United Needs New Plan

[UnitedChicago]

An excerpt from Crain's:

Issue: United doesn't plan to buy new planes over the next five years, while holding capital spending to a bare-minimum $400 million to $850 million per year.

Obstacles: Asian and European airlines competing with United on lucrative international routes have new fleets and are adding plush amenities that United may not be able to match.

Upshot: If it doesn't keep pace, United could be forced to compete by lowering prices — hurting its revenue growth and profits.


You all know that I've had it with Tilton and gang and months ago called for new leadership.

Tilton's plan calls for almost no capital spending for 5 years. I recall that Pan Am and TWA had similar problems after CH11 of not being able to buy new aircraft, new interiors, etc. to keep up with the Jone's.

Come on guys - this plan SUCKS. I know many of you will say, "I'm not quite ready to give up on Tilton yet...", "...an equity investor would cut United to the bone...".

If nothing changes - United will limp out of CH11 and stagnate.

IT'S TIME TO GET RID OF TILTON. His "boldest" move was to create TED. Give me a break.

I ask you all if you want United to be around for the next 75 years. If yes, then you need to get TPG in NOW. You'll say they'll demand more cuts, etc. However, those that want United around for 75 more years - isn't it better to cut more now than not have anything left?

TPG is 2 for 2. Don't tell me that the only reason TPG succeeded was low wages - they brought people to the table that had a vision, a plan and they executed it. And it didn't involve TED.

I know Brenneman, et al are tied up - but that doesn't mean there's not others out there up for the task.

Ok - off my soap box for now.

 

[767jetz]

Sorry UC... Just can't agree with you here. Many things can and will change once BK is behind us. There is an initial plan, but as circumstances permit, there is room for flexibility. Nothing is set in stone.

Air Canada wasn't planning capital expeditures either, but 6 months after emerging they are ordering new planes and expanding again. Initially the plan is for minimal capital expenditures. If cash flow is positive, that will change on short order.

Tilton & UAL have no intention of letting the competition get a leg up on us again. I know you don't like him and would love to see an equity investor step in, but that is simply not going to happen. Sorry.

 

[UnitedChicago]

Sorry UC...  Just can't agree with you here.  Many things can and will change once BK is behind us.  There is an initial plan, but as circumstances permit, there is room for flexibility.  Nothing is set in stone.

Air Canada wasn't planning capital expeditures either, but 6 months after emerging they are ordering new planes and expanding again.  Initially the plan is for minimal capital expenditures.  If cash flow is positive, that will change on short order.

Tilton & UAL have no intention of letting the competition get a leg up on us again.  I know you don't like him and would love to see an equity investor step in, but that is simply not going to happen.  Sorry.

[post="298619"][/post]​

I respect your points and hope that's the case for UA as well.

But let me ask you this - do you think Tilton has made bold steps to get United healthy? What do you think of Ted? How do you respond when you read the constant feedback by numerous analysts that say United has not done enough operationally like American? I can tell you as a Premier Exec that I don't like Ted and don't understand why I have to fly "a different brand". Don't tell me i'm not the target - because i fly to a lot of Ted destinations so i think that makes me a pretty good target. If United were to at least try a rolling hub, don't you think operation costs might actually dip enough to not require Ted? Do you truly think the expenses saved by having all coach dramatically offset the additional costs of 1 extra FA, the cost of new airport signage, distraction of management from mainline, and the loss of A320's from mainline? Let's assume the financial performance of Ted vs. mainline is marginally better. Do you think that's enough to justify a confusing strategy? Again - i'm who you want on board - i pay close to full fair. Sample size of 1 here - but i don't understand, nor like Ted. How do you feel about the fact that Tilton has repeatedly put deadlines out there and repeatedly missed them? Do you look to Tilton, Tague, and Brace as visionaries and among the most talented airline execs in the business?

How can after 3 years in CH11, the long awaited business plan still be a work-in-progress? I know things change almost daily - but come on - there has to be some sort of vision here.

For example, American is very clear that their vision is: they will not provide items that the business travel would not pay for. Pillows, I like em, but not gonna pay for them. A plug in every seat for my laptop, yep i'll pay for that.

Where's United's vision??????????????????????????

 

[767jetz]

I'll try to tackle some of these:

do you think Tilton has made bold steps to get United healthy?

- I've met Tilton personally and candidly spoke with him on 2 occasions. He is not one to care about labels like "bold" or "visionary." He is realistic, down to earth, and wants to get the job done. He does want a healthy UA that will reverse the mistakes of the past and position us for the future. There is much banter from people out there, and Tilton really doesn't care what the critics think is right. He is methodical and persistent and gets the job done without being distracted by outsider's opinions.

What do you think of Ted?

- Don't like SWA. Don't like Jet Blue. Not as companies, But just don't like their product or the "leisure" market. So I don't particularly like TED. Although I do think it is a better product on the routes that it competes. And what I think doesn't amount to a hill of beans. It is a necessary tool in todays market and as such I think it is good for UA.

How do you respond when you read the constant feedback by numerous analysts that say United has not done enough operationally like American?

- Analysts are nothing but self-proclaimed experts on subjects they view from the outside. Never put much weight on their opinions since they are wrong as often as they ar right. Kinda like flipping a coin.

If United were to at least try a rolling hub, don't you think operation costs might actually dip enough to not require Ted?

- As far as I know, UA did de-peak their banks at ORD and IAD. Rolling hubs and TED are not related to each other. They are both tools.

Do you truly think the expenses saved by having all coach dramatically offset the additional costs of 1 extra FA... Again - i'm who you want on board - i pay close to full fair. Sample size of 1 here - but i don't understand, nor like Ted.

