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On 2/13/2003 6:51:20 PM PineyBob wrote:
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http://biz.yahoo.com/fo/030213/2efbb6a9fa2...e8cbc3d8_1.html
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Piney,
Went on the website and got an excerpt of it below:
"If, that is, the unionized workers accept the changes. In January Tilton proposed to split off a big chunk of the carrier later this year and turn it into a low-cost, no frills airline, rumored to be named Starfish, that could compete with JetBlue (NasdaqNM:JBLU - News) and Southwest (NYSE:LUV - News). Pilots now making $225,000 (down from $316,000 last year) could be forced to trade down to jobs paying a maximum of $153,000.
Continental (NYSE:CAL - News) and US Airways (OTC BB:UAWGQ.OB - News) have gone the low-cost route before, without success. "If this is what they want to do, it's a nonstarter," stated Paul Whiteford, chairman of the 8,500-member United chapter of the Airline Pilots Association. It would, he added, "lead to the death of United Airlines." In other words a strike would push the airline out of business via the same route Eastern traversed.
By mid-March United must get its unions to agree to permanently hack off $2.4 billion in annual pay, or about 34% of their total. (Labor consumed half of UAL's $14.3 billion in revenue last year.) Mechanics and flight attendants have been publicly assailing Tilton for not offering a concrete proposal for them to consider. If no agreement is reached, United must petition the bankruptcy court to impose concessions.
To line up $1.5 billion in debtor-in-possession financing, United had to pay an unusually large 5% commission for a $300 million portion, plus a percentage point more in interest than WorldCom, Kmart or Adelphia paid. The postbankruptcy lenders are first in line during a liquidation, but even so they are taking a significant risk. If the workers won't come to work for reduced pay, then no lender is going to come out whole.
So far United has yet to buzz-cut any of its aircraft leasing deals. In fact, it just agreed to hold on to 154 of its 463 leased planes under the same old terms. But if the carrier starts offering, say, 25 cents on the dollar, big aircraft lessors like GE Capital (which owns 20 United planes) may just repossess and try to redeploy the jets to overseas carriers. When that market is saturated, the only thing to do with a commercial jet plane may be to park it in the desert in the Southwest, along with the 1,800 other jets already there.
Ready to feast on any leftovers are rivals like American, which would benefit from O'Hare's slots and routes. Continental lusts after United's Denver hub and its London Heathrow routes. Other hubs up for grabs would include Washington Dulles, San Francisco and Los Angeles. Delta, US Airways and Northwest would likely jump into the fray. With 20% of traffic already, and a strong tailwind at their backs, the discounters like Southwest, JetBlue and AirTran may be the biggest winners of all."
PITbull writes:
Maybe I am being way too cynical, but again, the whole "plan" depends on Labor according to the first sentence above. It also goes on to say that UAL hasn't asked for any CUTS from its leasing deals...what's with the waiting? Or, does labor have to go first again?