What does UAL have to do to Survive?

[JetPilot500]

Ok, fine. Since many people on this board seem to think that employee concessions are not necessary at UAL, what is the solution? Since I don't work at UAL, I don't have a first hand perspective of things, so I would love to hear some ideas from others.


What do you think needs to happen for UAL to survive?


Thanks,
JetPilot500

 

[AAflyer]

Jetpilot,

I do not think everyone is advocating not taking concessions. If a company is bleeding it will help temporarily, but the model needs to change, like I said in another post, the boys at UAL could fly for free and United would still bleed money, so how much do you give. If you are to give, wouldn't you like to see a business plan, a new foundation to build on, not just cut labor costs and hope the economy rebounds.

Now to answer your question, that is the 2 billion dollar question. I think if one of us could answer it, we would end up being very rich. Some ideas;

I think we should get away from banks of flight on a hub and spoke system

Focus on some point to point flying, with mainline jets, or develop the market with RJs.

I think the fare system needs to be changed to suit our current economic weather. The need for a first class or premium service on certain flights may not even be worthwhile.

Fleet simplification, for maintenance and crew training as well as scheduling. The majors can not fly one type aircraft, but they don't need to fly 8 either.

Just a few thoughts.

AAflyer

 

[JetPilot500]

Now to answer your question, that is the 2 billion dollar question. I think if one of us could answer it, we would end up being very rich.

AAflyer,

Good Post. I don't think there is any one answer to solving the airline crisis. But a dollar here, or a million there will add up. I think employee concessions will need to be a part of that, in addition to some of your suggestions.

I too believe that fleet simplification is the KEY to any successful air transportation operation (135 and 121). A fleet of CRJ, B737, B757/767 and B777 could really streamline an airline and cover all the bases with strech and shrink versions of each. (I suppose you could substitute Airbus in place of Boeing if you wanted)

Just curious, how do you think 'getting rid of banks of flights on a hub and spoke system' will help? I saw that AA is doing this, and I am curious about the benefits.

JetPilot500

 

[Frank Bama]

Management wants $780 million from the pilot group, and $100 million from the flight attendants. Although there are 3 times as many FA's. I know the wages overall are dramitically different, but it still made me think.

 

[Chas]

wondering

The difference is that the F/A's were sold out by the crappy AFA and are stuck with a 10 year contract with very little if any wage increases . Proportionately making less and getting less raises than the others .
The mechanics were high on crack threatening to strike just 2 months ago . Putting a "gun to the head" of UAL Mgt
The Dumb thing is that all these employee stock holders are losing $ in there stocks so giving up some salary may reward them through the back door by hopefully raising the stock value . I currently own $5,000 in UAL stock which may wind up worthless . All purchased through my rokerage account ( I am not a UAL employee)


As far as fleet Simplication UAL was pressured to buy Air bus in order to get landing slots in France ( This is what I was told ) . Chas

 

[altimaklr]

United pilots need to wake up and realize their (the companies) performance is not industry leading and they don't deserve industry leading compensation. Pilot pay can make a huge difference on the bottom line, at least short term, even if pilots don't like to admit it. In a pilot group with 10,000 pilots each flying 840 hours a year, each dollar of pay/yr represents $8.4 million dollars of cost.

United needs to get it's CASM down in other ways too. Smarter schedule planning including longer layovers and less peaking is a reality in this market. Reducing first class cabins are also a must, that's one reason CRJ's have so much better economics on low-end routes.

Getting RASM up may not be possible, but at least don't let it go lower. Fighting HP and WN is not a smart move, UAL will never match their CASM and the RASM on those routes is very thin. Alienating business passengers must be minimized. Reducing extras may be necessary, but rationalizing the fare structure could help keep business pax.

Fleet rationalization- this is longer term, but eventually getting rid of the 737's would save $. Going to 321's instead of 757's would be a good move too.

-Sean

 

[General Lee]

Sean,

I think you are correct, and there is another way to drum up some much needed cash: sell your Heathrow landing slots.
I know an airline that would love to buy them: Delta.

Getting rid of the 747-400's would be beneficial, there is just too much capacity and not enough pax demand. Yes, I know the 744 carries a lot of cargo, but the 777 can also carry a lot of cargo and is better suited for today's markets. There may be a couple routes that warrant a 744, but not enough for the whole fleet.

Bye Bye-----General Lee

 

[altimaklr]

Lee- you're right on the 744's, I love them, but it would be a nice decrease in capacity to replace them with new/existing 777's. The routes that support a 747 can either be supplemented with additional service, or just reduced capacity. Using brand new 777's on Hawaii flights seems a little wasteful, why not stick the older (and less appealing to pax) 767's and let the 777's do the intl work.. like AA does.

As far as the LHR slots, I think that would be a huge mistake. LHR slots are like gold. Sure, DL would like them, but could they use them? Bermuda 2 doesn't allow ATL-LHR, and DL doesn't have a strong presence in LAX or SFO, two popular UA LHR routes.

-Sean

 

[publisher]

right

Right, let's change the model.

OK, for starters let's shed ourselves of a few things. Like everything than is not one model, lets get rid of labor contracts, international routes that are not profitable, aircraft that are not profitable, gates we will not need. etc.

The inability to change fast because of burdensome contracts is what kills large elephants. Not only labor contracts by the way.

