Management asks for $9B, unions offer $5B

[batman]

[blockquote]
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On 9/26/2002 11:49:21 PM chipmunn wrote:

UAL777flyer:

UAL777flyer asked: Where did you read that Rono was RSA's consultant?

Chip answers: Bloomberg News.

By the way, with RSA controlling the US BOD upon emergence and the pension fund having $24 billion in funds, why do you think RSA sought out Rono Dutta as an advisor? I understand Dutta said last November he would not sleep until he put US & UA together.

I wonder what Greg Taylor is working on these days and why he went back to UA?

Chip
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[/blockquote]


I think you need to stop dreaming about the 400. I suggest you start getting comfortable with RJs.

The reason Dutta is gone is because United didnt want him or his desires and ideas. RSW got him because he is jobless and knows a thing or two about Usair.

As for Taylor, he decided he had enough of Usair and came back to his origional airline. Period.


Your six degrees of separation is getting old.

ps. so much for your invincible Texas group.

 

[chipmunn]

Batman:

I find your comments interesting, but Wall Street analysts offered a different view of the unfolding UA situation. Yesterday Jennifer Waters reported airline anslysts believe the UA union proposal lacks teeth and credibility. In addition, the following comments were made:

J.P. Morgan analyst Jamie Baker said, We are unimpressed. It's essentially an offer to negotiate, not a hard offer. There's nothing we've seen in the last 24 hours to lessen our conviction that a bankruptcy filing is far more likely.

Blaylock & Partners analyst Ray Neidl said, This is smoke and mirrors. They have to get serious, said analyst Neidl of the unions. Time is short and there's no time for fun and games.

Waters wrote however, the company left open bankruptcy as an option, which some observers believe could be the best long-term route to take. We are focused on ensuring that United remains a highly competitive business for the long term, the UA statement noted.

Reports indicate the union coalition is going to try and cut a deal that will permit the company to tap the public capital markets without having the access the federal loan guarantee. Reports indicate the ATSB believes the company cannot be restructured without the ESOP cancelled, the employee board memebers removed, and the governance changed. It's to early to tell if this union strategy will work, but there are now 51 days until the November 17 $375 million debt payment is due.

David Bronnner, who hired Rono Dutta who recently resigned as UA's president, to advise RSA on the new US agreements said, In my opinion, when they (US Airways) come out of bankruptcy, you're going to have the best airline in the country from a financial point of view.

According to Bloomberg News, “The good news is that the Texas Pacific people have terminated their interest as of now, Bronner said. That doesn't mean they won't reignite their interest. Indeed, Texas Pacific's statement left the door ajar. We will continue to watch the company's progress through Chapter 11 with interest, it said of US. Siegel concurred that RSA's bid could be topped by another party, including Texas Pacific. I would not say they are out of the picture, Siegel said.

Chip

 

[UAL777flyer]

These so-called industry experts, better known as industry investment analysts, haven't even seen the entire proposal. All they've seen/heard is the $5 billion in labor cuts over 5 years. Granted, there doesn't appear to be much teeth in that, but they've yet to hear any of the concrete proposals that may be included in the deal. You ask 5 of those jokers what their opinion is and you'll get 5 different opinions, some of which will be biased either for or against the carrier depending on the amount of stock their employer holds. So I believe one must take their opinion with a very large grain of salt.

While I'm not optimistic that this restructuring deal by the unions will be enough given the time factor involved, I still think it's only fair to reserve judgement until all the details of the proposal are known. It's been reported that UA has acknowledged that they will negotiate with each union for their group's participation. That is very discouraging because those negotiations will most likely drag on until UA has no choice but to file for Ch.11, just like US did. I stand by my view that this will all end up being a huge waste of time and that UA will file for bankruptcy within the next 6 weeks.

 

[whatkindoffreshhell]

UA will file within the next two weeks. People are making travel plans for Turkey Day travel. The sooner they file the quicker the negative PR fades from the headlines. Why would a family book holiday travel on UA if there is a possibility of getting stranded in a strange airport by a BK filing?

Been over a month now since US filed and I'd the common leisure-fare traveller has pretty much gotten over the fear of flying on a bankrupt carrier.

 

[Oliver Stone''s Apprentice]

If they file, it will have to be before November 17th, which is when the $900M in debt comes due.

They have just over 50 days to:

1) Agree to the splits between ALPA/IAM/AFA
2) Sell this to their members
3) Sell this to management
4) Sell this to the ATSB

Look how long it took for agreements to be forged at US...

Then recognize the fact that UAL has been trying to get a plan together for economic recovery for almost six months now.

Can this be pulled off in time? Maybe. And maybe not.

 

[UAL777flyer]

To be accurate, the entire $900 million is not due in mid-November. Only about $375 million is due at that particular time. The rest of the debt payments for the remaining amount are scattered between December and January.

 

[Bear96]

Well, eolesen is not known for accuracy.

He is known for his simple AA = good; OAL = bad line of thought.

