Hi Bob,
I''ll put in my two cents and try to answer your question. Let me preface this by saying that I mean no disrespect to U employees. I may not care for Chip, but you folks are doing a helluva job in spite of all that you have faced.
I don''t see U taking over a major portion of UAL''s flying for this simple reason: Despite some widebody a/c and some international routes, U is basically a regional carrier. U was cobbled together from Allegheny, Piedmont, PSA, etc., and still flies to many of the cities that these airlines served pre-deregulation. Many of these markets are smaller communities that may have been profitable when they were subsidized by state and local governments, but are now unprofitable.
U also is at a disadvantage because it can''t seem to find it''s niche among the airlines. It isn''t a low cost operation like LUV, so it has a difficult time competing against them. An example of this would be the struggle at Baltimore where U once had a large presence. LUV has steadily been chipping away at U''s market share until they are now the dominate carrier at BWI hands down. U also has trouble competing against the global carriers such as UAL, AMR, and DAL. One only needs to look at U''s failed attempt to establish a hub at Dulles in the mid 90''s. Once UAL determined that U was getting too big for it''s britches there they squashed them.
Why do they have trouble competing? Compare U to LUV. If a pax wants to go from Manchester, NH to somewhere in Florida they can go nonstop on LUV for probably less than $200, or they can fly U and stop in PIT or CLT for a much higher fare. Now look at U vs. UAL. The services they provide are much the same, i.e. they both cater to business travellers. However, UAL serves a much larger number of business destinations (NRT, LHR, etc.). If the price is comparable, this reason alone can be enough to win over a business traveller (not to mention the fact that they can redeem their mileage plus awards for a trip to Hawaii).
I won''t sit here and blow sunshine up your skirt about how UAL is going to come out of CH11 and dominate air travel. My opinion is that we will, however there is no way to prove it. I can point out several facts though:
1. UAL has gotten significant pay and productivity changes from it''s employees. The paycuts are what you hear about in the papers, but there have also been changes to retirement benefits, insurance, etc. This adds up to a whoppin pile of cash that the company is saving.
2. Employee motivation. I won''t use the word morale, but I will say that I have never seen UAL employees so motivated. Survival has something to do with it, so does proving people like Chip and Gordon Bethune wrong. I think the main reason, however, is pride. UAL employees have seen what they are capable of achieving despite the battering they have taken over the past couple of years. Look at the on-time performance, the intent to repurchase numbers, and even (yes Bob) the decrease in mishandled bags.
3. Reduced aircraft leases, reduced payments to United Express carriers, reduced payments to vendors, etc. Once again this adds up to a pile of money.
I realize I''m rambling, but the point is this: UAL has gotten costs down to the point where they can effectively compete with the low cost providers. Will they be able to match them fare for fare? No, but UAL will always provide features for business travellers that they low cost guys cannot. If we can compete with low cost outfits then it goes without saying that we can compete with AMR, DAL, and NWA/CAL.
Having said this, why would we turn over a large portion of our flying to U? If most of our routes have become profitable again why hand them over to U RJs when our 320/737 fleets can fly them and make money. Why hand over an entire hub, as Chip is so fond of predicting?
Why in God''s name would we ever hand over our coveted NRT and LHR routes? Those are cash cows (SARS not withstanding).
Believe me when I say that I do try to visualize what this industry will look like when the dust settles. Maybe somebody will fold, and maybe somebody will merge. Who knows? I can tell you that in February I thought things were looking pretty grim for UAL. Fuel prices were going through the roof, SARS was breaking out in Asia, a war was looming in Iraq, and we had yet to secure any labor agreements. A majority of these problems are behind us now, but we still have much to do.
I hope I have left the emotion out of my response. I just cannot envision UAL handing anything substantial over to U. Chip is fond of pointing our our weaknesses and the fact that we are still in CH11, but my opinion is that it was suicidal for U to emerge from BK protection so early. They are still weak and losing tons of money. One hiccup with the economy or terrorism, and they are either filing again or out of business altogether.
Cheers,
ExThunderGuppy
P.S. Come fly with us sometime. You might be pleasantly surprised.
55 AM Bear96 wrote:
17 PM avek00 wrote: 
