UA Announces Cost-Cutting Initiatives

Busdrvr

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Aug 20, 2002
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UAL777,
Go to this web address.

http://ccbn.tenkwizard.com/filing.php?repo...K=100517&CN=UAL

to those too lazy to surf, this page is from an april 1994 SEC filing that outlines the short haul cost of UAL flying before and after the implementation of U2 (shuttle). It's no wonder the SWA guys agreed to the pay freeze. We arguably killed U2 by bringing it's pay scale to parity in C2K. It was also killed by Dutta's premium pax philoshophy that changed it to nothing more than a hub feeder. You said our costs were too high to fly the extra leg from some of our layover cities (IAH-MEX, MSP-MCO). Isn't it ironic that SWA just added a daily non-stop from MCO to DET? U2 will likely come back, and with it, even lower marginal costs. If you were a businessman wanting to take your family to the magic Kingdom, when would you want to leave? amybe 4 or 5 PM (after work) so you could get to a hotel and be ready to go the next morning? When would you want to come home? Late in the evening (9PM or so) after the kids enjoyed one last day of rides, so you could even make it to work the next day? We need to take a harder look at places we can get a little more revenue. Using an idle jet for late night runs goes contrary to the high yield philosophy of Dutta, but it could be one of the smartest things we've done in a while.
 

UAL777flyer

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Aug 20, 2002
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Busdrvr,

I'm with you, but it's not as easy as it sounds. Considering the average time a plane terminates it's day and then the average time it begins it's day, it's not easy to put in a utilization flight that can get there and back in that time frame unless you're timing them at weird times (after 2100 and prior to 0600) that aren't very desireable. We added in a lot of utilization flights in June/July out of ORD to push up our schedule. Many of those flights didn't even cover cash, which is why they didn't last. If the flights don't generate positive cash, they are worthless. I am all for trying new things and new ideas. But not if they're projected to lose cash.

I agree with you that another low-cost operation will happen. However, to make it successful, we must keep it low-cost and high-tempo and ignore the reflex of gradually molding it into what we're used to doing: mainline, hub-feeder flying. That is what caused Shuttle to lose its' edge. It had the potential to keep WN in check out west, but was done in by the inability to maintain its cost advantage.
 

sparky

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Sep 20, 2002
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[blockquote]
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On 10/21/2002 5:53:18 PM UAL777flyer wrote:
put in a utilization flight that can get there and back in that time frame unless you're timing them at weird times (after 2100 and prior to 0600) that aren't very desireable.
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[/blockquote]

Remember the good old winter late night Midwest-Cancun flts btwn 2100-0600 at TW. Cancun was like a hub at 3am, with all those MD80s and 757s.
Probably didn't make much money, but increased utilization. (ATL/AUS/BWI/CID/CMH/DEN/DFW/DTW/EWR/JFK/LAX/MCI/MIA/MSY/PHL/PIT/RDU/SDF/STL/TPA-CUN.)
 
OP
B

Busdrvr

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Aug 20, 2002
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777,
Look at the MSP example. i guarentee there is a Guppy that gets there at around 4 and overnights. Consider the flight time i mentioned. wierd times may actually be Beneficial in some markets (especially leisure markets). Adding another flight to ORD would be a waste, but we MUST look at other oportunities. It's ironic that the ONLY money making airlines currently, arte those that are doing EXACTLY what we say won't work.
 

JS

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Aug 24, 2002
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DFW
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Originally posted by Busdrvr: 777,
Look at the MSP example. i guarentee there is a Guppy that gets there at around 4 and overnights. Consider the flight time i mentioned. wierd times may actually be Beneficial in some markets (especially leisure markets). Adding another flight to ORD would be a waste, but we MUST look at other oportunities. It's ironic that the ONLY money making airlines currently, arte those that are doing EXACTLY what we say won't work.


How about a MSP-MOT tag? Double the number of airlines serving Minot!
 

