Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
FriendlySkies
Topic Author
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 11:59 am

http://www.forbes.com/associatedpres...feeds/ap/2005/06/03/ap2075631.html

Basic summary, Tilton is stating that United will indeed exit in Fall 2005, as mentioned earlier. He predicts a modest profit in 2006 on top of that, despite a $124 mil loss for April.

I think they can do it if they get their heads out of their asses and figure out how to make money. Come on Tilton, EARN YOUR SALARY!
 
JonnyGT
Posts: 230
Joined: Fri Oct 19, 2001 1:39 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 12:01 pm

Ho ho ho, that's rich.
 
cslusarc
Posts: 554
Joined: Wed May 04, 2005 2:29 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 12:17 pm

ya... With $35 oil....
--cslusarc from YWG
 
n844aa
Posts: 1266
Joined: Fri Jul 18, 2003 10:38 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 12:22 pm

Honestly, I have to wonder what goes through CEOs' heads. Surely they can't believe this tripe ... right? When they make these statements, are they willfully lying, or just putting the best possible spin on their situations?
New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
 
S12PPL
Posts: 3603
Joined: Wed Mar 17, 2004 5:26 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 1:17 pm

Man, whatever he's smoking, I have GOT to get myself some of it!!

UA exiting BK in '05, and MAKING MONEY in '06.....That'll be the f**king day...lol

[Edited 2005-06-04 06:17:36]
Next Flights: 12/31 AS804 PDX-MCO 2/3 AS19 MCO-SEA QX2545 SEA-PDX
 
jmc1975
Posts: 3065
Joined: Mon Sep 18, 2000 10:57 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 2:12 pm

What does Tilton know? This is just a desperate measure to get his employees to come to work.
.......
 
TrappedinMKG
Posts: 232
Joined: Fri Dec 14, 2007 7:11 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 2:13 pm

(OK, is there a reason the Quote button doesn't work in Firefox?)

Quoting JonnyGT, Reply 1: Ho ho ho, that's rich.


Yes, Glenn Tilton IS rich. VERY rich. His employees, on the other hand, not so much...
 
rsmith6621a
Posts: 1508
Joined: Fri Aug 05, 2005 2:21 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 2:15 pm

Ill Bet UAL would have exited BK if Mr and Mrs Tilton were paying for their own housing and not the BK company UAL......I was talking with someone who work in UAL accounts payable/rec. she said that UAL is writting a six fugure check to a property mangment group where the Tiltons live all because Mrs Tilton doesnt want to make Chitown a permanant home and has made demand that UAL pay for their housing in the mean time.......oh.....UAL is also paying for on-call limo service amounting to five figures a month.......

Shame on Glenn he is living it up while those who have made the company have to lower their lifstyle.
Did You Ever Think Freedom Could Be this Bad
 
zotan
Posts: 582
Joined: Thu Jan 13, 2005 7:42 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 2:23 pm

Ah, hes on the good stuff now
 
ordpark
Posts: 641
Joined: Mon Nov 24, 2003 3:20 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 2:40 pm

I'm not defending Tilton by any means, but really folks......

Tilton didn't force UA into bankruptcy...Tilton was hired away from Texaco to get UA OUT OF Bankruptcy.....If the Board of directors had hired MOSES, the unions would be vilifying HIM. This is a thankless job for him...UA had to make an attractive off to get him to come aboard and try to fix the mess that others had made of the company. He knew he was gonna have to P**s off a lot of people and have them do things differently....

I hope he's right...time will tell...
 
SHUPirate1
Posts: 3428
Joined: Sat Sep 20, 2003 2:53 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 3:20 pm

Worth noting, by the way, is that this same Glenn F. Tilton guy just bought a 2.2 million dollar beachhouse at 2377 Gulf of Mexico Drive, in Longboat Key, Florida, off the coast of Sarasota, Florida. If you are interested, have a look at:

http://www.sarasotaproperty.net/scpa....asp?year=2004&propid=0007-11-1108

And if you don't think this is the same person, the ownership address of 1500 North Lake Shore Drive, Chicago, Illinois 60610 might give you a clue that this isn't just coincidental. Well, not at least United's employers know where Mr. Tilton's pension is going.

As always, comments welcome...and I am NOT usually a United basher...
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
zvezda
Posts: 8886
Joined: Sat Aug 28, 2004 8:48 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 3:36 pm

There are at most a few hundreds of people in the world with the skills and energies to even have a chance to return UA to profitability. All of them have other opportunities with less stress and a higher chance of success. I'm amazed that Tilton was willing to take on UA for so little compensation. He would have made far more staying at Texaco. I can only believe he's in it primarily for the challenge. The money isn't enough to make it attractive to anyone who could pull it off.
 
