Time To Demand New Management

[UnitedChicago]

Hello.

I've been avoiding the boards due to all that's happened in May and will probably continue to do so.

However - with United as close as ever to getting out of Chapter 11, now is the time for me to start this thread.

As some of you may know - I'm not an employee - rather a loyal customer with a family connection to United (person is now retired). I've generally supported Tilton in the past. Those days are over.

Glenn Tilton and his management team: Brace, Hacker, and Tague absolutely MUST GO.

-They have done too little to reduce costs for operations (i.e. rolling hub)
-Botched airplane lease negotiations
-Started Ted - which I now think is a complete waste of time. The final straw for me was converting MIA into a Ted only operation
-Are relying solely on debt financing for exit

United needs solid leadership and an equity partner with proven experience turning around Chapter 11 carriers. Below is an excerpt from a Crain's article this week. I can't post the link as you need to be registered...but this will give you the gist.

--

"The last thing in the world they need is more debt," industry analyst James M. Higgins says of United.

Private-equity firms could offer United a way out of bankruptcy without the $3-billion debt load Mr. Tilton's current plan envisions. An equity infusion would give the nation's No. 2 airline a better cushion to withstand the ups and downs of the cyclical aviation business.

Gordon Bethune, architect of Continental's comeback, is available if investors come calling for a new United CEO. Outside investors could bolster their credibility with the court and United's creditors by adding a proven airline executive to their team. Gordon Bethune, architect of Continental Airlines Inc.'s turnaround, is available and said to be interested in United. Mr. Bethune didn't return calls.

While any number of private-equity funds could be interested, New York's Cerberus Capital Management L.P. and Texas Pacific Group are considered the likeliest to take a run at United. Both funds decline comment.

--

So - call your union leadership and tell them to get TPG involved immediately. Or any other equity provider that can do what Tilton simply won't do.

Thanks and keep your chin up.

 

[North by Northwest]

Gordon Bethune...I am sure Mr. Bethune is prevented (retirement provisions)from working as CEO of any airline for many years to come. Unless he wants to lose his millions of retirement beenies.

 

[UnitedChicago]

Gordon Bethune...I am sure Mr. Bethune is prevented (retirement provisions)from working as CEO of any airline for many years to come. Unless he wants to lose his millions of retirement beenies.

[post="275366"][/post]​

And you know this from what source? Do you have a copy of his exit contract? It doesn't have to be Bethune...but certainly not Tilton.

 

[ualdriver]

I don't agree it's time for our fearless leaders to leave- not yet anyway. And certainly not for the reasons you mentioned.

They've done too little to decrease the cost of operations? I don't agree with that. I know now that huge labor cuts have been secured when all the 'analysts' said it couldn't be done, the popular mantra in the press now is that Tilton hasn't done enough to cut non-labor costs. I don't agree, they're not done yet, and I've listed many non-labor items in previous posts that have been cut already and are ongoing.

Botched lease negotiations? Really? Maybe. Maybe not. If you're referring to the 767's, I don't necessarily think so. Do you know what kind of price the lessors were asking for? Do you know the terms of the lease? Should UAL of paid anything they asked for no matter what? And if they had, what effect would that have had on the leases left to negotiate before we exit? Maybe if we had paid 'top dollar' for those leases, others would have demanded the same, costing us more in the long run rather than just letting the planes go? Too many questios, not enough answers to determine whether or not the lease negotiations are a failure. I'll wait for a bankruptcy exit (if we exit) before I make that determination or start second guessing.

Ted's a waste of time? I don't think so, especially since it's growing instead of shrinking. With Ted unit costs below mainline by a significant enough percentage to be worthwhile (sorry I can't say how much because I'm not sure it's public) and customers rewarding airlines with 'cheap seats,' paricularly in leisure markets, I think Ted is a great idea that is doing better than people expected even within UAL. Will we lose SOME premium customers? Yup. Again, from what I've been told from the guys who actually run Ted and see the numbers, the gains we're experiencing so far outweigh the losses.

