Ba Buys Four Heathrow Take Off Slots From United

[Bear96]

1. Bear96's analysis is correct, US Airways could not legally bid on the LHR slots, and the UCT proposed the sale of assets at LAX, SFO, DEN, & ORD, however, that could change.

2. Meanwhile, United Airlines has posted 18 767-222s as available for sale on SpeedNews.com. Six aircraft are available for immediate sale, while the remaining twelve will be available for sale as they retire from United Airline's schedule over the next 15 months.

...

3. Moreover, could we see a UCT or ICT in the not-so-distant future?

1. ??? How a discussion of LHR slots possibly provides a segue into a "UCT" involving domestic cities, I'll never know.

2. UA has been planning to sell the old 767-200s for some time now, so that is not really news.

3. As to an ICT or UCT, could you please be a little more specific as to what you are expecting in way of such a "transaction." Otherwise whatever happens (and no doubt there will be interesting developments for both UA and U in the coming months as both companies fight for survival) you will be on here saying how you "predicted" it. So please provide some details so we can see just how omniscient you really are when we compare your "transaction" to real world events. And please, try to stay away from something like "I'd tell you but I'd have to kill you." That has a way of somehow harming people's credibility.

 

[767jetz]

There are rumors floating around about Airbus being a player in UA's exit plans, to include a large aircraft order. This could include replacing the 737-300 fleet with new 319's and 320's. As Bear96 says, the 767-200 have been on borrowed time since last year. The Airbus rumor also incudes "larger" airplanes, which could mean some 321's and even 330's to replace the 767-200s.

If true, these airplanes would bring significant cost savings in fuel and maintenance compared to the 737 and 767-200.

Also, a few days ago, ALPA MEC Chaiman Paul Whiteford released a Q&A letter addressing specific questions submitted by the pilot group. One was in reference to USAir and if we are in currently in talks with them about any transactions. His answer was a flat out "No." Another was about pensions, an his answer was that under UA's current business plan, pensions are not at risk of termination.

Of course another terrorist event or severe downturn in the economy will change everyone's plans, not just United's

 

[FWAAA]

I can't believe how cheaply BA got these slots for. $20,000,000.00 is cheap for two pairs of slots. When AA bought from TWA in 1991 they paid $445 million for BOS, JFK, LAX for 10 pairs of slots. They got Miami for free since TWA never flew Miami - London( sorry Pan AM, they didn't have to pay Pan Am either for Miami). Twa's ORD was a previous deal about a year before the whole LHR sale to AA for about $195 million ( Crandall wanted it badly and Icahn knows when to cash in). AA got Miami, BOS, LAX, ORD and JFK, they bought a whole network and how they have made it work.

UA paid Pan Am $400 million and lots of empty code share promises. UA for its troublt got JFk, SFO, LAX, IAD and later through their own efforts ORD. UA really got strong gateway's fitting its hubs nicely. SFO, LAX & IAD have been cash cows since the beginning, JFK, never a hub for UA, has been a niche gateway for UA to LHR. AA, BA & VS are the big three on the JFK-LHR route. With ORD, IAD and SFO, UA dominates those three cities to LHR.

With no more Concorde I think VS star will only rise.

Although I agree that $5 million per slot sounds reasonable, keep in mind that AA got a lot more than slots when it paid $445 million - AA also got the route authority to fly to LHR. So it isn't as if AA paid $44.5 million per slot - to compare you would have to figure out what the route authority itself was worth.

All BA bought here were four takeoff/landing slots without any specific capacity controlled routes. B)

 

[magsau]

Chip,

I continue to disagree with most of what you have written in the previous post and pretty much everything you have written over the years.

On this issue I believe the two takeoff and two landing slots are not the death blow and imminent breakup you try to spin.

Over the years UAL has had slots at LHR that have been unused. In fact UAL still has a tremendous number of slots at LHR that are being "lent" to LH. UAL at one time operated a LHR hub with 727's that served inter-european flying with the Star Alliance those slots were "loaned" to LH.