User avatar
Jamake1
Posts: 1008
Joined: Mon May 17, 2004 2:30 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 3:52 pm

Quoting Zvezda (Reply 11):
There are at most a few hundreds of people in the world with the skills and energies to even have a chance to return UA to profitability. All of them have other opportunities with less stress and a higher chance of success. I'm amazed that Tilton was willing to take on UA for so little compensation. He would have made far more staying at Texaco. I can only believe he's in it primarily for the challenge. The money isn't enough to make it attractive to anyone who could pull it off.

I could not agree with you more. I think it will be a remarkable feat if Glenn Tilton is able to lead a company the size of UAL, out of bankruptcy and into a competitive, profitable, enterprise. In which case, he will have earned every penny of what he makes, limo and all.
Come fly the sun.
 
9844
Posts: 194
Joined: Fri Nov 16, 2001 12:36 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 4:56 pm

http://www.untied.com/feature/


Hahahaha this site is good...!
 
baw716
Posts: 1463
Joined: Thu Nov 20, 2003 7:02 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 5:15 pm

As I said in a different post in a more direct and less polite manner,

There is not one chance of UAL meeting the target that Tilton has set. ZERO.
They will not exit bankruptcy in the fall, because in order to do so, they will have to submit a reorganization plan that the creditors will believe is credible. In order to achieve the reorganization plan, UAL is going to have to put together a business plan which is based in some kind of reality. So far, they were not even close on the last attempts with the ATSB, and unless something has radically changed at UAL headquarters, I have no confidence in UAL management to come through on this attempt either.

Here is my rationale:

Basically, in a nutshell, UA management does not have a clear understanding of their customers. Absent a clear understanding of their customers, it is impossible for them to create a portfolio of products that the customer wants. United has operated under the premise that they will create the product and the customer will come to buy it because they are United. They are the leaders in the airline industry, therefore the business travelers will naturally fly UA. This was the thinking in the 1960s.

When I was in sales in the 1990s, the principal theme was focusing on the corporate business customer (the corporation, not the flyer) at all costs. We were to do business with the corporate travel manager, do our negotiations with them and put 80% of our efforts, split between maintaining existing relationships and developing new relationships that would solidify United's dominant position in the Bay Area. Our tools were the Mileage Plus free membership upgrade all the way to corporate agreements that topped out at or near 25-30% discount, plus upgrades and other perks galore. The leisure traveler, we were told not to deal with them...they were left to the reservations staff and the travel agents were to deal with an inside sales force that was made up of principally reservations staff with greater authority.

In reviewing the 2002 reorganization plan in the creation of the one I am writing now, the research I have done has revealed some very interesting conclusions about the current managements' ability to get the current job done. Here is the result of the research I have done and you can decide for yourselves where you can stand on this issue of success or failure:

In UAs reorganization plan they have a chart on page 27, in which they state the six distinct market segments that they serve:

Segment Name % of industry customers
1. Road Warriors 11
2. Pragmatic Business Travelers 9 Business Driven
3. Reluctant Business Travelers 14 34%
4. DIY Leisure Opportunists (VFR) 19
5. Just for fun Leisure Travelers 20 Leisure Driven
6. Price-driven Occasionalists 27 66%
Total 100

When looking at this model, it is easy to ask the question, why does United target the Road Warrior the most, then the Pragmatic and Reluctant Business Traveler, rather than the other 66% of the traveling public, who are out there and who would fly United if offered the right price?

There are even more in depth questions that need to be answered:
1. How do we know the travel patterns of each group, e.g. how many trips do they take per month?
2. If you look at the 66% of the Leisure Driven group, what would be the #1 driver to their buying decision – from this chart, it would seem the answer is price. They base their decision purely on price. This is because there is no value to airline travel anymore. The airline industry has taken the pleasure out of traveling by air. It is an experience that is now worse than traveling by bus.

Let’s take a look at United’s research on the subject (from page 28):
Here are some points to take away:
-Road Warriors travel the most, Price Driven Ocassionalist travel the least.
-Road Warriors are the least price sensivite, the Price Driven Occasionalist is the most price sensitive.
-Road Warriors are most impacted by Frequent Flyer Programs, primarily for status, the Price Driven Occasionalists aren’t even aware of Frequent Flyer programs.
-Road Warriors expect the best service, the Price Driven Occasionalist, do not care about service.

