Why United Airlines will fail again

[typhoonpilot]

I just skimmed the article, but it would appear there is one great big flaw in the assumption. That would be United's market share in the Pacific. It is a cash cow. If they play it right it is more than enough to sustain the company.

What all the people who cheerlead SWA, Jetblue, and Airtran fail to understand is that widebody aircraft make BIG money when properly utilized on international routes.


Typhoonpilot

 

[Andy]

I personally see a bright future for UAL and its employees--nothing in the forecast but sunshine and 75 degrees from here on out. In fact, I'm so positive about their future, I'm going to go out and get my UAL Chase card and the 1,000,000 FFB signing bonus they're offering!

(Singing: Zippity, do-dah, zippity-ay...) TC

Not blue skies and bright future, just light at the end of the tunnel.
The last three years UAL's employees have been flying through a tornado filled squall line that's been kicking our a$$es. We may have even flown through a hurricane or two, but I don't remember finding the calm in the eye. It looks like we might be able to find a less rough patch ahead; I see AltoCu Standing Lenticular above and ahead. Flying around ACSL will be a refreshing change for us; with luck, the turbulence will only be moderate.

I hope that you and your airline find less turbulence than we've found at UAL; the ride sucks.

 

[Publishers]

Just a couple of points --
?The exit loan is secured, it is a priority loan which leaves anyone else with a loan behind the curve.
Like most airlines, a number of things they do not controll will determine the odds --like the fuel price etc.

 

[boeing747-800]

Just for G4G5 fool...

Southwest pushes through a fare hike; get ready to pay more
​

Southwest Airlines is raising airfares as the carrier’s exposure to high fuel prices increases, reports the Fort Worth Star-Telegram (free registration). The increases will be modest -- $3 each way for routes longer than 750 miles, $2 each way for flights between 400 to 750 miles and $1 each way on some routes shorter than 400 miles. But even given the relatively small fare hike, the Star-Telegram writes that Southwest’s increased fares “likely means higher prices for travelers who fly any airline competing with the discounter.” What’s more, the Southwest fare hike is likely to give staying power to the recent trend of steadily rising airfares. For the past several years, discount carriers have been able to dictate the fare levels -– even forcing the biggest traditional carriers to match fares or risk being undersold on competitive routes. But now that the discounters are raising fares, that frees the nation’s big carriers to do the same.
As for Southwest, the increase was the airline’s first since September, but the low-cost giant says its $299 cap on one-way fares will remain. "We have to balance our desire to be the low-fare leader with the cost pressures in front of us," says spokeswoman Beth Harbin. So why is the airline increasing fares now? The airline's fuel hedges have been reduced. The Star-Telegram writes that “last year, Southwest was shielded from most of the oil-price increases thanks to contracts that allowed it to buy fuel at cheaper rates. But some of those contracts expired at the end of 2005, reducing that protection.” And Southwest isn’t alone among discounters raising fares; JetBlue also raised fares last week, pushing its prices up $5 each way, according to the Star-Telegram. The Dallas Morning News (free registration) says other carriers, including American and Delta, have also pushed fares up by $5 each way.

 

[bluejuice787]

Just for G4G5 fool...

