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United to shrink 9%

LR45JI

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USA Today:
"Dramatic shifts in the airline industry spread Tuesday as the nation's two largest airlines - American and United - announced they would shrink capacity by 9% this fall....."


I've heard all about AA (I live in Dallas) but haven't heard anything about UAL - did I miss something???
 

Lindy

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It was the lead story on the local am news this morning. Apparently UAL is to shrink it's workforce by 9%. I don't have any details.
 

Boz

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United had planed to reduce the summer flying schedule after labor day but have not come out and openly stated the decrease planned. The 9% is in line with AA and is to take effect in Nov. So far UAL has not stated if they plan on further furloughs.

The way the whole ERP is playing out is almost stalled to some degree. UAL will never have access to the ATSB loans unless all unions participate in concessions. I for one am convinced that this is not a scare tactic but a major crossroads in our company. If UAL goes into BK protection all unions stand to lose a great deal more than they do by coming up with some plan today. But like all things at UAL it will be dragged out, and take forever to come to the revelation that the company is in serious financial trouble. I have read and heard all the arguments relating to UAL having 2.8 Billion in cash and other assets. But my conclusion is that UAL is still not turning any profitable numbers and is still losing money as it has been for nearly a year. You can only burn through so much cash before it runs out and you are out of options.

It is sad to see a great company coming apart because of such bad management and major distrust amongst all employee groups. It is so clear to me that change is the key word in UAL 's future. By that I mean changes from an entire new CEO, and management team to ALL Unions coming up with plans to help get things progressing toward some kind of recovery. United has got to realize that the business travelers are not coming back for sometime, and that low cost carriers are planning on enticing more passengers that have been disrupted by the majors at some point in the last few years.

It seems that a couple of months ago, I was hoping that the economy would have started its recovery, and then we get hit by all the Enron, WorldCom BS. The summer flying is coming to an end in a few weeks and we can already see that the losses by most majors is going to be another record setting year. So, hopefully UAL will be able to get a new management team selected, the unions will realize that unless they don't comprimise with UAL they are playing a high stakes game of poker.


Here is a exert from a Chicago paper today:

Pilots spokesman Steve Derebey said Wednesday pilots are frustrated that other unions are not cooperating, as they all face huge losses in their ESOP shares if bankruptcy ensues.

``We just wish that the other employee groups would get on board as we have and face reality,'' Derebey said. ``It's time for the others to wake up and smell the coffee. Pilots have led this company out of worse scenarios than we're in now.''

Frank Larkin, a spokesman for the International Association of Machinists, said that while United needs the loan guarantees now more than ever, the union's position on wage concessions has not changed. Bankruptcy, he said, ``certainly isn't a first choice for employees and stockholders.''

In bankruptcy filings, common stock holdings are generally rendered worthless. The preferred shares in the ESOP holdings are also not likely to have much if any value, analysts said, coming far down the list of which creditors get paid first.

Jeff Zack, a spokesman for the Association of Flight Attendants, said United has never engaged his union in serious discussions, unlike its talks with the pilots.

``They refuse to acknowledge our ground rules,'' he said.


What really gets me is that all Unions are wise enough to see something is wrong, but yet the feet continue to be dragged on in this case. Why are they not taking action!!! We all know the time for action could not come any sooner at UAL and other airlines.

Hopefully, people come to there senses and stop playing this risky game of chicken.

Keeping the faith that we will survive this chapter, and not be heading to the final chapter for many years.
 

Boz

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UAL Corporation Intensifies Recovery Effort


CHICAGO, Aug. 14 /PRNewswire-FirstCall/ -- Responding to changes in the airline industry and feedback on its loan guarantee application with the Air Transportation Stabilization Board (ATSB), UAL Corporation (NYSE: UAL - News), whose principal operating company is United Airlines, announced today it is changing its business plan to build a stronger, more cost-competitive airline. As a result, the company is updating its application with the ATSB to include significantly broader, deeper and longer-term cost savings.

"The world has changed," said Jack Creighton, chairman and chief executive officer. "Revenue isn't coming back the way the industry expected. Demand isn't returning, fares remain low, and the industry is grappling with how to respond. At United, we have determined that we must make improvements in our business plan to ensure we get the cost savings we need to compete in an industry that has fundamentally changed. And our conclusions are consistent with the feedback we're getting from Washington."

