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Chicago Business: Smisek (UA) Is In Trouble  
User currently offlinetommy767 From United States of America, joined Aug 2003, 6584 posts, RR: 8
Posted (10 months 1 week 1 day 13 hours ago) and read 26503 times:

http://www.chicagobusiness.com/artic...10/311029985/three-ceos-in-trouble

Upcoming cuts at United will be near a billion dollars. Not a good sign. Thoughts?


"Folks that's the news and I'm outta here!" -- Dennis Miller
161 replies: All unread, showing first 25:
 
User currently offlineKarlB737 From United States of America, joined Mar 2004, 3105 posts, RR: 10
Reply 1, posted (10 months 1 week 1 day 12 hours ago) and read 26429 times:

Here is the heart of the article:

Courtesy: Crain's Chicago Business

"United shares have trailed the broader market and key competitors since United and Continental merged three years ago. Since revenue growth became an issue in July, United stock has lost 2 percent while Delta Air Lines Inc. and US Airways Group Inc. rose 22 percent and 17.5 percent, respectively. With revenue unlikely to improve in the fourth quarter, Mr. Smisek is taking another whack at costs. On United's third-quarter conference call, CFO John Rainey indicated the airline plans cost cuts in the $1 billion range."

I suspect that they will probably cut some costs a little at a time and see what happens.


User currently onlineUnited1 From United States of America, joined Oct 2003, 5951 posts, RR: 9
Reply 2, posted (10 months 1 week 1 day 12 hours ago) and read 26400 times:

Quoting tommy767 (Thread starter):
Upcoming cuts at United will be near a billion dollars. Not a good sign. Thoughts?

Old news was announced on the Q3 conference call.... and actually it's a great sign that they are getting a handle on costs at this point. UA has been on a bit of a spending spree the last few quarters fixing the integration issues.



Semper Fi - PowerPoint makes us stupid.
User currently offlineAirAfreak From United States of America, joined Apr 2012, 716 posts, RR: 0
Reply 3, posted (10 months 1 week 1 day 12 hours ago) and read 26243 times:
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How many more cuts can UA possibly do? The article does not detail much information.

I think someone should give Gordon Bethune a call and offer a nice compensation package to bring him back as CEO. This is my personal opinion as a passenger because those days really were the "glory days" of Continental. I understand there are technical difficulties and no airline is perfect, however, Mr. Bethune really had something positive to offer employees and passengers pre & post-9/11.

Again, this is my personal opinion.



Do you lead an Intercontinental life?
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17491 posts, RR: 45
Reply 4, posted (10 months 1 week 1 day 12 hours ago) and read 26212 times:

Quoting AirAfreak (Reply 3):
How many more cuts can UA possibly do?

Maybe one or two of the zillion HQs UA has in the Chicago area?  I think UA could do lots of buyouts--DL did several waves of buyouts post merger and I don't think UA has done much of that.

[Edited 2013-11-11 20:09:30]


E pur si muove -Galileo
User currently offlineRyanairGuru From Australia, joined Oct 2006, 5573 posts, RR: 5
Reply 5, posted (10 months 1 week 1 day 12 hours ago) and read 26105 times:

Quoting United1 (Reply 2):
Old news was announced on the Q3 conference call.... and actually it's a great sign that they are getting a handle on costs at this point

Exactly. This is neither "news", nor bad news ... unless you are a ramper.

Quoting AirAfreak (Reply 3):
How many more cuts can UA possibly do?

United's costs have been RISING. They haven't been any real "cuts" until now.

Quoting AirAfreak (Reply 3):
those days really were the "glory days" of Continental

100% agree that those were the glory days, but Gordon has been retired now for a decade so he's been out of game for a while and probably isn't interested in returning. While I have enormous respect for his turnaround of CO I'm not sure what he can do here, other than motivate employees. United has some systemic issues, and while the people at the top aren't helping, the issues run much deeper than just the choice of CEO.



Worked Hard, Flew Right
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17491 posts, RR: 45
Reply 6, posted (10 months 1 week 1 day 12 hours ago) and read 26074 times:

Quoting RyanairGuru (Reply 5):
100% agree that those were the glory days, but Gordon has been retired now for a decade so he's been out of game for a while and probably isn't interested in returning. While I have enormous respect for his turnaround of CO I'm not sure what he can do here, other than motivate employees.

   Gordon (and Crandall and Kelleher etc etc) were great in their own ways in their own times, but times are different, and they may not have the answers, or interest, today.



E pur si muove -Galileo
User currently offlineripcordd From United States of America, joined Apr 2000, 1164 posts, RR: 1
Reply 7, posted (10 months 1 week 1 day 12 hours ago) and read 25996 times:

This goes to the rumor I heard that UA may file for BK again.

User currently offlineJAAlbert From United States of America, joined Jan 2006, 1600 posts, RR: 1
Reply 8, posted (10 months 1 week 1 day 12 hours ago) and read 25928 times:

What sort of things will UA cut? UA isn't known for its in flight service - it hardly competes with the other international carriers with it's current offering. Park some planes and drive up yield perhaps?

User currently offlineRyanairGuru From Australia, joined Oct 2006, 5573 posts, RR: 5
Reply 9, posted (10 months 1 week 1 day 12 hours ago) and read 25873 times:

Quoting JAAlbert (Reply 8):
What sort of things will UA cut?

