United Recovery Is Huge

[Busdrvr]

"LUV's pilots, unlike some folks like, say, Rick Dubinsky, understand the concept of realistic compensation and that if you do manage to slaughter the "golden goose" that you will go down with it."

With all due respect, i don't think you fully understand the economics of the airline industry. Pay rates have NOTHING to do with "reasonable" I happen to think 150K is the bottom line reasonable number for an F/O who is "at work" 280 hours a month (now up to 380), has literally at least a DECADE of apprenticeship (average "new hire" around 38 years old), can lose his ENTIRE investment with one "bad day" (failed checkride), or one minor accident (lost an eye) or medical condition (diabetes, heart disease, two incidents of "blacking out", ect...), and is responsible for the operation of a $50 million to $250 million piece of equipment that weighs between 125-900 THOUSAND pounds, and carries up to 500 people around at 500 miles per hour, and don't forget, they are always subject to constant random drug tests (one "slip-up" and you are, rightfully, DONE) and complete monitoring on the job so that someone else can second guess every decision you made in the case of an "incident". Not even Dr's, who kill WAY more many folks a year, have to worry about that.

UAL's C2K only attempted to stop the rapid decline in pilot salaries. In real dollars, it was NOT even a payraise from the mid 80's (your job pay more than the 80's?). It's all about costs. The average passenger can AND WOULD pay 5% more for a ticket. that would pay for every pilot in the industry a 50% payraise. the problem isn't the amount a pilot is paid, the problem is the amount a pilot is paid OVER his competitors. There are no airlines that are immune to pricing pressures. If AMR, DAL, or UAL is able to offer a given route $.01 cheaper than SWA, then folks will fly them. SWA's management will then offer a few more options and the promise of growth in exchange for pay, and if history is any guide, the SWA guys will give it to them. And the cycle will continue.

 

[ClueByFour]

With all due respect, i don't think you fully understand the economics of the airline industry.

[snip]

UAL's C2K only attempted to stop the rapid decline in pilot salaries. In real dollars, it was NOT even a payraise from the mid 80's (your job pay more than the 80's?). It's all about costs. The average passenger can AND WOULD pay 5% more for a ticket. that would pay for every pilot in the industry a 50% payraise. the problem isn't the amount a pilot is paid, the problem is the amount a pilot is paid OVER his competitors. There are no airlines that are immune to pricing pressures. If AMR, DAL, or UAL is able to offer a given route $.01 cheaper than SWA, then folks will fly them. SWA's management will then offer a few more options and the promise of growth in exchange for pay, and if history is any guide, the SWA guys will give it to them. And the cycle will continue.

I do agree that if someone were actually able to threaten the LUV business model than the pilot group might be faced with a problem. I don't see it happening, as even after the latest round of Chapter 11 filings and the like that the majors are still not approaching LUV's costs.

Here is my understanding of the economics of the airline industry: over the past thirty years, there have been perhaps two airline stocks worth owning. That alone speaks volumes.

The LUV pilots, much to the detriment of their counterparts at the "majors" are happy accepting relatively high compensation that the company can afford to pay and still remain solvent. What a novel concept.

The reason that the job of an airline pilot pays less now than it did 20 years ago is that ALPA is no longer able to extort outlandish sums of money from the majors, because they are in turn no longer able to extort outlandish fares from the traveling public. You can thank deregulation and the LCCs. Of course, the fact that this trend has opened the world of air travel to the average american family and lowered the cost of doing business and making money for the entire economy is lost on many folks with the Dubinsky mindset.

As for the long "apprentice" time necessary to get hired at a major, that is entirely due to the habit of medium to senior airline pilots to eat their young. Had mainline pilots not scoffed at commuter pilots 20 years ago, and had the vision to get RJs placed on mainline properties in conjunction with flattening the compensation curve, the profession would be better today. Instead, you have a guy flying a glass cockpit jet with 50 people who can barely feed his family on food stamps, and the guy flying the glass cockpit widebody across the pond a few times a month making a quarter mil. Same basic skillsets, same basic responsibilities. A tenfold delta in compensation. I know of very few other professions where this is the case.

