douwd20
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USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:11 am

Interesting story in USA Today. The focus is United but a lot of it applies to all the legacy carries.

http://www.usatoday.com/travel/colum...telli/2006-01-30-brancatelli_x.htm

Synopsis:

-United's oil-price projections are fantasy
-United is swimming in debt
-United is mortgaged to the hilt
-United's route network is no longer admirable
-United is less competitive than ever
-United has no capacity to grow
-United's top managers are focused on short-term gains
-United has a looming frequent-flier crisis.
-United's employees are angry
 
londonlady71
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:13 am

Quoting Douwd20 (Thread starter):
-United's employees are angry

well I'm not I am very happy working for them  Smile
 
StevenUhl777
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:25 am

Joe Brancatelli has ALWAYS hated United, and the legacy airlines in general. Comments like this are expected from a know-ita-all idiot like him. Further, his paper has HATED United Airlines for at least 12 years, if not more. They RAILED against the ESOP even before it started.

Expect to see a similar article from him regarding Delta and Northwest.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
kanebear
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:29 am

Quoting StevenUhl777 (Reply 2):
Joe Brancatelli has ALWAYS hated United, and the legacy airlines in general. Comments like this are expected from a know-ita-all idiot like him. Further, his paper has HATED United Airlines for at least 12 years, if not more. They RAILED against the ESOP even before it started.

Expect to see a similar article from him regarding Delta and Northwest.

No, he is pretty no nonsense and is VERY even in his remarks. He's called LCCs to task as well... if you thought what he said about United is bad, you shoulda seen his comments on Indy. He's equal opportunity and gives props as well as bashes when appropriate.
 
satx
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:35 am

-United's oil-price projections are fantasy (probably)
-United is swimming in debt  checkmark 
-United is mortgaged to the hilt  checkmark 
-United's route network is no longer admirable ?
-United is less competitive than ever ?
-United has no capacity to grow ?
-United's top managers are focused on short-term gains (probably)
-United has a looming frequent-flier crisis. (possibly)
-United's employees are angry (probably)
Open Season on Consumer Protections is Just Around the Corner...
 
XFSUgimpLB41X
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:40 am

They are planning on 1.62 a gallon for jet-a.... prices are around 1.90.... I see them in Ch.11 again within a year... or worse.
Chicks dig winglets.
 
alphascan
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 5:44 am

Quoting StevenUhl777 (Reply 2):
They RAILED against the ESOP even before it started.

Steven,

Not exactly good evidence for your arguement considering how the ESOP turned out. Better hope they're not right again.

I think Brancatelli went a little over the top in this column in that he didn't focus on any of UA's strengths...but he does have some valid points.
"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
robsawatsky
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 6:02 am

If they've just re-organized why would they be "swimming in debt" and "mortgaged to the hilt" now? Doesn't that make it a rather insufficient re-org?
 
douwd20
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 6:08 am

Quoting Robsawatsky (Reply 7):
If they've just re-organized why would they be "swimming in debt" and "mortgaged to the hilt" now? Doesn't that make it a rather insufficient re-org?

In Ch. 11 you don't necessarily shed all your debt. The exit financing they received is secured by United assets hence the term 'mortgaged to the hilt'.
 
N79969
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 6:18 am

Some of his remarks are just puzzling. Like them or not, United is among the most recognizable brands out there. Their network is comprehensive and enviable. Their P.S. service has done remarkably well by most accounts. The well-heeled, business travelers are flying JFK-SFO and that is where UA has concentrated its premium resources. That they do not offer the same product every elsewhere simply is good business sense.

His points about fuel price assumptions are fair but... I think the WSJ article that came out about 2 weeks is far more credible and compelling than this guy.
 
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Jacobcal
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:00 am

Wow, great article. Thanks for the post!

JacobCAL
 
burnsie28
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:08 am

That guy makes a few good points, but for the overall i would say he is way off, hes never really been on the right path with a lot of stuff.
 
luv2fly
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:16 am

I think he does hit the nail on the head, so to say. Though time will ultimately tell.
You can cut the irony with a knife
 
Lumberton
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:17 am

Well, their stock (UAUA) is down 10% today. Not a very auspicious start. So the market is voting "no confidence" at the moment. Better cash in those options at the first opportunity, boys!
"When all is said and done, more will be said than done".
 