Southwest pushes through a fare hike; get ready to pay more​

Southwest Airlines is raising airfares as the carrier’s exposure to high fuel prices increases, reports the Fort Worth Star-Telegram (free registration). The increases will be modest -- $3 each way for routes longer than 750 miles, $2 each way for flights between 400 to 750 miles and $1 each way on some routes shorter than 400 miles. But even given the relatively small fare hike, the Star-Telegram writes that Southwest’s increased fares “likely means higher prices for travelers who fly any airline competing with the discounter.” What’s more, the Southwest fare hike is likely to give staying power to the recent trend of steadily rising airfares. For the past several years, discount carriers have been able to dictate the fare levels -– even forcing the biggest traditional carriers to match fares or risk being undersold on competitive routes. But now that the discounters are raising fares, that frees the nation’s big carriers to do the same.
As for Southwest, the increase was the airline’s first since September, but the low-cost giant says its $299 cap on one-way fares will remain. "We have to balance our desire to be the low-fare leader with the cost pressures in front of us," says spokeswoman Beth Harbin. So why is the airline increasing fares now? The airline's fuel hedges have been reduced. The Star-Telegram writes that “last year, Southwest was shielded from most of the oil-price increases thanks to contracts that allowed it to buy fuel at cheaper rates. But some of those contracts expired at the end of 2005, reducing that protection.” And Southwest isn’t alone among discounters raising fares; JetBlue also raised fares last week, pushing its prices up $5 each way, according to the Star-Telegram. The Dallas Morning News (free registration) says other carriers, including American and Delta, have also pushed fares up by $5 each way.

Uhh...a publish date would be most appropriate.

 

[G4G5]

Uhh...a publish date would be most appropriate.

No he did that on purpose. Seeing that it was just published today, he thinks he's being smart.

So smart that he forgot to check the SWA press release web site:
http://www.southwest.com/about_swa/press/prindex.html

He would have noticed that they have not announced a fare increase yet.

 

[bluejuice787]

No he did that on purpose. Seeing that it was just published today, he thinks he's being smart.

So smart that he forgot to check the SWA press release web site:
http://www.southwest.com/about_swa/press/prindex.html

He would have noticed that they have not announced a fare increase yet.

Idiot

The fare increase he is mentioning is nominal anyway by industry standards.

As much as I love my friends at United and wish them the best I very much agree with the original artical. LCCs are not simply leaner and meaner. In most cases they have started with the idea of a customer and built upon the idea of taking care of them. Someting Tilton et al know nothing about.

 

[G4G5]

Just for G4G5 fool...

Southwest pushes through a fare hike; get ready to pay more​

Southwest Airlines is raising airfares as the carrier’s exposure to high fuel prices increases, reports the Fort Worth Star-Telegram (free registration). The increases will be modest -- $3 each way for routes longer than 750 miles, $2 each way for flights between 400 to 750 miles and $1 each way on some routes shorter than 400 miles. But even given the relatively small fare hike, the Star-Telegram writes that Southwest’s increased fares “likely means higher prices for travelers who fly any airline competing with the discounter.” What’s more, the Southwest fare hike is likely to give staying power to the recent trend of steadily rising airfares. For the past several years, discount carriers have been able to dictate the fare levels -– even forcing the biggest traditional carriers to match fares or risk being undersold on competitive routes. But now that the discounters are raising fares, that frees the nation’s big carriers to do the same.
As for Southwest, the increase was the airline’s first since September, but the low-cost giant says its $299 cap on one-way fares will remain.

LET ME FINISH THE PART OF THE QUOTE THAT YOU LEFT OUT:
Fares in some markets where sales are going on, such as Denver and Dallas, remain unaffected
"Such as Denver" my next question would be what other markets?

"We have to balance our desire to be the low-fare leader with the cost pressures in front of us," says spokeswoman Beth Harbin. So why is the airline increasing fares now? The airline's fuel hedges have been reduced. The Star-Telegram writes that “last year, Southwest was shielded from most of the oil-price increases thanks to contracts that allowed it to buy fuel at cheaper rates. But some of those contracts expired at the end of 2005, reducing that protection.” And Southwest isn’t alone among discounters raising fares; JetBlue also raised fares last week, pushing its prices up $5 each way, according to the Star-Telegram. The Dallas Morning News (free registration) says other carriers, including American and Delta, have also pushed fares up by $5 each way.

Just so I have this straight, SWA wil not be raising their max fare of $299, nor will their fare increase go into effect in the Denver market.

And this is good for UAL? Nice try

But a $1,2 or even $3 fare increase on non competing UAL routes is not going to solve this problem:

This is from UAL's latest 8k SEC filing dated Jan 17, 2006

"The company expects mainline fuel price for the first quarter to average $1.92 per gallon, and for the full-year to average $1.81 per gallon (including taxes). Currently the company has no hedges in place for 2006. For the full-year 2006, the company anticipates fuel expense for mainline and the company's regional affiliates' operations will increase by approximately $885 million over its previous assumption, which was based on a mainline fuel price of $1.48 per gallon (including taxes). The previous assumptions were more fully described in the company's Updated G6 financial projections contained in Exhibit 99.1 to the Form 8-K filed with the SEC on January 17, 2006. The company expects to be able to offset some, but not all, of this increase through higher revenues."

http://app.quotemedia.com/quotetools/showFiling.go?name=UAL%20CORP%20/DE/:%208-K,%20Sub-Doc%203,%20Page%201&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frepo%3Dtenk%26ipage%3D3916596%26doc%3 D3%26num%3D1

So tell me again how is UAL going to manage to increasing fares out of Denver, to cover fuel costs when SWA is not increasing fares? ? Idiot, fool?

 

[FlyUnited]

Must really suck for you in your little RJ life G4. I can't believe your obsession with all things United related. Have any of you flown on United recently? We always take care of the other airlines, we always put you in first when available (something MOST of you don't do), our service has been receiving award winning responses, our p.s. service is second to none, we still board pillows and blankets (even on Ted), we still offer economy plus seating instead of cramming you into the can like most others have gone, and we still have the incredible route structure which you all guaranteed us we would sell before emerging. So please, tell me what we're doing wrong. How I seen it, United is defining itself as the ONLY airlines that still offers amenities among the legacies.

As for $50 bbl, that's over the long term of 10 years. Right now we need $67 to break even.

Good job United. Glad to see you made it.

 

[G4G5]

Must really suck for you in your little RJ life G4. I can't believe your obsession with all things United related. Have any of you flown on United recently? We always take care of the other airlines, we always put you in first when available (something MOST of you don't do), our service has been receiving award winning responses, our p.s. service is second to none, and we still have the incredible route structure which you all guaranteed us we would sell before emerging. So please, tell me what we're doing wrong.

As for $50 bbl, that's over the long term of 10 years. Right now we need $67 to break even.

Good job United. Glad to see you made it.

Playing Mr. Mom today.

I only wish the best for the UAL employees. My beef is with Tilton, I feel that he has done nothing except attack the pensions of the American worker. He was CEO of Texaco for under a year and his only claim to fame is being CEO when the company was sold to Chevron. As far as UAL, he has done nothing to impress me. Hiring expensive consultant and lawyers for countless millions, just to follow their advice does not add to his resume as a CEO.

Now it looks to me like he is trying to pull the company out of Ch11 too early just so he can cash in on his stock options. If I am pointing out UAL flaws it's not to hurt the employees but only bring to light the real problems and how little his mgt team has really done.

Good luck

 

[FlyUnited]

Right. So am I to understand correctly that if this does work out in United's favor, you will come back here and apologize? Or will you just make excuses?

 

[G4G5]

Right. So am I to understand correctly that if this does work out in United's favor, you will come back here and apologize? Or will you just make excuses?

Apologize for what? If it doesn't work out it's because of you leadership, hence my point.

No excuses, like I have alredy said I have lived through one airline's shut down and don't wish it upon anyone.

 

[FlyUnited]

So even if United comes out the darling of the skies, you see nothing wrong in how you've treated your fellow aviators. Good enough, thanks for proving exactly what type of guy you are. (not like this is a big surprise to any on this board)

Hope the airline shutdowns don't follow you throughout your career but bad things somehow seems to follow people who wish nothing but bad on others. Good luck with that.

