Who is Chip Munn?

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On 6/1/2003 11:07:13 PM PineyBob wrote:
I think that Chip is six fries short of a Happy Meal sometimes, but the underlying point he makes is that IF UA falters then any number of things could happen. I would be curious to hear some other theories from folks that don''t have such a very large axe to grind.
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Anything is possible if UAL does liquidate. Given the importance of UAL to the * alliance, I find it odd that none of the * alliance airlines has lined up any financing for UAL - yet. I''d figure that they would help out UAL, in a manner similar to what they did to AC. But I digress.

If UAL were to liquidate, there would be a bidding war for UAL assets and unfortunately US may most likely come up short. DL would probably be quite interested in the LHR slots, AA would be quite interested in the ORD operation. There would also be significant interest in the NRT slots (DL? AA? CO?) and the gates associated with them at SFO and LAX.

IAD - who knows, it would be up for grabs - maybe another hub for jetBlue? would SW move in? An eastern hub for NW maybe? Would US scrap PIT and move into IAD?

The only asset that I realistically see US having a good shot at gaining should UAL liquidate is a portion of the Denver hub and fight it out there with Frontier and CO.

Even with the Alabama Retirement money, I just don''t see US getting into a bidding war for UAL assets. It is possible but IMHO, not wise. Think about it, if US were to acquire say UAL assets at SFO or LAX, they would be a little meaningless without the flights to the Pacific - I''m sure DL (or AA would outbid US for these - even SW may want to expand its presence in LAX). South America from CLT or PIT or PHL would not work. ORD - AA would kill US in Chicago. LHR - should slots become available after UALs demise DL (or CO or NW) would be all over them like a fat kid on a smarty.

That''s my $0.02
 
Hi Bob,

I''ll put in my two cents and try to answer your question. Let me preface this by saying that I mean no disrespect to U employees. I may not care for Chip, but you folks are doing a helluva job in spite of all that you have faced.

I don''t see U taking over a major portion of UAL''s flying for this simple reason: Despite some widebody a/c and some international routes, U is basically a regional carrier. U was cobbled together from Allegheny, Piedmont, PSA, etc., and still flies to many of the cities that these airlines served pre-deregulation. Many of these markets are smaller communities that may have been profitable when they were subsidized by state and local governments, but are now unprofitable.

U also is at a disadvantage because it can''t seem to find it''s niche among the airlines. It isn''t a low cost operation like LUV, so it has a difficult time competing against them. An example of this would be the struggle at Baltimore where U once had a large presence. LUV has steadily been chipping away at U''s market share until they are now the dominate carrier at BWI hands down. U also has trouble competing against the global carriers such as UAL, AMR, and DAL. One only needs to look at U''s failed attempt to establish a hub at Dulles in the mid 90''s. Once UAL determined that U was getting too big for it''s britches there they squashed them.

Why do they have trouble competing? Compare U to LUV. If a pax wants to go from Manchester, NH to somewhere in Florida they can go nonstop on LUV for probably less than $200, or they can fly U and stop in PIT or CLT for a much higher fare. Now look at U vs. UAL. The services they provide are much the same, i.e. they both cater to business travellers. However, UAL serves a much larger number of business destinations (NRT, LHR, etc.). If the price is comparable, this reason alone can be enough to win over a business traveller (not to mention the fact that they can redeem their mileage plus awards for a trip to Hawaii).

I won''t sit here and blow sunshine up your skirt about how UAL is going to come out of CH11 and dominate air travel. My opinion is that we will, however there is no way to prove it. I can point out several facts though:

1. UAL has gotten significant pay and productivity changes from it''s employees. The paycuts are what you hear about in the papers, but there have also been changes to retirement benefits, insurance, etc. This adds up to a whoppin pile of cash that the company is saving.

2. Employee motivation. I won''t use the word morale, but I will say that I have never seen UAL employees so motivated. Survival has something to do with it, so does proving people like Chip and Gordon Bethune wrong. I think the main reason, however, is pride. UAL employees have seen what they are capable of achieving despite the battering they have taken over the past couple of years. Look at the on-time performance, the intent to repurchase numbers, and even (yes Bob) the decrease in mishandled bags.

3. Reduced aircraft leases, reduced payments to United Express carriers, reduced payments to vendors, etc. Once again this adds up to a pile of money.

I realize I''m rambling, but the point is this: UAL has gotten costs down to the point where they can effectively compete with the low cost providers. Will they be able to match them fare for fare? No, but UAL will always provide features for business travellers that they low cost guys cannot. If we can compete with low cost outfits then it goes without saying that we can compete with AMR, DAL, and NWA/CAL.

