To all of the United employees/interested parties who posted in this topic:
What I find interesting is the emotion you bring to the US Airways board while you rarely post on the United board. If my comments are not true, then why do you waste your time posting on the US Airways board with so much emotion?
Why not spend your time doing something else?
767jetz, I have taken a few days away from "Internet sparring" to spend more time with my family. My son has a serious medical condition and as many readers know we already had two of our children prematurely killed in separate car accidents. Therefore, cool it with your "smart aleck" comments.
I'm not in much mood to spend time debating my comments with you. But, you know exactly where the comments came from on the $400 to $500 million so grow up and stop trying to "shoot the messenger".
United reported a net income for October of $25 million that excluded reorganization expenses of $149 million, therefore, the
loss was $124 million. Therefore, it's not hard to figure out how the company could lose $400 to $500 million, as the Denver Post reported (not Chip Munn, which you knew when you posted your comment).
Regardless, United has significant challenges to over come if it’s going to emerge. Furthermore, Glenn Tilton is providing spin, just like Dave Siegel did, because if a bankrupt airlines true financial picture became public knowledge there would likely be passenger defection, thus a liquidation could be a self fulfilling prophecy.
However, the 174 unresolved EETC's are becoming a difficult renegotiation, the 3 remaining UCT airport municipal bond negotiations (in default since last April) have yet to see a resolution, the ACA/Mesa/Dulles fiasco seems to be getting worse, and the pension issue is likely to become an enormous challenge with the disappointing congressional news prior to this week's recess.
Last Tuesday the Senate left Washington, D.C. without providing a "unanimous consent" instead of a roll call vote that would have given a legislative solution to United's huge underfunded pension problem. ALPA R&I now believes there will not be legislative relief for the Chicago-based company's DB retirement plans even though there is one more small opportunity when Congress goes back into session December 9.
In fact, Senate staff members have told US Airways and ALPA lobbyists that any pension relief would still require a "unanimous consent", which they consider very difficult to obtain on such a demanding issue with so little time left before the next recess and the end of year requirements.
Maybe that is why United ALPA spokeswoman Captain Scotty Clark was so despondent in her November 26 recorded message at 800-THE-ALPA. Clark talked about the "disappointment and frustration" for all United pilots in her
prepared comments clearly indicating the huge problem.
Why? Because United recently informed the SEC that without legislative relief, the company would be required to put $4.8 billion into its DB Plans during the next five years, with most of the payments due by 2006. Simply put, the company cannot do this.
Therefore, in my opinion, considering my experience on Capital Hill doing pension lobbying and witnessing Bankruptcy Court pension termination hearings, it appears the only way United can obtain a loan guarantee and emerge is to terminate the pension(s). But, the question is, to meet the 7% profit margin within 7 years required by the ATSB; can the company afford a replacement DC Plan in light of deteriorating industry fundamentals?
In regard to ACA, this issue seems to be getting worse for United. The Dulles-based airline amended its complaint and included United in the suit. Furthermore, three days ago ACA said it was in the process of seeking written consent from shareholders, which will significantly delay the Mesa takeover bid.
Separately, regardless of what you say, there are reports United cannot easily replace over 100 RJs/Turboprops to provide Dulles feed without ACA in the picture, unless Mesa gains control of the regional company with the hostile takeover bid.
Last summer I told you that United had DIP problems and then reported Captain Duane Woerth's comments to the US Airways MEC made in open session, but you vehemently told me Woerth and I were wrong.
But, low and behold, United's bankruptcy attorney Jim Sprayregen recently told the bankruptcy court, “some of the aforementioned challenges placed great strain on United's business operations earlier in 2003. At that time, it appeared possible that our financial performance would not recover sufficiently to avoid a violation of our DIP covenants by around mid-year, and possible liquidity constraints in early 2004."
How could that be? Moreover, did United management lie only last summer or could they be doing it again?
Meanwhile, it appears Ted is not all as advertised and last week Crain's Business News made some interesting points. The periodical said the marketing hoopla surrounding Ted obscures the fundamental question of whether United Airlines' new high-concept, low-fare airline-within-an-airline can compete profitably with fast-growing discount rivals. As it prepares for takeoff from Denver to 12 vacation destinations in February, Ted is flying into a
stiff head wind of skepticism about its ability to bring costs in line with lower fares. "It could be even less profitable than the main line," says Robert Mann Jr., an aviation consultant in Port Washington, N.Y. "If the costs aren't much less and the revenues are much less, the economics aren't as good as for the main line." Skeptics note that United still has higher costs than any low-fare airline, even after Elk Grove Township-based parent UAL Corp. laid off almost one-fourth of its workforce and won $5 billion in labor concessions and other annual cost savings in Bankruptcy Court over the past year. United is the latest of many struggling airlines to spin off a low-fare venture in recent years, none of which — including Shuttle by United, which was shut down in late 2001 — have succeeded against the all-discount carriers, such as Dallas-based Southwest Airlines.
The 1½-cent difference -- As of Sept. 30, United's costs were 9.88 cents per available seat-mile, an industry benchmark measuring costs across every mile each seat is flown, vs. 8.34 cents for Frontier Airlines, its main rival at Denver. That penny-and-a-half puts United's costs more than 18% higher than Frontier's. "That could make a big difference," says New York-based Blaylock & Partners analyst Ray Neidl, Crain's reported.
Bob Mann is a highly respected consultant who has been employed by ALPA and APA. When he says, "It could be even less profitable than the main line," you should be concerned because I believe the ATSB will have the same thoughts as Mann.
In conclusion, I am tired of debating this issue and for you to try and be "I told you so's". Without pension relief, no reasonable ACA/Mesa/Dulles solution in sight, and Ted likely to have poor P&L, United has significant problems and maybe the UCT is not dead after all, although, I now believe an AF-KLM type of merger could be the likely type of corporate transaction completed by the business partners.
Regardless, both companies need to stabilize their business before they can consider a merger, but consolidation is
inevitable.
Respectfully,
Chip