Lumberton
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:25 am

This is an interesting factoid from the USA Today article:

Quote:
United's top managers are focused on short-term gains. United's top executives recently rewarded themselves with 8% of the new airline's shares. This bonus plan, which The New York Times called "insanity squared," has another intriguing fillip: They vest with head-spinning rapidity. According to court filings, 20% vest after six months and another 20% vest after one year. Then 20% more of the shares vest in each of the next three years. Bottom line: Chief executive Glenn Tilton and his 399 top lieutenants now have a financial incentive to make the kind of short-term, shore-up-the-share-value decisions that are often incompatible with the long-term vitality of an airline.

"Insanity squared"? First time in years I've agreed with anything attributed to the New York Times!  Wink
"When all is said and done, more will be said than done".
 
Iloveboeing
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:35 am

I really think that UA should introduce a uniform, low-cost, low-fare, quality service across the board. Having all of these different products is dangerous. Here's what I think United should do:

1. Eliminate Ted. Introduce a low-fare, JetBlue style across the board, domestic and international.
2. Make Economy Plus the standard for United. Give the customers something to enjoy at 35-inch pitch, not torture them at 31-inches.
3. Eliminate Business-Class and really spice up the First Class product. Make lie-flat beds the standard on international flights (like Air New Zealand) and offer a lot of amenities.
4. Get new management. Ones that think, "What can I do to make air travel more better and affordable?" instead of "How much money can I suck out of this company?"
 
tozairport
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:41 am

Quoting XFSUgimpLB41X (Reply 5):
They are planning on 1.62 a gallon for jet-a.... prices are around 1.90.... I see them in Ch.11 again within a year... or worse.

True, but fare increases have stuck making the cost of fuel a bit more bearable. Plus UA hedged a bit at $44/barrel which also helps. I see NW, Mesaba, and DL having more troubles than UA.

Quoting Lumberton (Reply 13):
Well, their stock (UAUA) is down 10% today. Not a very auspicious start.

On the surface true. HOWEVER, the stock was expected and widely reported to open at around $15/share. I think that there is a lot of profit taking going on while the market figures out what the true price of the stock should be.

Good ole' USA Today. Yesterday's news tomorrow. They can't even get their Soduku puzzles right (for those of you who tried Tuesday's version).
Meet the new boss, same as the old boss.
 
Lumberton
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:43 am

Quoting Iloveboeing (Reply 15):
4. Get new management. Ones that think, "What can I do to make air travel more better and affordable?" instead of "How much money can I suck out of this company?"

Wholeheartedly agree! But how? Obviously, they've sold this to the bankruptcy judge and the creditors, or they would still be languishing in BK. If I were a UA employee, I wouldn't be merely "angry" at all this.
"When all is said and done, more will be said than done".
 
rwsea
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:45 am

Quoting Iloveboeing (Reply 15):
I really think that UA should introduce a uniform, low-cost, low-fare, quality service across the board. Having all of these different products is dangerous. Here's what I think United should do:

1. Eliminate Ted. Introduce a low-fare, JetBlue style across the board, domestic and international.
2. Make Economy Plus the standard for United. Give the customers something to enjoy at 35-inch pitch, not torture them at 31-inches.
3. Eliminate Business-Class and really spice up the First Class product. Make lie-flat beds the standard on international flights (like Air New Zealand) and offer a lot of amenities.
4. Get new management. Ones that think, "What can I do to make air travel more better and affordable?" instead of "How much money can I suck out of this company?"

1. Right, and then alienate UA's entire target market - which is business traffic.

2. AA tried this and people weren't willing to pay for it.

3. So then they would offer first and coach. The price of a ticket would jump from $1,000 in coach to $8k or so in first class. Most businesses will pay for business class, but not for first on international flights. Under your plan, all these business pax would dump UA because they'd be faced with $3-4k in Business on AA/DL/CO and double that for first on UA.

4. Mangement's sole objective is to maximize return for their investors. "Making air travel better and more affordable" is not in their interest unless it increases stock value.


Looks like it's time to go back to the drawing board, kid.
 
