Must read UA Story

UnitedChicago

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Aug 27, 2002
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I''ve only posted a few times here...but each time i''ve blasted the press and analysts that follow United because they don''t truly understand the industry or United. They constantly mis-calculate.
Here''s a great article from Fortune. It doesn''t matter if you are pro management, pro labor, pilot, mechanic, flight attendant...this article states it like it is. They must have had access to an insider - Creighton himself? No...cause it''s a bit critical of him. I think Dutta or Studdert leaked this info confidentially as a parting shot.
Anyway...sorry it''s so long...happy reading. UA will make it! Keep your chin up! Keep the faith.
--
Why United''s Crisis Is Good for Flying
Waning hope of a rescue by taxpayers is forcing the airline leader in bloated costs to face reality.
FORTUNE
Monday, September 16, 2002
By Shawn Tully
The mayday came Aug. 14, but the crisis at United Airlines had been building for years. On that Wednesday, CEO Jack Creighton, the Solomonic 70-year-old who had been summoned from retirement to act as caretaker for the airline, set a draconian deadline. United is in such disastrous financial straits, Creighton declared, that it must wrest huge cost reductions from suppliers, lenders, and employees in just 30 days. Achieving those savings is the only way for the $16-billion-a-year giant to win what it desperately needs: a $1.8 billion loan guarantee from the U.S. government.
If the cost cutting fails, Creighton warned, United will probably file for bankruptcy by mid-November. "The world has changed," he said dourly. "Unless we lower our costs dramatically, bankruptcy protection will be the only way to ensure the company''s future."
Creighton''s mayday was less a cry for help than an ultimatum aimed at United''s unions. In an industry whose major players are hobbled by exorbitant union contracts, United, which employs 83,000, is burdened with arguably the highest labor costs of all. The problem is compounded because employees own more than half of United''s stock and thus have a strong say in setting their own raises.
Now, the challenge of guiding this ungainly contraption is shifting from Creighton to a new boss. On Labor Day, United''s board chose Glenn Tilton, vice-chairman of ChevronTexaco, as CEO. Tilton is neither a turnaround specialist nor an airline industry expert: He won the job chiefly because he was acceptable to United''s unions. At ChevronTexaco, Tilton built a reputation as an astute consensus-builder who nurtured an excellent relationship with workers. It was he who helped Texaco repair the damage from the infamous mid-1990s scandal over its alleged mistreatment of African-American employees. Though the shadow of bankruptcy is still his strongest lever, Tilton is already playing the peacemaker, stressing the need for a "genuine partnership" between management and the unions.
Tilton won''t have to reach far for an example of what can happen if the unions fail to come to terms--US Airways, America''s smallest major carrier, filed for bankruptcy on August 12. As part of its restructuring, US Airways agreed with the Air Transportation Stabilization Board, the federal authority dispensing post-Sept. 11 aid to airlines, to slash costs in exchange for $900 million in loan guarantees. The biggest cost-cut: 25% off the airline''s labor expenses.
