“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?â€
Did you include average stage length in your “analysis� What time period was covered by AVMARK’s yield study? You mean you could look at last Q’s numbers and see UAL’s yield per RPM was lower? Gee, Chip, are those numbers based on ASM? No? So an airline that has a 78% LF may be getting more revenue PER FLIGHT than an airline with a sub 70% load factor with a higher “yield� When I speak of revenue, I’m referring to our revenue recovery, and I alos consider STAGE LENGTH. But I guess in your world, we should be flying “jungle jets†or EMB-120’s, since eagle blew all our yield numbers away.:
“Furthermore, let’s look at some other factsâ€
To call your statements “facts†is BEYOND a stretch, some are outright WRONG.
“... 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?â€
Yes this IS true. But the company WOULD like to keep some aspects of the business plan out of the public domain. UAL got good press from the “buy three, fly free†campaign. Had that program been in the public domain, you can rest assured that NWA, AMR, DAL or even U would have pre-empted them.
â€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.â€
And if bullfrogs had wings they wouldn’t have to hop. Keep dreaming, I guess U would come rolling into ORD and DEN with all those RJ and LAX, SFO with the “big iron†and fly the pacific….right….
â€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.â€
Chip, have you ever had a course in accounting? Lets actually LOOK at some of the numbers from UAL’s Q1 report. DYK that UAL’s Q1 labor costs were reported as approx the same as the 1st Q 2002, DESPITE THE MASSIVE PAYCUTS AND 7.5 THOUSAND (9.5%) FEWER EMPLOYEES? DYK the 1st Q numbers reported only a 3.8% drop in “AC RENT†YOY? Why gee, with 60 days “freeâ€, and subsequently lower lease rates, shouldn’t that number be at least 67% lower than the prior year? Do you think there is a difference between GAAP accounting and “cash flow†accounting, ESPECIALLY IN BK? Please acknowledge, for once, that the 1st Q numbers DID not include reduced labor costs and reduced (or even “free) leases. I would like you to acknowledge it so that I know in the future if you are still quoting these numbers (despite knowing better), that it must be to attempt to put a slant on the facts.
â€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.â€
Take a CLOSE look at the 1st Q numbers and you’ll see that UAL, with it’s new cost structure, is AMAZINGLY close to being operationally cash flow Neutral ALREADY!
â€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."â€
And that’s different from which airlines? Of course (with one of the highest load factors of all the majors) filling seats ISN’T a problem.
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?â€
You are kidding right?! UAL cut back MORE than anybody else for the months of april and may. So we took a bigger RPM hit than other airlines, DUH. Yet our LOAD FACTOR went up SUBSTANTIALLY (which typically has a POSITIVE effect on yields,( what time frame was your irish consulting firms numbers from?). The net result? UAL got a SMOKING deal on the leases of our 400’s after we demonstrated a lack of “need†Now we are adding back 162 flights to the june schedule and an additional 54 to the July schedule.
â€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?â€
UAL DID NOT REPORT A HUGE REVEUE DROP! They reported a huge RPM drop, on a MUCH larger drop in ASM’s (which means we cut flights to save money, but unlike U, we actually had a HUGE jump in Load factor). THERE IS A DIFFERANCE!! Let me make myself clear, UAL’s YIELD is improving. That’s a fact. We are adding back over 10% of capacity (are you?). Again, for what time period is AVMARKS study? June? July? August? Even UAL doesn’t know exactly what the June yield will be. But they DO know if the months is shaping up to be better than in the past. The “fare bucket†changes DAILY.
â€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 reorganization? 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?â€
You had to go to a loan shark to get dip financing. UAL went to a BANK. Do you understand that there is a difference? You got conditional approval because you ENTERED BK with a huge level of concessions. UAL did NOT. Had UAL had YOUR level of cuts prior to the last ATSB denial, we would have likely gotten the loan and not even entered BK. You can rest easy that UAL WILL have plenty of money to exit. Some reports indicate UAL may not even NEED a big infusion of cash to exit. We weren’t the ones down to 500 million in cash. How many times have UAL’s DIP lenders publicly threatened to pull the plug on “Dip†financing? How about U?
â€In conclusion, can any UA employee tell me where one point, just one point listed above, is inaccurate?â€
Was that enough?
31 PM 767jetz wrote:
