US/UA merger?

[chipmunn]

Eolesen:

Eolesen said: Don't forget that the ALPA BOD rep voted -for- the US Airways merger, even though he opposed it as a union president. He had little choice from a fiduciary responsibility standpoint, and stated so to his members.

Chip comments: Eolesen, I have a copy of Rick Dubinsky's 30+ page merger announcement report to the UA pilots, where he indicated he was the only BOD member to vote against the last merger. The IAM & non-contract board members voted for the acquisition and the ESOP governance clause required two out of three employee board members to vote in concert.

Chip

 

[GGpillow]

[blockquote]
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On 10/3/2002 1015 PM eolesen wrote:

[blockquote]
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On 10/3/2002 5:00:06 PM UAL777flyer wrote:

Cosmo,

Sorry about that. My fingers must have edited a portion by mistake. I've corrected it.

To answer your question, yes ALL of the BOD members have a fiduciary responsibility to act in UA's best interests. But let's be realistic, labor's allegiance is to their membership first, best interests of the company second. Sued for breach of contract? Yeah, good luck proving in court that a union BOD member ignored the best interests of the company in favor of voting in favor of his/her union's interests.

As for them blocking a potential Ch.11 filing by UA, I'm not sure how much they could prolong it. I believe that according to company bylaws, the vote to file Ch.11 must be unanimous. I could be wrong.
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[/blockquote]

Don't forget that the ALPA BOD rep voted -for- the US Airways merger, even though he opposed it as a union president. He had little choice from a fiduciary responsibility standpoint, and stated so to his members.

But don't worry too much. Large creditors whom UAL defaults on can always file an involuntary petition for liquidation.

If that doesn't happen, assuming UAL has debt covenants which require a set amount of liquidity in the form of either cash or securities (remember DL's renegotiating some of its bond covenants last week for this same reason???), I believe bond holders can also declare UAL in default, and force a filing.

Should either of those moves appear emminant, even the IAM and ALPA reps couldn't justify voting against a Ch.11 filing without violating their fiduciary responsibility, since reorganization is still better than liquidation...
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[/blockquote]


Just a small correction, it was the IAM BOD member, who voted for the UA/US merger.


edit- oops, missed Chips post. Sorry bout that.

 

[DLFlyer31]

[blockquote]
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On 10/3/2002 8:15:09 PM JFK Fleet Service wrote:
[BLOCKQUOTE]
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On 10/3/2002 7:54:03 PM oldiebutgoody wrote:
[BLOCKQUOTE]
[/BLOCKQUOTE]
You can only hope that your new CEO has as much on the ball as Dave Siegel, who has the potential to be the next big hero of the aviation industry, alongside the likes of Juan Trippe, Howard Hughes, and C.R. Smith
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[FONT size=1]Dave has done some amazing things in a short period of time,but I'd stop short of putting him up there in the "Legends of Commercial Aviation" pantheon.[/FONT]
[/BLOCKQUOTE]
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[/blockquote]

I don't see what Dave has done so great. He declared bankruptcy and then used BK to scare all the unions into concessions. Pretty sad when we think declaring bankruptcy is a sign of great leadership....I don't think Trippe, Hughes or Smith would agree.

 

[DCAflyer]

DLflyer said:

I don't see what Dave has done so great. He declared bankruptcy and then used BK to scare all the unions into concessions. Pretty sad when we think declaring bankruptcy is a sign of great leadership....I don't think Trippe, Hughes or Smith would agree.


DCAflyer says:

Ahem, he saved the airline. He filed for bankruptcy because we were bankrupt. We were on the brink of an involuntary filing by creditors, which would have put us out of business. You are just pissed off because you know concessions probably aren't so far down the road for Delta. You're upset because your precious little Mullen is scared crapless. And he's scared because he now knows he can't swoop in and pick the remains of US Airways. Dave Siegel was the first one to say we have to take stock of what's going on here if we are going to save the airline (and the industry). The other airlines will either be learning lessons from us or parishing. And while I used to be a big fan of Delta and Mullen, he has shown himself in a sad new light... a pathetic one at that.