It bears noting that either Colleen Barrett or Jim Parker, when asked about the fact that LUV's payrates were (in some cases) now industry leading, replied to the effect "we pay our employees as much as we can while remaining financially sound." Profitable and responsible firms live and die by such a line of thinking (to answer your question, yes, I make less in real dollars now than in the 80's for exactly this reason).

I suppose the other thing that somebody (particularly somebody furloughed from UAL) should ask Dubinksy is which is better: getting paid at C2K rates for 18 months, or getting paid at less than C2K rates for the balance of a career?

 

[Busdrvr]

I'd disagree with your assesment.
SWA's stock "took off" in the early 90's. Why? UAL launch Shuttle, and if the cost structure had been what it was suposed to be, it spelled trouble for SWA. SWA's pilots TOOK A PAY CUT TO STAY COMPETATIVE. Now lets review slowly. SWA HAD TO TAKE A PAY CUT IN RESPONSE TO LOWER PAY AT A MAJOR. We can add cutesy little slogans from management, but thats the facts. This allowed SWA to GROW. guys traded PAY for GROWTH. At some point, growth can't continue at those rates. The stock options paid BIG TIME for those with seniority, Ask some of the fellas hired in the last two or three years how the value of thier stock options compare to the senior guys. Matter of fact, compare SWA's stock to the general market indexes for the last couple years. Still a good buy?


10 year vs the indices
http://moneycentral.msn.com/investor/chart...=0&D7=&D6=&D3=0

3 years vs the indices
http://moneycentral.msn.com/investor/chart...=0&D7=&D6=&D3=0

"suppose the other thing that somebody (particularly somebody furloughed from UAL) should ask Dubinksy is which is better: getting paid at C2K rates for 18 months, or getting paid at less than C2K rates for the balance of a career?"

See you got the wrong guy. First, post 9/11, when demand dropped 25% overnight, furloughs were going to happen. there simply was too much capacity. To some extent, the folks furloughed was determined by who was paid more (I'll work for p-nuts massa as longs as ya keeps me on...). Sorry. Not me. this skill set has value. If you are unwilling to pay me what I feel my services are worth, I will not be one of those cheapening the profession. The guys who will continue to underbid his brothers just to have the glamour of flying is just a troll waiting for a picket line to cross. Hopefully you'll be lucky and NOT get what you pay for, that thing Sen Wellstone got. You want to see the future of US Aviation, go fly around the middle east. minimally qualified folks who will gladly pacify the masses urge to fly. so in other words, if every pilot in the industry took a 50% paycut tomorrow, there'd be just as many furloughees. Thats another reason this industry should pay better. Lean times are part of the deal.

"The reason that the job of an airline pilot pays less now than it did 20 years ago is that ALPA is no longer able to extort outlandish sums of money from the majors,"

OK, what's "outlandish". Give me a number and tell me why. then tell me your educational background, job description, work hours, legal liability and how much YOUR skills are worth.

"and had the vision to get RJs placed on mainline properties in conjunction with flattening the compensation curve, the profession would be better today."

I agree that the RJ guys should make MUCH more. They are unfortunately doing themselves in by trading away present earnings ($17K a year at Mesa) for future earnings, all the while destroying the very position they aspire to.

"Of course, the fact that this trend has opened the world of air travel to the average american family and lowered the cost of doing business and making money for the entire economy is lost on many folks with the Dubinsky mindset."

It's funny some folks call SWA the "Walmart of the Airlines"

http://www.walmartwatch.com/

It's funny how the "perfect" business models somehow seem to become "not so perfect" at some point...

We could spend hours on this subject, you know, how there has been only 2 airlines created in the 80's that are still around (AWA, midwest). We could talk about all the tragic accidents I'd contend dereg brought. On balance it prob has been positive, but if you think you can convince me that getting the unwashed off greyhound onto jets is some great panacea, again, you got the wrong guy. I'd even contend that many of the delays and other "nasty" aspects of air travel have been a result.

