Ukridge Ponders The Meanining Of Things

[Ukridge]

1. Looking at some information from the Lufthansa web site, I noticed under the following link
http://konzern.lufthansa.com/en/html/ueber...otte/index.html
that the range of the A340-600 is listed as a non-insignificant 2000 km more than the 747-400. After BK does United plan to acquire any longer range aircraft or does the 777 have comparable range to the 340-600?

2. The above of course begs the question of whether United would even have need of ultra long range
capability. I seem to have noticed a serious divergence of planning between American and United in the area of service to India. United seems to believe that passangers love to connect through Frankfurt en-route to such places as India, whereas American is poised (from what I have read) to attempt non-stops. Novel though the thought may be, is it possible that there does exist a corps of business travelers who would prefer not to add 5 or 6 hours to an already long travel period and would just as soon fly non-stop?

3. Will United cede the Indian market and rely solely on Lufthansa? Refering to question 2, is it a sound
strategy? Remember, the Raj is no longer just one or two cities of import but is fragmenting into various areas of commercial strength.

4. I subscribe strongly to the theory that every gesture, comment, and proclamation made by a senior
executive is parsed, coreographed, and rehersed before it is brought before the public. Why then would the BA chief float the idea of a merger with American airlines? My former colonialist friends all tell me that it will not happen and that he is merely posturing for something else. Really? What then? An additional car park at Heathrow? Willie has been in harness barely more than a fortnight and yet out off the starting line he floats this idea. Thinking aloud? Please - no one at this level 'thinks aloud.' Yes, yes, I know about the laws, but I frankly am of the opinion that they will be re-formed. Willie's idea was a rather bold statement to make and is very much in line with the KLM-AF marriage. Will United stand on the touch-line while all this shakes out or will it strengthen its relationship with the Germanic tribes?

5. I was told (but did not see) that recently Royal Dutch Shell revised its long-term estimate for crude at 30 USD. Has anyone else seen what the oil firms themselves are predicting. I have grown weary of the "oil will never again be less expensive that it is now" chant. Perhaps, perhaps not. RDS seems to have a made rather a go of it over the last decades and so I would think there is something behind its estimates.

Cheers

 

[JFK777]

Once UA gets out of BK fleet renewal is going to be a big subject at UA. 777 are the newest if the 3 planes in UA international fleet, 747's and 767's being the other two. I think 777-200LR & 777-300ER should be added to UA's fleet for obvious reasons. The 767 are from the early 1990's and need replacing, 787 would come in handy for that mision. But the question I ponder is what replaces the 747-400 if anything.

Since UA has large operations to LHR, NRT, HKG, FRA & SYD then the 747 ADV or the A380 would seem to enter the equation. Two other questions are important too: will UA go Airbus for it long haul fleet & will it serve more point to point like India nonstop?

 

[JungleClone]

I agree with JFK777, in that once UA emerges from bankruptcy, you're going to start hearing whispers about aircraft acquisitions. It's no secret that UA's network growth engine is in the international area, especially Asia. However, UA's existing widebody fleet is already stretched. The only international widebodies you tend to see on domestic routes are used for maintenance rotation and routing purposes between hubs. So if UA is indeed intent on expanding further internationally, more aircraft will be needed.

As for whether UA goes Airbus or Boeing, I guess it depends on several things. Ultimately, UA will go where they get the best deal. They'd be wise to play one manufacturer off against the other. Let's also not forget that UA's B737 fleet is already a bit long in the tooth. While the aircraft can certainly fly for many more years, it will continue to require significant maintenance expense. And the cabin interiors are grossly outdated from a decor and entertainment perspective. I'm sure UA could work a deal for more A319/320 aircraft. Maybe even some A318's to stop the onslaught of SJ's (they really can no longer be called RJ's). It will be interesting to see how it plays out.

As for Ukridge's comments regarding oil, I honestly don't believe you should take anything spoken by the oil companies as accurate, especially RDS. They only recently were found to have grossly overstated their booked oil reserves and had to make a rather large downward adjustment. My personal opinion is that the industry is trying not to incite panic with rising oil prices. They're trying to calm the markets. To a degree, I agree that's what should be done. But anyone with an ounce of common sense realizes that there is not an infinite supply of fossil fuels in Mother Earth. At some point, the oil game will end. In fact, many believe we're already at the point where production can no longer keep up with supply. And that was BEFORE Katrina and Rita hit the Gulf Coast of the U.S. To say that oil will once again go down to $30 a barrel for any period of time is, in my view, extremely unrealistic.

 

[Ukridge]

Could the moderator correct my spelling error in the title of this thread. 'Meaning' of course, and not 'meanining.'

