UA/UA merger?

[argentomaranello]

UAL777, you wrote (very rationally): I'll be the first to admit that a combination of UA and US makes great business sense in terms of network coverage, frequent flier base, city presence, S-curve economics, domestic U.S. market share, etc. Looks great on paper, right? . . . Now some might say that because of bankruptcy, the concerns of employees would be irrelevant. . . . My point is what do you think the climate/culture of the combined airline would be AFTER emergence from Ch.11 as you try to integrate? It would be a nightmare. . . . These are all issues that simply cannot be ignored by merely saying that bankruptcy renders the concerns of employees irrelevant, so therefore the merger makes sense. . . . Regardless of how much business sense it makes to combine the two companies, if he [Tilton] were to try to do that again, before he's built up goodwill and a good track record at UA, he [Tilton] would be immediately lobbed into the Goodwin/Dutta category and lose all effectiveness at running this company. You might as well start another search for a CEO.

Perhaps without realizing the import of your commentary, you have very eloquently made the same case that seems that is founded upon CAPTAIN RON's disdainful denial (and his quaint trade unionist orientation). UAL will never survive in its current form if any business plan that it must devise in response to this unprecedented company (and industry) crisis must first pander to its incumbent employees. While I am certain that these folks are all of the decent, God-fearing sort, and that they, to a person, probably want nothing more from life than the opportunity to perform a good job well for fair and appropriate compensation, NOT ONE OF THEM IS IRREPLACEABLE. They hold no property interest in UAL employment; there is no government entitlement to a job at UAL. What they think and feel about a necessary strategic combination that you even concede makes great business sense (and may well be essential to the long-range survival of the UAL entity in some form) is indeed, and must be, irrelevant. So some of them don't like it. So what? They have a choice . . . they can go elsewhere or make the best of it. And if making the best of it results in pouting, insolance, poor customer service or insubordination . . . well, then, a good management will need to deal with that in the traditional way. As I've written many, many times, the real problem with the mature, network carriers has not really been exotic W-2 wages (although such may really be true with the UAL pilots), rather, it has been and remains (even with the radical restrucuring at UASir) far too many bodies for the tasks required to be performed. Its headcount . . . its productivity. That's where the LUV model runs rings abound the UALs of the world. These insidious problems must be addressed and solved in order for UAL (and the mature part of the industry) to begin to recover. But that will flat never happen if the most important management concern in all of this remains employee sensibilities.

Frankly, the best thing that UAL gould do, immediately upon entry into bankruptcy, would be to shut down, lay off all of its employees, reject the non-economic leases and reject the labor contracts and put out the help wanted signs, recruiting only people who wanted to work and were grateful for the opportunity. (Who knows? Maybe a number of ex-Braniff, ex-Eastern and ex-TWA employees might respond). In that way, UAL could overnight implement the LUV model (with LUV productivity) and thereby assure itself a bright future.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/19/2002 705 PM ua767fo wrote:

Chip Munn said "In regard to a corporate combination, its unfortunate that the majority of the UA employees can't seem to understand a business opportunity when presented or maybe it should be said they do not want to understand the business opportunity because their thought process is obscured by a personal interest."

Chip, in a sense, your comment is right on the mark. In a sense, your dead wrong. In my view "obscured" (your choice word) is the wrong word. I care first and foremost about my paycheck and working conditions, business opportunity is down the list. As an ESOP participant, I view the company as my mine, to run for whom I choose, ME.

What you fail to understand that as an owner employee, my first concern is that of the employee and seniority, governing what my pay and working conditions are. It may be a great business opportunity, and I do believe the merger was, and would have been. But, that is a secondary consideration to my paycheck and quality of life. As an owner/employee, I make that decision and dont care what anyone thinks of my opinion. That includes the analytical pontificates of wall street.

Denver, CO
----------------
[/blockquote]
I wouldn't worry. You won't have the burden of employee ownership clouding the issues for much longer.....[img src='http://www.usaviation.com/idealbb/images/smilies/16.gif']

 

[oldiebutgoody]

Oops, can't hit the button twice...