Having said this, why would we turn over a large portion of our flying to U? If most of our routes have become profitable again why hand them over to U RJs when our 320/737 fleets can fly them and make money. Why hand over an entire hub, as Chip is so fond of predicting?
Why in God''s name would we ever hand over our coveted NRT and LHR routes? Those are cash cows (SARS not withstanding).

Believe me when I say that I do try to visualize what this industry will look like when the dust settles. Maybe somebody will fold, and maybe somebody will merge. Who knows? I can tell you that in February I thought things were looking pretty grim for UAL. Fuel prices were going through the roof, SARS was breaking out in Asia, a war was looming in Iraq, and we had yet to secure any labor agreements. A majority of these problems are behind us now, but we still have much to do.

I hope I have left the emotion out of my response. I just cannot envision UAL handing anything substantial over to U. Chip is fond of pointing our our weaknesses and the fact that we are still in CH11, but my opinion is that it was suicidal for U to emerge from BK protection so early. They are still weak and losing tons of money. One hiccup with the economy or terrorism, and they are either filing again or out of business altogether.

Cheers,

ExThunderGuppy

P.S. Come fly with us sometime. You might be pleasantly surprised.
 
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On 6/2/2003 7:48:56 AM Bear96 wrote:

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On 6/1/2003 11:01:00 PM bigbusdrvr wrote:

Let''s see what you boys have to say about chips UCT''s and UAL in about 90 days!! The way I do the math thats about all the cash UAL has!!

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Well either your math, or your info, or both, are wrong. We will still be here by September 1. The serious problems will be encountered after that.

For the record, personally I am rather pessimistic about UA surviving the current situation. On that point I actually agee with Chip. This fall and winter will be ugly.

However, my problems with his postings have to do with his delusions of grandeur for U. He seems to forget his airline is in a very tenuous situation right now as well, and no longer has the benefit of hiding behind the protections of Ch.11. U is still losing buckets of money in a very unfriendly environment for airlines, despite having "successfully" restructured and repeatedly robbing its employees at gunpoint.

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Can you cite me a recent figure for this? April/May operation statement?

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On 6/2/2003 7:48:56 AM Bear96 wrote:


In addition, I have problems with the way he presents his information as fact based on sources that can''t be verified (he''d tell us but he''d have to kill us, I supposed). C''mon, why would a senior officer at U or an investment bank be feeding him exclusively such sensitive information? He is an airplane driver ferchrisake! Plus his motives are very transparent. He pretends he is just "telling it like it is" yet presents a very slanted and one-sided view of what is going on and what is in the media. Stories or parts of stories that don''t support his motives are not acknowledged at all; those that do are prominently held up as examples of irrefutable fact for all to see.
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I do disagree with his presentation of some information. However, I will have to say that this "airplane driver ferchrisake" has connections or sources that are beyond what you are crediting him with. He made a post recently on an ALPA situation - based on confidential corporate information. Every laugh, screamed, and moaned when he cited his confidential source. Suffice it to say, I''ve seen the same information and could confirm that the info that he had was reliable. So there.
 
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On 6/1/2003 11:01:00 PM bigbusdrvr wrote:

Let''s see what you boys have to say about chips UCT''s and UAL in about 90 days!! The way I do the math thats about all the cash UAL has!!

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Well either your math, or your info, or both, are wrong. We will still be here by September 1. The serious problems will be encountered after that.

For the record, personally I am rather pessimistic about UA surviving the current situation. On that point I actually agee with Chip. This fall and winter will be ugly.

However, my problems with his postings have to do with his delusions of grandeur for U. He seems to forget his airline is in a very tenuous situation right now as well, and no longer has the benefit of hiding behind the protections of Ch.11. U is still losing buckets of money in a very unfriendly environment for airlines, despite having "successfully" restructured and repeatedly robbing its employees at gunpoint.

In addition, I have problems with the way he presents his information as fact based on sources that can''t be verified (he''d tell us but he''d have to kill us, I supposed). C''mon, why would a senior officer at U or an investment bank be feeding him exclusively such sensitive information? He is an airplane driver ferchrisake! Plus his motives are very transparent. He pretends he is just "telling it like it is" yet presents a very slanted and one-sided view of what is going on and what is in the media. Stories or parts of stories that don''t support his motives are not acknowledged at all; those that do are prominently held up as examples of irrefutable fact for all to see.

Will U one day end up ruling the world and UA will end up biting the dust? Sure, anything is possible in this industry. But the reasoning and "proof" Chip is using to concoct his theories are illogical and based on faulty assumptions, so if he scores a home run it would be more like a blind man hitting a baseball-- everyone gets lucky once in a while. His conclusions are based on bad science.

He isn''t fooling anyone. At least not anyone at UA.
 
