Kaitak From Ireland, joined Aug 1999, 11957 posts, RR: 37 Posted (10 years 8 months 4 weeks 1 day 23 hours ago) and read 1119 times:
The BBC is reporting today that there are renewed fears of UAL having to file for bankruptcy. What effect would this have on its international routes?
US Air doesn't have a big international network and its sale wouldn't have much of an effect on its likely fate, BUT UAL . . .
In 1988 (?), UAL bought PA's network for $750m; what must it be worth now. And the transatlantic routes, particularly with UAL's access to LHR.
The point is whether UAL can file for bankruptcy if it has saleable assets which could prevent this. Could DL (for example) file an objection saying, "hang on, y'all, if they sold their Pacific network to an interested party (guess who!), they would not need to file for bankruptcy?
Kaitak From Ireland, joined Aug 1999, 11957 posts, RR: 37 Reply 4, posted (10 years 8 months 4 weeks 1 day 20 hours ago) and read 1012 times:
No, they'd have to be owned by a US carrier, because they are flights operated by US airlines in the particular bilateral agreement.
Stupidity or otherwise doesn't come into it (not now, anyway). It's a question of HAVING to take this action, whether or not they like it. My point, from a strictly legal point of view is, can they file for bankruptcy (i.e. declare in front of a bankruptcy court that they have no assets and their liabilities exceed their assets), when in reality they have assets - in the form of route networks - worth a few billion. The Pacific network would yield at least $3-4b, the Atlantic, maybe $2b, particularly because UA's LHR routes would be particularly sought after.
Of course, the problem for airlines buying these routes is that it's no use to DL or NW or CO having routes into ORD (even from LHR), if they don't have a network there. DL could probably use some of the t/a routes and AAL certainly could use the transpacific routes, even out of SFO.
UA744Flagship From , joined Dec 1969, posts, RR: Reply 5, posted (10 years 8 months 4 weeks 1 day 19 hours ago) and read 1002 times:
DL/CO/NW, while faring better, are in NO position to make $1 Billion+ investments.
When UAL bought out PA's PacDivision and LHR routes for large sums of money, it was profitable. (On the other hand, the Latin America operations were not too expensive, but UAL purchased it while it was losing money).
Still, the only sellable parts of UA's international route network are:
(a) the whole of the Pacific Division
(b) Latin American routes to Brazil and Argentina
(c) LHR operations, and Frankfurt slots
In all other routes, OALs (must be US based) are free to start operations based on bilateral agreements and open skies. Or OALs have authorities to these destinations already.
Anyone could start IAD-CDG, for example, because of US-FR open skies.
But then again, think about it. If UA, the USA's transpac leader, cannot run LAX-HKG profitably... who could? In point of fact, who could run SFO-Asia profitably without UA's SFO and Western USA feed?
As I said, UA's international operations run the most efficiently and profitably when paired with UA's route network. Take one away from the other, and traffic greatly diminishes in both. UA is not running a profit on these routes because of its obvious cost-containment problems.
Jessman From United States of America, joined Jul 2001, 1506 posts, RR: 8 Reply 6, posted (10 years 8 months 4 weeks 1 day 15 hours ago) and read 934 times:
By all accounts their trans-pacific flights are profitable. However they are operated out of SFO and LAX for the most part. The west coast in particular has really dumpy yields with Southwest, Alaska, Frontier, America West, and National driving fares down, as well as the normal cartel competition with United and American both having signifigant operations up and down the west coast. The really big problem is that if United cuts the west coast operations to just those routes that make money they will lose all the feed that makes their transpacific flights so successful. So in actuality, even though they make money on their transpacific operations, these are probably the very ops that are causing their financial woes.
Ryanair!!! From Singapore, joined Mar 2002, 4653 posts, RR: 27 Reply 7, posted (10 years 8 months 4 weeks 1 day 15 hours ago) and read 916 times:
How about an alliance with AA or Alaska to feed traffic into LAX, SFO and SEA so that UA can fly the pax across the Pacific to Narita and Asia. That way they could let go of some routes which have overlaps with these airlines. Low fare versus full service airline? Well, AA is a full service airline, no? So they could actually reduce their domestic ops (not entirely though) through a stategic alliance and concentrate on international routes?
Would it help cut cost if they were to concentrate on Narita and quit direct flights into Hongkong and Taipei? Ie, base a handful of 767s in NRT to fly to the Asian destinations. Can't so the same for Europe, I'm afraid!
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