 

[ualdriver]

Sorry, the Treo ran out of memory! As far as an equity investor goes, if you're implying that there are investors out there willing to make an investment in UAL- I don't doubt there are.......At what price to UAL? Will these equity investors demand UAL be pieced off? Will they demand more pay cuts from employees? Will they want to shrink the airline more? In other words, what are the strings? Do you know what they are? Are you implying that Tilton&gang are secretly holding back some sweet equity infusion offers in order to preserve their jobs? Doubtful, but I guess anything is possible if we're speculating.

Of course the last thing UAL needs is more debt! The last thing anyone needs is more debt. You need to quote an analyst to tell you that? That's why UAL will exit bankruptcy with BILLIONS less than they started out with (assuming we exit). But if you're trying to imply that somehow UAL is screwed if they exit bankruptcy with the aid of a couple of billion of bucks because that's the best 'deal' we can get, I disagree! When you know, first hand, of a better deal, I'm sure a courtroom full of people in downtown Chicago are all ears!

 

[UnitedChicago]

UALDriver:

It's a pleasure to actually debate someone on here that want's to see United succeed . I'll be the first to say that I'm not privy to anything that's discussed within WHQ nor do I agree and/or believe everything the analysts say.

AA established a way to save approximately $100mm annually by converting to a rolling hub. Delta and U adopted the same operation. While I know the disadvantage is long connection time - $100mm is significant. My beef is this - wouldn't you agree United is fighting for its life? If yes - why has it taken 3 years for Tilton and crew to finally make ops more efficient from a critical mass standpoint?

In terms of an equity investor - I know that could mean further cuts and potential shrinkage. However - it's my opinion that TPG would not shrink United any more than Tilton has. Even with all of the nay sayers - no one disagrees that United has the best route structure. Period. Why would an equity investory come in and screw with that asset?

One final thought on TPG. They're 2 and 0 with airlines. I don't see any improvements any time soon in this industry and I'd rather United go with someone that has a track record rather than an inexperienced CEO.

 

[Fly]

deleted by me!

 

[BigRed1]

Great post FLY. Thanks for forwarding it.

I was furloughed last year for about 9 months. When I came back on the property last November, we got a similar briefing from these guys including Tilton, McDonald, Forte, Krakowski, Winters, & Bathurst.

My first impression from all these guys was that they were sharp and talented. Tilton is without a doubt a straight shooter, and tells it like it is. I got the sense he sincerely cares, but also does not like to take any sh*t. Pull the power play Captain thing on him and he'll spar with ya anytime.

The briefings were long and informative. I won't reiterate what was said, as the points made in the above post were accurate and familiar. I will repeat a few specific points though that stood out to us, and are related to the starting post about the need to replace the managers.

1 Tilton blamed much of the soft pricing last year on Northwest's failure to match price increases. 90% of the time, they were the spoilers and did so for the specific reason of killing United Airlines to better control the Pacific. Tilton specifically said he is looking forward to "returning the favors" to Northwest upon our exit.

2 Tilton said the only way this indusrty will survive in a healthy manner is through consolidation and liquidations. It is imperative we survive this onslaught to fight the fight another day. After BK is over, we will be in a position to be the "preditor and not the prey." He also mentioned Bethune approached him during the first year of BK and wanted to join the airlines. United declined the offer, but my own personal opinion...CAL is the likely "consolidation" candidate for United in the coming years improving on our weakness in South America, strengthening our New York presence, and establishing a central/southern Texas hub rounding out our structure.

3 Tilton also agreed DAL cannot avoid BK. I think his number given was that DAL paid 757 million dollars to service their debt last year alone. That is crushing debt that cannot be managed outside of BK unless 80% of their debt is forgiven outright by their creditors. That ain't gonna happen without court protection.

4 Independence Air was offered a 7% gauranteed profit margin from UAL but declined that offer. He is convinced they do not have a bright future and says he was very surprised their "stupid ass business plan" got financed. There is no love lost between those two CEOs.

5 And one last point, as I could write for hours about all the stuff these guys said. Tilton admitted that UAL has been one of the most poorly managed companies he has ever seen. I think the number he mentioned was 7 CEOs in 15 years. When he was specifically asked if he would be with us for the long haul, he did the tap dance for quite sometime and with half smiles would never claim he will be staying too long after the BK exit. We all got the feeling that Tilton is the "turn-around guy" and was specifically challenged to navigate UAL through the BK. He mentioned he does not have specific plans yet after BK is done, but he also "does not yet have a succession plan in place." He mentioned that several times. So...for those of you who want Tilton gone, you will likely get your wish in the next 1-2 years. Not soon enough for you? I wouldn't worry. In my opinion, Tilton is not the problem, and has done a hell of a job with what he had to work with. And this is coming from a pilot who has been furloughed, transferred to another domicile without any other option upon my return, and of course has taken over a 50%+ paycut, and had my quality of work life decimated. If I can have a positive outlook on Tilton, that says a lot.

Did they do some things wrong? Yes. Could they have done some things better? Absolutely. Are all the naysayers doing the Monday Morning Quarterback thing? Yup.

United is still fighting and according to Tilton, we aren't going anywhere. We will be a competitor. All the other airlines who's business plan for success was UAL's liquidation better be very careful.

 

[UnitedChicago]

Great post BigRed...and Fly...thanks for sending.

 

[ualdriver]

If there's an equity investor out there UnitedChicago that wants to give UAL some money and the 'strings' are beneficial to the company, sure why not? And maybe that will happen? It seems as if in US Air's case, equity investors came out of the woodwork once their future was pretty well defined.

As far as the rolling hub goes, from what I understand, that is a consideration. I thought I read in AW&ST that rolling ORD saved them 4 airplanes, which obviously is huge. The disadvantage of that strategy is that it makes your connections less 'convienent' which connecting passengers of course might not like. I guess we'll see if they implement that strategy if they haven't started already.

And don't get me wrong about Tilton and gang. I neither like him or dislike him- yet. I've met him a couple of times, he seems like a sharp guy but I want to see what UAL looks like when we exit bankruptcy before I cast my humble judgement!

 

[Bob Owens]

Hello.

I've been avoiding the boards due to all that's happened in May and will probably continue to do so.

However - with United as close as ever to getting out of Chapter 11, now is the time for me to start this thread.

As some of you may know - I'm not an employee - rather a loyal customer with a family connection to United (person is now retired). I've generally supported Tilton in the past. Those days are over.

Glenn Tilton and his management team: Brace, Hacker, and Tague absolutely MUST GO.

-They have done too little to reduce costs for operations (i.e. rolling hub)
-Botched airplane lease negotiations
-Started Ted - which I now think is a complete waste of time. The final straw for me was converting MIA into a Ted only operation
-Are relying solely on debt financing for exit

United needs solid leadership and an equity partner with proven experience turning around Chapter 11 carriers. Below is an excerpt from a Crain's article this week. I can't post the link as you need to be registered...but this will give you the gist.

--

"The last thing in the world they need is more debt," industry analyst James M. Higgins says of United.

Private-equity firms could offer United a way out of bankruptcy without the $3-billion debt load Mr. Tilton's current plan envisions. An equity infusion would give the nation's No. 2 airline a better cushion to withstand the ups and downs of the cyclical aviation business.

Gordon Bethune, architect of Continental's comeback, is available if investors come calling for a new United CEO. Outside investors could bolster their credibility with the court and United's creditors by adding a proven airline executive to their team. Gordon Bethune, architect of Continental Airlines Inc.'s turnaround, is available and said to be interested in United. Mr. Bethune didn't return calls.

While any number of private-equity funds could be interested, New York's Cerberus Capital Management L.P. and Texas Pacific Group are considered the likeliest to take a run at United. Both funds decline comment.

--

So - call your union leadership and tell them to get TPG involved immediately. Or any other equity provider that can do what Tilton simply won't do.

Thanks and keep your chin up.

[post="275361"][/post]​

Yea so this way they can collect an extra couple of million bucks and not even have to show up to the office anymore.

Did Tilton ask you to write that post?

 

[NewHampshire Black Bears]

Great post FLY. Thanks for forwarding it.

I was furloughed last year for about 9 months. When I came back on the property last November, we got a similar briefing from these guys including Tilton, McDonald, Forte, Krakowski, Winters, & Bathurst.

My first impression from all these guys was that they were sharp and talented. Tilton is without a doubt a straight shooter, and tells it like it is. I got the sense he sincerely cares, but also does not like to take any sh*t. Pull the power play Captain thing on him and he'll spar with ya anytime.