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On 6/2/2003 10:10:55 AM Bear96 wrote:


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On 6/2/2003 7:54:31 AM ITRADE wrote:


Can you cite me a recent figure for this? April/May operation statement?

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Last figure I heard was the First Quarter numbers which were pretty dismal. You are free to do your own research if you don't believe me-- I have neither the time nor inclination. Are you suggesting I am wrong and U is currently hugely profitable and is caught up on all its debt obligations?



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Well, since you're speculating and don't seem to have any information to demonstrate that you're aware of what you're writing:

US Operating Loss Q1 2003 - $207 MM
US Operating Loss Q1 2002 - $370 MM

That Q1 2003 operating loss took place during a period where much of the east coast was shut down for an entire week and with fuel at or above $1.00 a gallon. So, things are better. I'd post the net numbers, but the net invovles a "Fresh Start" gain that would have put US's Q1 2003 net profit at $1.635 billion.

United, on the other hand, has its numbers going the opposite way. If US's figures were, as you would say it, "dismal," UA's numbers were abysmal - with an emphasis on the abyss:

UA Operating Loss Q1 2003 - $813 MM
UA Operating Loss Q1 2002 - $711 MM
 
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On 6/2/2003 7:54:31 AM ITRADE wrote:


Can you cite me a recent figure for this? April/May operation statement?

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Last figure I heard was the First Quarter numbers which were pretty dismal. You are free to do your own research if you don''t believe me-- I have neither the time nor inclination. Are you suggesting I am wrong and U is currently hugely profitable and is caught up on all its debt obligations?

Sure Chip has some "connections" of some sort. (Though on another thread on the U boards he is claiming to speak for Dave Seigel himself! Surely you don''t think he has regular meetings with Dave so Dave can share confidential information with him???) But he doubtlessly treats the info from his "connections" like he does other information-- if it fits into his strategy, he will quote them. If it takes credibility away from what he is trying to say, he will conveniently ignore them. And since his "connections" are so "secret," no one can prove him wrong or point out what he is omitting.
 
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On 6/2/2003 10:52:29 AM ITRADE wrote:



UA Operating Loss Q1 2003 - $813 MM
UA Operating Loss Q1 2002 - $711 MM

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UAL''s Q1 numbers did NOT include the effect of the over 2 billion per year in wage reductions. If you look at the breakdown of expenses, UAL labor costs Q1 2002 and 2003 are nearly identicle. With the labor cost reductions AND reductions in leases and rents, the number would have been closer to a loss of 150 million.
 
Busdrvr,

You are using logic, and logic doesn''t appear to work with ITrade. He is a long-time lurker on the U board, and takes shots at UAL whenever he can.
 
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On 6/2/2003 10:52:29 AM ITRADE wrote:

Well, since you''re speculating and don''t seem to have any information to demonstrate that you''re aware of what you''re writing:

US Operating Loss Q1 2003 - $207 MM
US Operating Loss Q1 2002 - $370 MM

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Hmmm, I said U''s 1Q numbers were pretty dismal, and you posted numbers to prove... U''s 1Q numbers were pretty dismal. You sure showed me!

And as I have said repeatedly here, UAL is in deep doo-doo. Though other UA employees may seem to be in denial about UA''s situation, I am not one of them and remain pessimistic about UA''s outlook-- so much so that I am leaving in a couple of months. I have no problem with describing UA''s figures as "abysmal." So, your jabs about UA won''t get a rise from me.

However, I will point out that you do seem to have a bit of Chip-itis by posting lots of "yeah, but" reasons rationalizing why why U did so poorly in the First Quarter, but didn''t give any such comment about UA''s numbers. Was UA''s IAD hub and other East Coast operations not affected by the blizzard? Did UA not have to pay excessively high fuel prices either? Don''t U''s 1Q numbers reflect the savings from the labor costs cuts already in place; while UA''s full labor cost cuts didn''t take effect until May 1?

Anyway, great logic. UA is doing even worse than U, so therefore things are just rosy at U and no one had better dare suggest otherwise. What does that prove? The fact is, both airlines are financial basket cases. But, to get back to the original point of this thread was, Chip just chooses to focus on one aspect of that to the exclusion of the other.
 
Hmmmm. I appreciate the responses concerning the qualifications of Mr. C. Munn. Remember, I posed this query as one step in an attempt to determine the financial viability of United. Mr. Munn seemed to prognosticate with great regularity, singular knowledge. and unprecedented access to the sanctums of power, on the status of United. Since I fly "*" often, I wish to redeem the miles and enjoy a week for the family at Disneyworld. So it is with both concerns in mind that I desired to learn of United''s ongoing recovery or lack thereof. Mr. Munn seemed to present a rather strong opinions but as a complete outsider I must admit inherant skepticism concerning why the high and the mighty use a laborer as an informational outlet. Mind you I do not use that term in a pejoritive sense at all. I think many of you understand that financial institutions, CEOs, and market makers all have motivations. Why they would let information to someone within the ranks they are trying to harness is problematic.

