Hello,
In conversations I've had recently with several members of UAL management, I get the feeling the company is moving forward with a business plan that does not include a merger with USAirways. Both people I spoke to said emphatically that a merger is not being discussed or on the table. Our expansion plans for Mexico and especially in the Caribbean seem to show we want to expand our network internally. I think UAL would like to strengthen the code share with US, but both fellows said they are worried about the survival of US. Of course UAL is not in a position to acquire anything from US while in BK. I personally think the codeshare with US is a very good thing.
Some other items of interest from these conversations:
1. The seat mile cost of TED will get down into the mid 7 cent range, and will be lower than Frontier (believe it or not). Although planned initially for up to 40 planes, it will eventually become much bigger. Look for an announcement about some new Mexico (not New Mexico) destinations soon. That answers the question about the departure of Mexicana from Star.
2. Total system seat mile costs will end up in the mid 8 cents per mile, almost a penny below the nearest network style carrier. We will be the “category killerâ€.
3. Widebody lease negotiations are going well, and we may end up with more widebody jets than people expect.
4. Both American and Delta have some significant financial obligations coming to bear on them in '04 and 05', and UAL management is keenly aware of this, and will take advantage of these difficulties with their competitors.
5. I've noticed some of the best adverts. and marketing at United in many, many, years. I really am seeing some good programs, and that is very encouraging. I think some of these new managers are starting to do some real good. With a few exceptions, there has been a good turnover in some of the upper ranks.
6. Our good performance of late is very important to the bankers, and they like what they see.
7. I was told by a VP that USAir didn't meet any DIP goals, and had to exit early to avoid getting called on exit financing, also potential difficulties with the credit card clearing house were brought up. It was this fellow’s opinion that they were not able to use the process to full advantage. UAL is really using the process well, and keep in mind that most of the "5 problems to solve before exiting" are really desirable by-products of being in Ch. 11. Sure, we have leases to settle, but that’s the point. Look at the great outcome of the Denver gate situation. We wouldn't have gotten that with an early exit. Also, exiting at the end of spring is right on target for an 18 mos. exit. When we went it the time frame was 18-24 mos. in CH 11. Also, make no mistake, UAL was in serious trouble this Spring.
Take this for what you will, but I can say in the last 2-3 weeks the mood at UAL has really shifted, and management and employees are quite bullish about the company. There is an excitment in the air now about our future. The tide is starting to turn. Sure, these managers aren't going to tell me negative stuff, but I don't think they are just making up good news either. Of course, one can’t help but see synergy between US and UAL, and there could probably be an instant solution to the ACA problem with some combination of the companies. But too much points to the fact that at this point a merger is too hot of a potato to handle, and probably will not be a factor for a long time.
I wish the best for everybody. Happy Holidays.
Chinook
In conversations I've had recently with several members of UAL management, I get the feeling the company is moving forward with a business plan that does not include a merger with USAirways. Both people I spoke to said emphatically that a merger is not being discussed or on the table. Our expansion plans for Mexico and especially in the Caribbean seem to show we want to expand our network internally. I think UAL would like to strengthen the code share with US, but both fellows said they are worried about the survival of US. Of course UAL is not in a position to acquire anything from US while in BK. I personally think the codeshare with US is a very good thing.
Some other items of interest from these conversations:
1. The seat mile cost of TED will get down into the mid 7 cent range, and will be lower than Frontier (believe it or not). Although planned initially for up to 40 planes, it will eventually become much bigger. Look for an announcement about some new Mexico (not New Mexico) destinations soon. That answers the question about the departure of Mexicana from Star.
2. Total system seat mile costs will end up in the mid 8 cents per mile, almost a penny below the nearest network style carrier. We will be the “category killerâ€.
3. Widebody lease negotiations are going well, and we may end up with more widebody jets than people expect.
4. Both American and Delta have some significant financial obligations coming to bear on them in '04 and 05', and UAL management is keenly aware of this, and will take advantage of these difficulties with their competitors.
5. I've noticed some of the best adverts. and marketing at United in many, many, years. I really am seeing some good programs, and that is very encouraging. I think some of these new managers are starting to do some real good. With a few exceptions, there has been a good turnover in some of the upper ranks.
6. Our good performance of late is very important to the bankers, and they like what they see.
7. I was told by a VP that USAir didn't meet any DIP goals, and had to exit early to avoid getting called on exit financing, also potential difficulties with the credit card clearing house were brought up. It was this fellow’s opinion that they were not able to use the process to full advantage. UAL is really using the process well, and keep in mind that most of the "5 problems to solve before exiting" are really desirable by-products of being in Ch. 11. Sure, we have leases to settle, but that’s the point. Look at the great outcome of the Denver gate situation. We wouldn't have gotten that with an early exit. Also, exiting at the end of spring is right on target for an 18 mos. exit. When we went it the time frame was 18-24 mos. in CH 11. Also, make no mistake, UAL was in serious trouble this Spring.
Take this for what you will, but I can say in the last 2-3 weeks the mood at UAL has really shifted, and management and employees are quite bullish about the company. There is an excitment in the air now about our future. The tide is starting to turn. Sure, these managers aren't going to tell me negative stuff, but I don't think they are just making up good news either. Of course, one can’t help but see synergy between US and UAL, and there could probably be an instant solution to the ACA problem with some combination of the companies. But too much points to the fact that at this point a merger is too hot of a potato to handle, and probably will not be a factor for a long time.
I wish the best for everybody. Happy Holidays.
Chinook