Most (all?) of the cuts are coming from the new IAM contract, including outsourcing something like 40 (?) stations.

The on board product is safe, indeed you will note that UA is continuing to heavily invest in its hardware, despite being the only airline in the USA to have 100% flatbed J/F on its transcontinental fleet.



Worked Hard, Flew Right
User currently onlineUnited1 From United States of America, joined Oct 2003, 5951 posts, RR: 9
Reply 10, posted (10 months 1 week 1 day 11 hours ago) and read 25599 times:

Quoting RyanairGuru (Reply 9):
Quoting JAAlbert (Reply 8):
What sort of things will UA cut?

Most (all?) of the cuts are coming from the new IAM contract, including outsourcing something like 40 (?) stations.

The on board product is safe, indeed you will note that UA is continuing to heavily invest in its hardware, despite being the only airline in the USA to have 100% flatbed J/F on its transcontinental fleet.

I am sure some of the cuts will be will be on the labor side (I am sure there will be some of the smaller mainline stations...ie one of two flights a day... that are currently UA staffed will be farmed out.) Some of it will also be from being able to cut some of the contracted staff that UA had to keep on hand prior to a joint contract being reached. Also now that the pilots have an integrated contract UA is able to start cross fleeting which will help cut crew costs.


Quoting MaverickM11 (Reply 4):
Maybe one or two of the zillion HQs UA has in the Chicago area?  I think UA could do lots of buyouts--DL did several waves of buyouts post merger and I don't think UA has done much of that.

There are about a 1000 people (now that the IAM has ratified their contract) that expressed an interest in an early out package...UA is supposed to start the separation process fairly soon.

It's not just labor though where UA will be looking at cost savings...in fact I would go so far as to say most of the billion or so that they intend on cutting won't be from labor.

Continuing to take delivery of new aircraft will also help (replacing a 757 with a 739ER saves UA 2.5 million a year.)
Now that they have done some of the preventative maintenance that was lacking on the UA fleet they are going to start increasing utilization of that fleet...that will lower costs and generate more revenue.
Adding in 6-12 seats on the Airbi and 738 fleets not only increases revenue but will also lower the CASM on those aircraft.
Bringing the EMB-175s onboard and retiring some of the 50 seat RJs again will cut costs.
Just shifting around the 744s again will add something like 40 million in revenue to the bottom line.

The biggest thing that needs to be kept in mind is that UA is doing this as a profitable airline trying to make itself more profitable. This isn't out of desperation or UA being in any trouble or danger of going away or BK again this is simply UA working on completing the merger process. Now that they heavy lifting is done this is more trimming fat and making sure things are being done as efficiently as possible....this isn't something that the average passenger will notice.

The details will be announced at the investors presentation...



Semper Fi - PowerPoint makes us stupid.
User currently onlineIADCA From United States of America, joined Feb 2007, 1290 posts, RR: 8
Reply 11, posted (10 months 1 week 1 day 11 hours ago) and read 25552 times:

Quoting ripcordd (Reply 7):
This goes to the rumor I heard that UA may file for BK again.

I'd love to be the bankruptcy judge that receives a petition from a company that's made $750 million (even including special charges) in the last two quarters. Humbly, I suggest that you need a new rumor mill.


User currently onlineUnited1 From United States of America, joined Oct 2003, 5951 posts, RR: 9
Reply 12, posted (10 months 1 week 1 day 11 hours ago) and read 25547 times:

Quoting ripcordd (Reply 7):
This goes to the rumor I heard that UA may file for BK again.

There is no need and no justification for them to...they have around 6.7 billion in liquidity and around 5 billion in assets that they can borrow against if they need more and are a profitable company. BK is really only good if you are short of cash (which clearly they are not) or if you need to restructure contracts/agreements ect that can't be re-negotiated voluntarily.



Semper Fi - PowerPoint makes us stupid.
User currently offlineKD5MDK From United States of America, joined Mar 2013, 335 posts, RR: 0
Reply 13, posted (10 months 1 week 1 day 9 hours ago) and read 24766 times:

Quoting RyanairGuru (Reply 9):
The on board product is safe, indeed you will note that UA is continuing to heavily invest in its hardware, despite being the only airline in the USA to have 100% flatbed J/F on its transcontinental fleet.

Isn't this obviously essential since they will be losing that distinction very quickly?


User currently offlinebjorn14 From Norway, joined Feb 2010, 3445 posts, RR: 2
Reply 14, posted (10 months 1 week 1 day 7 hours ago) and read 24431 times:

Gordon Bethune is not out of the game entirely as he is on the Board at HA.


"I want to know the voice of God the rest is just details" --A. Einstein
User currently offlineF9Animal From United States of America, joined Dec 2004, 5050 posts, RR: 28
Reply 15, posted (10 months 1 week 1 day 7 hours ago) and read 24343 times:

I still think the old UA is the problem. CO had it together IMO. Merging is not always a good thing, which is clear in this case. I never really thought UA and CO would be a good combination. UA has to change more than just its paint job. Cuts need to really start at the top, and I mean top brass.


I Am A Different Animal!!
User currently offlineapodino From United States of America, joined Apr 2005, 4272 posts, RR: 6
Reply 16, posted (10 months 1 week 1 day 6 hours ago) and read 24258 times:

Quoting F9Animal (Reply 15):
I still think the old UA is the problem. CO had it together IMO. Merging is not always a good thing, which is clear in this case. I never really thought UA and CO would be a good combination. UA has to change more than just its paint job. Cuts need to really start at the top, and I mean top brass.

