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sfointern
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Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:37 am

Sourced:
"United's Labor Issues Return to the Front Burner" ... 'Been There Done that'
http://biz.yahoo.com/rf/020207/n07360885_1.html

And I quote:
"Herb Hunter, spokesman for the United Air Line Pilots Association, said pilots have no interest in old-school concessions like ones in the early 1990s.

``We know the company's in trouble and we know that something needs to be done,'' Hunter told Reuters. ``We're not interested in concessions per se. This needs to be through and through the whole company. I don't need any more worthless stock.''

Jack Creighton, UAL's new interim chief executive, has been meeting with all labor groups and opening the company's books for review. Hunter said Creighton is perceived by pilots, at least, as candid. ``He came across as someone who wants to stand on his efforts and not on words. He's done more in getting out and talking to the people than Goodwin did in his whole reign.''

James Goodwin, the former CEO, was ousted after labor groups criticized his statement that the airline would ``perish'' unless losses stopped. "



I underlined the stupid remark. Herb Hunter, while a better alternative to Rick "Mad Dog" Dubinsky, is making as self-fulfilling of a comment as Goodwin here.

It's one thing to know the stock is, at the moment, worthless. It's another to say it to the press. Especially when all the financial markets are closely watching. Now if that isn't self-fulfilling, I don't know what is.

Personally, I think pilot's should be realistic, but should also be confident about their company. Especially because they've got so much at stake given their stock holdings.

Anyone else agree?
 
Guest

RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:42 am

I agree completely. It's sickening to see that United needs the wage concessions to survive, yet the pilots are refusing to fork over.
 
Guest

RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:44 am

Well think of it from their point, they took a lot of stock options which are worth nothing now. I think I would be pissed too!
Iain
 
sfointern
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:47 am

Iainhol--I repeat:

It's one thing to know the stock is, at the moment, worthless. It's another to say it to the press. Especially when all the financial markets are closely watching. Now if that isn't self-fulfilling, I don't know what is.

They can be pissed about it all they want, but saying the stock is worthless won't make UAL stock go any higher, I promise you!
 
ScottB
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 4:15 am

You may be right that Hunter's calling UAL stock "worthless" won't be helpful to its share price, but, honestly, in the short to medium term, UAL's share price really ought to be one of the last of management's concerns. The *only* things which will improve the share price is to get costs down and revenues up, and to get United Airlines back on a profitable footing. Otherwise it's all meaningless, since the stock would truly be worthless if UAL were to enter bankruptcy reorganization.

Remember that the pilots and machinists gave fairly substantial concessions in return for their restricted shares; yet they had little say in the running of the company and had to fight hard to gain back what they had given up when their contracts came up for renewal. Not just that, but the performance of their shares of UAL to present day has been abysmal. It's beginning to look a lot like what happened at Enron and Polaroid.
 
Guest

RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 4:16 am

SFOintern I agree, but I would be quite concerned if my savings was mostly in UA stock right now!
Iain
 
LJ
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 4:27 am

Well said Scotty!

Morover, a lot of UAL employees are blaming eachother for the worthless shares they have. It's gone so far that UAL is now the example of how you don't run an Employee Share Option Plan (in short ESOP).

BTW not all UAL employees seem to have stock in the company wheras all are equally paid 9correct me if I'm wrong).

Regards
Laurens
 
sfointern
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 4:37 am

ScottB...

Exactly, so it's a Catch-22 situation. United can't survive without significant cost reduction (ie Paycuts) and increased revenue (possible US Assets -- need $$$ from paycuts), but UAL workers are tired of giving "old-fashioned" concessions.

And in the end, if no further cash is raised, all points are moot as the stock truly becomes worthless!

Might I ask, what concessions are possible *other than* "old-fashioned" ones? There are creative solutions out there, but nothing as simple and more effective than wage givebacks.

It's time UAL stopped the fighting within and work together... Jack needs to start by defining a common goal to work towards besides financial stability. While that is the most important thing, he needs to show employees what will happen when UA runs in the black again...

CLT & SE growth could be one of those...
 
PanAm747
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 4:44 am

>>CLT & SE growth could be one of those...<<

But they will have to go right up against Delta. And after 9/11 Delta is probably the strongest of the three (UA, AA, and DL). I've been hearing for some time how AA will try to take over the south east, but it hasn't happened yet.
 
AlaskaMVP
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 6:06 am

Well someone has to buy their stock, is the pilot saying that he would prefer the alternative? Airlines are very capital intensive businesses, without the ability to raise additional funds they are all out of business. There is a limit to how much debt can be raised, eventually you have to sell stock to raise capital.

It's funny that the owners of the airline who are most responsible for it's condition (employees purchased over 50% of the airline in the ESOP), don't want to do anything that could possibly save it. They have significant representation on the board (two seats and veto power over 4 more), and control over the management.

