United (Airlines) says liquidation a "possibility"

MSNBC ^ | March 18, 2003 | Reuters

[Timesink]

United Airlines said domestic bookings are down and international bookings have dropped 40 percent in the last week alone.

CHICAGO, March 18 ?  Bankrupt United Airlines forecast a first-quarter operating loss of $877 million and said for the first time publicly that going out of business altogether is a ?distinct possibility? as war looms. UAL Corp.?s United said domestic bookings are down and international bookings have dropped 40 percent in the last week alone, due to the impending Iraq conflict.

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[Arkie2]

Lobor has no say in the current operation of the airline. Their ESOP shares have been drawn down below the level where they have any representation on the board. United's ongoing problems are associated with an incompetent mgt which can't hit itself in the ass with both hands. All United has to do to emerge from bankruptcy is present a viable business plan. Unions have already made very large concessions. If United fails look to mgt for the cause.

[cocopuff]

BINGO! It's about time someone mentions the CEO . If there weren't unions , my friends , we would have fatalities.If it was up to the airlines they would have their pilots , mechanics and flight attendants work around the clock with out any regard for safety or the FAR's . Unless you are in the industry you will not understand what thse people have to go through day in and day out. Let the CEO's take a pay cut!!

[Arkie2]

Thanks. I was feeling pretty lonely here!

[Alberta's Child]

In my mind, the official demise of the airline industry occurred just before Christmas in 2000. I was watching a news report about the chaotic situation for travelers at the New York region's three major airports. The weather in New York was OK, but due to of bad weather in the Midwest a lot of flights were delayed or cancelled because they were waiting for eastbound flights out of Chicago and Detroit.

The reporter came across a group of four complete strangers who somehow figured out that they were all traveling to destinations within a few hours of each other in Des Moines, Iowa. And because of the chaotic situation at the airport they decided to rent a minivan and drive the 22-24 hours to Des Moines.

I remember watching that scene, and telling someone who was with me that the airline industry was doomed if it couldn't compete with a 24-hour drive to a destination halfway across the continent.

[Arkie2]

It's a good website and not in tune with the conventional wisdom. I get a kick out of their analysis.

[texson66]

So true. But then the successful business model for airlines is very much like "Southworst" airlines AKA "Greyhound of the Sky". No meals, no movies, no wide body jets, AND no seat reservations!

This is just fine if you travel on vacation once or twice a year.

But, people who have to fly everywhere for a living need an efficient airline that can treat them at a level slightly above "cattle" and/or cargo.

Business only airline anyone?

[tamu]

You're right, of course. I can remember my dad saying the same thing (about 20 years ago, right after deregulation).

I would like to add to your comment that United was completely unhedged going from 2002 to 2003. Fuel costs are the number 2 expense for the airlines and jet fuel was around $0.60/gallon a year ago and is around $1.30 now. Guess who was 100% hedged going into 2003? Southwest.

[goldstategop]

If you're on a corporate account, I guess you can afford extras if the company's that generous. Most of don't want or need them.

[AmericanDave]

Thats right, when times are good the CEO's and VPs get millions of dollars in stock options, and that's directly sucking money out of the airline. And then when times are bad they want concessions out of 20yr plus employees who could have RETIRED on one annual stock option! You are paying for an experienced flight crew to take you through bad weather safely. You can fly cheaper on a commuter airline with a pilot that has two years flying experience!

[Beck_isright]

First, he works his butt off. However he notes as do fellow union members that half the crew does not. His words were that you would have to be a mass murderer to get fired there, and I believe him having managed a union shop in my past. Northwest and Delta will not be far behind United. The management and union structure along with the current "spoke and hub" systems are antiquated. The managment of Southwest and Jet Blue are successfully negotiating profitability through these tough times. AirTrans is growing and expanding. I don't want to hear crap from the other carriers. They have to lower their unit cost per passenger mile. If that means 3 or 4 of the big boys have to go out of business, so be it. Survival of the fittest. And perhaps the unions and management will learn from the demise and liquidation of these airlines. Open my eyes and educate myself? Hell, perhaps you should talk to former Braniff, Pan Am and Eastern employees. Personally speaking I couldn't give a crap if United, Northwest, and Delta were liquidated. They gave me crappy service, always late, always mechanical delays as their excuses and of course, rude employees when you ask simple questions. So if you are working for one of the big dinosaurs, I'd suggest putting in an application with an airline that has a clue. But leave your pro-union buttkissing attitude behind. Southwest and Jet Blue are moving forward, and don't need to hear it.

