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Can UA Be Saved?  
User currently offlineBAW716 From United States of America, joined Nov 2003, 2028 posts, RR: 27
Posted (6 years 7 months 4 days 7 hours ago) and read 12410 times:

As the 1Q statistics come out for the US airline industry, we are seeing some rather dramatic loss figures...not unexpected, unfortunately. While the DL figure of over $6 billion is making headlines (needlessly, since they actually only lost $274M in the 1Q), so far, it would seem that the airline that has posted the worst performance is United, posting a $542M loss in 1Q08.

UA has stated quite aggressively that they are flush with cash ($3 billion or more); however, it appears that they have actually just over about $750M that is really liquid (note: they have access to $2.7B in assets which can be converted to cash); this barely meets their creditor covenant. They have also stated that they intend to "fundamentally" change the way they do business. I've reviewed their statistics (the ones at the DOT) and they are contracting at a greater rate than AA and are number three in size (ASMs - AA is #1, WN is #2 for 12 months ended Jan 08), they are continuing to lose market share and in their high value key markets, AA is outcarrying them, in some cases, by a factor of two to one.

So here are my questions for the forum:

1. Does anyone here have any idea what it is UA is attempting to achieve?
2. Does anyone here believe that UA can make the kinds of changes that are necessary to mitigate the staggering increase in fuel costs? If you take a position, please back your position with some data to support it.

Just so you know, here are my thoughts:

Answer to question 1: I'm not sure...
I haven't seen anything in their plan that they have outlined in the past days that are going to achieve the kind of cost savings they are going to need to get through this unprecendented cost crunch. They are attempting to save in the area of $400M/year...and they are burning through more than $500M/quarter on paper. Now before anybody flames me here, I know that the reality in a down market is maintaining neutral or positive cash flow and in the absence of that, the goal is mitigating the loss. I've really not seen a goal that is achievable.

Answer to question 2: I don't believe so.
Reasoning: As above, $400M in cost savings annually is not going to get them there. Lopping off 1100 jobs (half in salaried/management) tells me that they have a little fat in the management ranks, but where are the other 500 jobs going to come from? Also, when jobs are cut, so is quality and while UA is still number three, they are continuing to lose passengers to their competitors...at least this is what the statistics suggest (US, WN and CO are posting growth in RSM, ASM and LF).

They discuss dropping 30 aircraft (mostly 737s, from what I am reading), but dropping 30 aircraft is only going to further reduce capacity and reducing capacity is not going to help them. They need to streamline their fleet and I am not certain that they can do that with the fleet they have without incurring a wicked cost in aircraft write downs.

The plan they discuss really doesn't "fundamentally" change anything, it just cuts some jobs and some aircraft that probably needed to be cut from the fleet anyway. I'm working my way through the numbers to see if there is anything of substance that they can do, aside from selling themselves to someone else, to get through this crunch.

Can UA really be saved?

The questions are on the table and I've put forward some statistics to back my thoughts, let the debate begin...

baw716


David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
126 replies: All unread, showing first 25:
 
User currently offlineContinental180 From United States of America, joined Oct 2007, 144 posts, RR: 0
Reply 1, posted (6 years 7 months 4 days 7 hours ago) and read 12400 times:

well, im half and half.

all i care about is that they dont merger with continental.

financially, continental is in a much much better standing then united is.

Continental stocks are higher, and cash is higher too.

If continental was smart, which they are, they would say, hey, you need me more then i need you. and i would hope that they would set aside from this merger madness.


User currently offlinePope From , joined Dec 1969, posts, RR:
Reply 2, posted (6 years 7 months 4 days 7 hours ago) and read 12382 times:



Quoting BAW716 (Thread starter):
Can UA really be saved?

The first question should be "Should UA be saved?"

As long as the bankruptcy laws allow failed businesses to continue to operate and provide a competitive advantage to the rest of the market participants in the industry, airlines will continue to struggle to achieve long-term profitability.

IMO, capacity needs to be reduced so that the supply-demand equilibrium allows airlines to exert some pricing power. Until this happens we're going to see cycle after cycle of bankruptcy. Imagine what the market would look like to today if US and CO weren't around. Both made two round trips through the Ch 11 process and gained advantages over their competition in doing so.


User currently offlineUnited1 From United States of America, joined Oct 2003, 6085 posts, RR: 9
Reply 3, posted (6 years 7 months 4 days 7 hours ago) and read 12349 times:



Quoting BAW716 (Thread starter):
UA has stated quite aggressively that they are flush with cash ($3 billion or more); however, it appears that they have actually just over about $750M that is really liquid (note: they have access to $2.7B in assets which can be converted to cash);

Where are you getting that number from?...UALs earnings release stated.

Cash and cash equivalents $ 2,438B
Short-term investments $486M
Restricted cash $728M
-------------------------------------
Total Cash $3,652B

That's in addition to the 3Billion in unencumbered assets.



Semper Fi - PowerPoint makes us stupid.
User currently offlineMariner From New Zealand, joined exactly 13 years ago today! , 25543 posts, RR: 86
Reply 4, posted (6 years 7 months 4 days 7 hours ago) and read 12342 times:
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Quoting BAW716 (Thread starter):
They have also stated that they intend to "fundamentally" change the way they do business.

There's the key. Several airlines are saying it, but few are actually doing anything "fundamental".

Delta said they were going to make "comprehensive changes". What this proved to be was simply nibbling at the edges - laying off staff, retiring a few aircraft and cutting some non-core RJ flying.

The proposed merger may be "comprehensive", but not in the way it has been presented, which is why Wall Street has reacted so negatively with both the Delta and NWA share prices.

"Fundamental" change means, to me, a radical rethink of the business model, that which might have happened in Chapter 11 - but didn't.

Any airline has core market, which must be protected at all costs. Everything and anything else is dross.

I am hopeful that United will address this, but I suspect we will see the same ol', same ol' - the attempt to be all things to all people, flying everywhere all the time, but with a reduction in numbers, staff and aircraft.

How bad does it have to get?

mariner



aeternum nauta
User currently offlineZRH From Switzerland, joined Nov 1999, 5569 posts, RR: 36
Reply 5, posted (6 years 7 months 4 days 7 hours ago) and read 12338 times:

Why are all big US airlines doing so bad when some of the big European made huge profits last year? LH about € 2 bi (incl 400 mi from LX), AF-KL 600 mi.

User currently offlineSTT757 From United States of America, joined Mar 2000, 16892 posts, RR: 51
Reply 6, posted (6 years 7 months 4 days 7 hours ago) and read 12311 times:

Interesting piece in the Houston Chronicle about how UAL's falling stock price and $542 Million dollar 1st Quarter loss changes the dynamics of the expected CO/UAL merger, basically CO's market Cap is now larger than UAL's. This puts CO and their shareholders in the driving seat with regards to pretty much every aspect of the possible combination, it makes it more of an acquisition of UAL by CO than a merger of equals.

http://www.chron.com/disp/story.mpl/side/5722564.html



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 7, posted (6 years 7 months 4 days 7 hours ago) and read 12221 times:

UA is a long way from going away....Their future will be easier to tell once they begin selling assets. The type of assets they sell will be telling

User currently offlineVC10DC10 From United States of America, joined Apr 2006, 1037 posts, RR: 3
Reply 8, posted (6 years 7 months 4 days 7 hours ago) and read 12200 times:



Quoting BAW716 (Thread starter):
They discuss dropping 30 aircraft (mostly 737s, from what I am reading), but dropping 30 aircraft is only going to further reduce capacity and reducing capacity is not going to help them. They need to streamline their fleet and I am not certain that they can do that with the fleet they have without incurring a wicked cost in aircraft write downs.

Sure, "streamlining" the fleet would be nice, but how does cutting capacity not help? You need to justify this statement -- surely excess capacity is one of the airline business's greatest problems today. And writedowns on assets are paper losses which, while they would damage the balance sheet in the short run, may not be all that damaging so long as they do not cause defaults on banking agreements.


User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 9, posted (6 years 7 months 4 days 7 hours ago) and read 12169 times:



Quoting ZRH (Reply 5):
Why are all big US airlines doing so bad when some of the big European made huge profits last year? LH about € 2 bi (incl 400 mi from LX), AF-KL 600 mi.

the weak dollar has caused oil to be very expsnsive here. Oil prices in $$$ have nearly 5X since 2001. In Euros the price of oil has only 2X....thus the oil shock is much worse in the USA than in Europe.


