CaptainTim
Topic Author
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Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 6:55 pm

With a major carrier like United facing a threat of going bankrupt after being in Chapter 11 before, i was wondering if any airline company will save them if they do go bankrupt?

United founded Star Alliance with Air Canada and has created the alliance to become the world's best with lthe best airline of each region it covers e.g. (Lufthansa ~ Europe, ANA ~ Japan, Air Canada ~ Canada etc.)

I was wondering if United does go bankrupt will any airline within the alliance or even out of it will come to save United?

thanks for any feedback
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soaringadi
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 7:18 pm

It is hard to say...... because no other airlines except a few Lcc's are in a good shape, and to buy UA is not that easy with all that fleet etc.

A merger could be possible, but still very hard to say. i don't know but just hope that we don't have to see United close one day.

If it ain't Boeing, I'm not going !
 
747firstclass
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 7:23 pm

My personal theory is that if UA really, really looked like ti was going to liquidate, the US govt. would step in and raise the limit to 49% that can be held by foreign investors etc.This would allow for more competition and also help save jobs. At that point, perhaps LH would invest in UA to save Star Alliance.It is just my personal theory.
 
kkfla737
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 7:33 pm

"At that point, perhaps LH would invest in UA to save Star Alliance.It is just my personal theory. "

I agree. I have had that disaster scenario in the back of my mind for sometime, unless of course LH is not in the financial position to offer such a package.




 
CaptainTim
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 7:37 pm

hmm.. which airline is the most economically strong/stable within the Star Alliance fleet?

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747firstclass
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 7:43 pm

I forgot to add to my above post, if you look at where most of the hubs are for UA, there would also be enormous political pressure on the US govt to do something. SFO,ORD and IAD all large states and in the case of IAD, there are a lot of Congressmena and Senators that fly out out IAD and DCA on UA.
 
EmiratesUK
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 8:01 pm

Would it be wise to allow UA or any other US carrier on the verge of bankruptcy to be saved? Am I the only one who thinks that the U.S has a few to many international carriers? By allowing one or two to go would surely help others and prevent more disappearing.

International Carriers

U.S
AA/UA/US/CO/NW/DL/HA

Japan
JL/NH

Australia
QF/DJ (not that big Int)

China
CA/CI/CZ (maybe one or two more?)

U.K
BA/VS/BD (again not that big int)

I'm only using BIG international carriers as we all have a ridiculous amount of low cost.

EK A380 Private suite - Here I come!!
 
jumbojim747
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 8:09 pm

I would hope that the government would step in and do something about united.
It would be a shame to just let a company like that to dissolve.
On a wing and a prayer
 
COSPN
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 8:28 pm

They said the same about PanAm in 91 UA need to save themselves with the BK Judges help.....no one else can,,
 
leelaw
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 8:58 pm

I think CaptainTim wants someone to say Singapore Airlines?
Lex Ancilla Justitiae
 
CaptainTim
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 9:00 pm

~ is singapore airlines the richest/ most economically stable in Star Alliance?

i heard rumours that lufthansa would be the one saving United but i'm not sure if Singapore Arilines would actually step in?

any comments?
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jeb94
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 9:06 pm

It would be a terrible shame to see another one of the four oldest airlines in the United States fail. The first two where Pan Am and TWA. The last of the original four airlines in the US are United and American. Despite the historical value of United, they need to save themselves. Such is the nature of a free market economy.
 
leelaw
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 9:09 pm

I think conventional wisdom is than SQ is far stronger financially than LH, which has been a very mixed bag for years. However, I think UA will emerge from Chapter 11 without any airline funded bailout.
Lex Ancilla Justitiae
 
ken4556
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 10:00 pm

I agree it would be shame if United fails. But like USAir, I almost believe the two airlines need to fail to help the other legancy carriers survive.

From a business and union stand-point, I think both airlines deserve to fail. Both management and the unions over the last six years have done nothing but bring the airline to where it is today. Even if 9-11 never happened, they both would be in bad shape right now.