Cosmo

Veteran
Aug 20, 2002
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Busdrvr/UAL777flyer:

If there is really a 737 that overnights at MSP starting at 4:00 PM, rather than looking for some tag-end flight that would only compete with a NW flight from its hub in MSP, why not run it to UA's own IAD hub at about 5:00 PM. It would arrive at IAD around 8:30 PM, in time to make connections (including some foreign cities like LHR and FRA) during the late evening connecting bank there. The plane could then return to MSP at 9:30 PM or so, arriving back in MSP at about 11:00 PM for a more reasonable overnight. It would also add 4 to 5 hours of additional aircraft utilization each day to an otherwise-idle plane.

I realize that this is not the greatest schedule for only one nonstop in a market, although it would be augmented by connections at ORD. Still, had this schedule been in effect last month, I would have used the eastbound portion of it on an IAD-MSP trip that I took at that time.

IMHO, adding flights from a spoke city to UA's own hubs is a better use of available aircraft time than operating tag-ends from another carrier's hub. And it's more likely to be profitable (or at least cash-positive) as well.
 

ualdriver

Veteran
Aug 20, 2002
509
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Actually, that's an interesting statement. We've seen some pretty significant and well publicized cuts of all employee groups except management. I'm not trying to start a fight, but how many WHQ lower/middle/upper management employees did we have pre-9/11 and how many have been cut so far and how many are going to be cut in the future? With MUCH less of an airline to manage, it would make sense that less WHQ personnel would therefore be needed?

Furthermore, just as many of our jobs have been/will be soon contracted out to a lower bidder, I wonder if many of the functions performed at WHQ could be contracted out at a lower cost? Certainly at our express feeders some management and accounting capabilities, for example, exist and more could be hired to perform the same functions that our management personnel accomplish at a much lower cost? Has this idea of contracting out many of the functions performed at WHQ been pitched to or by management? With salaried and management employees making up 15% of our 7.1B payroll (approximates), never mind the cost of leasing and operating office space, one would think that much money could be saved by outsourcing much of WHQ's capabilities?
 

UAL777flyer

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Aug 20, 2002
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The reason you don't see a press release on management cuts is because management people are leaving this company in droves. And their positions, unless deemed absolutely critical, are not being filled. We continue to attrit numerous management personnel, especially in vital departments like Finance, Planning and Inventory Management/Pricing. I'm sure it's going on in many other departments throughout the company. So it's not as if the management ranks are not being depleted. They are. And we've been told there will be more job cuts down the road. Just because they haven't been announced yet doesn't mean it won't happen. And have you noticed that the cuts announced yesterday affect IAM personnel? This seems to go along with what I've heard, in that IAM leadership would rather see job cuts and efficiency changes than paycuts.
 

ualdriver

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Aug 20, 2002
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Furthermore, just as many of our jobs have been/will be soon contracted out to a lower bidder, I wonder if many of the functions performed at WHQ could be contracted out at a lower cost? Certainly at our express feeders some management and accounting capabilities, for example, exist and more could be hired to perform the same functions that our management personnel accomplish at a much lower cost? Has this idea of contracting out many of the functions performed at WHQ been pitched to or by management? With salaried and management employees making up 15% of our 7.1B payroll (approximates), never mind the cost of leasing and operating office space, one would think that much money could be saved by outsourcing much of WHQ's capabilities? (sorry for the double print!)
 

flythewing

Member
Oct 7, 2002
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Management at ORD is certainly not being 'attrited'. They are still falling all over themselves. Many were shipped in or HIRED after 9/11.
 

ualdriver

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Aug 20, 2002
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The source of my info is an AFA publication that was posted on their bulletin board in ORD flight ops and in DENTK when I was out there for training. The numbers actually seem to jibe with some of the numbers that flight ops just gave us in a separate publication. Where did you get your numbers from?
 

kcabpilot

Senior
Aug 22, 2002
271
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The reason you don't see a press release on management cuts is because management people are leaving this company in droves.

drove (drov), n. {ME. drof; AS, draf < drifan;}
1. a number of cattle, hogs, sheep, etc. driven or moving along as a group.

Leaving in droves eh 777flyer?
Now that IS funny!