[Beck_isright]

And one more thing; the only people concerned with United I feel sorry for, are all of the families from the victims of 9-11. Since United was self-insured, they will not get squat because of the negligence of United's management. The CEO and COO should be charged with manslaughter for 9-11, along with American's. But this will never happen. It's never the fault of the union's or management's. It's us poor sob's the consumer's fault. Because now we have alternatives and don't have to fly on the old crappy rude late major airlines.

[Arkie2]

No I don't work for a major, you're wrong about the hub and spoke system since it's the most efficient way to route people, AirTran runs a hub and spoke system, SouthWest is unionized, Jet Blue is profitable because of sweetheart leases with Scarebus which will expire in a few years then they will have to face those costs like mx and training covered in that deal,: should i go on? Don't pretend you know anything about the airline industry because it's obvious you don't. Take your business to AirTran and Jet Blue and Southwest, that's your privelege as a consumer but don't show your ignorance by spouting platitudes about this industry.

[jpl]

The unions would rather see workers lose their jobs than accept temporary layoffs and short-term reductions in pay.

And the management would rather harass grandmothers and old Medal of Honor winners and force the pilots to be defenseless rather than do what is really necessary to insure the safety of the passengers.

[Arkie2]

Please explain how anyone was negligent at United or American re: 9/11? You're digging pretty deep to make a nonexistent point.

[Arkie2]

Northworst mgt just granted themselves bonuses at the same time they're asking their employees for concessions. Go figure.

[SpeakLittle_ThinkMuch]

"But, people who have to fly everywhere for a living need an efficient airline that can treat them at a level slightly above "cattle" and/or cargo."


United does not fit your criterion. They are not efficient or pleasant. It's why they are broke. The customers voted with their feet, as they always do.

[Slings and Arrows]

Slings and Arrows' Customer Service Model: If treating people like s*** drives them away, treating them even worse will not bring them back.

May Delta be next.

[Don Corleone]

Couldn't happen to a nicer airline.

I'm sure the 90,000 employees and their families appreciate your Christian concern for their problems. They won't get the benefit of the platinum parachutes that the executives gave themselves. If you can't see that what is happening to the airlines is a recipe for disaster then there is no hope for you. Can you say "Nationalization" and all the good things that come with it?

[SauronOfMordor]

I am just a ole boy from Mississippi so will someone please tell me how a business can NOT make a profit for years and years and years and still stay in business? Doesn't work that way for us here in Mississippi.

Probably by selling assets to pay for current operating costs. Years ago, I worked briefly for Pan Am Airlines. They also had high union costs (their IT dept was unionized by the Teamsters, which is why I quit in disgust after three weeks). What they did was to sell their buildings, sell (and lease back) their jets, gates, and whatever else they could. Finally, when there was nothing left, they folded

If management had been fulfilling their duty to the stockholders, they would have told the unions "either you back down enough to make the company profitable, or we will liquidate and give the shareholders a big dividend". But that would have meant that MANAGEMENT would be unemployed too, so that was a non-starter. So they just went on until it died, and the shareholders got nothing

[Don Corleone]

And the fact that it relies heavily on outside financing even in good times (I don't know of any airports or air terminals that are owned by airlines) means that many of the "costs" of operating an airline aren't even paid by the airline.

I'll bet that you also believe in a "Free Lunch". All those facilities are paid for by YOU the traveller out of your ticket price. They are called user fees, landing fees etc.