Ken 4556
 
NumberTwelve
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 10:36 pm

I don't think LH will spend too much money for UA. Why should they? They have US Airways in the US which has definitely not that network as UA.

Let's wait and see what happens with the carriers in the US - they got enough support from the US government. Hmmmmm, we don't want to call it subsidies  Wink/being sarcastic
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bobnwa
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:10 pm

Jeb94,

Is Northwest Airlines established 1n 1927 not a US carrier? For all these years I thought it was the oldest. I hope I was not mistaken!!
 
milesrich
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:36 pm

The US Government will NOT save United, at least not under the 2nd Bush Administration. If American were the airline on the edge of collapse, perhaps because they are based in the DFW Metroplex, the Bush Administration, with its Texas routes might step in. But the majority of the employees are from Blue States: Illinois, California, and Maryland, and the ones who live in Virginia and Colorado are not near enough political reason for this administration to jump in. Furthermore, most in Washington probably realize that letting United and US Airways survive will allow American, Delta, Northwest, and Continental to survive. American, at ORD has the most to gain. The Denver hub will be taken over by someone. Look for Delta, even with their financial problems, to move from SLC to DEN, because if they do not, and an LCC sets up a big shop there, SLC is doomed too. IAD, PHL and CLT are not necessary to the US air transportation network. The smaller cities that US Airways or UA serve exclusively or close to exclusively will get service to EWR or CLE from CO, or from DTW on NW, or DL from CVG or JFK, or AA from JFK. The hub cities like CLT, SFO, CLT, IAD, and PHL will get enough non stops to the major cities with main line aircraft, and will be key targets of WN, FL, and other LCCs.
 
hiflyer
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:42 pm

actually UA is in Chapt 11 now...and planning exit first half 2005.
 
CaptainTim
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:45 pm

Milesrich i dunno if that would be true~ as 747Firstclass said... most congressmen and politicians still fly either on US or UA and rarely do they use NW or Con....

would the US government not give any subsidies but be more leniant on some regulations on these companies that are facing bankruptcy?

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bobnwa
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:52 pm

CaptainTim,
I'm sure that cogressmen and politicians fly whatever carrier has the best schedule. Do you think the congressmen from Texas, Georgia, Minnesota, Michigan, Tennessee, Ohio, Nevada, Montana, North Dakota, South Dakota, Arizona etc, fly on US or UA?
 
Bicoastal
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RE: Who Will Save United If They Go Bankrupt?

Sun Jan 02, 2005 11:58 pm

Doesn't the law limit the amount of foreign ownership of US airlines? I believe Lufthansa, Singapore Airlines and or other non-USA investors could only purchase up to 49.9% combined.

And having worked on Capitol Hill at one point in my career, I know for a fact that members of the US Congress fly whatever airline gets them to their home district fastest/easiest. For example, Houston area members usually fly CO, Dallas area AA, Atlanta area DL, Californians usually fly United non-stop from Dulles, Detroit/Michigan area members fly NW. Actually, most Philly area members of Congress take the train from DC. New Yorkers usually fly US Airways or the Delta Shuttle. No single airline has a monopoly on politicians.

I also know, there is neither mood nor desire (Democrats and Republicans) today on Capitol Hill to save any airline. It's "hands off" as far as the US government is concerned. They'll let the courts and the investment community decided which airline(s) survive.

[Edited 2005-01-02 16:09:57]

[Edited 2005-01-02 16:11:14]
Airliners.net has many forums. It has spell check and search functions. Use them before posting!
 
bucky707
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 12:01 am

The U.S. Government will not and should not do anything to save United. The fact of the matter is, it's a poorly run company who has already abused the CH11 process, and still is not even close to making money. If UAL were to shut down tomorrow, that capacity and those jobs would be replaced by other airlines within two years.
 
N79969
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 12:02 am

My guess: nobody. The U.S. government would not even give them a loan guarantee. Let alone actually lending them money. There is no chance that the U.S. government will bail out United and in the process create an incredibly bad precedent.