Weirdly, the specter of a United bankruptcy is good for the airline industry. To begin with, United''s planes will keep flying whether it goes bankrupt or not--reassuring news for consumers, since United accounts for 17% of U.S. air travel and an even bigger share of the business market. Meanwhile, its crisis represents the first real possibility for the industry to break its disastrous spiral in labor costs. The major airlines--American, United, Delta, Northwest, Continental, and US Airways--are reeling from the recession and the aftermath of Sept. 11. Their revenues have dived 23% since 2000, while the costs of insurance and security measures have soared; analysts expect the six companies to lose $6 billion this year. United''s crisis may finally convince the unions of the need for change. "Because of the threat of bankruptcy, I see lots of downward pressure on pay," says Sean Sullivan, head of the National Pilots Association, which represents the pilots at AirTran, a low-cost carrier.
This isn''t the kind of industry leader United was supposed to be. When the airline restructured in 1994, it began a bold experiment in employee ownership. In exchange for deep pay cuts, the pilots, mechanics, ground workers, and management received 55% of United''s shares. The dream was that those employees would moderate their future pay demands for the good of the company they mostly owned; the reward for their restraint would be a strong share price.
But the concept was flawed from takeoff. The unions, especially the pilots union, soon realized that they could extract more wealth from United by driving up salaries than by growing the stock. In United''s boardroom the unions wielded a big club: veto power over the choice of any new CEO. That ensured a series of pliable CEOs sympathetic to the unions'' demands. "It''s good for labor and management to be adversarial," says Michael Boyd, chief of the Boyd Group, a leading airline consulting firm. "Unions should not be picking CEOs."
The problem became obvious in the spring of 2000. In the midst of negotiating a new pilots'' contract, CEO James Goodwin, a career United executive who had been championed by the unions, became intrigued with the idea of acquiring US Airways. He pursued a deal in secret.
When the pilots found out, they became enraged, not at the exorbitant $4.3 billion price Goodwin wanted to pay but at what they saw as a betrayal: They would have to sacrifice many of the best-paying positions and perks to US Airways pilots with more seniority. In protest, pilots failed to show up for work, forcing the cancellation of hundreds of flights. The slowdown brought United to its knees. To win the pilots'' support for the acquisition, Goodwin agreed to an incredible 28% pay increase in October 2000, far more than the pilots had demanded earlier in the year.
Washington ultimately blocked the merger on antitrust grounds. But the United pilots'' settlement created an industrywide feeding frenzy. "I was working with the American pilots on the day the 28% increase was announced," recalls Boyd. "All molecular motion in the room stopped. The reaction of the American pilots was ''When do we get ours?''" In early 2001, Delta pilots won the same increases granted United''s, plus one percentage point. American pilots are now demanding at least the pay garnered by their United brethren.
Even Sept. 11 didn''t stop the labor insanity. When Goodwin left as CEO in October, with a strong push from the unions, United picked Jack Creighton, a longtime board member. The unions liked him because as CEO of Weyerhaeuser he''d had excellent relations with the International Association of Machinists, the same union that represents United''s mechanics and ground workers.
Creighton was sympathetic to the unions at first. When he told them that United needed big givebacks, the mechanics and ground workers responded that they''d think about concessions. But they felt they were already underpaid. So they asked Creighton first to raise their pay to industry standards. Incredibly, the CEO agreed. The union loved the wage increases, but its enthusiasm for givebacks quickly evaporated.