 

[UAL777flyer]

DLflyer31,

Your remarks are a bit short-sighted in terms of what Siegel has done at US. Did he have a choice in declaring bankruptcy? Not if he wanted to save the company. Leo Mullin would do the exact same thing if Delta were in US Airways shoes. Considering what he inherited, I think he's done a masterful job. US Airways, little by little, is restructuring themselves to try to become a successfully profitable company when they emerge from Ch.11. While I'd stop short of calling him an industry legend, I think it would be unfair not to give him accolades for what he's accomplished in a very short amount of time.

 

[767jetz]

Chip,

With all due respect, don't you think it's about time you let go of your aspirations of flying one of United's 777's? With your attitude of 'I could tell you, but then I'd have to kill you,' you seem to have some confidential info. So one could assume that you are relatively senior at U and maybe involved with management. I'll give you the benefit of the doubt there. But your opinions on UA politics, seniority, and a UA/US merger are obviously biased and misinformed.

- considering the effects of 9/11 on our industry, if UA had purchased US at the rediculous price of $60.00 per share, both our companies would no longer exist. At least not in their current form. Call it luck, or forsight, but not merging was the best thing that could have happened for both our companies. Everyone one knows that Goodwin was in over his head and Wolf was pulling the strings.

- In saying that ALPA was the only one who opposed the merger, you are neglecting to mention the politics involved with the IAM and their fear of AMFA. Had it not been for that, the IAM would have voted with ALPA, blocked the deal, and the critical time and money lost in 2000 would not have happened. Had the deal been killed in the board room, one could speculate that the money saved from getting on-time contracts for ALPA and the IAM, the lower price of those contracts, the higher moral during summer 2000, concentrating on UA's customers instead of a merger, the price of dropping the deal in the end, all would have added up to close to $900 million. That would make our most immediate crisis a non-issue.

- Your comment of special interest actions of pre-nuptial seniority agreements to bypass national union merger and fragmentation policy is laughable! It was in fact the U pilot group that wanted to bypass the merger policy by collectively aquiring the mantra of date of hire... date of hire... date of hire... when in fact there is NO mention of date of hire in ALPA's merger policy. There IS however a very specific clause of career expectation. At the time, our career expectaion was far greater. (please spare us the comments about the current state of our companies in this regard. We all know that 9/11 has changed everything.) And please don't deny that U pilots had dilusions of grandure. I sat on many a U 737 jumpseat that summer, biting my tongue while enduring lectures from your captains about the 777 bids they were planning on!

- As far as our corporate governance being a bad thing, wasn't part of your new deal with the company a few seats of your own on the BOD?

Again, I think many of your posts are often informative, and at least entertaining. But your bias and opinions are obvious and becoming nausiating.

Fraternally,
767jetz

- UNITED WILL STAND -

 

[argentomaranello]

cltvff wrote:
Care to speculate on the point at which UAL no longer has sufficient liquidity to emerge from BK intact?[/P]

CLTVFF: Speculation is what makes participation on these boards so interesting (and its what demands that everything written here be taken with a proverbial grain of salt). That said, I would expect that the threshold cash level required for UAL to successfully negotiate Ch.11 is in the area of $1 billion. (USAir's liquidity minimum, by general consensus, stood at $500 million last spring, and its requirements, as a function of its size in contrast to UAL, could be said to be no more than half UAL's requirements). As you might recall from one of my earlier postings, UAL's 6-30-02 ststed cash level was about $2.5 billion, but non-deferrable cash requirements which hit it in the current quarter will require about half that amount and the cumulative impact of Q3 and Q4 operating losses, when added to the seasonal cash runoff associated with the normal drop in forward ticket sales, probably form a call on another $500 -- $600 million. In other words, UAL could be expected to limp into yearend with no more than $600 or $700 million cash on hand. And, as I had earlier noted, that $3 billion plus in unencumbered aircraft is worthless without access to the private capital markets, and even with such access (like AMR recently learned), those planes would likely bring only twenty cents on the dollar if hocked in this environment. So . . . . . UAL really has no responsible choice but to file BEFORE those Q4 debt payments come due. If it is actually foolish enough to pay those creditors (including the IAM's catch-up money), then all of us can likely add the name United to those of Eastern, PanAm, TWA and Braniff.