Also, an ESOP is typically shares, not options, so their stake still has value and can have a great deal more if the company is turned around. In fact, they are in the same boat as the public shareholders, who have no control over how the company is run. They should pray every night that those public shareholders will still believe in United and it's employees, or not only will their savings be gone, but so will their jobs.

This is not how an ESOP is supposed to work, it's supposed engender better employee-employeer relations by turning them into owners. I guess this could be a textbook for how not to do one.
 
sfointern
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 8:20 am

Excellent post, AlaskaMVP. United is the airline industry's manifestation of irony.
 
ILUV767
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 10:15 am

A friend of mine said this, and he is a pilot too...:

"If the pilots are not willing to make concessions in the time of crisis, then the company is not worth saving."

What that boils down to is that if they dont do wage cuts, then there will be no airline for them to work at. It will screw them over in the long run.

Now, here is what I think should be done.

Have the pilots and the mechanics take a 30% cut in their pay. Put that money aside and pay the employees back, with intrest in three years. Do not spend that money else where. Have it in a seperate account from the regular budget.

So what you are doing is not paying them the money, but you are not spending it else where. This would allow you to lower your overall losses by as much as 50%! That alone could make the difference between staying alive and going under.

I L U V 7 6 7
 
Murf
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 11:25 am

Why must the Pilots and mechanics be the only ones to take a 30% pay cut. Shouldn't rampers, Flight attendents and especially management since they created this mess help with these 30% concessions? What about dispatchers, customer service agents, secretaries, human resources, arn't they all part of the team too? Flight attendents didn't participate in the ESOP, maybe its their turn to take the bigger percentage cut this time.

What's the point of just holding that concessions money in a seperate account and not spending it. The airline will still be losing $10 million a day. Thats the point of the concessions. Use that money to help pay your bills, pay down debt and use it for future growth.

My final take is United's problems are much bigger than just concessions. They are losing way to much money. They've managed to go from losing $ 15 million to $10 million per day, an excellent achievement.
Here's some simple math.
United is losing on average $10 million a day and has about 80,000 employees.

$10,000,000 / 80,000 = $125
United is losing $125 per day per employee.

Divide this by 8 (hours worked per day for a full time employee).

$125 / 8 = $15.625.
United is losing $15.625 per hour per employee.

Multiply this by 2080. (average number of hours worked in 1 year for a full time employee).

$15.625 * 2080 = $32,500.
United needs each employee to give $32,000 back per year in concessions.

Thats a lot of money. Half the company would have to work for free. These numbers are just simple, "average" calculations. Obviously no work group would have to work for free while a $250,000 777 Captain still gets around $220,000. But I think this gives a basic idea on the average costs that United would need to cut per employee.
I don't think they will try to get $10,000,000 per day in concessions, but, where else do they have left to cut costs. Aircraft are already retired. Fuel prices are pretty cheap. Cuts to food service. Layoffs pretty much done except for pilots. Maybe they should ask Goodwin for concessions on his "golden parachute"
What else is left?

To me it looks bad, but, I don't have all the facts.

Anyone know what happened to all that money they had to buy US Airways with? One minute they can afford to buy an airline for twice what its worth, then they have no money(only 2.6 billion), need concessions, and are talking bankruptcy.

Murf


 
UALPHLCS
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 12:28 pm

I think that all this talk of the pilots NOT wanting to give back is a bit over blown. I have spoken to a number of pilots and Mechanics. The main issue is they do not want to give back without a formula for the pay to return to contract levels WHEN the company is back in good fincial health. I don't think this is an unreasonable demand to make. In the 80's and 90's the company made open ended promises to the employees promises that have not been kept. Wages are still at 1994 levels and these contracts that are due were the contracts that the company was supposed to make good thier ESOP wage consessions. There are people at UA who have had no raise cince 1994. Please remember that Customer Service has no contract either. I have not recived any raise, so i'll be damed if I'm going to take a pay cut after putting up with the pilots games in 2000. I'm sure they will give back, I'm sure the IAM will give back, and the IAM representing CS will give back as well, But NOT until we have a contract. You can't give back when you haven't recived anything.

Im down off my soapbox
UALPHLCS
 
ILUV767
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 1:31 pm

Muff wrote:

Why must the Pilots and mechanics be the only ones to take a 30% pay cut. Shouldn't rampers, Flight attendents and especially management since they created this mess help with these 30% concessions? What about dispatchers, customer service agents, secretaries, human resources, arn't they all part of the team too? Flight attendents didn't participate in the ESOP, maybe its their turn to take the bigger percentage cut this time.

I agree, but when you look at the overall budget, ALPA has 9% of the total budget in terms of what you pay them. IAM has a bit less than that, but it is the second highest. AFA's contract is not amendable, but in addition to that they only make up about 3% of the total budget which is a lot less than ALPA. The cuts need to start at the top. Senior managment, then to ALPA, IAM and so on.

