fspilot747
Posts: 3455
Joined: Mon Nov 01, 1999 2:58 am

Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 4:30 am

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
 
artsyman
Posts: 4516
Joined: Wed Feb 28, 2001 12:35 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 4:40 am

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
 
ScooterTrash
Posts: 553
Joined: Thu Aug 02, 2001 10:39 am

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 4:42 am

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.
 
ScooterTrash
Posts: 553
Joined: Thu Aug 02, 2001 10:39 am

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 4:48 am

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.
 
artsyman
Posts: 4516
Joined: Wed Feb 28, 2001 12:35 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 4:55 am

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
 
UPS Pilot
Posts: 828
Joined: Tue May 18, 1999 1:17 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 9:54 am

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.
 
artsyman
Posts: 4516
Joined: Wed Feb 28, 2001 12:35 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 10:25 am

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.
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 1:02 pm

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.
 
artsyman
Posts: 4516
Joined: Wed Feb 28, 2001 12:35 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 1:16 pm

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
 
prosa
Posts: 5389
Joined: Sat Oct 27, 2001 3:24 am

RE: Causes Other Than 9/11 For UAL Ch.11?

Sat Jan 04, 2003 1:23 pm

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"
 
srbmod
Posts: 15446
Joined: Tue Mar 20, 2001 1:32 pm

RE: Causes Other Than 9/11 For UAL Ch.11?

Sun Jan 05, 2003 5:09 am

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.
 
B747-437B
Posts: 8777
Joined: Thu May 30, 2002 6:54 am

RE: Causes Other Than 9/11 For UAL Ch.11?

Sun Jan 05, 2003 6:12 am

I covered this topic in my column at http://www.airwhiners.net/whine_cheez/20021212.htm.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

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