Smaller United

[GuppyPup]

Thanks for posting that, Fly. Much of it is exactly what I've been trying to get across to some skeptics who keep chanting the mantra, "United must shrink!"

😱 I'm actually shocked to hear Boyd say something positive about UA for a change.

Smaller domestic UAL, bigger TED and UAX.

 

[iflyjetz]

Smaller domestic UAL, bigger TED and UAX.

I agree with bigger TED. However, as people travel more, I wouldn't be surprised to see UAX flights replaced with 319s. And I would expect those routes to be mainline UAL, not TED.

 

[JungleClone]

Ok folks, it's time to stop living in denial and look at the harsh reality of United's situation. No lender or equity investor is going to throw $2 billion dollars into this airline without dramatic changes. There is no getting around it. Anyone who thinks that United Senior Mgmt will find lenders willing to invest in us without further, painful cuts is only fooling themself. The fact of the matter is that the cuts instituted after we first filed for Ch. 11 have not been deep enough. Our costs simply must come down considerably. My feeling is that to truly compete profitably against the dominant LCC's, our CASM needs to fall to around the 8.5 cents range, give or take. That's going to mean big changes. Remember that our goal is to be profitable during the down periods, not just during the boom cycles. To do that means considerable cuts. We also need to become more efficient. And unfortunately, lowering our costs to that level is going to entail more pay/benefit cuts, as well as layoffs. Trust me, the folks in CJ are analyzing it as we speak. Once the summer ends, there will be no choice. I don't like it any more than you all do, but it's time we all stop pretending that United will be fine with our costs where they are. Fuel prices aren't coming down to sustainable levels. With the geo-political situation in the Middle East showing no signs of stabilization, and with lots of credible talk about oil production having reached its' peak, the fuel problem is only going to get worse as time goes by, not better. Let's make the hard, necessary choices now that will position this airline as a dominant force to be reckoned with. If we do what's truly needed now, it is going to push AA, DL, NW and CO to the brink because they will have to respond in kind. And that will take a lot of time. Look at DL. They've been negotiating with their pilots for well over a year for cost cuts and nothing has been agreed to. Meanwhile, the company continues to bleed red ink. We have a golden opportunity to finally re-shape ourselves and once again rise to the top. Here's hoping our Senior Mgmt and BOD finally sieze it.

 

[Bear96]

Let's make the hard, necessary choices now that will position this airline as a dominant force to be reckoned with. If we do what's truly needed now, it is going to push AA, DL, NW and CO to the brink because they will have to respond in kind.

And then those carriers will cut costs to below ours, and then we will have to again cut to undercut them and remain competitive, and then they will need to cut further to counter that, and the spiral continues...

I agree with a lot of what you say, that more pain is coming. I think the question I and many others have is just how low do we want to go in terms of our wages and compensation to keep airfares cheap for the masses?

And what kind of talent will be attracted to airline jobs when the compensation gets that low?

I guess I am not as "Rah Rah" as you to take another hit to my pay or quality of work life. To what end? If it gets any more miserable, what's the point? Is it really worth it for the "glamor" of saying "I work for the airlines" and a chance to spend my vacation getting bumped off of flights as I try to use my passes?

 

[46Driver]

You are correct about the fuel prices not coming down which is bad for all of us. The culprit is worldwide consumption - not OPEC holding everybody hostage. China and India in particular are industrializing and driving the price higher. As for refining, the US is close to max capacity, in large part due to environmental regulations. Many of the refineries were forced to either meet new regs or close, quite a few were forced to due the latter as it was not cost effective to clean them up.

 

[Borescope]

Tthe US is close to max capacity, in large part due to environmental regulations. Many of the refineries were forced to either meet new regs or close, quite a few were forced to due the latter as it was not cost effective to clean them up.

And if and when we have a change of guard in the White House. It's only going to get worse, regulatory wise. :down:

 

[jimntx]

Many of the refineries were forced to either meet new regs or close, quite a few were forced to due the latter as it was not cost effective to clean them up.

Well, that's the official oil company story. Truth is, profits from refining would pay for almost any required cleanup. Only question would be how quickly the expense would be repaid.

Several of the refineries were closed because the oil companies thought that reduced capacity, and higher gas prices, would make the American public scream to let them re-open the refineries without any cleanup at all. It's called blackmail. "If you make me clean up this mess I caused, I'll just close the refinery and raise your prices."

 

[SVQLBA]

QUOTE (46Driver @ Jul 7 2004, 04:28 PM)
Tthe US is close to max capacity, in large part due to environmental regulations. Many of the refineries were forced to either meet new regs or close, quite a few were forced to due the latter as it was not cost effective to clean them up.


And if and when we have a change of guard in the White House. It's only going to get worse, regulatory wise.

I thought I read that the problem is several states have different refining standards for environmental reason, making it more difficult to match refining capacity with demand across the US. A refinery in say, Texas, can't necessarily produce the gasoline speced in say CA. With decent federal environmental regulations, there would arguably be less need for states to go-it-alone regarding environmental controls, alleviating this type of issue.

 

[767jetz]

No lender or equity investor is going to throw $2 billion dollars into this airline without dramatic changes. There is no getting around it. Anyone who thinks that United Senior Mgmt will find lenders willing to invest in us without further, painful cuts is only fooling themself.

Sounds like you are a UA employee. Have you been to any union meetings? Have you spoken to anyone who sits on the board of directors? Have you spoken to any managers, upper or even middle?

I know you haven't, because if you did you would know that this statement is not completely accurate.

The money is there, and it will come from a combination of sources, and not all of those sources will demand the changes you refer to.

The media has been in a frenzy writing mostly speculative articles without any facts. These rumor mills tend to create a largely inaccurate picture. I suggest to you, as our union has to us, that your best source of timely and accurate information is your elected union officers. Attend meetings, or talk to those that have. I came away from the meeting yesterday relatively optimistic. Don't sell the farm just yet.

767jetz

 

[Bear96]

Jetz, surely you don't really believe we are not in for further concessions???!!!

 

[AirplaneFan]

UAL had a load factor of above 86% in June. They have been given relief by the federal government to pay back pension obligations at a slower pace than they what is currently required by law. The economy is moving at a brisk pace (according to the Bush administration). If UAL still can't turn a profit given those conditions than ABSOLUTELY more concessions will be required. Of course, not before the whining and complaining from UAL employees about gross management incompetence and they claim that they were lied to.

 

[boeing787]

Smaller United...not likely....smaller paycheck...likely but not much smaller.

 

[BigRed1]

As the FED raises interest rates several more times this year to say, a 2% rate, the pensions funds will become less and less underfunded as returns on the invested money in those plans will return greater profits and close the pension shortfall gap. Remember when our credit union paid our savings account a 5.5% interest rate a few years ago? Then it went all the way to 2%. A few percent here or there doesn't sound like much, but when you are dealing with billions of invested pension dollars, it really adds up.

We used to be "underfunded" by 6 billion. Now they are saying 4 billion as the market has rebounded. This time next year it may "only" be 2.5 billion. These pensions were subjected to historical and unsustainable lows in interest rates. Time is actually on our side on this issue. I think as the money markets return to the more normal status quo, the funds will be more managable. This is why the government is establishing a new corporate bond rate to measure pension rates intstead of the now defunct 30-year T-bill. It was an unrealistic benchmark and the damage it was posing to the various funds was obvious.

Now I am not saying just wait, do nothing, and everything will be OK. I am saying that things will continue to return to the norms for both pensions, and hopefully fuel prices as well. We might not see 25 dollar-a-barrel oil, but I think 30 to 34 dollars is a definate possibility. When that happens, the additional 700 million per year in fuel expense will also return a lot closer to the norm and new hedging programs can be established.

Yes, we need to cut additional costs out of our operating budget. That will happen in various ways. Some more from us, but lets not get hysterical and think whole programs will get the ax.

The sky is not falling. It is just real stormy right now. Things will clear up and the sun is gonna come out again. And no doubt, that united Airlines Tulip will stand up tall and we will all be proud to call United our company again.

(I know, that last paragraph was a bit corny, but it really will be alright. I am a furloughed pilot and I still believe it will be. But...I've always been a glass half full kinda guy. I hope some of my optimism starts to rub off on my fellow employees.)

Thanks for reading.

 

[ual06]

Nice post BigRed1.

You are right on.

 

[767jetz]

Smaller United...not likely....smaller paycheck...likely but not much smaller.

I agree 100%.