Usairways-help Or Hurt

[BigRed1]

Hi Everyone:

As I watch the saga unfolding at USAirways, I want to start off by saying I feel very sad about the circumstances facing our fine brothers and sisters over there. While I realize UAL and USAirways differ in many ways, I also know there are many similarities in our situation and hope we are not watching a case of forshadowing regarding United's future path in BK.

My question to the forum is this...

Would UAL benefit more if USAirways stayed a healthy vibrant enterprise, or would UAL benefit more if the USAirways capacity was removed from the system?

USAirways is a Star Alliance Code Share Partner, and I believe UAL says we derive approximately 300 million per year in code share revenue from the cooperation with USAirways. Glenn Tilton said, while attending a meeting among industry participants in Europe, that he wanted USAirways to be a healthy contributing partner to the alliance and hoped they return to profitability and continue with the status quo.

USAirways does not overlap UAL on most routes, and therefore does not compete as much compared to say, Delta and USAirways. So, unless UAL were to start flying some of the now resulting underserved routes, it seems USAirway's demise would help UAL's competitors more. I am sure any "underserved routes" would be quickly swallowed up by the likes of Southwest in PHL or Indy Air in Dulles, or Delta in Boston, etc. Jetblue has been salivating over the Shuttle operation and the LGA slots. USAirways could really help a lot of other carriers more than UAL it seems.

All of USAirways frequent flier miles are valid on UAL. This could be beneficial, or it could be bad. If there are flights available to USAiways travelers on UAL using their old miles, it may help with a loyalty factor and if UAL added some of the previously flown USAirways routes, those passengers would continue to fly the STAR Alliance. But, on the other hand, it may cause a "run on the bank" and result in a huge flood of flyers trying to use up their miles and therefore causing UAL to fly a bunch of people around for free next Spring. High loads...No revenue.

I want to reiterate that I do not wish any ill will to our USAiways partner. I am just trying to quantify the impact on UAL, should things end up for the worse at USAirways.

I do know one thing though. Regardless of whether or not they continue to fly, if they succeed in imposing the working and compensation terms on their employees that they are currently seeking, it will be devastating to every remaining airline worker at every airline. Maybe this is a test. Just how low is one airline's workforce willing to go? Many, many managements are watching.

Any thoughts? Thanks for reading.

 

[firstamendment]

Hi Big Red,

You bring about interesting thoughts where US is concerned. Unfortunately the only airlines with cash are the lccs. Perhaps it will be in US Airway's demise that people will finally see the value of their passenger base. Whether we make it or not, our first and now second entries into chapter 11 have had a devestating impact on the industry. It has taken US Airways years to be a leader in something. Too bad it has come down to leading the industry this unfortunate way.

There are no what if's left. We are fighting for our lives at a time when most airlines would rather US just go away.

Will all this help or hurt UAL? I guess it depends on personal opinion. I for one could care less anymore...tired of the fight.

 

[767jetz]

UAL gets about $200-$300 Million per year from the US codeshare, so initially one would say that a US liquidation would hurt UA.

On the other hand, I'm sure UA is considering this scenario and coming up with alternate plans. For example, re-directing resources in order to increase frequency to destinations where both airlines fly. Adding service to destinations such as the Carribean would be another option. Not all of USAirways routes are profitable, but UA could selectively put resources to certain areas, especially since we have underused assets in the New York area.

I think Ted coming to NY would be an option.

An interesting idea might be to talk to Independence Air. Since they want to grow into an LCC model, they could grow into the void left by US Airways rather than compete with UA. Then UA could code share with Independance Air. A side benefit would be that under a code share agreement, there are agreed upon limits to who does what flying in areas where there is overlap. (ie: ORD & IAD) This would protect the loss of code share revenue as well as limit the competition.

Whatever happens, UA management has had time to come up with plan B. Remember when ACA and UA severed their relationship? There were some who predicted that UA would be devestated. In the end it worked out OK.

I hope all goes well with US and they weather the storm to emerge a stronger company. I must say that right now it looks rather bleak, but I hope I'm wrong.

Good luck to all...

 

[laura62]

Whatever happens, UA management has had time to come up with plan B.

