Todd B
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Ua Low-cost Operation To Start In 2004
- Thread starter Todd B
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I don't know if UA really know what it is doing? Since they have lowered their costs and is trying to concentrate on having a leaner business model would starting a new carrier that requires a seperate management team, a different marketing strategy and repainting aircrafts make any since financially for them? I wonder if UAL had run out of ideas on what to do with its business plan in order to get the creditors approval and this is just something to show the judge rather than not showing any plan at all. I know the majors are under a lot of pressure from the LCCs but where would Ual operate this airline since the market is almost saturated with them. Therefore I believe Ual should concentrate on correcting the Ills within their model before trying to start another airline. 😉
Dilligas
Veteran
Could it be...
October 2003 --
1-US Airways announces contracts with third party maintenance vendors in Alabama for Airbus Heavy Maintenance
2-IAM seeks "self-help" on this major dispute, walks off the job.
3-U responds immediately by more massive layoffs, stating the IAM has crippled the company, closes PIT hub.
November 2003 --
U announces it will be forced to re-enter chapter 11 bankruptcy, with a possible Chapter 7 Liquidation a very real possibility. Dave says "This time, it will not be a "labor friendly" re-organization."
U asks for relief from existing labor contracts to avoid chapter 7. Relief granted.
December 2003 --
The long rumored "unique corporate transaction" is announced, the remaining assets of U will be merged into UAL, without most of the U employees... financing courtesy of the Retirement System of Alabama.
"Too much capacity"; "Consolidation must occur"... no antitrust concerns due to the "ramping down" of the U system the past two years.
Spring 2004 --
The former assets of U converted into the new UAL low cost carrier. Furloughed UAL employees offered callback to LCC with greatly reduced wages and benefits.
Net effect:
-UAL aquires the long desired U east coast operation for no cash.
-Thousands more of the U employees are S-O-L on the street, with no recall rights, easing UAL employee concerns about seniority.
-Dave Siegel retires to Caribbean with obscene amounts of money
-Jerry Glass becomes VP Labor Relations of UAL (BOHICA)
-Laid off UAL employees are offered work (although at a fraction of former standard of living).
-RSA has recouped and profited from their short term investment in U by transforming that into a larger stake in a healthier, more robust UAL
-All Airbus Heavy Maintenance farmed out... to Alabama!
Disclaimer: This is not what I wish to happen, but I think its possible. What do you think?
Good luck to all at UAL and U. (Heaven knows we need it!)
October 2003 --
1-US Airways announces contracts with third party maintenance vendors in Alabama for Airbus Heavy Maintenance
2-IAM seeks "self-help" on this major dispute, walks off the job.
3-U responds immediately by more massive layoffs, stating the IAM has crippled the company, closes PIT hub.
November 2003 --
U announces it will be forced to re-enter chapter 11 bankruptcy, with a possible Chapter 7 Liquidation a very real possibility. Dave says "This time, it will not be a "labor friendly" re-organization."
U asks for relief from existing labor contracts to avoid chapter 7. Relief granted.
December 2003 --
The long rumored "unique corporate transaction" is announced, the remaining assets of U will be merged into UAL, without most of the U employees... financing courtesy of the Retirement System of Alabama.
"Too much capacity"; "Consolidation must occur"... no antitrust concerns due to the "ramping down" of the U system the past two years.
Spring 2004 --
The former assets of U converted into the new UAL low cost carrier. Furloughed UAL employees offered callback to LCC with greatly reduced wages and benefits.
Net effect:
-UAL aquires the long desired U east coast operation for no cash.
-Thousands more of the U employees are S-O-L on the street, with no recall rights, easing UAL employee concerns about seniority.
-Dave Siegel retires to Caribbean with obscene amounts of money
-Jerry Glass becomes VP Labor Relations of UAL (BOHICA)
-Laid off UAL employees are offered work (although at a fraction of former standard of living).
-RSA has recouped and profited from their short term investment in U by transforming that into a larger stake in a healthier, more robust UAL
-All Airbus Heavy Maintenance farmed out... to Alabama!
Disclaimer: This is not what I wish to happen, but I think its possible. What do you think?
Good luck to all at UAL and U. (Heaven knows we need it!)
The UAL business plan has always been, and will continue to be, all about the business traveler. Taking this approach sucks when times are bad, but reaps big rewards when the economy is good (it remains to be seen if this trick will work this time around).
The LCC will serve as a buffer to ward off encroachment by the likes of JetBlue, AirTran, etc, and will also serve to increase revenues when business travel falls off. Rest assured UAL has a plan. I have seen small bits and pieces of it, and when the company emerges from CH11 it will be a force to be reckoned with. This isn't bravado on my part, it is simple fact.