United needs to do two things. One streamline the management at the top which will save them a lot of money in the long run. Secondly, address the revenue problem. I don't think UA has a cost problem, I think they have a revenue problem. They still need to get some joint contracts done. They need to pull money losing 50 seaters out of service. And they need more mainline planes. These things will go a long way toward addressing the revenue problem. It won't happen overnight, but it needs to happen. As I have said before, much of this blame falls more on Glenn Tilton than it does Smisek as he inherited this mess from Tilton. But Smisek made the mistake of focusing solely on international operations post merger, when it is clear that Domestic revenue is killing United, and if US/AA happens, UA could have a major problem on this front.


User currently offlineaaexecplat From United States of America, joined Sep 2009, 635 posts, RR: 4
Reply 17, posted (10 months 1 week 1 day 2 hours ago) and read 21993 times:

Quoting F9Animal (Reply 15):
I still think the old UA is the problem. CO had it together IMO. Merging is not always a good thing, which is clear in this case. I never really thought UA and CO would be a good combination. UA has to change more than just its paint job. Cuts need to really start at the top, and I mean top brass.

The merger was supposed to do two things and two things only...to reduce the number of competitors (thereby increasing pricing power) and to remove overlap and therefore capacity (thereby increasing pricing power due to lower supply). The merger DID do those two things. And I also believe CO and UA could and still CAN be a great company. But the reason they are not (IMO) I will explain below.

Quoting apodino (Reply 16):
United needs to do two things. One streamline the management at the top which will save them a lot of money in the long run. Secondly, address the revenue problem. I don't think UA has a cost problem, I think they have a revenue problem. They still need to get some joint contracts done. They need to pull money losing 50 seaters out of service. And they need more mainline planes. These things will go a long way toward addressing the revenue problem. It won't happen overnight, but it needs to happen. As I have said before, much of this blame falls more on Glenn Tilton than it does Smisek as he inherited this mess from Tilton. But Smisek made the mistake of focusing solely on international operations post merger, when it is clear that Domestic revenue is killing United, and if US/AA happens, UA could have a major problem on this front.

I agree that UA has a revenue problem. Big time. They also have a cost problem although to a much smaller degree. Much of the cost problem is due to the new contracts coming online. But let's leave that for another day so we can tackle the revenue problem...

The reason UA has a revenue problem is that they have gone to war with their frequent fliers.

On the MileagePlus front, they first called them overentitled. Then they cut back RDM bonuses by a bunch in a short period of time. They introduced first minimum flying requirements on UA metal, later on they introduced PQD replete with rules that discourage Star Alliance booking an flying. They killed upgrade rates with the silly TODs that communicate to 1ks that their business is less important than selling a $20 upgrade to a discount coach passenger at the kiosk or OLCI in some cases.

And then of course there are the operational issues. Let's assume that a frequent flier is not flexible enough to move business from UA due to the lower value of the elite proposition and MileagePlus program. Those folks have had to endure the tardiest of all the US legacy operations since March of 2012. Shares is great at monetizing all sorts of services and products at different points of sale, but it is very inefficient when it comes to servicing a passenger. When it takes an agent a minute longer to process a passenger record and that happens millions of times a day, then the inefficiencies are staggering. I am sure there is the occasional idiot-savant pmCO agent that can use Shares super fast, but for the average agent, Apollo would have been the better choice because it was faster and more flexible for agents to use and to get the passenger taken care of.

Because the airline has generally been a poorly run airline, many employees have also been markedly less "friendly" than they were as pmCO or pmUA employees, and the uattitude has chased away more passengers, still.

And then, let's talk about the actual quality of the product...their new J seat is nowhere near as nice as the new AA J seat. The catering quality is horrendous. They are cutting meal service all over the place and the domestic F seats on pmCO fleet are in my opinion the most uncomfortable of all the F seats among the legacies. PmUA seats are better, but still not on par with AA or DL. UA also flies more RJs between major metros and more small RJs on long routes than AA and DL. And all the E-135/145s and CR2s don't have a F cabin and flights run by Skywest are bottom of the barrel stuff in terms of cabin cleanliness and quality. It is 2013 and AA and DL have wifi in all their mainline cabins, but UA is just now working on it.

So when it is all said and done, UA told Silvers and Golds that they don't really care about them unless they are buying a full Y fare at any given time. Plats get only marginally more love and 1ks are tolerated for now. Next year, the folks who have traditionally put all their leisure flying on UA will lose status because of PQD. The product and service have been lackluster for over a year and a half, and when IRROPS happens, one can count on some of the worst resolution services in the industry.

There is a reason AA matched UA elites vigorously in April of 2012. There is a reason why AA, DL, and US are all recording record revenue nearly every quarter while UA keeps lagging. There is a reason why UA shows the lowest PRASM growth in the last 18 months DESPITE being the most aggressive carrier in terms of cutting ASMs. There is a reason AA and DL are investing heavily in the flying experience. They are actually increasing amenities and improving cabins. They are adding new, more comfortable and spacious J products.

From a purely econ101 POV, what is happening is that when high volume fliers started leaving, there was greater supply than demand. Which put more pressure on yields to fill the empty seats. The more cuts happened subsequently and the more ASMs were killed by flying more RJs, the more FFs an HVFs left putting yet more pressure on yields. As the announcement yesterday shows, the answer from the Smisek team is "more cuts".

The evidence is very clear....Smisek and his teams are accountants who think they can manage this airline by managing a balance sheet and income statement. What is becoming painfully clear is that reacting to the daily stock price fluctuations and analyst grilling is having UA circling the drain at this point. They need to break free from their current way of thinking and do the exact opposite of what they have been doing. Investing in the flying experience by getting wifi install done pronto...by improving catering across the board both in quality and segment length...by adding amenities to long hauls and tanscons...by not killing off the value of MileagePlus...

It has also been clear to me from the start that Smisek is incapable of thinking this way nor is he capable of admitting he has been wrong and stepping down. Even the employees are now beginning to register that cabins are emptier than they should be and they are beginning to understand the direction the company is headed. It is definitely time for some new leadership. Forget Gordo...Tom Horton will be available very soon and along with him, Virab Vahidi may also be available. Those two did a bang up job at AA while the carrier was in BK, and if they can do for UA what they did at AA, then UA can dominate this industry.


User currently offlineCentre From Canada, joined Mar 2010, 490 posts, RR: 0
Reply 18, posted (10 months 1 week 1 day 2 hours ago) and read 21790 times:

Bring back Glenn Tilton!


I have cut 4 times, and it's still short.
User currently offlineenilria From Canada, joined Feb 2008, 7177 posts, RR: 13
Reply 19, posted (10 months 1 week 1 day 2 hours ago) and read 21797 times:

Quoting RyanairGuru (Reply 5):
United's costs have been RISING. They haven't been any real "cuts" until now.
Quoting apodino (Reply 16):
They need to pull money losing 50 seaters out of service. And they need more mainline planes.

Apodino is exactly right. UA is buying a lot more gas per seat than DL because of their glut of guzzling 50 seaters. That automatically lowers your profit margin. UA is basically at their all-time peak on 50 seaters and DL is down over 50% already with more to go. UA was EXTREMELY slow to that party and lags everybody else on fixing it. I think that was a major management mistake. They were too busy doing nothing and not adjusting their network/fleet. I also think UA puts zero focus on their domestic network other than shuffling about 10 RJs around from one set of backwoods markets to another. Aside from that they really do absolutely nothing domestically.


User currently offlinejayunited From United States of America, joined Jan 2013, 930 posts, RR: 1
Reply 20, posted (10 months 1 week 1 day 1 hour ago) and read 21604 times:

Quoting apodino (Reply 16):
Secondly, address the revenue problem. I don't think UA has a cost problem, I think they have a revenue problem.

I think this is one of UA's biggest problems. If we look at how UA has been able to make money in the past couple of quarters what we see it is that it has mostly been based on consolidated traffic while our competitors have been growing. UA burned a lot of bridges in 2012 and it is no secret that both AA and especially DL took advantage of what was a horrible year for UA and as a result UA has lost many customers at the high end and low end. And even though operationally 2013 has been much better for UA the damage has been done and so far neither AA nor DL have made any crucial mistakes for UA to capitalize on as a way to try and win back some of the customers we lost in 2012. 2012 didn't only cost UA passengers is severely damaged the UA/CO brand. Protecting and rebuilding the brand is very important and so far UA/CO has done nothing in 2013 to rebuild the brand. Relaunching the Friendly Skies campaign is good but it does not speak or relate to UA's current brand. Despite UA's operational improvements in 2013 every time a public poll it taken by any major travel or news organization UA is still ranked second to last or dead last. But those polls are not indicative of the service UA has provided in 2013 but of 2012 and the problem UA is facing is most human being don't forget when they have experience horrible customer service, and will hold it against a company for a very long time. And so far in 2013 UA has not done anything spectacular to make UA stand out and have some of those customers we lost think perhaps I should give UA another try. UA has to repair its brand and grow its passenger unit then hopefully revenue will start to grow but so far those things have not happened.

Another major problem that UA has is it's senior top heavy workforce. I know DL did a buyout but i'm not sure how many senior people making top scale took that buyout at DL or what DL workforce ratio is when comparing the number of senior employees to junior employee. But here at UA not only are we extremely management heavy and although UA has said in the past they were going to cut management that still hasn't happened but we have an extremely senior workforce. Then number of people making top scale at UA far exceeds the number of people making what is called "C" scale. UA is a top heavy airline not only from a management standpoint but also from a non-management standpoint. The current buyout offer that was on the table was not good enough for UA to get most top scale employee interested enough to seriously consider it as a viable option for them. Another problem hampering UA's buyout offer is (and I don't want to turn this into a political issue) Obama Care. With the lowball buyout offer UA extended and with all the uncertainty surrounding Obama Care, most top scale employees were simply not interested unless they were at or past the retirement age of 65. But UA has tons of people making top scale who are no where near 65 years of age and there major concern is if they leave UA and take the buyout offer what are they supposed to do for insurance because clause in the buyout that talked about insurance left people with more questions than answers as to what are they suppose to do for health insurance? So for most people the buyout offer was dead before it even hit the water because UA failed to offer people enough money as an incentive to leave the company and because of Obama Care and all the changes to health care in the country that has people everywhere concerned about their health insurance.

