The New Dude Ain''t Got No Time!

MrMarky

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I am particularily interested in hearing UAL777Flyer''s comments about my post below as well as his general assessment of Tilton and whether that''s the man, or kind of man, he was hoping for.
The present UAL management has already stated that they need to have union concessions in place by September 14 in order to have a chance at staving off bankruptcy.
I have been watching what''s going on at US Airways, where the issues are almost identical. They seem to be playing the same game but they''re a couple of innings ahead. U''s CEO Dave Siegel, told the workgroups that if he didn''t have concessions by a date certain from every group, he would file Chapter 11. The date came, he didn''t have concessions from the IAM (big surprise!!) or CWA represented agents by the pre-established date, and he immediately filed.
Based upon that scenario I have concluded that UAL would probably file around September 15, particularily when they upped the ante on the size of concessions, causing even the ALPA pilots to step back. Was the increase in concession demands a deliberate ploy to trigger Chapter 11? UAL says the ATSB is demanding more employee concessions. I can see the ATSB insisting on reaching certain targets on the balance sheet before they will commit to guaranteeing loans, but specifying how that is achieved is really none of their business.
In any event, Mr. Tilton comes on board with a stop watch already inevitably headed for zero. From what I can see, he has 11 days to prevent a bankruptcy. That would seem to be a rather daunting task.
I have to believe he came into this position either agreeing to the fact that a Chapter 11 is definitely going to happen -- and soon, or genuinely believing that he has at least a reasonable chance of avoiding Chapter 11 and turning things around. He must have gotten a good look at the numbers; he must have gotten a good assessment of the labor situation; he must have gotten a reliable evaluation of industry trends; he must have gotten a clear picture of what the ATSB will and will not accept; he must have gotten a fact-based impression that it is still possible to turn things around. I''m sure the man enjoys a challenge, but it seems unlikely a guy of his stature would take this position knowing full well bankruptcy was already inevitable. Unless that is, he was on the way out at Chevron-Texaco and saw the writing on the wall. >From what we know so far, that seems doubtful, but you never know.
So is he really out of time and has he been groomed to preside over a Chapter 11? Or does he have reason to be convinced that it can be avoided? If so, will he withdraw the company''s request for the ATSB loan guarantees? This would send the markets a strong message that United has confidence in its ability to weather this storm and it would get labor''s head out of the vice and buy some time to negotiate reasonable agreements which both parties can live with.
So as I see it, it''s all or nothing. I can''t believe he took the position knowing full well that bankruptcy is right around the corner, so I have to believe he has been convinced he has at least a fighting chance of pulling the company from the abyss late in the fourth quarter, with the clock ticking, no time outs, fourth down and about half the field to go. We''ll soon find out if he''s Joe Montana! [:bigsmile:]
I hope everyone, employees and customers alike, will give this guy a fair shake. He deserves the benefit of the doubt if he''s going to have a chance to succeed. I can hardly wait to see what he comes up with.
Good luck to him and to all of you at United.
Marky
 
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UAL24

Guest
MrMarky,

Wow, well written post. I think Dutta and Studdert intentionally sabatoged the ship knowing there was a mutiny about to take place. Don't know if Tilton can stop the train wreck those two incompetents put in place but one thing is certain. He can't do it without our support. It is not beyond the realm of possibility that him and the Union leaders can sit down and come up with an immediate cash impact concession and leave greater contractual issues on the table for continued negotiations in the mean time. Most people have not expressed to much concern about appropriate paycuts but, most of us have strong concerns about apparent genocide of our positions within the company. Let's see.

ps. deeply hurt you are not particularly interested in my thoughts on your post.[:blackeye:]
 

Bear96

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Aug 20, 2002
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I believe he has come in knowing full well he will most likely be presiding over a Ch.11 filing. Though he may hold out some hope for avoiding it, I believe any realistic and thorough assessment of the situation here would lead to the conclusion that it is a 95% certainty that we will be in Ch.11 at some point in the next couple of months (I don't think it will be in the next two weeks but certainly by some time this winter).
 

G4G5

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Aug 21, 2002
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Mr Marky,

Tilton doesn't have to get a thing back from the unions. As you mentioned he only has a couple of weeks to try and avert Ch11. That's just not going to happen.

IMHO in the next two weeks, he will take control, sit down with his mgr's and tell them what he want's. They inturn will advise him of what sort of concessions he needs from the various groups. Sept.15 will come and in the wake of 9/11, UAL will file Ch11. Tilton will then go to the various unions and offer them his deal. If they don't want to play ball, then in the same manner that Seigle is dealing with the CWA, Tilton will look to have their contracts abrogated in the courts.

It's not just the 9/15 dead line, it's the $875 million dollar note. To actually believe that he can take control of a company like UAL and avoid BK(within two weeks) would be unrealistic. From his stand point the BK is not on his record, he did not create UAL's current financial state. So why not use CH11 to his advantage? After all it's reorginazation, not liquidation. UAL could come out a leaner meaner profit machine. It's fairly simple, what does he gain by avoiding ch11?


Another thing to keep in mind in that Tilton was not the BOD's first choice. He realizes this, he needs to show results. Texaco was an adequatly managed company that had a seriies of racial problems in the past few years. He needs to show wall street that he's the man for the job and that his departure form Cheveron was his choice. The only way that he does this is with results. A year or two from now, no one will care if UAL filed for BK on 9/15/02. All they will care about is the stock price and the quarterlies (10Q)
 
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UAL24

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They have 34000 employees. If that statement were true they would be giving almost $59,000 per employee per year. Unlikely. He is using artisic freedom in his interpretation. ALPA at U accepted a 26.6% paycut and allowed the addition of more RJ's. Thats about it. What our mgt team asked for exceeds that by a factor of 2. Additionally, our mgt team want to eliminate maintenance entirely and outsource over half of our flying. Big difference between the 2. If we agreed to U's concessions we would probably be happy and the company would probably get about 2.5 billion a year in labor savings. They want far more than that.

G4G5,

Don't let your optimism get the better of you.(sarcasm) Mr. Tilton has a good record historically in labor relations. The racial issues you refer to occurred before his watch so please don't try to make smoke without a fire. I see it differently, although I also see your side. Why would a man with good worker relations intentionally take a job, leaving a company he love, if he did not think he could make a difference. He has seen our books and has had multiple face to face discussions with the ALPA and IAM leaders over the last month. No self respecting leader takes over an organization to make it fail. He brings strong financial connections and a respectable labor relations track record. Management has never directly said we will file BK without immediate and excessive paycuts. They said it is possible we might consider it without them. Semantics are important here. It implies we might have a little more time than they had led us to believe. Situation still critical but maybe we have more than just 2 weeks until we file. Just don't see why a guy would step into a hornets nest knowing a nasty BK was around the corner. Why not let Goodwin/Creighton/Doopuu/Studdert be the scapegoats taking us into the filing then he walks in and does the reorganization emerging the conquering hero. He runs the risk of being labelled the bad guy if we file in 2 weeks and thus further alienating labor. Wrongly of course but a possibility. How do you figure he was not our first choice. Of the candidates available, important distinction, he impressed the BOD very much in the last 2 weeks and received a unanimous endorsement. If the other two John's in the equations were such strong contenders why did the BOD not have some infighting over this. Doubt a unanimous decision would have been reached if he wasn't the best out of the contenders.
 

ualdriver

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Aug 20, 2002
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Quote from Credit Suisse First Boston analyst James Higgins (for what it's worth):

"By comparison, all US Airways unions except for the mechanics have approved labor cost savings that, if applied to United's higher base labor costs, would be nearly $2 billion, far more than the $1.5 billion United is asking of its employees"

Don't know if it is true, but that's an interesting statement when we consider whether or not we'll do better with a bankruptcy judge vs. meeting the ATSB's demands, whatever they turn out to be.
 