 

[General Lee]

Sean,

Delta wants those LHR slots badly. They have a hub at JFK, with the largest amount of INTL flights over the Atlantic, more than any other carrier. They have something like 19 767-300ERs or 777's to everywhere in Europe---including Moscow, Istanbul, Athens, Barcelona----you get my drift? LHR would be the crown jewel. The JFK--LGW business traffic isn't there. They want LHR.
And, Delta is building a new $400 million terminal at BOS (While Furloughing pilots...?)---and they used to go to LGW from there, but couldn't compete for the business pax because BA, UA, and AA fly from BOS---LHR.

There is some good news on that front, though. I read on Yahoo
aviation finance last week that the British Govt is considering allowing two additional carriers to have LHR slots in 2003, and two more in 2004 (a cargo carrier could be one of those carriers too), which would eliminate buying them at all. I guess BMI---
British Midland, is pressuring their own Govt because they have a lot of their own slots and new A330's, but can't fly them from LHR----only Manchester to ORD and IAD. I think Delta will be healthy enough and strong enough to be chosen by the US Govt to get slots, and then watch out.

Also, the publisher is right. When things are going down hill, you cant leave out any options. Pan Am and TWA had to sell the slots
to try to stop their demise. And, if UAL declares Chap 11, some creditors may want them to sell those slots to pay up debts.

I hope it all works out for everyone, but I sure would like to see Delta at LHR.


Bye Bye---General Lee

 

[Vik]

UAL has already parked 10 744's and replaced those routes w/ 777s or 767s.

Once they get their finances in order, they might consider converting those 744's into "combi" versions where 1/3rd of the rear main cabin is used for cargo. They can make the rest of the aircraft just two classes, one premium and one coach. I think JAL has a few 747s setup like that.

 

[Saabslime]

Lets say UAl gets the wage concessions it needs to secure a federal loan. Then lets say Bush gets the congressional support he's after to attack Iraq. Don't you think the economy will dip even further into recession resulting in continued revenue loss. What then?? Further concessions to help stop more bleeding? Where do you draw the line? Is a federal loan even guaranteed at that point or could the government come back and say you know what, this war against Iraq is going to really strain the budget so that money is no longer available (or at least not the amount UAL is seeking). Any thoughts?

 

[publisher]

combi

The reason that you do not see combi aircraft in the US other than Alaska is the cost and requirements for separation of cabin is very expensive to the point of prohibitive.

What they need to do is figure out what it is that they do well and focus there.

 

[JetPilot500]

Lets say UAl gets the wage concessions it needs to secure a federal loan. Then lets say Bush gets the congressional support he's after to attack Iraq. Don't you think the economy will dip even further into recession resulting in continued revenue loss. What then?? Further concessions to help stop more bleeding? Where do you draw the line?

You draw the line at the point where the company goes bankrupt.

Whether they get the federal money or not, Concessions will keep them going longer before bankruptcy. And yes, if they don't get the money and are still facing bankruptcy, they should give up more of their salary.

If the economy dips into a second recession, employee concessions and federal money will probally not help UAL or a few other airlines anyhow. But it is worth trying to save and employee concessions will help.

As I've said before, making less and keeping your job is better than standing in line for your unemployment check.

JetPilot500

 

[AAflyer]

JetPilot,

Sorry it took so long to get back to you (in Upstate NY visiting the folks).

The term they seem to be using is de-peaking. In a nutshell using less planes to fly the same number of flights. (increase aircraft utilization). Instead of pushing 50-60 jets all at once during a bank of flights, and then competing with other air-carrries for runways they have decided to fly jets in (or roll them)continuosly throughtout the day, also freeing up jetbridges and causing less delays.

AA has figured in ORD alone the de-peaking saves roughly 4 narrowbodies and 2-3 Rjs of flying (better utilized). I think it works too, the less sit time, the more money you make.

AAflyer

 

[Jetsnake]

I'm no expert at airline survival, but I was
just in DEN chatting with one of my High
School classmates that is in MGT. at UAL,
He showed me some figures that were
startling to say the least, I'm not sure if there
true but these figures were said to have come
from the "NEW" mgt. team at UAL.

Average ramper salary 46K
Average F/A salary 51K and some change.
Average IAM(A&P) salary over 100K.
Average pilot salary over 175K.

It's sad if this is true and the employee's
don't see what is in the future for them,
I would love to see UAL turn around, that
would be one of the biggest slaps in the face
say "GOODWIN" who has a reported
salary in excess of 600K until he dies along
with his grand kids getting priorty over paying
passengers the rest of there lives to fly.

I'm still wondering how UAL spent in excess of
250 Million for Avolar and only attained 2 USED
Falcon's at "GOODWINS" reign.

What happened to that money? And why hasn't
he been investigated for such a debacle as the
Enron and World Com CEO's.

If UAL has gone from losing 5 million a day to
around 1 million as has been published, and still
has in excess of 50,000 employee's worldwide.

Anyone that says employee concession's won't
work is full of, well let's just say I would love
to take the drug there on as long as I don't
bust a UA.

It would a sad day to see another carrier that
has been around for 75 years to go Tango Uniform.
But that may be the pecking order unless the
employee group will move together to help figure
out what can be done.

Just my opion based on what I've seen...

Jetsnake