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Causes Other Than 9/11 For UAL Ch.11?  
User currently offlineFSPilot747 From United States of America, joined Oct 1999, 3599 posts, RR: 12
Posted (11 years 7 months 1 day 17 hours ago) and read 1237 times:

Other than 9/11, what else contributed to the eventual filing of ch.11 for United? What was wrong with management? Any elaboration and explanations are very appreciated.

FSP

11 replies: All unread, jump to last
 
User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 1, posted (11 years 7 months 1 day 17 hours ago) and read 1230 times:

While it seems that many United employees place the blame squarely on former CEO Goodwin, and absolve themselves of any blame at all, but the truth of the matter is that most of the employee groups had a hand in what happened. I think the top 5 United killers were probably:

1) The Pilots taking a 38% Pay raise when the industry couldnt afford it
2) Goodwin's attempts at purchasing US Airways
3) Bad management, including massive over capacity, basically trying to be everyones friend and flying to more or less everywhere
4) Some other employee groups having excessive pay packages
5) Allowing the Pilots and other employees own 55% of the company

United were making massive losses in the quarters before 9.11, and this cannot be ignored.

That said, some of the groups at United seem to want to get through this, and while this is painful for them, I hope they succeed.

Jeremy


User currently offlineScootertrash From United States of America, joined Aug 2001, 569 posts, RR: 9
Reply 2, posted (11 years 7 months 1 day 17 hours ago) and read 1227 times:

9/11 didn't help UAL, obviously. The real source of their woes, however, lies in it's basic corporate structure and labor contracts (might sound funny coming from an ALPA member like me, but it is true!). The combination of corporate bloat and draconian work rules have made UAL the most inefficient carrier in the United States (except USAirways pre CH11).

UALs bankruptcy problems are actually worse than USAirways. IMHO, the unplanned, uncontrolled nature of UAL's filing and the extreme animosity between labor and management make a successful outcome rather unlikely. The next couple of months will be VERY telling.


User currently offlineScootertrash From United States of America, joined Aug 2001, 569 posts, RR: 9
Reply 3, posted (11 years 7 months 1 day 17 hours ago) and read 1224 times:

Good points Jeremy, especially on the failed U/UAL merger. Both U and UAL put their respective companies on autopilot with no plan "B" while the government thought out the implications of the proposed merger.

Do not, however, overestimate the effect of payrates on the bottom line. The real killer is not compensation, but inefficient work rules that really has hurt UAL. That 38% pay increase that the pilots got was the first received in several years. All it did was give the pilots parity, plus 1%, with the rest of the industry.


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 4, posted (11 years 7 months 1 day 17 hours ago) and read 1225 times:

All it did was give the pilots parity, plus 1%

This is simply not even remotely close to the truth, even after the 29% cut they just took, they are only down by 7% on the industry, and are still higher paid than some of the others.. Continental etc. There was no parity in that deal at all. Delta and American were more or less forced to come close to matching the UAL increases, but to suggest that this was to bring them to parity is incorrect.

I have also heard some of the others suggest that UAL were poorly paid (industry bottom) until 6 years ago, but I remember talking with a few of my fa friends that were hired at United in 1991, and the pay rates then, were very high compared to the industry then also.

Obviously not all employee groups were high paid, but many were.

Jeremy


User currently offlineUPS Pilot From United States of America, joined May 1999, 871 posts, RR: 3
Reply 5, posted (11 years 7 months 1 day 12 hours ago) and read 1189 times:

I was talking to a pilot from the U.K. the other day about the industry in Europe. He told me that most of the airlines in Europe are doing well. I told him that we are putting a lot of blame on "9/11" but we in the U.S.A. have to realize that the economy was weakening before "9/11". "9/11" didn't help and caused a lot of economic hardship but that was more temporary. In 9 months it will be 2 years since that tradgic day (hard to believe). We can't blame that one day for the problems. Look at all the companies like Enron and Worldcom to name a few that will have zero corporate travel this year. That's only 2 companies. With all the dot bombs that went bust the past 3 years, that worsened the industry. One of the first things companies look to do when they need to tighten the belts is to cut travel expenses. That impacts the airline industry more than anything. 9/11 was one terrible day, it's not an excuse for our poor economy. Only we can change that. Some of us seem to think the "company" pays our salaries. It isn't it's our customers. Treat the customer right and they will continue to give you business.

User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 6, posted (11 years 7 months 1 day 11 hours ago) and read 1172 times:

We can't blame that one day for the problems.

No we can't, but we cannot also look beyond the fact that more or less immediately following that day, load factors for the airlines fell around 20%. Now if it was purely economy, then their would be a gradual drop, but 20% overnight tells more of a story.


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3803 posts, RR: 29
Reply 7, posted (11 years 7 months 1 day 9 hours ago) and read 1153 times:

The real perpetrators that caused UA's Chapter 11 filing want us to believe it happened because of 9/11/01. Nothing could be further from the truth. To be sure, 9/11 may have hastened the process slightly (by no more than 2-3 months). What the spin artists want us to miss is that UA was predicting -- and was on course -- to project an all-time record loss for 2001 before 9/11/01. It all had to do with unsustainable labor contracts that resulted from an unsustainable fare structure, a house a cards that quickly collapsed as soon as the unsustainable dot com economy collapsed.

User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 8, posted (11 years 7 months 1 day 9 hours ago) and read 1147 times:

To be sure, 9/11 may have hastened the process slightly (by no more than 2-3 months).

I disagree, while I am known on here as United hater etc, and agree they were seriously broken before 9.11, other carriers like Continental, Southwest etc were all doing quite well, and are now not. 2-3 months is not a fair reflection, the amount of people flying is way down, I believe it is still down around 14% from where it was pre 9.11. I am not refering to prices, or revenue, I am talking purely bums on seats. 14% is a lot more than a few months of economic decline


User currently offlinePROSA From United States of America, joined Oct 2001, 5632 posts, RR: 5
Reply 9, posted (11 years 7 months 1 day 9 hours ago) and read 1141 times:

When you consider the absurdly low load factors on all four of the 9/11 flights, it's not hard to realize that UA's (and the industry's) problems were already coming to a head.


"Let me think about it" = the coward's way of saying "no"
User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 10, posted (11 years 7 months 17 hours ago) and read 1109 times:

At the time of the 9/11/01 terrorist acts, the airline industry was already suffering a downturn in loads due to a weakening economy. The 9/11 attacks attacks were pretty much like someone shooting a person that had already been stabbed, it made a bad situation even worse. UAL's union contracts were already dragging down the company, because the payroll was cutting into any profits, and if you're not making any money, you're digging yourself deeper into debt. US and UAL were still trying to get back on track after their failed merger, so UAL was not really well prepared for the fallout post-9/11. With two of their a/c being used in the attcks, it was not exactly good publicity for the carrier. The image of one of their planes smashing into the WTC is going to always be the image in the minds of those who watched the events of 9/11 unfold. People were afraid to fly, fearing another terrorist attack, and United, along with American suffered larger drops in bookings as a result of their a/c being the ones that were hijacked.

User currently offlineB747-437B From , joined Dec 1969, posts, RR:
Reply 11, posted (11 years 7 months 16 hours ago) and read 1109 times:

I covered this topic in my column at http://www.airwhiners.net/whine_cheez/20021212.htm.

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