United to shrink 9%

[LR45JI]

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]

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]

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]

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]

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

 

[NYRANGERS]

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]

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]

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]

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]

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