So to put it bluntly UA waited to long to offer a buyout. They should have done a buyout years ago before before Obama Care became the nightmare that it is today because now it going to be extremely hard for UA to get top scale employees out the door to make room for junior employees and we all know that junior or "C" scale employes don't cost nearly as much as employees making top scale. So yes DL will continue to outperform UA on the employee cost issue because they were able to lower their employee cost thru a buyout while UA failed to see the numbers they were hoping for because UA waited to long.

I know there are other issues costing UA money but these two issues are extremely serious and UA has to address them.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17491 posts, RR: 45
Reply 21, posted (10 months 1 week 1 day 1 hour ago) and read 21571 times:

Quoting aaexecplat (Reply 17):
Tom Horton will be available very soon

Oh good god no. The guy never had control of the carrier, zero strategy, and always seemed to shuffle from one gaffe to the next. All for an obscene paycheck. What. A. Deal.  
Quoting enilria (Reply 19):
UA is buying a lot more gas per seat than DL because of their glut of guzzling 50 seaters. That automatically lowers your profit margin. UA is basically at their all-time peak on 50 seaters and DL is down over 50% already with more to go. UA was EXTREMELY slow to that party and lags everybody else on fixing it

  



E pur si muove -Galileo
User currently onlineRDH3E From United States of America, joined Mar 2011, 1670 posts, RR: 3
Reply 22, posted (10 months 1 week 1 day 1 hour ago) and read 21564 times:

Quoting enilria (Reply 19):
Apodino is exactly right. UA is buying a lot more gas per seat than DL because of their glut of guzzling 50 seaters.

United actually pays less for fuel per ASM than DL does on a system basis:

http://web.mit.edu/airlinedata/www/2...uel/Fuel%20Expense%20per%20ASM.htm

You have to remember UA has a more efficient NB fleet and more international operations.

[Edited 2013-11-12 06:54:44]

User currently offlineaaexecplat From United States of America, joined Sep 2009, 635 posts, RR: 4
Reply 23, posted (10 months 1 week 1 day 1 hour ago) and read 21407 times:

Quoting MaverickM11 (Reply 21):
Oh good god no. The guy never had control of the carrier, zero strategy, and always seemed to shuffle from one gaffe to the next. All for an obscene paycheck. What. A. Deal.  

Zero strategy? No offense, but with a comment like that, you lose some credibility in my eyes. I am sure that if you spent more than 1 second thinking about this, that there is a distinct strategy that you can see that Horton implemented. And he did so in the face of massive resistance initially from labor.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17491 posts, RR: 45
Reply 24, posted (10 months 1 week 1 day 1 hour ago) and read 21185 times:

Quoting aaexecplat (Reply 23):
Zero strategy? No offense, but with a comment like that, you lose some credibility in my eyes.

What's the Horton strategy then?