User currently offlineMax999 From United States of America, joined Dec 2005, 1077 posts, RR: 0
Reply 10, posted (6 years 7 months 4 days 7 hours ago) and read 12135 times:



Quoting STT757 (Reply 6):
Interesting piece in the Houston Chronicle about how UAL's falling stock price and $542 Million dollar 1st Quarter loss changes the dynamics of the expected CO/UAL merger, basically CO's market Cap is now larger than UAL's. This puts CO and their shareholders in the driving seat with regards to pretty much every aspect of the possible combination, it makes it more of an acquisition of UAL by CO than a merger of equals.

http://www.chron.com/disp/story.mpl/....html



Quoting EXAAUADL (Reply 7):
UA is a long way from going away....Their future will be easier to tell once they begin selling assets. The type of assets they sell will be telling

Thanks for the article.

In my opinion, there's only one thing that CO really wants out of UA: its Pacific division. I think CO would prefer not to merge with United as a whole because of all the problems over there (as evidence by its Q1 results), but pick up assets in a fire sale. This is ironic since UA picked up the Pacific routes when Pan Am was selling its assets in the 80's.



All the things I really like to do are either immoral, illegal, or fattening.
User currently offlineUnited1 From United States of America, joined Oct 2003, 6085 posts, RR: 9
Reply 11, posted (6 years 7 months 4 days 7 hours ago) and read 12138 times:



Quoting BAW716 (Thread starter):
this barely meets their creditor covenant.

UA just addressed this today....

http://ir.united.com/phoenix.zhtml?c...-newsArticle&ID=1133823&highlight=



Semper Fi - PowerPoint makes us stupid.
User currently offlineSRT75 From United States of America, joined Jul 2005, 260 posts, RR: 0
Reply 12, posted (6 years 7 months 4 days 7 hours ago) and read 12138 times:



Quoting BAW716 (Thread starter):
They discuss dropping 30 aircraft (mostly 737s, from what I am reading), but dropping 30 aircraft is only going to further reduce capacity and reducing capacity is not going to help them. They need to streamline their fleet and I am not certain that they can do that with the fleet they have without incurring a wicked cost in aircraft write downs.

I suspect we will see the end of the UA 737 fleet (all models). Without 737s, UA will not need to buy 737 parts, keep 737 mechanics, retain 737 pilots, etc. (Assuming that UA has aircraft-specific staff aside from pilots.)

Also, I don't know how much of their fleet UA owns. To the extent any of these are leased aircraft, that is a saving without any loss of assets.

Quoting ZRH (Reply 5):
Why are all big US airlines doing so bad when some of the big European made huge profits last year? LH about € 2 bi (incl 400 mi from LX), AF-KL 600 mi.

This is a great question. I don't know the answer, but I would suspect that many US carriers lose money on the domestic side. US domestic stage lengts are often longer than intra-Europe flights (more costly fuel), and the US market has huge downward pricing pressure (both the fact that most Americans are very price sensitive when it comes to air travel and that we have lost of LCC competition and intra-legacy competition).


User currently offlineMadameConcorde From San Marino, joined Feb 2007, 10917 posts, RR: 37
Reply 13, posted (6 years 7 months 4 days 7 hours ago) and read 12052 times:

I hope UA will stay and they will keep flying and the mileage plus program will not close down. They are a landmark airline. Maybe they have too many routes and the ones that are not absolutely essential and not profitable can be dropped but it does not mean that United has to stop flying or sell out to another airline.

I just wish they would get rid of Tilton. My impression is that he has done anything he can to sell United at least in the last year. Also maybe Lufthansa will help out so not to let United go belly up, I am not a specialist so I can't really tell.



There was a better way to fly it was called Concorde
User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 14, posted (6 years 7 months 4 days 7 hours ago) and read 12005 times:



Quoting STT757 (Reply 6):
makes it more of an acquisition of UAL by CO than a merger of equals.

More than it was, perhaps. But still not.

They're within a few percent of each other.

NS


User currently offlineAllstarflyer From , joined Dec 1969, posts, RR:
Reply 15, posted (6 years 7 months 4 days 6 hours ago) and read 11906 times:



Quoting Pope (Reply 2):
As long as the bankruptcy laws allow failed businesses to continue to operate and provide a competitive advantage to the rest of the market participants in the industry, airlines will continue to struggle to achieve long-term profitability.

As happened in the case of Independence Air - US and UA both were in BK and were given the opportunity to undercut Indy Air's pricing w/o having to answer to their creditors.


User currently offlineUnited787 From United States of America, joined May 2005, 2745 posts, RR: 2
Reply 16, posted (6 years 7 months 4 days 6 hours ago) and read 11791 times:

I am not an economist but the answer for all of the US airlines is pure and simple...INCREASE FARES to coincide with the increase of expenses (mainly oil). This will result in less demand so the second answer to is DECREASE CAPACITY accordingly. The current fares are not sustainable with the current price of oil expenses, period.

