Ual Posts August Profit Meets Dip Target

[Busdrvr]

Come on guys, If Chip has a LEGITIMATE issue, then it's fine to discuss it.

Chip,
Until UAL gets it's lease payments lowered, the current leases, and bonds ARE reflected on the balance sheet EVEN WHEN WE DON'T PAY THEM. We still haven't completed all lease renegotiations. When you see extrodinary costs associated with lease restructering, it's good news. It means LT, our costs just got even lower. When the special charges stop, that will be an indication that we've pretty much minimized all the leases left on the table. UAL had approx 4 million a day in positive cash flow for August. how many consequtive months of positive cash flow is that? UAL could have easily paid the DEN bond payments and still been positive for August. The point is THEY DID NOT LEGALLY HAVE TO. Thats the whole point of BK. You get out from under obligations you don't think are cost effective (then you try to lower the rest even when they are already fair).

As for "future dealings with UAL", that is ALWAYS a concern. However, UAL is paying ALL the bills it's legally obligated to pay. Thats the same as every other smart business. BK just changed which ones. Comming out of BK, we will continue to meet all legal financial obligations. I'd think most large businesses and leasors are sophisticated enough to recognize that. I don't see why they would be less likely to loan/ lease to UAL for the same or even slightly higher ROR than to a company that didn't restructure and has more future BK risk. with respect to airport bonds, UAL is staying in BK and negotiating hard so that when we do emerge, issues like us current "problems' with Allegheny County will not be a factor. Better to have it all hammered out while under the protection of the judge

 

[737nCH11]

CAE,

Thanks for clarifying. I believe this is Bob's first time to travel on UAL since the summer of love, and I want him to go in style.

737

 

[CAETravlr]

CAE,

Thanks for clarifying. I believe this is Bob's first time to travel on UAL since the summer of love, and I want him to go in style.

737

If that is the case, then I hope his experiences are on par with what mine were on all of my mainline flights the past two years. However, I hope that they are NOTHING like some of my UAX experiences. I don't think ACA will be missed.

 

[iflyjetz]

I am flying on October first ORD to STL, 7:55 departure US codeshare 7223,
Return on 10/3 7:00 AM on US codeshare 7233
Both are 737 non stops. I am a CP on Us for what ever that's worth. Let's see what happens

And thanks

Bob

Bob,
UA flight numbers for those flights are 1471 (ORD-STL 755PM) and 526 (STL-ORD 7AM).
I nonrev out of STL frequently; the ground staff there is great. ORD's staff used to be similar to U's PHL ground staff, but there's been a noticable improvement in the way that customers are treated at ORD over the last couple of years.
Hope you enjoy your flights; let us know how they were. (They're pretty short, so it'll just be a drink and a bag of pretzels).

 

[Analyst]

http://www.aviationplanning.com/

United's Low Cost Carrier:
Sorry, But It Doesn't Add Up.

Everybody wants United to get its tail out of chapter 11. But this infatuation with starting an internal low-cost carrier (LCC) is getting spooky. It makes one wonder what's going on in the airline's Ivory Towers.

It's getting weirder and weirder. A couple months ago, the LCC was to be 30% to 40% of the airline's entire fleet. They even projected that the ASM costs of this "Starfish" would be 7.18 cents per mile. How many airplanes involved? Not sure. What kind of aircraft? Not sure. Where they going to go? Not sure. But the necessary costs were figured to the second decimal point, 'cause United's going to teach Southwest a lesson. Spooky.

Now, Starfish is planned to be just 40 airplanes. Southwest is out of the picture for the moment, and Starfish will start by replacing existing mainline service in markets where United competes with Frontier at Denver. The airline put out press releases noting that recent labor agreements make this LCC possible. Yes, everybody took big cuts. But, they leave out the fact that Starfish will have no labor cost advantage over mainline - they're the same rates. And the planes will have essentially the same operating costs, too, like fuel, maintenance, and the like. According to United, Starfish will bank with the rest of its Denver flights. Apparently, the only fundamental difference will be no first class section and the sector costs will be split up over more seats. Even here, there's a fly in the ointment - in some instances, the 156-seat Starfish aircraft will replace larger 757s. How's that going to get seat-mile costs down? Not sure.

A Model That Never Worked. There are lots of variations on this low-cost-inside-mainline theme. As it stands, it appears that United intends mostly to get its costs down to compete, and not necessarily get its fares down below those of Frontier, Southwest, et al. If they do this simply by cramming more chairs in the cabin with a new name on the side of the airplane, it's not likely to gain the airline market share. Adding capacity and frequency can only work if it stimulates more demand. In some markets, that can work. In others, say, DEN-MSY, it's not likely. And, as it appears, the Starfish A-320s will have essentially the same sector costs as the United A-320 two gates over. The only way the Starfish airplane can make more money is having more people on the airplane. To get more people on the airplane will entail some incentive to stimulate traffic, like, lower fares. Not a winning formula, especially since United generally matches Frontier's fares already.

And, please, the fast-turn, high-frequency thing won't fly. First, these flights will need connecting feed. That torpedoes the fast turn thing. Furthermore, the markets Starfish is planned to fly from Denver are not likely to be stimulated with higher frequencies anyway - none of them are underserved now. Then there's the fleet - from an operational point of view, the 40 all-coach aircraft will be a stand-alone sub-fleet, which can represent reduced flexibility for United.

Asking Hard Questions Is Not Being Negative. Outside of United itself and a couple of academics whose understanding of the airline business is rooted in the 1950s, almost nobody's buying this Starfish story. United's management seems to think that having cocktail receptions for travel agents and analysts will get them all to be nice, not ask hard questions, and agree that Starfish is a great idea. Unfortunately, giving travel agents a glass of jug wine and letting them belly-up to the shrimp bowl won't change the hard realities that this LCC is facing. Or answer the open questions about its validity as a competitive tool for United.

Nobody's arguing about the quality of United - it is a great airline. But this LCC thing hurts the carrier's credibility.

 

[Busdrvr]

Impressive "analyst", your ability to cut and paste is without equal!!

 

[Bizman]

He just figured that you would know how to get the link to come up on your screen.

 

[Busdrvr]

I'm just trying to get "analyst" to analyze something. admittedly, we're mostly a bunch of now poor and destitute, uneducated airline employees, who could really benefit from a "real" analysis of the current situation at UAL. Maybe one that includes sourcable facts and figures with a competant correspondance on those facts that lays a logical sequence that explains where we are, and where we will likely end up. That IS what "analysts" do, right? If I want to read Boyd's latest line, i will (and I do, every monday morning). Isn't Boyd's stuff copywrited?

 

[Bizman]

I couldn't answer on the copyright issue. But IMHO the facts and fiqures will probably never be released "completely" to the employees. This mainly for competitive reasons. Most everything you read on any of these forumns is conjecture by the poster. Good Luck.