The Future Of Ual?

[kcabpilot]

Think of the ATSB loan guarantee (it's not a loan, just a gov't guarantee of repayment in case of default) in the same manner as an VA loan to buy a house. For those that qualify for an VA loan, the interest rate is lower than a conventional loan.

If you really don't know what you're talking about (or even if you're not sure) it's probably best to not try to make it look like you do know what you're talking about because then, even when you do know what you're talking about, it looks like you don't know what you're taliking about.

 

[767jetz]

I'm not quite sure I understand that last post.

I thought the analogy of a VA loan, with it's lower interest rate was pretty accurate.

 

[CAETravlr]

I don't think the analogy to the VA loan was completely inaccurate. I think it also allows you to have less initial equity in your house purchase without having to pay PMI. It also seems like it is akin to an FHA loan.

However, the point I believe that was being addressed is the fact that people think that public money is being poured into UAL if we get the ATSB loan guarantee. That is not true, that is only if there is default on the loan, and it is an instrument for helping the airlines that get the guarantee get a more competitive interest rate than they would otherwise. It minimizes risk for the actual lenders.

There is a reason that the ATSB examines business plans and applications so closely. That is to protect the public's money, while at the same time helping to restabilize carriers. Those of you stating that we, the people, are giving away money to the airlines are wrong in your interpretation of this. Again, I believe this is the misconception that 767jetz was addressing.

 

[Vikedog64]

HISTORY will do so if things don't start changing soon at the airline.

Hey kid,

Thanks for your 2 cents. Now don't you have some homework to do?

Thanks for playing... Bye, bye.

Quit being such a company man.. Alot of what Avek says makes sense.

 

[iflyjetz]

If you really don't know what you're talking about (or even if you're not sure) it's probably best to not try to make it look like you do know what you're talking about because then, even when you do know what you're talking about, it looks like you don't know what you're taliking about.

OK, pleeze 'splain this here ATSB lown garantee to ignant me. Pleeze uze crayuns cuz Ise ain't skooled more 'n the turd grayde. But thems wuz da best twenny yearz uv mi life.

 

[767jetz]

Quit being such a company man.. Alot of what Avek says makes sense.

I definitely wouldn't classify myself as a company man. I am more of a labor guy who believes my company will survive and prosper once again in the near future.

As for Avek00, I disagree that with the notion that what he says makes sense. You may not have been around these boards for very long, so to clarify... He has a history of coming here to stir the pot and bait people. Historically he has very little factual information to share. He believes Continental is the "Holy Grail" of airlines and everyone else just plain stinks. In fact, if I am not mistaken he has been bannished from other sites such as the Yahoo message board.

 

[WorldTraveler]

Regardless of the intention of the original ATSB bill (which was rushed through Congress faster than just about any spending bill of similar size), there is real disagreement as to whether the government should be in the business of stabilizing old guard airlines 2 1/2 years after 9/11. Terrorism has not stood in the way of a recovery at the legacy airlines but a business model that has not transformed to adapt to the new demands of consumers certainly has. Regardless of the actions the ATSB takes, anyone at UA who thinks they will quickly become the king of the industry and take on the volume of pesky little carriers is seriously out of touch with reality. If UA has a business plan to become something decidedly different from the rest of the big 6, this is the time to bring it out. Right now, UAL has to turn a $1.4 BILLION annual operating loss - and that is of a magnitude that is still pretty near the worst performance of an airline. Until UAL proves that they have really turned things around, I won't be convinced and I will make sure my elected officials know I have no interest in helping United Airlines out of their problems.

 

[767jetz]

Terrorism has not stood in the way of a recovery at the legacy airlines but a business model that has not transformed to adapt to the new demands of consumers certainly has.

It is comments like this that will take away from your credibility.

Remember that little event last summer when we dumped hundreds of thousands of pounds of explosives on a little country the size of New Jersey? Do you think that just maybe the effects on international travel may have been a bit more than the effects on domestic travel? Last time I looked, Jet Blue and Air Tran didn't offer flights to Europe and Asia.

How about the hundreds of millions of dollars that have been spent by the airlines for post Sept 11th security? Maybe you've been hiding under a rock, but the government mandated many new security measures that the airlines themselves have had to pay for. These costs could not be passed on to the consumers due to the slump in travel and the pitiful shape of the economy. So the airlines stripped pay and benefits from the employees to help cover these astronomical costs.

Now, explain to me why me and every other airline employee have to pay for your security when is a matter of national security? And don't try to tell me that you don't understand the difference between the effect these costs have on legacy airlines as compared to fledglings like JetBlue.

If the government picked up the tab for ALL post 9/11 security, the state of the airlines would be a much different picture. So please don't try to say that there are no residual effects from Terrorism.

 

[Bear96]

Perhaps surprisingly, as a UAL employee, I agree with those that say the government should not aid the "legacy" (or any other) airlines any more than they already have. It has been 2-1/2 years and billions of dollars of government aid in one form or another since 9/11-- it's time to sink or swim already.

The TRAVELLING PUBLIC should pick up the tab for any more security expenses. Security expenses are borne by all airlines; let them figure out how to pay for it, through cutting costs or raising fares. If cutting labor costs is the answer, remember at some point you will end up getting what you paid for.

Any more government assistance, either direct (the immediate post-9/11 aid; mandated security reimbursements like cockpit door strengthening) or indirect (ATSB loan guarantee; pension relief), is really just addressing the symptoms and not the real underlying disease. I would love to try to sit here and argue how UA and the other "legacies" should get more breaks, because in the short term that would benefit me, but that is really just sowing the seeds of another decade or so of cycles of boom and bust in the industry.

