UAL ALPA will not agree to put an airline within an airline...

[767jetz]

It certainly stands to reason that IF management wants to staff a LCC with furloughed UA employees, AND force them to resign their seniority, AND have no union at the LCC, THEN it would be easy to spin it off to someone else (USAir) where the LCC employees would have no claim on date of hire and get stapled to the bottom of someone elses seniority list.

HOWEVER, this plan is very transparent and will never be agreed to by ALPA. We will fight this to the bitter end if neccessary. United pilots generally do not eat their young, and management hopefully realizes that the place will burn to the ground if they try to force this on the employees.

For a judge to terminate a contract, the company first has to show that they tried to negotiate in good faith. They WILL get their LCC, however it will be staffed by UA employees who keep their seniority and union. And there will be protections from "spinning" off the LCC to another entity.

 

[BottomFeeder]

[blockquote]
----------------
On 1/30/2003 10:05:32 PM 767jetz wrote:

United pilots generally do not eat their young,

**************************************

767jetz

Define your meaning of "GENERALLY".

Under what circumstance is it OK?

VERY INTERESTING

 

[767jetz]

[blockquote]
----------------
On 1/30/2003 10:39:12 PM BottomFeeder wrote:


767jetz

Define your meaning of "GENERALLY".

Under what circumstance is it OK?

VERY INTERESTING
----------------
[/blockquote]

My, My, My... Picky aren't we?

(WARNING: the following statement contains sarcasm.)

Sorry, it's late and I've been flying all day. I was making a GENERAL statement about my perceived view of a majority of UA pilots. I can't speak for every person in every situation. I don't think it's ever right to eat your young. Although we do have some Scabs still on the property. The descriptive word "generally" refered to the pilot group as a whole, not the act of eating their young. In other words, MOST UA pilots will not eat their young. Unlike the actions of USAir pilots to the USAir Shuttle pilots, or Delta pilots when they negotiated the Delta Express contract, etc...

There. Is that clear enough for you?

 

[tug_slug]

[blockquote]
----------------
On 1/30/2003 10:05:32 PM 767jetz wrote:

HOWEVER, this plan is very transparent and will never be agreed to by ALPA. We will fight this to the bitter end if neccessary. United pilots generally do not eat their young, and management hopefully realizes that the place will burn to the ground if they try to force this on the employees.
----------------
[/blockquote]

767jetz I like your attitude its obvious you still have allot of fight left in you.

After the second or third round of concessions you'll realize your back's up against the wall and the company's calling the shots. The fight you once had will turn into fear... fear of losing eveything youve worked for all these years, fear of having to go out and find another job in an industry thats saturated with unemployed Pilots.Fear of starting at a job making less money than you were making at United even after all the concessions.

Whether its splitting up the airline or taking away your pension United is going to get what they want. Don't believe me, ask Chip.

 

[767jetz]

Since Chip likes to quote UA ALPA, I thought I would post this clarification by our MEC in reference to the Low Cost Carrier (LCC).



"MEC Weekend Update Friday, January 31, 2003



By MEC Communications Committee Chairman Captain Scottie Clark



Perhaps heeding the message sent by ALPA and other labor groups regarding the Company’s plans to develop a Low Cost Carrier, the UAL board of directors on Thursday, according to various press reports, rejected a plan that would have basically caused a breakup of the carrier. "

"ALPA is not opposed to United creating an INTERNAL product to compete against Low Cost Carriers. We stand ready to discuss an agreement that makes rational economic sense.

"* In a related story, Reuters on Thursday night stated that the UAL board of directors “unanimously supported a restructuring plan to pull the airline out of bankruptcy.â€￾ There has been some confusion over this report. According to the Company, the board “was unanimous in its support for the need for fundamental transformation of the airline.â€￾ The board approved the framework for reorganization. It DID NOT unanimously approve the Company’s overall plan for reorganization, nor did it endorse the Company’s original outline for a Low Cost Carrier. Captain Whiteford and other labor leaders made their opposition to the LCC plan clear. The Company said late Thursday it would continue analyzing and pursuing union input for such a plan."




Sounds to me like there is very little chance of a "spin off" of any LCC happening.

