US business parter UA plans to return to basics, Business blueprint presented to creditors

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USA320Pilot

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United plans to return to basics, Business blueprint presented to creditors
Analyst: The plan still sounds vague. They seem to be foundering for a strategy

DENVER (Post) - United Airlines will attempt to rebuild its base of premium customers, deliver quality service and revitalize its marketing efforts under a new business plan presented to creditors on Wednesday.
Complete Story: http://www.denverpost.com/Stories/0,1413,3...1450092,00.html
 
It seem as if Chip Munn may be right again. UA appears to not have completed its business plan and may be stuck in a "quagmire" as Chip first reported.

In fact, the Denver Post wrote one industry observer praised United for focusing on gaining back business travelers but said the plan lacks clarity. "They want to unleash their employees and let them do what they do best, which is to treat customers well," said Michael Boyd, an airline consultant based in Evergreen. "That''s good, but the plan still sounds vague. They seem to be foundering for a strategy."
It sounds like to me...Chip was correct in his UA comments from the information in the Post article.
 
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On 6/12/2003 9:13:49 AM Chip Munn wrote:


Micheal Boyd "The plan still sounds vague. They seem to be foundering for a strategy"


Problem is Mr. Boyd has always been bipolar when it comes to UAL, this is what he was quoted saying last week,

"Good News At United. Things are looking very up. The carrier''s management sent out indications last week that its plan to start an internal low fare airline (United Shuttle II Part 2) may be on a back burner. Whether they''ve turned the stove off is another issue. Nevertheless, it indicates that some firm strategic direction may be forming to get the airline out of Chapter 11."


Problem is Mr. Boyd and the Denver post DO NOT have any more insight into the details of the plan than you do Mr. Mun. Which by design are only what UAL and its advisors want you to know. Time will tell for UALs business plan, you should be more concerned with US Airs interest and viability and transformation into a regional carrier.
 
Chip may be right here....UA is strengthing it''s ties with SkyWest...U may be a stand alone carrier after all....
 
Talk about ''same coin different sides''!

Smoke&Mirror says this article proves Chip is right, UA is stuck in a quagmire.

gilbertguy reads the same article and also concludes Chip is right, UA can survive.

I believe Chip posts everything on the US board because he sees everything through the prism of US.

Mods - move this thread to the UA board where it belongs.
 
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Group:

US & UA have tried to marry in one form or another for the past 12 years. Now they are talking with other Star Alliances partners on ways to reduce partner costs, as the companies continue to work closer to create creater synergies.

For example, in one small area US recently moved from the SEA South Terminal to the UA SEA North Terminal, which will reduce costs and provide a better customer code share experience. Small, but nonetheless another integration point.

But, the purpose of the "quagmire" thread was simple in that UA appears obscured on what it needs to do to emerge and not fragment or liquidate. By the way, AA seems to have some of the same sickness with Gerard Arpey telling the public yesterday the Ft. Worth-based airline may need to sell assets to obtain liquidity.

First, UA said it''s transformation would be through the LCO, then they said this plan was placed on the back burner. Now it''s to focus on the premium customer; however, RASM is 30% lower than pre-September 11.

Next Jake Brace calls Susan Carey and tells her the airline may emerge from bankruptcy ahead of schedule, but the airline has no exit financing or equity plan sponsor.

Shortly thereafter Brace calls Michelene Maynard and tells her UA may not emerge early. Well, which is it?

Regardless, UA lost over $1.7 billion in the first four months of of 2003, there are inconsistencies in their public comments, their business plan/POR lack clarity, the unsecured creditors committee has filed a motion against the airline for not disclosing the McKinsey & Co. analysis and reports, and it appears management does not have clarity.

Furthermore, with UA confirming it''s RASM lags its peers maybe it''s understandable management is having a difficult time trying to figure out how to make US'' business partner a success, which is my whole point.

Best regards,

Chip
 
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On 6/12/2003 2:48:55 PM Chip Munn wrote:

For example, in one small area US recently moved from the SEA South Terminal to the UA SEA North Terminal, which will reduce costs and provide a better customer code share experience. Small, but nonetheless another integration point.

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FYI - As of yesterday, US was still in the South terminal. My understanding is this move is happening in September.
 
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On 6/12/2003 4:02:16 PM USFlyer wrote:


FYI - As of yesterday, US was still in the South terminal. My understanding is this move is happening in September.

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Your right...I just worked the South Satelite today. The move is scheduled to happen sometime after Labor Day. It couldn''t be soon enough, our codeshare passengers are ticked -off when having to connect to UA. Or worse, when they realize that they are checking in at the wrong airline and have to hoof it a 1/4 mile to UA''s counter.
 
