Imkeww From , joined Dec 1969, posts, RR: Posted (8 years 5 months 1 week 6 days 20 hours ago) and read 461 times:
As you may or may not know, Moody's investment rating service recently downgraded UA's debt (approx. 12.9b) to "junk" status.
What does this mean? Essentially, UA's borrowing costs will be higher, so growth once again is thwarted at the airline. Don't expect very many aircraft orders, or other cost-inducing initiatives, until United is back on the financially stable bandwagon.
This is sad.
Now the only two airlines to retain "investment grade" status (not "junk") are AA and DL.
One of the primary objectives of Greenwald under his financially prudent and conservative tenure was to re-attain an investment-grade status, precisely so it could fuel more growth in the future, and so that it could keep up --financially-- with AA and DL. It was a hard goal to accomplish, but thanks to UA's massive profits in the mid-late 90s, it happened.
And now, all that progress is for naught. Thanks Goodwin, you are filling up Greenwald's shoes quite nicely-- with red ink. =(
DCA-ROCguy From United States, joined Apr 2000, 3824 posts, RR: 53 Reply 1, posted (8 years 5 months 1 week 6 days 17 hours ago) and read 374 times:
If Jim Goodwin sets off superconsolidation and screws medium and small size communities nationwide with high fares from SuperBig 3 Families, UA will deserve whatever happens to it. And with a $60 per share deal for US at junk bond borrowing costs, that's not a promising future. All that yummy labor strife waiting too as soon as Goodwin and WereWolf would attempt to consolidate a merger.
What a shame that an airline with such history and resources is being destroyed by a horribly incompetent management, and shareholders (at least as far as I read) don't seem to be all that upset. Why haven't they stormed Elk Grove and demanded Goodwin's head?
CV640 From United States, joined Aug 2000, 865 posts, RR: 6 Reply 2, posted (8 years 5 months 1 week 6 days 17 hours ago) and read 362 times:
I am surprised their shareholders aren't more upset as well. Over the past year United has screwed up a merger attempt, one labor negotiation, and is on the verge of screwing up two more. Delta was able to get its pilots to sign with a lot less hassle and American was able to buy TWA in the same time frame with very little disruption. UAL needs to make some significant changes.
Imkeww From , joined Dec 1969, posts, RR: Reply 4, posted (8 years 5 months 1 week 6 days 13 hours ago) and read 321 times:
Yes, I am baffled as to why shareholders have cried nothing. Does anybody smell "payoff", maybe?
To think-- this is only the latest in a long line of Follies under the MISguidance of Goodwin (Badloss).
The irony in UA's situation is simply astounding!
To think that Goodwin edged out the very capable Edwardson because he was an "insider" whom the employees trusted! I guess once this "rank and file" got a taste of power, that foundation of trust became non-binding...
SEVEN_FIFTY7 From United States, joined Sep 2000, 957 posts, RR: 6 Reply 10, posted (8 years 5 months 1 week 6 days 11 hours ago) and read 270 times:
Rumor has it, that Goodwin IS as good as gone. My FA and CSR friends at UA tell me that the pilots and the mechanics have already voted him and Dutta out. We should be reading something in the near future about Goodwin's much-needed replacement.
I can't wait to see who it is. (For the sake of UA employees & the traveling public, let's just hope that this turns out to be factual).
Like you guys, it boggles my mind that there doesn't seem to be any sense of urgency with the shareholders to wring Goodwin's fat neck.
Goingboeing From United States, joined Dec 1999, 4875 posts, RR: 26 Reply 11, posted (8 years 5 months 1 week 6 days 10 hours ago) and read 262 times:
They just can't win. Goodwin (whom I am NOT a fan of) agrees to pay the UAL pilots the "industry leading" (a better term would be "industry killing) pay that they were demanding. Moody's cites increased labor costs as a big reason for the downgrade of their debt. Now, somehow, it's GOODWIN's fault. I agree, a diced carrot wouldn't have given in to the pilots demands.
UAL-Fan From United States, joined Dec 1999, 358 posts, RR: 0 Reply 12, posted (8 years 5 months 1 week 6 days 10 hours ago) and read 260 times:
Who is to blame?
Is it a coincidence that UAL has been in a downward spiral since it's Pilots held the company hostage last year? I don't think so.
If you read why Moody's downgraded the company, one of the reasons given is out of control Labor costs. I'm sure the exodus of it's customers due to last Summer's labor action didn't help. Somethings got to give some where. It is very sad indeed. I place blame on the Pilot's Union.
Mac From United States, joined May 2001, 293 posts, RR: 0 Reply 13, posted (8 years 5 months 1 week 6 days 8 hours ago) and read 238 times:
Geez...don't people ever, ever learn? This sounds like TWA, PSA, PAN AM, EASTERN and the rest of the old and historical lines that are no more, all over again.
DCA-ROCguy From United States, joined Apr 2000, 3824 posts, RR: 53 Reply 14, posted (8 years 5 months 1 week 6 days 7 hours ago) and read 223 times:
Now we can wait for our pilot friends (JETPILOT, DE727UPS et al) to show up and explain to us why the United pilots deserved every cent and have no responsibility for United's financial situation, despite the volumes of commetary from analysts to the contrary. ;+)
UA made a BIG mistake, for the whole industry, capitulating to the pilots last summer. This was a strategic error of "Hard Landing" proportions. I predict that UA is pleading for concessions in less than two years.
If Goodwin is less competent than a diced carrot, I'd say he's the root of the problem. Beets me how United can recover with him at the helm, they should peel that guy right off the executive suite. Let him eat cake...
D L X From United States, joined May 1999, 7744 posts, RR: 54 Reply 16, posted (8 years 5 months 1 week 6 days 6 hours ago) and read 209 times:
It's not that big a deal folks. UA had been rated "junk" or non-investment grade by all the other credit houses, as are most airlines. (AA and DL being the exceptions.)
I don't think this will change much about the not-merger.
767-322ETOPS From United States, joined May 2001, 324 posts, RR: 0 Reply 18, posted (8 years 5 months 1 week 6 days ago) and read 187 times:
Compared to a lot of jobs it does seem like pilots make a lot of money.
But take into consideration the skill these people need to attain, up to 100s of lives literally in their hands, and responsible for machinery worth tens (if not 100s) of US$ millions, and it gives some perspective.
Also, pilot's aren't the only salaries that have increased recently: attorney's with 3-4 years experience making over US$200k/year, MBAs with 3 yrs experience on Wall $treet making $400k/year, and nothing to mention of the dot.com lunacy.
The next time you board a plane, check out the people sitting in 1st and business class - and think about how almost all of them are making more dough than the people in the cockpit.
TonyBurr From United States, joined Mar 2001, 964 posts, RR: 0 Reply 19, posted (8 years 5 months 1 week 5 days 23 hours ago) and read 182 times:
All airlines are facing some difficult financial times. A good part brought on by themselves. Obviously this idea of the "Employee/owner" concept does not work with US. It has been in a downward spin since then. It is the biggest employee buy out distaster ever. All the "employee/owners" did was to take more money (pilots).
But there are some airlines making money! WOnder why UA does not? Other airlines offer "customer service". Try THAT in your vocabulalry UA. It might be something new! During the cash rich times they did not get a darn about customers. NOW, when they desperately need "us" (imagine, needing customers UA??) they want us back and "apologize" in their countless form letters about the poor service.
Sorry UA, it does not hold water! FF asked you countless times "how much more abuse do you think we will take before we wipe the dust of UA off us?" That time has come.
Flashmeister From United States, joined Apr 2000, 2572 posts, RR: 11 Reply 20, posted (8 years 5 months 1 week 5 days 23 hours ago) and read 179 times:
767-322ETOPS... regarding your recent post:
True, pilots have a unique responsibility in handling the lives of countless people. In this case, though, I think both United management and United pilots screwed up big time.
I can sympathize with your points that cockpit personnel make less than high-flying attorneys they fly around, but the end result here is not logical.
Except where they're independently wealthy, people in the United States generally depend on a paycheck from an employer to support themselves and their families. That paycheck generally comes from a company for whom they work.
If, when negotiating the amount of said paycheck, you are placing the company in harm's way, wouldn't logic say "greed could bite us"?
I understand that people want appropriate compensation, but some logic has to come to play here. If UA goes under and these pilots go someplace else, it's not like they'll be handed the keys to the kingdom when they do: look at the TWA pilots as they get integrated into AA.
Moreover, shouldn't the pilots be thinking about continuous, consistent, long-term gains rather than short-term ones?
I agree with DCA-ROCguy in saying that this misstep is of "Hard Landings" proportions, but it's spreading past UA. Every time a pilot agreement comes up for review (for instance, later at Delta), they'll look to the UA contract.
The airline industry is very dependent on capital expenditures and cash flow. Little fluctuations in the economy -- in the US or abroad -- are amplified into potentially big problems for the big carriers. If other carriers adopt agreements like the one UA did , the instability will inevitably spread.
767-322ETOPS From United States, joined May 2001, 324 posts, RR: 0 Reply 21, posted (8 years 5 months 1 week 5 days 22 hours ago) and read 172 times:
Flashmeister: The pilots, and anybody else who wants to be paid more, are going to go for the most they can get. Then, through negotiation, it is *supposed* to be worked down to mutually agreeable middle ground.
I can't fault the pilots for trying to shoot the lights out -- maybe you and others can, and that's fine. IMO, the fault for this mess is UAL management. They had a duty to their shareholders, and other stakeholders - like the rest of the industry - to negotiate properly, and they blew it.
Labor negotiations are one of the hardest forms of hardball - management has to have some backbone.
Goodwin and the boys are the problem here - not the pilots. If the pilots hadn't cleaned their clock, then someone else would have - current UAL management is just incompetent and has to go, otherwise it's just a matter of time before another great airline goes down the tubes.
Goingboeing From United States, joined Dec 1999, 4875 posts, RR: 26 Reply 22, posted (8 years 5 months 1 week 5 days 22 hours ago) and read 164 times:
767-322ETOPS - I really fail to see how UAL management should bear the brunt of blame for UAL's current problems. Had they not given in to the pilots - the pilots most likely would have continued with the "service disruptions" and perhaps gone towards a strike. If the pilots were "shooting for the stars", what counteroffer from managment would have been viewed as "mutually agreeable"? How much longer was UAL supposed to endure service disruptions until the UAL pilots eventually "mutally agreed" with management on something?
IMHO, the pilots union were focused like a laser beam on salaries and profits of the past 5 years. Assumptions were made that nothing would change so dramatically that slight fare increases couldn't take care of them. Long term debt ratings weren't on the radarscope. Increased borrowing costs weren't factored in to the pilots negotiating team. Finally, UAL capitulated and granted the industry killing wage package.
Now, the current problems are somehow turned around a viewed as "management incompentence". The wage package was "mutually agreed" on by pilots and management. As such, BOTH parties should bear an equal share of the blame.
Imkeww From , joined Dec 1969, posts, RR: Reply 23, posted (8 years 5 months 1 week 5 days 21 hours ago) and read 152 times:
Management is completely to blame. A large part of their duty is to properly negotiate, as was stated. It is their responsibility to foster a company culture that clearly outlined what employees should come to expect from the company, and be motivated by.
Management's failure to foster goodwill between the pilots and them, and in fact all other employee groups, led to a severe case of tense labor negotiations. Had the corporati first taken that important step to define what the company should be like, why, and execute on that, it would not have been a case of "pull the trigger first" with the pilots.
Much like the product provided to the consumers, the company culture as defined by upper management is very inconsistent.
Flashmeister From United States, joined Apr 2000, 2572 posts, RR: 11 Reply 24, posted (8 years 5 months 1 week 5 days 15 hours ago) and read 134 times:
It's so funny to see the disconnect here -- all this "them", "us", "they", "you"...
No one seems to realize that to have a successful career as a pilot, one is generally affiliated with an airline... and to have a successful airline, you need pilots.
Each needs the other.
The points here regarding management (or lack thereof) are well taken, and true for the most part. The pilot unions, though, are arrogant for thinking that they don't need the company, when that's where their check comes from.
No one is guaranteed a job today. There's not a right to work, it's a privilege... and I get the idea from these discussions and the current Comair talks that the pilots are being VERY arrogant. It's a matter of pride now, I suppose, not business. Pride has little place in business these days.
TonyBurr From United States, joined Mar 2001, 964 posts, RR: 0 Reply 25, posted (8 years 5 months 1 week 5 days 9 hours ago) and read 114 times:
I am sure this will kill the UA-US deal. Yes, management is to blame, the pilots greed is to blame, but all emlpoyees have to share the balme for poor service which turns customers away!
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