Dave's Gloomy Forecast


Aug 19, 2002
This article is not dated, and seems to be taken out of context. I would like the the the unbridged version before I offer and further pithy comments.
Do we know if the above is really from Dave. It does not seem like his style.

While the war and oil prices are certainly an issue for U and all other carriers. I would be surprised if it would be worded this way
The following is a letter written by Dave to one of the pilot-employees who was offering some suggestions regarding the restructuring. Dave's response is a bit troubling.
Dave says, I couldn't agree more, except that the WN model gives up more in revenue than it saves in cost.
As we sought to restructure, our labor groups did not want to solve the problem so we compromised.
Now, with a war looming with Iraq (drop in pax demand, spike in oil prices)and US in bankrupcty, we will once again have an opportunity to face reality.
The two biggest problems we face now are productivity and pension.
On the productivity side, our industry lagging work rules make us the least productive, costing us hundreds of millions per year in pure waste. We will now have to address this or likely liquidate.
On the pension side, if the industry rebounded between 50 and 100% of our cash flow would go to funding pensions. With the world not getting any better we will either reduce accruals and funding rates or liquidate.
So, I guess the world has a way of sorting things out. Just read today's WSJ or watch today's coverage of the industry on MSNBC
Strap yourself in, it looks like the ride isn't over yet. Let's hope we all decide whatever we can salvage is better than zero

While I'm certainly not calling anyone a liar, I would take anything purported to have come from Dave Siegel with a LARGE grain of salt.
He's not talking about that. When he says that the WN model gives up more revenue, he's probably referring to their point to point system. The hub and spoke system allows you numerous city pair options between a given O & D. That accounts for a lot of revenue contributing to your network. By only serving point to point, all that connecting revenue is lost because you're only offering a flight between Point A and Point B, or Point A and Point D, with stops in Point B and C along the way. I think that's what Dave is referring to. Everyone likes to talk about how the hub and spoke system doesn't work anymore and that it's broken. Not so. While it needs to become more efficient, the fact of the matter is that giving up the hub and spoke system would give up far more revenue than you'd save in costs.
If this is true, which i doubt.....I don't think Dave would respond to an employee something like this, but if it is true.......Please tell me how you can get in touch with Dave, so I can advise him, how my wonderful union, is about ready to cost the company millions of dollars........
There is reason to believe the comments are accurate. I'm looking into this and will respond when I know more.

Dave says, "I couldn't agree more, except that the WN model gives up more in revenue than it saves in cost.

Note to Dave: You can't give up what people aren't willing to pay.
What kind of work rules is this addressing? I don't see how much of an assessment can even be made at the present time since many of the negotiated cost cutting items haven't even been implemented. Also, isn't it the present condition of investments (stocks, bonds, etc.) which determines the level of the retirement funds? I can understand them looking dismal now, but they shouldn't look so bad when the market recovers. Does this mean that Dave isn't looking at emerging from Chapter 11 in the first quarter of 2003? I know that many of these items were things left open in the current TAs, but this statement does sort of seem to contradict Dave's latest statements which indicate that U's restructuring is on track. There are a lot of employees that believe in Dave and his team(me being one of them). I really hope that he doesn't spoil that trust by making another grab at employee compensation unless U really needs it. It would sure have the appearance of an opportunistic attack on the employees.
It could be that the economy(at least the flying part) is just that bad...worse than anyone anticipated.
would just love to know how you can get a message to dave.....let me know....i would love to tell him about the good old union that represents some of the employees........
Did some checking. This letter is the complete response that the Pilot writing to Dave got. The Pilot that wrote dave did not edit his response. Both the letter to and from are posted on the Alpa webboard. It appears that it is a genuine letter from Dave.

I do not personally know the Pilot but I see no reason to doubt that this is what Dave said.
The month of September saw dismal RASM due to passengers not flying sue to the fear of September 11. Apparently the company as well of the rest of the industry are not meeting the revenue targets.

Leo Mullin and Don Carty have been beating a drum in Washington addressing the the industry crisis and Siegel appears to be looking at our problems while seking alternatives.