The enhanced plan will supplement United's work over the past 11 months to cut expenses, boost revenue and retool its operation. Since Sept. 11, United has:

Reduced its schedule, furloughed employees, retired fleets and made dramatic cuts in capital spending.
Eliminated base commissions.
Formulated a plan to increase network efficiency, reduce the cost of sales, better manage air traffic, focus on under-performance of certain distribution channels and customer segments; realign premium customer products; and improve processes and productivity.
Announced a code-share agreement with US Airways that is expected to generate more than $200 million in annual revenue.
"Despite those efforts, we have to do more," Creighton said. "We are facing debt payments of $875 million in the fourth quarter and we have insufficient access to the public capital markets to repay them. To avoid this liquidity crisis, Jake Brace, our executive vice president and chief financial officer, has been asked to lead the company's intensified recovery effort.

"We have given ourselves a very short timeframe -- 30 days -- to conclude our discussions with all stakeholders," Creighton said. "As a result, the changes we need to make are urgent, significant and immediate. Simultaneously, we are preparing for the potential of a Chapter 11 bankruptcy filing this fall, due to our fourth quarter debt payments. Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline."

As part of these intensified efforts, the company in the coming days will present new cost-saving proposals to employee representatives and other stakeholders.

"Whatever course we take, we have one message for customers: our recovery efforts are about the long-term health of United Airlines," Creighton said. "We will do whatever it takes to continue to meet the needs of our customers for many years to come."

Safe Harbor Statement: Some information in this press release is forward- looking and involves risks and uncertainties that could result in actual results differing materially from expected results. Forward-looking statements represent the company's expectations and beliefs concerning future events, based on information available to the company as of the date of this filing. Some factors that could significantly impact net earnings, revenues, expenses, unit costs and capacity include, without limitation, the economy and the demand for air travel; the ability to reduce operating costs and conserve financial resources, taking into account increased costs incurred as a consequence of the September 11 terrorist attacks to the company; the higher costs associated with new airline security directives and any other increased regulation of air carriers; the significantly higher costs of aircraft insurance coverage for future claims caused by acts of war, terrorism, sabotage, hijacking and other similar perils, and the extent to which such insurance will continue to be available; the ability to raise and the cost of financing in light of the September 11 events and the possibility of any further credit downgrades of the company; the cost of crude oil and jet fuel; the airline pricing environment; industry capacity decisions; competitors' route decisions; the satisfaction of the conditions to the pilots or management and salaried employees' participation in the company's financial recovery plan; the success of the company's cost-reduction efforts; the success of the company's implementation of its financial recovery plan; the outcome of the ATSB loan guarantee process; results of union contract negotiations and cost-reduction discussions and their impact on labor costs and operations; willingness of customers to travel; the mix of business and leisure fare travel; actions of the U.S., foreign and local governments; the stability of the U.S. economy; any additional terrorist activity and/or war; inflation; foreign currency exchange rate fluctuations; the economic environment of the airline industry and the economic environment in general.

Investors should not place undue reliance on the forward-looking information contained this press release, which speaks only as of the date of this filing. United disclaims any intent or obligation to update or alter any of the forward-looking statements whether in response to new information, unforeseen events, changed circumstances or otherwise.
 

HA25

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I still can't believe the IAM and AFA still have their heads in the sand.
 

NYRANGERS

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V70T5 said:
I still can't believe the IAM and AFA still have their heads in the sand.

I think they just want to see the facts before the blindly give in to concessions.
 

Mach92

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It was the pilots that wanted the ESOP in 1994. It was the pilots who DID NOT want John Edwardson to succed Gerald Greenwald. As we all know the Pilots run UAL. So who did they want? The "career" United man Jim Goodwin. Well we all know how he did running the company. I find it quite ironic that ALPA is now crying for the other unions to come on board. If they choose not to then so be it. If the pilot group is so hell bent on giving up concessions how about more then 10% ?? Do you really need to make 200K as an F/O?? For ALPA to publicly say "its time to wake up and smell the coffee" is rediculous! The pilots wanted this ESOP, The pilots wanted Jim Goodwin and The pilots wanted that big fat contract.
 

NYRANGERS

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Mach92 said:
It was the pilots that wanted the ESOP in 1994. It was the pilots who DID NOT want John Edwardson to succed Gerald Greenwald. As we all know the Pilots run UAL. So who did they want? The "career" United man Jim Goodwin. Well we all know how he did running the company. I find it quite ironic that ALPA is now crying for the other unions to come on board. If they choose not to then so be it. If the pilot group is so hell bent on giving up concessions how about more then 10% ?? Do you really need to make 200K as an F/O?? For ALPA to publicly say "its time to wake up and smell the coffee" is rediculous! The pilots wanted this ESOP, The pilots wanted Jim Goodwin and The pilots wanted that big fat contract.

Pretty original idea.....Blame the pilots for all company problems.
 

HA25

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NYRANGERS,

I would argue that the facts are there, just read the press releases about UAL on your yahoo finance page. The company is facing a $900 debt payment in one month and the govt will not give them a dime of backing unless they get money from all of their unions, so far it's just the pilots who gave, albiet a lousy 10%, I think more is likely to be needed in this stage of the game.

