Letter to UAL Board of Directors

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Feb 28, 2003
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If you still have UAL stock, or not, the letter to the BOD is from UAUA Shareholder Advocates



Dear UAL BOD

We are writing to you as a group of voting shareholders who have waited long enough to receive a return on our investment in UAL, Inc. More than five years after entering bankruptcy, UAL still has the highest non-labor cost per available seat mile (CASM) amongst the legacy hub and spoke carriers, despite having a competitive fuel CASM. More than five years after entering bankruptcy, UAL’s revenue per available seat mile (RASM) is still far inferior to that of its closest competitor, AMR, despite having lower seating density. More than five years after entering bankruptcy, employee morale is at its lowest level in years and is reflected in customer service surveys. More than five years after entering bankruptcy, UAL’s operational statistics are marginal at best and its operating margin is the lowest in the industry. More than five years after entering one of the longest bankruptcies in U.S. corporate history, United still has a considerably higher debt to asset ratio compared to DAL, another reorganized airline. UAUA shareholders demand a return on our invested capital and we will wait no longer.

Following are a series of initiatives we know will add value to this company’s customers, employees and shareholders:

We request the board terminate Mr. Tilton rescinding all of his unvested options and shares. We challenge the BOD to search for a new CEO who will focus on operational excellence, employee morale, customer service and, ultimately, long-term shareholder return. Due to the damage done by Mr. Tilton to shareholder confidence and employee morale we see no possibility of success under his tenure.

We blame the company’s poor non-labor CASM and operational performance on Mr. Pete McDonald and therefore request his immediate termination with all his non-vested shares and options rescinded. He failed as COO and he will fail as the Chief Administration Officer. Following his termination we request a search for his replacement throughout the industry but not from within UAL. It is our opinion that only someone from the outside can come into the company with a fresh approach on how to leverage its valuable assets.

With regard to consolidation: Should it occur, we advocate that UAL not be put on the chopping block but be kept intact while merged with another carrier. UAL has the most valuable worldwide brand name, strategic U.S. hub structure and lucrative route network in the industry. Compromising these assets would be devastating to the shareholders. Furthermore, we see absolutely no benefit in merging with US Airways. Not only is its financial condition more precarious than UAL’s, but its employees have been mired in a two and a half year-long battle resulting from the America West merger. More importantly, US Airway brings no international flying to the business. We urge the board to pursue more meaningful code-share agreements within the U.S. to bolster its Atlantic inventory.

As shareholders of United Airlines we implore you to take the steps necessary to finally transform the company into a sustainably profitable company where employees and management pull on the same end of the rope. It is our, the industry’s, and Wall Street’s opinion that this cannot and will not happen under the misguided leadership of Messrs. Tilton and McDonald.

Sincerely yours,



UAUA Shareholder Advocates
 
I heard this was begun by a pilot. So the real motive/agenda is what....another pilot money grab down the road...or the best share value for shareholders??
 
I heard this was begun by a pilot. So the real motive/agenda is what....another pilot money grab down the road...or the best share value for shareholders??
Your sources are incorrect.

I just found out that this (or at least a similar letter) was released by the AFA. What ALPA is saying is quietly going on behind closed doors to the BOD. I can not confirm or deny if the message is the same, but you can probably take a pretty good guess. (wink, wink)
 
United Restructures Senior Management
AWIN First
05/08/2008

Darren Shannon [email protected]


United Airlines unveiled a senior management structure today that creates a new position to govern corporate policy, labor relations, human resources, technology, safety and security and customer satisfaction.

The management reshuffle sees current COO Peter MacDonald, who has worked at United for 39 years, assume the newly created role of Chief Administrative Officer. In turn, United’s Chief Revenue Officer John Tague is named COO; his former position is now eliminated.

Both Tague and MacDonald continue to report to CEO Glenn Tilton. The responsibilities for CFO Jake Brace--who United says is still in charge of business strategy--and General Counsel Paul Lovejoy remain unchanged and both still report to Tilton, notes the airline in a statement. United’s Chief Customer Officer will report to MacDonald.