 

[KCFlyer]

test

 

[chipmunn]

767jetz:

My comments and information does not come directly from members of US management, but from discussions with people in the investment community, the news media, the government, and industry consultants. Anybody can do what I do and all it takes is a willingness to discuss and investigate the issues. I’m surely not special and I am not an expert, but what I am is a person with an interest in aviation and US. My only concern is for US and whomever it works with, to a be a strong, vibrant carrier, which in the end is the only thing that provides job security.

I agree with you that if UA had acquired US in July 2001, with the effects of September 11 both companies would be in trouble. I do not believe I said the UA ALPA was the only one who opposed the merger, did I? I understand the IAM-AMFA issue and the role the UA AFA played in torpedoing the deal over the Air Wisconsin scope issue and the eventual System Board award.

I disagree with your comment on the pilot seniority issue. ALPA National never initiated a Policy Initiation Date (PID) and no formal work was completed by the US ALPA Merger Committee. However, just like in 1995, the UA ALPA MEC tried to have a “pre-nuptial†seniority agreement completed with the two carriers. Once again this was tried to be included in the UA ALPA ERP TA, which is designed to bypass ALPA National Merger & Fragmentation policy.

In regard to the ESOP, I believe employee stock ownership and board representation can be good. People take better care of something when they own all or a piece of a entity and a board seat can create trust between labor and management, which in this industry is important. However, the difference between US and UA is governance, which many people including the ATSB believe is the major problem at UA, because labor controls many strategic decisions. This veto power can prevent decisions made in the best interest of the corporation and is viewed as a “noose†around management’s neck.

As far as your condescending comment of “I think many of your posts are often informative, and at least entertaining. But your bias and opinions are obvious and becoming nausiatingâ€, would you care to identify yourself instead of insulting people behind a computer screen? It doesn’t take much to “shoot the messenger†when you do not like the discussion. It takes courage to identify your self publicly and bare your sole? 767jetz, would you care to honestly identify your self?

Regards,

Chip

 

[KCFlyer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 10/4/2002 225 PM DLFlyer31 wrote:
[P]
[BLOCKQUOTE]
[P]I don't think Mullin is scared crapless.  Rather he is trying to run an airline w/o declaring BK...what a novel concept.[/P]
[P]Novel indeed[BR][BR]What lessons are the other airlines going to learn from U? That declaring BK is the only solution. Imagine if all the airlines declared BK like U...imagine what that would do to our economy?? It might still happen.[/P]
[P]I agree. To compete using a little assist from the bankruptcy court is detrimental to every other airline that is trying their damndest to show a profit.[BR][BR]Again, tell me what Siegel did that was so great? Everyone says how great he is doing, yet the only thing he did was declare BK...something he had no choice but to do. Since when is doing the obvious considered great leadership? Tell me something innovative that Siegel did beyond declaring BK? Carl Ichan led TWA into BK and shrunk down the airline...did that make him a great leader?? Obviously not. [/P]
[P]I dunno, considering some leadership demonstrated in the airline and other industries, maybe doing the obvious really is worthy of greatness.[BR][BR]I guess the standards for leadership around U are pretty low after Wolf & Friends, but I think you might want to wait around another year or two before singing Siegel's praise. Trust me, I'll be the first to praise him if he can come up with a way to grow U's mainline fleet and effectively compete with low-fare carriers.[/P]
[P]Again, agreed. The bankruptcy book contains two major chapters...11 and 7. Chapter 7 has a rather nasty ending as I recall, and there aren't any guarantees that this won't be the chapter that is eventually read.[BR][BR]As for a meger between U/UA...I guess I could see it happening further down the road. UAL will likely shrink more if they file BK and U is already shrinking, so within a year or two the combined airline might not be that much larger than AA (though AA is shrinking too. The merger would be ugly from the labor perspective and I don't necessarily think that having a mammoth UAL/U is the ticket to long-term financial success.[/P]
[P]Ugly would be a great understatement.[/P][/BLOCKQUOTE]
[P][/P]----------------[/BLOCKQUOTE]
[P][/P]

