Ual Ceo: Us Skies Need Deregulation

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UAL CEO: US skies need deregulation

Says new ownership rules would allow US airlines to better compete against European, Asian rivals.

September 22, 2005

LOS ANGELES (Reuters) - On Wednesday United Airlines Chief Executive Glenn Tilton called for the completion of U.S. airline deregulation, saying that without it American carriers risked being marginalized by Europe and Asia.

Tilton, addressing a business luncheon in Los Angeles, said that United, the bankrupt No. 2 U.S. carrier, would emerge from Chapter 11 next year in a much stronger position to seize growth opportunities in the future.

But no matter how well United or any of the other major U.S. carriers currently in bankruptcy proceedings transform their business, they would be hampered as global competitors without a change in the regulatory environment, he said.

"Since deregulation in 1978, U.S. government policy has encouraged the maximum number of domestic carriers and discouraged meaningful consolidation," he said.

Despite billions of dollars in financial aid granted by the U.S. government after the September 11, 2001, attacks, four of the seven major U.S. carriers are now in bankruptcy proceedings.

Tilton noted that carriers in Europe, such as Air France and KLM , and Asia had returned to profit and were consolidating across national boundaries to create "super-carriers."

"For the first time in the history of aviation, U.S. carriers are no longer the largest, strongest carriers in the world," he said.

"Without a coherent U.S. aviation policy that reverses the bias against airline size and removes the barriers that prevent us from constructive consolidation, U.S. carriers will be unable to compete on a global scale, and we risk being marginalized," Tilton said.

Asked how many major U.S. carriers would be flying in five years if the deregulation process was complete, Tilton replied, "Three." He did not elaborate.

UAL Corp., parent of bankrupt United Airlines, said Wednesday its August net loss was $30 million, with $82 million in expenses related to its reorganization.

Tilton noted that excluding expenses, United earned a "respectable" operating profit of $80 million in August despite a 43 percent increase in the cost of fuel over August 2004.

United received court approval last week for its schedule to exit Chapter 11 next year. United has said it aims to leave bankruptcy by February 1.
 
Fly said:
UAL CEO: US skies need deregulation

Says new ownership rules would allow US airlines to better compete against European, Asian rivals.

September 22, 2005

LOS ANGELES (Reuters) - On Wednesday United Airlines Chief Executive Glenn Tilton called for the completion of U.S. airline deregulation, saying that without it American carriers risked being marginalized by Europe and Asia. ...
"Since deregulation in 1978, U.S. government policy has encouraged the maximum number of domestic carriers and discouraged meaningful consolidation," he said....
"Without a coherent U.S. aviation policy that reverses the bias against airline size and removes the barriers that prevent us from constructive consolidation, U.S. carriers will be unable to compete on a global scale, and we risk being marginalized," Tilton said.
[post="304307"][/post]​

More than anything else, this sort of statement leads me to believe that Tilton is very confident that UAL will be in an excellent position emerging from bankruptcy.

Why? Two years ago, do you think he would have been talking up policies to encourage weaker airlines to be gobbled up or winnowed out by stronger ones? Fat chance.

Now, Tilton may be incorrect in his assessment of UAL's position vis-a-vis the other major carriers, but he clearly believes that United is (or very soon will be) capable of taking advantage of others weakness.

Good news for UAL if true, I s'pose. Maybe my wife's profit share bit or whatever will actually be worth more than a nickel.

-synchronicity
 
This may also be a "first shot across the bow" to allow the U.S. airlines to hire foreign nationals for flying within the U.S. They work for less, you know. The only time the government has been "against consolidation" has been at times when a merger/acquisition would have seriously reduced competition in a particular area of the country. It was not the size of the merged company that the govt objected to in the proposed UAL-U merger, it was the reduction in competition along the East Coast. The esteemed members of Congress were afraid their air fares might go up. :shock: :lol:
 
What this says is that Tilton wants to find someone to buy United so UA's value is maximized. It is highly doubtful that UA's creditors would be willing to acquire anyone at this point. Remember that CO is now expected to have the highest unit costs in the industry and DL is in bankruptcy and expected to successfully reorganize.
 
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WorldTraveler said:
What this says is that Tilton wants to find someone to buy United so UA's value is maximized. It is highly doubtful that UA's creditors would be willing to acquire anyone at this point. Remember that CO is now expected to have the highest unit costs in the industry and DL is in bankruptcy and expected to successfully reorganize.
[post="304570"][/post]​



actually Tilton contends that UAL will be a buyer, not a seller. UAL's move will be after BK, and the creditors will have significantly less influence
 
Busdrvr said:
actually Tilton contends that UAL will be a buyer, not a seller. UAL's move will be after BK, and the creditors will have significantly less influence
[post="304593"][/post]​

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

Busdrvr,

I'm a bit curious about the (post BK) "move" UAL will make.

Do you suppose it will be;

A. CO
B. DL
C. AS
D. US/HP

(Obviously it would'nt be AA or NW)

???????????????

NH/BB's
 
NewHampshire Black Bears said:
+++++++++++++++++++++++++++++++++++++++++++++++++++++

Busdrvr,

I'm a bit curious about the (post BK) "move" UAL will make.

Do you suppose it will be;

A. CO
B. DL
C. AS
D. US/HP

(Obviously it would'nt be AA or NW)

???????????????

NH/BB's
[post="304628"][/post]​
The article would strongly IMPLY that the carrier would not be in the US. So, Lufthansa yes, and all those other US Carriers you listed - NO.

Why would Tilton want to change regulation policy to consolidate across borders only to acquire a US Carrier?

That doesn't make any sense whatsoever.
 
I'm a bit curious about the (post BK) "move" UAL will make.

Why would Tilton want to change regulation policy to consolidate across borders only to acquire a US Carrier?

First, let me say that I'm not USA320 and I don't have super secret "deepthroat" connections. Anything I say is MY speculation and you won't offend me in the least to dismiss some or all of it (and please attack any faulty premises on my part in the name of moving the discussion along).

1st. I think UAL will first make a US (the country not the airline) play. Who? I think that has not yet been determined.
The obvious frontrunner in the past was U. Problem is U morphed into something UAL doesn't want. They wanted S curve fortress hubs and premium service.
Next in line and part of prior attempts is Dal. I personally don't know what Tilton thinks of DAL, although there has been talk at UAL and at CAL about the lack of strength of the DAL network. Is it lack of strength without a partner or would the DAL structure be a perfect complement to the UAL network. DAL arguably got a reprieve from serious LCC comp when Valujet put one in, but now the blood is in the water.
NWA? Not now not ever. Never get approval and plus I think Tilton intends to either completely kill NWA or at least severely cripple them (from his words elsewhere). Something about payback being a b1tch.
CAL? CAL WANTS a deal with UAL BADLY. They have been floating it for a while, and have even been telling it to the employees. Cal thinks it would make sense if DAL and NWA hook up. I can't argue, I just hate scabs, and there is still significant "bad blood" after the crap Gordo pulled and the things he said. If you want to know why UAL didn't want an "equity investor" to exit BK, that's the reason. an equity investor would have wanted control of the BOD for a billion $'s. Then he could sell us all out for two to CAL. No thanks. If a deal happens with CAL it will be after or as a part of them declaring BK. It doesn't make sense to can all your debt and pensions to just turn around and merge with a highly leveraged airline with pensions. If CAL declares (sometime in 2006), the deal will be done.
U/AWA? despite trying to buy both at one time, won't happen, unless it was in an effort to redeploy the jets to make a play for another hub on the east coast.

The LCC's FEAR the notion of 3 Legacys. SWA fought the last U/UAL deal. Something about it making travel too convienient for business pax, who wouldn't fly SWA anymore. Things are a changin, and nobody is safe. Like it or not, UAL is going to lead a REAL industry revolution.

Once UAL gets 1/3 of the domestic market, they will then look for a hookup with LH. Don't think Tilton is suddenly for mergers now that he's about to be in the catbird seat, he's wanted it for 3 years now.
 
I disagree. I think United is only interested in an international merger. The business plan clearly shows they do not need a merger to survive (unlike USAirways). I believe this is to deal with the possibility of not being able to change the ability to merge internationally.

DAL and NWA are far overburdened with Debt and why would a lean U want to take on that burden? Same with US Airways, sick, and U is healthy.

He also wouldn't want a carrier with pensions, so that rules out AA and Con (I think).

I'm sticking with international.
 
Busdrvr said:
Next in line and part of prior attempts is Dal. I personally don't know what Tilton thinks of DAL, although there has been talk at UAL and at CAL about the lack of strength of the DAL network. Is it lack of strength without a partner or would the DAL structure be a perfect complement to the UAL network. DAL arguably got a reprieve from serious LCC comp when Valujet put one in, but now the blood is in the water.

Just a thought...
What about UAL/DL merger with most of the DL domestic network except major city routes--ATL/LAX, for instance--sold off? Keep DL's international routes. But, what about fleet compatability?
 
Busdrvr said:
If CAL declares (sometime in 2006), the deal will be done.

[post="304683"][/post]​

I predict that CO will be the next "surprise" filer for Ch 11 protection, and it will happen in the next 3 weeks. CO has huge pension and debt problems looming on the horizon, and the recent $2.25/gal fuel costs will push CO into filing prior to Oct 17. Add in the effect of this hurricane on IAH and I don't see CO waiting until next year.
 
jimntx said:
Just a thought...
What about UAL/DL merger with most of the DL domestic network except major city routes--ATL/LAX, for instance--sold off? Keep DL's international routes. But, what about fleet compatability?
[post="304687"][/post]​


The fleets are not compatable, but too much is made of that I think. In the past, the strength of ALPA allowed for more fleet types = more opportunities for pilots. Tilton has led the way on changing that. Now, upgrading from a 737 to an A320 simply isn't worth it, likewise from a 777 to a 400. You just do what AMR wisely did and segment your fleet (no MD's in MIA, no 737's in some other hubs).

