NewHampshire Black Bears said:
+++++++++++++++++++++++++++++++++++++++++++++++
fly,
(Unless I'm reading industry reports wrong) UAL Corp. DOES NOT have A friggin' clue how to stop hemorrhaging $$$$ cash, EVEN with raping $$$ the employees, and #### canning hard earned pensions !!!
(Jesus, even "down and out" US is about to do a deal to exit BK)
Bottom line, you got a lot of BALLS (??) making predictions about AA, and BIG RED, when the Dick heads YOU work for are a financial Abortion !!!!
But I will give you this. If you can look at yourself in the mirror each morning, and go to work, while the "Good ol' boys from Elk Grove village are "slippin' it to ya", deeper every day, and still keep smilin', then what else can I say ???
Well actually there is 1 thing I will say.
Grandma had an ol' saying, that went like this,
"One man's ceiling, is another mans "FLOOR" !!
Good luck. YOUR GONNA" NEED IT !!!!!
NH/BB's
ps,
AA's got a ton of $$$ cash to pay the highly inflated prices UA will charge, for the Asian routes. AND we(AA) will gladly play "second fiddle" to BIG RED in the Orient
[post="269861"][/post]
May 15, 2005
How to Succeed in Business, Without Really Succeeding
By MICHELINE MAYNARD
HERE'S a pop quiz for you frequent fliers (and disgruntled investors
and union members): Who was the highest-paid executive at a major
domestic airline last year, taking home $1.1 million in salary and
bonus?
Not Gary C. Kelly at Southwest: His reward for running the
industry's most profitable company was just $542,000. Nor was it
Bruce Lakefield at US Airways, who got $425,000 as his company
struggled to avoid liquidation. And forget about Gerald Grinstein at
Delta, who earned a mere $250,000 as his airline battled to stay out
of bankruptcy protection.
The big payday went to Glenn F. Tilton, the chief executive of
United Airlines, which has been operating in bankruptcy since
December 2002. Since its filing, it has lost billions, forced its
workers to take deep cuts in pay and benefits, and dumped billions
of dollars of unfunded pension obligations on the federal government.
And he is still not sure when United will get out of bankruptcy.
Mr. Tilton's compensation has outraged some of his workers, who want
him to return his $366,000 bonus. (He did take a pay cut last year,
and is taking another this year.) But one could argue that Mr.
Tilton is worth every penny of his pay - even if his strategy has
not been out of a business school textbook.
In his time at United, which began shortly before the airline filed
for Chapter 11 protection, Mr. Tilton has - wittingly or not - used
bankruptcy protection as a competitive tool. And he has gained
respect in the industry, however grudgingly, for doing so.
If nothing else, United has made itself an airline to be reckoned
with - not in the traditional way, through strong operations, but in
a completely new way, by leveraging its weakness.
United's bankruptcy, which has lasted longer than any airline case
since 1989, has given the company the opportunity to take steps that
other carriers have found difficult, if not impossible. Cutting
wages and benefits, for one. Renegotiating and rejecting aircraft
leases, for another. And the biggest step: terminating its four
employee pension plans.
"United has become a much more formidable competitor than we were"
when it filed for bankruptcy protection, Mr. Tilton acknowledged in
an interview.
His timing could not have been better: United has used Chapter 11 to
shield itself from the most vicious competitive pressures in the
industry's history. In the process, it has accumulated more clout
than it might have as just another struggling airline.
"They're seen as being strong because they're in bankruptcy," said
Gary N. Chaison, professor of industrial relations at Clark
University in Worcester, Mass. "It's a remarkable use of bankruptcy
as a strategy."
On the surface, however, it seems like an accidental plan. United's
30 months in bankruptcy have been akin to a corporate soap opera -
call it "As the Plane Diverts" for all its many twists and turns.
Early on, for example, United promised that it would shift 30
percent of its domestic flights to a new low-fare subsidiary, but
the new unit, called Ted, handles only about half that many.
Along the way, Mr. Tilton and United's chief financial officer,
Frederic F. Brace III, have made numerous forecasts about when their
airline would emerge from bankruptcy. The first was the summer of
2003, then that fall, then the summer of 2004, then that fall, then
this summer. Now the projection is this fall - and many analysts say
they believe the airline will miss this forecast, too.
IN what has been the biggest course correction, United had to
regroup after the Air Transportation Stabilization Board repeatedly
turned down its request for federal loan guarantees on which it had
been counting to ease its way out of bankruptcy.
Even then, it took the airline 11 months after the final rejection
to get around to terminating its four pension plans, a step that it
has always said would be crucial to landing the financing it needs
to emerge from bankruptcy. And it shed the plans only after the
Pension Benefit Guaranty Corporation sought to take control of two
of United's plans, for fear their deficits would worsen.
Bankruptcy experts say United's case is unusually slow. "Over two
years, you're into a long case," said Lynn M. LoPucki, a law
professor at the University of California, Los Angeles. Only one in
seven bankruptcies lasts as long as United's, he said.
But Mr. Tilton, in an interview last week, said he always expected
that United would be in bankruptcy for at least 18 months, given the
mess he said he inherited when he came on board the company after
serving as chief executive at Texaco.
"This company had the most uncompetitive cost structure in the
industry," Mr. Tilton said. "It was clear we would have to avail
ourselves of just about everything available to us in Chapter 11."
He said United, an employee-owned airline for the previous decade,
had to invent a new management structure and devise a strategy for
life beyond bankruptcy.
The denial of loan guarantees - along with soaring fuel prices,
which have forced the airline to rewrite its business plan several
times - have been the major reasons the case has dragged on so long,
Mr. Tilton said.
Nonetheless, the length of the case has caused its competitors
consternation. The situation particularly riles Delta's chief
executive, Mr. Grinstein, who has steadfastly prevented his airline
from seeking bankruptcy protection even though, last fall, it was
just hours from toppling.
Though not uttering the name "United," Mr. Grinstein said in a
recent interview that bankruptcy should be a quicker process. "It
should be, you've got to go in, you've got to restructure and then
come out and go on if you can make it in the marketplace," he
said. "And that's not what's happening."
But Mr. Grinstein has suffered by comparison. While United has been
able to renegotiate repeatedly the terms of its bankruptcy
financing, Delta is now begging lenders for more lenient terms in
order to avoid having to seek bankruptcy protection.
And while United's lawyers successfully argued to have a federal
judge replace employee pension plans with less-expensive retirement
programs, Delta is among the still-solvent airlines trying to
persuade Congress to give them more time to pay overdue
contributions to their traditional employee retirement plans.
In frustration, Mr. Grinstein said he recently appealed to White
House officials for help in addressing the industry's problems.
Their answer: you can fix all those problems if you'll just file for
Chapter 11, Mr. Grinstein said he was told.
In an earlier time, of course, Mr. Tilton, might have been
criticized for lingering in bankruptcy so long. And there is still
plenty of room for debate and skepticism about whether he can
successfully bring the company out of Chapter 11.
For one thing, United's losses continue to mount: its first quarter
net loss, including bankruptcy-related charges, more than doubled to
$1.1 billion from the same period a year earlier. In total, it has
lost almost $6 billion while in bankruptcy.
Mr. Tilton acknowledged the losses but said that United's cash
position was improving and that high fuel prices, which cost it $202
million more than it expected last quarter, were its biggest problem.
But others see deeper obstacles. "It is not a sure thing that they
will be able to restructure," said Philip A. Baggaley, an airline
industry analyst with Standard & Poor's ratings services.
Colleen C. Barrett, the president of Southwest, said recently that
United and US Airways - which is also under bankruptcy protection as
it reorganizes its finances for the second time in three years -
were out of step with reality in the domestic market. "The elephant
is dying," Ms. Barrett was quoted as saying in The Pittsburgh Post-
Gazette. Southwest carried more passengers in the domestic market
last year than any other airline.
Nonetheless, Mr. Tilton is speaking confidently about what lies
ahead. He paints a picture of a company heavily focused on its
international operations, with more than half its revenue coming
from flights to Asia and other destinations abroad. United has clung
to its international routes despite calls to sell some of them, as
Pan Am, T.W.A. and Eastern did when they were in financial trouble.
All three were eventually forced out of business.
Of course, Mr. Tilton has not done all this alone: lacking airline
experience before joining United, he has relied on veteran
executives led by Mr. Brace, the chief financial officer, and John
P. Tague, United's chief marketing officer.
There is an expensive legal team at work as well, headed by James H.
M. Sprayregen, a feisty partner at Kirkland & Ellis, the Chicago law
firm. Consultants from McKinsey & Company are on the scene, too. All
told, United has paid out more than $200 million in fees - including
at least $50 million in legal costs alone - since its bankruptcy
began. Collectively, this team has managed to fend off people to
whom United owes a lot of money. For instance, despite strike recent
threats by United's mechanics, ground workers and flight attendants,
the airline's operations have not been interrupted. Even after it
has spent 30 months in bankruptcy, its creditors have not challenged
its right to draft a restructuring plan. And its banks have
repeatedly rewritten the terms of its bankruptcy financing (though
the interest rate on United's debt is about four percentage points
higher than the rate for Southwest, which has the industry's best
credit rating).
Frank Lorenzo, the former Texas Air chief executive who oversaw
Continental's first bankruptcy filing, in 1983, and was the target
of organized labor's wrath for terminating union contracts under the
protection of the bankruptcy court, said he was not surprised that
United is skating through.
"One of the things about bankruptcy is that 99 times out of 100,
people look out for their own best interests," Mr. Lorenzo said in
an interview last week. United's creditors believe the airline "is
still the best place" to put their confidence, he said.
A lawyer for the United creditors' committee, Fruman Jacobson,
declined comment last week.
DOUGLAS M. STEENLAND, the chief executive at Northwest, says he
thinks that there is nothing improper about United's strategy,
although he says emphatically that he does not want to follow it
himself. "A lot of things are changing in the industry," he
said. "Everybody's entitled to avail themselves of what the law is."
Still, Elizabeth Warren, a law professor at Harvard, said she felt
sympathy for United's workers, who owned more than half the airline
until shortly after its bankruptcy filing. "Employees, once treated
as the heart and soul of the company, are now treated as a
despicable expense," she said.
No matter that other airlines may ultimately be forced to copy
United's methods - even to the point of filing for bankruptcy and
terminating their pension plans - so that they can pull equal to it
in costs.
"The competition between carriers is so direct and so pointed,"
Professor Warren said, " that as soon as one gains some kind of cost
advantage, the other one feels compelled to match it."
Which, for Mr. Tilton, is the ultimate compliment
