA

 

[32LT10]

So you think UAL is the major leagues compared to a good corporate job at a place like GE, Pfizer, Coke, IBM, Ford. These places are AAA b-ball?

The companies themselves are not the same as the frustrated airman that fly for them. Do you read Pro Pilot? Take a look at the oped in the front of this months issue. The guy flying the 737 and the fuel crisis is an interesting read. He is concerned about gas prices and the future of his job. You seem to think the airlines and specifically UAL is the only company that pays for fuel. The rest of the world of flying uses champagne in your views.

By the way what about the corporate pilots for Enron, MCI? You mention Ford, interesting. The picture is not so great at the automakers these days. Everyone knows that when times get tight the flight department is the first thing that gets whacked. Also, how much of a profit has Exec jet produced?

I have flown corporate so you don't have to tell me what it is like. Been there done that got the catering trays in my cupboard.

 

[MACH-TUCK]

flyunited.

Thanks for the kind words. It is a shame that the others here do not understand the lengths we have gone to emerge from BK. Two years of waiting for ATSB loans that were rejected in no small part due to lobbying by the other carriers. UA has overcome the odds to find itself on the threshold of BK exit. This does not mean the work is over and we can all celebrate this milestone. What it does mean is that we have survived the near death experience and that we are now put to the test to perform. Our route structure and business plan are different than the others for the most part. (see WSJ article from last Firday). UA is keeping amenities, keeping the economy plus and using RJ's with better configurations than the competition. (as a UA pilot I am well aware of the issues involving RJ's but they are the better evil than the competitions airplanes)

To those that wished us ill I suspect this is not the news you wanted to hear. To those that wanted to carve us up. Well put the knives away for now. What the future holds nobody knows. However, during the stay in BK we heard many times from the DL, NW and SW pilots about how we were going to fail and their respective carriers were to take over the remains. As Lee Corso would say, "Not so fast my friend!" With the exception of SWA the future of the other carriers does not look so rosey. Tilton said recently that when we entered BK he had a cash offer for the Pacific routes from one of the carriers currently in BK that is based in GA. His wisdom of knowing what is core to the company helped steer us out of BK and helped put the others in.

Thats really good news..Hopefully United can keep it up and be on top again soon.....

Hey 32LT10, do you know how many United pilots are on the street, just curious? My friend is one of them, and he claims he will never be called back.

 

[32LT10]

We had 2173 on furlough to begin with. They called back around 150 last year and are probably going to do a little over 300 this year. The most senior furlough I think was a late 98 hire. So far the bypass rate has quite high and they are into the class of 2000 I believe for the guys that are getting recalled. I believe the way the system works is they run down the list and the pilot can bypass or comeback. If they choose to bypass they move to the next person. Once at the bottom of the list they then start at the bottom and move up. At this point the furloughed pilot has to decide to comeback or not as there are no more chances. I have read from some fairly reliable sources that based they may be through the entire list this year and possibly hire again off the street in 07. Of course that is along way off and much can happen between now and then. One thing is that nothing is set in stone, good or bad, no matter how much some on here think they know what is going to happen tommorow and in the next few years. The world and this industry is extremely fluid.

I hope your friend gets to come back soon if they wish to and look forward to having them back. It still is a great place to fly and the moral and future are not nearly as bleak as the outsiders like to portray it to be.

 

[Andy]

Thats really good news..Hopefully United can keep it up and be on top again soon.....

Hey 32LT10, do you know how many United pilots are on the street, just curious? My friend is one of them, and he claims he will never be called back.

From another thread; this looks very close. He's probably crunching the numbers weekly:

They are getting close to halfway through the recall list. So far 498 have accepted recall out of 2172. 431 have bypassed and could still return any time openings are available. 100 more recalls are planned this year. When they get to the bottom of the list, they will start back up and anyone who has bypassed recall will get one last chance to return.

Rumor on recalls this year is all the way up to 600. That would likely clean out the seniority list on the first pass; there's a second pass going reverse order for bypassers.
With the early May class, 200 will have been recalled in 2006. My guess is that it'll be 300 total, but I'm trying to remain pessimistic.

Your friend may want to visit this board, the UAL ALPA board, halfwingers board, or skynetlite for a better picture. Things are starting to move fairly quickly.

 

[level370]

The movement slowed down for the last two classes (Apr 17 & May 1), as by-passers decided to take recalls due to the 550 million note cutoff. Out of the last 45 recallees, 33 were by-passers.