Significant Layoffs

DB Cooper

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Aug 20, 2002
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UnitedChicago

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Of course anything is possible...but I would doubt that they would close any of their hubs. The strength of United is their route structure. Closing any of them would be a big mistake. Especially IAD as United is already weak on the east coast.
 

USFlyer

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Aug 19, 2002
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[blockquote]
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On 12/30/2002 9:56:45 PM BOBO BENKINS wrote:

The Wall street journal is reporting that UAL has warned it's employees to prepare for significant layoffs to be announced in the next few weeks. Good luck to all.
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[/blockquote]

I've been hearing from some industry insiders that UAL is going to close a hub, presumably IAD. Has anyone else heard this rumor?
 

UnitedChicago

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More two cents...

IAD is United's gateway to europe. They wouldn't be able to feed europe without a hub there.

If they closed anything...I would imagine latin america makes the most sense.
 
Aug 20, 2002
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UnitedChicago,
As an AA employee, Here's hoping that you'll believe me when I say that I sincerely wish the best for you and all UAers.
With that said, a question about possible hub closings?
I agree that IAD would be a mistake.
I rank UA's hubs in this priority order
1. ORD
2. SFO
3. IAD
4. DEN, therefore making DEN(hypothetically) the "odd man/hub out"

Your thoughts ?

Best wishes,
NH/BB's
AA/AFL-CIO
 

iflyjetz

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Oct 2, 2002
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[blockquote]
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On 12/31/2002 2:05:48 AM NewHampshire Black Bears wrote:

UnitedChicago,
As an AA employee, Here's hoping that you'll believe me when I say that I sincerely wish the best for you and all UAers.
With that said, a question about possible hub closings?
I agree that IAD would be a mistake.
I rank UA's hubs in this priority order
1. ORD
2. SFO
3. IAD
4. DEN, therefore making DEN(hypothetically) the "odd man/hub out"

Your thoughts ?

Best wishes,
NH/BB's
AA/AFL-CIO
----------------
[/blockquote]


How about HNL, LAX, SEA, MIA?
Are you guys suggesting that UAL will keep these hubs open, yet close IAD or DEN?
You guys are throwing darts while blindfolded ... you're not even using logic to develop those rumors/theories. Perhaps Chip will post here soon suggesting that U will get UAL's ORD, LAX, SEA, and SFO hubs. LOL!
 

GGpillow

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And you rank them that way why?????? Any reason...... or just "cuz"?

DEN is the best performing, highest load factors, highest tkt prices, lowest exposure to lc carriers (yes I know about F9) of any of UA's hubs. The company has said various times that it is performing better financially then any other hub. I just don't see it going. I really don't see any of our major hubs going. Perhaps MIA.... with more of the business there being farmed to *A carriers. MIA isin't a major hub for us though. I think you'll see more line stations going to UAX b4 you see a hub closure.
 
Aug 20, 2002
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iflyjetz, ggpillow,
First, I'm not saying that UA will close ANY of it's hubs !!

SEcond, If they were, I was refering to MAJOR hubs. I never considered LAX,SEA,MIA, and HNL, MAJOR hubs for Ua.
(Just like I don't consider JFK to be a MAJOR hub for AA, though sometimes I think that Kennedy should qualify)

So,"IF" it came down to ORD, SFO,IAD,and DEN, which one would you (HYPOTHETICALLY) suggest would be the first to close ???

NH/BB's
 

UnitedChicago

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NH/BB:

I believe you that you're not trying to bad mouth UA. :) Thanks!

In terms of closings...if it came to that, I think that MIA and south america would be the most logical. I know MIA isn't a hub...but UA is a #3 player in south america...maybe even #4 now.

Hope nothing closes...but wouldn't expect any primary hub closures.
 

Cosmo

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Aug 20, 2002
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Actually, IMHO, United's IAD hub is its "hub of the future" because it is already a mostly RJ operation and may give an indication of what operations at the other hubs will look like within the next 12-18 months. ACA and Air Wisconsin combined have about 3 times as many daily departures (over 200) at IAD as does United mainline (about 75). United's own service is limited to international (Europe, MEX, GRU, EZE), other United hubs, transcons (SEA, PDX, OAK, SJC, SAN, LAS and PHX), and a few other major cities (BOS, MIA, MCO, TPA, MSY and DFW, among others). On the other hand, the 2 regional carriers serve some 40 other cities east of the Mississippi River from IAD, including some big ones (ATL, DTW, EWR and LGA, among others).

I think that this kind of division of mainline/regional service will be replicated, to some degree, at United's other 4 hubs. I also believe that United will keep its hub at IAD due to the strong demographics of the Washington area and the fact that IAD has among the best long-term expansion potential of all east coast airports in terms of both traffic and facilities.
 

Speedbird

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Aug 20, 2002
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Here is the Tribube's article from yesterday's BK court revelations:

***************************************************************

UAL expects $3.2 billion loss in 2002
By John Schmeltzer and Thomas A. Corfman
Tribune staff reporters

December 31, 2002

A top executive for United Airlines disclosed in court Monday that the carrier will lose a record $3.2 billion this year, far surpassing previous estimates by the company or Wall Street.

Meanwhile, in a recorded telephone message to employees, the airline warned that it may be forced to lay off a "significant" number of additional workers soon. The message added that the company "has not yet decided which employees will be directly affected," and that those decisions "will be made in the next several weeks."

United, which has laid off 20,000 workers since last year's terrorist attacks, employs about 81,000 people. The airline filed for bankruptcy protection on Dec. 9.

The disclosure of the larger loss came in a U.S. Bankruptcy Court hearing. United asked for a permanent injunction prohibiting the trustee of the airline's employee stock ownership plan from selling additional shares in the company.

Instead, Judge Eugene Wedoff, chief of the bankruptcy court in Chicago, extended until Jan. 15 a temporary order barring sale of large blocks of stock.

But it was the magnitude of the loss that startled the jammed courtroom.

Jake Brace, United's chief financial officer, told Wedoff that the airline lost $2.8 billion through the end of November, with another $400 million loss expected this month. He predicted that United won't return to profitability until 2005, a year later than it had forecast earlier.

Wall Street had been estimating the airline would lose about $2.5 billion, while the airline had been indicating it would lose about $2.1 billion, the same as in 2001.

A United lawyer, Brian Sieve from Kirkland & Ellis, told Wedoff it was necessary to block Boston's State Street Bank & Trust Co., the trustee of the ESOP, from selling more shares.

State Street, which began selling shares in October because of the airline's financial problems, sold 24 million shares prior to the United's bankruptcy filing. But Wedoff blocked the bank from selling additional shares in order to protect tax benefits potentially worth more than $1 billion should the airline emerge from bankruptcy.

As a result of the sales by State Street and others, United employees now own only about 28 percent of the Elk Grove Township-based airline, down from a high of 55 percent. That's critically close to the level at which the airline's two most powerful unions would lose their veto power over business decisions through their seats on the company's board of directors.

Sieve disclosed that the airline, apparently fearing a hostile takeover, is preparing to seek an order early next month blocking anyone from acquiring more than 5 percent of UAL's outstanding shares.

Lawyers for State Street, however, argued that UAL's stock could be worthless if the bank is not allowed to sell. Shares of United parent UAL Corp. closed Monday at $1.43, up 5 cents, on the New York Stock Exchange.

Chester Gougis, president of Chicago-based Duff & Phelps, an independent financial adviser that specializes in ESOP issues, testified that the stock prices of large companies that file for bankruptcy almost always go down to "virtually nothing."

"And there is nothing about United to suggest it won't follow the same general pattern," Gougis said.

Even Brace appeared to support that contention.

"I think the stock will be worth very little at the end of the case," he said during testimony.

Also at Monday's hearing, Wedoff indicated he may order as early as next week pay cuts of up to 13 percent for the 37,000 workers represented by the machinists union. The cuts would come if United can sufficiently support a motion filed last week for temporary wage reductions for all its unionized workers. The other unions must approve the cuts.

Sharon Levine, an attorney representing the International Association of Machinists and Aerospace Workers, told Wedoff the union opposes the wage concessions because the airline hasn't provided enough information justifying the cuts.

The other unions representing United's workers are slated to vote by Jan. 8 on the temporary cuts. The Air Line Pilots Association is recommending its 8,000 members accept a 29 percent pay cut, while the Association of Flight Attendants is recommending approval of a 9 percent cut for its 22,000 members.

The Transport Workers Union and the Professional Airline Flight Control Association, which represent smaller groups of United employees, also are scheduling votes on the proposed cuts.

Joseph Tiberi, a spokesman for the machinists union, said it is the first time he can recall an airline involved in a bankruptcy proceeding seeking temporary pay cuts before attempting to negotiate permanent cuts.

"We've tried to make it clear to our members that [the 13 percent cut] is only an interim measure," he said. "United is certainly going to be looking for more."

Michael Boyd, president of the Boyd Group, an airline consulting group in Evergreen, Colo., was dumbfounded by the disclosure of the loss by Brace.

"How do you lose $3.2 billion on $15 billion in revenue?" he asked. "How did they get this far in the hole? It can't be just labor unions and silly work rules," he said, referring to contract stipulations that many critics say force United to hire more pilots and mechanics than are needed.

******************************************************************

This last paragraph should be underlined where it states that "labor unions and silly work rules" are not the primary cause for UAL's problems.

Whatever "significant" cuts they make, it appears it will not even come close to fixing the huge financial black hole at UAL. To use Boyd's own words, how do you lose $3.2 billion on $15 billion in revenue?
 

Wild Onion

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Aug 21, 2002
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If UA is going to lose $400mil this month and not return to profitability until 04, how will it make the DIP positive cash flow targets that take effect at the end of February?
 

Speedbird

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Well now it looks like UAL has done a full reversal on its attempt to stop State Street from selling the remaining ESOP shares:[BR][BR][BR]***************************************************
************[BR][BR][BR]Dow Jones Business News[BR]UAL Employee Stk Plan Files To Sell Remaining Stake In Co[BR]Tuesday December 31, 12:56 pm ET [BR][BR][BR][A href="http://biz.yahoo.com/djus/021231/1256000155_1.html"]UAL Employee Stk Plan Files To Sell Remaining Stake In Co[/A][BR][BR]************************************************************
****[BR][BR]This seems like an odd move by UAL after they made a deliberate and cogent agrument yesterday to prevent this from happening. [BR][BR]Perhaps it's a moot point now to attempt to gain any potential tax benefits for the company, as was outlined yesterday.[BR][BR]Perhaps someone from the DIP committee is whispering in the ear of Glenn Tilton about future expectations on further funding, now that their dire financial condition is spread all over the financial world for the public to gasp at. [BR][BR]Perhaps the airline may now want to give what little it can to its employee owners, before the doors are closed. [BR][BR]Perhaps the lawyers at UAL are telling Tilton to avoid another Enron-style debacle, a al 401K stock sell restrictions just before that company tubed last year.......hmmm.[BR]