US partner UA obtains first labor ERP TA
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767jetz
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On 11/2/2002 12:01:12 PM chipmunn wrote:
I suspect the $9 billion concession over 5 years may be the ATSB bottom line; however, the governance issue is in the Bush Administrations "cross-hairs". Will it be eliminated by the unions?...
The more UA delays in getting meaningful labor agreements, the less likely the creditors, vendors, and lessors will be to play ball, while the company continues to burn money.
Chip
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Well Chip, just looking at some of the FACTS regarding our ERP II. There is nothing in there that even remotely points to removing our governance. Looks like our seat on the board is here to stay.
Also, the protection against any hair-brained merger attempts is extended until 2009 unless a prenuptual agreement satisfactory to UA ALPA is obtained. Additionally, no pilots from another airline will be employed by United through an asset purchase until all furloughed UA pilots are returned.
Doesn't sound promising for the unique corporate transaction theory.
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On 11/2/2002 12:01:12 PM chipmunn wrote:
I suspect the $9 billion concession over 5 years may be the ATSB bottom line; however, the governance issue is in the Bush Administrations "cross-hairs". Will it be eliminated by the unions?...
The more UA delays in getting meaningful labor agreements, the less likely the creditors, vendors, and lessors will be to play ball, while the company continues to burn money.
Chip
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Well Chip, just looking at some of the FACTS regarding our ERP II. There is nothing in there that even remotely points to removing our governance. Looks like our seat on the board is here to stay.
Also, the protection against any hair-brained merger attempts is extended until 2009 unless a prenuptual agreement satisfactory to UA ALPA is obtained. Additionally, no pilots from another airline will be employed by United through an asset purchase until all furloughed UA pilots are returned.
Doesn't sound promising for the unique corporate transaction theory.
767jetz, You are discounting the theory of There's Reason to Believe way too much!my friend. [img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
As soon as U can furlough enough people to make a dramatic impact on our costs?..then the theory of Unique Corporate Transactions can take place. [img src='http://www.usaviation.com/idealbb/images/smilies/2.gif'] [img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
As soon as U can furlough enough people to make a dramatic impact on our costs?..then the theory of Unique Corporate Transactions can take place. [img src='http://www.usaviation.com/idealbb/images/smilies/2.gif'] [img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
Frankie Pantangeli
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chipmunn
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767jetz:[BR][BR]767jetz said: Well Chip, just looking at some of the FACTS regarding our ERP II. There is nothing in there that even remotely points to removing our governance. Looks like our seat on the board is here to stay. Also, the protection against any hair-brained merger attempts is extended until 2009 unless a prenuptual agreement satisfactory to UA ALPA is obtained. Additionally, no pilots from another airline will be employed by United through an asset purchase until all furloughed UA pilots are returned. Doesn't sound promising for the unique corporate transaction theory.[BR][BR]Chip comments: The purpose of the unique corporate transaction as I understand it, was to fragment UA's domestic system into US's lower cost structure, to download the high cost UA domestic network into US's system. The plan likely created by Greg Taylor and McKinsey Consulting was designed to prevent a UA bankruptcy filing. However, with US unable to obtain required agreements from the IAM/CWA and the other stakeholders to prevent a bankruptcy filing, the “unique corporate transaction†could not be completed with joint ATSB/TPG funds.[BR][BR]Regardless, that potential transaction will not happen with US in bankruptcy and now controlled by the courts.[BR][BR]But, the question is what will happen to the future of UA & US, whose ATSB applications require additional code share revenues, required to obtain the 7 percent profit margin? What if either airline fails? What happens if the additional revenue is not obtained if the DL, NW, and CO alliance is approved, thus neutralizing the benefits of the UA – US partnership? [BR][BR]Meanwhile, if UA does file for a formal reorganization, does the ERPII have a S.1113 letter for protection? If not, what happens to the UA ALPA ERPII once involved in a formal reorganization? Will the judge honor this proposal? Could the union see deeper cuts? Will the UA employees keep the governance clause and the board seat?