User currently offlineUnited787 From United States of America, joined May 2005, 2745 posts, RR: 2
Reply 17, posted (6 years 7 months 4 days 6 hours ago) and read 11741 times:

The other thing to consider is that United has recently had some new LCC competition at some of its main hubs:

Virgin America at SFO
Southwest at SFO
Southwest at DEN
JetBlue at ORD (Not as new)

Yes, Delta has AirTran at ATL etc. etc. but I would imagine the initial impact of this new competition is affecting United and competitive pricing and loyality will work itself out and United will hold its own against these...


User currently offlineCommavia From United States of America, joined Apr 2005, 11819 posts, RR: 62
Reply 18, posted (6 years 7 months 4 days 6 hours ago) and read 11631 times:



Quoting EXAAUADL (Reply 7):
Their future will be easier to tell once they begin selling assets. The type of assets they sell will be telling

Very true.

If United begins sells assets - and I think that is very much an if - it will be interesting to see what they sell.

If they sell things that are less-strategic, it may mean that they are just desperately trying to generate cash to keep operating, but if they start selling things of major, heavy strategic value - like the Pacific routes, the Heathrow slots, the Chicago/Denver/San Francisco hubs, etc. - that will tell us that they are pretty much selling out.

Quoting ZRH (Reply 5):
Why are all big US airlines doing so bad when some of the big European made huge profits last year? LH about € 2 bi (incl 400 mi from LX), AF-KL 600 mi.

In my mind, it is largely a function of two things:

1) The stupid government decision to continue pouring money into our economy, and thus devaluing the dollar, has amplified the spike in oil prices in the U.S. - we're feeling it more, in percentage terms, than others, because oil is priced in U.S. dollars

2) Our also-stupid government policy of structuring our bankruptcy laws so companies could use it as a corporate strategy instead of a lifeline has artificially kept capacity in the U.S. airline market when it should have gone away - either through bankruptcy or consolidation. Our politicians have encouraged bankruptcy and discouraged mergers, which has been immensely counter-productive on both counts.

Quoting United787 (Reply 16):
INCREASE FARES to coincide with the increase of expenses (mainly oil). This will result in less demand so the second answer to is DECREASE CAPACITY accordingly.

Thankfully, this has now begun - slowly - to happen.

The industry is finally starting to wake up to the realization that the hundreds of new airplanes on order that have been either placed into service (or soon will be) is simply not economically sustainable at these oil prices.

Over the last five years, however, the problem has largely been that while the legacy airlines have continued to shrink and shrink and shrink, parking planes, laying people off, and pulling more and more capacity out of the market, you have had the low-cost airlines with hundreds of new A320s and 737s on order and nowhere to put them come in right behind the legacies and backfill most of that cut capacity.

This has led to even more capacity in the market, which has driven fare levels even further downward, and rendered just about every airline in the U.S. - except Southwest - unprofitable. And even Southwest is starting to really heavily feel the pinch nowadays because their fuel hedges are beginning to expire - they've been relatively more insulated from the escalation in the fuel price over the last few years.


User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 52
Reply 19, posted (6 years 7 months 4 days 6 hours ago) and read 11584 times:



Quoting STT757 (Reply 6):
Interesting piece in the Houston Chronicle about how UAL's falling stock price and $542 Million dollar 1st Quarter loss changes the dynamics of the expected CO/UAL merger, basically CO's market Cap is now larger than UAL's. This puts CO and their shareholders in the driving seat with regards to pretty much every aspect of the possible combination, it makes it more of an acquisition of UAL by CO than a merger of equals.

CO was already in the driver's seat.



An unexamined life isn't worth living.
User currently offlinePlanecrazy2 From United States of America, joined Apr 2004, 615 posts, RR: 4
Reply 20, posted (6 years 7 months 4 days 6 hours ago) and read 11569 times:

I think a lot of people like to forget that 250 million of that loss was due to paying a one time dividend. When you factor that in the numbers are more in line with the industry. Many people on this forum just want to see UA disappear and quite honestly it's getting very old. They pull numbers from reports and try to create meaning which isn't valid.


United Airlines - Worldwide Service
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 21, posted (6 years 7 months 4 days 6 hours ago) and read 11553 times:

According to Yahoo Finance, UA's market cap now is > CO's market cap.(1.66:1.57)

In the end, I don't expect the situation to change all to much.  no 



"Up the Irons!"
User currently offlineIncitatus From Brazil, joined Feb 2005, 4047 posts, RR: 13
Reply 22, posted (6 years 7 months 4 days 5 hours ago) and read 11424 times:



Quoting Planecrazy2 (Reply 20):
I think a lot of people like to forget that 250 million of that loss was due to paying a one time dividend. When you factor that in the numbers are more in line with the industry.

I don't think so.

United's operating margin was -9.4% while most other competitors were between -3% and -4%. Notice the one time dividend is not part of the operating expenses. Definately NOT in line with the industry.

Quoting Planecrazy2 (Reply 20):
They pull numbers from reports and try to create meaning which isn't valid.

Yes.



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User currently offlineCommavia From United States of America, joined Apr 2005, 11819 posts, RR: 62
Reply 23, posted (6 years 7 months 4 days 5 hours ago) and read 11421 times:

The biggest strength United has is its network, and more specifically:

. its incredibly strong, vibrant and viable U.S. hubs in Chicago, Denver and San Francisco (and to a lesser extent, L.A. and Washington/Dulles)
. its Asia-Pacific network which is, in so many fundamental ways, stronger and more viable than Northwest's present Asia-Pacific network
. its Heathrow slots which, in and of themselves, are probably worth at least half a billion dollars

The above alone is the making of an incredible network airline franchise - the question now becomes whether or not the value of that franchises is presently being realized in its most viable form in the airline's present iteration, or (to use the buzzword that's been thrown around a lot lately) if it would be possible to "unlock some of the value" of the above network assets by transitioning some of those assets to other airlines' networks.

Quoting Planecrazy2 (Reply 20):
I think a lot of people like to forget that 250 million of that loss was due to paying a one time dividend.

Incorrect.

A $250M extraordinary disbursement to shareholders is not included in profit and loss figures.

Quoting Planecrazy2 (Reply 20):
When you factor that in the numbers are more in line with the industry.

United's performance is most definitely not in line with the industry. None of the legacies - and indeed, virtually no U.S. airlines except Southwest - are making money right now.

But United's results are hardly stellar, even relative to their less-than-stellar peer group's performance. Not only did United lose more money, on less revenue, than AMR, but it also generate negative cash flow from operations for the quarter which is concerning considering that several other airlines did manage to generate cash during the quarter despite the rapidly-deteriorating economic environment. And since several of United's competitors have significantly more cash than United does, they'll be able to weather the present storm better.


User currently offlineLAXdude1023 From India, joined Sep 2006, 7757 posts, RR: 25
Reply 24, posted (6 years 7 months 4 days 5 hours ago) and read 11373 times:

Excellent thread choice BAW

Quoting STT757 (Reply 6):
This puts CO and their shareholders in the driving seat with regards to pretty much every aspect of the possible combination

As if they werent already. CO is in the drivers seat on this one.

Quoting Planecrazy2 (Reply 20):
Many people on this forum just want to see UA disappear and quite honestly it's getting very old. They pull numbers from reports and try to create meaning which isn't valid.

I dont think for a second that UA will disappear. I do think that UA and the boys in Chicago are in a world of hurt. This one quarter isnt going to kill them, however they cant make a habit out of this. None of the carriers can make a habit out of their results from this last quarter.



Stewed...Lewd...Crude...Irreverent...Belligerent
25 DC8FanJet : With a good piece of the loss non-cash, UA has a large cushion at this time, but has to make the cuts outlined yesterday if they are going to ride thi
26 Qantas744ER : Which still clearly shows the difference of the US and Europe, we here on the old continent would never be able to pay that price for oil that you pa
27 Deltaflyertoo : That is EXACTLY what needs to happen. I hate to say it, and I'll probably get flamed for this, but what the industry needs right now is for UAL to fa
28 Pope : This ignores price elasticity of demand. As prices rise, demand will fall. However, in a capital intensive industry like this, parking the planes do
29 Commavia : I don't think United necessarily has to fail in order for the industry to stabilize. What this industry needs is less capacity - pure and simple, per
30 Pope : That's a nice theory on paper but how do mergers reduce capacity in the short- to mid-term? Anyone who comes out and honestly reports that the result
31 Commavia : By closing weak, redundant hubs. Which is why nobody is coming out and honestly reporting that. The CEOs are doing the political song and dance for t
32 Jacobin777 : In what sense?
33 Commavia : In the sense that it was already a foregone conclusion that the merged airline, while possibly retaining the United brand name, would be based in Hou
34 VC10DC10 : How so? Not necessarily. If CLE, CVG, and MEM are in themselves profitable (which some on this forum have led me to believe) then there is no reason
35 ER757 : I completely agree, which is why I find it disturbing that part of the DL/NW announcement stated that no hubs were going away. I really hope that's o
36 VC10DC10 : Well, if NW and DL are making money from them, why should they dismantle them? For the good of the industry?
37 Commavia : Several reasons. First, United has more flights to China, which is (at least for now) a closed market. And those flights are nonstop from United's U.
38 Pope : Closing hubs may reduce costs in the long term, but they won't do anything material in the 0 to 18 month range.
39 Commavia : It's not about reducing costs, but rather reducing capacity - and thus increasing fares. Sure they will. Supply goes down, prices go up. It's that si
40 Ncflyer : A hub small hub may be profitable, but if it can be shut down and its capacity moved to a larger hub, then a huge chunk of fixed costs can be eliminat
41 VC10DC10 : I'm going to have to disagree with you on the Tokyo hub strategy. First, NW has Fifth Freedom privileges out of NRT. Second, at least in theory, pass
42 Pope : So you don't believe increased fares will reduce demand? Last time I checked, airline travel was a price elastic good. Profit is revenue less cost. Y
43 Mariner : Denver may be "viable" for United. I am not sure how strong and vibrant it is. A year ago, Mr. Tilton said that DEN had turned from being one of its
44 Jacobin777 : That's nothing more than speculation (at least where the HQ will be). I also don't expect to see CO just "coming in and taking over" UA management. T
45 LAXdude1023 : It wont be, trust me. I dont expect CO to walk in and take over UA, but lets face it: UA is in tatters right now. I think it would be a merger of equ
46 Incitatus : Dulles is the only large airport in the NE with plenty of space to grow. Over time its importance is bound to grow. With UA or anybody else, it is a
47 Mcdu : Based on the flawed logic of the original post. Perhaps we could start a line of threads with: Can Delta be saved? Can NWA be saved? Can AAI be saved?
48 WorldTraveler : which I predicted year ago. UA has done a very poor job of defending its hubs against LFC competition and that is part of the problem. It is obvious
49 STT757 : DL is so far behind AA, UAL, CO, NWA with their Asian network adding a dozen or so in the time frame between now and when CO's 787-9s arrive really d
50 Jacobin777 : I know we agree on 99% of things here, but I think this is one subject we somewhat disagree on to a certain extent. I think we're beginning to see th
51 LGA777 : Many of the replies in this thread talk about a UA-CO merger. I think many will be surprised when it ends up being a UA-US merger instead. Regards LGA
52 LAXdude1023 : I agree with this. In my opinion (and I know you disagree with me and thats all good ) What UA gives: Their name The Star Alliance What CO gives: The
53 LAXdude1023 : If US and UA merge, neither will exist in the long run.
54 ADent : UA could just take the Pan Am route. Wither the domestic flying to nil, surviving on international routes - until those fail and the airline collapses
55 Jacobin777 : semi- . I think there will be some of UA management as well as quite a number of middle-management. . It's going to Chi'town. Of course I knew you we
56 Commavia : Fifth freedom privileges that are becoming less and less valuable by the day. United has now cut the vast majority of their Tokyo-Asia routes, and I
57 MasseyBrown : While the first quarter's earnings are usually the worst of the year, UA still needs to do something. If UA reduced DEN to a focus city feeding the U
58 Mariner : I doubt that will happen, although part of it may be what they should have done five years ago. If they had bought, say, a 25% interest in Frontier a
59 N174UA : A merger. That's Tilton's specialty...bringing a company into Ch. 11, restructuring it, getting it out of Ch. 11, and then selling the company. That'
60 Max Q : Ironic that having great route systems and traffic rights /slots have been irrelevant when mismanaged. Pan Am, bless their heart had all these, then U
61 NYC2theworld : Now who get to choose which airline has to eliminate a frequency on lets say NYC-LAX/SFO?? No airline is going cut a frequency to improve everybodys
62 Jetdeltamsy : A few percent of what? What are you talking about??
63 N174UA : For United, they're "money losing"...yes. But what about for a different airline with a very different cost structure? One man's garbage is another m
64 F9Animal : I highly doubt it, as the books at UA are not very attractive at the moment. I agree, I think CO is fine on its own. I am sure they are going to post
65 Klwright69 : In DEN, if UA has 50% of the market share, they do just barely.. Not exactly incredibly strong.
66 Mariner : I am very aware of that. I thought it was the point of my post. As I have said several times, at the recent JP Morgan Conference, it was stated that
67 Pope : But you continue to ignore the issue of the fixed costs. What are DL and NW going to do with those CRJ's and MD80's that you've just idled? If you ag
68 Thegeek : Umm, nothing! You are assuming that those not particularly efficient MD-80s are actually worth something. If they are leased then the lease payments
69 Archer : Continental should NOT merger with anyone. They have smart management, good (usually)service, great people, new planes and good routes. Mergers just d
70 Burkhard : Even this cannot be the whole story. Lufthansa, AF, BA, IB all are under a much stronger LCC competition ( Ryanair is much cheaper than Southwest ).
71 Sxf24 : DL and NW, combined, have more wide body orders than CO. They will also have the traffic rights to significantly grow the Asian network. Well, DL wil
72 Thegeek : Our average aircraft size in Australia is much larger than in the US too. I've never even seen a CRJ, and while there are a some 73G and 734 (all the
73 Commavia : Of course it's highly elastic - if fares rise 15-20% as Anderson said is necessary, demand is going to fall by probably 10-15%, which is precisely th
74 EMB170 : But can the majors simply say "We don't want the 50 seaters anymore" without incurring heavy penalties from the contracts they've set up with their r
75 EXAAUADL : Commavia and EMB170 you guys have really good posts above. There seems to be such a mindset at the airlines about RJs, they just dont seem to want to
76 Hiflyer : 2002 dollar about even with the Euro 2008 Euro worth about $1.60 2002 oil about $30/bbl or 30eur/bbl 2008 oil about $118/bbl or 70 euro So while oil i
77 STT757 : No they don't; CO: total 33 firm widebody orders 8 777-200ERs, 8 787-8s, 17 787-9s DL/ NWA Total 24 widebody orders 6 777-200LRs 18 787-8s
78 JFKPurser : Their manangement has never demonstrated their ability to effectively deal with any kind of real change in time for it to really matter for UA. Things
79 Post contains links Tozairport : What many have said but most of the A.net CEO's don't want to accept is that UA has over 2.5 BILLION (with a B) dollars in UNRESRICTED cash. " As of
80 Hiflyer : Heck....I thought they were CFO's....grin. Seriously....with the low value of the dollar and the high cost of oil all carriers are going to keep clim
81 Jacobin777 : Where is your proof that UA isn't a well run company? From a company which never filed for BK, which means there were doing something good. Adding sh
82 Commavia : In many cases they can. Most of the airlines in question actually already own much of their RJ fleets - companies like AMR, Delta and Northwest own m
83 Qantas744ER : Here at airliners we have armchair CEO's, amrchair pilots, and armchair mechanics. Find some armchair cabin crew and we got an airline Very entertaini
84 Post contains images Bmacleod : Wow...this is the first time I've ever heard UA being labelled as a "failed business".    They've done remarkable well despite their inept and shor
85 GCT64 : Unfortunately, that figure rather than being "great" just puts UA's position into perspective: UA Mkt Cap = $1.85Bn (24 Apr) UA unrestricted cash = $
86 STT757 : That's where someone like Gordon Gecko comes in, sells off the pieces which are worth more than the whole.
87 United1 : Unfortunately that would include most of the US carriers, including all the legacies at this point. Current Market Caps... AA 1.92B UA 1.84B DL 2.12B
88 Commavia : This is very true. As an analyst said the other day after AMR kicked off the network airliner earnings season - no airline has a business model that
89 United1 : Yes other carriers simply back filled capacity, a carrier going under didn't solve anything in the long run because the majors are all back in the sa
90 Commavia : No network airline has a hub in Kansas City today like Eastern did. No airline has a 400-flight-per-day hub in St. Louis like TWA did. That's the poi
91 United1 : No but that capacity that was taken out was added back in at other hubs, take a look at ATL or DFW as prime examples, both of those airports have gro
92 Jacobin777 : Many of those management weren't at UA at the time so it doesn't apply. Actually it is, that is why AA had to offer some mighty good incentive packag
93 LAXdude1023 : It is indeed relevant. Tilton was there. He came on board before UA filed. The BK took about 3 years. They just came out in Feb. 2006. Now they are s
94 ExFATboy : You can't write off the book value of an asset simply because you've removed it from active use - if anything, for an asset such as an airplane whose
95 Jacobin777 : Commavia was talking about the middle-management who left AA for UA (at least that is what I inferred). They came afterwards. Tilton saved a company
96 United1 : Tilton started at UAL 3 months prior to UA filing for BK, he's hardly responsible for what caused UA to end up in BK. I'm not going to get into wheth
97 Commavia : Sure, but that's because the country's population, its economy, and the air travel market overall have all grown since then. That's only natural. Ove
98 United1 : True as a population grows so should the amount of seats available to them, however adjusted for inflation what year is the average fare paid today e
99 LGAtoIND : Just curious, but have you personally met with everyone on the UA and CO mgmt teams?
100 Hiflyer : May I suggest probably not in regards to the senior mgt teams at either carrier. Think the thread starter stated earlier this decade that he was let
101 BrianDromey : The thing you fail to take into account is that no airline the size of a US major has ever gone belly up. There is no way any one airline could make
102 United1 : EA and BN when they went under were both massive carriers back in their day, EA was the largest airline in the free world during the mid 80s, remembe
103 FruteBrute : If CO really feels they need to be larger to compete with the soon to be bankrupt DL/NW and can't help but try to buy UA, I would hope they team up w
104 BrianDromey : None of these carriers imploded overnight though? They were downsizing for years. They way the current financial markets are right now, if an airline
105 Jacobin777 : Since when has UA become insolvent? How has UA become "financially stagnant"? One or two quarters doesn't make a trend Commavia. Where do you get "fa
106 United1 : EA went from first to out of business in 3-5 years. None of those carriers are a subsidiary of the any of the other carriers thats why they can get a
107 Commavia : Several - and all the Continental ones were nothing but immensely impressive. They have a command of their company and their industry that I haven't
108 Jacobin777 : They weren't 100% insolvent, they were still paying some debt, expense, etc even during bk. I guess we're playing with semantics here.
109 WorldTraveler : you fail to grasp the concept that DL and NW are on their way to becoming one airline. Combined, they are the 2nd largest airline across the Pacific
110 Commavia : Because it didn't file for bankruptcy, screw its employees, hold its unions over a barrel, or freeze and/or cancel any of its employees' pension plan
111 Jacobin777 : One of AA's fastest income growth is via codesharing. With CX, DragonAir and JL part of the OneWorld Club, AA would rather have pax fly on their meta
112 LAXdude1023 : I didnt like disagreeing with you Jacobin777, lets start agreeing again! DFW-PVG and ORD-HKG spring to mind. Dont think for a second AA is going to do
113 United1 : I agree with most of what you say except for the quote above. AA threatened to file BK if its employees didn't take wage cuts after 9/11, if that isn
114 Commavia : One difference, though: AMR didn't file for bankruptcy. It didn't threaten to utilize a Section 1113 filing to abrogate its labor contracts, and - ke
115 N174UA : Oligopoly at its best...each of the key "players" in the "game" are interdependent on the other's next move to survive. If oil goes to $130 or $140 s
116 United1 : None of UAs contracts were imposed all were agreed upon by the unions. You can make the case that UA had the unions over a barrel to agree to them ho
117 Commavia : You could make that argument, but I would still disagree and contend that the deals AMR reached with its unions - that saved the company from bankrup
118 United1 : Oh I'm not even debating that with you - as I said in my OP I agree with most of what you said except for the part about AA not having there unions o
119 STT757 : We are talking about orders, CO has more than a combined DL/NWA. That's what the 8 777-200ERs address, again those are firm orders, Saying DL is like
120 EXAAUADL : No, EA was the largest airline in the free world back in the 1970s, not the mid 1980s. By 1985, I think both UA and AA were jockying for first place
121 Post contains links United1 : Its possible that you are right I got that quote of off Wiki. After deregulation EA added the BN Latin America network to there operations, that is s
122 Mcdu : If Delta is to expand in the Pacific hopefully they will give their pilots better instructions on how to communicate when operating in Polar and Paci
123 Ocracoke : Now we just need an A.net DFW member to be the airchair FAA, and shut the whole thing down. Well, make some money first by fining the airchair CEOs,
124 Commavia : The pilots have been acting stupid and short-sighted in the last few years. That won't last forever - I have faith (perhaps foolishly, but only time
125 LAXdude1023 : First off, I dont think that AA intends to fly from DFW-BKK or SIN, and HKG would first come from ORD. However DFW-PVG and PEK will come. Dont forget
126 BAW716 : Sorry everyone, I've wanted to respond to your questions...I've been very sick since I posted the thread (story of my life)...will be a few more days
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