[post="185198"][/post]​

Sad to say that just because UA had the time to come up with plan B doesn't mean they did it. That we know from experience. They had a year and a half to come up with plan B to get us our of bankruptcy if we didnt get the ATSB loan and...well, were still waiting for that Plan b. <_<


What I've read is the demise of USAir or any of the "legacy" carriers would be devastating not only to the employees but bad for the rest of the industry as any "legacy" carrier would leave open a big toehold that only the LLCs can afford to take advantage of these days. Makes sense.

I believe many at AA are salivating in anticipation of UAL going out of business. What they should stop and consider is this. UAL would leave a lot of empty slots in one of their largest bases-ORD (and elsewhere). And just who do they think would fill those slots? Southwest, Jetblue, etc. LLCs that operate for far less and will kick their butts on pricing.

Anyway, this is my 19th year and I'd like to stick around.
Good luck to all of us.

 

[boeing787]

Sad to say that just because UA had the time to come up with plan B doesn't mean they did it. That we know from experience. They had a year and a half to come up with plan B to get us our of bankruptcy if we didnt get the ATSB loan and...well, were still waiting for that Plan b. <_<
What I've read is the demise of USAir or any of the "legacy" carriers would be devastating not only to the employees but bad for the rest of the industry as any "legacy" carrier would leave open a big toehold that only the LLCs can afford to take advantage of these days. Makes sense.

I believe many at AA are salivating in anticipation of UAL going out of business. What they should stop and consider is this. UAL would leave a lot of empty slots in one of their largest bases-ORD (and elsewhere). And just who do they think would fill those slots? Southwest, Jetblue, etc. LLCs that operate for far less and will kick their butts on pricing.

Anyway, this is my 19th year and I'd like to stick around.
Good luck to all of us.

[post="185229"][/post]​

 

[UAL_TECH]

UAL gets about $200-$300 Million per year from the US codeshare, so initially one would say that a US liquidation would hurt UA.

On the other hand, I'm sure UA is considering this scenario and coming up with alternate plans. For example, re-directing resources in order to increase frequency to destinations where both airlines fly. Adding service to destinations such as the Carribean would be another option. Not all of USAirways routes are profitable, but UA could selectively put resources to certain areas, especially since we have underused assets in the New York area.

I think Ted coming to NY would be an option.

An interesting idea might be to talk to Independence Air. Since they want to grow into an LCC model, they could grow into the void left by US Airways rather than compete with UA. Then UA could code share with Independance Air. A side benefit would be that under a code share agreement, there are agreed upon limits to who does what flying in areas where there is overlap. (ie: ORD & IAD) This would protect the loss of code share revenue as well as limit the competition.

Whatever happens, UA management has had time to come up with plan B. Remember when ACA and UA severed their relationship? There were some who predicted that UA would be devestated. In the end it worked out OK.

I hope all goes well with US and they weather the storm to emerge a stronger company. I must say that right now it looks rather bleak, but I hope I'm wrong.

Good luck to all...

[post="185198"][/post]​

767jetz,
Love your optimism
Hang on bro........... Rough ride is a commin!!!

JMHO&PO,
UT

 

[BigRed1]

No matter which way it goes, the decision is a monumental one for the industry. If the court agrees with US Airways, and dismisses employee contracts, it will essentially establish new pay scales for the entire industry and break from the government's tradition of honoring legal agreements. But if the court disagrees with the carrier, it will likely spell the end of US Airways and its nearly 30,000 employees.
---------------------------------------------
A paragraph from TheStreet.com article. So true.

 

[Stratoboozer]

An interesting idea might be to talk to Independence Air. Since they want to grow into an LCC model, they could grow into the void left by US Airways rather than compete with UA. Then UA could code share with Independance Air. A side benefit would be that under a code share agreement, there are agreed upon limits to who does what flying in areas where there is overlap. (ie: ORD & IAD) This would protect the loss of code share revenue as well as limit the competition.

There were some burned bridges between ACA and UA back a year ago. I highly doubt both sides would be agreeable to that, but weirder things have happened. If anything, Indy would love to grab more assets in the east to compete head-to-head with UA. Therefore, a US demise would not be beneficial to UA (or all the legacies) since it keeps pressure on all LCCs from rapid expansion on the east coast.

I believe US will pull through and make it, but it's going to be a painful recovery for everyone.

