Why United Airlines will fail again

[Andy]

The irony out of this, most of the TWA guys I speak with seem to think it was UAL who usually treated them the worst, or wished they would do everyone a favor, and go out of business.

Man, I don't recall anyone saying that they wished TWA would go out of business. Then again, the last 3 years have wiped most of my memory banks clean.
The Guard unit that I flew in had about half a dozen TWAers and at least a couple of dozen non-TWAers (AMR, LUV, UAL, NWAC, DAL, lotsa regionals). I jumpseated in & out of STL a lot, so I'd be trying to jump with a lot of TWA pilots. I never saw any of them treated poorly or told that they should go out of biz.

 

[Hvy]

Ever heard the one about the UAL gal pestering center for a shortcut? Some unknown voice came over the radio and said "just be patient sweetie, your whole career has been a shortcut."

Stepping off the ridgeline,
Gup

Another nasty shot from GuppyWN. Too bad all you'll ever fly is a light twin. But since you don't have a clue what you're missing maybe it doesn't matter to you. I'll bet that it does though because you go out of your way to cut UAL down. Look up next time I taxi by...I'll give ya a friendly little wave.

 

[AAflyer]

Man, I don't recall anyone saying that they wished TWA would go out of business. Then again, the last 3 years have wiped most of my memory banks clean.
The Guard unit that I flew in had about half a dozen TWAers and at least a couple of dozen non-TWAers (AMR, LUV, UAL, NWAC, DAL, lotsa regionals). I jumpseated in & out of STL a lot, so I'd be trying to jump with a lot of TWA pilots. I never saw any of them treated poorly or told that they should go out of biz.

I have just said what was told to me by TWA captains I have flown with. I am sure the majority never said a thing. When you look around, it seems there is always the 5% at each airline that likes to raze everyone else. I think we may have even seen a couple on this board.

regards,

AA

 

[Andy]

I have just said what was told to me by TWA captains I have flown with. I am sure the majority never said a thing. When you look around, it seems there is always the 5% at each airline that likes to raze everyone else. I think we may have even seen a couple on this board.

Like I said before, I had the chance to jump a lot with TWA. I do recall one flight during my probationary year, right after C2K. The 36 year TWA 767 Captain asked me what 2d year FO pay on the -400 was. I looked it up; he got fairly pissed and spent most of the rest of the time lecturing me on how he was being paid less than a 2d year 747-400 FO. I'm not the brightest bulb in the pack, but I clammed up except for the occasional 'uh huh' and 'yes sir,' along with the dog in the back window bobbing head.
That was the only lecture that I ever got, and I never lectured a TWA pilot.

I'm sure that when he got hired at TWA, it was the place to go. You never know if you made the right choice until you hit retirement, and even then you're not quite sure.

 

[Dizel8]

CASM excluding fuel:

AMR 7.78
UAL 7.5

A little surprised UAL was not able to get it lower!

"It now has about 30 percent fewer employees (58,000), 20 percent fewer airplanes (460) and 20 percent lower operating costs (7.5 cents per seat per mile), excluding fuel, than it did when the bankruptcy began on Dec. 9, 2002. Labor costs are down by more than $3 billion annually after two steep pay cuts and the elimination of defined-benefit pensions. Dozens of daily domestic flights have been eliminated".

 

[Andy]

CASM excluding fuel:

AMR 7.78
UAL 7.5

A little surprised UAL was not able to get it lower!

With recalls for pilots and new hiring in other positions, the labor side of CASM will continue to decrease, so I'd expect CASM ex-fuel to go lower in '06.

 

[Dizel8]

I may be ignorant, but it seems if you add more employees, without increasing flights or adding airplanes, that hiring more would drive CASM up.

After all, less employees per plane is more efficient. Unless of course you mean, that at the same time hiring and recalls of less senior people, while more senior people leave, will drive cost down?

