ATSB - Action/Reaction

[hommegros]

Dear ATSB,
Recently, ALL of the United Airlines Employees have capitulated on wage and work rule concessions to the tune of $5.8 BILLION for a $1.8 BILLION loan ''guarantee''. I believe that this is an unprecedented effort on behalf of the thousands of Loyal Americans and Dedicated United Airlines employees. Your immediate public action/reaction is paramount in the success or failure of these efforts.
Personally, I am not willing to give osama/al qaeda the satisfaction of success in ANY KIND !!!
Are You?

 

[DB Cooper]

November 23, 2002
UAL loan hunt gets political
By Julie Johnsson and Sandra Jones

With UAL Corp. just days away from a possible bankruptcy filing, its friends on Capitol Hill are stepping up political pressure on the Air
Transportation Stabilization Board to approve a $1.8-billion federal loan guarantee sought by the parent of United Airlines.

Nineteen members of the 22-member Illinois congressional delegation asked the board to resolve the matter quickly—and in UAL’s
favor—in a letter sent Friday to David Montgomery, executive director of the Air Transportation Stabilization Board (ATSB).
Congressional members from other states where United has a major presence are also pressing for ATSB’s approval.

The Illinois legislators, including House Speaker J. Dennis Hastert, R-Yorkville,
and Rep. William O. Lipinski, D-Chicago, “strongly urge†the board to provide the
loan guarantee, saying it would help avert both a bankruptcy filing by United
and further economic damage in Illinois, where the air carrier employs 18,000.

Although President George W. Bush is copied on the Illinois letter, which was
drafted by Rep. Lipin-ski, the letter alone is unlikely to allay concerns held by
the three members of the independent board regarding UAL’s ability to find a
way out of its financial crisis.

The ATSB plans to meet again this week with representatives of the Elk Grove
Township-based airline, according to a source close to the board.
Spokespersons for both sides declined comment on the meeting and said there
is no timetable for resolving UAL’s application.

The nation’s second-largest airline needs the $1.8-billion guarantee to secure a $2-billion private loan package aimed at avoiding
Chapter 11 bankruptcy. The airline has a $375-million loan payment due on Dec. 2. Without extra funding, the payment would bring
UAL’s cash holdings to less than $700 million, a level that industry analysts say is well below what the airline needs to continue
operating.

Currently, United is reportedly burning through $5 million to $7 million per day.

Nevertheless, the carrier is making headway in its turnaround efforts, having renegotiated some of its loans while announcing a total of
$5.4 billion in wage concessions from its unions. Crains Chicago Business 11/23/02

 

[AirplaneFan]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/23/2002 2:55:32 AM hommegros wrote:
[P]Dear ATSB,[BR][BR] Recently, ALL of the United Airlines Employees have capitulated on wage and work rule concessions to the tune of $5.8 BILLION for a $1.8 BILLION loan 'guarantee'. I believe that this is an unprecedented effort on behalf of the thousands of Loyal Americans and Dedicated United Airlines employees. Your immediate public action/reaction is paramount in the success or failure of these efforts. [BR][BR]Personally, I am not willing to give osama/al qaeda the satisfaction of success in ANY KIND !!![BR][BR]Are You?[BR][/P]----------------[/BLOCKQUOTE]
[P]well the employees could have just loaned UAL the $1.8B instead of giving back $5.8B. Or gone to the banks ..... except they won't lend them the money. But then the systemic problems would continue and it would delay the inevitable for a year or so. The ATSB is asking for enough givebacks for UAL to become a viable, profit making airline again. And I am not even sure that $5.8B over 5 or 6 years is enough to do it. The airline has been losing around $2B a year for the past 2 years, so I am not sure that if the employees give back $1B per annum that will give them all the help they need. UAL has yet to fix its systemic problems, but they have lowered their labor costs so the problems aren't as glaring. Bottom line, hub-n-spoke is a flawed business model and 6 of the 7 major US airlines run it. There is going to be market pressures to reduce that number from 6 to 3 in the upcoming 5 years. UAL's chances have certainly improved in the last few months, but they have yet to show that they fully comprehend the problem.[/P]

 

[ual06]

Following is a paragraph quoted from an article at the Haaretz Daily web site.
http://www.haaretzdaily.com/hasen/pages/Sh...SubContrassID=0

Sunday, November 24, 2002 Kislev 19, 5763
Israel Time: 04:04 (GMT+2)
Back Home

Last update - 01:55 24/11/2002
Top Sharon adviser to discuss special aid request in
Washington
By Aluf Benn, Ha'retz Correspondent

Israel wants NIS 4 billion in military aid, to be given over a number of years, to
support Israel's war on terror and to help the country face new strategic and
military threats in preparation of the expected American-led war against Iraq.
Israel also is asking that the Bush administration provide $10 billion in loan
guarantees that would help ease its economic plight.


As a taxpayer, I feel the USA should look after its own first.

 

[UAL777flyer]

AirplaneFan,

I agree with some of what you posted. My feeling is that the ATSB loan guarantee really only buys UA enough time to implement the changes that are necessary for our survival and prosperity. $1.8-2 billion will hopefully last us long enough to turn things around. But the bottom line is that the way we do business must change, and change for the better. So all the business model changes and revenue enhancements that are being implemented or are coming in the near future MUST work. Otherwise, we'll just be back to square 1 in a year or 2. So, in that respect I agree with you.

However, while I do accept that the hub and spoke model has flaws, I don't believe that it must be abandoned (I know you didn't specifically state that, but I'm wondering if that's what you were alluding to). Such a system creates inefficiencies with personnel and assets that are flawed. But such a system also creates considerably more revenue into the airline than point to point service. So the key is to iron out the inefficiencies in the hub and spoke model by making better use of personnel, aircraft, gates, etc. But you're only going to make the hub and spoke model efficient to a certain degree. It will never be a completely efficient system. But it is still a system that pours in a lot more revenue than without it. And taking away the hub and spoke model would mean numerous communities would lose airline service, even from commuter carriers.