The briefings were long and informative. I won't reiterate what was said, as the points made in the above post were accurate and familiar. I will repeat a few specific points though that stood out to us, and are related to the starting post about the need to replace the managers.

1 Tilton blamed much of the soft pricing last year on Northwest's failure to match price increases. 90% of the time, they were the spoilers and did so for the specific reason of killing United Airlines to better control the Pacific. Tilton specifically said he is looking forward to "returning the favors" to Northwest upon our exit.

2 Tilton said the only way this indusrty will survive in a healthy manner is through consolidation and liquidations. It is imperative we survive this onslaught to fight the fight another day. After BK is over, we will be in a position to be the "preditor and not the prey." He also mentioned Bethune approached him during the first year of BK and wanted to join the airlines. United declined the offer, but my own personal opinion...CAL is the likely "consolidation" candidate for United in the coming years improving on our weakness in South America, strengthening our New York presence, and establishing a central/southern Texas hub rounding out our structure.

3 Tilton also agreed DAL cannot avoid BK. I think his number given was that DAL paid 757 million dollars to service their debt last year alone. That is crushing debt that cannot be managed outside of BK unless 80% of their debt is forgiven outright by their creditors. That ain't gonna happen without court protection.

4 Independence Air was offered a 7% gauranteed profit margin from UAL but declined that offer. He is convinced they do not have a bright future and says he was very surprised their "stupid ass business plan" got financed. There is no love lost between those two CEOs.

5 And one last point, as I could write for hours about all the stuff these guys said. Tilton admitted that UAL has been one of the most poorly managed companies he has ever seen. I think the number he mentioned was 7 CEOs in 15 years. When he was specifically asked if he would be with us for the long haul, he did the tap dance for quite sometime and with half smiles would never claim he will be staying too long after the BK exit. We all got the feeling that Tilton is the "turn-around guy" and was specifically challenged to navigate UAL through the BK. He mentioned he does not have specific plans yet after BK is done, but he also "does not yet have a succession plan in place." He mentioned that several times. So...for those of you who want Tilton gone, you will likely get your wish in the next 1-2 years. Not soon enough for you? I wouldn't worry. In my opinion, Tilton is not the problem, and has done a hell of a job with what he had to work with. And this is coming from a pilot who has been furloughed, transferred to another domicile without any other option upon my return, and of course has taken over a 50%+ paycut, and had my quality of work life decimated. If I can have a positive outlook on Tilton, that says a lot.

Did they do some things wrong? Yes. Could they have done some things better? Absolutely. Are all the naysayers doing the Monday Morning Quarterback thing? Yup.

United is still fighting and according to Tilton, we aren't going anywhere. We will be a competitor. All the other airlines who's business plan for success was UAL's liquidation better be very careful.

[post="275400"][/post]​

++++++++++++++++++++++++++++++++++++++++++++++++++

BigRed1,

In response to #2 of your post "consolidations/liquidations"(and their IS the only place that I agree with Tilton), I don't see how UA could consolidate with CO, given the fact that from what I understand, CO is "joined at the hip, BIG time, with NW"

Also I agree with you that DL could be the first "fatality" instead of US , or UA.

AND "if" UA was to get the chance to "cohabitate" with CO, that would ultimately(99.9% CERTAINLY) find AA and NW "under the covers"(with AS thrown in for good measure).

THAT scenario, AA +nw vs. UA+co, I'd give a years $$$ pay to see !!!!!!!!!!!!


NH/BB's

 

[NewHampshire Black Bears]

BigRed1,

I forgot to throw BA and KLM in with a possible AA/NW/AS.

NH/BB's

 

[Bigsky]

I would have to say forget mergers until UA gets their ducks in a row. Still no business plan. What are they waiting for? Anyone teaming up with UAL at this point would find themselves in a very depressing situation. Replace and Glen and the boys with a true airline management team and let the good employees of UAL bring your airline back as a true competitor. Glen's all bad for you guys. Axe please!!!

cheers

bigsky

 

[Dave]

The hold-up at this point is the aircraft leases. The way I understand it, an agreement was reached last year with all the leasors. Unfortunately, the creditor's committee scuddled the deal, claiming it was too lucrative for the leasors. Interesting note: Airbus is on the creditor's committee, Boeing is not. UAL is now back at the bargaining table trying to hammer out a deal.