Such deals helped bring United to the brink. Revenues have declined 26% since 2000, in part due to substantial cuts in scheduled flights, yet United''s total costs have dropped less than 3%. A major reason the expenses are so stubborn is the pilots'' contract, which is costing United an extra $692 million this year over 1999. United captains with 12 years of seniority now earn $265,000--the figure at AirTran is about $100,000 less--and work around 12 days per month. This largesse comes at a price. Since 1998, United''s market cap has dropped from $6 billion to $180 million. The entire company now trades for less than the price of a pair of 747s.
The ATSB, whose loan guarantee United is seeking, was set up by Congress to help airlines recover from the financial shock of Sept. 11. But under executive director Daniel Montgomery, a tough former bankruptcy workout
specialist from Bank of America, it has evolved to serve a very different purpose--instead of a lifeline, it has become a lever to help the industry force down its bloated costs at last. Montgomery says United needs to prove two things to win the board''s support: "It must show that it can cut costs enough to become a viable, profitable airline. That''s what US Airways showed us. It must also prove that it can''t raise financing from private sources."
Neither hurdle will be easy to clear. United got off to a weak start. It first applied to the ATSB with nothing more than a proposed 5% pay cut from management and 10% from the pilots. And the pilots'' concession was even less than met the eye. After taking a dip, their pay was to shoot back up, so that by 2006 senior captains would be making $295,000 a year, even more than they would have made under their original contract. "Where United started was borderline laughable," says a top government official familiar with the ATSB negotiations. "They thought they could get guarantees by getting their Congressmen to call."
Now United is getting serious. For one thing, the arrival of Tilton, whom the unions endorsed as CEO, could smooth negotiations within the company. To win the guarantees, it knows it will have to come close to US Airways'' 25% labor cost cuts. The pilots, who have the most to lose in a bankruptcy because they have the highest salaries and own the bulk of the employee-controlled stock, are talking to management about deeper concessions. Says Paul Whiteford, who heads the United chapter of the Air Line Pilots Association: "We''re married to this company." But United will need concessions from all its unions. The toughest customer is the IAM, whose mechanics still refuse to make concessions to US Airways. To make matters worse, the IAM is struggling with a rival, AMFA, to represent United''s mechanics. The IAM lost to AMFA in 1999 at Northwest. It doesn''t want to lose again at United.
The IAM, its leaders say, has already done its share: Last year it agreed to allow United to pay $500 million in retroactive wage increases over two years--with interest, of course--instead of demanding the full amount upfront in cash. Now the IAM is weighing a company proposal to cut pay. But attorney Harvey Miller, who tangled with the IAM during the Eastern and Continental bankruptcies, says, "I don''t think United can get the givebacks they''ll need because of the IAM--it''s the toughest union."
United may also have difficulty convincing the ATSB that it can''t raise private funds. The company holds $3.4 billion in debt-free aircraft that could serve as collateral for hundreds of millions of dollars in loans, though at lofty rates.
Bankruptcy, on the other hand, could get United big concessions, including givebacks on the epic scale the ATSB is seeking. The loss of passengers in the event of bankruptcy would probably be minor--consumers have readily patronized bankrupt airlines in the past. In Chapter 11, management must first try to negotiate new contracts with its unions. But if United deems that the concessions the unions then offer aren''t big enough, it can present the bankruptcy judge with its own plan for achieving profitability, and the judge can impose management''s deep cuts. Even if management proves too timid, the judge can enforce cuts on behalf of creditors that want to get the company flying profitably. Bankruptcy would have another healthy effect: Once employees'' shares become worthless, the unions lose their hold on the board.
A good guess is that United will gain a 20% reduction in its labor costs and a 10% reduction in total expenses, either in bankruptcy or in a deal with the ATSB. That would place United wing to wing with the lowest-cost majors, Continental, Northwest, and US Airways, and well below American. Most important, it could start something revolutionary in the industry, a ripple effect of lower labor costs. "This will change the direction of compensation," says analyst Philip Baggaley of Standard & Poor''s. Conceivably the cuts at United could send high-cost American scrambling for bankruptcy. More likely United''s example will allow American to win better deals with its unions.
Pay cuts won''t end the major airlines'' travails. Even Continental and Northwest have costs about 40% higher than cut-rate carriers like JetBlue and Southwest. The majors collect more revenue per seat than the Southwests because they attract business customers with lavish frequent-flier programs, more frequent flights from big business hubs, and creature comforts like extra legroom. But the majors'' hold on the road warrior is weakening. Says Douglas Weeks, travel manager for Booz Allen Hamilton in Washington, D.C.: "Our consultants drive to Baltimore to save money on AirTran and Southwest flights. They can save $1,000 flying to the San Francisco Bay Area on Southwest, vs. the cost on US Airways, United, or American, from Washington."
In the long term, the major airlines will have a hard time charging the sky-high business fares they need to make money in good times and bad. The low-cost airlines will continue to win market share. The question is how fast the erosion proceeds. But that''s next year''s crisis.
 