As for the UAL/U merger, I am about 80% convinced that it will occur. Hopefully no more employees will be furloughed at either company. UAL LCC pay and benefits will not be reduced, as they have already been negotiated in Contract2003.
Cheers,
737
The LCC will serve as a buffer to ward off encroachment by the likes of JetBlue, AirTran, etc, and will also serve to increase revenues when business travel falls off. Rest assured UAL has a plan. I have seen small bits and pieces of it, and when the company emerges from CH11 it will be a force to be reckoned with. This isn't bravado on my part, it is simple fact.
As for the UAL/U merger, I am about 80% convinced that it will occur. Hopefully no more employees will be furloughed at either company. UAL LCC pay and benefits will not be reduced, as they have already been negotiated in Contract2003.
Cheers,
737
coolflyingfool
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I am not convinced that a UAL LCC is going to deter Airtran, JetBlue, SWA, or even AWA from entering any markets, except for possibly ORD, because of slot restrictions. Airtran is going head-to-head with DL in ATL, is expanding at DFW to mix it up with AA, and has started going into BWI and has butted heads with SWA. Jetblue is making money and getting more new planes. B6 also is taking on DL, AA, and UA. SWA has got something like $2.2 BB in the bank and 45 new planes coming in '04, 40 more in '05, and has never really backed down from anyone. It appears that AWA's new pricing strategy is working and they MAY have turned the corner. They are starting coast-to-coast and mixing it up with all the Big 6 on those routes. Just my 2 cents........... :unsure:
737NCH11. I hope they have really have a plan since time is soon going to run out and June 2004 is just around the corner! I am very interested in what this lcc is going to do and which parts of the US it is going to serve and what type of service it will have on board to compete against the other LCC's?
About the subject of a UA merger with U, I have doubts it will happen any time soon since mergering 2 companies takes a lot of money which UA does not have at the moment. However, it could happen 10 years later.
About the subject of a UA merger with U, I have doubts it will happen any time soon since mergering 2 companies takes a lot of money which UA does not have at the moment. However, it could happen 10 years later.
I personally hope that the merger never happens. However, recent comments by UAL CEO Glen Tilton give me reason to suspect that they are still thinking about it. If it happens, keep in mind that U is a heck of a lot smaller and cheaper than it was in 2000.
whatkindoffreshhell
Veteran
This constant chatter about a UA/US merger reminds me of the definition of insanity: repeating the same action over and over with hope of a different outcome.
But then again, you could be Jake Brace' kind of people!
But then again, you could be Jake Brace' kind of people!
E
Eagle
Guest
There are a lot of folks out there with their own agendas that want to see us fail.
The company is not only getting its act together but also getting it ready for the long road. In a competitive environment we would not want the competition to know too much to soon. The LCO (operation vs. carrier) will allow us to retain the low fare minded flyer or the business traveler that would prefer mainline but needs to focus on the dollar spent instead of giving them up to the SWs of the world. Part of the challenge is to differentiate the products yet ensure each customer feels they get a fair value of product for what they pay. Perhaps not an easy task. When personal finances get better they’ll move up to mainline. Those that have watched this industry know we tend to spend more time in the low end of the business cycle. The LCO would allow us to stay in the game better when times are bad and the bulk of flyers need to move down to the lower cost alternative, then when things get better they move up and LCO is an entry point for those just starting out.
The company is not only getting its act together but also getting it ready for the long road. In a competitive environment we would not want the competition to know too much to soon. The LCO (operation vs. carrier) will allow us to retain the low fare minded flyer or the business traveler that would prefer mainline but needs to focus on the dollar spent instead of giving them up to the SWs of the world. Part of the challenge is to differentiate the products yet ensure each customer feels they get a fair value of product for what they pay. Perhaps not an easy task. When personal finances get better they’ll move up to mainline. Those that have watched this industry know we tend to spend more time in the low end of the business cycle. The LCO would allow us to stay in the game better when times are bad and the bulk of flyers need to move down to the lower cost alternative, then when things get better they move up and LCO is an entry point for those just starting out.
Re: competing with Southwest by launching a low cost carrier, this is only part of the answer to United's woes. Please read the letter below to see the fundamentals of a new paradigm.
-------
To United Employees, etc.
I need your help to get into a position to be interviewed for the job of Revenue Management Strategist. Over the past two years I have been working in the field of loyalty management and capacity theory. I have worked with a great number of theorists, economists, technicians and skeptics to develop a model of dual currency which engages the purchasing power of customers in a whole new way.
This dual currency system is a patented process, but is in limited function in the mainstream business world. The patent allows the developer or licensed user to implement a dual currency pricing and transaction system which would enable the point of sale transaction of cash and non-cash currency (ie, US cash plus Mileage Plus Miles).
For instance, instead of discounting a product, service or airline seat, the business utlizing dual currency would be able to have their price for the general public and the price for members or dual currency users.
Let me give you an example. United is competing with Southwest Airlines for customers based on price. However, there are some customers who will choose United over Southwest because of the chance to earn miles. Yet those same customers may also fly Delta because they also earn miles there. If the customer is flying on a competitive route, let’s say $100 roundtrip, there is not much room to compete.
With dual currency pricing and accounting, United would have the exclusive chance to price their product at $75 US Dollars (USD) and 150 Mileage Plus for empty seats one week in advance. A trip to Europe may cost $1,200 two weeks in advance but with 20% capacity open, email alerts to over 40 million mileage plus customers can price the seats at $500 USD and 5,000 Mileage Plus within one week in advance. ( the examples may not be correct calculations since I don’t have exact data and conversions to determine the relationships of price, hence my interest in being a Revenue Management Strategist.)
The dual currency model was developed to expand the purchasing power of customers and utilize the over capacity of a businesses production. In our current business models we work in one paradigm of money. In the dual currency model we expand the paradigm to include partnership, cooperation and capacity. I have flown United when there were over 100 seats empty. I would have flown that route a number of times had someone let me know my wife and I could use our 100,000 miles and cash within a weeks notice.
The possibilities of using dual currency and United’s Mileage Plus is limitless since it has three functions when it works in tandem with loyalty. First, it increases cash flow since capacity is fully utilized. Second, it decreases loyalty point’s liability since the second currency has an increase of flow. Finally, it increases the purchasing power of loyal customers who will have a conscious reason to earn loyalty points and then reuse those points with United.
The assets and capacity to use dual currency are already present; it’s the future which is so full of potential. United has one of the largest loyalty currencies in the world along with partners who could set themselves apart by using a dual currency pricing model. The ability of United to work outside of the paradigm that is limiting its potential is the challenge ahead of the company and I want to help set the stage for a marketing and pricing revolution.
Please pass this on to everyone and anyone who may be able to help me help United.
Thank you,
Christian (Xian) Isquierdo, MA
Xian@XianLeft.com
-------
To United Employees, etc.
I need your help to get into a position to be interviewed for the job of Revenue Management Strategist. Over the past two years I have been working in the field of loyalty management and capacity theory. I have worked with a great number of theorists, economists, technicians and skeptics to develop a model of dual currency which engages the purchasing power of customers in a whole new way.
This dual currency system is a patented process, but is in limited function in the mainstream business world. The patent allows the developer or licensed user to implement a dual currency pricing and transaction system which would enable the point of sale transaction of cash and non-cash currency (ie, US cash plus Mileage Plus Miles).
For instance, instead of discounting a product, service or airline seat, the business utlizing dual currency would be able to have their price for the general public and the price for members or dual currency users.
Let me give you an example. United is competing with Southwest Airlines for customers based on price. However, there are some customers who will choose United over Southwest because of the chance to earn miles. Yet those same customers may also fly Delta because they also earn miles there. If the customer is flying on a competitive route, let’s say $100 roundtrip, there is not much room to compete.
With dual currency pricing and accounting, United would have the exclusive chance to price their product at $75 US Dollars (USD) and 150 Mileage Plus for empty seats one week in advance. A trip to Europe may cost $1,200 two weeks in advance but with 20% capacity open, email alerts to over 40 million mileage plus customers can price the seats at $500 USD and 5,000 Mileage Plus within one week in advance. ( the examples may not be correct calculations since I don’t have exact data and conversions to determine the relationships of price, hence my interest in being a Revenue Management Strategist.)
The dual currency model was developed to expand the purchasing power of customers and utilize the over capacity of a businesses production. In our current business models we work in one paradigm of money. In the dual currency model we expand the paradigm to include partnership, cooperation and capacity. I have flown United when there were over 100 seats empty. I would have flown that route a number of times had someone let me know my wife and I could use our 100,000 miles and cash within a weeks notice.
The possibilities of using dual currency and United’s Mileage Plus is limitless since it has three functions when it works in tandem with loyalty. First, it increases cash flow since capacity is fully utilized. Second, it decreases loyalty point’s liability since the second currency has an increase of flow. Finally, it increases the purchasing power of loyal customers who will have a conscious reason to earn loyalty points and then reuse those points with United.
The assets and capacity to use dual currency are already present; it’s the future which is so full of potential. United has one of the largest loyalty currencies in the world along with partners who could set themselves apart by using a dual currency pricing model. The ability of United to work outside of the paradigm that is limiting its potential is the challenge ahead of the company and I want to help set the stage for a marketing and pricing revolution.
Please pass this on to everyone and anyone who may be able to help me help United.
Thank you,
Christian (Xian) Isquierdo, MA
Xian@XianLeft.com