This will prove to be rather interesting regarding what the manufacturers will offer United. I would think that the reality is that both Airbus and Boeing will table offers. It will also be of interest to observe how the management decides to play these cards. If I have drawn the correct conclusions from my reading, the cash on hand will be substantial - almost 4B after re-payment of the DIP loans. Management is then in the position of deciding among many possible courses of action. To not pull the entire 3B from the banks (and to not incur the debt expense) or draw the entire 3B financing and make capital investitures. A very fine line to walk. If the decision is made to purchase equipment and physical plant, then what? Time will only tell.

 

[Stratoboozer]

As UA slowly emerges from BK, fleet replacement and growth has definitely been on the minds of the senior heads who determine what works best given the current/future market conditions and the route structure UA has and will need to effectively compete in a rapidly changing global aviation industry. As much as I would like to see certain aircraft become a part of the UA family, any manufacturer and type chosen will be determined based on one thing: Cost to operate. Other factors just as important include fleet commonality, dispatch reliability, performance criteria, etc. will play an effective role when determining new aircraft purchasing. UA undoubtly learned in BK that they won't pay for anything at high market prices anymore. A 'sweet deal' offered by either Airbus or Boeing will be the ultimate decision based on what UA wants and what it can get.

I'm assuming that UA would like to stick to it's Airbus narrowbodies and Boeing widebody theory, but anything could happen. I also think UA would move towards a 2 engine only systemwide fleet since costs to operate decrease dramatically compared to a 4 holer (given comparable markets and price of fuel). With that being said, I'd see a definite purchase of the B787 or A350 to replace the B763 (eventually). The B744 replacement candidates would be my first choice of the 777-300ER or possibly the 747ADV. I believe there will be no consideration given to the A380 mainly because it simply costs too much to operate for UA's current routes. The fact that only a limited number of airports can currently handle such a beast is another reason it's not feasible. The A320 family, minus the A318, will definitely expand in UA's fleet when they phase out the B737. As far as the replacement for the B757, it's a long way before that happens, but I could see the A321 possibly joining the fleet. By the time that happens though, I believe Boeing will introduce somewhat of a totally new long range narrowbody to fill in the void that fits nicely between the B737NG and the B787. These predictions are solely based on my opinion, trying not to be biased on a particular manufacturer since I like them both. Who knows, maybe Embraer or Bombardier will produce something that will revolutionize and shake up the widebody industry.... or vice versa.


Regarding mergers and price of petrol in the future, everything is politically driven these days along with who has the right amount of money to influence the right politicians/governments to get what these corporations want. It's a whole different story I will reluctantly not want to delve into. I'd expect more chaos and crisis in the future.

 

[JFK777]

Any new international airplane UA introduces also has new engines coming with them, since the 777(we have), 767 and 744 are Pratt powered and P&W will not be making an engine for the 787, the 747 ADV or the 777-200LR & -300ER(GE exclusively). I think a limited number of 747 ADV for the truck routes(west coast to Japan, Hong Kong & Aussie), 777-200LR & 300ER for some Asian & Europe and new routes like ORD-SYD, and 787 for the 200 passenger routes from the hubs to Europe, South America, and new destinations like India(nonstop) and one day UA will serve Africa. South Africa from Dulles or Chicago and who know possibly the day has arrived for a nonstop say from Dulles to Nairobi, Kenya.

 

[UnitedChicago]

How's United going to buy these planes when their business plan calls for no large capital expense spending - including aircraft - for the next 5 years?

 

[767jetz]

How's United going to buy these planes when their business plan calls for no large capital expense spending - including aircraft - for the next 5 years?

Because the plan is a growth neutral starting point that pleases the banks. As things change, so will the plan going forward.

 

[JFK777]

Opertating the international fleet we have now in 2010, when our competition is operating the A380 from Asia to the USA, would leave us in a sorry state.

 

[JungleClone]

United Chicago,

Just because UA didn't include any large capital expenditures or aircraft acquisitions in its POR, doesn't mean it won't happen. The POR only includes the bare minimum to satisfy the creditors and Judge Wedoff that UA can successfully emerge from bankruptcy. That's it. They're not about to show their growth cards until they absolutely have to. Also, remember that since UA's been in Chapter 11, long-term strategic planning hasn't been the focus. The focus has understandably been on reducing costs, increasing revenue, shoring up the balance sheet, and running the company day to day to bring it out of bankruptcy. Once UA emerges, once again the focus will start to gradually go outward to develop a long-term growth plan/strategy. They won't simply stand pat. You can be sure of that.