 

[ClueByFour]

"OK, what's "outlandish". Give me a number and tell me why. then tell me your educational background, job description, work hours, legal liability and how much YOUR skills are worth."

I personally find anything north of $200k a year to be outlandish. IMHO, $60k to about $180k/year would be the ideal range, in the "perfect" hypothetical (1st year RJ FO to 35 year 744 Captain). My personal skillset is suffering a similar fate--only it's not Mesa or Massa, it's the mass exodus to the Indian subcontinent that is lowering the bar.

In my spare time, I've got the private ticket with the instrument and multi endorsements, which means I have an overinflated sense of stupidity when it comes to evaluating the skillset of a commercial airline pilot (I don't consider 20 hours of turbine time to be adequate to gain a fair understanding of the skillset). However, by the responsbility and legal liability metrics, we should be paying our public safety folks the same type of scratch, the A&P holders should be making a mint, and every member of the armed service is underpaid.

"On balance it prob has been positive, but if you think you can convince me that getting the unwashed off greyhound onto jets is some great panacea, again, you got the wrong guy."

Fair enough. Think about the economic generation that has come about as a result of LUV alone. Nevermind the growth of the big six since deregulation.

I agree with what you are saying about the great unwashed--there is nothing better to me than standing in line for my 5th flight of the week behind mom and pa kettle trying to drag a lead lined steamer trunk thru the WTMD in their pants, and then asking "Why'd I beep?"

 

[Fly]

ClueByFour Posted on Jan 4 2004, 01:15 AM

I agree with what you are saying about the great unwashed--there is nothing better to me than standing in line for my 5th flight of the week behind mom and pa kettle trying to drag a lead lined steamer trunk thru the WTMD in their pants, and then asking "Why'd I beep?"

OMG!!!! That is classic!

 

[ClueByFour]

ClueByFour Posted on Jan 4 2004, 01:15 AM

I agree with what you are saying about the great unwashed--there is nothing better to me than standing in line for my 5th flight of the week behind mom and pa kettle trying to drag a lead lined steamer trunk thru the WTMD in their pants, and then asking "Why'd I beep?"

OMG!!!! That is classic!

It's only funny until you settle into your comfy chair in Biz on the 777 bound for JFK, and Ma and Pa sit down behind you, order Champagne, and ask:

1. Why does it come in this little glass?

and

2. Can we have the whole bottle if we finish it before we "launch?"

Mind you, I'm the slob in decent jeans asking to have my tweed sportcoat hung while all this is going on (those in glass houses and stones and all that). That said, this type of stuff was a PITA before 9/11--after 9/11, you would think that some people don't own televisions or radios or stuff. The TSA put out warnings about not trying to carry-on fruitcake, and some numbnutz still tries to carry a whisky still thru the WTMD in his overalls.

All this having been said, I'd rather see Ma and Pa be able to travel and spend ancillary cash on lodging and the rental pickup at the other end. 'Tis better for the economy than if Pa just purchases a bigger still.

 

[Fly]

That's it....I wanna party with Clue. I just know I'm never going to stop laughing. 😛

 

[WorldTraveler]

while not trying to undo the levity that has been expressed here, let me remind you that UA has substantial obstacles to overcome in order to get out of bankruptcy and which were not cited by the very biased agency that has a vested interest in UA's recovery. UA has certainly kept loads up but they have discounted fares and added promotion after promotion which have certainly helped to improve their performance which suffered months before and after the bankruptcy filing.

1. UA has a little issue at IAD to deal with. Not only are they losing a partner but that partner is becoming a competitor and will likely dramatically reduce the potential profitability of the IAD hub. Further, UA is losing RJ's at a time when they desperately need to grow their RJ fleet in order to increase their network. In contrast, Delta has nearly 400 RJ's in its owned and contracted fleet and American is moving full speed ahead w/ RJ expansion.

2. UAL is counting on government intervention in order to meet its pension obligations in the next few years which will exceed $750 million in several years. No business can be viable when 5% of its annual expenses go to pension obligations. The current administration is quite opposed to granting large scale pension relief as UAL needs. In the absence of legislative relief, UA will have to renegotiate labor contracts - a process that will be very difficult and likely not successful.