There once was a very popular song by the Everly Brothers. Perhaps a certain poster
has listened to it too many times. The title is "All I Have To Do Is Dream".
 
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UAL06, Bear96, Busdrvr, 767jetz, Ohcaptainron, Falco, Supercruiser, & other UA posters:

In my opinion, I believe the UA employees may be in denial and you might want to focus on some of my warnings. In a recent UA thread I was chastised when I said that UA’s revenue was lagging its peers. However, AVMARK Consulting recently released network carrier and WN Yield RPM and as I predicted, before the information was made public, UA is dead last in revenue. How can that be and how could I have known this before the information was made public?

Here's the report:

Airline – Yield RPM

US – 13.05
AA – 11.86
CO – 11.57
WN – 11.54
DL – 11.33
NW – 10.76
UA – 10.54

Source: AVMARK, Inc.

Furthermore, let’s look at some other facts:

1. The unsecured creditors committee has filed a motion against UA to obtain the McKinsey & Co. reports and analysis for the restructuring business plan. Unless there was a reason to hide something, why would UA not willingly provide this information to the key parties who have to vote on the POR?

2. Six key airports, LAX, SFO, DEN, ORD (all part of the UCT); as well as VHP and NYC airports jointly filed a motion against UA to force the airline to pay its debts or if monies were not transferred, the airports could serve eviction notices.

3. UA entered bankruptcy in early December and for the first 60-days did not have to pay aircraft lease expense. Shortly thereafter, the Company reached interim wage concessions from all unions, which basically became the new contract wage rates, and during the first four months of this year the carrier lost more money than any airline in the world, when it did not have to pay all of its bills.

4. In my opinion, UA’s biggest short-term challenge is the airline must be cash flow positive in October, which appears unlikely. In fact, UAL chief financial officer Jake Brace indicated this acute problem in the June 4 WSJ article when he said that the airline could still miss some of its financial targets by late summer. Interestingly, on May 30 the Associated Press reported while officials of the airline express confidence that United also will meet its lenders' May 31 benchmark, it must make dramatic improvement to get back to positive cash-flow by the end of October as required.

5. Also noteworthy, speaking at the Star Alliance news conference at the National Press Club on May 31, UA chief executive officer Glenn Tilton said, "United's chief problem now is not filling plane seats, but low revenue."

6. On June 11, Busdrvr wrote on this message board, “Chip, If the revenue picture (I've checked, it is improving and the companies emphasis is now on revenue generation now that the turnip is bled out) does not improve adequately enough for UAL to meet it's numbers or get close enough for a waiver from the DIP's (like Mr Alabama gave you), then I think any practical objective view would see NWA, CAL and AMR in BK by then and U doing a repeat trip (one bill just doesn't go as far these days). Given the published numbers, UAL's performance is on track to be better than all the other hub and spoke airlines. I don't think the DIPs would walk away from the best performer.â€

7. On June 12 NW reported its May Pacific RPM’s fell 26 percent on a 13 percent reduction in capacity. NW’s chief U.S. Pacific competitor -- UA -- said its May Pacific RPM’s plummeted by 47 percent with a 40 percent reduction in capacity. Also noteworthy, UA’s May load factor rose to 77.2% from 73.2%, but its systemwide RPM’s dropped 13.8% in April – the highest drop in the industry. What should be concerning is that UA is carrying significantly more passengers and earning much less money. In fact, the Chicago-based airline’s April RPM drop was the highest in the industry and lags its peers. Again, who first broke this news on this message board before it was made public?

8. Busdrver, on June 11 you wrote “the revenue picture (I've checked, it is improving and the companies emphasis is now on revenue generation now that the turnip is bled out)â€, but on the very next day UA reported a huge revenue drop that is the worst in the industry. Furthermore, AVMARK consulting just released a report indicating UA was dead last in Yield RPM. As a UA employee who checked on UA revenue, can you tell me how you “checked†on UA’s revenue numbers to dispute my claim, when your company publicly released dismal revenue numbers less than 24 hours after your post?

9. Finally, US entered bankruptcy with conditional loan guarantee approval, exit financing, and an equity plan sponsor. However, after more than six months in bankruptcy UA said it’s now beginning the process to find exit financing. Why has nobody stepped up to the plate, at this point, to lend UA money, when US had all of these financial agreements complete before filing for its formal organization? If UA were definitely going to be solvent and it had such a strong franchise, doesn’t it make sense people would be willing to lend the airline money, like they did with US?

In conclusion, can any UA employee tell me where one point, just one point listed above, is inaccurate?

Best regards,

Chip
 
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On 6/12/2003 11:17:28 PM Chip Munn wrote:

Here's the report:

Airline – Yield RPM

US – 13.05
AA – 11.86
CO – 11.57
WN – 11.54
DL – 11.33
NW – 10.76
UA – 10.54

Source: AVMARK, Inc.