 

[G4G5]

So even if United comes out the darling of the skies, you see nothing wrong in how you've treated your fellow aviators. Good enough, thanks for proving exactly what type of guy you are. (not like this is a big surprise to any on this board)

Hope the airline shutdowns don't follow you throughout your career but bad things somehow seems to follow people who wish nothing but bad on others. Good luck with that.

Since you have decided to take the low road, I'll take the high road and just wish you, "good luck"

I think your statement after the BUT shows what type of guy you are. I have never openly wished bad luck to another aviator. You are a class act.

 

[AAflyer]

So even if United comes out the darling of the skies, you see nothing wrong in how you've treated your fellow aviators. Good enough, thanks for proving exactly what type of guy you are. (not like this is a big surprise to any on this board)

Hope the airline shutdowns don't follow you throughout your career but bad things somehow seems to follow people who wish nothing but bad on others. Good luck with that.

FlyUnited,

Not really sure where G4G5 said anything demeaning to you or your fellow UAL employees. I do however agree with his comments on your management team. They raped the employees and just gave themselves bonuses that are out of this world. (How do you feel about this, what about your fellow employees?) I also have not seen a dramatic change of UAL's business model.

I don't think anyone (except a few pathetic individuals) would wish UAL or any other airline out of business.

Regards,

AA

 

[Andy]

Now it looks to me like he is trying to pull the company out of Ch11 too early just so he can cash in on his stock options.

WOW! That's the first time that I've heard someone say that United is coming out of Ch11 too early.
UAL is the largest airline that has declared Ch11. I haven't verified this, but I've seen in print that they spent the longest time of any airline in Ch11.
Early in UAL's BK, Tilton said that he would not have UAL emerge from BK until UAL got every benefit of filing Ch11 (that's a paraphrase; if it's a big point of contention, I'll dig up a reference). I don't know how many more benefits UAL would see in Ch11; CASM ex-fuel has been reduced significantly.

I'm not happy with senior executive salaries in corporate America, but Tilton is receiving market compensation for what he's done. It wouldn't matter if UAL emerged this year or next, Tilton would still receive a ludicrously high (by our standards) compensation package. Unfortunately, ludicrously high compensation packages are the norm in corporate America.

But let me throw this back in your court. Since you think that more needed to be done at UAL, tell everyone what you would have done if you were 'king for a day.' I wouldn't change too much (I'd fire a lot of middle managers and replace them with ones who understood how to use positive motivation, at least on occasion), but I'm not the sharpest tool in the shed. You seem to think that you're a lot sharper than UAL's senior management; let us know what changes you would make.

 

[Andy]

I don't think anyone (except a few pathetic individuals) would wish UAL or any other airline out of business.

In the post-911 world, many employees view the airline industry as a zero sum game. So I do think that there are many that would like to see UAL/AMR/CAL/LCC/DAL/NWAC/LUV/JBLU/AAI/ALA (insert whatever airline you like) go out of business. Just as long as it's not their airline.

 

[boeing747-800]

787Bluejuice...how them embraers working for ya? I give you 5 years.

 

[BigRed1]

UAL's plan may not be perfect, but they used the BK process to its fullest and now it is time to move on while contintuing to IMPROVE in every aspect, from cost cutting to revenue enhancements and operation execution, etc. This is not the end game, but rather the begining.

Remember...You don't have to outrun the bear, just outrun the other guy trying to outrun the bear.

In this business, there are a lot of other airlines that are still trying to outrun the bear. UAL's plan may not be perfect, but until all you other yahoos at airlines still losing money by the hundreds of millions start earning a profit, Shut the h*ll up and worry about your own problems. If your company becomes profitable and UAL is still losing money, then you can throw yet more stones.

Thanks.

 

[bluejuice787]

787Bluejuice...how them embraers working for ya? I give you 5 years.

Let's see...we have all of seven (7) of them. They have been in service since..uh..late November. Uh...pretty new fleet type and we are the launch customer for the 190. Uh...Is that all you got?