Jamake1
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:47 am

I think that for the most part, the employees of UAL understand that an industry-wide market correction has taken place and they were merely among the first (as well as US employees) to take a hit on pay and pensions. As far as the management stock options are concerned, I can only say this: Very few individuals possess the skill-set that was required to command a listing, sinking ship the size of United Airlines and steer it out of troubled waters in the way Glenn Tilton and his team have done. It was a formidable task, and as an employee, I personally do not begrudge the stock options or bonuses. Tilton should be rewarded for having positioned UAL to be a competitive powerhouse. Only time will tell, but the fact that UAL was able to obtain $3 billion in exit financing, I think speaks for itself.

Having read the USA Today article, my sense is that the author is not coming from a clearly objective view. The undertones of the article, suggest to me a bias he may have against United and perhaps is using his platform as a journalist to grind his axe, so to speak.

It is important to note that United has emerged with its global route structure intact, unlike the Braniffs, Eastern's, TWA's, and Pan Ams of a decade prior. Asian routes weren't sold off, the Heathrow routes weren't sold off, each of the hubs have been retained.

I personally believe that United has more going for it than the author of the USA Today article suggests, with the wild card continuing to be the price of oil. He neglected to mention that United has been approved for $400 million in capital expenditures to revamp the international 3-class fleet with lie-flat beds in business class, upgraded PTV's, and improved airport automation.

To sum it all up, the author's objectivity seems to me, to be rather skewed.
United's B747-400. "She's a a cruel lover."
 
Iloveboeing
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:48 am

Quoting Lumberton (Reply 17):
Wholeheartedly agree! But how? Obviously, they've sold this to the bankruptcy judge and the creditors, or they would still be languishing in BK. If I were a UA employee, I wouldn't be merely "angry" at all this.

It's hard to find good management these days. But I believe these airlines would be far more successful if they had management that was focusing on the customer and constantly trying to improve the flying experience (with low fares), rather than having their heads stuck in Wall Street.

I think I good first step would be to get CEO Glenn Tilton out of there. I don't know why he's in there in the first place. The man has no previous airline experience whatsoever.
 
jacobin777
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:50 am

Quoting Iloveboeing (Reply 15):
1. Eliminate Ted. Introduce a low-fare, JetBlue style across the board, domestic and international.

why? Ted is doing well on its routes, in fact its expanding..something which DL couldn't do with Song.. no 

Quoting Iloveboeing (Reply 15):
2. Make Economy Plus the standard for United. Give the customers something to enjoy at 35-inch pitch, not torture them at 31-inches.

why? not every pax want to pay extra....most want the cheaperst fare possible..some pax want the extra pitch and pay for it, but not the vast majority.

Quoting Iloveboeing (Reply 15):
3. Eliminate Business-Class and really spice up the First Class product. Make lie-flat beds the standard on international flights (like Air New Zealand) and offer a lot of amenities.

why? Business-class sells out much more than First-class...and most Business Class seating is rivaling that of First Class from just a few years ago...

Quoting Iloveboeing (Reply 15):
4. Get new management. Ones that think, "What can I do to make air travel more better and affordable?" instead of "How much money can I suck out of this company?"

ok..I might agree with you on that... Wink

but I still think Tilton has done a great job steering the ship....
"Up the Irons!"
 
Iloveboeing
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 8:54 am

I just think that United is in serious danger because I believe they have overestimated the premium market. Yes, it does exist, but I don't think it's as large as they think it is.

Low fares and quality service are here to stay! The legacy carriers must accept this or they'll never succeed. The days of $1,000 R/T from Washington, DC to Charlotte are over!
 
StevenUhl777
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:02 am

Quoting Alphascan (Reply 6):
Steven,

Not exactly good evidence for your arguement considering how the ESOP turned out.

My point was that they boohooed the entire concept before it even began. Hindsight is 20/20, but UAL did very well the first several years, thanks in part to a great economy. There was relative labor peace and a big departure from the turmoil of the Steve Wolf days. Granted, things turned south in '99/00.

Quoting Robsawatsky (Reply 7):
If they've just re-organized why would they be "swimming in debt" and "mortgaged to the hilt" now? Doesn't that make it a rather insufficient re-org?

