Examining a Divided United Airlines in This Sunday''s Chicago Tribune


With all due respect, you''re getting downright creepy with your continued UAL bashing.


Thanks for the logical post. I have spoken with several friends within ALPA, and they all agree that UAL has turned the corner. I''m glad that you have found a good job, and look forward to the day that you can return.
Two of Munn''s habits are especially revealing:

1. He claims to not ''visit'' boards other than US (c''mon here is a guy who surfs every other aviation-related website yet resists the temptation to explore what is right under his nose).

2. You would think that Munn, with all of his expertise, would offer commentary on other airlines (if nothing else just throw the dogs off his trail).

He''s an interesting chararacter but I''m going to employ the "ignore" button from now on....
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Dear Fellow Posters:

There is nothing I have written in this thread that is not fact and I have never bashed, but it is very clear some of the readers want to ignore the facts because the pain is to strong. I understand that, but I still believe it's better to know the truth. In regard to the last failed attempt to merge, most people do not know what truly occured in the final days of the companies attempt to join, but according to a source in the Department of Justice's conference room here's what occured:

The final days of UAL’s attempt to acquire US Airways
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By Chip Munn, August 2, 2001
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On July 12 UAL Corp. and US Airways jointly submitted their 21-day Hart-Scott-Rodino Act notice to the Justice Department. This notice advised the government of the airline’s intent to complete the proposed transaction and required the regulators to render an antitrust opinion by August 1. Regulators have told sources that UAL submitted the final requested documentation to the Antitrust Division on July 13 and the parties genuinely tried to complete the deal.

On July 23 all interested parties met in Washington at the Department of Justice and the airlines aggressively lobbied the federal government to not oppose the transaction. The parties in attendance included airline senior management (from UAL, US Airways, AMR, and DC Air) the company’s antitrust attorneys, States Attorneys Generals from Pennsylvania, New York, and Maryland, Senator Arlen Specter (R-PA), and the Justice Antitrust Division staff lead by Deputy Attorney General for Antitrust Hewitt Pate.

Reports indicate both UAL and US Airways aggressively sought to complete the deal, but no one knows for sure if UAL’s efforts were designed to complete the transaction or to avoid a potential breach-of-contract lawsuit. Nonetheless, Pate was said to be a “problem solver†versus “problem maker†and he tried to broker a deal that the federal government believed was within established M & A guidelines and case law. The airlines had no choice but to submit the original UAL-US Airways MOU, amended by the UAL-AMR Corp. January 9 agreement, to complete the transaction by the August 1 termination date, because any material change would require up to another four month regulatory review per present M & A law.

During the July 23 meeting at the Justice Department reports indicate Pate offered a solution for the deal to proceed with a government “no action†letter. The proposed changes included eliminating DC Air, selling Washington National gates/222 slots to an established carrier(s), if this carrier was AMR eliminate the Shuttle Joint Venture/limits on American Airlines growth to permit AMR to create its own independent Shuttle, and sell approximately 15 PHL gates to provide
effective competition for both the post-merger route monopoly/duoply issue.

Reports indicate UAL was agreeable to the governments requirements provided their would by no labor interference. Why? Simply put UAL found itself in a “catch 22â€. The Chicago-based airline is projected to lose over $1 billion this year, is experiencing a serious increase in costs, like other airlines has witnessed a stunning year-over-year revenue loss of approximately 10%, and has limited access to capital markets. With open labor contracts for the mechanics and ramp workers, coupled with the AFA mid-term wage increase demands/scope clause issue, UAL could ill afford to complete the transaction and pay $4.3 billion for US Airways (minus the capital obtained from the post-merger divestitures) plus assume $8.1 billion in debt, if the airline was going to face continued labor unrest.

Reports indicate UAL Corp. Chairman Jim Goodwin approached the unions about UAL’s predicament and the IAM was generally agreeable, but the AFA was not. The AFA said they would support the transaction and waive their scope agreements provided the company would provide the Flight Attendants with pilot type wage increases of 20%. The company rejected the AFA demand and when the union filed its lawsuit in U.S. District Court on July 26, UAL could not accept the governments brokered plan to complete the merger transactions and the deals collapsed.

Faced with no alternative and the airlines request to have the regulators announce their decision by July 27, the government was forced to issue its press release announcing it would seek injunctive relief to block the merger if the airlines attempted to complete both the UAL-US Airways and UAL-AMR transactions. In response, the airlines elected to jointly terminate the MOU and US Airways agreed to accept the $50 million termination fee. These two steps eliminated a US Airways potential breach-of-contract lawsuit and there is widespread speculation US Airways will not seek damages because the airline does not want to jeopardize any future relationship with United Airlines. Nonetheless, immediately after announcing the deals joint termination UAL surprisingly issued a “curious†statement.
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The airline said, "UAL Corporation intends to work with US Airways to determine the appropriate steps that need to be taken now that US Airways has acknowledged that the merger with United will not go forward.†This statement has increased speculation the airlines may at some point revisit a corporate transaction, but before that could be accomplished both carriers must rectify a number of outstanding issues. For US Airways it appears that issue is to quickly remedy shareholder value concerns. [/SIZE]
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Clearly senior management at both airlines is disappointed in their inability to complete the deal, but more importantly for US Airways employees the large institutional shareholders are even more disappointed. Interestingly, this shareholder disappointment seems to be more of being disgusted with the regulatory decision then US Airways present situation, but regardless the shareholder opinion will have an affect on US Airways employees one way or another. These large investors believe “how dare the government tell us what we can do with the company we own and moreover prevent us from exercising our right to obtain a capital gainâ€, but the current issue for US Airways employees is immediate shareholder demand to quickly obtain a large ROI. [/SIZE]
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These on and off again marriage partners seemed destined to once again revisit some form of a corporate transaction and it will be interesting to see how events between the two companies procee[/SIZE]d.
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Chip concludes: As I have said, I have very little interest in debating UA except how the company will effect US, just like I would be interested in AA or NW if they were involved with US. Moreover, the only reason I ventured onto this board was because of some sophists who began writing about me, which I consider a compliment that my posts generate this much interest. However, when the reaction posts are inaccurate, I believe they need to be corrected to set the record -- thus my comments. We'll know more about UA aas an on-going concern this Friday, on August 1, and most importantly in just a few short months, even if the truth hursts.

Best regards,

Chip [/SIZE]
Chip wrote;
"Moreover, the only reason I ventured onto this board was because of some sophists who began writing about me, which I consider a compliment that my posts generate this much interest."

Chip, let’s be honest, if this is the only reason why you ventured over to the UA board, then I am sorry to say, but I do believe you to be a bit of a liar. I will again quote you.

Chip wrote;
"As I have said, I have very little interest in debating UA except how the company will affect US, just like I would be interested in AA or NW if they were involved with US."

Well my dearest, UA and US have been inter-twined for sometime now. I know for at least the last six years, so wouldn''t it be fair to say that you ventured over to this board before and not only because of some sophist who enticed you over? I mean honestly Chipster; I found your postings in four different categories, and number one on my list was even started by you.

1) "Examining a Divided UA in this Sundays Chicago Tribuneâ€￾ Your last post being 7/14/03.

2) "United Rhapsody of Blues." Your last post 7/14/03

3) "Bad News" Which clearly justifies others opinions about you and your gravitational pull towards anything negative in regards to UA. Your last post 7/14

4) "Star Alliance Partner Outâ€￾ The topic doesn''t say which Star Alliance Partner. Your last post 7/08/03. This happens to be the last day anyone posted on that board.

Now let’s talk about newspaper articles and the press. Chip, Having once lived in L.A., and knowing many people in world of show business (or the "Biz" as they would say,) I can honestly say that many of the stories you hear about in the papers are in most part fabricated or are set up by the stars themselves in order to gain FREE publicity. I understand that UA is not a starlet in the Hollywood scene, and I am not saying that UA has fabricated any of their stories, but what I am saying is that FREE publicity surely goes a long way.

Free publicity can also be very cost effective. Examples involving UA would be: A) to achieve better lease agreements (which UA has been working on,) B) to gain employee wage concessions (which UA has accomplished,) C) to attain, slash, and discontinue anything that would help lower their daily, weekly, monthly and yearly costs (I am confident that this is on-going,) and finally D) to make sure that the traveling public does not forget that UA is still a operating airline, and would gladly like to take them to wherever they want to go. You know, my mother use to tell me, “Get what you can, while you can, because when the well fills, everyone will come running with their buckets.â€￾

In addition, all the information that has been given to the press about any immediate or future “UA business planâ€￾ has been carefully calculated. Do not fool yourself if you think it otherwise. These people in higher offices know exactly what they are doing. Why would they tell any of their competitors (including U) their entire business plan? It does not make good business sense, an interesting game of chess, battleship (you sunk my battleship, remember that?), or hide in go seek. The best business advice that any businessman or avid game player could give, is to keep the competition guessing.
Chip, I don't know what your article from the past has to do with this thread; the only thing that I can figure out is that it's a subterfuge to avoid answering questions from your critics.
I have answered questions that you've posted of me, yet you continually avoid answering others' questions. Why do you not answer others' questions? Perhaps the answers would be too painful?
As for your article, it was poor analysis then, and in light of Goodwin and Dutta's ouster, it's even poorer analysis in today's light. Here's my analysis in a nutshell: UAL made an extremely generous offer back in early '00 based on projections of the overheated economy continuing at that rate for several more years. While I'm sure that Goodwin and Dutta had backing in WHQ for the purchase, I doubt that many were happy at the high price that UAL was offering for U. As the economy deteriorated and the high revenue business traveler became more scarce than a virgin in a whore house, it became increasingly obvious at WHQ that the timing was wrong for buying U. I believe that WHQ looked for a way out of the agreement without triggering lawsuits; paying $50 mil was peanuts compared to the possible ensuing litigation. WHQ's plan seems to have been to not yield to all of the government's demands in order to consummate the buyout. So, WHQ allowed the government to take the 'heat' for blocking the buyout. As it turns out, the timing was propitious. If the buyout had been consummated, I doubt that the combined company would have survived 9/11.