E pur si muove -Galileo
25 stlgph : Step 1? Separate the roles of chairman, chief executive officer, and president into three separate positions.
26 mcdu : On the cost side. I have heard that at DL all operations below the wing is contract services. Is this correct? That is a major cost on the UA side and
27 enilria : The RJs aren't included in those numbers. In fact, the reason it looks like that is exactly the problem. UA has basically eliminated its domestic fle
28 MasseyBrown : Based on the last conference call, I'd say UA has identified most of the problems posters have cited in this thread and is addressing them in a more c
29 aaexecplat : The strategy was to create a better product and service than the competition which would allow them to charge a premium for pax flying AA. This shoul
30 1337Delta764 : Perhaps UA should consider selling their Chelsea Food Services catering unit to Gate Gourmet. I would be surprised if Chelsea is actually making money
31 TonyBurr : And how many Elites has Jeff driven away to the other airlines? How much has that effected the bottom line? And he continues to develop policies which
32 T5towbar : That's true. The buyouts (on the IAM side) was a convoluted formula that left a whole lot of uncertainty. Many people wanted to take them, but the re
33 777ord : Bethune may have been a great business man when he was "CO", but he won't be coming back. The problem does fall on Smisek's lap, but there are tensio
34 MSPNWA : If I was a UA investor, Smisek would be in trouble if he DIDN'T attempt to cut costs. Costs are the big problem for UA right now. And much of that is
35 AA777223 : I agree, completely. UA has declared war on their FFs and in this industry, that just is a really poor decision. I am lowly Gold, and have been prett
36 MaverickM11 : Everything you listed was the standard bankruptcy playbook: paint the planes, order some new ones, turf the old ones that you can, make a big splash
37 cle757 : UA needs to offer an early out package to all employees with 10yrs or more..and not tie it to ratifiying a contract!
38 ramprat74 : The latest from Smisek & Co. The 30,000 IAM members that ratified the latest TA that took affect November 1st. We got a IOU from the company regar
39 mbm3 : I've heard this as well. This would allow them to "more effectively" manage their costs at all levels. Their goal may be profits, but forgetting abou
40 catiii : Rumor where? From whom? Based on what financials?
41 ripcordd : Just because you have cash in the bank dosnt mean you cant file for BK look AA and what they did.
42 aaexecplat : 1) What other airline has ordered 400+ firm orders for planes in BK to replace nearly their entire fleet in just a few years? 2) Note that you mentio
43 tommy767 : For those who say Gordo needs to come back need a reality check. The man is in his early 70s, practically retired, and flourished in the go-go '90s --
44 brilondon : UA just stinks when it comes to customer service and the way they treat their FFs. I routinely travel 20,000 miles a month and try to avoid UA where
45 F9Animal : I just hope they can get it together! The airline has huge potential, and I am hoping the bankruptcy rumours on here are false. The employees have bee
46 airtechy : For the life of me, I don't understand how they adopted that horrendous business class layout. Jim
47 catiii : You're kidding, right? You think that's the only factor that comes into play when doing something as disruptive to your business plan as filing for C
48 DeltaMD90 : Employees at DL seem to be doing just fine. Labor relations are very good there. Many aren't unionized anymore but the majority ruled against unioniz
49 thebatman : To say that this is a "merger" is kind of a joke. More like "you will do it CO's way and like it". Our maintenance programs have just taken a time wa
50 tommy767 : Whoa, paper log books? That's horrifying. Not trying to be ignorant, but what's SCEPTRE?
51 IAHWorldflyer : aaexecplat says things I agree with here. As does Apodino. Smisek spent 2011 and early 2012 trying to merge the two carriers with ( let's be honest) l
52 AADC10 : UA has offered early out but it was so stingy that unsurprisingly, few took them up on it. I am sure that UA is looking to conserve short term cash b
53 jayunited : Exactly UA is trying to have it both ways they want top scale employees to leave so they can save money on employee cost but they were not willing to
54 nycdave : Ah, yes. Because their post-merger problem is they haven't been cheap *enough* with customers...
55 RDH3E : But what if paying a buy out package that will "get the attention of employees" will cost more than the savings? I think that is what the stingy firs
56 airzim : Better let Delta (the blue eyed boy of US aviation at the moment), since they also use SCEPTRE. There are pluses and minues with paper logs vs electr
57 tommy767 : What advantage is there to paper logs? Smudging ink?
58 airzim : ELBs are transited via ACARS and have a more rigid, and perhaps limited, set of information that can be communicated to maintenance staff and systems
59 Post contains images tommy767 : Well, duh. That's why the personal computer blew up in the early 1980s People got sick of reading chicken scratch.
60 nomorerjs : Now that the AA/US merger is a go, will UA be proactive at ORD and add flights / new destinations? Parker said he will add at ORD.
61 jayunited : There is no way the cost of a "real" buyout would cost more than what it would save the company over a 10 year period. First of all most employee gro
62 holzmann : LOL. Great. They are dead last in WiFi rollout IMO and offer arguably the worst in-flight experience of the majors. They consistently have the unfrien
63 Post contains images 777ord : If UA files again, I'd strongly consider much bigger problems than layoffs. I don't see it happening. Delta has DGS which only pays those employee's
64 N62NA : No they don't. UA flies 737s and A320s transcon and they don't have flatbeds up front.
65 STT757 : I think in this context Trans-Continental means literally between Continents (North America-Europe, Asia, Australia etc..).
66 1337Delta764 : Agreed. Removing IFE and forcing everyone to use their own devices (and charging for it) is a stupid idea. DL is playing it safe by offering passenge
67 DeltaMD90 : It's not like the "safe" option is free of risk. IFE is expensive and adds a lot to fuel costs. Time will tell what decisions are better and one way
68 SHAQ : If you want flat beds, you take United P.S. If you can't pay that, you can take domestic first class on 737. Between continents it is intercontinenta
69 Post contains images N62NA : Oh, OK. So what he meant was Inter-Continental.
70 1337Delta764 : I expect that DL will eventually put IFE at the forefront of their advertisements, thus winning over passengers from UA. After all, IFE is what made
71 FlyASAGuy2005 : That's false. Delta is transitionin to SAP Then the correct term would be inter-continental. He confused me too.