What's the point of just holding that concessions money in a seperate account and not spending it. The airline will still be losing $10 million a day. Thats the point of the concessions. Use that money to help pay your bills, pay down debt and use it for future growth.


The money would be set aside so that United does not have to pay the employee as much, but can pay them back in the future. What that allows you to do is to stop your cash bleed to that employee group, and even get a return on your investment.

My final take is United's problems are much bigger than just concessions. They are losing way to much money. They've managed to go from losing $ 15 million to $10 million per day, an excellent achievement.

United has cut from every area with the exception of wage cuts...that is the next step for the employees/labor groups. Part of the reason that United is loosing money, and the reason that they will keep on loosing money is because their seat per mile costs are slightly higher than their yeilds. Until the numbers change so that the yeilds are higher than the seat/mile costs United will continue to loose money.

Allow me to explain. The basic idea of yeilds is how much people pay to travel. In addition to that, there are the costs along with traveling or your seat/mile costs. If it costs more to send the plane, than you make in revenue from passengers, then you will loose money. You can cut your cash bleed by having a wage cut. It costs less to get the plane out in terms of overall staffing, and the money that you would pay that staffing is earning intrest in the bank. Its a win-win situtation, as the employees would get their money back after the company returns to profitability.

Anyone know what happened to all that money they had to buy US Airways with? One minute they can afford to buy an airline for twice what its worth, then they have no money(only 2.6 billion), need concessions, and are talking bankruptcy.

They bleed most of that money in the post 9/11 world. Remember that United is worth less than half of what it was a year ago.

UALPHLCS wrote:
There are people at UA who have had no raise cince 1994.

Remember that during ESOP, they were not allowed to strike or change their contracts. Now all employee groups with the exception of AFA is able to ask for wage increases, but United simply does not have the money to do it.

With what you wrote about how you wont give a giveback until you get a new contract, well...you make a good point. Your '94 wages are insignificant to that of the pilots and the new mechanics wages of a 37% increase...which BTW IAM district 141 wants to get more money out of UA. The cuts have to start from the pilots and the mechanics. They will trickle down to you, but you know what...if you dont take a cut, you might very well be out of a job. United was close to chapter 7, but since they settled with IAM that went away. If you dont belive me, check the PEB reports.


I L U V 7 6 7
 
UALPHLCS
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 2:04 pm

I LUV 767
I think you and I are on the same page here, but are going about it differently. Most of the people I'v talked to Pilots Mechanics CS and FA's will agree to some sort of concessions. But the IAM 141M (nechanics) and IAM 141 are not going to give back when they have not increased our wages cince the start of ESOP. The pilots will not negotiate w/ management until EVERYONE has a contract. Then we are all on a level playing field. But I agree w/ ALPA that these concessions can not be open ended. What the Unions are saying is there has to be a mechanism that as soon as UAL is profitable the wages start to return to the levels negotiated in this contract. UAL had record profits during ESOP, and the employees who GAVE so muh to make that happen have been cut out of reaping ANY of the reward. That should not be allowed to happen again. If I give back, and I am willing to do it after I get a raise, then I want to know that as soon as my hard work starts to pay off I will get back whay I gave up.
UALPHLCS
 
UALPHLCS
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:11 pm

BTW Murf,

Nice math there but I have to calculate my Gross for a WEEK so I can get particial Unemployment Comp. Because I was cut from FT to PT. 1 WEEK GROSS not NET GROSS is $295.00 FOR A WEEK. So go do your math again and get the $125 a DAY from the $900,000 we're paying Goodriddence, I mean Goodwin, to leave us. Or from the $125 an HOUR we're paying some pilots. Or from that 90 acres surrounded by reality we call WHQ. But they will NEVER get a concession out of me or any CS agent I know until we get paid for ALL the work we do.
 
DeltaSFO
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RE: Careless Comment By United Pilot In Media

Fri Feb 08, 2002 3:59 pm

ILUV767....

Brilliant post.
 
777D
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 4:35 am

On this issue of Pilots vs. Mechanics vs. CS I am siding with the CS and Mechanics.

Let's start with the Mechanics, they haven't had a raise in 6-8 years. They deserve and should receive a raise without concessions whatsoever.

The flight attendants received a raise as well as the pilots. Significant raises were received by these two groups.

The flight attendants do deserve to be paid a higher salary for what they do in skies. Safety, guidance and passenger comfort.

The piltos salary has taken too much of the "pie" so to speak. The other unions and employees feel betrayed by management and the pilots by the significant raises the pilots received. Also upper management by UAL has a nice salary as well.

Who is to blame?

UAL management for paying high salaries and not planning to satisfy the other employee groups.

The pilots as well, they know they receive a good salary, perhaps after 5 years time they receive a nice salaray but none the less it is greater than the CS and mechanics. Greed does not benefit everyone and the pilots only want themselves to benefit.

I hope the other carriers domestically and internatinally are watching this situation because it could benefit them if UAL goes under or reduces service. On the other hand it could hurt them because their employee groups are watching what the salaries are being paid at UAL.

Once again the consumer will not benefit, if UAL continues to fly and they have a monopoly (i.e. DEN, SFO and others that slip my mind) higher fares will have to be paid, which no one like's.

Once again, a smaller UAL would be my choice.

They can be the feeder airlines from the US to their Star Alliance partners to international destinations and the international airlines feeding the passengers from their countries to UAL.

By the way, UAL is not a preference of mine for flying, lousy service and always late.

777D




 
FDXmech
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 4:54 am

It's ashame, an airlines profitability is directly related to executive managements ability to run and properly guide, make sound and wise business decisions, not pay cuts.

Just look at Continental. Essentially the same pilots, mechanics, flight attendants etc prior to Bethune and the airline was a shambles. After Bethune took the reigns, a complete turnaround.

Look at AA. Very savvy executive management from Crandall till the present time. Roughly an equivalent airline to United but a world of difference due to a competent managements ability to keep the company on course.

In the case of United, past management (the posterboy of Ivory Tower mentality) has done so much to undermine its longterm viability and then has the gall to pin its very future on employee pay cuts. I pin all UAL's present woe's on management as the actual problems (labor strife, 9/11, etc) were no different than the other majors had to solve.

Pay cuts make a profitable airline not, good management does.
 
777D
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 6:40 am

Jetblue, Airtran, Frontier, Southwest and any other low fare carrier has be to looking for ways to attract passengers that formerly flew UAL.

They will benefit. Perhaps Frontier would receive the most benefit from the passenger side?

I agree that management is partially to blame for the current situation that UAL finds themselves in at this moment.

When you have an employee group that purposely delays flights, sickouts and etc how can you blame the management for that? UAL pilots did this to the company but worst of all did this to the flying public who ultimately pays the bills.

I believe any group at the airline would have done something to disrupt service but the pilots tried, did it and they did it without any concern for who pays their salaries.

They are both to blame, management and pilots. The mechanics not having a raise for 7 years, but stock options that are currently worthless according to a Warren Buffet wannabe who is head of the pilot's union making these statements which by the way, the management will remember when negotiations begin.

Good Management plus employees that understand that they should work together makes a good company. Not just good mangement, the pilots are creating a stir at this moment....

Remember, you and I will pay the price for UAL's managements terrible decisions as well as the pilots and perhaps another union for the problems that face UAL.

I hope the mechanics stand their ground as well as the ground people who have to deal with the people, noise and bs.....

777D

 
ctbarnes
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 7:17 am

It's the same old story. The economy goes into recession. The airlines are lose their shirts. Management demands wage consessions from the unions who bluster a lot but in the end give the airline what they want. The economy recovers, and with it the airlines' fortunes because people start travelling again. The airlines make record profits and the unions demand a big pay increase to compensate them for what they gave up earlier in the decade. Pay increase granted after yet more labor-management squabbling, and a strike or slowdown just to keep things interesting. Labor costs go through the roof, just in time for the economy to tank yet again. The airlines lose their shirts. Management demands wage concessions, etc. etc.

Is it just me, or is there something wrong with this picture?

Perhaps C.R. Smith was right when upon retiring from American he was quoted as saying "There is no goddamn way to make any money in the airline business. The economics are sheer hell!"

Charles, SJ
 
FDXmech
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 7:53 am

How and why did management let labor relations reach such a low point where the "summer of hell" lasted as long as it did?

Did management realize at some point that contract negotiations somehow, somewhere and sometime get settled? And if the answer was *yes*, then what possessed them to allow this to go as long as it did causing so much harm to UAL's future.

Did management even care, care enough or even know? Or was their solution to United's mainline problems devoting resources to the USAir merger and starting a fractional jet division.
 
777D
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 8:10 am

The perspective that I prefer is that, pilots earn more than mechanics and customer service people. They deserve to earn more due to the training and responsilibty they have. I am agreement with earnings difference, but I am not in agreement with the gap that currently exists between the employee groups. The pilots and management play russian roulette and management blinked because of the pilots work stoppage (sickout). Their goal was to show UAL management that they cannot function without the pilots without them and UAL cannot function without the pilots. Also created animosity among the empolyee ranks. They affected their lives with angry passengers, shorter work days, and etc.

You know, UAL cannot function without mechanics and CS people as well....

Who is going to maintain the planes? Who is going to book the passengers for the flights? Who is going to do this work? Certainly the planes do not fix themselves? Can passengers just walk up to podium and make the announcement that the flight is ready for boarding? Some of this sounds trivial but someone has to do it and you know, these employees are tired of being overlooked....