Chip, let me discuss in detail why I anticipate U transforming into a regional feed for UAL in the years to come.
First, the short stage length of the bulk of U's flights are more fitting for RJs than larger aircraft.
Second, now that U will be joining *, U won't need any international or transcon flights; * partners can provide this service for U's customers.
Third, U plans on retiring the 75/767 with no replacement. That leaves a large gap between the A330 and A321. Does this not raise any eyebrows?
Fourth, U is looking at replacing their 737 fleet with EMB 190/195s. Why not A318s? A318s would make much more sense from a fleet simplification plan. I believe that the reason for that is because, in the future, those EMB 190/195 orders will turn into EMB 170/175s.
I expect U to eventually sell their A330s and let their * partners pick up all of the international pax. That will be followed by U selling all of their A320 series aircraft, transforming U into a regional.
Again, UAL and U management doesn't give a rat's a$$ about you or me. Their primary motivation is to maximize profits. David Bronner has no reason to care about the type of aircraft that U flies; he's just concerned about making money for the RSA. Right now, the big money in the airline industry is in operating RJs. And that's where he will take U.

Let's be perfectly clear here. UAL has MANY problems. But those are short term problems, and UAL employees and management are meliorating UAL's problems every day. UAL's long term prognosis is much better. U's markets, on the other hand, are being assaulted on all sides from multiple carriers. SWA, Jetblue, AirTran and Delta are making inroads in just about every market that U serves. Unless U is able to counter the inroads that multiple carriers have made into U's territory, U will be forced to reinvent itself as a regional. And let's be honest. U's route structure beyond short stage length flights on the east coast is thin.

"Chip concludes:
As I have said, I have very little interest in debating UA except how the company will effect US, just like I would be interested in AA or NW if they were involved with US. Moreover, the only reason I ventured onto this board was because of some sophists who began writing about me, which I consider a compliment that my posts generate this much interest. However, when the reaction posts are inaccurate, I believe they need to be corrected to set the record -- thus my comments. We'll know more about UA aas an on-going concern this Friday, on August 1, and most importantly in just a few short months, even if the truth hursts. "

Novaqt responds: Here it is folks, the real underlying concern for Chip's continued bashing of UA. The first sentence reveals "except how the company (UA) will effect US, just like I would be interested in AA or NW if they were involved with US."
He just cannot accept the fact that UA has turned the corner and will emerge from bankruptcy successfully.

Chip, you say that you came to the UA board because you received an email that your posts were being discussed here. However, when someone responds to you and your posts, you repeatedly go on the defensive to defend you posts. Why do you FEEL that you have to repeatedly defend yourself? This is another sign of INSECURITY. Since you copy and cut and paste other reporters' verbage to pass off as your analysis, you come across as not being sure of the info you post. Everyone knows that newspapers have an Agenda and thus report accordingly to their Editor's agenda. Reporters and or Editors are known to edit out important info out of their stories to further their paper's agenda.

BTW, you must have an awful lot of time on your hands to be "obsessive compulsively" posting on both US and UA boards as much as you do. How often are you scheduled to fly your 320 Airbus? It can't be much or you only fly short hauls. I really feel sorry for you, because you really need to get a life, one that you can have fun and enjoy. Perpetually negatively analyzing United Airlines speaks reams (sp?) about you and your inner-desires to wish ill-will on your former employer.
On 7/13/2003 10:47:02 AM Chip Munn wrote:

What company has reduced capacity to match demand ...
Comparing UA and US, the answer is ... UA! From June 2002 to June 2003, UA''s system ASMs decreased by 14.2% while US'' system ASMs dropped by only 7.3%. And imagine my surprise when I looked at the system ASM change from June 2001 to June 2003: UA -25.9%, US -25.4%!!! Moreover, by virtue of UA''s load factor rising from 78.1% in June 2001 to 82.0% in June 2003 (up 3.9 points), contrasted with US'' load factor increasing from 76.8% in June 2001 to only 78.6% in June 2003 (up 1.8 points), it appears that UA has done a better job of "reduc[ing] capacity to match demand."

On 7/13/2003 10:47:02 AM Chip Munn wrote:

... also had the highest load factor in the history of the company from 78.0% to 78.6% for the month of June?
Are you seriously bragging about US'' June 2003 load factor of 78.6% while eight other carriers (AA, B6, CO, DL, HP, NW, TZ and UA) had higher load factors for the month? And while nine other carriers (AA, AS, B6, CO, DL, F9, FL, HP and UA) had larger percentage point increases in their June 2003 load factors? (And incidentally, US'' June 2002 load factor was 77.3%, not 78.0%!)

IMHO, Chip, you need to do a better job of getting your facts straight regarding capacity reductions and load factors. And while US'' June 2003 load factor might be a company record, it pales against UA''s all-time record load factor achieved during the month, and it isn''t really all that great when compared to the rest of the industry, either.