OP
U

UnitedChicago

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Obviously there is no "smoking gun" or direct quote that would implicate Dutta or Studdert as providing commentary to this article.

Off course, my off-the-cuff thought is that someone had to help this reporter with this story. Sure all these facts have been discussed before. However, this reporter did an exceptional job to paint a detailed picture in a complex industry and company that spanned several years. Not just the last 1.5 years.

But that's besides the point...the reason for the post was to share this article. My comments were just babble on my part. Please comment on the merits of the article.
 

UAL777flyer

Veteran
Aug 20, 2002
730
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Forgive my ignorance, but what info do you suspect Dutta or Studdert may have leaked for this story? I didn't read anything in there that hasn't already been public knowledge.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
----------------
On 9/5/2002 12:12:03 AM

"Meanwhile, its crisis represents the first real possibility for the industry to break its disastrous spiral in labor costs."

3.5% percent annualized since 1994 for the pilots...Yep disasterous spiral.

"The major airlines--American, United, Delta, Northwest, Continental, and US Airways--are reeling from the recession and the aftermath of Sept. 11. Their revenues have dived 23% since 2000, while the costs of insurance and security measures have soared; analysts expect the six companies to lose $6 billion this year. United's crisis may finally convince the unions of the need for change."

Maybe it should convince the government of the need for change, that IS why the ATSB was formed. The government fails in it's primary responsibility, and the employees of the airlines should pay for it.


"" I see lots of downward pressure on pay," says Sean Sullivan, head of the National Pilots Association, which represents the pilots at AirTran, a low-cost carrier."

He must be looking in a mirror.

"But the concept was flawed from takeoff. The unions, especially the pilots union, soon realized that they could extract more wealth from United by driving up salaries than by growing the stock."

Nope, the unions realized the company would waste money buying back the stock and wasting money on U and Avolar, instead of growing the company

"When the pilots found out, they became enraged, not at the exorbitant $4.3 billion price Goodwin wanted to pay but at what they saw as a betrayal: They would have to sacrifice many of the best-paying positions and perks to US Airways pilots with more seniority."

Factually incorrect. the UAL pilots had merger protection. the main beef WAS the price.

"In protest, pilots failed to show up for work, forcing the cancellation of hundreds of flights."

Absolutely NOT true. Some pilots refused overtime. There was NO sick out!

"The slowdown brought United to its knees. To win the pilots' support for the acquisition, Goodwin agreed to an incredible 28% pay increase in October 2000, far more than the pilots had demanded earlier in the year."

Again, not true.

"Washington ultimately blocked the merger on antitrust grounds. But the United pilots' settlement created an industrywide feeding frenzy. "I was working with the American pilots on the day the 28% increase was announced," recalls Boyd. "All molecular motion in the room stopped. The reaction of the American pilots was 'When do we get ours?'" In early 2001, Delta pilots won the same increases granted United's, plus one percentage point. American pilots are now demanding at least the pay garnered by their United brethren."

Only 777 and 747-400 payscales went up by 28%. They were artificially lower prior to that point, and the 777 rates merely went up to the level DAL already paid. Narrowbody pay for some years went up 21.5%. Some payrates WENT DOWN.


"United captains with 12 years of seniority now earn $265,000--the figure at AirTran is about $100,000 less--and work around 12 days per month."

ABSOLUTELY AN OUTRIGHT LIE. A twelve year capt makes about 60 less per year and works 16-18 days. but who should make more, a Capt of a 900,000 lb 747-400 or a 100,000 lb DC-9?

"The ATSB, whose loan guarantee United is seeking, was set up by Congress to help airlines recover from the financial shock of Sept. 11. But under executive director Daniel Montgomery, a tough former bankruptcy workout specialist from Bank of America, it has evolved to serve a very different purpose--instead of a lifeline, it has become a lever to help the industry force down its bloated costs at last."

An outright VIOLATION of his congressional mandate.

"Neither hurdle will be easy to clear. United got off to a weak start. It first applied to the ATSB with nothing more than a proposed 5% pay cut from management and 10% from the pilots. And the pilots' concession was even less than met the eye. After taking a dip, their pay was to shoot back up, so that by 2006 senior captains would be making $295,000 a year, even more than they would have made under their original contract."

Distortion! UAL pilots would get less than a 3% raise in exchange for extending the contract a year.

"Where United started was borderline laughable," says a top government official familiar with the ATSB negotiations. "They thought they could get guarantees by getting their Congressmen to call."

