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What Happens If UA Is Liquidated?  
User currently offlineMSY-MSP From United States of America, joined Jun 2002, 151 posts, RR: 0
Posted (11 years 11 months 1 week 15 hours ago) and read 2172 times:

This post is purely for a hypothetical analysis. I do not think UA will be liquidated if they go into Chapter 11. However, I was wondering what do you think would happen to UA's opperations, and who would take over the routes. There are also some quandry issues to consider.

UA has some routes that no other US carrier flies.
SFO-SYD
LAX-SYD
LAX-AKL
SFO-HKG

With these routes who could pick up the slack? all of these routes with the exception of LAX-AKL are served with the 744. No US airline other than NW operates the 744. The longest range aircraft that any other US airline operates is the 772ER. According to boeing's web site the 772 cannot fly non-stop from SFO to these cities, at least with a full load, and a couple of these routes are near the full range of the 772ER, but with a lot less capacity than the 744. Therefore I see a problem with other airlines being able to pick up these routes. They are not going to want to gain another fleet type ie the 744, nor do they have the cash to do it. NW would be the only one who could do it, but do they have the cash to get the extra 744's needed to operate these routes?

Now turning to the domestic routes. If UA were to disappear from ORD, IAD, DEN, and SFO who would pick up the lost capacity here. I don't know. In reality I don't think any airline has the cash needed to expand to pick up the lost routes domestically. My theory is that at least in the short term UA's hub cities will be underserved resulting in astronomical prices for tickets into and out of these cities, as the remaining airlines will be operating at or near full capacity. (This excludes the shared hub at ORD, but even then how much extra traffic can AA actually provide).

So who buys or acquires UA's routes. DL, NW, or CO -- AA is not in this equation as they have enough trouble dealing with the TWA merger, and probably wouldn't be allowed to play anyway.

Now my reason why I don't think UA will disappear. We all agree that the US industry has too much capacity for the current demand. Most seem to think a capacity cut of around 10-20% would probably make sense. Assuming UA holds 15% of the US domestic market, their disapearance would create a 15% capacity cut industry wide. However in certain markets this would result in an 85% decrease. In those markets air travel would be dead, until a new entrant could come in and make up for a portion of the lost capacity, because prices would be too high for most people. In order to fill the gap, the remaining airlines would have to expand, which given the current state of affairs is probalby not possible given most airlines cash flows.


I know some of this probably doesn't flow real well. Try writing this over a couple hours, while doing your real job too. I am really interested in hearing your thoughts on how the industry would readjust, both in terms of routes and aircraft, if UA disappeared, or for that matter any one of the six majors. (NW, CO, AA, DL, UA, WN)


THanks for your input, I look forward to the replies

MSY-MSP

17 replies: All unread, jump to last
 
User currently offlineOuboy79 From United States of America, joined Nov 2001, 4599 posts, RR: 22
Reply 1, posted (11 years 11 months 1 week 14 hours ago) and read 2139 times:

Here is how I envision a UA fire sale going...

The Pacific routes would like be divided up amongst American and Northwest. Northwest lacks any major west coast operation. They could esentially pick up routes out of either SFO or LAX. Delta could be another possibility.

United's South American and Caribean routes would be split between American and US Airways (which is in almost every airport possible in the Caribean).

Europe is anyones guess. Most of these routes will like just be eliminated where they over lap with other airlines, cutting capacity.

Now the domestic picture is interesting. ORD hub would become an AA super hub and could look like Dallas with Delta or another domestic airline (maybe CO dropping CLE for it?) coming in to provide some hub services. SFO & LAX would like be chopped up between whomever picks up the pacific routes. Should see a huge decrease in capacity out here though. IAD would like be hubbed up either US Airways or another airline looking to solidify an east coast position - American? US Airways would go for it just to be able to offer transatlantic services to its home city...but then we run into the question - BWI didn't work, why would IAD with DCA just a few miles away. We'll see. DEN is the complex one. Who the heck knows. This is a high cost field. Frontier would like explode and probably pick up as many 319s as it can. Southwest could consider coming into DEN or COS at the very least. Delta move into and leave SLC behind? Skywest is a United Express carrier too. American wouldn't need it, Northwest would want something further west maybe...so that leaves a couple majors left. US Airways won't be in a position yet (Embraer 170 deliveries won't be coming in fast enough) to pick up another hub...especially a high cost hub. Continental...would they go back to DEN? It would seem like old times with the new Frontier there as well.