- Don't think it's "dramatic" but I do think it's enough to justify. In times of penny pinching, every cent counts. As for wanting customers like you on board, I agree whole-heartedly! However we must also focus on other segments of the market. One of UA's past mistakes was catering exclusively to business travelers.


How do you feel about the fact that Tilton has repeatedly put deadlines out there and repeatedly missed them?

- I feel that it is smart to adjust course when neccessary during such a complex process. I commend him for not sticking o other people's time lines. Look what happened to US Air after BK#1. Just like in flying, it is negligent to stick to one course of action just because you said so, even when presented with complelling reasons to change course.

Do you look to Tilton, Tague, and Brace as visionaries and among the most talented airline execs in the business?

- I personally don't care what anyone is called. I just want the end result to be a positive one. Titles don't impress me.


Just one pilot's opinion.

 

[dc3fanatic]

It's a baseline that doesn't use questionable assumptions for growth.

It doesn't require a merger to survive.

THAT's what you need to see.

 

[casual rat]

I agree dc3...no bells and whistles with the ability to adjust as 767Jetz pointed out. I like it!

 

[UnitedChicago]

Thanks Jetz for the response - I had a total brain dump on ya.

With all due respect - 2 points of disagreement:

-Rolling hubs and TED are not related to each other. They are both tools.

-I commend him for not sticking o other people's time lines.

[post="298645"][/post]​

Then you commend him for not sticking to his timelines. Who else is setting the timeline that he continues to miss?

If rolling hubs make the entire operation more efficient and lower CASM, then why do you need Ted which is designed to lower CASM? Why not make the entire operation more efficient so you generaet higher RASM and profits on the good routs and break-even or make actual money on the bad routes that Tilton put Ted on? I very much think it's related here.

I

 

[767jetz]

UC,

As for timelines, I'm just saying that it's not like he's just arbitrarily putting out dates and ignoring them. The timeline is set according to present info and future projection. As circumstances change, so does the timeline.

The rolling hub issue is a worthy debate, but I don't have the perfect answer. Above my pay grade I guess.

 

[767jetz]

One more point about TED. Operationally TED is no different than Mainline. You could substitute a mainline Airbus on a TED flight any time you want. In fact it does happen from time to time. Within UA we call the Airbus and 737 fleet the LCO. Same work rules, pay, etc. etc. etc.

TED is mainly a marketing tool. It doesn't cater to the business traveler in many respects, but it does add to UA's bottom line.

 

[UnitedChicago]

TED is mainly a marketing tool.  It doesn't cater to the business traveler in many respects, but it does add to UA's bottom line.

[post="298751"][/post]​

See this is exactly what I don't understand. Has anyone bought a ticket on Ted becuase it's Ted? What is Ted? Seriously - if it's a marketing tool - what's the Ted brand stand for? I mean it's Part of United as they like to say - so wouldn't the person just have booked on United in the first place?

I'd love to see the stats on FlyTed.com. I bet the traffic and booking is very, very low. Because - guess what - you can book on Ted on UAL.com. Why would anyone go to flyted.com? WHAT IS TED? Confused? I AM.

At least Delta made (or tried to make) Song into a distinct brand. Cosmos, colorful cabins, Kate Spade FA uniforms, even a Song retail store in NYC. Song is a completely different experience than Delta mainline.

What's unique about this marketing tool called Ted? Oh yes - Ted's beer of choice is Fosters. And Ted wants us to be safe as the safety video states. But beyond those two things - the seats are the same as mainline, interior same (except for that $10 Ted sign on the bulkhead), even the crew uniforms are the same. Oh I forgot, someone pulled the black foam off of the headsets and put on new colorful ones.

So if Ted is a marketing tool - Ted is completely not delivering an experience anything other than a Mainline 320 with different paint, all coach seating, Fosters, cheesey headsets, and flight crews that try too hard (if at all) to be like SWA flight crews.

Sorry Jetz - not jumping on you - but I'm truly stumped as to what value Ted provides United beyond (and I'm only guessing here) marginally better CASM than mainline. And if every penny counts as you say - why hasn't Tilton gone to a rolling hub?

and one more time for good measure - who or what is TED?

 

[sastal]

One of UA's past mistakes was catering exclusively to business travelers.

I am just curious as to whom you would have catered.

 

[UnitedChicago]

One of UA's past mistakes was catering exclusively to business travelers.

I am just curious as to whom you would have catered.

[post="298763"][/post]​

There was a time when United didn't cater to business travelers as aggresively as they did in the 90's. Did they have a airline within an airline? NO.

I would have reduced operational costs enough to maintain one, and only one airline.

Can you explain the experience people get with Ted?

 

[Breath_of_Fresh_USAirways]

It's a baseline that doesn't use questionable assumptions for growth. 

It doesn't require a merger to survive.

THAT's what you need to see.

[post="298662"][/post]​

Doesn't the "business plan" assume $50 oil? I would consider that, alone, a very questionable assumption.

Not that I wouldn't LOVE to see $50 oil again -- it would benefit EVERY U.S. airline -- not just United!

 

[mrfish3726]

I loved UniTED managements prediction of a 300+ million dollar profit in 2006 It's good to be able to dream!!!! Lets see, my prediction is that UniTED will take another trip through BK in 2006 just like US Air has done in 2005 :blink: .

 

[mrfish3726]

UNITED CHICAGO,

Just wait till one of UniTED'S RJ'S comes your way with FC, and ECONOMY + seating. Now that is something you would enjoy and be willing to paying a couple of grand for LOL! Just what you want, more leg room but NO HEADROOM OUCH! :unsure: