United Still Committed to Low-Cost Unit

Segue

Senior
Oct 31, 2002
276
0
www.usaviation.com
[blockquote]
And I still say that most of the ~280 page document is common sense items explained in a very roundabout fashion.

-synchronicity
----------------
[/blockquote]

Its good that you think its common sense!

It would be nice if the creditors would take a one page document that says "we have to cuts costs and we want to do it with a LCC" and be done with it, but thats not the way things work. You need to create a credible (yes sensible) argument and support it with facts and detail analysis. For every one of those high level numbers, there is literally reams of supporting documentation and analysis to back it up.

Even more, these slides are not stand alone and are designed to support a presentation.

More business 101 for all you who think that all managment people do is sit around and drink coffee and read the Wall Street Journal.
 

synchronicity

Advanced
Nov 27, 2002
144
0

On 2/18/2003 6:15:10 PM Segue wrote:

And I still say that most of the ~280 page document is common sense items explained in a very roundabout fashion.

-synchronicity
---------------------

Its good that you think its common sense!


I suppose I should be impressed by the fact that United's senior management is finally exhibiting some common sense. Others might have higher standards for senior management of a very large corporation.

It's not that I disagree with the concept "we need to cut costs and we need to treat employees well". What's is frustrating and in many ways frightening is that it's taken this long for UAL to make that a primary message. Well run companies live those concepts every day; it's hardwired into everything they do. So is "superb customer service", and UAL is also finally showing some awareness that they need to promote an environment where superb customer service is a primary focus of front-line personnel.

It would be nice if the creditors would take a one page document that says "we have to cuts costs and we want to do it with a LCC" and be done with it, but thats not the way things work. You need to create a credible (yes sensible) argument and support it with facts and detail analysis. For every one of those high level numbers, there is literally reams of supporting documentation and analysis to back it up.

You mean like the revenue numbers they presented to the ATSB? OK, that's a bit harsh. So was my first paragraph, for that matter, sorry.

The important thing to note is that these are projections, especially the estimated costs for the LCC. All that supporting documentation is based on many assumptions, and it just takes are a few small changes in your assumptions to change your end result dramatically. As I've said before, it looks like UAL is being very conservative with their revenue projections, but very aggressive with their cost cut projections.

Even more, these slides are not stand alone and are designed to support a presentation.

Yes, somebody points to each item and says essentially the same thing, only with even more words while aiming a laser pointer at each bullet point. I've sat through a number of those presentations. Sometimes they give you additional sheets of supporting documentation. It's one thing to say "we want to 'engage' employees", and you can even have some fancy planned programs with nifty jargon loaded names on glossy documents you give to creditors. It's another thing to actually do it!

Now, the positive part of all this is that UAL is showing an awareness of the glaring deficiencies in the relationship between management and employees. The "Tilton travelling roadshow" that we hear about every week in his message to employees shows some visible effort to speak with employees and hear from them. The future will tell us if this is just a symbolic gesture while UAL continues "business as usual" or if it represents a serious systemic change in UAL's management at all levels. Just a pity that it took a BK filing to force that type of change.

I tend to assume that people will continue to act as they have in the past. UAL's senior management has an execrable record at dealing with their employees, so they have to do a lot to prove to me that they've changed (and the limited other parties I've spoken with share my opinion). Tilton seems to be a breath of fresh air as far as attitude; the next few months will show what he can do. The LCC still seems very "pie in the sky" right now. pp. 110-111 mention that LCC's within a mainline have failed so far, and doesn't really address how UAL's will be different (much less how a "brand new" airline can keep CASM under SWA, the acknowledged "best in class". Since the LCC is an intrinsic part (it looks to be the core part) of UAL's transformation and emergence from BK, there's a long way to go here. (If all it took to create an SWA beating LCC is a powerpoint presentation and some files of supporting docs, it would've happened already). And I've already discussed the problems of A) getting the cost cuts you want in BK, and B) not alienating all your unionized employees when you do.

More business 101 for all you who think that all managment (sic) people do is sit around and drink coffee and read the Wall Street Journal.

You mean they don't read the Wall Street Journal?
 

atabuy

Senior
Oct 13, 2002
419
0
segue,
In an earlier post you posted this tidbit:

The degree of "cost cutting" also know as poductivity gains, is a key measure of economic health. The only way a national economy can grow is to either produce (and sell) more goods, or produce the same goods for less cost. Its a good thing and not to be confused with deflation which is negative price growth caused by weak demand.

Would you say that the airlines are in a deflationary period, caused by weak demand, or am I using this out of context.

In another post you mentioned it is good to see lcc's because it is good for the consumer.
Ok, I am a consumer also, just like everyone on this board.
It is always good when , competition, over supply or closeout sales give us opportunities to purchase items below retail value.
Even with these purchases, the retailer, probably still makes enough for the handling of the product.

This threads issues are about a business that has to re-invent itself. About employees who owned a company, without much control, and watch as one after another bad decision, or, no decision was made, to save itself.

Wages must be geared to revenue. 100% of the employees must work together, and many cuts must be made in non-essential work groups to accomplish these goals and ensure the survival of Ual.
I do not think starfish will accomplish this goal.

I do beleive modeling Ual after a Luv will work only if they model all the work groups proportionally with a Luv.