As for foreign investors, UA would be no better of a deal than it would be for U.S. investors. They would have to deal with the same exact problems: high costs, low yields, debt, and difficult labor relations. More fundamentally the Congress is not going change the foreign ownership limits to simply save United. They did not do it for Pan Am or Eastern.

I suppose there is an outside chance that an aircraft lessor/financier may roll the dice on United simply to avoid having a flood of new airplanes on the market.

I hope this does not play out.
 
sccutler
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 12:52 am

Periodically-appearing speculation about whether an airline would be saved based upon where it is based (i.e., the government would not allow AA to fail because of he Texas connection) is childish and irrelevant.

1. UA already is bankrupt; that is what "Chapter 11" means;

2. If UA fails, it fails, and there will be plenty of operators available to take over its capacity using, presumably, more efficient and better-managed business practices;

3. There is no reason why UA should be saved just because it is one of the "oldest" airlines; so were Braniff; Pan Am; TWA; and Eastern.

If UA cannot find a way to (1) motivate employees to work with the airline, and thus (2) improve productivity and customer service concurrently; then, they fail. Much rending of garments and gnashing of teeth, and life goes on.

There is no need for foreign carriers to take over a substantial portion of UA just to "save" it, especially if it does not merit saving; to allow that to happen would just help to continue the bleeding of the domestic carriers which remain.
...three miles from BRONS, clear for the ILS one five approach...
 
luv2fly
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 12:58 am

Sccutler

Well said and I could not agree more with you. I think soon if UA does not provide the court that is over seeing its handling of the bankruptcy some sort of plan to emerge from bankruptcy, then the court is going to take over. The choice will no longer be there's.
You can cut the irony with a knife
 
JoFMO
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:02 am

You can't ask the market to solve the problem and on he other hand prevent the market to react.
Not lifting foreign ownership rules just means to limit the possibilities for UA to be rescued. If foreign investors see something valuable to invest in you shouldn't prevent them. Foreign ownership rules are a left over from communism times. There is no argument for them anymore in a free market environment.

If you don't want to let the goverment step in to save UA, let it be done by the market.
 
isitsafenow
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:02 am

BOBNWA...We in Michigan know which carrier Sen. Levin flys. I am not going to tell you but here's a hint. I have seen in in WorldClubs at DTW on Sunday and Sunday a few times.
safe
If two people agree on EVERYTHING, then one isn't necessary.
 
Seamus
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:06 am

I can't fathom why another carrier would come in to "save" UA. If UA were to liquidate, would the international routes be up for sale, similar to when Pan Am's routes went to other carriers?

Alternatively, what is the chance that UA would spin off Ted and use it to feed into their international routes?
 
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STT757
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:24 am

Gordon Bethune of CO made public his contacts with UAL's managment about a merger of CO and UAL, he said UAL's CEO rejected the offer. If UAL continues on in bankruptcy at some point the Creditors and the Court are going to tell UAL's management to leave.

That would open up a CO/UAL meger, Bethune is now retired as CO's CEO but still part of the airline has the creditbility and connections to bring in investors from outside and to win the support of UAL's creditors to finance the merger.

This scenario is more realistic than the US Government raising foreign ownership rules, or the Government offering any kind of tax payer support.

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toltommy
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:36 am

The market will adjust if UA goes under. Just like it did when PA shut down. The attractive parts of UA will go to new owners, the unattractive parts won't attract bidders. Personally, the ownership cap should be eliminated completely. If I can fill my car up at a British Petroleum station in Toledo Ohio, then why can't I fly British Airways between two US cities? BUT, the gov't should lift the cap, unless it's lifted on the other side as well.
 
F9Animal
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:37 am

Hi, just my feelings on this subject. United still has assets it could sell to raise needed cash. First they need to get paycuts established, and look ahead. I do think UAL needs to consider downsizing more than they have already. The airline is still huge, and has lots of options.
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ANCFlyer
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:38 am

I see no USA investor coming to their rescue. Perhaps a foreign carrier (LH seems to be my best bet). And certainly not the US Government . . .