The pilots and management are leading this airline into the ground and then perhaps someone will learn a lesson, but that lesson was wasted on Eastern airlines.

I will say it again, with UAL with high costs, who is going to pay.......THE CONSUMER IS GOING TO PAY......


777D





 
cedarjet
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 12:06 pm

Why don't management take a pay cut? They got the airline into such a mess in the first place.

And expecting employees to lie to the press about how great and valuable UA shares are when they're junk won't save the airline any more than pay cuts will.
 
UALPHLCS
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 12:33 pm

Jack Crieghton is starting to make this airlinr turn the corner. But he will not be able to get started until the contracts are settled. Hopefull in the next 2-3 weeks.
We will get the increases that we deserve then we can finally get back to work. I blame management only for stalling as long as they did. If these issues where solved back in 2000 when our contracts first became amendable UAL would not be in this mess. The merger may have been approved if UAL could have proved to the Government that iit didn't have crippling labor relations.
As for UAL as an airline Crieghton is right when he says to us employee that there is nothing wrong with United that can't be fixed by whats right.
UA is the dominate carrier in 5 citites, UA draws from a population pool of 42 million potential passengers. the next closest is AA with only 25 million passengers. that comes from a Solomon Smith BArney report on the transportation sector, so its as independent as you can get.
UAL has a great partnership with STAR. And despite some personal opinions expressed here UA has won awards from Buisness travel magazines.
United Airlines will survive the Goodwin debacle and we will come back stronger.
 
ILUV767
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 1:22 pm

Cedarjet wrote:
Why don't management take a pay cut? They got the airline into such a mess in the first place.

They are going to have too, but their pay is insignificant to that of ALPA and IAM.

FDXmech wrote:
Pay cuts make a profitable airline not, good management does.


When the airline has to spend more money on paying employees than they take in from flights, where do you make the cut in order to lower the point where you would break even? Everything else has been cut. UA wont be able to turn around until you cut else where. Where else would you suggest they cut? Food is gone, planes are being sold/leased/differed, special projects are on hiatus, and the list continues.

Just look at Continental. Essentially the same pilots, mechanics, flight attendants etc prior to Bethune and the airline was a shambles. After Bethune took the reigns, a complete turnaround.

Actually, Continental declaired bankruptcy twice, and when they declaired chap 11, it voided out all of the contracts. Continental's employees are among the lowest paid in the industry. Bethune has had his part in turning around a company after employee wages were reduced.

777d wrote:
Let's start with the Mechanics, they haven't had a raise in 6-8 years. They deserve and should receive a raise without concessions whatsoever.

What money would you pay them with? With about 10 million lost per day, you come up with avalible money to pay them. I wanna see you try! It is simply not possible to do so at the moment. If you pay the mechanics more, United may loose up to 15 million aday, which could make Goodwin's words come true. If you catch my drift.

The flight attendants received a raise as well as the pilots. Significant raises were received by these two groups.

Actually, the flight attendants/AFA members have recieved nothing. Their un-amendable contract will not allow it. Sorry to break it to you but United's flight attendants have not gotten a raise in five years and they wont get one for another five years.

I L U V 7 6 7
 
DCA-ROCguy
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 2:53 pm

Discussions about how to restore a big high-cost airline to profitability are always fascinating. The union folks always talk about "1994 pay," "formulas for increases," and which group got pay increases when. It's as if the money to pay them, well, falls out of the sky. Others correctly point out that United not only cannot afford pay increases right now, because passengers won't fly at fares high enough to pay for them.

The consumer, in the end, determines what air transportation can cost to provide. Once seat-mile cost goes above a certain level, we simply stop flying. Especially after 9/11. And if we do fly, many of us are flying low-fare carriers, which offer excellent service on new planes for a fraction of the cost of flying a Cartel carrier.

Charles raises the most important question: how to make airline economics sustainable? The bottom line is, that the Cartel Six all must bring their CSM's down substantially if they want to even out as investments, and become dependable employers. An airline that isn't addicted to $500-2500 domestic full-fare coach fares won't be as vulnerable in the next downturn, or God forbid, if there's another terrorist attack.

Either UA's CSM's come down *and stay down*--at least 2-2.5 cents lower than they are now, maybe more--or the airline isn't going to make it. How that's done is up to management and employees. But we consumers decide the cost of air travel; that's how a free market works. And we're not paying excessively high fares for the privelege.

But since we're not organized into a militant union, and we don't occupy the paneled management offices, we generally are the forgotten party in these discussions. Our voice is clear, though: CSM's come down or air travel isn't a viable business at a price we can afford.

Jim
 
ILUV767
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RE: Careless Comment By United Pilot In Media

Sat Feb 09, 2002 5:58 pm

Excellent Post Jim. You clearly show how supply and demand affects the price that you pay for airline tickets.