DAL is very stron on the east coast, and very strong over the pond. SA could be stronger (not as strong as CALs SA network). I personally like DAL and at least with pilots, the demographics are pretty similar. As far as "selling of domestic routes", they have no value, and neither does DAL's NB domestic fleet. They'd merely be giving them away (or put more precisely, quitting making payments).

I predict that CO will be the next "surprise" filer for Ch 11 protection, and it will happen in the next 3 weeks. CO has huge pension and debt problems looming on the horizon, and the recent $2.25/gal fuel costs will push CO into filing prior to Oct 17. Add in the effect of this hurricane on IAH and I don't see CO waiting until next year.

As much as nothing surpises me anymore, i would be mildly surprised. Then again, three weeks prior to the NWA filing, not many people thought it would happen so soon. If it does, all bets are off, and I'd be putting my money on a CAL/DAL hookup. Then again, maybe a BK filing would put NWA and CAL back in bed. My head hurts. ;)
 
dc3fanatic said:
I disagree. I think United is only interested in an international merger. The business plan clearly shows they do not need a merger to survive (unlike USAirways). I believe this is to deal with the possibility of not being able to change the ability to merge internationally.

DAL and NWA are far overburdened with Debt and why would a lean U want to take on that burden? Same with US Airways, sick, and U is healthy.

He also wouldn't want a carrier with pensions, so that rules out AA and Con (I think).

I'm sticking with international.
[post="304686"][/post]​

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

dc3fanatic,

Your right , Tilton would not want a carrier with pensions.
BUT,
Don't put AA + CO in the same sentance !!!!!!!!!
Tilton "could" buy CO !!
As far as AA, Tilton CAN NOT "think that FAR and WIDE" !!!!!!!!!!!!!!

NH/BB's
 
Busdrvr said:
I'm a bit curious about the (post BK) "move" UAL will make.

Why would Tilton want to change regulation policy to consolidate across borders only to acquire a US Carrier?

First, let me say that I'm not USA320 and I don't have super secret "deepthroat" connections. Anything I say is MY speculation and you won't offend me in the least to dismiss some or all of it (and please attack any faulty premises on my part in the name of moving the discussion along).

1st. I think UAL will first make a US (the country not the airline) play. Who? I think that has not yet been determined.
The obvious frontrunner in the past was U. Problem is U morphed into something UAL doesn't want. They wanted S curve fortress hubs and premium service.
Next in line and part of prior attempts is Dal. I personally don't know what Tilton thinks of DAL, although there has been talk at UAL and at CAL about the lack of strength of the DAL network. Is it lack of strength without a partner or would the DAL structure be a perfect complement to the UAL network. DAL arguably got a reprieve from serious LCC comp when Valujet put one in, but now the blood is in the water.
NWA? Not now not ever. Never get approval and plus I think Tilton intends to either completely kill NWA or at least severely cripple them (from his words elsewhere). Something about payback being a b1tch.
CAL? CAL WANTS a deal with UAL BADLY. They have been floating it for a while, and have even been telling it to the employees. Cal thinks it would make sense if DAL and NWA hook up. I can't argue, I just hate scabs, and there is still significant "bad blood" after the crap Gordo pulled and the things he said. If you want to know why UAL didn't want an "equity investor" to exit BK, that's the reason. an equity investor would have wanted control of the BOD for a billion $'s. Then he could sell us all out for two to CAL. No thanks. If a deal happens with CAL it will be after or as a part of them declaring BK. It doesn't make sense to can all your debt and pensions to just turn around and merge with a highly leveraged airline with pensions. If CAL declares (sometime in 2006), the deal will be done.
U/AWA? despite trying to buy both at one time, won't happen, unless it was in an effort to redeploy the jets to make a play for another hub on the east coast.

The LCC's FEAR the notion of 3 Legacys. SWA fought the last U/UAL deal. Something about it making travel too convienient for business pax, who wouldn't fly SWA anymore. Things are a changin, and nobody is safe. Like it or not, UAL is going to lead a REAL industry revolution.

Once UAL gets 1/3 of the domestic market, they will then look for a hookup with LH. Don't think Tilton is suddenly for mergers now that he's about to be in the catbird seat, he's wanted it for 3 years now.
[post="304683"][/post]​

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

Busdrvr,

I agree with you, the International only route, would Ideally be the best way to go.
BUT,
That's easier said than done, and UA needs a bit more east coast domestic(that CO would bring). Not a lot, but just a little.

As I posted on AA, in this FAST "shaping up game" of musical chairs, among the legacy's, WHOEVER is left standing without a seat, OR a new partner, just bought themselves a DEATH SENTANCE(IMHO), and I think it will be DL.

Now on to NW.

There is NO HUMANLY POSSIBLE WAY, that AA would miss ANOTHER bite, at the ASAIN APPLE. So with all due respect, I don't feel NW will be taught any pay back lessons by UAL, as long as NW starts "camping out in DALLAS !!!!!!!!!!!!

Also to sweeten the "global pot", simply add LH to "United +", and BA to "AA +", and what have you got. 2 of the 3 surviving USA(legacy) airlines, + 1 LCC Southwest. Total...."3"

Looks good to me. Perhaps you may agree ??

NH/BB's