United Needs New Plan

[Fly]

At least Delta made (or tried to make) Song into a distinct brand. Cosmos, colorful cabins, Kate Spade FA uniforms, even a Song retail store in NYC. Song is a completely different experience than Delta mainline.

[post="298760"][/post]​

They have? Besides the uniform differences, they too are nothing more than Delta. I booked a flight on Delta recently and when I showed up it was Song. No biggie to me, just needed the flight.

Here is what Ted is.........more seats than mainline. Some may not like it because there is no chance of an upgrade but when the business travelers proved that the only thing important to them was the price, United listened and responded.

 

[UnitedChicago]

Here is what Ted is.........more seats than mainline. Some may not like it because there is no chance of an upgrade but when the business travelers proved that the only thing important to them was the price, United listened and responded.

[post="298886"][/post]​

Ok - so that makes sense. Then why all the cutesy "marketing" behind it?

 

[RowUnderDCA]

The Seabury Group will explain it all to you.

 

[BigRed1]

UAL's strategic plans will not be made public until they take place after BK exit. The outline in the filing contains the basics and the minimum for the filing. Do you think it would be a great idea to tell everyone what our fleet plans are, or CAPEX expenditures that would show our hand?

One rumor I hear quite often, and even got some buzz from the execs during a classroom briefing...

UAL really wants to get back into the cargo business. They cannot start the business with a trickle of airplanes. Tilton wants mergers and consolidations. The talk is a UAL purchase or merger with ATLAS/POLAR AIR Cargo. The yield is better on the cargo side, and fuel costs are more easily passed on to the consumer. United Cargo is doing great right now and revenues are increasing.

Ya think this might not want to be put into the BK exit plan and furture earnings and cost assumptions? Ummm, no.

I threw away one of our briefing sheets on our Jepp revisions last month where flight ops explained our unique strategic position regarding fuel. While we may not be as hedged as the Southwests of the world, we're hedged better than CAL and DAL and NW and AMR. We also have something they don't, and that is pipeline rights to ensure no supply disruptions. We have purchased and negotiated a certain portion of the flow in these complex pipline networks and when there is a shortage of fuel supply, UAL has first rights to that gas. This is a good thing. You also must remember we have a previous CEO of an oil company running UAL. As the previous leader of Chevron/Texaco, it makes me feel better that he has probably has some good insights, connections, and plans as how to ensure we get the best possible deals and ensures the supply to UAL. If I can dig up the briefing sheet, I will post it. It did make me feel a little better about UAL's fuel hedging and supply availability. While not perfect, it is much better than our rivals.

Please quit talking about TED so much. TED is not our savior, but rather one aspect of the Mainline, PS, TED, Explus, United Services, and STAR portfolio. It will cater to a small nitch in UAL's huge network. Tilton is doing fine, and he is smarter than you think. A BK free CEO can finally start to run the company to the sole benefit of UAL and not the creditor's comittee or the judge. As Tilton put it in our briefing...After the exit, UAL will be the preditor and no longer the prey. I got the feeling he is really ready to "compete" as he is always saying. He singled out two major targets, Independence Air and Northwest as his most loathed competitors. He also said CAL had come to him wanting to talk merger. This is straight from Tilton. CAL wanted to merge with UAL when Bethune was still at CAL. Me thinks this is still a solid possibility.

These guys have some things planned next year. They will not tell you now. I know it is tough to stay positive. I admit I am the eternal optimist but do not always agree with everything UAL does. But...I still think we will do fine. As Michael Boyd put it, "United has an incredible franchise."

One thing to remember about the $50 dollar oil assumption. We make good money at 50 dollar oil. The latest stats I have read, and they make sense to me is this...At 65 dollar oil, UAL will lose 460 million in 2006 IF revenue yields remain at present levels. At 45 dollar oil, UAL makes 690 million in 2006. So my assumption is that our break even oil price is about 56 dollars per barrell. I think this is a reasonable target for break even and it is also realistic as MSY gets back online and prices drop. If UAL can break even at 56 dollars for oil, we can ride this out a while and beat up our competitors until they can get their house in order(If they ever do). All the while, revenues will increase as capacity is removed from the system in BKs of other airlines, mergers, and the lessoning of Southwest's fuel hedges next year and beyond resulting in price increases.

As a side not, this year Southwest was hedged 85% at 26 dollars. In 2006, they are hedged 65% at 32 dollars. Still amazingly good, but you will see upward pressures on fares at Southwest.