 

[Boeingman]

Enlighten me, please. I know that UAL's pilots have several skeletons in the closet. Does this have to do with the original Frontier?

Not this, but the original Frontier and the hosejob United pilots did to their ALPA brethren there earned them the nickname "Brainsurgeons". That came about after FAL was ditched due to pressure by United ALPA, a "code a phone" (As they were called back then) from the United ALPA spokesman said that basically, "the Frontier pilots were really like general practitioners and the United pilots were more like Brain Surgeons, we don't need them anyway".

Now T ry O ur R eal Q uality U nited E xperience was a childish campaign in the early 90's with numerous (mostly Denver) United employees wearing a pin with a screw into a Continetal logo. Lots of harassment by United employess, agents going into our ticket lines trying to rebook our pax, pilots forcing go arounds, blocked radio calls, telling us to fall on our swords etc. etc.

Really a pathetic and arrogant display of attitudes shown to fellow airport and airline employees.
I can just about guarantee that any Continetal person who shows zero empathy for United's plight most certainly was either a Frontier victim or endured some form of harassment with the Torque program.

Shall I talk about the United pilots who would spit at us just because we wore a Continental uniform? Some of these idiots didn't even take the time to notice some of us were wearing ALPA pins with stars on them.

 

[Andy]

I may be ignorant, but it seems if you add more employees, without increasing flights or adding airplanes, that hiring more would drive CASM up.

After all, less employees per plane is more efficient. Unless of course you mean, that at the same time hiring and recalls of less senior people, while more senior people leave, will drive cost down?

Keeping ASMs flat (UAL will increase ASMs), your retirements off of the top of the payscale are being replaced by workers at the bottom of the payscale.
The most junior pilot on UAL property prior to recall was on year 7 pay.
Just imagine the difference in pay & benefits for a first year FA compared to a 30 year FA.

Incremental ASMs will also be less expensive, since you won't have to add much to your fixed costs for the incremental ASMs.

 

[Dizel8]

True, adding ASM will certainly lower it, unless the growth is in high cost RJs.
As for lower seniority, hence less paid, you are indeed correct, although since those on the property gets a small raise (?), then it is math above my ability.

 

[Andy]

Really a pathetic and arrogant display and attitudes shown to fellow airport and airline employees.

Yep, UAL has its share of skeletons in the closet.
Thanks for the education.

 

[Boeingman]

Yep, UAL has its share of skeletons in the closet.
Thanks for the education.

No problem. I'm sure most of these zeros are gone now. I had a very productive PM exchange with UAL78 a few months back, opened up a lot of common ground and healed a few wounds on my part.

 

[Sonny Crockett]

No problem. I'm sure most of these zeros are gone now. I had a very productive PM exchange with UAL78 a few months back, opened up a lot of common ground and healed a few wounds on my part.

Still aint feeling the love, but I bet we will be talking merger in a few months with CAL.

 

[Boeingman]

Still aint feeling the love, but I bet we will be talking merger in a few months with CAL.

Depends on what shakes out with NWA & DAL. If either of them liquidates and my guess is one will, I don't think so. If there is a breakup of either carrier and someone goes on a spending spree or merger then yes, it will probably happen.

These mergers are not for the economic health or long term prospects for either company. They are soley to enrich the lawyers, investment bankers, management and any other elitist vermin that will enjoy a handsome payout.

 

[Dizel8]

Depends on what shakes out with NWA & DAL. If either of them liquidates and my guess is one will, I don't think so. .

I doubt NWA or DAL will disappear, sounds like the thoughts they had about UAL.

 

[Andy]

I doubt NWA or DAL will disappear, sounds like the thoughts they had about UAL.

Concur; I expect both to survive.

 

[Boeingman]

I doubt NWA or DAL will disappear, sounds like the thoughts they had about UAL.