Yeah thats laughable. Congress creates the ATSB, and the ATSB ignores them when they call to tell them that they are out of line?! The height of hubris.

"United may also have difficulty convincing the ATSB that it can't raise private funds. The company holds $3.4 billion in debt-free aircraft that could serve as collateral for hundreds of millions of dollars in loans, though at lofty rates."

At guido rates. The ATSB was formed to stop such nonsense.

"Bankruptcy, on the other hand, could get United big concessions, including givebacks on the epic scale the ATSB is seeking. The loss of passengers in the event of bankruptcy would probably be minor--consumers have readily patronized bankrupt airlines in the past. In Chapter 11, management must first try to negotiate new contracts with its unions. But if United deems that the concessions the unions then offer aren't big enough, it can present the bankruptcy judge with its own plan for achieving profitability, and the judge can impose management's deep cuts. Even if management proves too timid, the judge can enforce cuts on behalf of creditors that want to get the company flying profitably. Bankruptcy would have another healthy effect: Once employees' shares become worthless, the unions lose their hold on the board."

Real classy plan. Give us what we, the annointed pistipped suits making WELL in excess of anyone at UAL, want, or we will, under the guise of BK law, forcibly take what you paid dearly for.

"A good guess is that United will gain a 20% reduction in its labor costs and a 10% reduction in total expenses, either in bankruptcy or in a deal with the ATSB. That would place United wing to wing with the lowest-cost majors, Continental, Northwest, and US Airways, and well below American. Most important, it could start something revolutionary in the industry, a ripple effect of lower labor costs. "This will change the direction of compensation," says analyst Philip Baggaley of Standard & Poor's. Conceivably the cuts at United could send high-cost American scrambling for bankruptcy. More likely United's example will allow American to win better deals with its unions."

Sickning to say the least. BTW, Northwests labor costs are not much lower than UALs (10% for pilots, less for Mechs). The cost "Savings" comes in the form of more seats on a given airframe.


----------------
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
busdrver,

I think you bring up an interesting point that is often lost on many regarding Contract 2000. Delta can take much of the blame for the large pay increases because they are the ones who set the bar when they negotiated the B777 pay rates for their pilots BEFORE Contract 2000 was finalized. People need to remember the difficulty at Delta over the B777 pay rates. At one point, Delta had their B777's parked on the ground because they hadn't reached an agreement on a payscale with their pilots. Then they reached the agreement which set the high pay level for the B777. That had much to do with setting the new widebody pay rates at UAL.
 

DLFlyer31

Senior
Aug 20, 2002
444
0
----------------
On 9/5/2002 12:12:03 AM

3.5% percent annualized since 1994 for the pilots...Yep disasterous spiral.
----------------

It is disasterous when your revenues drop 23% and are then held stagnant for many years (as is the case now). Who cares how large the annual increase is if costs go up and revenues go down, trouble will follow.

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Maybe it should convince the government of the need for change, that IS why the ATSB was formed. The government fails in it's primary responsibility, and the employees of the airlines should pay for it.
---------------

How did the gov't fail? Is it the gov't's fault that UAL has had poor management? Is is the gov't's fault that some airlines have been living on an unreliable and poor business model? You can't blame the gov't for all your problems in life.

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Absolutely NOT true. Some pilots refused overtime. There was NO sick out!
---------------

Just keep telling yourself that.

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The ATSB, whose loan guarantee United is seeking, was set up by Congress to help airlines recover from the financial shock of Sept. 11. But under executive director Daniel Montgomery, a tough former bankruptcy workout specialist from Bank of America, it has evolved to serve a very different purpose--instead of a lifeline, it has become a lever to help the industry force down its bloated costs at last.

An outright VIOLATION of his congressional mandate.
-----------------

I agree with you on this one. The ATSB should not be a lever to force wages down....that's not the gov't's job. Of course, I think the ATSB is a dumb idea to start with.