That having been said, I am no more confident that my miles will still be valid a year hence. One side is convinced that the rents, aircraft leases, and wages are insufficient at best and liquidation will occur on 1 October. On the other side there are those who make note of the great progress that has been made in these area and that further lease concessions are on the way.

So, an opinion only. I hope that UAL survives. I have too many miles to use just for this summers vacation.
 
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On 6/2/2003 11:24:36 AM Busdrvr wrote:

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On 6/2/2003 10:52:29 AM ITRADE wrote:



UA Operating Loss Q1 2003 - $813 MM
UA Operating Loss Q1 2002 - $711 MM

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UAL''s Q1 numbers did NOT include the effect of the over 2 billion per year in wage reductions. If you look at the breakdown of expenses, UAL labor costs Q1 2002 and 2003 are nearly identicle. With the labor cost reductions AND reductions in leases and rents, the number would have been closer to a loss of 150 million.

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The bottom line is that your airline continues to hemmorage over $10 million/day despite all of the BS that has flowed from McKinsey and UAWHQ since December. Maybe people wouldn''t speculate over whether UAL will survive if the company gave us good reason not to...
 
Busdrvr,

Don''t bother with this guy. I''m now convinced that he is Chip''s little brother. He is one of the vocal minority who will be satisfied with nothing less than the demise of UAL.

We''ll prove them wrong in the long run.

767jetz
 
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On 6/2/2003 8:11:17 PM avek00 wrote:


The bottom line is that your airline continues to hemmorage over $10 million/day despite all of the BS that has flowed from McKinsey and UAWHQ since December. Maybe people wouldn''t speculate over whether UAL will survive if the company gave us good reason not to...

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After all you anti-labor rantings in the past icouldn''t believe you could possibly be a democrat, but after your complete refusal (or inability) to read numbers, and your propensity to take the numbers you do cite out of context, I now see you are as liberal as the come. When is it we were hemoraging 10 mill a day? If I have a 100 million airplane (that''s paid for) and tomorrow I decide It''s worth 90 mill, did I just "hemorage" 10 million? If I "planned" to spend 2 billion on labor (all the while knowing that all that had to fall into place to reduce that to 1.5 million was the CC and judges approval) and actually spent considerably less over the course of a quarter, would that be "hemoraging"? If I put 500 mill in "lease" payments on my books despite not making any, would that be hemoraging? Next semester, might I suggest less Poly Sci and more accounting and econ.
 
The question is, should the government give UAL a loan guarantee?

IMHO, the government should stay out of private enterprises, certainly it can be argued, that if U was allowed to fail, UAL could have seen recovery. As well as a few other carriers, I might add.

Unfortunately, U was given a loan guarantee, without which, no one would have loaned them money. As it stands now, it is almost a sure bet for the RSA, have no doubt they will get a return of their money, regardless of what happens to U.

If UAL is now offered a loan guarantee, then, in my humble opinion, it is only a matter of time before the next domino falls, AMR perhaps. Then what? Another loan guarantee?

This is in no way directed at UAL or the great employees there. It is merely a speculation. Since the Government did accept and guarantee U''s loan, UAL certainly deserves the same consideration. But how will that shape the competetive and financial health of the industry in the future to come?
 
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On 6/3/2003 9:36:58 AM PineyBob wrote:


"the proliferation or arcane, unproductive work rules, bloated worforce and unsustainable salaries."

Couldn''t let that go by. Unproductive work rules? In actuality, the ALPA contract (the old one) went a long way in making us MORE productive. It limited sits at airports, time between flights, and put in real incentives to work us like dogs when we are at work. The COMPANY threw those out. It''s all about the way we are paid. We are ONLY paid when the door is closed and the brake is of. It would be like having a cashier who only got paid when someone was in line. If you get to pay her that way, then you can see it works for you to have her sit around half the day, you''ll just maker her work longer hours. Compare our number of days at work per month to that at SWA. you''ll see we now work at least two more days on average for the same amount of flight time. The lack of productivity is the COMPANIES dream. as for unsustainable pay rates, ours are now below SWAs (except for the F/As).

"with a down economy (which you could argue prudent business people should prepare for) and a terroist attack that no one could have forseen and you have a recipe for complete failure."

If you look at the cash numbers immediately following 911, you''d see that most of the airlines (except for CAL) had some pretty healthy cash balances. why? they had planned for the downturn which looked to be ending soon. You are right, nobody planned for 911, it''s just a shame some folks expect only certain people and families to have to pay the price for it.

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