 

[real world]

As a US employee I am amazed at the arrogance of UA employees you guys are in bankruptcy, going on almost two years now and you have no idea when you are going to come out. Yet you talk about US as though you have WN balance sheet.

UA and US have great franchises and that is what will/can make us successful together. US is not leading the change in labor rates and work rules for the airline industry, we are just following along the LCC's. Post deregulation carriers are a much different animals, unfortunately they are eating our lunches and it won’t be long before they start flying internationally, jet blue was in Toulouse looking A330’s two weeks ago. LCC’s are fortunate as they are not burdened with outdated work rules – they are far more efficient then we are and they have come in and upset our eco-system and they are not going to get any smaller. The world is changing and UA, needs to admit they have a problem and figure out how they compete in the new world and stop pointing the finger.

 

[UAL_TECH]

As a US employee I am amazed at the arrogance of UA employees you guys are in bankruptcy, going on almost two years now and you have no idea when you are going to come out. Yet you talk about US as though you have WN balance sheet.

UA and US have great franchises and that is what will/can make us successful together. US is not leading the change in labor rates and work rules for the airline industry, we are just following along the LCC's. Post deregulation carriers are a much different animals, unfortunately they are eating our lunches and it won’t be long before they start flying internationally, jet blue was in Toulouse looking A330’s two weeks ago. LCC’s are fortunate as they are not burdened with outdated work rules – they are far more efficient then we are and they have come in and upset our eco-system and they are not going to get any smaller. The world is changing and UA, needs to admit they have a problem and figure out how they compete in the new world and stop pointing the finger.

[post="189368"][/post]​

RealWorld,

BigRed1 (for some reason?) attempted to start a hypothetical discussion which (in my ethics) may be construed as a little out of line and maybe even disingenuous (if not inflammatory) on his part. I for one wish you all at US the best of luck and (as you may know) I ‘lurk’ and occasionally post in your forum.

We are all in a place wherein some people cannot decide their own position.

Good Luck to you all at USAir!!!

B) UT

 

[Winglet]

The basic fact is that there is 25% more seats in the US system than there should be. Shutdown of U won't affect the system as a whole very much. LCCs and surviving legacy carriers can easily fill any void. It won't be any godsend for legacy carriers . . . . just buy a little breathing room for DAL firstly, UAL secondly, and eventually AA, when they figure out, while they've come a long way, there's a long way to go still. It will help the Low Pay Carriers expand, however.

 

[PITbull]

portion deleted by moderator: don't assume the identity of our posters.

 

[real world]

The basic fact is that there is 25% more seats in the US system than there should be. Shutdown of U won't affect the system as a whole very much. LCCs and surviving legacy carriers can easily fill any void. It won't be any godsend for legacy carriers . . . . just buy a little breathing room for DAL firstly, UAL secondly, and eventually AA, when they figure out, while they've come a long way, there's a long way to go still. It will help the Low Pay Carriers expand, however.

[post="189486"][/post]​

________


Why should US shut down anymore than UA, who has been in BK longer?

 

[UAL_TECH]

I find it amazing that real world will post on UA board but not U board. Fine, we all know who you are. And if you think you can come over to UAL and infect their forum with your irrational logic, we will just follow you here too.

Just so you all know without giving it away....real world was fired by U's BOD

None the less, we still see him lurking on our U forum.

Don't pay him any mind.

[post="189479"][/post]​

PITbull,

Thanks for the heads up.
Hard to keep track of everyone here (and abouts).

Take Care,
UAL_TECH

 

[Winglet]

________
Why should US shut down anymore than UA, who has been in BK longer?

[post="189503"][/post]​

Didn't say anthing about should, but did imply "if."

However, it's very likely that U will run out of operating capital very soon, even if Lakefield gets everything he wants from the court. This last year has been so badly bungled and wasted that nobody has any confidence in the mangement team. Bookings will probably continue to fall, oil prices continue to spike, and GO FAREs at $69 aren't going to help. Not to mention the PO'd workforce, if they get raped by the judge. Customer confidence after mangement's stupid public statements has to be eroded badly. Let's put it this way . . . . I'd buy a ticket on UAL for holiday travel because I'm pretty sure UAL is still going to be flying in December. I wouldn't buy a ticket on U until I walked up to the gate and saw the airplane sitting there ready to go.