 

[Busdrvr]

[blockquote]
----------------
On 9/19/2002 8:16:46 PM oldiebutgoody wrote:

[/blockquote]
I wouldn't worry. You won't have the burden of employee ownership clouding the issues for much longer.....
----------------
[/blockquote]

I've sat back and watched the Ron Bashing and some of it is rather comical, and some of it is sad. Whatever you think of Ron, his analysis is right on the money. If UAL has a negative cashflow of about 700 million a year and a net loss of 1.5 billion a year, please explain to me how better than 1.5 billion in annual wage and vender concesssions will lead to a UAL BK? If you were loaning money to airlines, would you loan to now PROFITABLE UAL or one of the remaining majors bleeding cash? It's ludicrous. I don't think the non-employee BOD members would welcome the litigation. It's also rather comical to see a U pilot try to convince the masses that he somehow is more in the loop than a UAL BOD member. Do they kick the Union guys out of the room, then write memo's to Chips Source? Laughable! As for Tilton, the union BOD members CAN NOT OUST HIM! We can complain, we can whine, but the BOD governance rules prevent us from doing anything. We've been after Dutta and Studdart for YEARS! We just don't have that power. We can only guide the BOD, just like any other BOD member, when they hire a new guy. It reflects poorly on the legal profession' to have a self described lawyer posting on the board, who is consistantly flat out WRONG on FACTUAL matters (not to mention nutty opinions)

 

[oldiebutgoody]

[blockquote]
----------------
On 9/19/2002 9:12:45 PM Busdrvr wrote:

[blockquote]
----------------
On 9/19/2002 8:16:46 PM oldiebutgoody wrote:

[/blockquote]
I wouldn't worry. You won't have the burden of employee ownership clouding the issues for much longer.....
----------------
[/blockquote]

I've sat back and watched the "Ron Bashing" and some of it is rather comical, and some of it is sad. Whatever you think of Ron, his analysis is right on the money. If UAL has a negative cashflow of about 700 million a year and a net loss of 1.5 billion a year, please explain to me how better than 1.5 billion in annual wage and vender concesssions will lead to a UAL BK? If you were loaning money to airlines, would you loan to now PROFITABLE UAL or one of the remaining majors bleeding cash? It's ludicrous. I don't think the "non-employee" BOD members would welcome the litigation. It's also rather comical to see a U pilot try to convince the masses that he somehow is more in the loop than a UAL BOD member. Do they "kick" the Union guys out of the room, then write memo's to Chips "Source"? Laughable! As for Tilton, the union BOD members CAN NOT OUST HIM! We can complain, we can whine, but the BOD governance rules prevent us from doing anything. We've been after Dutta and Studdart for YEARS! We just don't have that power. We can only guide the BOD, just like any other BOD member, when they hire a new guy. It reflects poorly on the legal "profession' to have a self described "lawyer" posting on the board, who is consistantly flat out WRONG on FACTUAL matters (not to mention nutty opinions)

----------------
[/blockquote]
UM, WRONG! People are invited to leave board rooms every day, especially if the stakes they hold are worthless. The structure of the company's finances is what drives companies into chapter 11; not necessarily whether they can pay short term bills. I understand that besides the tail wagging the dog setup at UAL, they have a couple of HUGE payments coming due. Ron seems to be hung up on the whole UAL has billions in cash argument, but it's not just what you have on hand that counts. It's also how much you owe (liabilities) and UAL is in a deep hole, and the poor airline revenues aren't helping them. I'm sorry, I really have to strongly disagree with your statement that Capt Ron's analysis is right on the money, unless you're dealing in some alien form of currency.

 

[argentomaranello]

BUSDRVR said: Whatever you think of Ron, his analysis is right on the money. Oh, really? What analysis. For the most part, his postings ring of Yahoo-style attack bombast. You know, shoot the messenger and such. This forum was intended for reasonable discussion of legitimate aviation related issues. Evidently the subject of a potential combination between USAir and UAL (this string) has, like a magnet dragged through a junkyard, attracted more than its share of UAL-oriented job-related demogoguery. You and CAPTAIN RON are more than free to articulate your case against the somewhat speculative UAL-USAir combination; you are not free (here on USAviation.com) to do so abusively. You must keep in mind that this form of public debate on a subject (the USAir-UAL situation and/or the unique financial that may impel UAL toward such) may cover topics that you find personally distasteful, but your ought not deteriorate into these rants.

 

[cavalier]

Frankly, the best thing that UAL gould do, immediately upon entry into bankruptcy, would be to shut down, lay off all of its employees, reject the non-economic leases and reject the labor contracts and put out the help wanted signs, recruiting only people who wanted to work and were grateful for the opportunity. (Who knows? Maybe a number of ex-Braniff, ex-Eastern and ex-TWA employees might respond). In that way, UAL could overnight implement the LUV model (with LUV productivity) and thereby assure itself a bright future.

Argento

Well I guess that would be a good idea, but only if you wanted to start a war. This guy seems very intelligent, but when he wrote this and being a very opened mind individual, I stopped and looked at the clock thinking maybe it was late and he was just tired not thinking straight. That would be the start of an American labor revolt given everything else that is currently happening. The entire airline industry would be shut down, by ALL the other airlines labor. Do I have an answer, no I don’t, but I KNOW that isn’t it.

 

[Busdrvr]

[blockquote]
----------------
On 9/19/2002 10:57:24 PM argentomaranello wrote:

For the most part, his postings ring of Yahoo-style attack bombast. You know, shoot the messenger and such. This forum was intended for reasonable discussion of legitimate aviation related issues. You and CAPTAIN RON are more than free to articulate your case against the somewhat speculative UAL-USAir combination; you are not free (here on USAviation.com) to do so abusively. You must keep in mind that this form of public debate on a subject (the USAir-UAL situation and/or the unique financial that may impel UAL toward such) may cover topics that you find personally distasteful, but your ought not deteriorate into these rants.
----------------
[/blockquote]


I'd invite you to re-read Capt Rons posts from page 4, SLOWLY. I'd also like you to point out where I have been abusive to you. I stated I find your anti-union BOD arguments FACTUALLY INCORRECT, and that I think your OPINIONS are nutty. Never do I say anything abusive to YOU! Do you get as indignant in court when someone questions your credibility? Keep in mind YOU are putting forth a VERY inflammatory argument that UAL should fire all the employees and hire a bunch of scabs, lorenzo style. Boy that'd make the airways safe

 

[Busdrvr]

[blockquote]
----------------
On 9/19/2002 9:29:50 PM oldiebutgoody wrote:

UM, WRONG! People are "invited to leave" board rooms every day, especially if the stakes they hold are worthless.


Duh, if the rest of the BOD regularly kicks the Union reps out, then explain again how the unions have too much power?


The structure of the company's finances is what drives companies into chapter 11; not necessarily whether they can pay short term bills.


Then UAL has no worries, we have MUCH more equity than CAL, NWA, and U


I understand that besides the "tail wagging the dog" setup at UAL, they have a couple of HUGE payments coming due. Ron seems to be hung up on the whole "UAL has billions in cash" argument, but it's not just what you have on hand that counts. It's also how much you owe (liabilities) and UAL is in a deep hole, and the poor airline revenues aren't helping them. I'm sorry, I really have to strongly disagree with your statement that Capt Ron's analysis is "right on the money", unless you're dealing in some alien form of currency.
----------------
[/blockquote]

Ron's sources are industry experts hired to help us out of the abyss, not some guy in a dirty T-shirt with a beer in his hand spouting off what he read in USA Today.

 

[Taipan]

I have been reading this topic since it started , and I must agree Chip has a very slanted view of UAL and he is a big time homer for US air, now if he wasnt the message of the week guy it would be ok , but in his delusional plan of US basically taking over all Uniteds domestic routes/aircraft and laying off 2/3 of Uniteds employees leaving United an international carcass of itself is laughable

 

[batman]

[blockquote]
----------------
On 9/20/2002 113 AM Taipan wrote:

I have been reading this topic since it started , and I must agree Chip has a very slanted view of UAL and he is a big time homer for US air, now if he wasnt the "message of the week guy " it would be ok , but in his delusional plan of US basically taking over all Uniteds domestic routes/aircraft and laying off 2/3 of Uniteds employees leaving United an international carcass of itself is laughable the kicker is that he says the goverment (ATSB/Republicans) would force UAL into chapter 11, let me say right here two words NOVEMBER ELECTIONS you here me right, November elections, trust me the republicans are probably in line to lose the house in November and any kind of plan along the lines of what chip has speculated would be the straw that broke the camels or a bushes back.Look unlike most of you I work next to US air employees everyday they are good people, hard working and I get along well with them, but I must agree with UAL777flyer anything more than the code share would not be advisable in the near future.
----------------
[/blockquote]


Finally some sanity. It really is sad how Chip has become delusional. Anything other than a codeshare is not probable. Certainly anything is possible if an airline liquadates. As for that, Usair is alot closer to that than any other airline. Period.

 

[argentomaranello]

BUSDRIVER wrote: I'd invite you to re-read Capt Rons posts from page 4, SLOWLY. I'd also like you to point out where I have been to you. I stated I find your anti-union BOD arguments FACTUALLY INCORRECT, and that I think your OPINIONS are nutty. Never do I say anything abusive to YOU! Do you get as indignant in court when someone questions your credibility? Keep in mind YOU are putting forth a VERY inflammatory argument that UAL should fire all the employees and hire a bunch of scabs, lorenzo style. Boy that'd make the airways safe

There you go again -- you seek to defend the indefensible. Both you and Ron have fallen over yourselves taking shots at my professional capabilities (about which neither of you can know anything) while you dismissively characterize my views as antiunion and nutty. Obviously, my posting have hit a nerve. But the rules and spirit of this forum demand that you respond to those views -- not to Yahoo-style kill-the-messenger tactics.

For what its worth, I'll repeat my central point (perhaps made badly via the use of a tongue-in-cheek suggestion that UAL simply use Ch.11 to completely clean house). No airline, indeed no business, can conduct its affairs with the parochial interests of its own employees as the centerpiece of its business strategy. If UAL is indeed unable to pursue the most rational course available to it because that course is offensive to the delicate sensibilities of some of its employees, then maybe its time for a fresh UAL approach to the entire business. Nobody said there wasn't a role for unions in all of this. But the unholy combination of the Railway Labor Act's protractive collective bargaining scheme and the ESOP governance arrangement at UAL have armed its unions with more power and influence over that great airlines's affairs than is healthy or constructive. This is the very reason that UAL is heading into the long, dark abyss; and it could, perversely, become the very reason that something like the unique corporate transaction with a re-organized and vibrant USAir becomes inevitable.

 

[UAL777flyer]

Argento,

With all due respect, who says UA needs to combine with US to survive long-term? I simply don't believe that to be true. While I firmly believe that a combination of the two companies would be a great strategic move, that doesn't mean it is the right thing to do.

I wholeheartedly agree that the best thing for UA long-term is to get rid of the employee-ownership. It has never worked. It is simply impossible in my view to have successful airline employee-ownership because every union has their own issues and own agenda. And when they feel slighted, they never hesitate to take out their frustrations on the operation and the customers. That is not necessarily acting like an employee-owner. The ESOP was mere window-dressing, used to disguise UA's problems for about 6 years.

If Tilton were to pull off the sales pitch of a lifetime and somehow get the employees behind a combination with US Airways, then I'd be all for it. But I've seen the internal dysfunction that was created from the last merger and the absolutely horrible job Goodwin and his Gang That Couldn't Shoot Straight did in selling the necessity for that deal. Making another attempt at such a deal by once again taking the employee concerns for granted would completely destroy the fabric of this company. In my view, the key to being a great leader is to not only recognize great business opportunities when they present themself, but ALSO recognizing their impact to your employees and how they will receive it, because without their support, you're in for a nightmare of a time. So on the business side, combining UA and US makes a heck of a lot of sense. But when you examine the employee side and the current climate at both companies, you begin to see that it may not be the right thing to do at this time. Alot of the hesitation on the UA side towards merging with US is bred from the lousy leadership we've had at this company for the last several years. If Tilton can change that and prove to the employees that he is the right man to lead us out of this mess, and, if he could sell the necessity for a combination with US to the employees, than I think that would be a different story. But the guy just arrived. He doesn't have much credibility with the workforce yet. They want to trust him and believe in him, but he's going to have demonstrate his ability first. I'm telling you that if he attempts another merger with US at this time, the employees will consider him another less-than-leader in the Goodwin/Dutta mold and turn a blind eye to him. I truly believe there is a time and a place for everything. And I don't believe the time is right to try this deal again. However, if the Feds are intent on using the ATSB and bankruptcy courts to push along a combination of the two companies, than that changes the game completely. But I'm not convinced YET that that is what is going on.

 

[DCAflyer]

Batman said: Finally some sanity. It really is sad how Chip has become delusional. Anything other than a codeshare is not probable. Certainly anything is possible if an airline liquadates. As for that, Usair is alot closer to that than any other airline. Period.

DCAflyer says: It's not about profit at this stage in the game, and this is especially true of UAL given their ESOP situation. It is about capping losses, regaining control, and regaining market share. In UAL's case, the control issue will prove to he a herculean task given their tail wagging the dog infrastructure. Anybody who doesn't see that is in deep denial. I absolutely agree with Chip that there are discussions going on between the two airlines for a deeper transaction than simply a codeshare. My friends at HQ have hinted that this is indeed occuring.

DCAflyer

 

[cavalier]

No airline, indeed no business, can conduct its affairs with the parochial interests of its own employees as the centerpiece of its business strategy.


I disagree with this statement because:
When Southwest first started and things were not going well, they realized they needed to get rid employees, or an aircraft to stay in business. As we all know the choice was the aircraft, the employees stayed and have made history because of the very fact the employees came first. Yes the UAL problems are a LOT bigger. But there are too many successful companies that have put employees first. Success is based on large part by the employees treatment of the very customers that make it a success, why would anything less then great employee relations make an airline a success? Now in industry where people are not front line employees they can be treated as cave dwellers without hurting the bottom line. I see both sides here and really don't have an answer, but the answer is not going to be one sided either way.