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.
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