BillLumbergh
Veteran
[A href=http://www.cnn.com/money/2002/11/17/BUSINESS/bc.airlines.ual.reut/index.htm][FONT color=#333366]Struggling United expects 9,000 job cuts[/FONT][/A]
Struggling United expects 9,000 job cuts
- Thread starter BillLumbergh
- Start date
No wonder the economy stinks in this country. Airlines like United and American keep laying people off. You can not cut an airline to profitability, but you can cut an airline right into the ground. It has never worked in the past. Former airlines like Eastern, Pan Am, and Braniff are just prime examples of what happens to an airline when the gee whiz kids start messing up the works. The airlines need to fire all these kids in the office and get back to the business of doing business and hire all their laid off people back, like the mechanics, pilots, and flight attendants.
UAL777flyer
Veteran
- Aug 20, 2002
- 730
- 0
acmech,
With all due respect, you cannot possibly compare the failed shrink-to-profitability strategies of Pan Am, Braniff, Eastern and TWA to the airlines of today. You simply can't do it. Why? The dynamics of this industry are completely changed. All of those airlines began those strategies in an era when alliances were non-existant and codeshare relationships with express carriers were almost nonexistant. Therefore, when they shrank, they had no viable way of maintaining market share in the markets they abandoned or shrank. Nowadays, carriers can leverage large alliances like STAR, OneWorld and SkyTeam to retain market share. They can also leverage extensive relationships with express carriers to maintain some form of branded product in the abandoned markets. So they are not totally walking away from that market share. Some form of product still remains. So it still gives their customers a foothold into the network. I'll admit that shrinking stinks. But you cannot retain money-losing markets for long when cash flow is of vital importance.
With all due respect, you cannot possibly compare the failed shrink-to-profitability strategies of Pan Am, Braniff, Eastern and TWA to the airlines of today. You simply can't do it. Why? The dynamics of this industry are completely changed. All of those airlines began those strategies in an era when alliances were non-existant and codeshare relationships with express carriers were almost nonexistant. Therefore, when they shrank, they had no viable way of maintaining market share in the markets they abandoned or shrank. Nowadays, carriers can leverage large alliances like STAR, OneWorld and SkyTeam to retain market share. They can also leverage extensive relationships with express carriers to maintain some form of branded product in the abandoned markets. So they are not totally walking away from that market share. Some form of product still remains. So it still gives their customers a foothold into the network. I'll admit that shrinking stinks. But you cannot retain money-losing markets for long when cash flow is of vital importance.
The dynamics of the industry may have changed, but the fundalmentals have not. The same business models that caused the failures of Eastern, Pan Am, and Braniff are still in place at United and American and Usair. It is a business model that depends on high yield business travelers and high ticket prices. The airlines were in trouble even before the events of 9/11 took their toll.
Now the airlines want a bailout from their failed business model. The airlines got their initial bailout money last year due to the shut down of the airspace system. Any further bailout should be tied the the recall of everyone the airlines laid off, no ifs, ands, or buts.
Now the airlines want a bailout from their failed business model. The airlines got their initial bailout money last year due to the shut down of the airspace system. Any further bailout should be tied the the recall of everyone the airlines laid off, no ifs, ands, or buts.
NewHampshire Black Bears
Veteran
- Aug 20, 2002
- 10,154
- 681
UAL777flyer;
As usual,(IMHO), your right.
I can still remember when Crandall first came on board,(early 80's), he put AA on a swift version of the slim fast plan
The rest, as we know, was history.
These have to be agonizing times, for the good folk's at UAL, right now, but things WILL start to turn the corner', and soon.
Good Luck,
NH/BB's
As usual,(IMHO), your right.
I can still remember when Crandall first came on board,(early 80's), he put AA on a swift version of the slim fast plan
The rest, as we know, was history.
These have to be agonizing times, for the good folk's at UAL, right now, but things WILL start to turn the corner', and soon.
Good Luck,
NH/BB's
UAL777flyer
Veteran
- Aug 20, 2002
- 730
- 0
acmech,
Ok, now you're talking about something completely different. I agree with you that the basic business model of this industry is archaic and no longer supportable. That was clearly evident in early 2000. It only took the events of 9/11 to greatly speed it up. Now, as was the case with de-regulation, airlines are in a situation where they must adapt to survive. Sooner or later, some airline is going to happen upon a new model to survive and prosper and all the other airlines will closely follow it. It's just a question of finding what works and moving forward. It's very hard to do that right now because the situation is still so volatile. Traffic trends are only now starting to show themselves. But first airlines must squeeze out all the costs and fat that they bloated themselves with in the 90's, when the basic feeling was that the high yield revenue would always be there. I've always felt that it was foolish to take it for granted that those high yield passengers would keep coming back for more. And now we see that they'll come back for more, but only at a fraction of the fare. So now we'll see which airlines succeed in restructuring themselves to survive going forward. I'm confident UA will be one of those airlines.
Ok, now you're talking about something completely different. I agree with you that the basic business model of this industry is archaic and no longer supportable. That was clearly evident in early 2000. It only took the events of 9/11 to greatly speed it up. Now, as was the case with de-regulation, airlines are in a situation where they must adapt to survive. Sooner or later, some airline is going to happen upon a new model to survive and prosper and all the other airlines will closely follow it. It's just a question of finding what works and moving forward. It's very hard to do that right now because the situation is still so volatile. Traffic trends are only now starting to show themselves. But first airlines must squeeze out all the costs and fat that they bloated themselves with in the 90's, when the basic feeling was that the high yield revenue would always be there. I've always felt that it was foolish to take it for granted that those high yield passengers would keep coming back for more. And now we see that they'll come back for more, but only at a fraction of the fare. So now we'll see which airlines succeed in restructuring themselves to survive going forward. I'm confident UA will be one of those airlines.