“We are focused on the long term, and with our financial resilience and these changes announced today, I have tremendous confidence in our ability to execute against our plan,†says Tilton. “By bringing together those responsible for revenue, costs and execution, we have a clear line of sight and shared accountability across key areas, better alignment around actions we are taking to combat record high fuel costs and can more quickly implement other necessary changes to the business.â€

United’s management restructuring comes one day after the carrier confirmed lenders had amended a $1.5 billion credit facility that gave the airline “the flexibility to implement the significant actions we are taking to combat higher fuel costs including reducing capacity, creating new streams of revenue and lowering our costs.â€

All these changes come as attention is focused on reported merger talks between United and US Airways. In the past days, this focus has turned to concern for several union groups, including United’s Air Line Pilots Association branch, who called a merger with US Airways “extremely negative,†and from the Association of Flight Attendants-CWA members from both airlines, who in a joint statement criticized management-labor relations at the two carriers.
 
we see absolutely no benefit in merging with US Airways. Not only is its financial condition more precarious than UAL’s, but its employees have been mired in a two and a half year-long battle resulting from the America West merger. More importantly, US Airway brings no international flying to the business.
This letter would be more effective if this letter was based more on facts than opionion. US has posted nearly a half billion dollar profit every year since it merged with AWA. Granted it did show a loss this past quarter, much like every airline caused by fuel.

As far as international flying, it has 21 daily European departures from its PHL hub alone, (granted, much smaller then the current UA presence) not to mention that US is second only to AA in the Carribien where AA maintains a MIA and SJU hub.

As far as labor unrest, it only extends to the pilots, who are in disagreement over seniority issues. All other contracts are settled, with the exception of the FA group.

So what does US have to offer UA?
-A stronger finacial position
-A stronger European presence
-A much stronger Carribien presence
-A Southeast Hub.

What do we here at UA have to offer US?
-A big airline with a lot of finacial baggage.
 
^^^^^^^^^^^^^^^^^ (welcome to the board, your post is amusing.....)^^^^^^^^^^^^^^^

Weeks ago I posted that the UA BOD should just hold their nose and pay off Tilton/Brace to just leave.

Then stand proud and ALONE and focus on your product value.

US will eventually dissolve itself.
 
^^^^^^^^^^^^^^^^^ (welcome to the board, your post is amusing.....)^^^^^^^^^^^^^^^

Weeks ago I posted that the UA BOD should just hold their nose and pay off Tilton/Brace to just leave.

Then stand proud and ALONE and focus on your product value.

US will eventually dissolve itself.
I doubt that US will dissolve itself but I think if the oil prices keep going up I believe no airline would survive
 
I don't understand this.

Why do the US folks seem to want to merge with UAL if UAL is in such horrible shape? I'd think you'd be screaming LOUDLY to your BOD to not merge with us.

Please explain.
 
No way could US stand alone for an extended amount of time. The route network is still polorized East/West. However the veteran employees continue to provide a professional operation. UA offers the Worldwide recognition of thier efforts.
 
I don't understand this.

Why do the US folks seem to want to merge with UAL if UAL is in such horrible shape? I'd think you'd be screaming LOUDLY to your BOD to not merge with us.

Please explain.
I could be wrong, but I dont think the majority of the US folks want the merger Heck Dougie cant even complete the fiasco mess he created 3 yrs ago with the acquisition of US by HP. I for one dont want a merger with UAL
 
partially to get their mitts on some pacific and europe flying i would think

if someone was hot for 'europe flying', wouldnt they be better off at the airline that flies to more europe destinations (us airways)? or is it more exciting to fly more seats to fewer places? flight attendants say really stupid things
 
if someone was hot for 'europe flying', wouldnt they be better off at the airline that flies to more europe destinations (us airways)? or is it more exciting to fly more seats to fewer places? flight attendants say really stupid things
Talk about saying stupid things! :huh:

This type of thinking is exactly why you are not running a major corporation. You see the world only through your eyes.

Do you think an airline makes it's business decisions based on "If I wanted to go on vacation, this would be a cool place to go." ?????????????? It's got nothing to do with being "more exciting" as you say.

Yes, flying to less places with more seats is a much more sound model than spreading those seats all over creation. First of all, from an infrastructure point of view, every destination you fly to requires new landing permits, terminal space, ground service employees, maintenance support, catering, hotel contracts, and the list goes on and on. Consolidating your seat capacity on highly traveled routes, be they business destinations or major gateways like Heathrow or Frankfurt, or very popular leisure destinations, maximizes the utilization of your existing assets. Better to fly 2 daily flights to LHR than 1 weekly flight to 14 "exciting" destinations. Business travelers spend money on flights to where they need to go. Then they cash in those miles at places that are fun or "exciting."

Then of course there is cargo. I'm sure boxes and palates don't care how exciting the destinations are. Filling the pits with cargo can pay for a flight regardless of how many seats are filled.

So this illusion that your 18 international widebody planes going to all those destinations is better that UA's fleet of 117 767's, 777'3, and 747's covering the globe is perplexing. There is not an airline in the US that would not love to "get their mitts on some pacific and Europe flying" as spacewaitress accurately points out.