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You forgot one other DOT listed Major...American Eagle, with a yield of 29.79
 
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On 6/12/2003 11:17:28 PM Chip Munn wrote:

UAL06, Bear96, Busdrvr, 767jetz, Ohcaptainron, Falco, Supercruiser, & other UA posters:

In my opinion, I believe the UA employees may be in denial and you might want to focus on some of my warnings.

...blah blah blah...

In conclusion, can any UA employee tell me where one point, just one point listed above, is inaccurate?

Best regards,

Chip


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Oh Lordy. If anyone needed proof that Chip is simply trolling to try to get the UAL employees riled up, this is it. I haven't said anything in this thread up to now, yet Chip is trying to pull me in.

Anyway. Chip, you continue to ignore my points. I have repeatedly said that I too am very pessimistic about UA's outlook, and would not be surprised if UA does not emerge from Ch.11 at all. I feel so strongly about this that I will be leaving UA in a few months, which I have mentioned before as well. Even if UA should somehow happen to survive the current mess, this is barely the job I want any longer, and it will only get worse, IMO. It is no longer the job I signed up to do.

Yes some UA employees still are in denial, IMO. But don't lump me in with them.

I have in the past agreed with you about UA's outlook. My problem with your posts is in your presentation, and how you so obviously have a one-sided agenda, yet you try to present yourself as neutral and focused only on the facts. When you only present facts to prove your point and ignore those that may work against your point, that is less than honest or factual. It is deceitful by omission.

That you think anyone perceives you as really neutral or presenting things the way they are in a balanced or straightforward manner is more pathetic than any UA employee in the deepest denial. Coupled with the fact that your own company's survival is at least as shaky as UA's at this point and yet you conveniently continue to ignore THOSE facts would be downright hilarious, if it weren't so sad.

Your obsession with and grudge against UA, and your uncontrollable glee at our demise, are unhealthy and bizarre. Seek help! (If only for your family-- which, thankfully, you haven't rattled on and on about in this thread.)

Best regards!
 
UA clearly has a revenue issue that must be resolved ASAP. The number one metric is Revenue Passenger Miles (RPM). Per UA June 5[sup]th[/sup] press release: Total scheduled revenue passenger miles declined in May by 13.8 percent on a capacity decrease of 18.3 percent. Chip is correct with his observations concerning the situation with UA and their lack of ability to generate revenue. US has the advantage over UA as one looks into the future. US will maintain its industry leading yields, while UA is far behind in last place. US (CASM) will continue to decrease, which will translate to profits for US in another 18-24 months. UA has reach a point where the load factors are “okâ€￾, but the revenue is lagging. This is not a good sign for a carrier that is struggling to avoid liquidation without any “deep pocketsâ€￾ to help the airline weather the storm. UA is a sinking ship and must act fast to avoid the likes of Braniff and Eastern. Every time UA cuts back on its capacity it makes it more difficult to spread its fixed costs over the fewer remaining flights and seats it operates each day.
UA must minimize the “low-yield revenue spillâ€￾ that is generated from the competition introduction low fares. Another important factor with UA is their inability to gain financial support. My personal belief is that the investors have not decided on the path that UA will take in the next 12 months. Liquidation is an option that all UA employees must understand and they are not out of the woods yet. UA needs its customers business and should start to act appropriately. Currently, United''s strategy is to stay in business and avoid liquidation.
 
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On 6/12/2003 11:17:28 PM Chip Munn wrote:

7. On June 12 NW reported its May Pacific RPM’s fell 26 percent on a 13 percent reduction in capacity. NW’s chief U.S. Pacific competitor -- UA -- said its May Pacific RPM’s plummeted by 47 percent with a 40 percent reduction in capacity. Also noteworthy, UA’s May load factor rose to 77.2% from 73.2%, but its systemwide RPM’s dropped 13.8% in April – the highest drop in the industry. What should be concerning is that UA is carrying significantly more passengers and earning much less money. In fact, the Chicago-based airline’s April RPM drop was the highest in the industry and lags its peers. Again, who first broke this news on this message board before it was made public?
----->
In conclusion, can any UA employee tell me where one point, just one point listed above, is inaccurate?
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Chip:

I''m not a United employee (nor do I work for any other airline), but I''ll take that challenge.

In your point #7 shown above, you have not one but two inaccuracies. First, the Northwest press release was issued on June 5th, not June 12th as you stated (see the press release). And second, you twice mistakenly referred to United''s May RPMs as being from April.

I know these are very minor points, but when you challenge folks to find inaccuracies in your statements, you''d better be damn sure that there aren''t any. Otherwise, it could lead folks to ask themselves, "Hmmm, I wonder ... what else did he not get right?"
 
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