3. UAL is showing operating profits but that is based on its sheltered existence in bankruptcy. Other carriers like AA, DL, NW, and CO are making pension payments and paying for all of their airport facilities and aircraft. UAL has yet to show that it can make all of these payments and still be profitable.

4. UAL continues to count on the ATSB to provide the money (or backing for commercial loans) necessary to exit bankruptcy. USAirways' deteriorating finances do not bode well for UAL's loan application. Further, US's deterioration will have a negative effect on UAL finances which will be compounded now that CO, DL, and NW are in partnership and will quickly move in to take the business UAL was getting from US if US fails.

5. The economy continues to improve, creating a stronger market for UA's assets and jobs for UA employees. There will be much less fear if UA should fail to emerge from bankruptcy and other carriers will find the resources to bid on UA's highly covetable assets.

UA has probably done the easiest part of turning the company around but the real magic has to happen in the next six months if UAL has a future.

 

[Busdrvr]

"3. UAL is showing operating profits but that is based on its sheltered existence in bankruptcy. Other carriers like AA, DL, NW, and CO are making pension payments and paying for all of their airport facilities and aircraft. UAL has yet to show that it can make all of these payments and still be profitable."

You could not be more wrong. You can make the argument that UAL's CASH position is helped by BK, but the notion that the "shelter" of BK is helping operational results is absolutely ludicrous. Please provide an example of ONE bill that isn't reported as an expense on UA's books while in BK that will be when they emerge. Lease costs? They are THERE, paid or not. Airport leases? Check again, THEY ARE THERE. Find just ONE item.

"2. UAL is counting on government intervention in order to meet its pension obligations in the next few years which will exceed $750 million in several years. No business can be viable when 5% of its annual expenses go to pension obligations. The current administration is quite opposed to granting large scale pension relief as UAL needs. In the absence of legislative relief, UA will have to renegotiate labor contracts - a process that will be very difficult and likely not successful."

UA's REAL pension situation is similar to Delta's and probably BETTER than NWA's. In addition, deep cuts in labor costs MORE than covers the change in pension liability (a luxery not shared by NWA, DAL). There's no magic there.

"Further, UA is losing RJ's at a time when they desperately need to grow their RJ fleet in order to increase their network."

The key to success is to add as much capacity as possible utilizing the highest CASM airframe availible.... Hmmm.

"4. UAL continues to count on the ATSB to provide the money (or backing for commercial loans) necessary to exit bankruptcy. USAirways' deteriorating finances do not bode well for UAL's loan application."

Hmmm, UA will post a 4th Q operating PROFIT while in BK, and expects a NET PROFIT for 2004. With all due respect, what parameters will the ATSB be using?

"Further, US's deterioration will have a negative effect on UAL finances which will be compounded now that CO, DL, and NW are in partnership and will quickly move in to take the business UAL was getting from US if US fails."

So you expect U to fail in the next 6 months? otherwise, it likely wouldn't have an effect on UA's emergence. The comical part is that the DL, CAL, NWA partnership doesn't even really affect UA's core domestic market, the western US.

 

[WorldTraveler]

Let me simply provide these excerpts from UAL's 10Q filed w/ the SEC on 10/30/2003.
Other Restructuring Issues - Pensions. The combination of 45-year low interest rates, poor stock market performance and pension benefit improvements have caused many U.S. pension funds, including ours, to become underfunded. This situation is exacerbated because government funding requirements obligate us to pay, on a going-forward basis, a special funding surcharge, referred to as a "deficit reduction contribution" ("DRC"), that is imposed when a pension plan's funding status drops below 90%. This would require us to make significant accelerated contributions to our pension plans. As described below in "Liquidity and Capital Resources," we currently estimate that we could be required to contribute approximately $4.8 billion to the defined benefit pension plan trusts by the end of 2008. As part of our bankruptcy reorganization, we must address the underfunded status of United's U.S. pension plans. We are working in several areas to address this issue. On October 10, 2003, we filed with the IRS multiple applications for pension funding waivers for all of our U.S. defined benefit pension plans. The waiver applications must be approved by the IRS and such approval, if any, is expected to take six to eight months. If approved, the waivers would allow us to reschedule the required contributions over a five-year period.
In addition, we continue to work closely with other airlines, airline unions and the AFL-CIO in support of a pension reform proposal that would allow companies affected by the DRC requirements to defer certain accelerated pension funding contributions and smooth out minimum funding requirements over a longer period of time than provided by the current law. We are also advocating for legislation (already approved by the U.S. House of Representatives) that would re-set the interest rates that are used to determine corporate funding requirements for pension obligations.
We are also actively exploring additional options that could ease the temporary cash flow requirements caused by accelerated pension contributions under the current laws and regulations. Our ultimate goal is to ensure United's financial stability as we exit from bankruptcy. In the event that these steps are not successful or are insufficient to address the funding issues in planning for exit from bankruptcy, we may need to take additional measures designed to help stabilize United's financial condition.
We did not make any cash contributions to our defined benefit pension plan trusts for U.S. based employees in 2001, 2002 or in the first three quarters of 2003. In lieu of making cash contributions, we utilized a portion of our credit balance (the cumulative difference between the prior year's minimum required contributions and actual contributions) to meet the minimum required contribution. On October 10, 2003, we filed with the IRS multiple applications for pension funding waivers for all of United's U.S. defined benefit pension plans, which would allow us to reschedule our contributions. See "Other Restructuring Issues - Pensions."
We have a remaining credit balance that is available to be used in the latter part of 2003; however, once the credit balance is fully utilized, in the absence of any additional pension funding relief, substantial contributions will be required. We estimate, based on current market conditions and benefit plans, that we could be required to contribute approximately $4.8 billion to our domestic defined benefit pension plan trusts by the end of 2008. This is higher than previous estimates primarily due to updated demographic studies and changed assumptions concerning the long-term interest rate forecast. However, future funding requirements depend upon factors such as interest rates, funded status, regulatory requirements and the level and timing of asset returns compared to those of expected benefit disbursements. Significant future changes to the Company's demographic mix or pension plans could also impact future funding requirements. As a result, actual future contributions may differ materially.
Section 365 of the Bankruptcy Code requires that we meet all of our post-petition obligations for unexpired leases of non-residential real property in a timely manner. We believe that we are in compliance with all payment obligations under our lease agreements relating to airports where we have not rejected our lease and have municipal bonds outstanding. However, we have not made and do not intend to make debt service payments or any other payment on account of any of the municipal bonds issued on behalf of the Company relating to domestic airport financings. As a result, under certain of our airport lease agreements, we may be considered in default due to non-payment of the debt and therefore subject to the default provisions of our lease agreements with the airports. Possible consequences could include loss of our status as a signatory airline (resulting in increased rents and landing fees) and loss of our exclusive space agreements.
We have taken a number of steps to reduce the risks associated with non-payment on the municipal bonds. On September 18, 2003, we filed a complaint for declaratory judgment for all seven municipal bond issues relating to our facilities at the Chicago O'Hare International Airport ("O'Hare"), seeking, among other things, a declaration that a certain cross-default provision in the O'Hare airport lease is unenforceable. At this time, the City of Chicago has not answered the complaint.
Previously, we filed four complaints for declaratory judgment and corresponding motions for temporary restraining order concerning municipal bonds issued for facilities at the Denver International Airport, the New York City - John F. Kennedy International Airport, the San Francisco International Airport, and the Los Angeles International Airport. In each case, we are seeking clarification of our obligations under the applicable municipal bonds, and the protection of our rights concerning related airport lease agreements at the applicable airport until the Bankruptcy Court decides the merits of the complaints.
Subsequently, the Bankruptcy Court entered an order that requires each of the defendants in these actions to give us a 15-day notice and cure period before taking any action to terminate any of our rights concerning these airport leases until such time as the Bankruptcy Court enters final orders on United's declaratory judgment actions. The Bankruptcy Court has conducted a hearing on motions for summary judgment filed by various parties.
Pending the Bankruptcy Court's ruling, we are unable to predict what, if any, action might be taken in the future by either the bondholders or the airport authorities as a result of UAL's failure to pay these obligations as contractually required. However, we believe that the Bankruptcy Court's orders substantially reduce the risk of any declared default by providing us an opportunity to make required payments and preserve our rights under the leases.

