UA Announces Cost-Cutting Initiatives

[ualdriver]

Yes, the number and the chart in total included salary and benefits for all employee groups.

But rather than haggle about whether or not those numbers are a percent or two off here or there, my question still remains. Just as many labor groups are seeing/going to see many of their jobs being outsourced to groups like our Express carriers, I don't understand why many of those management/salaried positions could not also be outsourced to those same companies. I'm sure many of those same jobs could be done at Express a heck of a lot cheaper than they could be done here!

 

[sumsonic]

We were given those numbers in a presentation from our leadership. We also heard the headcount for management is something like 8000 folks. That would point to salary compensation of 125g's. I have a hard time with those numbers. If that includes all benefits, maybe that number is not that far off.

 

[G4G5]

I am not a UAL expert but does 1200 really sound like it will fix the problem?

It looks to me like this is just posturing by mgt. What I am refering to is 3Q reports come out and DAL announces 7000-8000 and retirement of the MD11's, AMR announces additional cuts in capacity by retiring 42 additional aircraft in 2003(not to mention the already parked TWA equipment and the 75 F100's) and 500+ additional pilot furloughs (they have already hacked at the employees). All this and they lost less then UAL.

UAL looses $800+ mill and the only solution mgt offers is 5 bases and 1,200 folks. This was done at AA/DAL a long time ago. Could it be that UAL is trying to keep folks around to maximize their leverage in the event of a BK filing?

 

[UAL777flyer]

G4G5,

1200 won't be the end of it. You can be sure there will be more.

 

[sumsonic]

ualdriver,

Actually, you could take all the functions out of UAL and outsource them to UAX. There is nothing that is sacred. You could simply have UNITED AIRLINES painted on the a/c, but everything would be handled by the UAX partners. I think you would have some things to work through, but anything and everything could be outsourced. Is it practical, probably not. There are reasons why things work the way they work, it's the same for pilots, mechs, fa's, or management. Am I for stations going to UAX? No. However, unless we bring down our costs of operating, and overhead, we're going to continue to switch stations. I guess you could call it, “the lose least scenario,â€￾ for the short term. Long term, well I guess we're not too concerned about that right now. ;-)(I'm being sarcastic) Personally, I think we’re going the wrong way in shrinking. I think we should all pitch in (shared sacrifice), stabilize ourselves, share in the rewards, and live long and prosper: “(shared sacrifice leads to highly negative markets becoming marginal markets = less to NO shrinking) + (economic rebound or changed revenue picture) = growthâ€￾ Just my 2 cents. You could also assume, with all the SJ coming on board, we use them as additional feed not replacement. That should help mainline in the future.

 

[ualdriver]

Yes, I understand all this. We all have to pull together, take one for the team, etc., etc. Got it. Yes, I understand that we have the highest CSM's in the industry, and a company losing 7 mil/day with only a few shillings in the bank can't have that. But as an 8 year airline employee who has seen many, many jobs being outsourced to companies that provide a decent but inferior product in my opinion, I'm just asking questions to make sure in my mind that the pain is spread around equally when it comes to cost savings. I don't want to see anyone lose their job in any position at United. But I'm just asking if WHQ jobs, as well as flight attendant, mechanic, pilot, and ramp jobs, etc., are being considered for outsourcing as general hourly labor jobs have. If they haven't been considered, they surely ought to be as Express probably could provide the same WHQ services for us at a much lower cost, therefore lowering United's CSM's and putting a stop to the shrinking sooner.


*****You could also assume, with all the SJ coming on board, we use them as additional feed not replacement. That should help mainline in the future****

Can't assume that at all! In fact, in the future I would bet with all the SJ's coming on board, MORE of our flying will be replaced down the road, especially if we go into bankruptcy. And there's a pretty big gap between Express' 50 seat RJ's and our 108 seat (or so) 737's. Who do you think is going to get the airplanes that eventually fill that gap in capacity? Not us, even if we do get our costs under control. Yes, I know. All these little SJ's buzzing around just makes United grow and grow. Heard that one a few years back too. I remember the argument back when we voted on the argument, Why should UAL invest in RJ's when we can take that same money and invest in widebodies, where the real corporate profits and career growth is! A few 400's in the desert later, I think I've been had.

 

[Frankie Pantangeli]

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On 10/23/2002 253 PM sumsonic wrote:

You could also assume, with all the SJ coming on board, we use them as additional feed not replacement. That should help mainline in the future.


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[/blockquote]

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Sorry but that's the funniest thing I've heard in a while. How many times can that dog be wagged before people wake up. Short term, long term debate the issues and realities of both, but the bottom line is UA management(upper UA777Flyer) has no interest in flying UA airplanes and that's been the case since before 9/11. They simply have the vehicle to accomplish it now.

 

[sumsonic]

Bingo, reality is a..........well let's just say it is down right scary. It's very somber.

 

[Busdrvr]

Well, by that logic, we'd lose 0 per flight if we just quit flying...Hardly a good long term business plan

 

[UAL777flyer]

No, UAL is not paying for any of these SJ's.

And yes, there is a process in place for UA to convert mainline service to UAX that goes through ALPA. A BIRR test (Basic Internal Rate of Return) is performed on the market, basically an economic analysis. The results are coordinated with ALPA to prove the necessity of changing over to UAX.

And sumsonic, you're absolutely right. Somber is a major understatement. When PRS comes out each month, it's enough to make you want to hang yourself from the nearest rafter.

