Airline Consolidation

[novaqt]

This should be good for some forum discussion.....


Sent: Saturday, September 01, 2007 4:48 PM
Subject: Airline Forecast



Hi-
I was down in the crew lounge in Kuwait, chatting it up with this pilot. He owns www.airlineforecasts.com.
While chatting about airline stuff and opening a private business on the side was interesting to talk about ,
another pilot walked into the lounge and we went into details on United Airlines. He told us
that United is planning to spin off mileage plus program to make 7million off it
2. divest into selling off parts of United such as international routes to another carrier and domestic flying.
3. Merge with another carrier and the only carrier that is going to happen is CO. Once NW and Delta
merge together. Captain Cordle says Delta is not a good merge for us. United will have to make some quick
decisions on the fate of ual by this fall. United can't afford to give any huge raises at this time or
it will put the carrier back into bankruptcy. Any pilot who thinks they will get 40% raise in 2010
is dead wrong because it will only put ual into bankruptcy again. The lowest UAL can do to stay
out of bankruptcy is 15% no more or less than 18%. This captain, Vaughn Cordle, is chief analyst
for airline forecasts 5years down the road has already approached Tilton and said that
A . he needs to offer an early out to get rid of the top pilots and flight attendants and rampers
to save bundles of money inorder to survive. This way the junior pilot can do the same job at 50k less than the senior pilot. Same with flight attendants getting rid of old ones and bring in new and junior ones to fly the international routes at cheapier rates to help not to sell off UAL. Just like Southwest is doing now to cut cost. UAL has about 3million in capital sitting and paying interest on this money because we borrowed too much money when united came out of bankruptcy. He told Tilton that 1million of it should be spent on early out for employeesto save money for the company. Tilton has to keep the stock above 37 share or he will loose his job
and the only way to do this he needs to make decisions quick and the answers will be coming out I think he said by mid fall. We can't buy any aircraft now or the stock will drop. Many different ways that the company is looking at now. If we do merge, it won't United buying CO, it will CO buying United and the name might be replaced and all United managment will not have jobs. Upper management.

Anyways this is what Vaughn Cordle, the captain told us. He owns the business and American and Northwest have hired his company to look into books also. He can't do United because of conflict of interest being a pilot for UAL. The man sure does know his stuff. So we better plan out next future in the next 3-4 years down the road if we will have a jobs. Because if a spin happens before
a merge happens this means many of us won't have jobs if no early comes or merge doesnt happen. Even with Merge 12% work force be let go. Northwest and Delta will have to do the merge first to get Northwest off CO board so CO can merge without Northwest saying so. Many believe with Anderson now CEO of Delta as of Sept 2007, is the reason why Delta and Northwest stock keeps jumping this week because streets thinks this is what will happen. If UAL does merge with CO this will be a quick fix and bring profits of 3 million a year on the table and starve off any divesting of the company. As you see it now, United is already spinning off SFO division to help offset this course fuel and all. We already see it happening now and its the first of the divesting he said. I hope I didn't burst anyones day. I think we all have to plan our cards in the yet direction. I just wanted to share with you guys what this pilot said. You can check him out at
www.airlineforecasts.com

Interesting guy and he knows his #### and i don't think he is talking ####. He works outiside of United for golden sachs and wall street stuff. He is a consultant besides being a captain for ual 777. This is his business on the side.
You are welcome to share my article with your flying partners.

 

[Ride the Glide]

Is this the same Vaughn Cordle (dob: 2/3/1955) that is on the master SCAB list? If so why does one voluntarily engage him in conversation or share the same oxygen in a room with him?

Inputs from SCABS are simply not worthy of discussion.

Ride

 

[Busdrvr]

The guy is a worthless scab. What does it say about a guy when he has to cross a picket line to get a job. From all accounts, he's incompetent as an aviator. The problem is that the aviation industry is an analyst vacuum, so this troll has used his "capt" (small c) status to claim credibility, and frankly he's about the only "independant" analyst out there. This troll was claiming UAL would liquidate YEARS ago. He's an idiot.

 

[jimntx]

This captain, Vaughn Cordle, is chief analyst
for airline forecasts 5years down the road

Excuse me, you need to get the esteemed Mr. Cordle's title correct. He is CEO and chief analyst for AirlineForecasts.com. He is also one of 4 employees at that organization that have names. Other than those 4 the rest of the staff is listed as "Experts."--no resumes, no bona fides, just the title, Experts.

has already approached Tilton and said that

I think I'll wait until I see the cancelled check before I believe that he was paid by United to give that advice to Mr. Tilton. Any employee who ran into Mr. Tilton could more than likely give Mr. Tilton his own opinion of what Mr. Tilton and the board should do.

Beside that, I worked at Texaco for many years when Glenn was there. Glenn Tilton never struck me as the type to take advice from an employee as far down the ladder as Mr. Cordle would be if he is a pilot for United. The next thing you know, you will hear that Glenn is being consulted by flight attendants and rampers.

Also, go back and re-read the advice that Mr. Cordle "gave" to Mr. Tilton then reflect upon whom that advice would help. If the advice is followed, AND Mr. Cordle is a senior pilot, he gets an early out check. If he is a junior pilot, he gets to move to the left seat. Just a little self-serving, don't you think?

Interesting guy and he knows his #### and i don't think he is talking ####. He works outiside of United for golden sachs and wall street stuff. He is a consultant besides being a captain for ual 777. This is his business on the side.
You are welcome to share my article with your flying partners.

First off, it's Goldman Sachs. Second, a LOT of people call themselves consultants, but it turns out they simply have a lot of opinions, but no job and no clients. I know. I used to be a consultant myself. We had an inside joke that the definition of our job was "a consultant is someone who steals your watch in order to tell you what time it is." In other words, a consultant usually tells you what you already know, or should know.

 

[novaqt]

Sorry folks, I am not the person who wrote this discussion piece. I only posted it so as to get some lively discussion going on the board. It was written by some guy named Larry, who I do not know. It was sent to me by a friend. I should have caveated the article. I removed all the email foreward addresses to preserve their identities.

 

[rotate]

You guys are absolutely unbelievable.

Ever heard the term, argumentum ad hominem?

Of course not. Look it up.

 

[NewHampshire Black Bears]

Be that as it may, the FACT that Richard Anderson came BACK to the Industry, and LEAPFROGGED 2 in house heavy hitters(atDL), is in itself..............................EXTREMELY INTERESTING !!

??????

 

[AIRBORN1]

Sorry folks, I am not the person who wrote this discussion piece. I only posted it so as to get some lively discussion going on the board. It was written by some guy named Larry, who I do not know. It was sent to me by a friend. I should have caveated the article. I removed all the email foreward addresses to preserve their identities.

I guess the scab pilot who stated to Larry, in Kuwait is the truth! "Read today's news about United Spinning off and selling routes"
Any Pilots who said this was all bs now you will rethink yes, this can happen even if the scab pilot says it will. Wonder which routes will sell off first??? UAL is about to be chopped up into pieces.
Read below and worry if you will have a position at ual in the next few years.

UAL board looking at asset sales
Spinning off units could raise $16 billion
By Julie Johnsson | Tribune staff reporter
September 26, 2007
Article tools
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Digg Del.icio.us Facebook Furl Google Newsvine Reddit Spurl Yahoo Print Single page view Reprints Reader feedback Text size: The board of United Airlines parent UAL Corp. is mulling spinning off several key assets, including the airline's popular frequent-flier program, as directors contemplate shrinking the carrier while substantially increasing its cash stash, United sources said Tuesday.

Among the options that United may consider, according to analysts, are shrinking its real estate portfolio, which includes the 66 acres that its former headquarters in Elk Grove Township sits on, and selling or leasing overseas routes, landing slots and airport gates. The Chicago-based airline also is exploring divesting much of its maintenance unit, known as United Services, as part of an effort to convert assets into cash, the Tribune previously reported.

Whether or not firm decisions will be made when the directors meet this week in San Francisco is not clear. United's directors meet each September to survey the airline's business environment, study its operations and discuss strategy. The three-day session this year, however, also is expected to include debate on large-scale spinoffs that would pare down the airline and at the same time build up its cash reserves.



A United spokeswoman said the company doesn't comment on board matters.

United Chief Executive Glenn Tilton told analysts during an earnings call in July that the airline was looking into strategic options for Mileage Plus, United's 45 million-member frequent-flier program.

And United last month confirmed to the Tribune that it was mulling a sale or joint venture of its giant maintenance facility at San Francisco International Airport. The airline has set up a detailed analysis of that business for potential partners seeking to do due diligence, says a source with knowledge of the company's plans.

Both moves represent a change in course for the second-largest U.S. airline, which until recently has seemed focused on building its business by pursuing a merger or acquisition. Tilton, a former oil industry executive, has been a vocal advocate of airline industry consolidation.

But mergers have been tough to pull off in the unpredictable airline industry. With few options to consolidate, Tilton may look to Plan B, analysts say.

"If you can't sell the company lock, stock and barrel, then maybe you look to sell it in parts," said Robert Mann, a consultant and principal with R.W. Mann & Co., based in Port Washington, N.Y.

Frank Boroch, an analyst with investment bank Bear Stearns, calculated in a July report that United could raise about $16 billion if it sought buyers or business partners for units that weren't integral to its core flight operations.

In the report, circulated widely within United as well as the airline industry, Boroch estimated that Mileage Plus, the second-largest frequent-flier program in the world, could attract about $7.5 billion from potential buyers, and United Services about $330 million.

He also valued the real estate portfolio at about $200 million and its international routes, domestic landing slots and airport gates at $2.2 billion.

"Now is the time when these units have a value that will decline at the end of the business cycle," said Mann. If United waits, he said, "it won't have an opportunity to do this again until when the next upswing occurs."

Doing so now would enable the highly leveraged airline to pay down debt and repair its balance sheet, pay shareholders a special dividend, build cash to help fund merger activity or perhaps attract a private-equity buyer, analysts say.

However, United's directors also will have to weigh potential benefits against the cost of losing direct control over divisions that long have supported its operations. Mileage Plus, for example, generated $600 million in revenue for the airline in 2006; United Services brought in about $280 million, Boroch said.

In a recent briefing to analysts, United's management deemed Mileage Plus "a greater challenge to spin off," wrote Credit Suisse analyst Daniel McKenzie in a Sept. 19 note.

United executives admitted to analysts that they have run the maintenance division poorly as a business, according to McKenzie. He said he believes an outside partner could rapidly build up the business.

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[JungleClone]

If this rumor proves true and United begins selling/leasing overseas routes and infra-structure, you might as well start updating your resume's. UA's entire franchise is based upon its GLOBAL route network. Nobody cares about their domestic system. It's meaningless without feeding to/from a lucrative network of international service, which is where the bulk of their revenue comes from. Selling off international routes would be the beginning of the end. Just ask anyone who worked for TWA. There is simply no way that United could survive as a domestic airline, even if they held onto a hand ful of international routes. Their costs are simply too high to be competitive. Here's hoping this rumor is just that....a rumor. As dysfunctional as United still is, and as inept and completely incompetent as their executive leadership team is, they still have a great franchise that can be revitalized. All they need is a leadership team and BOD that is actually interested in doing the necessary heavy lifting to achieve that.

 

[LGA Fleet Service]

United isn't going to sell itself off in bits and pieces.Pan Am did that, and look how well selling LHR and the Pacific worked out for them...

 

[UALIADCS]

I have heard that they are planning on having many CSR classes overseas in the future, and are staffing up instructors. Three hubs got additional instructor in CS and two got additional CG instructors. Heard that current instructors will be spending a lot of time overseas......

 

[cormacmoylan]

I have heard that they are planning on having many CSR classes overseas in the future, and are staffing up instructors. Three hubs got additional instructor in CS and two got additional CG instructors. Heard that current instructors will be spending a lot of time overseas......

Yes UALIADCS , it is absolutely true. I also heard the same news. I think this would be better in future.