Numbertwelve: I don't think LH will spend too much money for UA. Why should they? They have US Airways in the US which has definitely not that network as UA I'm not sure what you're trying to say here Numbertwelve, but if I read it right, my response is: US will be long gone before this demise of UA becomes an issue. Even if they weren't, LH would be fools to throw money at US.
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KateAA
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 1:40 am

If UAL who will save them?

Mmm, maybe parts of the company will be sold off, or other airlines will increase their own capacity to cope with the extra passenger loads.

I do feel either US Airways or UAL need to go under, depends which one goes first. I mean, if US goes bust, then the passengers they would have carried will need to go some where, UAL could step in and the extra revenue may just keep them out of trouble.

But know knows.

Kate.
 
NWAFA
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 2:00 am

No one should save them. They got them selfs into their own mess. The world will survive if United goes under. The Government should and will keep their hands out of that mess! They need to get their act together and stop abusing the BK process.

Do I think UA will go, I don't think so..I do think they will be getting much smaller though in order to survive.

When we at Pan Am went under, the world adjusted just fine. Braniff...adjusted just fine...etc.

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NumberTwelve
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 2:11 am

Another Chapter11?
But why save them, why giving them subsidies? US admin is always crying cause of A "subsidies".
Let UA die and the other airlines take UA routes as vulture takes its sod. So that's free market economy.
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OPNLguy
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 2:30 am

>>>With a major carrier like United facing a threat of going bankrupt after being in Chapter 11 before

Just to clarify, United has only been in Chapter 11 proceedings ONCE. You may be confusing them with USAirways, who indeed is operating under Chapter 11 for the second time.

As far as an airline (or any business) here being "bankrupt" please keep in mind that there are two types of bankruptcy filings. Chapter 11 is filing for reorganization (you get some relief on paying your bills and can shedd debt while you try to "fix" your airline). Chapter 7 is filing for liquidation, and the airline shuts down. A Chapter 11 filing can eventually be converted into a Chapter 7 filing.

Currently, United, ATA, USAirways, Hawaiian, and Aloha are in Chapter 11 and still operating. Aloha just filed on 12/30/2004, and Hawaiian is suppose to Chapter 11 sometime this month.

Southeast Airlines (NOT Southwest Airlines) recently shutdown their operations, but I don't know if they filed Chapter 11 or went straight to Chapter 7.

In a nutshell, "bankrupt" can have different meanings here....  Big grin
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
aa777jr
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 2:47 am

Anti trust arbitrators are VERY unlikely to allow any carrier to absorb the amount of debt UA has. Doesn't look promising for any help.
A liberal is a man who is right most of the time, but he's right too soon.
 
OPNLguy
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 2:53 am

>>>Anti trust arbitrators are VERY unlikely to allow any carrier to absorb the amount of debt UA has.

How much debt a company wants to assume while taking over another company in bankruptcy is up to the acquiring company. The concerns of the anti-trust folks have more to do with the effect of the merger reducing or eliminating competition in the marketplace...
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
burnsie28
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 3:04 am

It would be a terrible shame to see another one of the four oldest airlines in the United States fail. The first two where Pan Am and TWA. The last of the original four airlines in the US are United and American. Despite the historical value of United, they need to save themselves. Such is the nature of a free market economy.

WRONG!!!!

1- TWA- 1925
2- Northwest- 1926
3- Pan Am- 1927
4- Delta- 1928
5- Eastern- 1929
6- United- 1931
7- American- 1934
8- Continental- 1934
 
SwissINTLA340
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 3:21 am

UNITED WILL NOT GO BANKRUPT.
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NWAFA
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 3:36 am

Swiss,

They ARE Bankrupt...do you mean belly up?
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EA CO AS
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 3:51 am

Just to clarify, United has only been in Chapter 11 proceedings ONCE. You may be confusing them with USAirways, who indeed is operating under Chapter 11 for the second time.

And yet UA has managed to milk their one stay in Chapter 11 proceedings longer than BOTH US Airways' Ch11 trips combined.  Nuts
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

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AAplatnumflier
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 4:14 am

Maybe a couple of private investors could save UA??
 
whitehatter
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 4:15 am

Forget Lufthansa.

They have already stated they do not wish to invest in United before all this bankruptcy business started off, when the airline was merely 'in trouble'.

LH has the money, but not to throw away by investing in someone elses debts. They recently raised money via a float for expansion of their own business and wouldn't want to jeopardise anything they are doing with regard to their own financing. Buying a tub of UA equity would seriously damage their own stock value.
Lead me not into temptation, I can find my own way there...
 
Cactus739
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 6:00 am

OPNLguy

What do you mean by "Hawaiian is supposed to go chapter 11 sometime this month?"

Are they expecting to exit chapter 11 or go 7?
You can't fix stupid.... - Ron White
 
ha763
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 6:29 am

Hawaiian is expected to exit bankruptcy in the first half of 2005. They still need new contracts with all their unions to be completed before exiting.
 
OPNLguy
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 7:20 am

Meant to say -exit- ....

I sometimes have a 56K brain and 300 bps fingers...  Big grin

I thought I'd read January versus 1st half 2005...
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
goingboeing
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 7:39 am

I'm sure that cogressmen and politicians fly whatever carrier has the best schedule. Do you think the congressmen from Texas, Georgia, Minnesota, Michigan, Tennessee, Ohio, Nevada, Montana, North Dakota, South Dakota, Arizona etc, fly on US or UA?

The real answer is "none of the above". When Bob Dole was the senator from my state, he usually flew Archer Daniels Midland jets.

But, the government won't step in to "save" United. Nor will they change any laws to allow foreign ownership to save a frequent flier alliance. Scuttler beat me to it, but when Braniff failed, the thoughts of many were that there was no way that the government would allow them to fail. Same thing with Eastern....the thoughts were that they were "too big" to let fail. If UAL fails, there will be lots of jets for other airlines to purchase, there are other jets in the desert, waiting to go back into service. There are other airlines who would "cherry pick" the former UAL system. Those same airlines would hire many of the former UAL employees. In short, there is no reason for the government to "save" them.

YEars ago, Pan Am fought hard to be the "chosen instrument" as the international carrier of the US. Lobbied the government hard to grant them that status. You'd kind of think that if the government was going to save any airline, that would have been the one.
 
UALFAson
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 8:57 am

Stream of consciousness...

--Politicans fly any and all airlines. Being from D.C., I personally have recognized politicians in UA, YX, NW, and AA boarding areas at DCA & IAD.

--I don't understand this argument that UA has "abused" the BK process. Yes, they've been in for a while, but we're talking about a multi-billion dollar corporation with thousand of creditors. This isn't the corner "Yarn Barn" store having a going out of business sale. And from the creditors' perspective, isn't it better for them to use BK to try and get most of their debts paid by UA, versus the pennies-on-the-dollar they'd wind up with if UA liquidates?

--There are a lot of variables here that will have a big impact on UA, including whether US liquidates first, and whether the price of oil returns to a more reasonable level. My guess is UA's trying to tread water in BK until at least 1 of these things happens, which may be enough to save them.

--I'm not old enough to know the details of Pan Am and Eastern BKs, but weren't they pretty long and painful? I know Pan Am sold off its int'l routes bit by bit. And yet it wasn't enough. With the exception of dropping a few routes or cities, show me an airline that has shrank its way to profitability.

As a result, were UA to throw up its hands and just close its doors as some on this forum seem to advocate, while UA may be replacable in the long-term, the short-term results would be disasterous for the economy. Major airports would be left without a rent-paying tenant, 70,000 people would be out of work, tens of thousands of pax would need to be accomodated by other airlines...and it's not exactly like AA or CO could just pick up UA's planes and employees and take over service tomorrow. I think that scenario is UA's trump card that they get one chance to play when it's fourth and inches with no time left on the clock.
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CaptainTim
Topic Author
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RE: Who Will Save United If They Go Bankrupt?

Mon Jan 03, 2005 9:02 am

"were UA to throw up its hands and just close its doors as some on this forum seem to advocate"

When do you think is the earliest month/date that United would actallly officially go into Chapter 7 / go fully bankrupt?

this is terrbile news  Sad

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