It was a 100% debt-financing, rather than going to outside investors and offering equity stakes, who in turn could have decided to break up UAL. Instead, four lending banks issued $3 billion in asset-backed collateralized loans.

Quoting Lumberton (Reply 13):
Well, their stock (UAUA) is down 10% today. Not a very auspicious start. So the market is voting "no confidence" at the moment. Better cash in those options at the first opportunity, boys!

This was the market adjusting for the true value, and I wouldn't be surprised if it goes down again tomorrow. The expected price was $15, but it started at $40? I'm scratching my head on that one, too. In addition, the market was rattled by lower productivity data, which could lead lead to inflation down the road. Markets never like hearing/seeing inflationary-related news.

Quoting Iloveboeing (Reply 15):
3. Eliminate Business-Class and really spice up the First Class product.

Hmmm...if anything, they should do the opposite. Business class is where the revenue is, not First. Most people riding in first are either upgrades or employees.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
Iloveboeing
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:06 am

Ok........I change my response. Yes, Business Class is where the revenue is. If they can keep Business Class of good quality and at a reasonable price, then it would be ok.

I really think United should dump the 31-inch pitch, though. I sat in Economy Plus from ORD to HKG, which was nice, but I saw the people in regular economy and I really felt sorry for them. 31-inches is too small. All flights should have 32-inches minimum.
 
Lumberton
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:08 am

Quoting Iloveboeing (Reply 20):
rather than having their heads stuck in Wall Street.

Unfortunately, Iloveboeing, when you depend on the capital markets for your life blood, this is where you need to be focused. If you miss earnings targets, your stock will be decimated and your longevity at your present job very much at risk. Look at UA's stock performance today. 10% loss isn't anything to crow about--especially after such a long stint in BK!

Quoting Jamake1 (Reply 19):
Only time will tell, but the fact that UAL was able to obtain $3 billion in exit financing, I think speaks for itself.

Anyone know who fronted the $3B?
"When all is said and done, more will be said than done".
 
Jamake1
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:16 am

J.P. Morgan Chase and Citigroup...
United's B747-400. "She's a a cruel lover."
 
incitatus
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:20 am

I've tried to start a thread on United's ability to stay out of bankruptcy a couple of weeks ago and it got deleted in less than a day. As to why discussing United's chances of staying out of BK is forbidden is beyond me.

So here is my original take.

In disagreement with the USAYesterday article, United is quite competitive on the labor front. It has pushed wages to new lows. On the other hand, the operation is not very efficient and now that the judge is out of the way, United management has their plate full.

The ability to stay out of Ch11 rests with their realizing that success can't be purchased with a spending spree. If UA goes airplane shopping, it will be done before they are painted.

Also, very important, is that the competitive landscaping changed and is changing. All United hubs will face new pressures. Virgin at SFO, Southwest at DEN, Southwest with a large operation at MDW. And then there is IAD which is the last large airport in the NE US with room for major expansion. IAD will be a battle ground between JetBlue and AirTran and United needs to price and schedule smart not to be the casualty.
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StevenUhl777
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:26 am

Quoting Iloveboeing (Reply 24):
I really think United should dump the 31-inch pitch, though. I sat in Economy Plus from ORD to HKG, which was nice, but I saw the people in regular economy and I really felt sorry for them. 31-inches is too small. All flights should have 32-inches minimum.

E+ is a great product...I flew IAD-FRA on a 744 in E+, 37C. Only problem was that there wasn't IFE at the seat, but instead on the overhead monitor. T7 I imagine is much nicer. 757 and Airbus E+ is also a great product as well.

Quoting Iloveboeing (Reply 22):
I just think that United is in serious danger because I believe they have overestimated the premium market. Yes, it does exist, but I don't think it's as large as they think it is.

Domestic or International? Premium service is doing very well, according to United, at least. I don't have reliable enough evidence (i.e. internal data) to refute it at this point. UA has slashed domestic capacity in the last three years by approx. 13%.