-----------------
Yeah thats laughable. Congress creates the ATSB, and the ATSB ignores them when they call to tell them that they are out of line?! The height of hubris.
-----------------

Congress was dumb enough to create the ATSB so they shouldn't complain when things go wrong.


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United may also have difficulty convincing the ATSB that it can't raise private funds. The company holds $3.4 billion in debt-free aircraft that could serve as collateral for hundreds of millions of dollars in loans, though at lofty rates.

At guido rates. The ATSB was formed to stop such nonsense.
-----------------

NW,CO,DL and AA have used their aircraft for loans. Why can't UAL? What makes UAL so special that the gov't should give them an edge over the competition? Of course, it leads back to the fundamental question, why is the gov't intervening at all??

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Sickning to say the least. BTW, Northwests labor costs are not much lower than UALs (10% for pilots, less for Mechs). The cost savings comes in the form of more seats on a given airframe.
------------------

I take it then you advocate UAL dumping Economy Plus and First Class....an interesting proposition. Although, I still think NW must be making gains elsewhere since I don't think a few extra seats can account for the huge differential in losses. Maybe keeping all those DC9's so long really did pay off.
 
OP
U

UnitedChicago

Veteran
Aug 27, 2002
756
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www.usaviation.com
There's been a lot of talk about the 3+ billion in unen***bered assets that UA can use for loans.

It's not a wise business option in my mind For UA to use these assets to secure high interest rate loans. I'd rather see them file CH11.

We can't leverage the company like US Airways did and how Eastern, Pan Am and others did.

By the way...i have the habit of saying we. I don't work at United, but my dad was a captain and I've been obssessed with them ever since he joined. I hope I don't offend any employees with my verbiage :).

By the way...I own a lot of UA shares that I purchased in the last year. I would hate to lose my equity...so I can feel a fraction of your pain.
 

mga707

Veteran
Aug 19, 2002
1,330
2
[blockquote]
----------------
On 9/5/2002 2:22:57 PM UnitedChicago wrote:

unen***bered [/blockquote]


...now THAT'S funny!
Let's try a few more....cucumber...cumbersome...
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
Busdrver,

I completely agree with you. Profit sharing would have been a great thing to do and was the RIGHT thing to do. However, we all know that the Goodwin/Dutta/Studdert regime had all the vision of a blind man. They never were in touch with the workforce because they came down with a case of **** Ferris syndrome and spent too much time trying to grow the corporation instead of growing the airline. I have great hope that Mr. Tilton won't make those same mistakes.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/5/2002 11:32:21 AM UAL777flyer wrote:

busdrver,

I think you bring up an interesting point that is often lost on many regarding Contract 2000. Delta can take much of the blame for the large pay increases because they are the ones who set the bar when they negotiated the B777 pay rates for their pilots BEFORE Contract 2000 was finalized. People need to remember the difficulty at Delta over the B777 pay rates. At one point, Delta had their B777's parked on the ground because they hadn't reached an agreement on a payscale with their pilots. Then they reached the agreement which set the high pay level for the B777. That had much to do with setting the new widebody pay rates at UAL.
----------------
[/blockquote]

A few other small points. UALs C2K provided only a 5% raise above DALs 737-800 rates for the A320, and UALs top 767 rate was 10% LOWER than DALs top 767 rate. People have gotten rapped up with the percent increase, while failing to realize that the UAL pilots were below AMR, DAL, NWA and even U in some cases befor C2K. Unfortunately the company sent a clear meaage about priorities when it spent nearly 1 billion buy back stock instead of growing the company or even profit sharing with the employees. Think of the good will that would have been harbored had just 1/3 of that been handed back to those responsible for the largess.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/5/2002 1:37:49 PM DLFlyer31 wrote:


----------------
On 9/5/2002 12:12:03 AM

3.5% percent annualized since 1994 for the pilots...Yep disasterous spiral.
----------------

It is disasterous when your revenues drop 23% and are then held stagnant for many years (as is the case now). Who cares how large the annual increase is if costs go up and revenues go down, trouble will follow.