I L U V 7 6 7
 
sfointern
Topic Author
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RE: Careless Comment By United Pilot In Media

Sun Feb 10, 2002 2:40 am

Jim, spot on as usual.

But it's not as simple as supply and demand.

As Einstein once said, "Make something as simple as possible, but not simpler."

CASMs do have to come down at UAL, but that is only one part of the equation. It is almost impossible to make CASMs come down without affecting RPMs... in other words, lowering costs will inevitably drive some revenue away (as amenities are cut, etc.) UA has already cut as many amenities as competitively possible, so the last major block of cuts comes in labor.

However, Creighton sees the need to enhance revenue. The way you make something like this successful is to be aggressive with whatever concessions may come. That's why he's "reorganized the deck chairs on the Titanic" by taking away Dutta's duties over operations, and making him focus solely on revenue generation.

United has to find new markets to tap into, please existing customers, and gain additional customers in existing markets: if it expects employees to give concessions, employees must also expect to know and understand how those concessions will be used.

First of all, most of that wouldn't be used to pay off the debt. Paying off the money UA secured to fill its current war chest would have marginal effect on stock price right now. What investors like to see is performance. This means UA must make month-over-month increases in RPMs, Load Factor, Yield, and ASMs. Growth. This is the key to attracting investment. At the same time, decreasing CASMs will lead to enhanced growth. So, cut labor costs, but show them what the recovery plan is. This is exactly what Bethune did. Take a look at CO, highly leveraged, but investor preferred.

In other words, it is more efficient to grow and pay off debt with the extra profits, then to cut costs and use the concession money to pay off debt and fund growth.

* * *

As for the IAM contract. I have a creative solution to a small problem.

In the current contract, IAM's hammered out a stipulation where MECHANICS would handle aircraft reception & dispatch. At every other major carrier (with the exception of TWA, which is now gone, god bless her soul), qualified RAMPERS do this. What do mechanics do here? They marshall in aircraft, wand them in, push them back on the tugs.

Believe it or not, the mechanics that do this on a rotational basis do not spend most of their time at the hangar or fixing an airplane. They spend a good deal of their time travelling from the maintenance areas to an aircraft arriving/departing gate, waiting for the aircraft, waiting while there is any departure delay, etc.

In other words, they are not being paid what they are paid to do. Rampers can easily do this job, and would like to do this job, as every other airline has rampers that *do* do it. In fact, I have seen several arriving aircraft at SFO that have been waiting to pull into an empty gate, just because a "prima dona" mechanic was late.

It is a small cost, but significant when compounded. Like taking the olive out of the salad, squared.

The only reason why UA mechs want this still is that they feel it is their version of "SCOPE". Hardly. Pilot Scope Clauses are necessary because that affects their jobs. This does not affect mechanics' jobs because in the first place, it is not in their job description!

UA will recover faster if there are more creative solutions to new contracts, both posed by management and the frontline.

While pilots "say" they won't give any money back, in some way a way will be found for them to save the company a large sum of money, somehow.
 
Hoffa
Posts: 946
Joined: Wed Nov 21, 2001 8:04 am

RE: Careless Comment By United Pilot In Media

Sun Feb 10, 2002 3:45 am

It's one thing to know the stock is, at the moment, worthless. It's another to say it to the press. Especially when all the financial markets are closely watching

I would think the financial markets and investment banking houses would have a much clearer position of UAL's financial fundamentals than a UAL pilot would, press or no press. The fact that UAL is a sinking ship and that Creighton is an arrogant dotard has not escaped the WSJ, FT, etc.
 
Murf
Posts: 158
Joined: Mon Nov 06, 2000 11:47 am

RE: Careless Comment By United Pilot In Media

Sun Feb 10, 2002 3:51 am

UALPHLCS,
My math was just basic average estimates. I am in no way an accountant so just take my numbers with a grain of salt. And no way was I suggesting you work for free or even have a cut. Obviously bigger paycheck take bigger cuts. It really pisses me off that United will not honour the employees contracts, yet they "choose" to honour the contact of the ASS who put them in this mess. What is wrong with these people.

Good points DCA-ROCguy.

ILUV 767,

Good post, I forgot about the paying passsengers, duh.
For my next math eqaution. United flies let say an average for Jan 160,000 passengers per day. UAL is losing $10,000,000 per day.

$10,000,000 / 160,000 = $62.50
This is what united needs to increase every ticket price by, to break even, with no concessions.

This seams more realistic. However the higher fare paying passenger will probably be the ones that will absorb this by paying about $100 while people who buy the lower fares will eat about $10 or even nothing. But, at this time its not practicle. What I believe the industry is doing is just trying to put asses in seats. Let people get a taste of the post 9/11 product at a very cheap price, see that it is still safe and the fares will slowly go up again and profits will return.