Who fronted the $3B....JP Morgan Chase, Citibank, and I'm blanking on the other two. I'm pretty sure it's the same four banks that provided DIP financing. So...part of that $3B essentially pays off the DIP loans, and is now in the form of short term (revolving credit facility) and long-term debt. You'll find more info. on the UA website under "United's restructuring".
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
Iloveboeing
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:38 am

Quoting StevenUhl777 (Reply 28):
E+ is a great product...I flew IAD-FRA on a 744 in E+, 37C. Only problem was that there wasn't IFE at the seat, but instead on the overhead monitor. T7 I imagine is much nicer. 757 and Airbus E+ is also a great product as well.

I definately agree.
 
Tango-Bravo
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:38 am

Quoting StevenUhl777 (Reply 2):
They RAILED against the ESOP even before it started.

Whether you like it... or whether you don't... they called it the way it happened, did they not?

Quoting StevenUhl777 (Reply 2):
Joe Brancatelli has ALWAYS hated United, and the legacy airlines in general.

So what? What really matters is whether his points are valid. Attack the messenger all you wish because you don't like the message, but whether the messenger hates UA or is madly in love with UA will have not one iota of bearing on the ultimate effects of the troublesome issues raised.
 
MaverickM11
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:45 am

Quoting Douwd20 (Thread starter):
United's top managers are focused on short-term gains

Especially now that they have stock incentives, and the way those are wired, they are geared solely toward short term gains.
E pur si muove -Galileo
 
CTHEWORLD
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:46 am

Quoting Tozairport (Reply 16):
Quoting Lumberton (Reply 13):
Well, their stock (UAUA) is down 10% today. Not a very auspicious start.

Closing at 35.89 a share is still way over the 15.00 a share that was forecast. For those of you that can't figure out how it opened at 41.00, it is called pretrading. Basically, at 35.89 a share, UAL still has the second highest market cap of the U.S. airlines, and the over subscription of the stock allows then to lower their loan rates another 375 points. So Tozairport, the stock was down 10%, it was up more than 100%.
 
CTHEWORLD
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:51 am

Quoting RwSEA (Reply 18):
Looks like it's time to go back to the drawing board, kid.

Yeah, who is this 16-20 y/o genius that thinks he can run an airline anyway. At his age, shouldnt he be outside playing sports and chasing girls, not sitting in front a computer fantasizing about running an airline?
 
db373
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 9:56 am

Quoting Iloveboeing (Reply 20):
It's hard to find good management these days. But I believe these airlines would be far more successful if they had management that was focusing on the customer and constantly trying to improve the flying experience (with low fares), rather than having their heads stuck in Wall Street.

Improving the flying experience, while continuing to offer below industry standard fares is a contradiction in itself, no? What ever happened to the old saying "You get what you paid for..."?
Keep Delta My Delta
 
ChicagoFlyer
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 10:13 am

Quoting Jamake1 (Reply 26):
J.P. Morgan Chase and Citigroup...

And GE as the 3d member... but they were not the investors, just the guys who will invest some and sell the rest to other banks--running the syndicate so to speak.

They lined up $7 billion in offers. Allowed United to get a slightly lower rate (though bonds are still junk territory, and an attractive yield for the lenders.... assuming they get repaid of course).

The Brancatelli article is not all useless, but his style of crazy mouth-foaming rants is not really helpful for good discussions. Nevertheless, let me offer my opinion on the substance of ALL his points... I am risking going on longer than Brancatelli himself!

•-United's oil-price projections are fantasy
True, but I am thinking it was more of a "creative forecast" to get the financing rather than what the internal assumption is--do you think UA managers are blind? Oil prices are a problem for all except WN (so far)

•-United is swimming in debt.
•-United is mortgaged to the hilt.
Less so than before bankruptcy! I don't see the point of bringing up obtaining exit financing as a disadvantage, plus it seems that the stock price is a tad higher than JoeBra assumes.

•-United's route network is no longer admirable.
•-United is less competitive than ever.
This makes no sense and was addressed before. The only good point was on aging premium-class, but I am sure that an upgrade is forthcoming!

•-United is stretched to the limit
The examples (bad weather, computer glitch--blamed on Cendant) are completely irrelevant if not downright laughable. But the point is somewhat true, since I see fewer CSRs at the gate dealing with large crowds. On the other hand, "United's employees are a lot more productive" or "the operation is a lot more efficient" is a flip side of this same comment.