 

[UAL777flyer]

Oops, got ahead of myself and had to edit. Had my facts wrong.

Anyhow, it's very easy to now say that the merger of UA/US would have spelled trouble for the combined company. That's because even in the merger, labor costs would have been sky high at the combined company. However, hindsight is always 20/20. I still think that from a purely strategic point of view, a combined UA/US makes the most sense and could be a dominant force in the industry and just what is needed to return the combined carrier to greatness. The problem lies in overcoming the fear, paranoia and anger amongst the employees in getting to that point. We all know what a bloodbath seniority integration is. Is a combination of the two companies possible? Absolutely. In bankruptcy, it would be MUCH easier to pull it off. But is it in the best interests of both companies, their shareholders and employees LONG-TERM? That is indeed the question.

It would appear that the UA/US codeshare will most likely lose much of its value if the DL/NW/CO alliance goes through. So then what do you do? It would appear that a golden opportunity is before both companies if their true intent is to combine in some fashion. This may be as good a time as ever to do it, if that indeed is their intention. I don't think it is, despite some perceived coincidences. But in this industry, ya just never know.

 

[DLFlyer31]

[blockquote]
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On 10/4/2002 9:40:25 AM DCAflyer wrote:
DCAflyer says:

Ahem, he saved the airline. He filed for bankruptcy because we were bankrupt. We were on the brink of an involuntary filing by creditors, which would have put us out of business. You are just pissed off because you know concessions probably aren't so far down the road for Delta. You're upset because your precious little Mullen is scared crapless. And he's scared because he now knows he can't swoop in and pick the remains of US Airways. Dave Siegel was the first one to say we have to take stock of what's going on here if we are going to save the airline (and the industry). The other airlines will either be learning lessons from us or parishing. And while I used to be a big fan of Delta and Mullen, he has shown himself in a sad new light... a pathetic one at that.
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[/blockquote]

I don't think Mullin is scared crapless. Rather he is trying to run an airline w/o declaring BK...what a novel concept.

What lessons are the other airlines going to learn from U? That declaring BK is the only solution. Imagine if all the airlines declared BK like U...imagine what that would do to our economy?? It might still happen.

Again, tell me what Siegel did that was so great? Everyone says how great he is doing, yet the only thing he did was declare BK...something he had no choice but to do. Since when is doing the obvious considered great leadership? Tell me something innovative that Siegel did beyond declaring BK? Carl Ichan led TWA into BK and shrunk down the airline...did that make him a great leader?? Obviously not.

I guess the standards for leadership around U are pretty low after Wolf & Friends, but I think you might want to wait around another year or two before singing Siegel's praise. Trust me, I'll be the first to praise him if he can come up with a way to grow U's mainline fleet and effectively compete with low-fare carriers.

As for a meger between U/UA...I guess I could see it happening further down the road. UAL will likely shrink more if they file BK and U is already shrinking, so within a year or two the combined airline might not be that much larger than AA (though AA is shrinking too). The merger would be ugly from the labor perspective and I don't necessarily think that having a mammoth UAL/U is the ticket to long-term financial success.