I agree but dissagree with you on this take
" If it costs more to send the plane, than you make in revenue from passengers, then you will loose money."

This is what I think. Many time I've flown UAL and 2 times post 9/11 between SFO-LAX. Many times my flight has been cancelled because of lack of passengers. They won't admitt this but it is obvious when you only see 10 or so people in the gate area. United isn't always gonna fly a route if the flight part of the finances can't pay for itself. Positioning aircraft, different story. Basically what I'm saying is that each flight must pay for itself and some. You have employees, aircraft, property, buidings, maintenance, Fired CEO's and a whole other bunch of expenses to cover.

As for concessions, I forget who said it, but they said "No airline has been save by concessions."
You post like you have taken the flight attendants under your wing. I'm reading it like they only contribute to 3% of payroll so whats the point taking their money. No. Everyone must participate.
The F/A's didn't participate in ESOP, gave no concessions, negotiated an indutry leading contract while the rest of the company was the lowest paid or close to it, were talking about the CHAOS thing during their mid term barginning sessions 1-2 years ago, plus, the company didn't give them raises because they were still the highest paid in the industry at that time. F/A's have given up nothing and you think they should do it again. That is not fair. I think they should be hit the hardest this time around (give the biggest % paycut per paycheck). "Everyone" must help save the company and this time its the F/A's turn to give up the most.


Also, Uniteds accounting company is Arthur Anderson, a company well known for hiding stuff and destoying documents. Look at Enron and I think it was Sunbeam. So it wouldn"t suprise me if some creative accounting is going on to look like loses for contract negotiations and free govt money.

I think I read this on the IAM website, that historically union members of all different unions have rejected the PEB recommendations come voting time. This could be bad news for UAL. A strike would surely put them into bankruptcy or even out of business.

Murf






 
UALPHLCS
Posts: 3232
Joined: Thu Jun 28, 2001 5:50 am

RE: Careless Comment By United Pilot In Media

Mon Feb 11, 2002 2:22 pm

I love when people say that Union people think that money falls from the sky, as DCA-ROCguy stated. And My fomula for increases was in relation to a give back. The responce was to the topic about not having open ended give backs. This is why piots and mechanics don't want open ended give backs. because they gave in 1994 and did not get the pay back when UA returned to a healthy finacial condition.
AS to the high CSM yes UA needs to figure a way to lower costs. But passengers seem to want to fly on nice big airplanes to asia europe and south america. connect from there own small city. sit in a Red Carpet Club, w/ free sodas and a nice barhave great food and economy plus seating if in coach or a FREE upgrade if one is available, and PAY Southwest peices to do it.
ATTENTION PASSENGERS you want premium service you pay premium prices. If you want those prices you want to fly OAK-ISP intead of SFO-EWR, no lounge, no food that you complain about anyway.
I know you all will jump to Southwest defence. "They are always on time." "The're people are funny they have a good time." WN doesn't have ACARRS they don't report their times to the minute. If they're close, they're on time. They have a formula that works. But its appels and oranges. Its a KIA vs. A BMW. Stop demanding the BMW at the KIA price.
Example:
the RCC in PHL has been closed for a week due to renovation. This renovation was badly needed. Customers were unhappy w/ the state of the club, they had every right to be. What was totaly unexpected was the Outrage that frequent PHL RCC members displayed at the closure for renovation. Very rarely have I heard that much Anger over something that was being done FOR the Customer. One guy even asks for free vouchers for food because of the club being closed. Here was a man in a nice suit, nice briefcase asking for freebies when he could have sucked it up and bought himself a soda. I ask you all How can any airline that wants to provide Premium service survive if the cumsumer is willing to pay for the extras that are provided?
 
ctbarnes
Posts: 3269
Joined: Thu Mar 30, 2000 2:20 pm

RE: Careless Comment By United Pilot In Media

Mon Feb 11, 2002 2:58 pm

ATTENTION PASSENGERS you want premium service you pay premium prices. If you want those prices you want to fly OAK-ISP intead of SFO-EWR, no lounge, no food that you complain about anyway.
I know you all will jump to Southwest defence. "They are always on time." "The're people are funny they have a good time." WN doesn't have ACARRS they don't report their times to the minute. If they're close, they're on time. They have a formula that works. But its appels and oranges. Its a KIA vs. A BMW. Stop demanding the BMW at the KIA price.


Sorry UALPHLCS, that arguement does not wash with me. In the mid-90's when profits were high, United in a much-ballyhooed advertising campaign said they were moving in "a different direction" with better meals and increased service etc. Then comes the down turn, the meals are yanked and pastic turkey rolls substituted. The central problem is airlines routinely overpromise and underdeliver. Southwest customers, by contrast, know exactly what they are getting: open seating, a drink, a bag of nuts and irrepressively friendly crews. If airlines are going to promise the moon, the stars and several small planets, they had jolly well better deliver.