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UAL24

Guest
Taipan,

Good to see some encouraging words about the need for support for our new guy coming from an IAM member. I think for all of us the thought of having payscales and workrules we had during the ESOP term will seem like we had won the lottery compared to what awaits us if we file BK. 1993 wages beat the snot out of 1939 wages.
 

ualdriver

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Aug 20, 2002
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And isn't this 9/15 deadline an "arbitrary" deadline imposed by a management team that no longer exists at our company? Maybe Tilton has a little more time than we think to work things out?
 

G4G5

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Aug 21, 2002
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UAL 24,
Their was no sarcasm in my post. I truly believe that for UAL to actually turn it around, CH11 would be the quickest and easiest methold for the new CEO to acomplish the task at hand. I also believe that their is no shame for him or UAL to file CH11. Look at U, they were able to get rid of $400 million worth of bad F100 leases. This was not going to happen any other way. Union concessions are only part of the CH11 equation. IMHO, Tilton would be well advised to have the ability to negotiate ALL contracts to his terms VS those handed to him from the previous administrations.

Look at CAL, today no one cares that Bethune was CEO during the BK. All they care about is the results. UAL can achieve similar results by properly using the BK system. Despite what you may think I would love to see UAL avoid BK court, I am a pilot with AA and would hate to see UAL have the competitive advantge of CH11 but I also have plenty of friends employed at UAL and don't want to see them hurt. A quick in and out of CH11, would turn UAL into a profit center a lot quicker then relying on Tilton and his ability to talk the various unions/banks into concessions.

Tilton has spent his entire career at Texaco, he was a high ranking manager when the racial issues were all over 60 minutes. To say he knew nothing or was not part of it, is your right. But unfortunatly, it's the equilvallent of being an accountant and having Arthur Anderson on your CV. My post was not ment to flame only to say, beware. Don't discount the corportate culture in which this indivdual has spent his entire career. To think he is the second coming of Gerstner or Welsch would be a bit much, their are reasons why he was not the first choice.
 

UAL10000

Newbie
Sep 3, 2002
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Has anybody else considered that the payment dates on the upcoming bonds are not due until NOVEMBER???

Tilton actually has ~2 months to avoid a Ch. 11 filing if the government loans are not considered. In fact, with employee concessions, they may not even be needed---after all, the government is only co-signing the notes, not loaning UAL any money.

With a viable business plan (including cost reductions) UAL should be able to refinance its debt on the open market, avoid crazy ATSB terms, and focus work on the long-term ‘plan.’
 

Taipan

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Aug 20, 2002
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Our deal was way worse than US Airs too in my opinion (IAM/CWA),have you heard anything about the actual cost for the Medical insurance ? the RUMOR I heard was $50.00 a month if your single no dependents $150.00 a month if you have dependents.Lets see 22% percent raise, 9.5% cut then $150.00 a month medical wow I am back below 93 pay [:)] Also I do not think we got any credit what so ever from the Bush Administration for are unencombered assets if these were truly the expectations of the ATSB/Bush Admin and who knows if they are, I dont know who is hiding behind who.Anyway glad we finally got a new CEO/perspective of things ,and I myself am willing to see what he says and give him some time.
 
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UAL24

Guest
G4G5,

I agree with some of what you say but there is a difference in the eyes of our finicky Labor Unions here at UAL. If he walks in the door making the statement I am here to help and avoid BK and files 2 weeks later all the negative images of traditional management will be cast upon him and we will be in big trouble. Bethune was brought in to emerge the company from BK not take it into it. Seigel made no pretenses about why he was there. I am here to extract huge tolls from labor and if I don't get them I will file BK on this date. I can respect that. I don't think anyone will doubt anything that man says. To me that is worth something. I will grant you this, the task is daunting but not impossible. It is interesting to me in the business world a company like United must honor all contracts and debts to other businesses or else those creditors will extract a toll one way or another to get their money. Doesn't UAL have contracts with the Unions? Yet in the eyes of the business world those aren't valid contracts and therefore are not afforded any credibility. Labor is always blamed for all problems and expected to pay for all errors of management. Dutta and Studdert will get golden parachutes and headhunters are ringing their phones off the hook. We will all get the big screw.
 