BTW I *do* get a kick of how normally right-wing, Republican, free-market, survival-of-the-fittest, "if you wanna make what a pilot makes go out and get your pilot's license," pilots are now sounding like bleeding-heart liberal democrats, as I have heard on my recent trips as they rationalize still more government bailouts for the struggling airlines.

Of course if some of our colleagues at other carriers wouldn't agree to work for such pathetic compensation and working conditions, that would help too. But that is another thread. I don't like it, but that is the trend in the industry, so if you can't deal with it as an airline employee, it's time to move on. You can stay and fight it if you want to but you are fighting the invisible hand of the free market and so will probably just end up battered, bruised, exhausted, impoverished, and either unemployed or employed at an airline job that a few short years ago wouldn't even have been recognizable.

 

[WorldTraveler]

767Jetz,
I need only point to American Airlines as a company that was able to do what United needs to do but did it outside of bankruptcy and without special government help. I am not at all discounting the effects the war and terrorism of the last several years had had on the legacy airlines. I only fully support those businesses that can adapt to the new business environment without special handouts.
Disclaimer: I do not work for American Airlines, own stock in them, fly them, or have any business or personal relationship with them.
I do agree with Bear that aviation should be self-funding but the unfortunate reality is that there is too much capacity in the industry to price the product in a way that covers airline and security costs.

 

[767jetz]

767Jetz,
I need only point to American Airlines as a company that was able to do what United needs to do but did it outside of bankruptcy and without special government help.

I guess we just have to agree to disagree.

Can you be more specific in your reference to AA? What have they done that UA has not been able to do?

As I pointed out, they did not get the cost savings from their pilots that UA obtained. And what they did get, they got with the threat of BK, and the example of UA. Remember they were within hours of filing when agreements were reached.

Also remember that UA had large sums of revolving debt that were coming due just as the capital markets dried up. So UA was in a unique position compared to other legacy carriers that had more time on their side.

AA, Delta, and NWA all have similar sums that will have to be refinanced in the next year or so, which will become great obstacles for them.

The poor financial performance of UA in 2003 that you point to does not paint the whole picture. It did not reflect a full year of cost savings. It was only the begining. Still it was an enormous improvement over 2002, plus it included large amounts of BK costs, and write downs from the rejection of leases. Absent those paper losses, after emergence from BK the picture will be significantly different.

Additionally, UA's YOY improvement in CASM and RASM, load factors, intent to repurchase, etc. has been well ahead of it's competitors. BK also gave UA the leverage to restructure all leases to an extent simply not possible for carriers like AA and Delta.

You can expect the second half of 2004 to show a more accurate picture of UA's future. Also expect 2004 year end results to be far better than 2003, and 2005 to end in the black.

I understand your scepticism, but if the financial institutions who are willing to put their money at risk, and who have seen the POR are confident in UA, why are you so unconvinced?

I would still like to understand what you think AA has done so well that UA has not?

 

[767jetz]

The TRAVELLING PUBLIC should pick up the tab for any more security expenses. Security expenses are borne by all airlines; let them figure out how to pay for it, through cutting costs or raising fares. If cutting labor costs is the answer, remember at some point you will end up getting what you paid for.

With this, I definitely agree. Unfortunately, as WorldTraveler points out, I don't think in the current economy that pricing will support these security costs. If every airline added a 15$ - 20$ security fee, all airlines would be profitable.

It's also unfortunate that the consumers are so price focused that they are forgetting how unforgiving aviation is, and that eventually they will get what they are paying for.

Just ask the families of passengers on that USAirways Express Be1900 last year.

 

[IntelligentObserver]

I would still like to understand what you think AA has done so well that UA has not?

Maybe it is because AA managed to stay out of bankruptcy, while UA, operating under protection of the Bankruptcy court, STILL can't make any money. And, if you think that screwing your creditors out of the monies due them, under aegis of bankruptcy, is an acceptable business practice, think again.

Denigrating what AA has done right does nothing to help you in stating your case for your own very sick airline.

 

[Cosmo]

Has it not occurred to anyone else that the only reason American avoided filing for bankruptcy is that United was already in bankruptcy and could be used as an example of the difficulties of operating in Chapter 11 and the sacrifices required to emerge? In other words, without the United situation showing how bad things could get, I believe that the American employees would not have agreed to the large wage and productivity concessions they ultimately (and just barely) accepted, and thus American would have filed for the bankruptcy protection that it only avoided at the last minute. So IMHO those who trumpet American's "success" in avoiding bankruptcy are overlooking what amounts to no more than a fluke of timing.

 

[IntelligentObserver]

Has it not occurred to anyone else that the only reason American avoided filing for bankruptcy is that United was already in bankruptcy and could be used as an example of the difficulties of operating in Chapter 11 and the sacrifices required to emerge? In other words, without the United situation showing how bad things could get, I believe that the American employees would not have agreed to the large wage and productivity concessions they ultimately (and just barely) accepted, and thus American would have filed for the bankruptcy protection that it only avoided at the last minute. So IMHO those who trumpet American's "success" in avoiding bankruptcy are overlooking what amounts to no more than a fluke of timing.

Doesn't make a difference WHY AA did not file, all that is important is that they DID NOT file BK. They continue to pay their bills, and service their debt...and still managed to outperform UA.

Of course, I expect the usual personal attacks from UA employees, despite the fact that I do not wish to see UA go under. Even though I no longer fly UA, by choice, I do not begrudge anybody their livelihood. Fire away.