Mach92,

You chose a Delta MD11 for your picture, so I will assume that you want to work for them, do you think that UAL pay's more than DAL? The answer is NO. Especially when you factor in DAL's work rules. However, the answer is not overpaid pilots, this is just a short term bandaid to get the company back in the game, the answer is as AMR is doing, a re-think of the whole model, and doing more of what SWA is doing. This, combined with SWA and JB wages rising to close the gap, will make the "majors" competitive.
 

Mach92

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Im not blaming the pilots simply stating facts. I worked at UAL from 1986-1998 and ALPA has always called the shots. Dont call foul now just because 2 other unions dont want to play ball. Remember the summer of hell?? Enough said
 

banned username 2

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I had read somewhere that the government will require much greater concessions than what is on the table (10% cut in pilot pay)... They said it is likely they would have to go back to what the pilot wages were before their latest contract (37% cut) in order for the government to consider that appropriate concessions for the loan backing.

If I can find the article again I will post a link...
 

Boz

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What concerns me the most after hearing the 30 day announcement is UAL's union are very, very slow in there decisoin making process. The fact that we have employees that feel the company is just bluffing just blows my mind. I am not saying this because of all the media attention UAL has recieved over the last few weeks.

I know the ERP roadshows have painted the typical doom and gloom picture since the inception of the plan. I know I will get flammed by UAL pilots that thing the ERP is BS. Yes, there are sections of it that give me heartburn, but it has taken so long to develop and get the info out there that we are simply running out of time, not to mention this thing is all over without IAM and AFA coming onboard.

It does not take an economics major to figure it out. If you are burning through close to million dollars a day, it is just a matter of time before you are going to go bankrupt. So I think it is about time the wake up bell sounded to the other union came up with a plan that being bullheaded. In addition, I would not be surprised if ALPA come up with ERP2 and has more givebacks attached to it.

The industry has changed a great deal in the last 11 months and I am willing to bet that it will not return to the 90's era anytime soon, if ever. Low cost carriers are emerging and have made there presence known. Now I am not saying that UAL needs to become like a SWA. But obviously they are doing something right by staying out of the red, and we need to rethink our entire operation. Possibly entering back into the freight market, converting some jets into a low cost style operation. We had a few pilots come up with a great plan which was put aside by our MEC becasue of political garbage. Our MEC has disappointed me this last few weeks, I just hope they can get it together and fast. I know they are never going to satisfy everyone, but they really need to focus on stabilizing things and advancing there progress which has not occured.

Well, all the same today's news is not all that alarming as was US Airways declaring BK. It was more a matter of when than if, and Wall Street has predicted the same of United.

It is going to be a very interesting 30 days!
 

HA25

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Boz,

UAL's biggest problem isn't the 1 million per day they are loosing, as AMR is loosing much more, it's the $900 M payment due in 31 or so days. They have to keep some money in the bank if they are to file BK in order to operate the company, so the $900 M, payment will be their theoretical deadline, as they will need a minimum of $1 billion to operate under Ch11 or else they have to stop operations, which is not what they plan to do.

I can only hope the IAM and AFA will jump on board with ALPA and get that $1.8 billion gurantee soon. Last I saw the stock was selling for just over $2.00/share. There are very few companies that achieve that much market flight and avoid BK's as their credit ratings are nil, this is a unque case where the government is willing to give them a 1.8B gurantee, but the children at the AFA and IAM are just not willing to play.
 

Boz

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V70T5,

Hey brother I agree with you, I guess I emphasized the diaily cash burn more than the overall debt repayment due in the coming months. Either way you slice it the fact remains that UAL unions have to come together with a plan in a very short time. The clock is ticking and it is a matter of time that BK is the only option. The way I see it, either all the unions realize they have control over what they give up or in 30 days UAL goes to BK judge and he/she decides our fate. To me the solution is easy, I want control over what I give up! 10% was the start but I can see the BK judge going much deeper perhaps 25 - 30% and that goes for all unions.

Another way I see it is that company would rather go the BK route and break all union contracts. This way they won't have to pay the IAM there big retro check, nor the big raises that have taken years to win. Ultimaltely, UAL would break us down in BK court and have the opportunity to rebuild and reorganize the company. Again, only speculation!!! But at this point I hope the new CEO and his team are on the way!
 

HA25

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BK would do just that, break all contracts (including the AFA/IAM ones) and make all of the ERP a moot point. The employees will get exactly what the company/BK judge gives them.
 