•-United has no capacity to grow.
United CHOSE to not grow by adding planes. If they can prove their ability to make $$, expect to see an order suddenly materialize. Until now, there are efficiency improvements, and of course UAX  Smile

•-United has a looming frequent-flier crisis.
This is true but for a different reason. I don't think the issues of "more miles chasing fewer seats" is that relevant, since govt mandates a % of seats to be reserved for cheap 'saver' awards, and United has an excellent 'standard' award policy. I do think that there are other value propositions (CapitalOne) that make being just an "average" frequent flier with UAL or another major less attractive. The 1Ks of the world will still want their perks though!

•-United's top managers are focused on short-term gains
Without going into "how much they should have gotten" discussion... It may be true, but I do not see the point of that argument since I think the TYPE of compensation was the best possible. The 4-year vesting is quite standard. Good corporate governance practices want the shareholders' and management's interests to be aligned. Stock, if anything, is a good kind of compensation in that regard, and better than, for example, options (which encourage too much risk). Afraid that mgmt would manipulate the stock price? I can only say that it's more difficult with an airline than with an Enron. What better to do, give management piles of cash with no performance incentive?

•-United's employees are angry
As opposed to "you all thought they are ecstatic?" Maybe true, but what exactly is the point again? They are not happy, for sure, but they are good. The employees were able to deliver excellent customer service and performance throughout the bankruptcy and especially in tough times of having their pensions terminated in 2005. Why would they perform worse now? it's another one in line of arguments: because UA just emerged from bankruptcy, they will have problems.

In all, take Brancatelli with a grain of salt.
 
halls120
Posts: 8724
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 10:21 am

Quoting Iloveboeing (Reply 22):
I just think that United is in serious danger because I believe they have overestimated the premium market. Yes, it does exist, but I don't think it's as large as they think it is.

Which is why United PS is only JFK/SFO-LAX.

Quoting Iloveboeing (Reply 22):
The days of $1,000 R/T from Washington, DC to Charlotte are over!

Really. UA's current R/t fares IAD-CLT range from 187-227.

I guess they got your memo.  Wink

What other nuggets of unique insight do you have for United? What with all your vast experience in the airline business, of course.

Quoting Iloveboeing (Reply 24):
I really think United should dump the 31-inch pitch, though. I sat in Economy Plus from ORD to HKG, which was nice, but I saw the people in regular economy and I really felt sorry for them. 31-inches is too small. All flights should have 32-inches minimum.

Right. They should run out and adopt something that AA tried and rejected because it was a money loser.

Keep 'em coming, kid.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
flyjetstar
Posts: 678
Joined: Fri Feb 03, 2006 6:37 am

RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 10:22 am

Quoting N79969 (Reply 9):
His points about fuel price assumptions are fair but... I think the WSJ article that came out about 2 weeks is far more credible and compelling than this guy.

Do you, or does anyone have a link to that WSJ article?

Thanks
 
Lumberton
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 11:35 am

Quoting CTHEWORLD (Reply 32):
Quoting Tozairport (Reply 16):
Quoting Lumberton (Reply 13):
Well, their stock (UAUA) is down 10% today. Not a very auspicious start.

Closing at 35.89 a share is still way over the 15.00 a share that was forecast. For those of you that can't figure out how it opened at 41.00, it is called pretrading. Basically, at 35.89 a share, UAL still has the second highest market cap of the U.S. airlines, and the over subscription of the stock allows then to lower their loan rates another 375 points. So Tozairport, the stock was down 10%, it was up more than 100%.

Actually, it wasn't Tozairport questioning the success of the IPO, it was me. Let's see how UAUA plays out in the next few weeks. I don't own any, but I wish UA well. But it is not an auspicious start! They better get some of these well compensated managers in the PR department to counter the kind of press we saw in the USA today article. This stuff can do serious damage to the share prices in the short term.
"When all is said and done, more will be said than done".
 
