Smaller United

[Bear96]

No offense, but that's any easy thing to say when you are at a high paying company and want to maintain the status quo. If you are at the bottom, you are going to scratch and claw to get what you can, the status quo is only hurting you.

Absolutely. But, I would maintain (as I have mentioned on another thread-- or maybe it was even earlier in this thread-- don't remember and I'm too lazy to look it up) that it is easier when you are not yet employed at a company-- or in an industry-- to give it the "No thanks" and look elsewhere, than it is to actually leave a company where you have the time (seniority) / energy / personal connections / etc. already invested in a company or an industry that WAS providing a decent living when you entered. Why anyone would want to start now in the airline indistry is truly something I cannot comprehend.

However I agree with you overall-- it is easier, and definitely somewhat arrogant, for those who already "have" to preach to the "have-nots," "Don't take the job you've always wanted or you'll ruin it for us!"

As for moving from Company A to Company B, you are trapped at Company A due to seniority rules. 80% of something and at the top of the seniority lists (with its benefits. Besides, if you go to B, you are starting over at the bottom, making even less money and more subject to a furlough.

Pardon me-- I should have been more clear-- I really was trying to direct that at mweiss in what I presume will be his professional / non-unionized field, and I meant in a NON-UNION / non-seniority type environment where you don't suffer a seniority (and resultant wage scale) penalty for changing companies.

I don't deny the beauty of the ideal world, but we don't live there, so I don't spent a lot of time thinking about it.

Well, we COULD live there in this case, if enough people would say enough is enough, as some of us already are doing.

Besides, isn't it wise to have a good picture of what the ideal world looks like, to encourage us to focus on our goals and map out a way to get from here to there, or at least as close as possible? (Rhetorical question-- no need to answer.)

 

[Busdrvr]

"F-9's Jet Express (RJ700) couldn't compete with UA on the ONT route with Ted's $58/RT fares. Likewise, F-9 couldn't compete with NWA on MSP-LAX with NW's $89/RT fares. I think pulling out of those markets was the prudent thing to do."

but that's NOT what you said. you said

"This statement is either clearly out of context or you have a skewed view on reality. F-9 has had an increase in RASMs and LF on Ted routes."

Which is it?

"As you know Frontier is a very conservative company with a strong Balance Sheet. You characterize them as being in "Big Trouble", but I don't see it that way relative to the rest of the industry."

You might need to expound on that one. What percentage of it's equip is owned vs leased (ie CASH FLOW...)? Like I asked before, who do YOU think will have the best performance percentage wise in the APR-JUN Q? UAL or FRNT? Does an extremely high growth rate with firm orders rolling in while at the same time having to abandone routes you previously thought would be profitable (and by implication, routes you though would be MORE profitable than the next routes you attempt) what you would consider a "very conservative" company? FRNT has dropped more cities this year than SWA has in it's entire existance.

Besides, wouldn't F-9's demise mean another furlough for you?

Not that I know of... Obviously you have me confused with someone willing to work for those wages... FWIW, I'm in the unfortuanately small minority who thinks wages are already too low and would rather walk away (No, I don't work for, nor have I ever so much as applied to FRNT. Nothing against the fine employees at FRNT, the pay and career prospects there were never sufficient to entice me to seek employment)

 

[JungleClone]

C54,

Don't forget that Frontier also couldn't compete against AA and WN on STL-LAX. They've announced that route's demise also. Frontier is in a corner. Their rapid expansion is coming back to roost now as they deal with TED. The fact remains that TED has stolen 9 points of share from F9 since February. If UA can FINALLY lower costs to a competitive level, Frontier's in real trouble. The only saving grace for Frontier is if United is bleeding money on TED markets from DEN where they're forced to match the low fares. I'm absolutely salivating at the prospect of us finally geting our costs down to a level where we no longer give the LCC's free reign in the marketplace.

 

[WorldTraveler]

JungleClone,
Nice job of trying to convey the reality of the situation in the airline industry.

The root problem for the legacy airlines is that, while fares and market entrance/exit were deregulated in the US in 1978, most costs, including labor costs were not. Airline labor is still covered by the Railway Labor Act which was never designed to operate in a heavily competitive industry. Logic tells you that at some point costs and revenues would diverge enough (losses would become high enough) that airlines would be forced to deal with the cost issues. Labor costs happen to be the biggest differentiating cost item between legacies and LCCs. Pension costs stand out as being particularly troublesome considering that similar jobs in other industries don’t have benefits of that nature. Productivity is a big piece of why LCCs make it and legacies are not; relief will only come to the legacies when they can improve their productivity – perhaps not to the level of the LCCs but at least in a positive direction.

The current problem for the legacy carriers as a group is that there are simply too many hubs in the US. IN reality, the US could be efficiently served by less than 10 strong hubs instead of the dozens that are operated today. As LCCs pick off more and more point to point routes, true hubs will be needed only to carry traffic from the dozens of cities that will only support flights to a large hub to connect that city to the world. LCCs will never serve those kinds of cities but the legacies cannot make money solely on the basis of connecting traffic because it is very expensive to handle and there are few customers who are willing to pay vastly inflated fares to fly from their hometown airport when discount fares are available within a 2-3 hour car ride of most cities in the US. Clearly, several hubs have to go – either through the death of some airlines or as carriers abandon less-profitable hubs and move their assets to point to point flying. While the failure of any legacy carriers will not turn any other carrier around, the legacies are all competing for the same shrinking pool of customers while the LCCs are stealing share from the legacies as well as growing new customer segments. No one can reasonably expect that all six of the current US legacy carriers will survive; given that none of the six are strong enough to acquire each other, hub and spoke capacity reductions are most likely to come through carrier failures.

Despite all the knocking of US management, they do understand the situation their airline is in and are probably doing the right thing from a network strategy perspective. Unfortunately, they have so alienated labor that their chances of survival are very slim. United, on the other hand, is an ideal candidate to transition to being a point to point carrier instead of being a nationwide hub and spoke carrier. Many of United’s costs are related to being a hub and spoke carrier with a very complex set of products even though United’s hubs are in some of the biggest cities in the world and United carries some of the highest percentage of local traffic of any of the legacy carriers. Yet, their operation is designed for connecting traffic which increases the costs even for those passengers who are carried on a point to point basis. United cannot continue to be all things to all people and the domestic connecting market is probably the market it should most consider abandoning.

With all of the legacy carries in a very fragile state, survival will come to those who are best able to adapt to the new revenue and cost environment. Despite many UA employees assertions otherwise, bankruptcy is a huge impediment to UAL. Bankruptcy does provide the opportunity to shed costs easier than can be done outside of bankruptcy but every day spent in bankruptcy increases the risk that UAL will never emerge. While United’s business plan at present is probably no better or worse than any other legacy carrier’s, investors have to be convinced there is some value in investing in a company in a very sick industry. In order to attract financing and emerge from bankruptcy, United has to have a business plan that is BETTER THAN every other legacy airline and has the reasonable expectation of being consistently profitable. Never in the history of aviation have profits been so elusive for so long, making it all the more necessary for United to turn their ship around quickly or face the same extinction that has claimed Braniff, Eastern, TWA, and Pan Am among others.

 

[WorldTraveler]

Interesting article about pensions.

http://www.businessweek.com/magazine/conte...92001_mz001.htm

 

[mrfish3726]

C54,

Frontier is in a corner. Their rapid expansion is coming back to roost now as they deal with TED. The fact remains that TED has stolen 9 points of share from F9 since February. Frontier's in real trouble.

Jungleclone,

F9 is doing just fine, we aren't loosing anything to TED. Right now if you asked a finacial anylist who he'd put his money on, he'd probably put it on Frontiers stock at 8.35 a share compared to UAL's mizzley 1.30.

 

[mrfish3726]

JetBlue, and even the can-never-do-no-wrong Southwest, have no defined benefit pensions for the rank-and-file. That is the wave of the future to be able to compete in this industry where apparently employees at the LCCs are willing to work for nothing.

Firstammendment,

WOW, AMAZING that you don't think SW employees have any kind of pension. Don't forget that SW has a 1 to 1 match on folks 401k's there. And remember that new contract that AMFA negotiated for their mechanics group at 40+ an hour and company shares to boot.

Believe me, folks at SW are happy to go to work everyday!

 

[mweiss]

WOW, AMAZING that you don't think SW employees have any kind of pension.

fish,

WOW, AMAZING that you don't read before you write.

firstamendment said

Southwest [has] no defined benefit pension for the rank-and-file

He didn't say "any kind of pension," he said "defined benefit pension." There is a difference between the two statements. Perhaps you should look into what it is.

 

[mrfish3726]

mweiss,

Now don't try to tell me that a 401K is not a defined benefit??? At least it's something that you have total control over, un-like the pension that you are about to loose at UAL. It's sad if it happens, but management doesn't care! Their covered!!!

 

[mweiss]

Now don't try to tell me that a 401K is not a defined benefit???

I will tell you precisely that. You need to learn a few things about the definitions.

A "Defined Benefit Plan" has the benefit defined, meaning that you know in advance precisely how much you will take out of the system (per week, month, or year). You (in theory) know even twenty years in advance how much you will receive. If you happen to live to be 120 years old, you get much more out of the system than was put into it on your behalf. If you die the minute you walk out the door, your estate loses whatever was in the system on your behalf (there are dependent exceptions, of course, but I'm oversimplifying here). This is commonly referred to as a "pension."

A "Defined Contribution Plan" is defined by the amount you contribute to the plan. You do not know until retirement how much will be available at retirement, and you only get to take out whatever is in your account. If you live longer than you expected, your account goes to zero and you don't get any more out of it. If you die the minute you walk out the door, your estate gets the proceeds of the account. 401ks and IRAs are two of the many plans that fall into this category.

Thus, when someone says "defined benefit," they are using a synonym for "pension." When they say "defined contribution," they are using a synonym for "401k" (usually).

As you noted, one of the advantages of a defined contribution plan is its insulation from the health of the employer. It should be noted, however, that this is not universally true; witness the employees of Enron, who had defined contribution plans that became worthless when the company folded.

 

[JungleClone]

Mr. Fish,

Not losing anything to TED. You obviously don't have access to market share reports. The only way Frontier succeeds at UA's expense is if we once again blow a golden opportunity to re-shape our costs to be profitably competitive against LCC's like your employer. If that happens, Frontier will feel a huge squeeze because given equal costs, they can't compete with United's network. And United would be in a huge position to put a serious hurt on them in the marketplace. So you better hope and pray that things remain the same. But it ain't likely. United has no choice but to lower costs. The only question is: how much lower will we get them? We need to do what is necessary to get them down considerably, to a level that makes us competitive with all the LCC's. We can't keep wasting our time benchmarking against the other failing, struggling majors.

And you can have that hangar in DEN. Maybe the City will be nice enough to subsidize your existence there so that they don't tax your tool and part inventory to help pay for it.

 

[mrfish3726]

Jungleclone,

After United is sliced and diced to intruiqe outside investment, then and only then will they be able to compete with the LCC'S. You can't tell me that flying TED with the same mainline help makes it profitable. You can't put a pretty paint job on a plane, pay the crew, all the ground help the same wages as the main line and say that you make money. If you do it will only be by the utilization of the aircraft with more seats (no legroom), and flying longer hours. But like I said before, folks don't really give a crap what they fly on as long as it's cheap. I don't wish the employees of UAL anymore suffering than they have already. It's a long agonizing road for you all still. But so be it, F9, SW, Air Tran, nor Jet Blue drove UAL to bankruptcy. Frontier (DENVERS HOME TOWN AIRLINE) will still be around long after the dust is finally settled at UAL HELL.

 

[boxer]

mrfish
Those who wish United no ill will ad nauseum wishes United ill will.
Also, consider a spell checker.wishes

 

[Borescope]

I thought this was an airline board. There seem to be a lot of english teachers on these forums.
Goes to show you how many other professions read here.