Must Read Column From The Denver Post

EyeInTheSky

Veteran
Dec 2, 2003
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Pittsburgh
United needs a big break, and so do we
By Al Lewis
Denver Post Columnist


To the Air Transportation Stabilization Board: Quit messing around.United Airlines needs $1.6 billion in loan guarantees to help it get out of bankruptcy, and you guys are balking.

Time to throw good money after bad. You already blew $900 million on US Airways and now it's yakking about filing for bankruptcy again. So what?

It's time to blow some more dough. United is the world's second-largest airline. It has 62,000 employees worldwide. And because it's responsible for 60 percent of the air traffic at Denver International Airport and has 6,200 Colorado employees, we need this airline out of bankruptcy.

I say this as a columnist who has taken United to task many times for its boneheaded management and demanding unions. In the past, United factions have been so busy fighting that they've left customers at the gate. And when it comes to Ted, United's new low-cost airline, I am still trying not to laugh.

"It's not a strategy," jokes local aviation wonk Mike Boyd, "It's a paint job."

More than a year ago, I wrote a column suggesting that United pilots helped drive their employer into bankruptcy with what was once the fattest union contract in aviation history. I also suggested they were glorified bus drivers. I still get obscene calls and e-mails from United pilots to this day. One said he hoped I'd die in a plane crash.

But I have a big heart: They may wish me dead, but I want them to survive.

Now, you boys at the ATSB were formed to help airlines recover from 9/11. But you turned down United Airlines, which lost two planes in the tragedy. The Wall Street Journal, citing unnamed sources, reported on Monday that you are unimpressed with United's business plan and might turn it down again. Thanks to your balking, United on Friday had to ask for a three-month extension of its Chapter 11 reorganization, which was supposed to be completed by June 30.

I suppose it's kind of scary giving a loan guarantee to an airline that has lost about $8 billion in the past three years. And in 17 months of bankruptcy protection, United has not demonstrated that it will ever be profitable.

But United has made progress. For one thing, service is better and employees are a heck of a lot nicer, with the possible exception of a few pesky bus drivers - I mean pilots.

The airline cut $5 billion in annual expenses, half of it by negotiating wage and work-rule concessions from union workers. More cuts are possible.

"It now has one of the lowest cost structures among the big hub-and-spoke carriers," said Dan Kasper of Emeryville, Calif.-based aviation consultant LECG.

OK, so it's still not low enough. Low-cost carriers like Frontier, JetBlue and Southwest have far lower cost structures than the hub-and-spoke carriers, and they are taking over the industry.

And it's true that rising fuel costs will make profits more elusive for United.

"If not for fuel prices, I'd be able to say we'd be profitable this quarter," CEO Glenn Tilton said last month at an airline industry meeting in New York.

And if United could beam customers through the sky without expensive jetliners, it would be even more profitable. But that's not the point.

If United tanks, a few regional economies may follow, particularly Colorado, where United is so dominant.

Forget about those self-serving "free-market champions" who are lobbying against loan guarantees for United. Like Douglas Parker, CEO of America West Airlines, who last week told a U.S. House subcommittee on aviation that loan guarantees are no longer necessary.

"It worked," he said. "Now, let the free market take hold."

The airline industry has lost $25 billion since 2001. Parker now wants free-market forces to serve up the losers. Of course, America West got its $380 million loan guarantee in early 2002. And today Parker is a free-market capitalist?

The airline industry has never seen a free market. I'm not sure it's ever seen a profit either, if you subtract the down cycles from the up cycles.

The Air Transportation Stabilization Board was created for a reason.

Now stabilize United.

Al Lewis' column appears Sundays, Tuesdays and Fridays. Reach him at 303-820-1967 or [email protected] .

http://www.denverpost.com/Stories/0,1413,3...2198738,00.html
 
"For one thing, service is better and employees are a heck of a lot nicer, with the possible exception of a few pesky bus drivers - I mean pilots."


"More than a year ago, I wrote a column suggesting that United pilots helped drive their employer into bankruptcy with what was once the fattest union contract in aviation history. I also suggested they were glorified bus drivers. I still get obscene calls and e-mails from United pilots to this day. One said he hoped I'd die in a plane crash."


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