That's the whole reason the ATSB was formed! You point out the 23% drop here, but somehow discount the effects of 9/11 later. 23% is larger than EVER before. No Airline planned for this level of a drop. It is just temporary.


---------------
Maybe it should convince the government of the need for change, that IS why the ATSB was formed. The government fails in it's primary responsibility, and the employees of the airlines should pay for it.
---------------

How did the gov't fail? Is it the gov't's fault that UAL has had poor management? Is is the gov't's fault that some airlines have been living on an unreliable and poor business model? You can't blame the gov't for all your problems in life.


I can blame them for failing in it's PRIMARY responsibility, protecting it's citizens from outside forces. BTW, ALPA has been requesting fortified cockpit doors SINCE THE 70's!! The Government TOOK weapons away from the pilots. Seems to me that EITHER ONE of these items would have prevented Sept 11.


---------------
Absolutely NOT true. Some pilots refused overtime. There was NO sick out!
---------------

Just keep telling yourself that.


Now you're just propagating a lie to try to be cute. Please provide the eveidence of a sickout. UALs pilots refused overtime (wich pays the same as regular time anyway). There was not a massive sickout. Those are the facts. The company was warned MONTHS in advance (before the U buyout was announced) that the summer schedule could simply NOT be flown with the current level of manning. I personally believe the company was right sizing the pilot force for the merger.


-----------------
The ATSB, whose loan guarantee United is seeking, was set up by Congress to help airlines recover from the financial shock of Sept. 11. But under executive director Daniel Montgomery, a tough former bankruptcy workout specialist from Bank of America, it has evolved to serve a very different purpose--instead of a lifeline, it has become a lever to help the industry force down its bloated costs at last.

An outright VIOLATION of his congressional mandate.
-----------------

I agree with you on this one. The ATSB should not be a lever to force wages down....that's not the gov't's job. Of course, I think the ATSB is a dumb idea to start with.


CAL would have been BK by NOV, not because they were weak, but because NO AIRLINE PLANS ON LOSING 25% OF ITS REVENUE OVERNIGHT (the drop was even larger then). Had CAL filed, AMR, UAL, DAL, NWA, U and possibly even LUV would have followed suit. that would have been REALLY good for the jittery post 911 markets. it could have even led to other industries having BKs. Who knows, maybe even Boeing.


-----------------
Yeah thats laughable. Congress creates the ATSB, and the ATSB ignores them when they call to tell them that they are out of line?! The height of hubris.
-----------------

Congress was dumb enough to create the ATSB so they shouldn't complain when things go wrong.



They pass a lot of stupid laws. Does that give the law enforcers the right to pick and choose the ones they want to obey?


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United may also have difficulty convincing the ATSB that it can't raise private funds. The company holds $3.4 billion in debt-free aircraft that could serve as collateral for hundreds of millions of dollars in loans, though at lofty rates.

At guido rates. The ATSB was formed to stop such nonsense.
-----------------

NW,CO,DL and AA have used their aircraft for loans. Why can't UAL? What makes UAL so special that the gov't should give them an edge over the competition? Of course, it leads back to the fundamental question, why is the gov't intervening at all??


Not looking for an edge. The loans aren't free and all those other Airlines could have applied also. I'm hoping that with even smaller concessions that UAL can go get money elsewhere.


------------------
Sickning to say the least. BTW, Northwests labor costs are not much lower than UALs (10% for pilots, less for Mechs). The cost savings comes in the form of more seats on a given airframe.
------------------

I take it then you advocate UAL dumping Economy Plus and First Class....an interesting proposition. Although, I still think NW must be making gains elsewhere since I don't think a few extra seats can account for the huge differential in losses. Maybe keeping all those DC9's so long really did pay off.
----------------
[/blockquote]


It is a cumulative effect. Econ plus and United First Suites are wonderful. but so are Ferraris. Unfortunately, contrary to public perception, I can't afford one. If the public is unwilling/ unable to pay for the extra room or the First Suite, then we should look at selling them something they can pay for. There is a 15% diff in the number of seats on A NWA 400 and a UAL 400. Even our star alliance partners put more seats on the jets. If we are getting enough additional revenue to justify the additional expense, great, if not, then Yes, I would change our seat configurations.

