United Studying All-cargo Service

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United studying all-cargo service United studying all-cargo service By David Kesmodel, Rocky Mountain News
August 22, 2003

Bankrupt United Airlines is exploring launching an all-cargo service on international routes by leasing wide-body jets from ailing Atlas Air, sources said.

United, which today carries freight only in the bowels of its passenger planes, is studying the move as a way to boost revenues on its robust route network.





The airline has talked with Purchase, N.Y.-based Atlas about "wet leasing" Boeing 747 jets for a service that initially would focus on U.S.-Asia routes, sources said.

Under a wet lease, Atlas, the largest shipper of freight for other carriers, would provide planes, crews, insurance and maintenance. United would market the service and load and unload freight.

United spokeswoman Chris Nardella said the airline is exploring re-entering the all- freighter market, which it abandoned in 2000. But she would not say whether United has talked with Atlas Air.

Chicago-based United had plans to enter the market before September, when the cargo season swings into high gear, she said, but "we haven't found a viable option."

Atlas Air spokesman Thomas Becher declined to comment.

Atlas Air, whose clients include British Airways, was based in Golden until 1999. The company said last month that it might file for bankruptcy to complete a debt restructuring.

Leaders of United's pilots union are opposed to a cargo operation in which United wet-leases planes, Scottie Clark, a union spokeswoman, said.

"We'd like it to be flown with United pilots," which would be a dry lease, Clark said.

United and the union continue to discuss the issue, Clark and Nardella said.

Cargo today accounts for 5 percent of revenues at United, the second-biggest U.S. carrier and Denver's dominant airline.

United's powerful route network in Asia provides a good opportunity to haul more freight and boost sales, analysts said.

"It's a revenue stream they should be looking at," said Joshua Marks of the George Washington University Aviation Institute.

The landing slots that United controls at Tokyo Narita International Airport "are the critical element," said John Pincavage, a financial adviser to airlines in Westport, Conn.

United also could benefit from a tie-in with its partners in the Star Alliance network of international carriers, he said.

Latin America is another potential growth area, analysts said.

Today, Northwest, the No. 4 U.S. carrier, is the only major U.S. airline with its own all-cargo fleet. United and Northwest are the main U.S. operators in Asia.

Northwest's freighter fleet consists of 12 Boeing 747 jets.

The cargo business has suffered since the 2001 terrorist attacks. But Northwest's cargo revenues, which account for about 8 percent of its business, rose 7.4 percent in the first six months of 2003 to $348 million.

United's cargo revenues rose 3 percent to $318 million in the first half of 2003.

UAL Corp.'s United filed the industry's largest bankruptcy last December. It hopes to emerge from Chapter 11 next spring.
 
Why do we need planes from Atlas Air when we have plenty sitting in the desert? They wanted out of leases and to sell some of the lumps. Convert a few and use them for cargo. You have pilots and mechanics. There should be no reason to look outside the box here!!!

I think it's great that they want to bring in more revenue with cargo. But lets keep it in house. With the Concessionary contracts in place United should be able to use its own resources to operate the cargo operation competitively. I'm not sure what models of 747's Atlas has. All of there planes I have seen looked like -100 or -200 & maybe -300 models. Our -400's would probably cost less to fly.


That is my thought on the subject. But who am I?
 
I heard a UAL exec say that they didn't want to spend the money to convert 747s to cargo right now.
 
Atlas and its sister POLAR Air have 744F as well as 742 and 743's with GE engines. Atlas would be a great way for UA to Renter the freighter market.
 
Right now this topic is a negotiating item. UAL does not want to move on this until it's agreed upon with ALPA. Bottom line the contract does not allow them to wet-lease aircraft for use in our operations.

If it'll make $$ for them and it's indeed worth it, they'll have UAL pilots fly it, or at least quarantee we'll be flying these aircraft at some point down the road or some suitable agreement. Don't hold your breath on this one.

Right now the Company does not want to spend the $$ to reconfigure aircraft. That costs $$ and there isn't much of that to pass around these days unless the idea, market, etc. is a GUARANTEED money maker.

Cheers,

Z B)
 
JFK777 said:
Atlas and its sister POLAR Air have 744F as well as 742 and 743's with GE engines. Atlas would be a great way for UA to Renter the freighter market.

Thanks for the info. That is why I underlined the part about what I have seen.
 
Just got back from a barbeque and talked to several people from Atlas Management. Seems like the wet leasing of cargo is now dead in the water. According to my sources, it looked like a sure thing, and UA had already agreed to 2 747-200's and 2 747-400's. There was even part of TK allocated to Atlas Air.

But as of right now, the MEC put a halt to it until further negotiations can occur. Also Atlas crews, who are now ALPA also have no interest in stepping on UA ALPA's toes over a scope issue.

Atlas guys seemed to think the deal was over, but in my opinion our MEC is going to want something reasonable in return, and will probably continue to deal with management.
 
Interesting turn of events. Hopefully ALPA and management can come to a mutually beneficial agreement. This is a great way to boost revenue.

By the way Jetz...your most recent PM on you-know-who was hilarious.

UC
 
Yes...they converted DC-10's to freighters. BTW...remember when United was considering refurbishing their pax DC-10's to MD-10's?

Anywho...i think the converted birds were unreliable at first and that the economics never added up.
 
UnitedChicago said:
the converted birds were unreliable at first and that the economics never added up.
It is also my understanding that the DC-10 is not a great cargo platform and is limited in it's heavy lift ability. 747's are much better for this purpose.
 
Folks, I sure do not know the answer; but, in the matter of "wet lease" of cargo aircraft, I feel it may be best for ALPA to back off. I do realize the concerns of ALPA. But at this time, with UAL re negotiating leases on its aircraft, it may be difficult
for them to justify a dry lease of cargo aircraft. Perhaps ALPA should look towards a Letter of Agreement that would transfer a wet lease to a dry lease in an appropriate time frame. Yes, there are birds in the desert, but the cost of conversion to freighter may be near their net worth.
 
ual06 said:
Folks, I sure do not know the answer; but, in the matter of "wet lease" of cargo aircraft, I feel it may be best for ALPA to back off. I do realize the concerns of ALPA. But at this time, with UAL re negotiating leases on its aircraft, it may be difficult
for them to justify a dry lease of cargo aircraft. Perhaps ALPA should look towards a Letter of Agreement that would transfer a wet lease to a dry lease in an appropriate time frame. Yes, there are birds in the desert, but the cost of conversion to freighter may be near their net worth.
ual06,

That's a good point, and I think that's exactly where ALPA is headed. I think they realize the need to increase revenue in any way possible, and don't want to kill the idea completely. A wet lease could get us started until we emerge and have some capital resources to to commit to doing it ourselves.
 
Does this mean united is getting out of the pax carring business all together? Is this the plan of reorganization? Oh that's right you don't have a POR now do you! :eek:

Great second quarter showing, let's really show what united can do in the third!! :up: