Sun-Times Commentary

DB Cooper

Member
Aug 20, 2002
70
0
Seat 18C
www.usaviation.com
Bankruptcy not answer for United
November 1, 2002
United Airlines is in deep financial trouble and must be saved from
bankruptcy. The airline has appealed to the government for a $1.8 billion
loan guarantee to help it through a terrible period for airlines, and United
parent UAL deserves to get it.
If these were usual times, we might believe otherwise. The free market
works remarkably well, rewarding skill, efficiency and smarts while
punishing failure. In usual times, even the most gilt-edged airlines of the
past--Pan Am, Eastern, TWA--failed, and the economy still thundered
forward.
But these are not usual times. The extraordinary financial loss to United
began at 9:05 a.m., Sept. 11, when the hijacked United Flight 175 from
Boston to Los Angeles slammed into the World Trade Center, and was
compounded by the protracted slump in air travel that followed. After
9/11, United cut nearly a quarter of its flights. The government needs to
consider whether U.S. interests would be served by allowing national
assets such as United to collapse in the wake of terrorist acts.
Yes, the airline was in trouble already. Employee salaries soared while
customers were snatched away by discount carriers. The plane that hit
the World Trade Center only had 38 passengers on board. The airline''s
competitors initially complained that United had not done enough to cut
costs before seeking out taxpayer help. That has changed. United has
taken dramatic steps to bring its finances in line, red-penciling billions of
dollars in cost cuts across the company, including dramatic concessions
by its famously remunerated unions.
Some argue that the airline should simply go bankrupt, if need be, and
address its financial woes that way. Bankruptcy is a crapshoot. Yes, it
can shield a company while it gets its financial house in order, but it also
can turn out to be a giant step toward dissolution. And it devastates
shareholders--not that United shareholders, seeing their stock fall from
$142 to $2.20, aren''t devastated as it is. As bad as it would be for the
nation to have its No. 2 airline fail, dissolution would be even worse for
the Chicago area--possibly disastrous. Not only would we lose
jobs--office managers to mechanics, food service workers to pilots--but
we also would lose revenue from passengers who pass through O''Hare
because it is United''s major hub. Nothing would stop Delta from scooping
up United''s planes at fire sale prices, then routing its New York-to-LA
flights through Detroit or Dallas or Denver instead of Chicago.
Which brings up another point. With modernization of O''Hare an open
question, the potential unraveling of United creates a nightmare scenario
where Chicago''s status as a commercial center is endangered by the
concurrent death of its major airline and decline of its major airport. The
bottom line is that a federal loan guarantee is only one leg of a
multiphase plan to bring the struggling airline back to fiscal health. But it
is an essential part, one that everyone who cares about Chicago and the
nation will support. Chicago Sun-Times 11/1/02
 

mga707

Veteran
Aug 19, 2002
1,330
2
[blockquote]
----------------
On 11/1/2002 4:12:01 PM DB Cooper wrote:
(quote from Chicago Sun-Times editorial)
Nothing would stop Delta from scooping up United's planes at fire sale prices, then routing its New York-to-LA flights through Detroit or Dallas or Denver instead of Chicago.

[/blockquote]

Yep, we've got yet another industry expert here...
Guess this bozo editorial writer never heard of Atlanta or Cincinatti!
 

JFK777

Veteran
Aug 20, 2002
694
0
Delta would declare CVG closed now if tomorrow they could take over UAL's ORD hub. Chicago is also a huge market, it would be like having a twin Atlanta hub in the upper midwest.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 11/5/2002 6:20:08 PM JFK777 wrote:

Delta would declare CVG closed now if tomorrow they could take over UAL's ORD hub. Chicago is also a huge market, it would be like having a twin Atlanta hub in the upper midwest.
----------------
[/blockquote]

Kind of like UAL and AMR swooped into ATL when EAL went under?
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
People need to remember that it's all about selling newspapers. Fact-checking and accuracy in reporting are no longer priorities at rags like the Sun-Times and Tribune. The fish hacks who write these stories often run with inaccurate and misleading quotes from so-called industry experts. I think the only qualification for being an expert is to have flown once in your lifetime. It's a joke. At least the Sun-Times tends to be more pro-UA in their stance than the Tribune does. But if you're looking for accurate information on the industry, you're much better off getting it from trade publications like Aviation Week, Air Transport World, Aviation Daily, and the like. Otherwise, you're just wasting your time.
 
Aug 20, 2002
1,423
90
Valhalla
www.usaviation.com
Nah, UA/AA have too many rules working to prohibit that type of aggressive market grab.

Wait a minute, doesn't some obscure financial filing contain some twisted numbers (including unencumbered assets)indicating why this scenario is not possible?

Aww, just go get some revenue!
 

Latest posts