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United Airlines And Bankruptcy

Sat Sep 28, 2002 10:09 pm

I was talking with a friend yesterday that works at American. He was telling me that if United files for bankruptcy that American would follow suit and file also. His feelings were if United and American file that they could try and break the unions and get their operating costs down to a point that the carriers would be profitable again.

After a horrible year like we have had in the airline industry with carriers losing hundreds of millions of dollars, do you think that this would be the way to go ?? And if UA and AA do file, do you think DL, NW, CO and others would follow along ??

I don't want to start uproar about unions with this posting but I would like to hear what do you think.

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RE: United Airlines And Bankruptcy

Sat Sep 28, 2002 10:13 pm

A bankruptcy filing by UAL would hurt all of the majors, it would give them an oppportunity to dramatically lower their operating cost. Although they would likely be a smaller carrier once they emerged from BK, they would still have a dramatic cost advantage agaist the other majors. It is for that reason many analyst think that if UAL did go into bankruptcy, it would likely drag at least AA along with them.
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RE: United Airlines And Bankruptcy

Sat Sep 28, 2002 10:15 pm

If United and American follow US Air into Bankruptcy, then you will see DL, CO, NW etc all follow. As you have seen with the US air dealings, they have been able to more or less walk away from any responsibility that they had, 100's of planes just allowed to be dropped with Boeing / Airbus and the leasing companies left high and dry. They get to break their union contracts, force pay cuts and whatever else they see fit, and at the moment, the courts seem to be allowing them a lot of freedom to continue.

With very low payments for planes, lower wage bills etc, they can then start undercutting the other majors. If this happens, all will follow them just so that they can compete.

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RE: United Airlines And Bankruptcy

Sat Sep 28, 2002 10:17 pm

And if they came back as a smaller carrier, would they try and keep their international routes or would they drop some or all of them ?
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 12:23 am

They would probably drop some of them, but not too many. After all, the Star Alliance will want to avoid that, as they rely heavily on United. At this point UA is the most important Star Alliance member and also the one preferred by most carriers. In fact I would not be too surprised to actually see financial assistance being given to UA by other Allaince members. But that's just speculation.... However, dropping the international routes would be fatal as that is where they make the money and i am sure they won't do it.
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 12:49 am

That's why any airline that takes the trip to bankruptcy court should just fail. No "reorganizing"...just fail. The argument goes that there is 15 to 20% too much capacity. Let a failing airline fail, and the industry as a whole will improve. The "protection" offered by the US bankruptcy code is a joke, and only allows failures to become bigger failures.
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 12:58 am

how do you explain CO then? They aren't failures, now everyone is hurting but they emerged stronger. Your logic is lame and this country would fail if it wasn't for bankruptcy. All the companies in this country to ever file would be to many for us to name.

UAL wont file for bankruptcy, the employees will come through. We should know here in a week or so once the company has had time to look over the proposals the unions have given them. 5 billion in savings from the pilots,mechanics,flight attendants,ramper and they want management to come up with some of the difference. And to let employees finely have a say as to how we can save some cash. It will work out, and my gut tells me they are trying to save the company.

we'll see, but yes if UAL files then I do believe that AA,DL,CO,NW will be right behind us in line to file.

ual 777 contrail
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 2:09 am

I think the bankruptcy laws need to me revised. While the last Continental and the current US Air Chapeter 11 are probably with carriers too small to influence the whole costing structure of the industry, a United trip through bankruptcy would lower their costs so dramatically that the only way for AA, NW and DL to stay in the game would be to also walk away from their obligations.

Perhaps if the courts strip UAL of its liabilities they should also strip them of some of their non aircraft assets, such as their slots at LHR and NRT as well as their gates and slots at SFO; ORD, IAD. Why should they retain these assets? Let them keep some of them, ok, but even out the playing field so maybe the others such as DL and NW don;t have to follow UAL through bankruptcy.
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 4:04 am

I think all the major airlines are keeping a close eye on how well US Airways pulls through it's bankruptcy filing, especially United. If it pulls through, which it looks like it will, all the other airlines will follow suit. I don't want to jump the gun, but that would put US Airways months or maybe years ahead of it's competition if US Airways emerges with a clean slate from bankruptcy just as the others are starting to file.

If you remember a couple of years ago, the same thing happened to all of these movie theater chains here in the United States. They all built luxury theaters but never closed down older less popular sites. The industry exploded quickly and almost all of them filed for chapter 11 around the same time about a year later. The interesting thing is, if the airline industry is indeed shadowing the cinema chains, almost all the chains have since merged into three of four major companies and are now profitable again.

RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 6:01 am

Strip United of slots/gates at NRT, LHR, SFO, ORD, IAD??? That's all of their main airports right there!!!!!!!!!
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 8:07 am

Actually, I would not expect Delta to follow. The only union that they need to worry about is the ALPA, so they could adjust pretty much everyone else's pay with little objection.

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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 2:21 pm

Couple points. US Airways aircraft that they have been given court permission to walk away from do NOT include any Airbus aircraft. Airbus has already been paid in full and those aircraft are leased/financed through various banks. The aircraft they are looking to get away from are the Boeings -- and Siegel has said he will dump them and pick up stored Airbuses to replace them (at much lower lease rates).

I fully expect UAL to file for Chap 11. Their employees have come up with a $5 billion concession package...but this laughably misses the needed target that the ATSB wants. Time is running out on them and I don't see them getting an agreement before the $900 million debt payment comes due here soon.

Every airline is watching US Airways very closely. This is an airline that has always had the highest operating costs anywhere. These costs are going to end up being DRAMATICALLY lowered. Maybe not Southwest low...but a lot lower than the 12-13 cents they were pull Pre-Chap 11. Airlines are running into the problem which is:

US Airways is going to emerge a much lower cost airline that will need to maintain profitibability until the ATSB loans are repaid. This will be a company that rakes in a profit next is just a matter of how big. This will be a problem for everyone else because if US Airways is now competitive and able to beat other airlines' costs...then those airlines will be under pressure to reorganize and lower their costs as well.

In respect to Delta...yes they only have ALPA, but they would also likle renegotiation aircraft & facility leases.
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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 11:24 pm

Some of these opinions are funny, if any of you think that delta or American will survive a ual bankruptcy then your smokin something. They cant and wont survive, and to take slots from a large airline to give the scraps to the little one like delta is absurd.
they don't deserve the slots and they wont get them. Think about what you said, take slots from united and give them to delta to even the playing field?
that is like taking you car away from you and telling you, you still have a job but now you have to walk to work. If you take away profitable routes then they have nothing, delta would ruin the Asian slots, they have no name over there like united.

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RE: United Airlines And Bankruptcy

Sun Sep 29, 2002 11:48 pm

When do you put a dieing dog to sleep?
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RE: United Airlines And Bankruptcy

Mon Sep 30, 2002 3:29 am

The obsenely flawed U.S. bankruptcy laws will, IMO, be too tempting for UA to resist, regardless of concessions offered by employees: by hiding behind bankruptcy, perhaps even bigger than giving them the opportunity to impose upon labor for givebacks, they will be able to stiff their creditors to the tune of 100s of millions in obligations.

What is happening now at UA is, IMO, nothing more than a charade so they will be able to snooker people (including their employees) into believing the line, "we did everything possible to avoid this, BUT....."

The unconscionable provisions of bankruptcy law that puts responsibly managed competitors at a huge disadvantage may well compel others, beginning with AA (not to say they are competently managed), to follow suit in the interest of survival.

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