72 Post contains images SESGDL : This logic is highly flawed. If old planes = profits, then every airline would do it too right? DL is making bank, should every airline be flying DC-
73 United1 : UA is not neglecting their customers at all...there are a lot of customer facing changes that they have made over the last few years that have been h
74 nutsaboutplanes : I don't think you have to worry about that. We are all very excited about the updated AA brand and the positive changes that we will see in the curre
75 MaverickM11 : Ordering a bunch of planes and improving the product is the easy part. How many times has Stephen Wolf alone done that? Horton on the other hand neve
76 justloveplanes : Just my two cents, UA is losing more in premium revenue through brand degrading cost cuts that it is gaining in direct savings. Those who say they nee
77 MasseyBrown : That what I thought, too; but, checking the last SEC 10-K, it said only 16 E-145's are owned. The rest of the CRJ2's and E145/135's are leased. I won
78 strfyr51 : the ELB acars log is SO far superior to paper logs it isn't even a comparison. With the ELB you find the Maint Reporting Code and input it in ACARS O
79 strfyr51 : The CAL airplanes aen't even Wired fo Channel 9 (at least Not Yet) I've been on their airplanes and Delta's AND Americans And I haven't seen a DAMN t
80 DL_Mech : Delta inherited SCEPTRE from NW, it was created at North Central Airlines. SAP is used for logistics/parts provisioning. SCEPTRE is used for MTC trac
81 FlyASAGuy2005 : Something is in the works for TechOps come next year. IDK if the pads are meant to repalce logbooks but something is going paperless. Thanks, that wo
82 calmsp : can you name something specific that is so terrible about the 4 you listed? I can name a few things that are better about each of those. by "on board
83 aaexecplat : So Wolf has ordered 400+ firm orders and another few hundreds of options to replace an entire fleet multiple times? Which airlines did he do that for
84 RDH3E : Your math doesn't add up. You cannot replace a FT employee with a PT employee. If you consider equivalent schedules here is what you'd get: Entry Hrl
85 hohd : My suggestion on UA could do. Downsize the HQ at Chicago and bring back some of the jobs to Houston. It is obviously cheaper to operate from Houston t
86 tugger : Am I right that this means they are looking to cut 2.5 to 3% of their expenses? Tugg
87 RDH3E : The company is receiving huge tax breaks from being in Chicago. Moving people back to Houston would require cutting salaries (hard to retain staff th
88 AADC10 : It would cost UA to move to Houston because they received a tax and office lease deal to stay in Chicago and become the largest tenant in Big Willie,
89 apodino : You know how US was an all Boeing carrier until the late 90's, and is now almost an all airbus carrier? That was Stephen Wolf who did that. Remember
90 mcdu : Jeff Smisek has not driven anyone away. Policies created from integration and the need to get to a common platform in Reservations, common flight ope
91 calmsp : not really. More than 75% are in Chicago.
92 RDH3E : Yes really. Not more than 75% are in Chicago. Also not I said Non-Airport Managment, ie not includad Salaried folks in a non-management roll, as I do
93 tommy767 : Are you for real? You need to jump on flyertalk and see the masses that Smisek has already driven away to AA and DL
94 calmsp : you are wrong. who do you think is left in Houston? Teh only people that are in HQS/HQJ are tech ops, one small HR group, a few scheduling people, fu
95 EaglePower83 : I agree 100% with aaexecplat's post. BRA fricken VO. To put it simply, it's miserable to fly United today. In the past, I used to know many people wh
96 aaexecplat : Thanks for catching me up on this. But the question remains...anyone who orders new planes is automatically a rudderless hack?
97 RDH3E : Go look at the figures on the intranet, come back and apologize to me. I'm looking at them right now.
98 COSPN : Very simple to save a billion Move HQ from Chicago to a cheaper location, Houston or Other Location (Indiana SBN, IND or Illinois Downstate someplace,
99 United1 : That would be interesting if they got out from underneath those aircraft....hmmmmm will have to look into that. Tommy....go look on the AA and DL boa
100 bjorn14 : Didn't Bethune say they werent rules just guidelines and that he trusted CSA/PSAs to do the right thing for the pax. How far have we fallen.
101 tommy767 : How so? More trip reports, more threads about passenger experiences, it's quoted by news sources like the WSJ. What makes them "the worst source of i
102 RDH3E : I believe the phrase is "the squeeky wheel gets the grease". So people complain as much as possible in order to try to convince the airlines that thi
103 United1 : I think people on here are really overestimate just how expensive the space in the Sears Tower actually is. Chicago is not that expensive, yes it is
104 tommy767 : Well you can easily pick out the people who overembellish. You just ignore those threads. The UA meals threads is very comprehensive. It shows how do
105 aaexecplat : Not arguing with your dislike of FT or your description of the members as "do we cheat and how". Agree completely. But to deny the very clear exodus
106 United1 : I don't disagree that UA needs to overhaul domestic midcon firsts meal service...although the burrito is not bad and I have had the soup/chicken sala
107 aaexecplat : If this cinderella story makes you sleep better at night, more power to you. But until Smisek and his team "get" this, UA will underperform with its
108 United1 : So I'll ask you a question when UA was leading the pack a few years ago, prior to the merger, in terms of PRASM and yield did you think that UA was s
109 tommy767 : It might not be bad if you are used to eating complete garbage. There is no way you make that thing look good. Considering UA is serving that 7/11 bu
110 calmsp : yeah right. You can take a look at the entire finance organization, and roughly 55 management employees out of the entire company are in Houston. tha
111 United1 : Have you ever tried it...or are you simply basing your statement off what it looks like? It's a plain burrito...
112 tommy767 : Again, a burrito served on a midcon is a sheer embarassment. UA should provide a proper meal.[Edited 2013-11-13 14:54:36]
113 United1 : So no you haven't tried it then....... ......hmmmmm maybe.[Edited 2013-11-13 15:14:16]
114 Post contains links tommy767 : I gotta be honest, I'm not really looking to try it since it looks like it would make me sick and a poor offering compared to the competition. Ever s
115 United1 : What exactly do you think should be in a burrito?
116 Post contains images FlyHossD : Yes, it's still "a work in progress." More than 3 1/2 years past the merger announcement and there is still much work to be done. The sCO aircraft -