Just for clarification I qualified that with an "if". Different ball game though between United Delta and Northwest. United filed before they were leveraged to the hilt which NWA and DAL find themselves in today. One reason United has been able to secure funding is the ability to borrow on assets. Delta and Northwest have little left to borrow against. Thrown in a combination poisonous labor relations at NWA the liquidation scenario there is not far fetched.

Even Tilton is now admiting United was perilously close to Chapter 7 with the employees bending over several times with labor relations not even close to what is occuring now. Plus, they filed early and was able to protect their assets.

 

[enigma]

After reading this string, I think I'll just walk away if Spirit ever goes down. Why stay in an industry in which everyone holds lifelong grudges based upon flawed reasoning?

Peace people, don't forget who the adversary truly is

enigma

 

[Andy]

Just for clarification I qualified that with an "if". Different ball game though between United Delta and Northwest. United filed before they were leveraged to the hilt which NWA and DAL find themselves in today. One reason United has been able to secure funding is the ability to borrow on assets. Delta and Northwest have little left to borrow against. Thrown in a combination poisonous labor relations at NWA the liquidation scenario there is not far fetched.

Even Tilton is now admiting United was perilously close to Chapter 7 with the employees bending over several times with labor relations not even close to what is occuring now. Plus, they filed early and was able to protect their assets.

NWA did not require DIP financing because they filed with more than enough cash on hand to carry them through the bulk of chap 11. I don't know how leveraged they are, but DAL was the one that I was more concerned about. But DAL looks like they're able to line up DIP financing, so they'll probably be OK.
You're definitely right about labor relations at NWA. It ain't pretty.
I haven't followed NWA & DAL too closely; after just living through that nightmare of a TV show, I have no desire to watch the reruns.

I think that most pilots at UAL were aware of how close that UAL was to going chap 7. SARS pushed UAL to the brink. Pacific loads were anemic. C2003 passed because of how close UAL was to going under.
I'll give Tilton credit for filing early with unencumbered assets. Many don't understand how important that was for UAL's survival, because UAL couldn't find a loan on those assets for any decent rates outside of chap 11.

 

[G4G5]

I was reading a copy of the WSJ this morning with my morning coffee when I noticed Dave Neelemans statement about fuel prices

Neeleman said Jetblue can expect to pay $1.98 per gallon in 2006. This is also be verified in their 2/1/06 SEC8K filing

http://www.sec.gov/Archives/edgar/data/1158463/000095013606000623/file002.htm

This is what UAL had to say.

On Jan 27, 2006 from UAL's 8K filing
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.

Average mainline fuel price for the quarter (Q405) was $2.09 per gallon (including taxes).

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

This is the one I love
From UAL's 8K on Jan 17, 2006

United assumes a long-term crude oil price of $50 per barrel for 2006 to 2010, or an equivalent of jet fuel price of $1.48 per gallon (before hedging expenses). So
http://app.quotemedia.com/quotetools/showFiling.go?name=UAL%20CORP%20/DE/:%208-K,%20Sub-Doc%202,%20Page%2029&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frepo%3Dtenk%26ipage%3D3895033%26doc%3D2%26num%3D29

Neelman feels fuel will be $1.98 and has told the street that this is his number for 2006. Yet Tilton seems to feel that will be 17 cents less or $1.81 per gallon. Keep in mind that UAL has NO FUEL HEDGES and Jetblue has some.

So where does Tilton get his numbers from and if I were bring out a compnay from CH11 wouldn't you at least want to use the more conservate information.

What I really love is the $1.48 per gallon price (or $50 a barrel) over the next 4 years. Let's see with current fuel prices where they are, UAL averaged $2.09 per gallon last quater. What did UAL predict for the first quater of 06, $1.92 per gallon. Where is this guy pulling his numbers out of?

Tilton says he needs fuel to be $1.48 over the next 4 years. If you use Neelmans number of $1.98 for they year. Next years fuel would have to be $.98 cents just to say on track.

Even if we use Tiltons $1.81 for 2006 he needs $1.15 per gallon for all of 2007 just to stay on track.