Now I am not suggesting that passengers should get first class treatment when they pay for a $199 fare, but they should be entitled to receive good service, fair treatment when things go wrong (two days on perpetual standbys is not acceptable), and most of all, the airlines need to stop paying lip service about listening to their customers and actually do it. The vast majority of people out their do not give the airlines very high marks for service, and frankly a lot of it is deserved. It's time the airlines stop giving customers the stock, and in my mind very arrogant, "if you want more pay more" brushoff, and start to grasp the fact they have a very serious problem with the way they treat their customers.

OK. Rant over.

Charles, SJ
 
UALPHLCS
Posts: 3232
Joined: Thu Jun 28, 2001 5:50 am

RE: Careless Comment By United Pilot In Media

Tue Feb 12, 2002 12:28 pm

An airline as anyother business is a purchaser of work. In the airline golden age working for an airline had alot of prestige. It was a hard job to get, and it paid well. Airlines trained people right back then. Right now airlines are trying to deliver Lord and Taylor service paying McDonald's wages. Once again you get what you pay for. You want outstanding service people, well they demand to be paid better than $8.25 to start. Otherwise your going to get the cheap, high turnover, uncaring, crappy service people that major airlines have been hiring for 15 years.
Once a customer service agent truely like the job. The airlines looked for people who LIKED people, who had a head in their shoulders. The past few years airlines have looked just for warm bodies. I know I got hired with some of these cretins. These people didn't care, and the quit before they even learned how to do the job correctly. One thing I do know about WN they pay for their CS people, and they reap the rewards.
But its true that WN set their bar low. Which is why I don't feel its fair to compare large airlines trying to deliver world spanning service, with all kinds of amenities, to airlines that don't have anywhere near the scope. Again its like comparing a cheap car like a KIA to a luxury car like the BMW. I know that the analogy breaks down but the underlying truth is that customers want the first class sleeper booth for Southwest prices.
Airlines do not promise the sun and the moon and the stars as you put it. They promise to get you from point A to point B. If they can't do that they can sign you over to someone who can. EVERYTHING else is extra.
This crazy buisness is the only one I can think of where people think they can get something for nothing and usually they are correct. That is the fault of airlines in general.
 
ctbarnes
Posts: 3269
Joined: Thu Mar 30, 2000 2:20 pm

RE: Careless Comment By United Pilot In Media

Wed Feb 13, 2002 1:10 am

Working as an airport chaplain allows me an interesting perch from which to watch a lot of what goes on in an airport. I spend a lot of time talking to both passengers and employees, many of whom are frustrated for a variety of reasons. As a result, I think I have a good understanding of the employee's and customer's perspective.

What you say about the trend of customer service is correct, particularly in terms of the job having become a low pay high turnover position, and having to deal with all kinds of crap.

I know a lot of CSA's at ORD and I have a lot of admiration for how they do their jobs. What I have heard from a lot of people I have talked to is that they genuinely want to provide good service, but feel hamstrung by a management structure that simply does not care.

I do not think the problem is primarily with the people on the ground, so to speak, rather with a corporate culture that when push comes to shove feels indifferent, or at least ambivilent towards its customes. They are passengers to be managed, rather than customers to be listened to, and their needs taken seriously.

I have a theory that goes some way towards explaining what turns otherwise normal people into children when they set foot in an airport. Flying, by necessity, requires the surrender of a significant amout of personal atuonomy. You are putting your life basically in the hands of strangers. This is necessary, up to a point, due to safety, and more recently, security reasons. Yet what has happened in recent years is that in a quest to control passengers, they will do things like put baggage templates on x-ray machines, forcing people with bags too large to spend yet another hour on line, when someone is stranded in a hub city between point A and point B and are told there are no seats available for two days, your bags are lost in your destination city and all you have are the jeans you are wearing for tomorrow's board meeting, all these inconveniences mount, not to mention the number of hoops passengers have to jump through just to get on a plane these days. You can't flee, so you fight. That is why there have been so many problems with air rage in the past. It is because people feel victimized by a system that is indifferent, and when they complain, rather than getting their concerns addressed, they get a restatement of policy.

The fact is, as one travel consultant told the New York Times back in June, 2000, the airlines seem to lack a basic understanding of how to treat passengers. They want to make passengers do business their way.

What airlines need to do is to move from a culture whereby passengers are to be treated as a problem to be managed, to a culture where customer satisfaction is the overarching goal, that employees are empowered to provide that satisfaction and are actually trusted to do their jobs, and yes, pay them a just wage for doing so. It means ending the acramonious and adversarial relationship between management and unions, with the goal of making passengers and employees feel is if their loyalty is no longer taken for granted

Charles, SJ

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