 

[chipmunn]

[P align=justify][STRONG][FONT face=Times New Roman size=3]Analysts Give Thumbs Down To United Unions' Concession Plan[/FONT][/STRONG][/P]
[P align=justify][FONT face=Times New Roman size=3]WASHINGTON (Aviation Daily) - Industry analysts are unimpressed by a combined concession proposal presented to United by its main union groups, saying that much greater detail and further concessions will be necessary before the proposal is sufficient to address the airline's financial woes. The proposal, released Wednesday night, included $1 billion a year in concessions for five years. It's considerably less than United's proposal of $9 billion over six years, and the fact that the total has not yet been divided among individual union groups rang alarm bells for industry experts.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]Blaylock & Partners analyst Ray Neidl told The DAILY the lack of detail makes it impossible to tell if the concession total is hard dollars or if it's smoke and mirrors, such as vague productivity improvements. Even if all $5 billion is hard wage concessions, the carrier would still need more, Neidl said.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3][/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]Robert Mann, of RW Mann and Company, said although [the proposal] is better than nothing, it's far less than what the company asked for. He said, There clearly must be negotiations on the total, and he believes the proposal is intended as an offer to[BR]negotiate more than anything else.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]Mann said it's troubling the unions have not released a breakdown of the total. If the total is $1 billion, but no one has signed up for a particular share, is it really $1 billion?[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]United spokesman Joe Hopkins said the airline will analyze the unions' proposal, and respond in a few days. The airline has not determined whether talks will be sought, Hopkins said, though he said it's obvious their proposal is not identical to our proposal.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]If a deal is negotiated between United and its unions, employees would still need to ratify it. The unions recognize there is a tight timetable, International Association of Machinists (IAM) spokesman Frank Larkin said. The absence of a firm deadline hardly diminishes the fact that [the concession process] needs to move forward pretty quickly, Larkin said.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]Larkin said United's $9 billion concession proposal came before the recent management change, so the airline and union positions may not be as far apart as [the United proposal] indicates.[/FONT][/P]
[P align=justify][FONT face=Times New Roman size=3]The $5 billion in labor concessions was part of a wider restructuring plan presented by the union. The unions portray the proposal as a framework only, with details to be decided after discussions with United. Overall, it would let the carrier improve its core annual profitability by $2 billion to $3 billion a year, according to the IAM.[/FONT][/P][BR]
[P align=justify][FONT face=Times New Roman size=3][/FONT] [/P]
[P align=justify][/P]

 

[Bob Owens]

As we go back and forth over the proposed givebacks one thing that we should take into consideration is: Can the Economy withstand a UA liquidation? Chapter 11 is a real possibility, it seems that the protections that were put in place after Lorenzo are not what they were said to be.
Lets say that UA goes Chapter 11. Lets even say that the workers still refuse long term concessions and a judge voids the contracts. Then the workers strike. Thousands of flights are cancelled. Hundreds of communities are isolated. Thousands of other industries are effected. Dont you think that the politicians from all the communities that United serves will be screaming for a settlement? Historically when the government steps in to a labor dispute the status quo is maintained-the government has never forced workers to go back to work for a lower wage than when they walked out.
If the airlines are an essentail service, as claimed by Bush when he issued his PEBs, then they should be regulated and treated like a utility. The deregulation experiment has failed. If the industry requires government intervention to regulate wages-to the detriment of the workers, then the whole thing should come under government control.
This is a big bluff. While USAir could have shut down without having a major effect on the economy the same cant be said about UA. UA will not be shut down, even if they go Chapter 11. If you guys go on strike the government will be forced to bail out the company. Corporate bail outs are the American way of life. When the S&L system was deregulated and then crashed, the government even covered deposits over the $100,000 FDIC limit(they didnt have to). Lets not forget LTCM. When the Federal Reserve orchestrated that bail outs they didnt require a 7%ROI. They did it because of the collateral effects that these failures would have caused to the economy without a bail out. The fact is that we are considered easy targets-suckers. We lose because we do not hold out. We must call their bluff and say OK if the airline system is so unprofitable, then shut it down. We have a contract, if you dont live up to its terms neither will we.

 

[Oliver Stone''s Apprentice]

Well, according to the 2Q SEC filing, the Company anticipates significant cash needs for the remainder of 2002, including approximately $200 million in non-aircraft capital spending, a $70 million retro payment under the new contract for the International Association of Machinists and Aerospace Workers (IAM) in December and nearly $900 million in debt maturities in the fourth quarter.

The first payment might only be $375M, but the remaining amount is due within a matter of weeks.

Bear96, this has nothing to do with AA, but whether or not there's enough time to pull off a deal and get the ATSB loan. I say there's an even chance y'all can do it. That's a lot more of a chance than some people are giving it, though.

 

[Rhino]

The airline system is not unprofitable. The business plan and salary structures of the Hub-and-Spoke majors make those carriers unprofitable, except during economic boom times.

 

[The Ronin]

There will be no $70 million dollar retro payment for the IAM. That is already gone, nor the total IAM retro of over $400 million over the term of the contract. Everyone at the lodge and district said this was the first thing to go...sorry fella's

We need men who can dream of things that never were.
John F. Kennedy (1917 - 1963), speech in Dublin, Ireland, June 28, 1963

 

[skyglider99]

[blockquote]
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On 9/28/2002 130 AM The Ronin wrote:

There will be no $70 million dollar retro payment for the IAM. That is already gone, nor the total IAM retro of over $400 million over the term of the contract. Everyone at the lodge and district said this was the first thing to go...sorry fella's

We need men who can dream of things that never were.
John F. Kennedy (1917 - 1963), speech in Dublin, Ireland, June 28, 1963
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[/blockquote]
Do you have proof of this statement?****Are is this just conjecture on your part?******thx

 

[kcabpilot]

Yes Ronin, please show proof of this. I took out a retro loan from the credit union to buy shoes and school clothes for the kids and to get my broken down refrigerator fixed so the frozen case of Hot Pockets wouldn't spoil. Payments on that loan will begin in January!

Please tell me it isn't true. I need that retro money to live!

 

[n711ac]

THE FIGHTING I A M NEW MOTTO FOR 2000-2010
EARLY TO BED
EARLY TO RISE
STEAL LIKE HELL FROM MEMBERS
AND
MAKE UP LIES

wish you at UNITED luck you saw what I A M did for us at US AIRWAYS