Two of the slots (those sold to BA) were used being maintained by fly a 767 from LHR-BRU as a continuation of a ORD flight and or LHR-AMS as a continuation flight from the US. The AMS was mostly seasonal and in the peak summer of that slot was used in other markets (eg.3rd or 4th IAD-LHR) . Since 9/11 UAL stopped BOS-LHR and suspended the LHR-AMS and LHR-BRU turns on the 767. Last summer the EU decided to challenge the airlines on the "use it or lose it" rights and UAL restarted the LHR-AMS and LHR-BRU service to save the slots. With the current economic climate selling the LHR slots for service that is not generating revenue does not sound like a bad idea. With all of the route authority UAL has at LHR this is hardly the begining of the end of UAL.

If UAL sells the entire LHR access then I would agree that perhaps things were not going very well. However, with the current bookings and revenue tending to outpace the industry I am pleased with what is happening. Last week I spoke to a member of our MEC scheduling cmmte. and they said there are several international and domestic city pairs that UAL says we could get into soon that we have served previously and now can make money flying there or city pairs that we have not served previously that could generate revenue.

No ICT or UCT or TCI or transaction of gross imagination in the near future I hope. 😀

 

[USA320Pilot]

I have described the UCT over-and-over, therefore, for those who would like to review this potential alternative/business plan, please check the USaviation.com archives.

Bermuda II does not permit US to obtain LHR slots. Reports indicate US Airways is interested in obtaining SFO, LAX, ORD, & DEN gates and facilities, as well as unspecified aircraft. In addition, Siegel has publicly said he is interested in acquiring the IAD hub, although I cannot understand why.

The key here is the intention of US Airways chairman of the board David Bronner and his advisor and fellow board member Rono Dutta. As you know, Bronner has publicly speculated that United has a 50-50 chance of surviving. He said that if United were to sell assets, he would consider backing the purchase of some "if it would be beneficial to US Airways."

United may be on the verge of selling more assets than just some B747s, B767s, and LHR slots. If Duane Woerth's comments are true and United is unable to obtain exit financing except the ATSB, then there may be no alternative but to sell assets to emerge from Chapter 11. Obviously, this would be preferred over a Chapter 7 liquidation.

Three of the key corporate benefits to the UCT is the asset divestiture would allow United to improve its business plan by lowering costs and increasing revenue, increasing the odds of ATSB loan guarantee approval by providing another avenue to meeting the 7% profit margin in 7 years (code share revenue with US Airways), and possibly avoiding the difficult issue of integrating labor forces.

Regards,

Chip

 

[767jetz]

Perhaps if Chip would quote actual informed sources, he would have a better chance of getting some respect and credibility.

As long as his dreams are based on David Bronner's interest in buying assets from UA or Bronner's opinion that UA has a 50-50 chance of survival; and as long as his dreams are based on something said by a Delta (or is it a NWA?) captain who happens to be the head of ALPA National, I think Chip is setting himself up for disappointment. And his ability to convince others of his opinion will remain in the toilet.



So let's recap some facts:

- David Bronner's opinion about UA is no more informed than mine or anyone else on this board. Many people predicted (and still predict) that USAir has a less than 50-50 chance of surviving in it's current form. Many people have publicly expressed interest in purchasing USAir assets, such as the Boston Shuttle, if they came up for sale. Does this mean that it is part of a UCT? I think not.

- Duane Woerth is nothing but an airline captain who happens to be the presidant of ALPA National. Just because he states his opinion, does not add credibility to anyone else's speculation. His position as ALPA president does not give him access to confidential information at UA. He reads the tea leaves just like everyone on the outside.

- Selling a few unused airplanes, or airplanes at the end of their useful life, or un-used takeoff and landing slots, is not considered a major asset sale. It can not be compared to Eastern, or TWA, or Pan Am. Especially when UA is simulateously adding flights to areas like China, and the Carribean. There are no route authorities or hubs up for sale.

- United Airlines APLA Master Executive Chairman has publically stated as recently as last week, that a deal between UA and US is NOT in the works; That under the current business plan the pension is not at risk; Under the current business plan there will be no change to our hubs. The public can decide whether to believe those that are present at UA board meetings and have access to confidential information, or those that do not.