 

[KCFlyer]

[BR][BR]
[BLOCKQUOTE]
[P][BR]----------------[BR]On 10/4/2002 3:08:46 PM UAL777flyer wrote:[BR][BR]Wait a second Correct me if I'm wrong, but isn't filing for bankruptcy a legitimate and legal option for failing companies as a means to reorganize themselves and restructure into a company that can be successful? US Airways is merely using legal means to restructure themselves because they are a failing entity at the present time. If you have complaints with that, why don't you complain to your senators and congressmen who make the laws. Why are airlines any different from other industries? Should we merely eliminate every company that fails without giving them a chance to reorganize? Think of what the implications of that would be to our economy.[BR][BR]Yes, U is doing what they can legally do and UAL might follow. Worldcom is also doing what they can legally do, and the fallout from that poses serious risks to Sprint and others who compete with them. I might feel differently if the economy were in much better shape, but if, as has been posted several places on this board, the solution is to reduce overcapacity of the system by 25%, just exactly how does bankruptcy help accomplish this. U in total doesn't represent 25% of the capacity, how would a smaller, nimbler U help in these conditionis? Fact is, it won't. It'll only serve to hurt the AA's, Delta's, Northwest's, Southwest's and Continentals of the country. [/P]
[P] [BR]Nobody should be knighting David Siegel yet. However, when you consider what he walked in to, he has done a great job of making the necessary decisions to put US in the best possible shape for a successful restructure. Let's not forget getting the necessary voluntary agreements from all unions. That alone was a major accomplishment. He has laid out the facts straight. He's been honest and candid. Is he a legend? Of course not. He has a long way to go before he could earn that distinction. But he is a refreshing leader in an industry that could use a lot more.[BR][BR]Herb Kelleher has been doing that for years. But if any other airline managment even suggested becoming more Southwest-like, labor balked...big time. [BR][BR][BR]Every company deserves a second chance. While I'm firly against a second go round in bankruptcy, I think every company is entitled to a second chance to become successful, provided bankruptcy is their only legitimate option, which in US Airways case, it was. DLflyer31's comments sound like sour grapes from a competing carrier that would much rather see US go out of business. Delta would be afforded the same opportunity should their situation ever get to that point.[BR][BR]DLflyer31 didn't sound like sour grapes at all. Delta isn't at that point, but can you honestly tell me that, given today's environment, if it were Delta on the brink of bankruptcy and not UAL you might have second thoughts about the entitlement to protection under the US bankruptcy code, espescially when it means that YOUR airline might be sent down the bankruptcy route because of the competitive advantage of a bankruptcy filing? ----------------[/P][/BLOCKQUOTE][BR][BR]Side note - is there any way to get rid of the @#$%(#$( that is added after any punctuation in a quoted post????

 

[UAL777flyer]

Wait a second. Correct me if I'm wrong, but isn't filing for bankruptcy a legitimate and legal option for failing companies as a means to reorganize themselves and restructure into a company that can be successful? US Airways is merely using legal means to restructure themselves because they are a failing entity at the present time. If you have complaints with that, why don't you complain to your senators and congressmen who make the laws. Why are airlines any different from other industries? Should we merely eliminate every company that fails without giving them a chance to reorganize? Think of what the implications of that would be to our economy.

Nobody should be knighting David Siegel yet. However, when you consider what he walked in to, he has done a great job of making the necessary decisions to put US in the best possible shape for a successful restructure. Let's not forget getting the necessary voluntary agreements from all unions. That alone was a major accomplishment. He has laid out the facts straight. He's been honest and candid. Is he a legend? Of course not. He has a long way to go before he could earn that distinction. But he is a refreshing leader in an industry that could use a lot more.

Every company deserves a second chance. While I'm firly against a second go round in bankruptcy, I think every company is entitled to a second chance to become successful, provided bankruptcy is their only legitimate option, which in US Airways case, it was. DLflyer31's comments sound like sour grapes from a competing carrier that would much rather see US go out of business. Delta would be afforded the same opportunity should their situation ever get to that point.

 

[trvlr64]

Let's insert a little humor here...........

A company files for BK, so they close their doors and go away and all the other similar companies feed off of their losses.

A person files for personal BK, what do you do with them?? Hang em? You're taking up valuable resources for your continued presence anyway.

lighten up ..............jeez