 

[sumsonic]

Yes, I understand all this. We all have to pull together, take one for the team, etc., etc. Got it. Yes, I understand that we have the highest CSM's in the industry, and a company losing 7 mil/day with only a few shillings in the bank can't have that. But as an 8 year airline employee who has seen many, many jobs being outsourced to companies that provide a decent but inferior product in my opinion, I'm just asking questions to make sure in my mind that the pain is spread around equally when it comes to cost savings. I don't want to see anyone lose their job in any position at United. But I'm just asking if WHQ jobs, as well as flight attendant, mechanic, pilot, and ramp jobs, etc., are being considered for outsourcing as general hourly labor jobs have. If they haven't been considered, they surely ought to be as Express probably could provide the same WHQ services for us at a much lower cost, therefore lowering United's CSM's and putting a stop to the shrinking sooner.

No argument there. It is the companies responsibility to look at everything.

Can't assume that at all! In fact, in the future I would bet with all the SJ's coming on board, MORE of our flying will be replaced down the road, especially if we go into bankruptcy. And there's a pretty big gap between Express' 50 seat RJ's and our 108 seat (or so) 737's. Who do you think is going to get the airplanes that eventually fill that gap in capacity? Not us, even if we do get our costs under control. Yes, I know. All these little SJ's buzzing around just makes United grow and grow. Heard that one a few years back too. I remember the argument back when we voted on the argument, Why should UAL invest in RJ's when we can take that same money and invest in widebodies, where the real corporate profits and career growth is! A few 400's in the desert later, I think I've been had.

First, I am not aware that the company has spent any money on these birds. If that is the case, I would like to see how much.

Also, just heard that management will be seeing a 12-18% head count chop. Current head count is 7000 folks. Don't know if it's true, and I don't know even if I really care.

 

[sumsonic]

UAL777,

Couldn't agree more. It's amazing how much our company can take.

Busdrvr,

Losing less for the short term, sustains myself much longer than if I'm losing 4 times as much. At some point, things have to and will get better. I just don't want to see our company be an SJ product, because when things do turn around, we will not be in position to make the most of it. We have to use our cost savings to fund our fights that have to be fought, and when the dust settles, I want us to be the ones left standing not the other guys. I'm not talking about AA, DL, NW, CO. I'm talking about the other guys that dumped their capacity into our markets.

What's that saying.

We don't only fight the fights that we could win, we fight the fights that need to be fought.

 

[UAL777flyer]

We got AA's attention with hourly service between ORD-DFW over the summer. Even now, in the slow fall shoulder period, we've got a lot of capacity in ORD-DFW, for all the good it does us.

And it isn't so much AA driving down yields in Chicago, it's ATA and WN from MDW that have really been killing our yields. Not much we can do about that until we get our costs in line, no matter how low our fares are.

 

[Busdrvr]

[blockquote]
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On 10/24/2002 2:18:05 PM sumsonic wrote:

We have to use our cost savings to fund our fights that have to be fought, and when the dust settles, I want us to be the ones left standing not the other guys. I'm not talking about AA, DL, NW, CO. I'm talking about the other guys that dumped their capacity into our markets.

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[/blockquote]

I agree to a point. The prob is if you dump too much capacity, you lose the big money. I'm not worried about ma and pa kettle, they'll go to the cheapest seats regardless, i'm worried about the big money contracts that go to another major because we don't serve X, Y or Z anymore or the CFO doesn't like RJs. I've had a 1K million neighbor tell me he was looking elsewhere because UAL has pulled most mainline flights out of COS. as for capacity dumpers, I'm assuming you mean Alaska. Maybe a few flights from SEA to various Alaskan destinations at cutrate prices... I could start a whole string on Airlines I Hate (I've got freinds at ALL the major Airlines so I wich them no ill). How about AMR for adding capacity and driving down yeilds in ORD? How about NWA stopping every attempt to increase prices? BTW, check you PM's

 

[sumsonic]

Busdrvr,

I agree to a point. The prob is if you dump too much capacity, you lose the big money. I'm not worried about ma and pa kettle, they'll go to the cheapest seats regardless, i'm worried about the big money contracts that go to another major because we don't serve X, Y or Z anymore or the CFO doesn't like RJs. I've had a 1K million neighbor tell me he was looking elsewhere because UAL has pulled most mainline flights out of COS. as for capacity dumpers, I'm assuming you mean Alaska. Maybe a few flights from SEA to various Alaskan destinations at cutrate prices... I could start a whole string on Airlines I Hate (I've got freinds at ALL the major Airlines so I wich them no ill). How about AMR for adding capacity and driving down yeilds in ORD? How about NWA stopping every attempt to increase prices?

I'm not sure if you understood my point. I don't want to use the SJ as the cost savings to fight our fights, because like you point out, we have frequent flyers leaving us since it's an inferior product. I don't want to dump capacity, because, like you say, we lose big money. What I want to do is keep our existing capacity, but with lower costs of operating that capacity relative to the current costs and revenues. I don't want to see you be bumped down, I don't want to see people lose their jobs, I don't want to see us convert to an all SJ carrier. What I want to see is us pulling together (reducing our costs of operation) to put the hurt on the other guys. We spent too many years and BILLIONS of dollars on our infrastructure to have it be taken away from us. Right now, it doesn't matter who's (management/unions/government) fault it is. First, we have to have the tools (lower costs) in order to get into the ring. Then it's judgement day for those airlines that have taken too much from us.