DeltaSFO
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United Airlines - One Year Later

Mon Dec 15, 2003 6:21 am

This was in the San Francisco Chronicle this morning. Interesting Bay Area perspective on the changes since last year.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/12/14/BUGNC3M92U1.DTL&type=business

United -- one year later
How the airline has flown the turbulent skies

David Armstrong, Chronicle Staff Writer Sunday, December 14, 2003


When UAL Corp.'s United Airlines filed for Chapter 11 bankruptcy protection on Dec. 9, 2002, the world's second-largest carrier faced a ride so bumpy, some airline industry observers thought United might disappear altogether.

After a year of painful restructuring, the airline's prospects for survival have improved, although the turmoil it created has left its mark on a much-changed company.

Pressed by a need to curb its high operating costs, United has extracted $5 billion in savings from employees and vendors and slashed its workforce to 63,000 from 100,000 just before the Sept. 11, 2001, terrorist attacks.

In addition, it has petitioned Congress and the Internal Revenue Service for relief from having to make accelerated payments to its pension plans, dissolved an employee stock ownership plan that had given organized labor a big say in running the airline, and announced plans to start a low-cost carrier in February to challenge upstart rival discount carriers.

United also continues its slow but apparently steady journey out of Chapter 11. On Wednesday, the company reportedly landed commitments from J.P. Morgan Chase and Citigroup, its leading debtor-in-possession lenders, for $2 billion in exit financing, which UAL hopes will allow it to leave Chapter 11 by the middle of next year.

"They will definitely emerge from bankruptcy. The pressing question is whether they will emerge as a handicapped company or a very healthy and strong company,'' said bankruptcy attorney Martin Zohn, a partner in the Los Angeles office of the Proskauer Rose law firm.

"You can cut costs, but there is only so far efficiency and reduced capacity can take you, especially in a shrinking industry. Right now, the aviation industry is waiting for a turnaround in passenger levels,'' Zohn said. "United is presently battening down the hatches and surviving until the recovery comes.''
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futureualpilot
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Joined: Thu May 25, 2000 10:52 am

RE: United Airlines - One Year Later

Mon Dec 15, 2003 6:23 am

"United also continues its slow but apparently steady journey out of Chapter 11."

Great news!!!!

Go UA!

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tommy767
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RE: United Airlines - One Year Later

Mon Dec 15, 2003 7:16 am

"some airline industry observers thought United might disappear altogether."

Gee I didn't know the analylists had that bad of an outlook on UAL. I knew they were doing bad, but not that bad!

I wish them all the best luck. I think they should seriously take a look at the proposed "unofficial" color schemes. I think they should go for the blue ones  Smile




[Edited 2003-12-14 23:44:51]
"KEEP CLIMBING" -- DELTA
 
FA4UA
Posts: 777
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RE: United Airlines - One Year Later

Mon Dec 15, 2003 7:27 am

I hope UA really continues the good job of restructuring and can achieve their targeted Cost per Avail. Seat Mile (CASM) of around 8.5 cents. It would be terrible if they emerged from Chapter 11 without that! All the carriers are slashing costs aggressively so the par has been lowered across the board. In order to compete well we have to have that CASM around 8.5-8.8.

I look at USairways and I shake my head in disbelief that they are still in such a mess with such a high CASM. They had the opportunities to change everything around in Ch. 11 and it would seem, from my very limited perspective, that they didn't lower costs enough. They are what the aforementioned article calls a "handicapped company" after emerging from Ch.11.

Look out world, UA is back! and we have some expansion to get done overseas!

FA4UA
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CactusA319
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RE: United Airlines - One Year Later

Mon Dec 15, 2003 8:29 am

I look at USairways and I shake my head in disbelief that they are still in such a mess with such a high CASM. They had the opportunities to change everything around in Ch. 11 and it would seem, from my very limited perspective, that they didn't lower costs enough. They are what the aforementioned article calls a "handicapped company" after emerging from Ch.11.

Which explains the reason why UAL has taken their sweet time getting out of bankruptcy protection. Why rush out and then find yourself with the same problems you had before you declared, not to mention a worse credit rating. I don't agree with some of the decisions made by UAL brass, but they have survived until now, and their chances of long term survival are much better than USA's.


 
Thrust
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RE: United Airlines - One Year Later

Mon Dec 15, 2003 10:09 am

A great airline which I have had the pleasure of flying on four times lives on...good for you, UAL.
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StevenUhl777
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RE: United Airlines - One Year Later

Mon Dec 15, 2003 11:13 am

Thanks for posting that article...I didn't know they secured $2b in exit financing...that's a HUGE positive development...and I believe they're also looking for the ATSB loan guarantees (a loan, folks...NOT a bailout...) totalling $2b to go alongside it.

UAL will emerge a healthy company. US Airways emerged a handicapped company, because they simply emerged too soon. I know that because US' costs are still way too high, and their core business operation (EBITDAR) continues to lose money each quarter. Contrast that to UAL, which has been cash flow postive and operationally profitable, excluding special items.

And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!

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