117 aaexecplat : Not surprising at all. Most bean counters are not good business people. Good business people drive revenue and sales through accountable investments
118 tommy767 : Very true. And unforuntely in this economic climate many CFOs are getting to become CEOs because they are good at cutting costs and looking at the bo
119 Post contains images MaverickM11 : That's not even close to what I said. AA's comps are great because fall 2012 was terrible; they *should* be great. It has nothing to do with UA. I'm
120 tommy767 : Because it's a pathetic offering? What are people supposed to shut up and be happy no matter what?
121 FlyHossD : As I recall, it was Bob Ferguson - Bethune's immediate predecessor - who pulled CO out of DEN. Bethune hired some great senior management including L
122 commavia : Respectfully, I think that's ridiculous. Even if you take the impact of last fall's pilot slowdown out of the YOY comps, AA still posted the best Oct
123 aaexecplat : If you think AA only outperformed UA in PRASM growth YOY in 3Q13, take a look at the prior two quarters...same exact story. This isn't just about one
124 TW870 : What is the soup that goes with the burrito? It looks like broccoli cheddar or something - which would be completely strange with a burrito. Is it so
125 MaverickM11 : I think you've lost track of what this was originally about, ie Tom Horton being a viable replacement for Smisek. You will get no argument from me th
126 aaexecplat : OK. So let's forget UA. What is your oosition on the recently released DL and AA October PRASM growth numbers? DL reported 2% PRASM growth and AA rep
127 silentbob : But the up front cost would look bad on the quarterly report, you can't have that. And that is exactly the mindset that has resulted in an economic r
128 MaverickM11 : DL is at the top of their game, and industry, posting double digit margins in Q3 and forecasting another one in Q4--when AA gets close to that type o
129 Post contains links aaexecplat : So now you are saying that we can't compare AA and DL because there is not enough data to make a comparison viable? I love data. I use it to determin
130 MaverickM11 : Again, not at all what I said. DL is running a much better airline than AA right now--there's no question. AA may have higher unit revenues, but you
131 LDVAviation : For some reason that I have never been able to figure out when I have posted links to the MIT Airline Project in the past, the links to specific data
132 aaexecplat : Ugh...I don't think I can edit the post anymore, but I did not know that the links didn't work....I do know what I did wrong though. The page URLs en
133 tommy767 : I really couldn't stand Kellner as a CEO either. He just kind of sat back and did nothing while making silent cuts, then handed the airline over to L
134 flydeltajets : Not true, UA likely has more contracted employees than DL, even at hubs there is a lot of contracted work (i.e. Skywest and Air Wisconsin handing UAX
135 justloveplanes : Former UA/CAL elites..... AA is the more logical choice for FF switches. Chicago perfect horizontal switch Dallas/Houston, closer, and New York. Lati
136 1337Delta764 : Yet UA isn't expanding their operations to the PMUA hubs; UA renewed their contracts with Gate Gourmet last years at most of them. Even in DEN (which
137 flydeltajets : Chelsea expanded to cater all UA at IAH as well as Air China and many other carriers there, Chelsea provides catering to 19 other airlines other than
138 Post contains links and images CALTECH : He is so misinformed. Doesn't even know the true historical facts, http://money.cnn.com/magazines/fortu...chive/2004/10/18/8188058/index.htm "It's th
139 T5towbar : And with the new contract, that will continue, except ATW will regain the work that Air Whiskey does at IAD. Note: today is the first day for the 6 o
140 rwy04lga : DL has a MUCH lower CASM than UA and WHO??
141 Slider : Listen, this is revisionist history. I know people like to idolize Gordon--some reasons legit others not so much--but the cold, hard truth is that it
142 tommy767 : I mean, I still fail to see what Kellner actually did at CO. I feel he failed to listen to his customers and didn't make any major moves to really ex
143 Slider : Other than the example of DTV/WiFi you cite, can you name something specific? ASMs went up. Number of destinations increased generally speaking, but
144 tommy767 : He was a sitting duck. Off the top of my head: --No new widebody order to cover for 787 delays. Just 757 on TATL missions which ended up being a mixe
145 777ord : Technically, CO was only profitable 2 out of 8 years vs. UA's one... (as of 2012) Unions... Or, in CO's case. Lack thereof. Treated the employee's wi
146 OB1504 : Is that above-wing as well? Any word on which stations would be affected?
147 klwright69 : Yes, except changing planes all the time at another hub would get really old after awhile.
148 flydeltajets : DGS mostly does Other Airline work and smaller DL city ground handling. There is also Delta Air Eliete that also does other airline work and some pur
149 Post contains links tommy767 : I think Smisek comes off as a major phony and a bean counter -- probably not a bad guy in actual real life (people say he's nice when they encounter
150 T5towbar : I thought Regional Elite was folded into DGS when Comair was going away? Anyway, we will be getting back some of the work that DGS was doing on the s
151 FlyASAGuy2005 : You're talking about Regional Elite and Delta folded them into DGS in 2012. As of current, DGS is DL's only wholly owned pure ground handling company
152 Post contains images tommy767 : They should have picked the sUA CIO that left UA after they went with SHARES. He went to Apple
153 MaverickM11 : So smart and shrewd the ATSB turned UA down. Twice. sCO CFO
154 tommy767 : NO. Not as bad as the CO RJ scope clause that is still lingering and they are doing NOTHING about.
155 MaverickM11 : Yes. Look it up. Zane Rowe. Also wrong. But that has never stopped you so I don't know why I bother.
156 777ord : He's very nice. I had the chance to meet with him and directly ask him some questions I've been dying to ask. Very well spoken, very nice. He needs t
157 UA772IAD : Wow what a deal! While I didn't travel on a discounted fare today, I was offered to upgrade to UF (first) for "only" $949! For that low price, I coul
158 tommy767 : Then why are they not making any active attempts to retire the over 200 fleet of ERJs?
159 United1 : There is a cap on how many aircraft can be part of UAX and they will be retiring 50 seat RJs to stay under that cap as new large RJs (EMB-175s) come
160 tommy767 : Why is there a cap? Seems like DL is being more proactive about this and UA is just sitting quietly.
161 United1 : UA is taking delivery of 70 EMB-175s over the next two years......both DL and UA have caps on their RJ fleets...scope requirements from their pilots
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