 

[Oliver Stone''s Apprentice]

Just to put a final nail into Chip's consipiracy theory:

[blockquote]
Plan for budget carrier dropped
By Heather Draper, Rocky Mountain News
February 1, 2003

UAL Corp. has backed off its controversial plan to launch a low-cost carrier as a separate airline after union members said there was no way they would back such a plan.

Sources close to the bankrupt company said Chicago-based UAL is still pursuing starting a low-cost carrier, but flying it as a UAL Corp. airline.

Late Friday, the union representing United Airlines flight attendants confirmed that, saying in a letter to workers that it is "assured that United is not entertaining operating this competitive element as a separate carrier."

[/blockquote]

Put a fork in it already, Chip. It's done.

 

[chipmunn]

A Tale of Two Bankruptcies - US Airways will emerge from Chapter 11 far better off than United. Here's why.

NEW YORK (Fortune) - When the nation's No. 1 carrier, United Airlines, tried to buy US Airways in 2000, it seemed more like a mercy killing than a merger. US Airways was a weak No. 6, with poor prospects as an independent. The outlook only worsened in 2001 after the Justice Department nixed the deal and terrorists torpedoed aviation. US Airways was a consensus pick to be runway kill.

Today, of course, both airlines are bankrupt: US Airways filed for Chapter 11 last August; United's parent, UAL, last December. But it's US Airways, not the once-mighty United, that's rapidly regaining altitude. Under Chapter 11, which gives a company protection from its creditors, $7-billion-a-year US Airways has restructured its debt and attracted new capital; it is scheduled to emerge from bankruptcy March 31. Meanwhile United, which had $14.3 billion in revenues last year, is struggling just to meet its lenders' cash-flow and cost-cutting requirements. Absent progress, United could soon begin a spiral from Chapter 11 into Chapter 7: liquidation. The two airlines provide an object lesson in crisis management, proving that strong leaders, swift action, and smart strategy count for more than superior markets, equipment, and hubs.

One of the most obvious differences between the two airlines is the guy at the top. David Siegel, a young (41) yet seasoned veteran of the Continental Airlines turnaround whom US Airways hired as CEO last March, quickly implemented a new strategy: Focus on the carrier's best short-hop Eastern routes, and scuttle many big jets for cheaper regional ones. Siegel also forged new ties with pilots. His "jobs for jets" program (he gave furloughed pilots first chance to fly regional jets) and his willingness to open the company's books induced them to agree to pay cuts of at least 26% last July. That helped the carrier win conditional approval of $900 million in federal loan guarantees.

When the airline's mechanics wouldn't join other unions in making voluntary sacrifices, Siegel took the carrier into Chapter 11--a status that gives companies the ability to void labor contracts with a judge's approval. That leverage helped Siegel bring the recalcitrants around. "Filing Chapter 11 is a scary thing, but not nearly as much as Chapter 7," says Siegel. US Airways sought a second round of concessions in December; the pilots again led the way, agreeing to major work-rule changes. Now the pilots are grumbling because Siegel terminated their pension plan, eliminating a $2 billion shortfall and clearing the final hurdle out of Chapter 11. But many others are cheering. "David Siegel knows where he's going, and he's tough," says Frank Jay, a Houston-based executive recruiter for the industry.

Compare Siegel with United's Glenn Tilton, the former vice chairman of ChevronTexaco, who replaced interim CEO Jack Creighton last September. Tilton delivered swell pep talks to the demoralized workforce, but this oil-industry lifer knew too little about airlines to take decisive action and was too nice a guy to play hardball with union leaders. He allowed United's application for vital federal loan guarantees to be dictated by what labor was willing to offer in pay cuts ($6 billion) rather than what management felt was required ($9 billion). "Tilton is good with people, but that's not what they needed," Jay says. "They need somebody to kick ass and take names."

The Air Transportation Stabilization Board (ATSB), which administers the industry's bailout fund, found United's cost cuts too low. On Dec. 4, the ATSB rejected United's application for $1.8 billion in federal loan guarantees, forcing United to file for Chapter 11 a few days later. The company foresees another 18 months in bankruptcy.

Another key difference between today's United and US Airways is union power. Because a 1994 employee stock-ownership plan (ESOP) gave United's pilots and mechanics unions board seats and employees 55% ownership of parent UAL, the carrier's union leaders think of themselves as the true bosses. And they have an odd notion of sacrifice. Unions have so far agreed to only $70 million a month in interim pay concessions--a fraction of the required payroll trimming. Some bumper stickers in employee parking lots say full pay to the last day.