Ok, I am done rambling. Give Tilton and UAL a chance OUTSIDE of BK and lets see what they can do. Give this oil expert CEO of ours a chance to get some hedges in place and work with his contacts. Know they have not revealed their post BK strategy, and know the pain of our competitors will be United's gain. As Tilton put it to us..."I am looking forward to returning all the favors our competitors so purposely slammed us with the last few years to try and put us out of business..." In the next 5 weeks, prior to October 17th you will likely see 3 more bankruptcies. Fuel is crushing them.

Fuel in ONT today...$2.48 per gallon for JET-A!!!!!

Ok, I really am done now. I'm sure my opinions will be hotly debated. Be gentle.

 

[boeing787]

Good insight BIGRED1

 

[Fly]

Thanks Red, great post as usual.

 

[WorldTraveler]

UAL is filing what needs to be filed in order to obtain financing and get out of bankruptcy with the approval of its creditors. There will be financial targets in its post-BK financing that UAL will have to meet but they will not be as onerous as the ones in bankruptcy.

Although Tilton may think he has been slammed while in bankruptcy, UA has fared quite well compared with what most airlines endure. Further, airlines in bankruptcy are generally considered to have the "advantage position" when it comes to dishing out headaches for competitors. If Tilton thinks he is going to dish out trouble when he comes out of bankruptcy, UA employees ought to be scared. He's messing with real money now and cutting costs to cover up mistakes is a lot harder.

Fly,
apparently you haven't flown much on Delta or Song - and I wouldn't expect you to since you fly for UA. Song is considerably different from Delta mainline. Song was created as a fighter brand against JetBlue. Song has an in-flight entertainment system that is superior to JetBlue's (Song's is digital and has on demand music and video in addition to TV). Song has onboard food sales which Delta does not do any longer. Song has no first class (which I don't think is a good idea esp. on the California flights); because there are no first class seats, there are more coach seats - without increasing flight attendant staffing. While I personallyi think it was an expensive proposition, it is decidedly different from Delta and does not serve hub markets as Ted does (JFK being considered an international gateway rather than a hub). I'm sure Delta would love to convert more of its service to Song but can only invest in so many conversions. There is no doubt that customers would rather fly Song than any other airline's coach service given the very high customer ratings Song gets when compared to other carriers - including Delta mainline. While you apparently flew Song because of where you needed to go, Song has developed an identy of its own that is well recognized in the markets it serves. Because it is highly concentrated in a few Northeast, Florida, and west coast markets, it will likely continue to be viewed favorably in those highly competitive markets.

 

[LGA Fleet Service]

We also have something they don't, and that is pipeline rights to ensure no supply disruptions. We have purchased and negotiated a certain portion of the flow in these complex pipline networks and when there is a shortage of fuel supply, UAL has first rights to that gas.

[post="299271"][/post]​

Could you clarify exactly what "Pipeline Rights" are and exactly how they work?

I ask this because in a station like LGA where both UAL and AA fuel their own aircraft, I see tankers at the Allied tank farm, not an airline specific tank farm.

How does this work in a station like JFK, where Allied is *The* fueling vendor?, or any station for that matter?

 

[Borescope]

One thing to remember about the $50 dollar oil assumption. We make good money at 50 dollar oil. The latest stats I have read, and they make sense to me is this...At 65 dollar oil, UAL will lose 460 million in 2006 IF revenue yields remain at present levels. At 45 dollar oil, UAL makes 690 million in 2006. So my assumption is that our break even oil price is about 56 dollars per barrell.

[post="299271"][/post]​

All the airline exec's should be basing their business plans on $70-$75 per barrel oil. We're never going to see $40-$45 per barrel oil again and probably not $50. However if we do see a glut of oil and the price does drop then everyone is banking money for the times when oil rises above $75 a barrel.

 

[ualdriver]

UAL is filing what needs to be filed in order to obtain financing and get out of bankruptcy with the approval of its creditors.

UAL filed the plan it negotiated with its creditors behind closed doors. Unless someone with a couple of billion of dollars burning a hole in their pocket comes forward when exclusivity ends, it will be the plan the Judge signs next year. And it's certainly possible that someone/group could come forward with the cash and a better plan.

There will be financial targets in its post-BK financing that UAL will have to meet but they will not be as onerous as the ones in bankruptcy.

Actually, there won't be the "financial targets" you're implying or "financial targets" like Delta or Northwest are about to learn about if/when they enter reorganization. As long as Brace keeps sending those big, fat, interest payments in, the banks will be most happy.

Although Tilton may think he has been slammed while in bankruptcy, UA has fared quite well compared with what most airlines endure.

