UAL ALPA Confirms Interesting Corporate Transaction

[A320 Driver]

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On 1/30/2003 8:49:29 AM UnitedChicago wrote:

eolesen...thanks...agree with you. that was basically my point.

i've always wanted U and UA together and it still makes a ton of sense. I just don't think either one - especially UAL - has a spare second to event think about a combination.

Sure Bronner does...but UA is under intense pressure - i think any talk of a deal would have to wait.
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DEMS in 04

 

[UnitedChicago]

Well I guess our moderator doesn't like a little joking around regarding conspiracy theories and kool-aid.

Seems a bit silly to me.

 

[767jetz]

fatburger,

I disagree. It's called negotiating. I realize that employees don't exactly have alot of leverage. But management knows the value of keeping some peace on the property if they want a successful recovery. If ALPA and AFA negotiate and accept changes to the contract that allow the flying to be done at a lower cost by a branch of United, then there is no reason for UAL to spin off the subsidiary to anyone, especially USAir.

I don't think anyone at U should get too excited that UAL's low cost idea will mean lost jobs for UA and more flying for USAir. It just won't happen. One way or another, I would expect Shuttle II to be an expanded version of Shuttle I, with more significant work rule and pay rate changes, and not limited to just the west coast.

 

[N305AS]

Beware the Zombie Alliance, rising up to go after the Evil Alliance and the Low Cost Carriers.

The Zombie Alliance? Ah yes, the two carriers who, for one reason or another, JUST WILL NOT DIE!!! (And that's NOT meant in a good way)

 

[Light Years]

eeeeeeeeeeeeeeeeeeeee

 

[tug_slug]

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On 1/30/2003 9:44:22 AM 767jetz wrote:

fatburger,

I disagree. It's called negotiating.
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767 if you consider management telling you "either accept our offer or well shut it down" negotiating your right on the money but from where I come from an offer like that is called an ultimatum and over the next 6 to 8 months United is going to have plenty of them... ultimatum's that is.

 

[Oliver Stone''s Apprentice]

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On 1/30/2003 10:55:27 AM chipmunn wrote:

Separately, I find it interesting UA employees never post on the US message board unless a transaction with US is discussed. Why is that?

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Why is it that you won't post a message related to UA on the UA boards?

Back to your question, most of the time non-US employees speak up on something, we're told we have alterior motives or that we don't know what we're talking about, so why bother?

 

[wings396]

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On 1/30/2003 1034 AM tug_slug wrote:

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On 1/30/2003 9:44:22 AM 767jetz wrote:

fatburger,

I disagree. It's called negotiating.
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767 if you consider management telling you "either accept our offer or well shut it down" negotiating your right on the money but from where I come from an offer like that is called an ultimatum and over the next 6 to 8 months United is going to have plenty of them... ultimatum's that is.
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AMEN to that one tug slug. Negotiating has become a thing of the past in CH-11. Take it or we will liquidate is the new slogan of choice. Sure we got to vote on it..kind of like a presidential election with one candidate...and if he loses, we will give you another chance to vote for him just in case you were confused the first time around. The company would like to have you agree to their demands, but they will plow ahead without your blessing as well. The folks at UA will learn this lesson very soon.

 

[chipmunn]

UA & US began discussing the "unique corporate transaction" or the fragmentation of some of UA's domestic system into US' lower labor contracts since last spring.

The deal collapsed when US management could not get labor and lesser cuts in time to obtain the federal loan guarantee by June 30, 2002.

Since that time much has changed at the two airlines. UA and US have announced their code share relationship, UA and US are beginning to combine some facilities such as the US moving into UA's SEA North Terminal in May, and IT changes.

Furthermore, one of the reasons Greg Taylor returned to UA was his in-depth knowledge of both company's and to provide a strategic direction if the deal proceeds.

In regard to IT, US obtained a favorable ruling from the bankruptcy court that could abrogate the EDS Sabre contract and then there was the recent announcement of the new arrangement with Galileo. These moves could lead to both UA and US utilizing Apollo as its IT platform and remove a significant obstacle to the companies integrating.

The companies continue to operate and the potential of an "interesting corporate transaction" has never been higher. It appears UA may make three changes: Lower mainline costs; create an airline within an airline, and possible fragment some of UA's domestic network.

Reports indicate if a fragmentation occurs, US is interested in DEN, LAX, SFO, and ORD gates; as well as unspecified equipment that could include B737, A320, and B757 aircraft.

Will it occur? I do not know and US has its own problems to handle first, but I do know Dave Siegel and other management personnel have openly discussed a potential transaction. In addition, I have been told if US emerges from bankruptcy, financing is not a problem.