Whatever happens...a UAL failure would benefit the industry more than US or HP going under. Those two airlines are concentrated in one part of the country. That wouldn't solve the capacity problem system wide. If UAL were eliminated from the picture...that would reduce capacity system wide and hopefully ensure full planes - with money making pax - to allow the industry to recover sooner.


User currently offlineTrickijedi From United States of America, joined May 2001, 3266 posts, RR: 4
Reply 2, posted (11 years 11 months 1 week 14 hours ago) and read 2114 times:

Southwest will buy all of UA's routes.  Big grin


Its better to be on the ground wishing you were in the air than be in the air wishing you were on the ground. Fly safe!
User currently offlineSjc>sfo From , joined Dec 1969, posts, RR:
Reply 3, posted (11 years 11 months 1 week 14 hours ago) and read 2096 times:

*IF* and only if (IFF for all you math people) United is liquidated, I really don't see that much of a change in SFO. American has plenty of strength at LAX to take over what UAL could leave behind, and in terms of the routes only to be served by 747s, American has partners for all of those routes that they would turn it over to. In terms of intra-Western region flights, I see these being completely taken over by the LCCs (on the way regardless of UALs presence), aside from the presence of American Eagle, and Delta's regional operations out of SLC. American and Delta would probably take over the remaining trunk routes of SFO (accompanied by increased frequencies to Newark by CO), to destinations such as JFK, BOS, and IAD.

User currently offlineTrvlr From United States of America, joined Feb 2000, 4430 posts, RR: 21
Reply 4, posted (11 years 11 months 1 week 12 hours ago) and read 2063 times:

First of all, this ain't gonna happen. But if it did...

I think we'd see an effort by key members of the Star Alliance to buy up as many United assets as is economically feasible, and resurrect the airline as much as they could. Lufthansa, Air Canada, ANA, Thai, Varig, Austrian Airlines Group would set up a holding company in the United States, and go from there. All of United's hubs, with the exception of DEN, are key international markets. So it's very hard to determine which city they'd go for first...probably all of them, come to think of it. In any case, planes, gate space, landing slots, maintenance facilities...the Alliance would try and get its hands on pretty much anything. LHR and NRT slots would be priority "small" items.

Interesting to imagine how it would all play out, but I think it's safe to say that we don't need to worry about it too much.

Aaron G.


User currently offlineSWALUVFA From United States of America, joined May 2002, 277 posts, RR: 6
Reply 5, posted (11 years 11 months 1 week 11 hours ago) and read 2029 times:

United has about the best fleet and the best global route structure in the world. United is a great airline that has just had AWEFUL management the past few years. Give them time and they will pull out of this financial rut that they are in. The employees are running a great airline reguardless of what the $$$ amounts show. I miss working at United and I know tha I will be back one day!  Smile

User currently offlineIronchain15 From , joined Dec 1969, posts, RR:
Reply 6, posted (11 years 11 months 1 week 10 hours ago) and read 1985 times:

I would never fly on UA from LAX to SYD. Qantas all the way for that one.

User currently offlineSjc>sfo From , joined Dec 1969, posts, RR:
Reply 7, posted (11 years 11 months 1 week 10 hours ago) and read 1985 times:

United does seem to have a very customer friendly fleet, and alot of good people working for them... it'd be a shame to see'em go.

User currently offlineN751PR From Japan, joined May 2002, 1249 posts, RR: 1
Reply 8, posted (11 years 11 months 1 week 9 hours ago) and read 1981 times:

Indeed it would Sjc>sfo  Crying


"Ladies and Gentlemen it's happy hour. You will get two approaches for the price of one."
User currently offlineCoronado From United States of America, joined Jun 1999, 1177 posts, RR: 2
Reply 9, posted (11 years 11 months 1 week 7 hours ago) and read 1925 times:
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The interesting question is what will happen to UA's LHR slots. Why shouldnt;t NW, CO and DL have a shot at them if UAL goes Chap 11. Why should they hold on to this asset if they go bust?


The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
User currently offlineSean-SAN- From United States of America, joined Aug 2002, 770 posts, RR: 1
Reply 10, posted (11 years 11 months 1 week 7 hours ago) and read 1919 times:

SFO goes to NW..
LAX goes to AA and AS..
DEN goes to a LCC, probably Airtran, JetBlue, or Alaska..
IAD goes to US..
MIA goes to AA..