Well let's see there World. Our employees have had a significant portion of their pay cut, they've lost their pensions, they've been laid off in mass, their company has been shrunk, and they really won't have any short to intermediate job security until the Judge signs on the dotted line sometime next year, if that happens. People have lost their houses, their cars, there's been divorces, there's even been suicides. Pray tell, World, short of liquidation, please explain to all us UAL employees how we've "fared quite well compared with what most airlines endure?"

Further, airlines in bankruptcy are generally considered to have the "advantage position" when it comes to dishing out headaches for competitors. If Tilton thinks he is going to dish out trouble when he comes out of bankruptcy, UA employees ought to be scared. He's messing with real money now and cutting costs to cover up mistakes is a lot harder.

Really? I could have sworn you were on this very forum telling us how much "incredible pain" we're going to endure while we're in bankruptcy. Does "incredible pain" come with companies that are in an "advantage position" or without an "advantage position?" I guess I'm confused. You'd think the latter, but I guess now that DAL is teetering it's changed to the former?

And how you can even call it an "advantage position" is beyond me. Your boys in Atlanta are about to lose direct control of the airline and will have to "ask permission" to make any decisions. They're about to piss off every employee on the property. They're going to shrink the airline more than they have already. They're going to lay off a bunch of people. They're going to lose customers as people "book away" from the newest carrier to enter bankruptcy. They risk losing control of the airline to God knows who. They have to come up with some sort of plan they can "sell" to obtain exit financing if they can even obtain exit financing, and to top it all off, since DAL has been in a quasi-bankruptcy condition for well over a year now, I suspect they're not going to have too much success making significant cuts to their non-fuel costs as the "low hanging fruit" has already been picked under their ill-fated transformation plan. Yup, sounds like an 'advantage position" to me. I wish UAL would stay in bankruptcy a few more years!


Fly,
apparently you haven't flown much on Delta or Song - and I wouldn't expect you to since you fly for UA........ There is no doubt that customers would rather fly Song than any other airline's coach service given the very high customer ratings Song gets when compared to other carriers - including Delta mainline........... it will likely continue to be viewed favorably in those highly competitive markets.


Fly, I'll save you a ton of reading. Basically he's saying that Song is wonderful and great because it has TV's and neon paint and 199 seats in a tube and because of that, customers would rather fly on Song than any other airline's coach service (including ours, implied). The fact that DAL is teetering on the edge despite having a coach product that everyone wants to fly and all of their competitors' coach product (like Airtran's and JetBlue's) are doing reasonably well outside of bankruptcy is incompreshensible to me, but hey, whatever.

 

[BigRed1]

Could you clarify exactly what "Pipeline Rights" are and exactly how they work?

I ask this because in a station like LGA where both UAL and AA fuel their own aircraft, I see tankers at the Allied tank farm, not an airline specific tank farm.

How does this work in a station like JFK, where Allied is *The* fueling vendor?, or any station for that matter?

[post="299777"][/post]​

Hey LGA Fleet Service:

Like I said, when I can find the breifing sheet from last month I will post it so as to clarify exactly what it said. If there are any other UAL pilots who remember what I am talking about from last month, please elaborate on what I posted about the pipeline rights UAL has secured. I assume that allied tanker farm gets its fuel from the "Colonial Pipieline" for example which comes from the Gulf states like Louisiana. If there is a reduction in supply because of diminished flow on that line, UAL would get that fuel first from Allied before AA. Just a guess though. Anyone else care to add anything concerning this discussion?

 

[Borescope]

Big Red,

I think you meant to address that last post to LGA Fleet Service

 

[uafa21]

What does the filing of bk by both dl and nw do to Ua wanting to come out of bk?

Will the banks actually loan money to us now that the playing field may change? Their may be some interesting new circumstances that may now develope.

 

[dc3fanatic]

What does the filing of bk by both dl and nw do to Ua wanting to come out of bk?

Will the banks actually loan money to us now that the playing field may change? Their may be some interesting new circumstances that may now develope.

[post="300620"][/post]​

Well, United has done their restructuring and are relatively strong. Delta and NWA . . . they have a long way to go before being awarded money to exit.

Where would you put your current money? Someplace that is done with restructuring or wait for someone that is just beginning.

Expect capacity to go down, which would overall be a good thing for United.

 

[scuba]

With DL and NW both filing BK, things will change. Cost structure will change. Competition will change. The only thing that is certain is UA has almost a three year head start on cutting costs with the judge. The question is when the music stops who will still be playing the game?