[BR][BR]Furthermore, with the governance issue still unresolved, could this language cause the ATSB to reject UA's loan guarantee application? Some observers believe as long as the company is controlled in union halls, the airline will never become viable due to employee special interest decisions controlling the business plan.[BR][BR]It's unclear how the ATSB will respond to the ALPA ERPII, but what happens if the other employee groups fail to reach an agreement that satisfies the board?[BR][BR]On Friday, UA elected to pay two bond debentures totaling $41 million. With cash pouring out of the company time is very, very short, but this is an interesting development. Either management expects to avoid bankruptcy or the company could be setting up the airline for a liquidation, without ample capital to reorganize. If UA continues to make large debt payments and does not obtain adequate labor, vendor, creditor, and lessor restructuring agreements, the company could be down to less than $500 million, of which $344 million is restricted cash by December 2. [BR][BR]I fully expected ALPA to reach an agreement, which once again will attempt bypass ALPA Merger Policy with the restrictions you listed that could actually led the Bush Administration to not approve the loan guarantee, because the governance issue has not been resolved. But, I expect the board to provide a “conditional†approval, putting the pressure squarely on the shoulders of the employees with the company burning cash and making debt payments. [BR][BR]Could it be the ALPA ERPII would actually led to the demise of UA? Nobody knows for sure how this will turn out and the pilots cannot control their own destiny, but one thing is for sure. Without lender payment extensions, we could know the status of UA’s and possibly US’s future in less than four weeks.[BR][BR]Nobody wants to see anybody get hurt, but I believe UA could still be a long way from being out of the woods. Nonetheless, there is reason to believe you may be surprised on how this all turns out.[BR][BR]Chip[BR]
Chip , That's all very interesting to say the very least.
I tend to believe that both U and UAL are going to continue to spiral for awhile. U's going to continue to gut itself of it's younger talent..and in the end , wind up with nothing but a bunch of old bitter high timers with more vacation and sick leave to be covered by other high timers at time and a half and double time rates. Where's the benefit in that?
UA is likely to continue on a downward spiral due to continued Union Domination...and no real sense of urgency to resolve any of thier core issues.
UA folks love to try to seperate themselves from the comparison to U's problems...they can kid themselves till Gabriel blows his horn. Thier problems are just like ours..Only on a much larger scale.
We did what the company wanted from us..but it still didn't change the need for Formal Re-Organization (Chapter 11)...UA is going to need Devine Intervention to avoid the same fate..if they continue to drag thier feet?..and that still doesn't create any assurances of avoiding BK...it certainly didn't change diddly for us.
The dynamics of this industry have been shaken everyway but loose...The full-service carriers will either adapt or die!! ..and that is the long and short of that!!
I tend to believe that both U and UAL are going to continue to spiral for awhile. U's going to continue to gut itself of it's younger talent..and in the end , wind up with nothing but a bunch of old bitter high timers with more vacation and sick leave to be covered by other high timers at time and a half and double time rates. Where's the benefit in that?
UA is likely to continue on a downward spiral due to continued Union Domination...and no real sense of urgency to resolve any of thier core issues.
UA folks love to try to seperate themselves from the comparison to U's problems...they can kid themselves till Gabriel blows his horn. Thier problems are just like ours..Only on a much larger scale.
We did what the company wanted from us..but it still didn't change the need for Formal Re-Organization (Chapter 11)...UA is going to need Devine Intervention to avoid the same fate..if they continue to drag thier feet?..and that still doesn't create any assurances of avoiding BK...it certainly didn't change diddly for us.
The dynamics of this industry have been shaken everyway but loose...The full-service carriers will either adapt or die!! ..and that is the long and short of that!!
767jetz
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[blockquote]
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On 11/3/2002 5:03:23 PM chipmunn wrote:
Meanwhile, if UA does file for a formal reorganization, does the ERPII have a S.1113 letter for protection? ...Will the UA employees keep the governance clause and the board seat?
Furthermore, with the governance issue still unresolved, could this language cause the ATSB to reject UA's loan guarantee application?
It's unclear how the ATSB will respond to the ALPA ERPII, but what happens if the other employee groups fail to reach an agreement that satisfies the board?
On Friday, UA elected to pay two bond debentures totaling $41 million. Either management expects to avoid bankruptcy or the company could be setting up the airline for a liquidation, without ample capital to reorganize.
Chip
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[/blockquote]
- Yes, there is a S.1113 letter.
- Yes, we will keep the governance and board seat.
- Why do you keep refering to unresolved governance issues? What makes you think it's unresolved. There is no governance issue. We are still employee owners. Sorry this ruffles your feathers, as does our ability to insist on a pre-nup. Get over it! We're tired of your crying about bypassing ALPA merger policy. If you want that kind of say at your company, next time shell out a few Billion dollars and buy your company as we did!
-Don't worry. The other UA employees will get on board. We have you guys to thank for demonstrating how bad a CH11 filing can be.
-If you really think they are setting up the company for a liquidation, you are really smokin' something funny. Can anyone predict the actual outcome of any of this? Of course not. But rest assured, from Tilton down to the most junior CS agent we are committed to fixing our company and not following in US' footsteps.
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On 11/3/2002 5:03:23 PM chipmunn wrote:
Meanwhile, if UA does file for a formal reorganization, does the ERPII have a S.1113 letter for protection? ...Will the UA employees keep the governance clause and the board seat?
Furthermore, with the governance issue still unresolved, could this language cause the ATSB to reject UA's loan guarantee application?
It's unclear how the ATSB will respond to the ALPA ERPII, but what happens if the other employee groups fail to reach an agreement that satisfies the board?
On Friday, UA elected to pay two bond debentures totaling $41 million. Either management expects to avoid bankruptcy or the company could be setting up the airline for a liquidation, without ample capital to reorganize.
Chip
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[/blockquote]
- Yes, there is a S.1113 letter.
- Yes, we will keep the governance and board seat.
- Why do you keep refering to unresolved governance issues? What makes you think it's unresolved. There is no governance issue. We are still employee owners. Sorry this ruffles your feathers, as does our ability to insist on a pre-nup. Get over it! We're tired of your crying about bypassing ALPA merger policy. If you want that kind of say at your company, next time shell out a few Billion dollars and buy your company as we did!
-Don't worry. The other UA employees will get on board. We have you guys to thank for demonstrating how bad a CH11 filing can be.
-If you really think they are setting up the company for a liquidation, you are really smokin' something funny. Can anyone predict the actual outcome of any of this? Of course not. But rest assured, from Tilton down to the most junior CS agent we are committed to fixing our company and not following in US' footsteps.
C
chipmunn
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[FONT face=Times New Roman size=3]Hi 767jetz:[/FONT]
[FONT face=Times New Roman size=3]767jetz said: Yes, there is a S.1113 letter.[/FONT]
[FONT face=Times New Roman size=3]Chip comments: I understand the UA pilots received limited S.1113 protection, unlike the US unions who received full protection.[/FONT]
[FONT face=Times New Roman size=3]Specifically, the UA ALPA ERPII TA states under the [/FONT][FONT face=Times New Roman size=3]1113 Protection paragraph:[/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman size=3](ERP 14) New; limited protection against future 1113 proceedings if [/FONT][FONT face=Times New Roman][FONT size=3]every stakeholder signs on to the recovery plan and the ATSB provides loan guarantee.[/FONT][/FONT][/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman][FONT size=3]Chip asks: Why only limited and not full protection like the US agreements? What if one creditor, vendor, or aircraft lessor fail to reach a restructuring accord? By the way, former UA president Rono Dutta is a RSA consultant and on Friday, October 25, UA announced in a SEC filing that Dutta has been retained by UA as an consultant. I find it interesting Dutta consults to both UA and the US Equity Plan Sponsor, whose pension fund controls $25 billion.[/FONT][/FONT][/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman][FONT size=3]Chip[/FONT][/FONT][/FONT]
[FONT face=Times New Roman size=3]767jetz said: Yes, there is a S.1113 letter.[/FONT]
[FONT face=Times New Roman size=3]Chip comments: I understand the UA pilots received limited S.1113 protection, unlike the US unions who received full protection.[/FONT]
[FONT face=Times New Roman size=3]Specifically, the UA ALPA ERPII TA states under the [/FONT][FONT face=Times New Roman size=3]1113 Protection paragraph:[/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman size=3](ERP 14) New; limited protection against future 1113 proceedings if [/FONT][FONT face=Times New Roman][FONT size=3]every stakeholder signs on to the recovery plan and the ATSB provides loan guarantee.[/FONT][/FONT][/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman][FONT size=3]Chip asks: Why only limited and not full protection like the US agreements? What if one creditor, vendor, or aircraft lessor fail to reach a restructuring accord? By the way, former UA president Rono Dutta is a RSA consultant and on Friday, October 25, UA announced in a SEC filing that Dutta has been retained by UA as an consultant. I find it interesting Dutta consults to both UA and the US Equity Plan Sponsor, whose pension fund controls $25 billion.[/FONT][/FONT][/FONT]
[FONT face=Times New Roman size=3][FONT face=Times New Roman][FONT size=3]Chip[/FONT][/FONT][/FONT]
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On 11/3/2002 5:03:23 PM chipmunn wrote:
Chip comments: The purpose of the "unique corporate transaction" as I understand it, was to fragment UA's domestic system into US's lower cost structure, to download the high cost UA domestic network into US's system. The plan likely created by Greg Taylor and McKinsey Consulting was designed to prevent a UA bankruptcy filing. However, with US unable to obtain required agreements from the IAM/CWA and the other stakeholders to prevent a bankruptcy filing, the “unique corporate transaction” could not be completed with joint ATSB/TPG funds.
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Another stone thrown from the glass house. While I am no defender of the IAM, I am so sick and tired of Chip blaming them for his unique corporate transaction not occuring. Chip, Chapter 11 was filed mainly because the Company realized they could gain other creditor and lessor concessions while still having sufficient luquidity to operate. Ask Dave himself. It was in the letter he sent to every employee dated 8-11-02.
Yes, the IAM and CWA did not have concessions in place on the filing date, but a court hearing was not needed to get the concessions, they occured during the normal course of business. Union contracts take typically many years to negotiate. How long were the United Mechanics in negotiations recently? The company got completely new agreements from all groups within something like 6 months. Sure it was not within the original timetable, but the June 15 or 28 deadline was not realistic anyway, it just provided a table on which to get both sides sitting down.
Please now go back to the left seat of your A320, before it becomes the right seat. Your accusations do nothing but rile up the more militant on this board, and while I respect your right to your opinion, it is just that, an opinion. You have yet to provide any tangible evidence that your unique corporate transaction was ever anything more than a daydream you came up with sitting at the gate while passengers for your next flight boarded. Any attempt to guilt trip anyone else has, and will continue to fail miserably.
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On 11/3/2002 5:03:23 PM chipmunn wrote:
Chip comments: The purpose of the "unique corporate transaction" as I understand it, was to fragment UA's domestic system into US's lower cost structure, to download the high cost UA domestic network into US's system. The plan likely created by Greg Taylor and McKinsey Consulting was designed to prevent a UA bankruptcy filing. However, with US unable to obtain required agreements from the IAM/CWA and the other stakeholders to prevent a bankruptcy filing, the “unique corporate transaction” could not be completed with joint ATSB/TPG funds.
