[BR]
[P align=justify][FONT face=Times New Roman size=5]Rueters Report[/FONT][BR][BR][FONT face=Times New Roman size=3]NO TIME TO WASTE [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]Discussions with individual coalition members to finalize their component of the $5.8 billion are moving forward, but at varying paces, Chief Financial Officer Jake Brace said in a statement. These discussions need to be brought to a quick resolution to achieve our common goal.[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]UAL, which has warned of a possible autumn bankruptcy, said the third-quarter net loss amounted to $15.57 per share, compared with a net loss of $1.2 billion, or $21.43 a share, a year earlier. Revenue fell 9 percent to $3.7 billion. Before special items, the per-share loss was $8.82. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]There is no question that United continues to suffer from the financial challenges that plague our entire industry, the airline's new Chief Executive Glenn Tilton said in a statement. But he added, At this point, nobody should consider a Chapter 11 filing inevitable. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]PILOTS UPBEAT [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]A pilots union official said he believed the savings outlined Friday would be enough to pull United out of its financial crisis. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]When finalized these historic employee sacrifices will stabilize the company and permit United to access critical lending through the ATSB and the general capital markets, said ALPA official and UAL board member Paul Whiteford. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]The International Association of Machinists has been the most outspoken in its belief that pay cuts may not be needed. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]However, on Friday, an IAM spokesman said ongoing talks with management about participating in the $5.8 billion in labor savings were progressing well. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]UAL shares traded in a wide range on Friday, at one point dropping nearly 20 percent to $1.42 -- its lowest level in decades. Later, the stock recovered as word of the unions' deal spread. They were unchanged at $1.73 on the New York Stock Exchange in early-afternoon trading.[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]ROULETTE? [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]Industry experts were not so sure United could get its house in order quickly enough.[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]Labor unions seem determined to wait to the last possible minute before accepting lower take-home pay, said Joseph Schwieterman, an airline expert at DePaul University. That moment is rapidly approaching. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]With each passing day and week, Schwieterman said, bankruptcy becomes almost inevitable. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]Susan Donofrio, airline analyst at Deutsche Bank, also said time was running out. [/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]We also are somewhat skeptical that management will be able to achieve labor cost savings in time since they haven't done so thus far and it looks like their labor groups want to negotiate with management separately, she said.[/FONT][BR]
[P align=justify][FONT face=Times New Roman][FONT size=3][STRONG]CHIP'S COMMENTS:[/STRONG][/FONT][/FONT][BR]
[P align=justify][FONT face=Times New Roman][FONT size=3]I believe industry consolidation is the answer to match capacity and demand, but for any airline to participate they must survive the current short-term crisis. ALPA EF&A briefed the MEC that following the Gulf War there was a 25% decrease in traffic, it took about one year for traffic to return to pre-war levels, and the current fundamentals do not support continued industry viability for any U.S. carrier. The unprecedented crisis of continued terrorist attacks, the double dip recession, oil rising to over $30 per barrel, air fares at 20 year lows, rising security costs, and the pending war with Iraq are cyclical are there will be eventual stabilization.[/FONT][/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]In some respects the US Airways route network is more valuable than other trunk airlines because it primarily serves spokes versus large O&D markets. The government thoroughly understands this macroeconomic fact and its demise would likely result in what the DOT calls essential air service on a market-by-market basis being eliminated. Other airlines want US Airways and United to fail, so they can fix their problems on the backs of other company failures. However, if US Airways was not a viable medium or long-term candidate why would other investors be interested in acquiring the company, whom must provide an offer greater than the RSA?[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]I suspect at US Airways there is a need for short-term W-2 cuts, pension changes to prevent fund payments during a period of cash outflows, and possibly work rules changes to reduce hourly wage rate reductions. However, those airline employees who elect to make these sacrifices will likely remain in place to benefit from the near-term industry restructuring/consolidation.[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]It appears for US Airways' partner UAL, no union has reached an accord and the parties have agreed on a $5.8 billion cuts for 5.5 years. The unions and management began specific discussions on how the cuts would be administered and the company will likely submit a dual track loan guarantee application next week with one for the bankruptcy option and one for an out of court restructuring . The UAL board could decide on a bankruptcy filing at its October 23-24 meeting, which may be the deadline for the unions to try and prevent a formal reorganization.[/FONT][BR]
[P align=justify][FONT face=Times New Roman size=3]Chip [/FONT][/P]