UAL777flyer

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Aug 20, 2002
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MrMarky,

I'll try to answer your post as best I can. First off, US Airways was forced to file Ch. 11 because otherwise, due to being in default on debt, third parties would have forced them there involuntarily. So while the lack of agreements with the IAM and CWA may have contributed to the filing, it wasn't the only reason for it. So if September 15th comes and goes, that doesn't necessarily mean UA will file Ch. 11 immediately. The large debt payment isn't due until November. However, UA would want to go into bankruptcy with as strong a cash position as possible. So we're not about to wait until then to file bankruptcy. UA still has a bit more wiggle room than US Airways had. However, I do agree that the parallels are interesting. We do appear to be following US game-plan so far.

Was the increase in concessions a deliberate ploy to trigger a Ch. 11 filing? I don't think so. Was it an attempt to ask for the sky, knowing it would be turned down, only to have the new CEO ride in and give him a more positive reception? Who knows. I think the company did what they normally do in negotiations: ask for the moon and stars, knowing it won't be accepted. However, in this case, it appears the bottom line cutback numbers are being driven by the requirements of the ATSB. There is probably a bit of play with the final numbers, similar to Siegel and his 85%.

My opinion is that Tilton came in knowing that bankruptcy was a possibility. Considering that there are only 12 days until the self-imposed deadline, it appears that reaching agreements with all unions in that time frame is highly unlikely. So, will the deadline be moved back if progress is being made? Only time will tell. Bankruptcy looks more and more likely each day. I just think it's going to happen. Not enough progress has been made to avoid it, in my opinion. So a painful restructuring looms on the horizon in my opinion. And it will mean dramatic changes for this company.

What little I've been able to find on the internet on Tilton has been positive. He seems to be a great communicator and leader. He has the financial background necessary. He can be brought up to speed on the airline business soon enough. So I'm optimistic that he's the guy we need at this time. However, it's essential that he surround himself with a top-quality senior team. You can bet that there will be ripple effects in UA's management ranks in the coming weeks as Tilton sends a message to all that he is in charge. We'll just have to see how that shakes itself out. The next several weeks are going to be very critical for UA's future.
 
OP
M

MrMarky

Advanced
G4G5--

I think you make some good points and I agree with you that there are some strategic advantages to going the Chapter 11 route. But it would not all be peaches and cream. Remember, ALPA (and the IAM) have their pensions tied up in an ESOP that would be liquidated in a Chapter 11.

As for the $875 million note due in Novemeber which UAL says it cannot obtain refinancing on, maybe Chevron-Texaco is willing to carry the paper?[:bigsmile:] [:bigsmile:]

UAL777Flyer--

Thanks for getting back to me with your thoughtful insight. As I recall, the US default with some of its creditors was not really an issue in terms of a threat the creditors would try to force a BK. And with $600 million cash in the bank, US could have avoided that eventuality had they wished. The default was a deliberate attempt to force concessions out of them.

It's interesting that we have now switched places, with you convinced a BK is unavoidable, and me now seeing some glimmer of hope where I saw none before.

You have spoken often of the need for a competent management team to help the new CEO. I couldn't agree more.

In that spirit, and I AM NOT KIDDING here, I suggest you have a polished up resume sitting on his desk first thing in the morning. You might want to supplement it with excerpts from some of your more thoughtful posts on these boards. The cream rises to the top. AND, you've got a new milkman. But you gotta let him know you exist, you're dedicated and you're talented. Time to blow your horn. Feel free to use me as a reference.[:bigsmile:]

He's going to need some key people as his right hand men/women, in terms of influence -- not necessarily titles. He will be looking to those who he is convinced know what they're talking about. You are one of those. Sieze the opportunity and go save your company!!!

All the best,

Marky
 

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