flydreamliner
Posts: 1928
Joined: Sat Jan 07, 2006 7:05 am

RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 12:26 pm

UA has been riddled with issues for a long time. Not that other airlines haven't, but that's the nature of the legacy business. Typically they have issues, it's just usually they aren't fatal. I think the most dangerous mistake UA made is assuming unrealistically cheap fuel prices. They just won't see that, and it will hurt their business model. DL is planning for reasonable fuel prices in their plans, but DL has had the most level-headed management in the industry. UA will probably see a near future of shakey finances, but they'll live. As for their routes and capacity not being up to snuff, I'm not sure I buy it. Their frequent flier issues, that's been a long time coming.
"Let the world change you, and you can change the world"
 
ctbarnes
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 12:41 pm

Quoting Iloveboeing (Reply 15):
1. Eliminate Ted. Introduce a low-fare, JetBlue style across the board, domestic and international.
2. Make Economy Plus the standard for United. Give the customers something to enjoy at 35-inch pitch, not torture them at 31-inches.
3. Eliminate Business-Class and really spice up the First Class product. Make lie-flat beds the standard on international flights (like Air New Zealand) and offer a lot of amenities.
4. Get new management. Ones that think, "What can I do to make air travel more better and affordable?" instead of "How much money can I suck out of this company?"

1. I agree Ted should be eliminated. It's an industry joke. I would go the other direction however and go for the higher end of the market. Let the people who want rock bottom fares go to Southwest.

2. I also agree with this. AA was on the right track but kept fooling around with the rest of the product to the point flying them now feels like Southwest without the jokes. They should have stuck with MRTC, kept a higher level of amnities and charge a few extra bucks. The "we have to be like Southwest mantra/obsession" is what bit them in the end.

3. Not really feasible. This and First are what make the money on any given flight. There are a lot of business travelers who feel an extra $10,000 for a first class seat is not worth the money and that business class is a good value.

4. Very true. United needs visionary management and consistent, trustworthy leadership; something they have not had for decades. Tilton, et al might have gotten them through bankruptcy, but look at the cost.

Charles, SJ
The customer isn't a moron, she is your wife -David Ogilvy
 
NWDC10
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 1:18 pm

Time always tell. Robert NWDC10
 
User avatar
coronado
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 1:26 pm

A recent round trip a couple weeks on United to Dulles--
I flew out on a E-170 operated by their Republic Shuttle America affiliate from MSP-IAD with a return on an overwater 777, extending a Frankfurt -Dulles Flight to ORD before connecting a 737-500 from ORD to MSP.

Interesting contrast! Mixed message!

I think I liked the E-170 better! I was off that plane in less than 3 minutes compared to 20 minutes for the 777.

And the E-170 has great leg room in Y--sure beats NWA's DC9's and A320's in so far as comfort!
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
ordpark
Posts: 562
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 2:21 pm

Well, let's see...When UA went into Bankruptcy...the media couldn't wait to bury us! Liquidation was just around the corner! The all knowing aviation consultants were full of gloom and doom....and here we are!

We're out of BK...it's a big relief to most of us,

A lot has been made of the "400" and the financial packages the are getting.
Personally, I'm not going to waste time complaining what Tilton makes, it's not gonna change my life one way or another...I do have an issue, however, with some of the others and there incentives.

Are the employees angry? Yeah, a lot of them are, but for the most part, we realize that we are still standing, the airline has a 2nd chance and most of us realize that the front line employees are gonna make or break our 2nd chance.

anyway, the future is a lot brighter today then it has been in a long time.
 
ckfred
Posts: 4694
Joined: Wed Apr 25, 2001 12:50 pm

RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 2:40 pm

Some random thoughts.

1. I don't think anyone knows what will happen to the price of oil. There is a professor from the University of Houston who appears regularly on CNBC. He predicted $100 a barrel for oil, as well as $25 per 1000 cubic feet for natural gas by Christmas. Then he pushed his date to Orthodox Christmas, January 6th. Now, he's hedging his predictions.

For every naysayer who says we will run out of oil in 10 to 25 years, there is another who says that prices will come down in the long run, because the current prices are funding tremendous exploration.

In other words, United's predictions as to oil prices are just as good as anyone else's.

2. It does seem that UA hasn't worked on fleet simplification the way AA has. AA has 3 narrowbody types, each with one configuration. UA has 5 narrowbody types, with a total of 7 configurations.

