Ted - An Analysis From The Boyd Group

[HPearlyretiree]

Yep, the UA folks seem to have attended the Brannif (I) school of economics; "Sure, we will lose money on every seat, but we are sure to make up for it in volume!"

Turd is a bad idea, ask anyone who took an economics class in 7th grade...

 

[Dave]

>>Which is better - to protect the market share at a loss, or to come in second place in market share at a profit?<<

What is best is if you can chase your competition from the market, then raise fares to a profitable level.

 

[firstamendment]

Fubijaakr Posted on Dec 5 2003, 10:40 AM

know its been said before:

"Ted is the end of United."

Wow....welcome to Kindergarten. Do all the employees at USAir act like this or just a few select on this board? What is it folks? One thread you spread the "merger" theory and the next you close our airline. One only needs to read this board to see what airline is in the biggest mess.....especially in the morale department! Despite all the attacks on United here, at least the employees don't spend day after day slamming US and "predicting" their demise. Grow up! Do you really want to see people lose their jobs?

As for Ronin: :blink: Whoa man.......is it even possible for you to GET what ZMan is talking about? yipes

Oh come on Fly, time for a little inventory. I have seen plenty of your venom over on the US Airways boards. I can't believe you would EVER question anyones maturity with the amount of crap you have written. You should no more question this fellas maturity than I should your anger issues, so please don't go there.

 

[Busdrvr]

Wow, an early retiree from AWA attacking the future profitablilty of another airline... Your us of "Turd" is nothing short of offensive. I guess if the UA employees and retirees were of an equal class level they'd be over on the AWA board spouting off "Americas's Worst" or "America's Waste" slams at your employer. when you sought employment at AWA, had you been through 7th grade econ yet? Yet you went to work there? .

KC,
here's my take on Ted, profitablility, market share. Ted simply takes out the 12 FC that usually aren't sold anyway, and replaces them with 30 econ plus seats. I think it is slightly diff in execution than shuttle or CAL lite. If you were a FF on UA and booked a "Shuttle" coach ticket, you DID NOT get econ plus. If you book Ted, you do. So with the exception of the ability to upgrade to FC, the travel experience for a FF is nearly identical, if not BETTER (when compared to video less 737's and former shuttle jets on those markets). as Mike Boyd likes to point out, UAL ALREADY matches FRNT on price in most of those markets, TED, with 18 more seats simply lowers the average cost for those seats and makes UAL more of a LOW COST airline to match LOW FARES.
Profitablilty and market share: I've got an old college buddy who has done very well for himself. I ran into him on a UA flight I was deadheading on. His company buys flight miles, not the traditional ticket, and does so in blocks of over 1 million miles. He fly's on UA ONLY. he's a little diff because he personally knows several UA pilots and therefore feels safer on UA due to the quality of those folks. But lets pretend he doesn't. lets say UA sitsa back, content to be number 2 and "profitable". FRNT adds flights to all the markets he needs to fly to. UAL in an attempt to "be profitable" cuts a city pair he needs, but is "unprofitable". He needs that city 5% of the time. He now takes ALL of his business to FRNT because they provide what he needs. Cutting that flight didn't just cost UA the 5%, it cost them 100% of his business. Make no mistake, initially TED is aimed directly at FRNT. Because of the benevolence of the high cost DIA, UA simply cannot compete head to head from MCI to LAS via DEN with SWA. TED's goal is to get a higher cut of DEN O&D traffic. The gap between FRNT and UAL on O&D is MUCH closer than the respective airlines total DIA RPM's

 

[GEO]

Its 'a lot' not 'alot'
thank-you for your support.

 

[FWAAA]

Borescope:

First, I am no tax expert, but it seems to me I recall that it used to be that if you owned a business that was unprofitable for three years (the number of years for losses may be off), that business had to become profitable the following year. The losses would be written off which would offset the profits made in other businesses the company owned. Since Arthur Anderson's famous tactic of offbalancing is now unfashionable, perhaps companies are going back to the old way of doing business. Have a loss leader to offset profits elsewhere, thus lessening your tax burden and/or even qualify you for a tax refund.

However, I do not believe that this is Ted's intent. United wants Ted to be successful and if all of you naysayers would give Ted a chance, just maybe with some slow growth and careful planning, over the long haul, Ted wil surprise you!!

You're thinking of the "hobby loss" rules, most often applied to horse owners (race horses, in particular). They were designed to keep the wealthy doctors and lawyers from writing off huge losses from their hobby (owning race horses) against their huge taxable incomes from medicine or law.

No such 3 out of 5 rules apply to publicly held businesses like UAL. Real businesses are allowed to lose money until they run out of money.

 

[HPearlyretiree]

Thank God Uni-ted didn't buy out HP a few years ago!

Lets see, #2 and profitable or bankrupt and liquidated? Hmmmm, might have to call up Milton Friedman for some help on this one...

 

[Busdrvr]

Thank God Uni-ted didn't buy out HP a few years ago!

Lets see, #2 and profitable or bankrupt and liquidated? Hmmmm, might have to call up Milton Friedman for some help on this one...

yeah the pay raise and retirement plan would have sucked huh... . But you illustrate the complete lack of understanding some folks fave toward finance. It's no wonder that the NASDAQ hit 5k a couple years ago. Simply put, the most successful hub and spokers during this downturn are the ones that had the HIGHEST hub dominance, ie the highest share of traffic in a hub. that's where pricing power comes from. Maybe they'll cover it in 8th grade econ, let me know when you've finished it....

 

[HPearlyretiree]

Which airlines are making profits now, and which ones aren't?

Hint; they both begin with "U"

 

[Busdrvr]

Which airlines are making profits now, and which ones aren't?

Hint; they both begin with "U"

UAL IS making an operating profit, and will likely have one of the highest if not the highest operating margin for Q4. I figured you of all people, given your history at HP, would have a better understanding of BK accounting....

 

[Borescope]

Dave,
"Isn't meant to make a profit" implies "a loss" that's why they call it P & L. Business 101, maybe you should retake the class.