The unions at US Airways had no such ideas. With their employer operating in secondary hubs like Pittsburgh and long hanging on for dear life, the workers were plenty receptive to credible management with a clear plan. "US Airways had been told for the last three or four years, 'You're the next Eastern,'" says George Hamlin, an airline consultant based in Washington, D.C. "Siegel has taken his troops through a positive, near-death experience. At United people are still in a grieving process."

Does United, whose debt load is now $21.5 billion (vs. $7.5 billion for US Air), have a future? "There's no remote chance of [Chapter 7]," Tilton insists. "There's far too much opportunity and far too much improvement that's within our control." He cites the airline's still-vast route network, its recent bold (and, he claims, successful) business-travel fare cuts, its plans for a new and separate discount-airline subsidiary, and its progress in negotiations with unions and creditors.

But United's relationship with labor is still frosty: The unions recently denounced the discount-airline plan as an attempt to shuttle their members into lower-paying jobs. And United is taking a very hard line in trying to wrest concessions from lenders and aircraft lessors, according to people close to those talks. That's risky, considering how many of those parties have US Airways as a basis for comparison. US Airways "went into bankruptcy with a very specific plan," says James Tussing, a lawyer representing some United creditors. "They established a degree of credibility with creditors that United hasn't."

 

[chipmunn]

Eolesen & 767jetz:

I have often said that a corporate transaction may or may not proceed, however, it has and still is being discussed. In fact, I have personally discussed the potential corporate transaction idea with Dave Siegel.

Will it ever proceed? Who knows because there are enormous problems at UA; however, US mailed its disclosure statement to its creditors for their vote last Friday and the Arlington-based company is scheduled to emerge from bankruptcy in a few weeks.

Meanwhile, the news media and analysts now clearly believe a UA liquidation is a stronger possibility and clearly there seems to be a major disagreement brewing between the Board, Management, and Labor. How can this be good for UA employees?

If liquidation occurs, which appears to be a strong possibility, a "unique or interesting corporate transaction" may have been in the best interest of the UA employees all along.

Again, I do not wish anything bad to happen to UA employees, but if the UA employees would not have attempted to bypass union merger policy, created pre-nuptial seniority lists, and only furloughed US employees, I believe the two companies would have integrated in 1996 and neither airline would be in bankruptcy today.

However, the US unions rejected the UA union concept to bypass national union merger policy and to only furlough former US employees, if that occurred.

Now today Fortune magazine said, "US Airways will emerge from Chapter 11 far better off than United." This seems sort of ironic, doesn't it?

Regardless, it will be interesting to see what unfolds for UA when it announces its new business plan to employees on February 11 and when the carriers exclusive right to submit its POR expires on April 8. Clearly, with the airline having very tight financing agreements and still losing $20 million per day, with the disagreement that now exists within the company, the airline is moving dangerously close to a fragmentation, complete liquidation, or TWA style LBO.

Chip

 

[chipmunn]

United gears up for eight weeks of critical decisions

CHICAGO (USA Today) — Whether the nation's second-largest airline lives or liquidates could be decided in the next eight weeks.

Almost two months after filing for bankruptcy reorganization, United Airlines' parent, UAL, faces a tangle of critical decisions about its future that it must make soon if it is to have any hope of survival. But United is a managerial Rubik's Cube whose problems are interlocking and solutions confounding.

While operating 1,700 flights a day worldwide, UAL must in coming weeks cut costs dramatically by renegotiating contracts with labor unions, regional airline partners and the companies that own the leases or hold debt on 80% of its jets. It must convince its bankers that its negative cash flow is improving, or they could call in the crucial loans that keep United aloft, shutting it down.

There could not be a harder time for UAL to reinvent itself. The company announced Friday that it lost $1.5 billion in the fourth quarter and $3.2 billion for 2002 in the midst of the airline industry's worst slump in history. A U.S. invasion of Iraq, and fears of retaliation, could further chill the economy and scare off passengers. If the U.S. starts bombing Iraq, airline traffic could suddenly drop and fuel prices spike, soaking up precious cash United needs to fly and possibly destabilizing it and other cash-strapped carriers.

"If United fails, it's likely to be because of what happens in the next several weeks and months with its financing, labor contracts and the possibility of war," says Philip Baggaley, senior airline analyst for credit-rating firm Standard & Poor's.

Adds Mo Garfinkle, an aviation consultant who once advised United: "It is a task so difficult, so enormous, it will be miraculous if they achieve it all."

Among the issues that UAL executives are grappling with:

Reorganization plan. It must issue a preliminary business plan for reorganization and sell it to creditors, lenders, labor unions, customers and Wall Street. The plan will set the direction for everything else it has to do. CEO Glenn Tilton and his team presented the plan last week to UAL's directors and are scheduled to meet today with the creditors' committee. Without exaggeration, Tilton calls the document UAL's "plan for transformation." The company has declined to make Tilton available for an interview or discuss details of the plan.

Labor contracts. It must renegotiate labor contracts by March with increasingly hostile unions representing pilots, mechanics, flight attendants and other workers. Failing that, it could seek the court's permission to break the contracts and impose new, cheaper ones. That could alienate the employees who interact with United's passengers every day.

Fleet. UAL must decide which planes it's keeping or rejecting. The bankruptcy code gives airlines a 60-day stay on making aircraft payments, but UAL's grace period expires Friday. The company has asked the court for more time so it can continue negotiating for better terms on leases and other financing deals covering about 460 of its 567 jets. If it can't strike better deals before time runs out, UAL will have to make its payments current on the jets it wants to keep or risk them being repossessed.

One complication is that UAL is still trying to identify and track down some of the several thousand parties that have claims on more than 100 jets used as collateral for loans. Another problem is UAL's uncertainty about other aspects of its plan — such as its future labor costs — hampers productive negotiations with aircraft lessors. Lessors also are wary of giving a big carrier like UAL better terms because that could further depress already weak values for new and used airplanes at other carriers. It's a process that United executives anxiously call a high-stakes game of musical chairs.

Regional airlines. UAL must rework contracts with its regional airline partners to possibly let them handle more flying on small, less-expensive regional jets and perhaps at reduced rates. Unsettled labor issues touch on this problem, too, because United's pilots contract limits how much RJ flying the regionals can do. The partners — independent companies that have ordered millions of dollars of RJs — are worried. Atlantic Coast Airlines, one United Express carrier that gets 80% of its business from United, has asked the court to force United to spell out what role Atlantic Coast will play in future plans.

Financing. UAL must demonstrate to four big banks that lent UAL $800 million to operate that it can repay them later — and that it deserves an additional $700 million in months ahead. United this month must meet the first of monthly cash-flow targets. Although it's expected to hit February's goal, future months set progressively higher targets that will be harder to achieve.

At UAL's Chicago-area headquarters, the mood is determined. Executives say they haven't taken a day off since the filing. A small army of specialized consultants and lawyers is helping them shoulder through the mountain of work under impossibly tight deadlines. Employees note with irony how expensive bankruptcy is.

Tilton, who signed on to run UAL just last September, is poised to start promoting his business plan. Even before it's unveiled, the plan — which calls for a new low-fare airline subsidiary — is under fierce attack from union leaders. Last week, they angrily called it a "breakup" of the airline.

Pilots, flight attendants and other work groups that already have sustained thousands of furloughs could be hurt by more lost jobs or lower pay under that plan. One out of every five United employees has been furloughed since the Sept. 11 terrorist attacks, and unions are braced for announcements of many more layoffs.

"We will oppose management's breakup plan by every lawful means available to us," says Paul Whiteford, pilots union chairman.

His anger stems partly from the fact that 92% of United's pilots recently voted to take voluntary 29% pay cuts from January to April to help United cut costs quickly in bankruptcy. Flight attendants also agreed to pay cuts.

A shift in strategy

People briefed on the low-fare concept say as much as 30% of United's flying capacity might be shifted to the new low-fare airline subsidiary that would have a separate identity, fleet and workforce.

The new airline would fly from United's hubs, such as United's home base of Chicago O'Hare, to leisure destinations, and connect with regular United flights at hubs.

Tilton, who was previously vice chairman of ChevronTexaco and CEO of Texaco, has become convinced a low-fare airline operated within UAL is critical to its survival and can succeed — even though it's never been done profitably by a traditional airline.

His view is not unique. Delta Air Lines last week announced the April launch of Song, a low-fare airline that will fly Boeing 757s between the Northeast and Florida.

United is facing threats from aggressive discounters undercutting its fares: Frontier Airlines at United's Denver hub, American Trans Air at Midway Airport in Chicago, and Southwest Airlines on the West Coast, among others.

But United's unions suspect management wants inexpensive, separate labor contracts for the new unit and plans to take job applications from anyone without regard for United employees' seniority. The controversial venture could draw UAL into an ugly, public court fight with its unions, who have two seats on its board. The conflict is the latest example of labor-management tensions that have bubbled within UAL for years despite a 1994 deal that brought employees majority control and broad influence over UAL's governance in exchange for billions of dollars in concessions.

"Given labor-management relations at this airline, this low-fare airline strategy is a good concept in theory but could be nuclear in practice," Garfinkle says.

Labor leaders don't want employees' honeymoon with Tilton to end. Since arriving, Tilton has worked hard reaching out to employees craving leadership after the terror attacks. On a January trip to Tokyo's Narita Airport to christen United's renovated terminal, Tilton was met by employees wanting his autograph.

"I'd be lying if I told you the labor-management relationship at United is wonderful right now. But it's better than it's been in my 14 years here," says Greg Davidowitch, the new chairman of United's flight attendants union. "We don't want a company of people who are scared."

There are no plans to amputate parts of the airline's massive network, such as the valuable trans-Pacific routes. United has been closing individual international cities that apparently weren't profitable. Last month, Caracas, Venezuela; Santiago, Chile; and Dusseldorf, Germany, dropped off United's route map. Next month, New Zealand will, too.

The painful cuts reduce losses but risk losing customers.

"I am staying with United, but I am very disappointed in the number and severity of the service cutbacks," says Jennifer Eck, a Chicago-based human resources director who flies to Latin America. "Now, I am almost forced to fly American to those markets."

In a clear outreach effort to coveted business fliers, United just launched a sale reducing some last-minute business fares 40% from Chicago and Denver and on connecting routes. That has brought an encouraging uptick in bookings, although UAL officials won't say exactly how much and whether revenue is up as well.

It could be a sign of things to come. United and other traditional airlines have to revamp their fare structures and close the wide gap between leisure and business fares to survive. The throngs of $2,000-a-ticket business fliers haven't returned since the recession hit, and they might never come back.

Amid their turmoil, United executives and employees can't help but brag about the kind of airline that passengers see every day. For the first 11 months of 2002, latest figures available, the government ranked United No. 1 among the largest carriers for on-time flights.

"Despite everything that's going on, our people are doing an extraordinary job," says Davidowitch, a flight attendant from New York. "When the whole world is out there saying, 'You're going to fail,' that's really inspiring."

 

[767jetz]

[blockquote]

Again, I do not wish anything bad to happen to UA employees, but if the UA employees would not have attempted to bypass union merger policy, created pre-nuptial seniority lists, and only furloughed US employees, I believe the two companies would have integrated in 1996 and neither airline would be in bankruptcy today.

----------------
[/blockquote]

OK Chip. I think it's time for that random drug test. You really think that if United had PURCHASED USAirways at $60 per share, we would not be in CH11??!!!! Unbelieveable!

To everyone else on this board who is tired of Chip's ranting, this one paragraph pretty much sums up the source of poor Chip's hatred of UAL.

(Sorry Chip. Still no 777's for you. Buh-bye.)

 

[fatburger]

767jetz..............the $60 share price was for the attempted 2000 purchase. Chip is talking about an attempt at U by UAL in 1996. Were you hired back then or do you not remember that far back?

-fatburger-

 

[a320av8r]

"Clearly, with the airline having very tight financing agreements and still losing $20 million per day..."

Aren't we (U) still losing $9 mil/day. At half the size of UAL I'd say we're about equal. No?

 

[chipmunn]

767jetz:

767jetz said: OK Chip. I think it's time for that random drug test. You really think that if United had PURCHASED USAirways at $60 per share, we would not be in CH11??!!!! Unbelieveable!

