How will UA be sold off? What will the other airlines get?

[luv2fly]

[blockquote]
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On 12/5/2002 1031 AM 767jetz wrote:

[blockquote]
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On 12/5/2002 8:59:09 AM AA191 wrote:

As UA will most likely sell off assets, what airline will get what? Asia routes? Australia routes? European routes? Will America West take the Airbus fleet?
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[/blockquote]


Selling assets????!!!!!! CH11 is quite different than CH7. UA is not headed for liquidation. Only reorganization. [/blockquote]

"Only reorganization"? That is a good thing then, right? Right?

 

[luv2fly]

[blockquote]
----------------
On 12/5/2002 1031 AM 767jetz wrote:

[blockquote]
----------------
On 12/5/2002 8:59:09 AM AA191 wrote:

As UA will most likely sell off assets, what airline will get what? Asia routes? Australia routes? European routes? Will America West take the Airbus fleet?
----------------
[/blockquote]


Selling assets????!!!!!! CH11 is quite different than CH7. UA is not headed for liquidation. Only reorganization. [/blockquote]

"Only reorganization"? That is a good thing then, right? Right?

 

[funguy2]

767Jets:

I agree with you that selling off assets like Pan Am, TWA, or Eastern, is not an option. Those types of assets (hubs - i.e. MCI and PHL for EA, route authorities - i.e. PA, the EA Shuttle) are what they business needs to move forward. Selling those types of assets leaves only leaves the garbage that helped cause the bankrupcy in the first place. The industry has learned this is a mistake based on the bankrupcies of the 80's and 90's. You will notice that US Air has not sold off The Shuttle or a hub as many predicted prior to its recent bankrupcy. I can only envision an asset sale for United or US Airways at the point of a Chapter 7 liquidation (and neither airline is close to that yet).

In the short term, competitors will benefit from a UA reorganization. Passengers will book away. It is naive to think otherwise. In UA's primary hubs ORD and DEN and on many of their prized international routes, there are competing carriers with nonstop service. The business guys will start to earn miles with other carriers, because they cannot be assured that UA will be here in 2 years for their trip to Hawaii or whereever. If I can buy ORD-LGA for the same price on AA and UA, and I am a member of both FF programs, why would I pick UA over AA? Especially since AA right now looks more likely to be here in 2 years, when I might use my FF miles?

Even if there is no "booking away" from UA. The whole market, or the "pie" has become smaller. Especially the business market, which you claim will understand Ch. 11 means the airline will operate. Of course, these business people, fewer in number, remember when they were told that EA, PA, TW, both Midway's would not shut down in Ch 11 either. All did. OK, there are some carriers who have successfully reorganized... But the media doesn't cover the fact that CO is still around the way they cover the fact that EA stranded its passengers... or even the recent demise of N7.

While I agree that the reorg plan doesn't change much, I think it becomes quicker and harsher in court, since the need is more urgent. If the only thing needed to cure UA's ills was an additional 2%-3% of employee wages, I would have to think that could be accomplished outside of bankrupcy court. For someone who makes 100K a year, 2% is 2K/year or $166/month. I am sure any UA employee would do that to ensure their job exists next year. The reality is that another small concession does not change anything in the big picture.

While I do not think you will see an asset sale, I do think you will see some aircraft go to the desert. Does UA really need 4 types of medium haul aircraft (A320/319, B737-300/-500) and 4 types of widebodies (767-200/300, 777, 747)? Especially considering that there is not as much demand for travel as there has been in the past? And probably some work-rule changes for employees to make each employee more productive. I don't think you will see many route reductions, but you will see capacity "right-sized" on all routes. Probably including frequency reduction and aircraft size changes.

Sure, UAL and US are different companies... But both face similar problems. High costs, lots of different aircraft fleets. But I think UAL has a much more valuable franchise than US... Better hubs (in terms of both geography and O/D traffic), world-wide network, the alliance. I do think UAL has a better chance at a substantial and successful reorg in Chapter 11 than with the ATSB, since the court has more power to terminate leases, etc, etc than the company has outside of court. Should UAL successfully reorganize, it will cause major problems for AMR, DAL, NWAC and CAL. With UA's route network and more competitive costs, UAL can become a force to be reckoned with. I am sure that is what as CO's Bethune so riled up.