Rhetorically,

767jetz

 

[The Ronin]

Two cents from maintenance. We have known every since 9/11 that the B767-222's were going to be set down. They are pretty much junk, utilizing the JT9D-7R4D engines that we don't even maintain in our engine shops anymore. I have no idea from a corporate stance how bad a position we are in. Unlike Chip, I am not privy to such sensitive information. Are we selling the trash or the house, who knows? As far as the airframes go, we are selling the trash.

 

[scot]

Please return to the topic of the thread (LHR Slots) or it will be closed. There are plenty of other threads to discuss the UCT/ICT if needed. Thanks.

 

[UnitedChicago]

I'll get us back to the thread topic - however since the pension irs waiver issue was raised, I thought I'd provide a few quotes on the matter:

US Airways killed its pilots' plan before emerging from Chapter 11 in March, turning it over to the Pension Benefit Guaranty Corp., a federal agency that insures only some of the obligations of failed plans.

Paul Whiteford, head of United's pilots union, said there's a big difference between United's pension problem and that of US Airways.

"US Airways had already used all of its IRS waivers - they were 'waivered out,' " he said. "They were out of options."

I thought you all would appreciate an actual credible, sourced comment from UA's alpa president rather than pure and simple speculation.

NOW back on topic...

I don't dispute anything in regards to the Bermuda Rights. However - an airline without these rights has purchased LHR slots before - it is not without precedence.

American acquired TWA's ORD-LHR route back in the late 80's. OBVIOUSLY they weren't granted LHR - as I recall it was transferred to ORD-Gatwick. Once they acquired the full LHR operations in late 1990 i believe they were allowed to transfer the route back to ORD-LHR.

So...while it would be unlikely any non bermuda rights carrier would bid - it has been done before.

In terms of asset sales like this and the circa 1982 767-200's - it is a prudent thing to do. These are not core assets - rather either not being used (LHR slots) or do not fit with the post ch11 fleet plan.

I think it shows the mangement team has strong contingency plans for meeting the DIP requirements.

 

[Bear96]

I have described the UCT over-and-over, therefore, for those who would like to review this potential alternative/business plan, please check the USaviation.com archives.

Correction-- you have never "described" it in any detail, only referred to some vague "transaction" as being imminent-- for at least a couple of years now.

We're still waiting for it.

So, howzabout some specifics for a change?

 

[USFlyer]

Chip, I need to agree with Bear96. Many of us like to speculate on what could happen, what is possible, what would be cool, etc., and I very much enjoy reading your posts. However, in terms of specifics, you rarely provide any. I realize some of what you say may come from internal and/or confidential sources, but you'll fight a constant uphill battle on this board without specifics.

 

[FLYLOW22]

The vultures are circling.... I smell asset sale. Time to burn the furniture to stay warm.

 

[JFK777]

According to the 10/13/03 Financial Times, UA sold slots involved in EWR-LHR & LHR-BRU service. These were at best supplementary to UA's massive LHR ops. UA is strong from LHR to IAD, SFO, ORD & LAX.

I would feel very sad if UA had to sell LHR slots to get out of BK. I doubt this would happen though, LHR is the anchor of UA European ops. I know the Star Alliance is big in FRA with Lufthansa, but UA has more flights to LHR(on it metal ) then to FRA. The strength of the Star alliance on the Atlantic is anchored by UA & AC to LHR and by LH to FRA. SAS, Austrian and LOT round out the service to Scandanavia amd central europe. IF UA sells LHR then what's next, NRT ? We have been here before, it was Pan AM.

If this happens it would be a very sad end to Dick Ferris's Pacific Vision( inspite of Allegis) and Wolf's Atlantic Vision. These were the two guys (as hated as they might be) who took UA fron North America to the world. It was under Wolf when UA went to Boeing and ordered 777 and 747-400's. April 1, 1991 at LHR saw the first 4 UA 747's land from SFO, IAD, JFK and MIami. The rest is well known history.

 

[UnitedChicago]

777:

Got to agree with you on Ferris and Wolf's pacific and atlantic visions respectively.

Not trying to start a debate on their tenures but both acquisitions made United the global carrier it is today.

 

[whatkindoffreshhell]

Anyone know what Dick Ferris is up to these days?