Chip answers: 767jetz, as you know I have repeatedly said the March 2002 merger would have sunk both UA & US because of the tragic events of September 11. Fatburger is correct in that I was discussing the 1995/1996-merger attempt, when Gerry Greenwald brought all of the US unions to WHQ. At this meeting, which at the time was confidential, Greenwald demanded three items from US labor: agree to a pre-nuptial seniority integration, bypass merger policy to give UA employees super seniority, in the case of ALPA furlough 20 percent of the US pilots (1000), furlough other US labor groups, provide furlough protection for UA employees, and park and undetermined number of US aircraft (F-28s, DC-9s, MD-80s, etc) that did not match the UA fleet.

These egregious merger terms were unacceptable to the US unions who told UA to basically pound sand.

My point is if the airlines had integrated at that point, according to Stephen Wolf the combined business entity would have generated an additional $1.6 to $1.9 billion in annual revenue. Moreover, according to Merrill Lynch there would have been a $450 million DL and $250 Million AA revenue transfer to the combined UA-US combination.

Therefore, I believe if the UA ESOP owners would have not asked for egregious integration terms and abided by national merger policy, UA and US would not have been in bankruptcy today.

It's ironic how things turn out because it appears UA is much closer to a total liquidation than US, who is scheduled and appears ready to exit bankruptcy in a few weeks.

In fact just today in an article titled "American Airlines Fights Bankruptcy Risk" the Associated Press wrote "prolonged war in Iraq, meanwhile, could cause a sharp enough rise in fuel prices and a steep enough decline in air travel to force United's parent company, UAL Corp., to sell its assets and exit the business."

In addition, last night I was told by an informed Wall Street analyst, who you regularly read his name and his quotes, that one of David Bronner’s deputies indicated US was preparing for a strategic transaction after it emerges from bankruptcy.

Moreover, let's not forget the US ALPA December 7 supplemental restructuring agreement proposal, which I posted on these boards, included a clause titled "RSA Acquisition Support". This clause would have required RSA to invest in a strategic transaction with the target airline having over $3 billion in quarterly revenue. This clause did not make it into the final agreement ratified by the ALPA MEC on December 13, but I believe the implication is significant enough for ALPA to seek this language in its final contract agreement.

What's truly sad is that UA and US could have built the first truly integrated domestic and international route network that would have had significant market power. Instead, US is scheduled in a few weeks to emerge from bankruptcy a much smaller airline and UA is on the verge of liquidation. In my opinion, it didn't need to be this way.

Chip

 

[chipmunn]

a320av8r:

a320av8r asked: Aren't we (U) still losing $9 mil/day. At half the size of UAL I'd say we're about equal. No?

Chip comments: A320, take out the "pension charge" and then take a look at the numbers. This informtion should have been presented to PITbull (Teddy) and the AFA, which I believe will then provide an interesting operating loss. My question is why did a company in bankruptcy make that pension payment, to a plan they have petitioned to terminate?

Specifically, the company recognized a $742 million charge to stockholders' equity in connection with its increased minimum pension liability. Make no mistake about this entry, ALPA and its advisors have seen this information.

In addition, US recorded a $392 million impairment charge on its Boeing aircraft and a $176 million charge for bankruptcy expenses. These two one-time charges for $568 million alone reduced the $794 million net loss to a $226 million loss, much lower than the total net loss.

On a positive note, revenues were up 3.1 percent to $1.6 billion as its traffic fell 1.5 percent, far less than the 8.8 percent drop in capacity.

However, most surprising was the 7.7 percent increase in revenue to 10.3 cents, which is likely due to US pulling out of highly competitive markets.

Chip

 

[Oliver Stone''s Apprentice]

[blockquote]
----------------
On 2/4/2003 9:09:35 AM chipmunn wrote:

What's truly sad is that UA and US could have built the first truly integrated domestic and international route network that would have had significant market power. Instead, US is scheduled in a few weeks to emerge from bankruptcy a much smaller airline and UA is on the verge of liquidation. In my opinion, it didn't need to be this way.

----------------
[/blockquote]

No, it didn't need to be that way, but that's how the chips fell (no pun intended).

And don't count your chickens just yet.

Pan Am v1.1 was supposed to emerge from bankruptcy on December 3, 1991. They didn't. DL had a last minute change of heart, and decided not to put any more money into it.

If a war with Iraq is in full swing in March, it wouldn't surprise me to see Bronner have a change of heart, either.