 

[funguy2]

767Jets:

I agree with you that selling off assets like Pan Am, TWA, or Eastern, is not an option. Those types of assets (hubs - i.e. MCI and PHL for EA, route authorities - i.e. PA, the EA Shuttle) are what they business needs to move forward. Selling those types of assets leaves only leaves the garbage that helped cause the bankrupcy in the first place. The industry has learned this is a mistake based on the bankrupcies of the 80's and 90's. You will notice that US Air has not sold off The Shuttle or a hub as many predicted prior to its recent bankrupcy. I can only envision an asset sale for United or US Airways at the point of a Chapter 7 liquidation (and neither airline is close to that yet).

In the short term, competitors will benefit from a UA reorganization. Passengers will book away. It is naive to think otherwise. In UA's primary hubs ORD and DEN and on many of their prized international routes, there are competing carriers with nonstop service. The business guys will start to earn miles with other carriers, because they cannot be assured that UA will be here in 2 years for their trip to Hawaii or whereever. If I can buy ORD-LGA for the same price on AA and UA, and I am a member of both FF programs, why would I pick UA over AA? Especially since AA right now looks more likely to be here in 2 years, when I might use my FF miles?

Even if there is no "booking away" from UA. The whole market, or the "pie" has become smaller. Especially the business market, which you claim will understand Ch. 11 means the airline will operate. Of course, these business people, fewer in number, remember when they were told that EA, PA, TW, both Midway's would not shut down in Ch 11 either. All did. OK, there are some carriers who have successfully reorganized... But the media doesn't cover the fact that CO is still around the way they cover the fact that EA stranded its passengers... or even the recent demise of N7.

While I agree that the reorg plan doesn't change much, I think it becomes quicker and harsher in court, since the need is more urgent. If the only thing needed to cure UA's ills was an additional 2%-3% of employee wages, I would have to think that could be accomplished outside of bankrupcy court. For someone who makes 100K a year, 2% is 2K/year or $166/month. I am sure any UA employee would do that to ensure their job exists next year. The reality is that another small concession does not change anything in the big picture.

While I do not think you will see an asset sale, I do think you will see some aircraft go to the desert. Does UA really need 4 types of medium haul aircraft (A320/319, B737-300/-500) and 4 types of widebodies (767-200/300, 777, 747)? Especially considering that there is not as much demand for travel as there has been in the past? And probably some work-rule changes for employees to make each employee more productive. I don't think you will see many route reductions, but you will see capacity "right-sized" on all routes. Probably including frequency reduction and aircraft size changes.

Sure, UAL and US are different companies... But both face similar problems. High costs, lots of different aircraft fleets. But I think UAL has a much more valuable franchise than US... Better hubs (in terms of both geography and O/D traffic), world-wide network, the alliance. I do think UAL has a better chance at a substantial and successful reorg in Chapter 11 than with the ATSB, since the court has more power to terminate leases, etc, etc than the company has outside of court. Should UAL successfully reorganize, it will cause major problems for AMR, DAL, NWAC and CAL. With UA's route network and more competitive costs, UAL can become a force to be reckoned with. I am sure that is what as CO's Bethune so riled up.

 

[wts54]

First they have to get dip financing.

 

[wts54]

First they have to get dip financing.

 

[JFK777]

FUNGUY,

UA has 3 types of medium haul (A319/320, 737-300/500 & 757) and 3 lomg haul( 767-200/300, 777, and 747-400). You are mixing different versions od the same planes.

 

[JFK777]

FUNGUY,

UA has 3 types of medium haul (A319/320, 737-300/500 & 757) and 3 lomg haul( 767-200/300, 777, and 747-400). You are mixing different versions od the same planes.

 

[N421LV]

767jetz, where can I get a pair of rose-colored glasses like yours?

 

[N421LV]

767jetz, where can I get a pair of rose-colored glasses like yours?

 

[avek00]

IMHO, the minimum contribution from labor in any BK-related ERP will be AT LEAST the $9B (or, more precisely, $1.5B/year) originally requested by UAL mgmt.

 

[avek00]

IMHO, the minimum contribution from labor in any BK-related ERP will be AT LEAST the $9B (or, more precisely, $1.5B/year) originally requested by UAL mgmt.