Pacific routes goto NW
Atlantic routes get split, DL gets Heathrow rights from ATL
S. America goes to AA
Australian routes probably go bye-bye.. maybe NW will try them

-Sean



User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 11, posted (11 years 11 months 1 week 7 hours ago) and read 1908 times:
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This is how I see it:

SFO goes to NW
LAX goes to jetBlue and Alaska
ORD goes to Continental, dropping CLE like a hot potato
DEN sees explosive growth by F9, and AirTran starts services, maybe focus city
IAD dwindles... no way US could pull that off
MIA dwindles as well -- AA gets the whole thing

Collateral effects:
- Southwest quickly starts lots of service to COS
- DL restarts some Latin-American routes from ATL (maybe DFW) and gets UA's route authorities plus ATL
- SkyWest partners with NW at SFO and SEA, F9 at DEN


User currently offlineBA From United States of America, joined May 2000, 11153 posts, RR: 58
Reply 12, posted (11 years 11 months 6 days 17 hours ago) and read 1796 times:

You will almost definately see either Continental or Delta establish a hub in Denver.

Continental has long wanted to return to Denver and since the troubled times United ran into, that interest sparked even further.

Delta for quite some time has been evaluating alternatives to SLC that have a larger O&D base and have been strongly looking at Denver aswell. You can bet that Delta will want to move to DEN if UA liquidates and when the economy recovers.

I hope United does not liquidate as they are my favorite US carrier and have had plenty of pleasant experiences on them. I will be deeply saddened if they liquidate.

Regards



"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
User currently offlineSean-SAN- From United States of America, joined Aug 2002, 770 posts, RR: 1
Reply 13, posted (11 years 11 months 6 days 9 hours ago) and read 1703 times:

I can't see DL or CO taking DEN when they already have hubs in DFW and IAH. Maybe NW can use it. It would be great for Airtran, allowing their range-limited 717's to serve tons of new cities, and their regional partner Air Wisconsin is already there, established.

-Sean


User currently offlineAA-STL From , joined Dec 1969, posts, RR:
Reply 14, posted (11 years 11 months 6 days 9 hours ago) and read 1686 times:

Good lord this would be a mess. Well here is my 2 cents
AirTran would jump at DEN like a monkey that hasnt eaten in two weeks would at a banana. You would see ALOT of new cities introduced as it is a focus city within the first two years. F9 would speed up those A319 deliveries and start service to several markets that UA dropped.
AA, AS, and DL would pick up some market share at LAX
CO would leave CLE and those high landing fees, HELLO ORD!
IAD-Sorry i guess you still got B6
MIA, not really all that big there but I'm sure AA would take it
SFO, too good to pass up internationally wise.....I'm sure someone would take it
Thx,
TWA4EVER


User currently offlineBA From United States of America, joined May 2000, 11153 posts, RR: 58
Reply 15, posted (11 years 11 months 6 days 9 hours ago) and read 1672 times:

Sean-SAN-,

Continental used to be hubbed in Denver until 1995. CO returning to Denver is nothing unusual.

DFW can hardly be considered a major hub for Delta.

DFW/IAH serve entirely different purposes than DEN/SLC.



"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
User currently offlineORD Boy 2 From United States of America, joined Aug 2000, 287 posts, RR: 1
Reply 16, posted (11 years 11 months 6 days 8 hours ago) and read 1656 times:

Thankfully, UA is to big for the gov't to let fail. If there was a vote in the house it would be 435-0 and the senate 99-1 (a certain gop senator from illinois would vote against it and kill his states economy and vote against ua for supporting ORD Expansion!) But if it happened

UA Express -
ACA - Delta
Air Wisconsin - AirTran
Skywest - Delta

ORD - Delta (dump CVG)
DEN - CO would reclaim it
LAX - US (it needs a west coast hub)
SFO - NWA (Also needs a west coast hub)
IAD - AA (one more hub)

AA would get bigger at JFK, SEA, BOS and EWR
DL would grow at ATL
NWA would grow too at DEN


User currently offlineORD Boy 2 From United States of America, joined Aug 2000, 287 posts, RR: 1
Reply 17, posted (11 years 11 months 6 days 8 hours ago) and read 1649 times:

Star would get US Airways into the organization immediately

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