What's important to note is UA has very stringent revenue and cash flow requirements as part of its DIP financing. If UA is forced to sell assets to fund operations, especially with yesterday's news the Elk Grove Twp-based airline is having difficulty lining up lenders, it is clearly better for UA to "spin off" assets to US and keep revenue under the alliance umbrella, versus transfer revenue to the competition.

Such revenue transfer to a competitor could cause UA to end up not meeting its revenue and cash flow targets required by its DIP lenders, which could lead to the liquidation of the airline.

Time will tell if and when a deal proceeds and there are obstacles to a transaction; however, it is now my understanding the Stephen Wolf is again involved with US negotiations.

Separately, I find it interesting UA employees never post on the US message board unless a transaction with US is discussed. Why is that?

Chip

 

[UnitedChicago]

"Separately, I find it interesting UA employees never post on the US message board unless a transaction with US is discussed. Why is that?"

I'm a UA customer/loyal supporter...so I don't want to confuse that I'm an employee. Chip...doesn't it make sense that UA folks only post on U when a topic involving UA is posted? It makes sense to me. Otherwise, what are they to post?

In terms of Whiteford's use of the word "spin off" it could mean spun into a holding company within UAL Corp. like Loyalty Services, etc. However, it's no secret that Wolf wanted to create 2-3 regional affiliates and spin them off to existing UAL Corp. shareholders in the early 90's. Obviously that lead to the ESOP.

Anyway...here's to both emerging successfully. I've said it before - but I truly am pulling for you all at U.

I haven't utilized the code-share yet, but look forward to my first U experience soon!

 

[chipmunn]

Captain Paul Whiteford, Chairman of United's branch of the Air Line Pilots Association, told Reuters, "But ALPA will not agree to put an airline within an airline that would have a separate seniority list, a separate employee list and a separate collective bargaining agreement and then have that possibly be spun off."

Chip

 

[chipmunn]

Whiteford also said executives had proposed "giving away some of our most modern narrow-bodies to another company and allowing that company to operate a large part of the United network with non-United employees."

Chip comments: Note the word "giving" versus the word "selling".

Chip

 

[chipmunn]

Eolesen & 767jetz:

What's your opinion of Paul Whiteford's comment of "then have that (Shuttle II) possibly be spun off."

Moreover, from a reorganization plan would it be better for UA to "spin off" Shuttle II to US and keep the revenue within the alliance umbrella or to...let's say CO or DL?

Which transaction would the creditors and court likely approve? A deal with US or a deal with another carrier?

Chip

 

[Cosmo]

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On 1/30/2003 12:25:33 PM Busdrvr wrote:

Chip, I actually gave your "unique corporate trans" theory about two seconds of thought with ref to the deep south. It would not have surprised me to see U (with it's caribean strength and CLT banking hub) takeover some SA routes from UAL ...
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I think even here you're giving Chip too much credit. UA's current gateways to deep South America (MIA, ORD and IAD) have the benefit of large local markets, which provide most of the high-yield traffic on these flights. Even IAD, the smallest of the three UA gateways, has access to vastly more local traffic than CLT and a good bit more than PHL as well.

IMHO, UA has focussed its remaining South American service (to GRU and EZE, with tags to GIG and MVD, respectively) to markets that offer the carrier the greatest long-term profit potential. Moving any of its current flights to CLT or PHL, whether operated by UA or US, is unlikely to be as profitable for UA.

 

[DLFlyer31]

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On 1/30/2003 10:55:27 AM chipmunn wrote:

it is clearly better for UA to "spin off" assets to US and keep revenue under the alliance umbrella, versus transfer revenue to the competition.

Such revenue transfer to a competitor could cause UA to end up not meeting its revenue and cash flow targets required by its DIP lenders, which could lead to the liquidation of the airline.

Chip
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Who cares if the revenue goes to a competitor or to US? Either way UAL loses revenue. Who cares if the revenue stays under umbrella of the alliance? There's NO REVENUE SHARING. UAL's loses revenue whether they sell the asset to US or they sell it to AA.

Sure, if they keep it in the alliance, UA can feed traffic into the US planes/routes. But guess what? US still gets the revenue and UA gets NOTHING. There's no REVENUE SHARING....something you don't seem to understand Chip.

Even if UAL does do this low-fare spin off, do you think US pilots will want to fly it? The payscales will be below US's already low pay scales and guess what....the low-fare spin-off won't have a pension plan? Isn't that what all the US pilots are fighting for? Now, you're suggesting the US pilots will want to fly for this new UAL LCC that will not have a pension plan.

Of course, Bear96 brings up an excellent point. It's okay with you (Chip), for U to go out and buy UAL gates/planes/etc and simultaneously terminate the pilots plan because they can't afford to make 300million dollar contributions? The pilots don't have a problem with this???