Cattlepanel

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This will always and forever be a marriage on the rocks. Us Vs. Them. Hopefully we don't live our personal lives like this. Whether it's this side is slowing and not giving or what ever, mgtmt. and the workforce will never coexist happily. Both sides are to fault. The worker will always feel mgmt. is reeping more of the financial benefits than us. Perhaps they are. I guess in the percentage of us vs. them, we certainly out number them by a tremendous amount.
The best we all can hope for is fairness. Like our personal checkbooks, we only have so much to operate with and after that, it's just that, no more..Something has to give. Being a grossly grossly underpaid line pilot, where quality of life is not suffering at my company, I tend to be more open about frustration than before. These companies are in trouble and have been for quite awhile. I laugh at AirInc., that I subscribed to talking about the pilot shortage. As pilots, we unfortunately live and die by the economy. How can the "bean counters" foresee or at least anticipate that the "good" ride is nearing to an end and time to bring the cows back to the barn?
The other side is, I feel that us as the workers need to be humble and accept that hard times are approaching or upon us and make adjustments. To my/our dislike, companies have an amazing ability to operate with little money in a checkbook unlike all of us. On that note I look long term and think we do need to give as long as both sides are giving. The CEO does not recieve a bonus, or no dividends are paid for the year etc. We are so fortunate to be pilots. We are given an ability and the health to do something we at one time loved. I remind myself everyday I preflight where I came from and love what I do and like all of us, want a career that will yield us a comfortable lifestyle and provide for our families. Both sides need to give and take.
Everyone be safe and love what you do.
 

Tweetybird

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Hey folks,

I certainly agree that it's insane for any loyal employee not to be willing to immediately do anything possible to keep their livelyhood ALIVE!

(loyal = to family, company, career, contemporaries, etc...you decide)

I also hate the finger pointing, but the whole team better take part ASAP.

I kinda feel like we're on the big boat ride in the North Atlantic on that cool clear night. Some saw it coming, some were oblivious, some took action, and some did nothing. Regardless of each reaction, they were ALL in it together.

One thing's for sure. During all the chaos, SOMEBODY should have closed all the da^^n hatches.

"Iceberg, Right Ahead!"
 

Boz

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"I remind myself everyday I preflight where I came from and love what I do and like all of us, want a career that will yield us a comfortable lifestyle and provide for our families. "

Yeah man, I hear yeah! That is like all die hard pilots, we got into this business because we love the sheer love of flying, it dynamic and exciting enviornment. It bring us great pleasure and excitement. I still get a kick out of the fact that they actually pay us to do this work.

Now, that is where the rub lies! I feel most of us started of very simple in our love of flight, but you know as well as I do, that the greed has set in deep at many companies, and UAL has proved that. Yeah, I hope these problems get resloved but not until we get all parties to play well together.

I often think about all the bridges I have crossed, hoops I have jumped through to get get to where I am, and there still is a great deal of aprehension as to what the future has in store for us. I am fortunate to live life without regretting a day, but I can tell you that this latest chapter is definately testing me.
 

Rob Beeks

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SWA management rhetoric

Interested in how SWA management is using the current news at US Airways, United, American, et al? This is the most recent newsletter from the VP Flight Ops. In other words, this is what the CEO, Mr. Parker, had the VP Flight Ops put out to the pilots a week before the voting deadline on the 2-year extension of our 10-year contract. I'll let you decide how to interpret their intentions.

"INDUSTRY NEWS
US Airways has filed for Chapter 11 bankruptcy protection. It is going to give 110 planes back to the companies from which they were purchased. Employees face layoffs and wage concessions.

In the first half of 2002, United Airlines (UAL) lost an average of $4,700,000 per day. Many analysts predict it will also file under Chapter 11 bankruptcy if not given $1.8 billion in government loan guarantees.

In the first half of 2002, American Airlines (AMR) lost an average of $5,950,000 per day. It announced that it was retiring 83 aging aircraft, deferring deliveries of 35 new ones due this year, and canceling as many of its other orders as it can. It is also cutting 7,000 jobs by March 2003, with 40% of those being from the Pilot and Flight Attendant ranks.

In the first half of 2002, Delta Airlines (DAL) lost an average of $3,200,000 per day.

In the first half of 2002, Southwest Airlines averaged a PROFIT of $700,000 per day.

While Southwest faces an uncertain and bumpy road ahead, we can all be thankful for a sound business plan and cost control measures that insure our job security. In the coming days, as you make decisions about issues concerning Southwest and yourself, take a moment to reflect on the current state of the airline industry. Reflect on why we are in this fortuitous position now and how we avoid joining the ranks of unprofitable airlines in the days to come. Consider the future value of your Profit Sharing Contributions, your 401K, and most importantly, your job security. The key is long term thinking - nothing worthwhile happens overnight."
 
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