3. Apparently, p.s. service has been successful, but why not add it to routes out of ORD to the West Coast or routes out of DEN to the East Coast? These routes do carry a lot of business travelers, and upgrading service could take away traffic from AA at ORD and F9 at DEN.

4. If things start to get rocky, and UA's board does decide to make a change in CEOs, then hire someone from a LCC. I've thought for some time that managers and executives have trouble getting away from the legacy style of operations. If you want a legacy carrier to act like an LCC, then hire as the CEO someone who was an executive with an LCC.
 
777fan
Posts: 2256
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 3:08 pm

Well, I think we should all just give up and book our next trips on Braniff! Whatever.
DC-8 61/63/71 DC-9-30/50 MD-80/82/83 DC-10-10/30 MD-11 717 721/2 732/3/4/5/G/8/9 741/2/4 752 762/3 777 A306/319/20/33 AT
 
StevenUhl777
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 3:15 pm

Quoting Tango-Bravo (Reply 30):
Whether you like it... or whether you don't... they called it the way it happened, did they not?

Hindsight really is 20/20, isn't it? Whether you worked for UA or not during those years or not, things went well under Greenwald for the first several years..then things unraveled.

There you have it...  Wink
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
MX757
Posts: 495
Joined: Wed Aug 17, 2005 5:38 pm

RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 3:35 pm

Quoting CTHEWORLD (Reply 33):
Yeah, who is this 16-20 y/o genius that thinks he can run an airline anyway. At his age, shouldn't he be outside playing sports and chasing girls,

That's what I was doing at his age. Especially the chasing girls part.  Wink

Quoting 777fan (Reply 45):
Well, I think we should all just give up and book our next trips on Braniff! Whatever.

You never know Braniff 3 might be getting ready to start-up. Or is it Braniff 4? I lost count.  scratchchin 
Is it broke...? Yeah I'll fix it.
 
jacobin777
Posts: 12262
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 3:39 pm

Quoting Halls120 (Reply 36):
Right. They should run out and adopt something that AA tried and rejected because it was a money loser.

Keep 'em coming, kid.

c'mon mate, at least he's making an effort...when I was his age, I was just playing guitar, going to school/college and chasing girls... Smile

Quoting Ctbarnes (Reply 40):

1. I agree Ted should be eliminated. It's an industry joke

as I stated above, if it is, then why is it still expanding? surely it would have been cut by now if it was doing poorly (aka-"Song")

Quoting Ctbarnes (Reply 40):
They should have stuck with MRTC, kept a higher level of amnities and charge a few extra bucks. The "we have to be like Southwest mantra/obsession" is what bit them in the end.

was a money loser..people wanted to pay less...the market spoke...simple as that...

Quoting Ctbarnes (Reply 40):

4. Very true. United needs visionary management and consistent, trustworthy leadership; something they have not had for decades. Tilton, et al might have gotten them through bankruptcy, but look at the cost.

tilton has done the best job possible..he was "visionary" in expanding TED, introducing E+, expand IAD (as opposed to what the analysts were recommending).....

and to top it off, got them out of a potential chapter 7 liquidation....not to mention, deal with the after effects of 9/11 and SARS...

what else do you want from a CEO in a few short years? He's done a great job so far!

heck, I even saw Boyd on CNBC say that UA has so far done a good job...

Quoting Ordpark (Reply 43):

anyway, the future is a lot brighter today then it has been in a long time.

though I no longer fly UA, I certainly wish them well.. yes 

love them colours...!!


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ctbarnes
Posts: 3269
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RE: USAToday: Why United Airlines Will Fail Again?

Fri Feb 03, 2006 3:52 pm

Quoting Jacobin777 (Reply 48):
was a money loser..people wanted to pay less...the market spoke...simple as that...

Er, no. Not quite so simple. The obsession with market share is what is driving the airlines into bankruptcy. You have to charge what it costs to provide the service, plus a little more for profit. Cutting fares way below cost and deluding themselves into thinking people won't fly them if they raise their fares is simply nuts. People do not necessarily want low fares. They want value for their money. And the airlines have no one but themselves to blame for the economic trap they are in right now as a result.

Charles, SJ

[Edited 2006-02-03 07:55:46]
The customer isn't a moron, she is your wife -David Ogilvy

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