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Another stone thrown from the glass house. While I am no defender of the IAM, I am so sick and tired of Chip blaming them for his unique corporate transaction not occuring. Chip, Chapter 11 was filed mainly because the Company realized they could gain other creditor and lessor concessions while still having sufficient luquidity to operate. Ask Dave himself. It was in the letter he sent to every employee dated 8-11-02.
Yes, the IAM and CWA did not have concessions in place on the filing date, but a court hearing was not needed to get the concessions, they occured during the normal course of business. Union contracts take typically many years to negotiate. How long were the United Mechanics in negotiations recently? The company got completely new agreements from all groups within something like 6 months. Sure it was not within the original timetable, but the June 15 or 28 deadline was not realistic anyway, it just provided a table on which to get both sides sitting down.
Please now go back to the left seat of your A320, before it becomes the right seat. Your accusations do nothing but rile up the more militant on this board, and while I respect your right to your opinion, it is just that, an opinion. You have yet to provide any tangible evidence that your unique corporate transaction was ever anything more than a daydream you came up with sitting at the gate while passengers for your next flight boarded. Any attempt to guilt trip anyone else has, and will continue to fail miserably.
C
chipmunn
Guest
N628AU, don't be so sensitive because my comment was not intended to be inflammatory. I did not single out the IAM and in fact said, with US unable to obtain required agreements from the IAM/CWA and the other stakeholders.
The problem was three-fold due to a lack of progress with three general groups: the aircraft lessors, CWA, and IAM. Without agreements from all stakeholders, US could not obtain the loan guarantee funds by the June 30 target, thus preventing US from gaining access to the combined US-UA ATSB loan guarantee percentages.
Regardless, it's water over the dam and there is nothing anybody can do about the past. All we can do is focus on the future to improve our collective prospects.
Chip
The problem was three-fold due to a lack of progress with three general groups: the aircraft lessors, CWA, and IAM. Without agreements from all stakeholders, US could not obtain the loan guarantee funds by the June 30 target, thus preventing US from gaining access to the combined US-UA ATSB loan guarantee percentages.
Regardless, it's water over the dam and there is nothing anybody can do about the past. All we can do is focus on the future to improve our collective prospects.
Chip
Yes, Chip, it is water over the dam, but you keep bringing it up. I have bitten my tongue long enough on the issue, even gave myself a two week mental health exile from this board to remain sane. I come back and you are still throwing the same stones you have been throwing. I am also not being too sensitive, just a bit fed up. Maybe if the company had begun dealing with these issues in October or November, instead of bringing in Dave in April, things would have been different. Is that ever mentioned? No, but consistently the IAM and CWA are always the first two reasons you bring up for this unique corporate transaction not taking place.
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On 11/3/2002 10:44:49 PM chipmunn wrote:
By the way, former UA president Rono Dutta is a RSA consultant and on Friday, October 25, UA announced in a SEC filing that Dutta has been retained by UA as an consultant. I find it interesting Dutta consults to both UA and the US Equity Plan Sponsor, whose pension fund controls $25 billion.[/FONT][/FONT][/FONT]
[FONT face="Times New Roman" size=3][FONT face="Times New Roman"][FONT size=3]Chip[/FONT][/FONT][/FONT]
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Dutta is employed as a consultant at a rate of $2000 a month. he also got a secretary until the end of the year, lots of cash (1.5 mil?) and a car. That's what you do when you fire the president of a company. Ron Allen is a consultant for Delta. DUH!
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On 11/3/2002 10:44:49 PM chipmunn wrote:
By the way, former UA president Rono Dutta is a RSA consultant and on Friday, October 25, UA announced in a SEC filing that Dutta has been retained by UA as an consultant. I find it interesting Dutta consults to both UA and the US Equity Plan Sponsor, whose pension fund controls $25 billion.[/FONT][/FONT][/FONT]
[FONT face="Times New Roman" size=3][FONT face="Times New Roman"][FONT size=3]Chip[/FONT][/FONT][/FONT]
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Dutta is employed as a consultant at a rate of $2000 a month. he also got a secretary until the end of the year, lots of cash (1.5 mil?) and a car. That's what you do when you fire the president of a company. Ron Allen is a consultant for Delta. DUH!