Further, Delta is converting its defined pension benefit plans for non-contract employees so the Delta situation is remarkably different from UAL and will probably improve.

You may recall that the number one objection the ATSB had to UAL's previous loan was the size of its pension obligations over the next few years. Regardless of the underfunding at any other carrier, they aren't asking for a government loan to get out of bankruptcy.

RJ's are important tools to increase network footprint which is exactly what a network airline like UAL needs to do. While I recognize the objection mainline pilots have to RJ's, in reality it creates significant additional revenue on mainline flights.

I hope you don't truly believe that UA's core domestic market is in the west. UA is most dominant in the west but the vast majority of their revenues come from east-west domestic flow in markets that CO/DL/NW serve well. Further, UAL has stated that the US partnership is worth $200 million/year. Difficulties at US will affect UAL's ATSB application precisely because UA has stated that it is gaining revenue benefits from the US partnership.

No, I don't expect UAL will fail in the next six months but they will have to make further tough choices in order to emerge from bankruptcy. While UAL has significantly reduced costs in bankruptcy, predominantly through labor cost cuts, they have financing issues they uniquely have to face in order to get out of bankruptcy. No one wants to invest in a company that has such huge pension obligations. Other carriers have the same issues but the resolution of those issues is not necessary in the next six months in order for them to survive. They are for UAL.

 

[Busdrvr]

It appears you read, copied, and pasted from UAL's 10Q, but you still didn't UNDERSTAND. Again, slowly, UAL, through the benefit of the BK courts, does not have to "write a check" for many of it's bills in a timely manner. As a matter of fact, they may NEVER write that check in some circumstances. (liabilities subject to compromise....) HOWEVER, THEY STILL GO ON THE BALANCE SHEET!!!!. For example, UAL posted a small operating profit for the month of October, yet they had a positive operational cash flow of 7 MILLION A DAY!!! Thats approx 210 a month (in a SLOW month), and a rate of 2.5 BILLION A YEAR!! That's on par with cash flow from some of the "good" years in the late 90's. UAL's "costs" will only go down as they are "renegotiated" (UAL only terminates "deals" they think they can renegotiate at a better rate).

Now to pension "obligation".
OBLIGATION implies it has already been earned. They can NOT legally take the EARNED portion away. They can "renegotiate" "future earnings". Thats what UAL did. That, however, does NOT change the amount ALREADY OWED. Keep in mind, differant copmpanies use differant "assumptions" (discount rate, ROR, annual compensation increase), so to fully understand the diff in the "real" pension situation across the industry, one must be able to understand the implication of all those factors. In addition, did you noticew that your pension blurb mentioned "prepaid obligations"? It said nothing like "we's in BK so we's ain't gotta pay no pension money's". UAL is following the SAME pension rules as all the other airlines. If you look at most other airlines cash flow reports from the last couple years, you will see most others didn't pay into the account either (with the exception of NWA, my understanding is that they were not as far ahead on required funding and had to get an IRS waiver to deposit the stock of a subsidiary in luie of cash). Same rules, same pension crunch. the only diff is UAL is now profitable on an operating basis while most of the others are not.


Next

 

[Busdrvr]

"I hope you don't truly believe that UA's core domestic market is in the west. UA is most dominant in the west but the vast majority of their revenues come from east-west domestic flow in markets that CO/DL/NW serve well. Further, UAL has stated that the US partnership is worth $200 million/year. Difficulties at US will affect UAL's ATSB application precisely because UA has stated that it is gaining revenue benefits from the US partnership."

The latest stats tend to refute your belief that the CO/DL/NWA is a much better arrangement than U/UAL. I'd ask you to do just a little research into what is happening on the "yield" front at CAL and compare it to UAL's since the implementation of the "arrangement" UAL's unit revenue for oct was up 9%, nov was up 14%. Cal? (I'll give you a hint, it wasn't...)

 

[Cosmo]

WorldTraveler:

However, future funding requirements depend upon factors such as interest rates, funded status, regulatory requirements and the level and timing of asset returns compared to those of expected benefit disbursements.

In looking at United's unfunded pension obligation today versus its status on 9/30/03 (which the third quarter 2003 SEC Form 10-Q that you quoted stated was at that time about $4.8 billion), you need to take into account the changes in the stock market since then. The main indices increased approximately as follows during the fourth quarter of 2003:

Dow Industrials - 13%
NASDAQ - 11%
S&P 500 - 10%
Russell 2000 - 15%

Now, I don't know the actual valuation or investment composition of United's pension plan assets as of 9/30/03, but I believe it's a reasonable assumption that the value of those assets increased by at least 10% during the fourth quarter of 2003 based upon the changes in the above indices during that time. And while asset valuation is only one component in the formula that calculates the unfunded pension liability, an increase in asset values must cause the unfunded liabilities to decline (all else being equal).

It will be interesting to see how that $4.8 billion figure has changed once United announces its fourth quarter financial results later this month or when it files its SEC Form 10-K in March.

 

[WorldTraveler]

You are correct, Cosmo, that the stock market is the biggest factor that will improve pension underfunding at UAL and nearly every other corporation. We all have an interest in a healthy stock market and it will certainly help UAL. At the same time, an improving stock market might actually make it harder for UAL to get the legislative relief it needs in order to deal w/ its pension underfunding. I don't know what UAL thinks they can successfully "budget" for pension funding in their business plan but it has certainly got to be far less than the 5% of revenues which UAL has expected to pay at this point and which is way too much for creditors or the government. Hopefully, UAL won't have to revert to pension termination which is what U had to do but it is a possibility that is at least inferred in UAL's statements quoted above.

Busdrvr,
it's a shame that UA's employees didn't fight for its survival BEFORE they went into bankruptcy. Instead, they were determined to get everything they could from the golden goose and were surprised when there were no more golden eggs. I truly hope the investment UAL's employees made in their company yields positive results. More than anything, my point is that UAL's emergence is not at all certain and many United employees still seem to embrace the attitude that everything will be ok - the same attitude they had on December 1, 2002 and that landed the company in bankruptcy.
United has shown remarkable recovery and they should have given the huge sacrifice United employees have made. UAL's income statements certainly do show that other expense categories have dramatically been reduced. Nonetheless, UAL is not paying all of its bills as is clearly stated in the excerpts I copied and is why companies file bankruptcy (why else do you think they call it "protection"?) Airline bankruptcies usually result in a eliminating a significant amount of unsecured debt; while it is not certain how that will be resolved, it is clear that UAL cannot emerge from bankruptcy solely on the basis of rejecting a few airplane leases, renegotiating others, and cutting employee costs. Some debt will have to be eliminated and the creditors will only do so in return for something else; in U's bankruptcy and in AMR's non-bankruptcy reorganization, they offered stock to creditors. Further, UAL is playing a risky game of assuming that creditors will not repossess their investments or terminate the rights currently enjoyed by UAL.
If UAL emerges from bankruptcy similar in shape to the present, it will defy the odds of bankruptcy and will have flirted closer w/ failure and survived than any other airline in history. And the sad reality is that UAL never needed to end up in bankruptcy if it were run right and if its employees did not assume that skyhigh wages were their right; no other airline has had as expansive and valuable route system or fleet. If United survives, their employees can look in the mirror every day knowing that if they had worked w/ the company in the 90's, their life might be alot better than it is today because life can never be as good post-bankruptcy as it could have been by restructuring outside bankruptcy. Hopefully, United and its employees will never have the invincible attitude that helped land them in bankruptcy and which obviously proved to be wrong.

 

[Fly]

You can get down from the pulpit now Preacher....and rest assured, the bad, bad, bad people at United are sincerely humbled and we promise to do whatever management tells us...forever and ever. k? Wow....you sure told us

:blink: