On 2/6/2003 1:56:53 PM Ukridge wrote:
Before the long knives come out and everyone starts to dance around the May Pole in a moment of Orwellian hate against United management, is it possible that this may very well be the best possible course against the creditors? By this I mean that United is using they leverage they have to negotiate better lease arrangements. In turn, the other parties scream and cry that they are not being treated fairly. Too bad. These are the very firms that would kill and maim to make a dollar. I would rather think that this pressure is exactly what is needed and it must be cutting close or the protests would not be so great. I have watched from the sidelines as other airlines, financial institutions, and analysts have tried to drive United out of business. When United fights back then this is then characterized as unfair. I must throw my support in behind United managment on this. I hope they end up having to pay a penny on every dollar!
Actually, that would be me you appear to be responding to, not UnitedChicago, and the simple answer is: no, this is not in Unitedâ€™s best interests.
Itâ€™s not that United is being â€œunfairâ€. It is that the creditors can take back their airplanes if they want, at which point itâ€™s game over for UAL.
Now, the market for airplanes stinks currently (although at different levels for different aircraft, the 737 market is just about non-existent, the 757 market is also poor, but is better for the newer planes with certain engines), but if United pushes it far enough, the creditors can choose to take their ball (or their 757) and go home. United wonâ€™t pay â€œa penny on the dollarâ€ unless the market for the aircraft works out to less than that, both now and in the upcoming 12-36 months.
The other thing is that UAL is in no position to be â€œplaying hardballâ€. There is a fine line between â€œbeing a strong negotiatorâ€ and â€œbeing a horseâ€™s assâ€, and United is firmly on the â€œhorseâ€™s assâ€ side of the line. Which, coming from a company that is in in bankruptcy, is phenomenal.
Iâ€™m not saying Unitedâ€™s management should get down on the rug and beg forgiveness, but they should realize that they need to work with their creditors to survive, not actively piss them off. And so far theyâ€™ve been actively pissing them off, which is stupid.
As for Segueâ€™s comments, youâ€™re right, given the poor market, the lessors options are limited. However, this doesnâ€™t mean United should act as though the lessors options are non-existent. Nor should they be coming down to the last minute (and beyond) without having worked out ANY agreements.
You might think this is a â€œbash UAL managementâ€ post. Itâ€™s not, itâ€™s an observation that UAL management doesnâ€™t seem to have learned anything, and institutional arrogance will only get in the way of any revival, and Iâ€™ve knocked some union personnel for that same attitude.