BTW DAL FLYER, What line of work are you in?
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/5/2002 12:12:03 AM UnitedChicago wrote:

But the majors' hold on the road warrior is weakening. Says Douglas Weeks, travel manager for Booz Allen Hamilton in Washington, D.C.: "Our consultants drive to Baltimore to save money on AirTran and Southwest flights. They can save $1,000 flying to the San Francisco Bay Area on Southwest, vs. the cost on US Airways, United, or American, from Washington."

----------------
[/blockquote]

Booz Allen, better lay off the BOOZE. I checked the current rates to the Bay Area

Leaving 10 Sept returning on the 11th (business days)

UAL NON STOP!! A320 (Each seat 1/2 to one inch wider than 737s)(hot meal)
departs at 8 am
RT fare $356.50

SWA 1 to 3 stops 737 (no hot meal)
Departs 7:05 am (get there early to get a window or aisle)
Quickest option takes approx 90 extra minutes travel time (Hmmm, Does Booz Allen Hamilton bill for travel time?...Maybe that's why they use SWA)
RT fare OVER $600!!!
WHAT A BARGAIN!!!
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
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On 9/6/2002 12:07:56 PM KCFlyer wrote:

What a difference a day makes bussdriver - I checked IAD-SFO and the only nonstop I saw was $2,307 - depart 9/09 return 9/13 (business week). SWA had a one stop from BWI to OAK with no change for $422.50, but the worst case would have been $622. To be truthful, UAL did have a lower fare of $1,807 but you had to stop in ORD and most likely to suckers back in coach wouldn't have gotten a meal (not a long enough flight, you know).
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[/blockquote]

No, NO, NO! You checked SFO! How much to fly to SFO on SWA? They decided they couldn't make a profit at SFO and ran away. Try it again IAD-OAK. I did it for you NON-STOP A320 SERVICE. EVEN CHEAPER AT $336.50. The Booz hound specifically points out how much money his anti-UAL RONO and Gangwahl creating Firm can save by going on SWA to OAK, when all the while IT'S CHEAPER ON UAL
 

KCFlyer

Veteran
Aug 20, 2002
10,830
1,340
www.usaviation.com
What a difference a day makes bussdriver - I checked IAD-SFO and the only nonstop I saw was $2,307 - depart 9/09 return 9/13 (business week). SWA had a one stop from BWI to OAK with no change for $422.50, but the worst case would have been $622. To be truthful, UAL did have a lower fare of $1,807 but you had to stop in ORD and most likely to suckers back in coach wouldn't have gotten a meal (not a long enough flight, you know).
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
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On 9/6/2002 1:08:41 PM DLFlyer31 wrote:

I more or less agree with you on that point. Although, the risk of angering FF'ers should be noted. I'm not sure I would dump E+ entirely, but maybe shrink down F/C and put in more E+ seats.

As for what I do, I do work in transportation (not airlines specifically) doing contract work for the Federal gov't...which is probably why I like to see the gov't keep out as much as possible. I know all too well what happens when the gov't gets too involved. I appreciate your responses, even if I don't usually agree with them.
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Ah, you work for the government...Hmmm. wouldn't you think that since the average citizen is unwilling to pay the amount the government cost, wouldn't it be appropriate to reduce ALL those high paying government job's salaries by, I don't know, 30%. At least until the economy turns around (let's say 6 years, with no provision to renegotiate if the economy comes back earlier). I know that 911 has costs the government lots in the way of the war on terror and such, but why should I, joe Citizen have my future takehome wages lowered (higher taxes), because the government can't live within it's means....BTW how much have your annual pay hikes averaged over the last 8 years. I know we were running a surplus, but the roaring 90's are over, if the government takes in less, then simple math says they have to pay out less, so the need for your annual COLA raises is irrelavent.
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