UAL777flyer
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I think it's foolish to keep comparing UA's ATSB application with US Airways application. US needs deeper cuts because they lack many of the intangibles that UA has in its' favor. UA has worldwide network coverage and strategically placed hubs to leverage, as well as an anchor in the STAR Alliance. US doesn't have that strength. Granted, UA's problems at present are just as troubling. But I believe UA has a better chance of repaying their loan than US Airways, hence the need for deeper cuts at US. Do not sell Glenn Tilton short. I have heard through a couple of good sources that initial feedback from the ATSB since UA filed their new application has been positive. I firmly believe Tilton knows what he's doing. Don't be too quick to say that UA's cost cuts won't be enough to get the ATSB loan guarantee. When politics is involved, anything can happen. And make no mistake about it, politics is involved in this process.
Chip,
If you honestly think Tilton is setting up UA for a possible liquidation, you're out of your mind. You are way off the beaten path on that one. It's just not going to happen.
Chip,
If you honestly think Tilton is setting up UA for a possible liquidation, you're out of your mind. You are way off the beaten path on that one. It's just not going to happen.
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On 11/2/2002 11
43 AM chipmunn wrote:
[STRONG][FONT face="Times New Roman" size=3]Thus, the US Airways average annual reduction is about twice as much per pilot than at United. Reports indicate the UA pilot W-2 cut is 18 percent and the US pilot cut is 26 percent, with elimination of Airbus overides, A-330 pilots receiving a greater reduction, and supervisor pay reduced an additional 6 percent. [/FONT][/STRONG][/P]
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Apples and oranges Chip. What does you're lowest paid 737 F/O make? How about the lowest paid A-320 F/O. Your most junior F/O will be MAXED OUT (over 12 years) on pay. Far cry from the situation at UAL.
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On 11/2/2002 11
43 AM chipmunn wrote: [STRONG][FONT face="Times New Roman" size=3]Thus, the US Airways average annual reduction is about twice as much per pilot than at United. Reports indicate the UA pilot W-2 cut is 18 percent and the US pilot cut is 26 percent, with elimination of Airbus overides, A-330 pilots receiving a greater reduction, and supervisor pay reduced an additional 6 percent. [/FONT][/STRONG][/P]
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Apples and oranges Chip. What does you're lowest paid 737 F/O make? How about the lowest paid A-320 F/O. Your most junior F/O will be MAXED OUT (over 12 years) on pay. Far cry from the situation at UAL.
UAL777flyer,
You hit the nail on the head! Glenn Tilton is not at UAL to start a fire sale of any type. He impresses me more and more with what I read he is saying about UAL and the plan for OUR future. With the current grass roots effort to assist in the ATSB loan I am hopeful that the future of UAL has turned the proverbial corner and is moving up and onward again.
Holly is touting much of this same idea in this weeks PBB. It details much of the dissimilarities that U and UAL face and also sheds light on todays announcement that AA is going to need contributions to stay competetive with UAL. In fact she even titles the article AMR and UAL tied at the hip. Does not draw any comparisons to the U situation.
Make no mistake, I believe the task ahead is daunting for all carriers.
You hit the nail on the head! Glenn Tilton is not at UAL to start a fire sale of any type. He impresses me more and more with what I read he is saying about UAL and the plan for OUR future. With the current grass roots effort to assist in the ATSB loan I am hopeful that the future of UAL has turned the proverbial corner and is moving up and onward again.
Holly is touting much of this same idea in this weeks PBB. It details much of the dissimilarities that U and UAL face and also sheds light on todays announcement that AA is going to need contributions to stay competetive with UAL. In fact she even titles the article AMR and UAL tied at the hip. Does not draw any comparisons to the U situation.
Make no mistake, I believe the task ahead is daunting for all carriers.
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