We can therefore conclude that the Road Warriors and the Price Driven Occasionalists are polar opposites. However, look at the similarities of the other groups:

-Pragmatic Business Traveler and Just for fun Leisure Traveler both travel frequently
-Pragmatic Business Traveler and Just for fun Leisure Traveler both are driven by their need to travel more so than price.
-Pragmatic Business Travel and Just for fun Leisure Travel are slightly different when it comes to service…the business traveler is not demanding while service is important to the leisure traveler. I would surmise that if good service were presented to the business traveler that over time, the business traveler would become accustomed to that and would miss it were it not present.

There are a lot of similarities between the Pragmatic Business Traveler and the Just for fun Leisure Traveler. They are both fairly price sensitive, yet are more travel driven and therefore would be willing to spend up if a superior product offering, e.g. nonstop service and or a more pleasing travel experience or both were presented to them:

-Reluctant Business Traveler and DIY Leisure Opportunist both travel fairly frequently for either business or pleasure, but not as much as the pragmatic business or JFF Leisure traveler.
-Reluctant Business Traveler and DIY Leisure Opportunist are very different in that the RBT does not care about miles and the Leisure opportunist is VERY interested in Frequent Flyer miles. They are very important to this leisure traveler.
-Reluctant Business Traveler and the DIY Leisure traveler both are price driven, the DIY Leisure traveler is always looking for the “best deal” and will spend time looking for it.
-Reluctant Business Traveler and the DIY Leisure Traveler are very different in that the RBT does not expect service (he has come to expect none), and the DIY Leisure traveler is interested in service, but the “deal” is the most important component. This person could be swayed to pay slightly more if they perceive they are really getting something for their dollar – value. This is a very intelligent traveler – very unlike the price driven traveler. Price is not the be all and end all. VALUE is the key with the DIY traveler.


The Road Warrior Misconception

In United’s reorganization plan on page 30, they have a slide which states the following:

-Road Warriors represent 11% of the population and 48% of airline revenue
-Pragmatic Business Travelers represent 9% of the population and 14% of airline revenue
-Reluctant Business Travelers represent 14% of the population and 16% of airline revenue
-Business total 68%

-DIY Leisure Opportunists represent 19% of the traffic and 10% of the revenue
-Just for fun Leisure represents 20% of the traffic and 9% of the revenue
-Price driven Occasionalists 27% of the traffic and 3% of the revenue.
-Leisure Total 22%

In their next slide on page 31, they have a slide in which they state what the relative factors are for Road Warriors in selecting a flight (2002):
-Schedule: 33%
-Price: 26%
-Frequent Flyer Program: 23%
-Service Quality: 11%
-Company Policy 7%

I find these statistics interesting, given the fact that their slide on page 28 indicated that they were least price sensitive of all the passenger groups and that they expect better service due to higher status. Given this slide that rates price higher than service, I am somewhat puzzled to know which statistic to believe.

I am inclined to believe the first slide on page 28 more than this information on page 30. It is more consistent with what is generally known of Road Warriors: a) Schedule rules then b) service, since they often need to rest and be ready to be at a meeting when the arrive after a long haul flight. c) Frequent flyer miles are important, since they often get them perks when they cannot get them from their company, e.g. free upgrades, recognition, special service, etc. Road warriors that have a personal relationship with the management of a major airline will live with that airline forever.

Leisure Traveler Misconceptions

Just as United has missed the mark with the business traveler, so too has it missed the mark with the leisure traveler. In its micro study of the purchasing drivers of the leisure traveler, it puts price as number 1 by far above all the other purchase drivers of all the leisure travel groups. In reviewing the original travel segments characteristics, we determined that 40% of the leisure travelers were price driven, however, when you combine the other drivers, we find that 60% of the leisure groups based their decisions on drivers other than price. Therefore, to base a decision wholly on the fact that the leisure group makes buying decisions purely on price perpetuates the concept of pricing as the driver for airline travel. This will keep airline pricing in the realm of the commodity. In order for United to survive, it must undertake a paradigm shift in its pricing orientation, away from commodity pricing. Only by improving the service product for the leisure traveler can United build value in its product for the leisure traveler. In addition, by selling that product at a price slightly about the competition can United build value in that product. The concept of selling up is not new; however there has to be a product to be able to support it.

United’s current management plan is flawed in many ways. Here are the principal drivers to failure:

United's conclusion regarding product positioning is that they have a network strategy based on a hub and spoke system, with a multiple airline product portfolio: 1) United - high quality, high fare for the business traveler 2) TED - low fare, no frills for the leisure traveler 3) United Express for the smaller city markets. This multi airline product positioning will fail for the following reasons:

a). They assume that the leisure traveler will focus purely on price. They have not considered the notion that the leisure traveler, if presented with a quality product may be willing to pay a little more for that product if it were marketed correctly, and the product offered gave true value for the money.
b) They also assume that commodity pricing is still a viable pricing model for the airline industry. I believe both Southwest and JetBlue (especially) has established that commodity based pricing system is no longer necessary if people want your product.
c) They also assume that the business traveler will continue to pay the high fares that will be associated with this high quality airline that will most likely have the high costs associated with it. Since United has not been able to control its costs, it is likely that they will depend on this airline to be the “cash cow”, bringing in the major profits for the company.
d) They also believe that they can create an airline in TED that will have the cost structure of the LCC like Southwest and JetBlue. This is not achieveable. In order to create TED, United will have to incur costs to start the operation in different cities, fund its operating costs, marketing, staffing, etc. This will be a hugh liability for United until TED can carry its own cashflow for it to stand on its own two feet. Even then, a good portion of the costs of operating that airline will still be borne by United, since they willl have to share facilities, reservation systems, airport costs, and most of all, accounting and revenue allocation costs. With all this said at the cost level United incurs for these costs, there is no possible way that TED can stand on its own and be able to have fares low enough to stand against Southwest and JetBlue and be competitive and generate profit. United Express stands alone in its own market niche, but its product is far inferior to the other products and therefore is inconsistent with the other products in the group.
e) Lastly, in today's current competitive environment, in which capacity far outweighs demand, even United has had to drop pricing to rock bottom dollar even on its most high yield routes. The current fare for travel tomorrow from SFO to JFK is $309.00 one way, which is far below break even for the PS service offered in Economy on that flight. It begs the question how much real revenue is being generated in F and C on that flight. It either is so high that they can afford to give it away in Economy or they are so desperate for revenue that they are giving it away in Economy to mitigate the loss. This one is difficult to answer. In any case, there is no possible way to make money when your most profitable route has walk up fares with unit revenues of 7 cents per mile and unit costs above 10 cents per mile.

While I recognize that this has been an exceptionally long post, this is only the tip of the iceberg in terms of the depth of the research I have done into the realities of the business mentality of UA management, as well as their overall business planning skills. It is my conclusion that, as the ATSB has concluded, their short term conclusions regarding revenue rebound are over stated to a degree that begins to stretch credibility.

Given the low fares in the high yield markets in Economy, I cannot see United achieving the high yields it has to achieve under its current organization and product portfolio to achieve the results it believes it can achieve. Furthermore, I believe it is fundamentally flawed in its understanding of the customer and the dymanics of the needs of the various customer segments. It has reached conclusions that it wants to hear instead of reaching conclusions that it needs to hear, so that it can make the necesssary adjustments to its revenue base to weather the ups and downs of the various economic cycles that plague the airline industry. As a result, I cannot believe that the statements of Glen Tilton regarding the exit of United from Ch 11 in the Fall of 2005 nor profitability in 2006 have any foundation in fact, they are merely statements meant to puff up the industry to believe that United's situation is far better than they would like us to believe. The problem is, the situation is far worse then they believe that it is.

many thanks for reading
baw716

note: source document: "Plan for Transformation (Presentation)-Creditors Committee Meeting, January 31, 2003" available from the US Bankruptcy Court of Northern Illinois. see http://pacer.psr.uscourts.gov for more details.
source document: "A Vision for the Future-United Airlines Reorganization 2005" - David L. Lamb, ITC,
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
User avatar
kc135topboom
Posts: 11192
Joined: Sun Jan 30, 2005 2:26 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 5:54 pm

UA will be lucky to even still be in business in '06, never mind making any profit.  tombstone 

Quoting Zvezda (Reply 11):
There are at most a few hundreds of people in the world with the skills and energies to even have a chance to return UA to profitability. All of them have other opportunities with less stress and a higher chance of success. I'm amazed that Tilton was willing to take on UA for so little compensation. He would have made far more staying at Texaco. I can only believe he's in it primarily for the challenge. The money isn't enough to make it attractive to anyone who could pull it off.

IF he should turn UA into a profitable company, he will be in very high demand and will be able to write his own paychecks. He will have earned it.  Smile

Quoting SHUPirate1 (Reply 10):
Worth noting, by the way, is that this same Glenn F. Tilton guy just bought a 2.2 million dollar beachhouse at 2377 Gulf of Mexico Drive, in Longboat Key, Florida, off the coast of Sarasota, Florida. If you are interested, have a look at:

http://www.sarasotaproperty.net/scpa....asp?year=2004&propid=0007-11-1108

And if you don't think this is the same person, the ownership address of 1500 North Lake Shore Drive, Chicago, Illinois 60610 might give you a clue that this isn't just coincidental. Well, not at least United's employers know where Mr. Tilton's pension is going.

So?  spin 

The link also said he bought it in April, 2004. Isn't that just before, or at least just about the time he moved to UA?  highfive 
 
SHUPirate1
Posts: 3428
Joined: Sat Sep 20, 2003 2:53 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sat Jun 04, 2005 6:01 pm

Quoting KC135TopBoom (Reply 15):
The link also said he bought it in April, 2004. Isn't that just before, or at least just about the time he moved to UA?

From Forbes.com:

http://www.forbes.com/finance/mktgui...rsheet.jhtml?passedPersonId=137723

"Glenn F Tilton

Chairman of the Board, President, Chief Executive Officer at
UAL Corporation
n/a
TRANSPORTATION / AIRLINE
Officer since September 2002
Director since September 2002"
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
baw716
Posts: 1463
Joined: Thu Nov 20, 2003 7:02 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Sun Jun 05, 2005 4:44 pm

Does anybody else have any further thoughts about this, given that UA did fairly well in April (I hate saying a loss is ...fairly well).

Thanks
baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
avek00
Posts: 3254
Joined: Mon Oct 25, 2004 5:56 am

RE: Tilton: UA Exit In Fall, Profit In '06

Sun Jun 05, 2005 10:58 pm

Quoting Baw716 (Reply 14):
Basically, in a nutshell, UA management does not have a clear understanding of their customers

I disagree 100%. The problem isn't that United doesn't understand its customer base, but rather that the airline lacks the means to actually cater to its best customers - the company needs tens if not hundreds of millions in capex to do things like install a competitive United Business cabin, expand IFE for Economy, and "refresh" International First, but has little hope of getting it anytime soon.
Live life to the fullest.
 
zvezda
Posts: 8886
Joined: Sat Aug 28, 2004 8:48 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 12:01 am

Quoting Avek00 (Reply 18):
The problem isn't that United doesn't understand its customer base, but rather that the airline lacks the means to actually cater to its best customers - the company needs tens if not hundreds of millions in capex to do things like install a competitive United Business cabin, expand IFE for Economy, and "refresh" International First, but has little hope of getting it anytime soon.

A great pity UA didn't attend to the important matters during the era when the unions controlled the board of directors. Instead of investing in their product, the union bosses oversaw the squandering of billions on Avolar, Defined Benefit pensions, the USAir merger, stifling work rules, and inflated wages.
 
ual777
Posts: 1642
Joined: Thu Aug 14, 2003 6:18 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 2:00 am

The USAir merger was not because of the Unions. Nor was Avolar. Those were some of Jim Goodwin's brilliance.
It is always darkest before the sun comes up.
 
zvezda
Posts: 8886
Joined: Sat Aug 28, 2004 8:48 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 2:51 am

Quoting UAL777 (Reply 20):
The USAir merger was not because of the Unions. Nor was Avolar. Those were some of Jim Goodwin's brilliance.

The USAir merger and Avolar were more Jake Brace's "brilliance", but both Brace and Goodwin were the men the unions wanted running the show. The unions insisted upon having Goodwin as CEO, over the objections of the non-union board members. The unions controlled the board of directors and could have removed Goodwin or Brace at any time.
 
incitatus
Posts: 3380
Joined: Wed Feb 09, 2005 1:49 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 8:09 am

A variation of $10 in the price of oil has an impact of $650 million on UA's results. It is pretty much impossible to forecast a small profit next year.

Denial at UA seems to go all the way to the top. What are they announcing next?
- Purchase of 50 A380s
- The tarmac at Chicago Terminal 1 will get with a double deck. Commuter planes will park at the lower level and mainline at the main deck
- United is purchasing American Airlines
- Shuttle service Chicago-Tokyo with hourly departures
- Longhaul pilots will make 400k/year
- FA's to get free facelifts
- Avolar takes off with 1000 G-five's

Yeah....
I do not consume Murdoch products including the Wall Street Journal
 
baw716
Posts: 1463
Joined: Thu Nov 20, 2003 7:02 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 1:34 pm

Avek00
I recognize that you disagree with my position on this point. However, if I understand what you are saying, the entire problem is that United lacks the money to cater to its best customers? You are talking about spending money on "product enhancements". How do you know that these are these "product enhancements" that you are refering to (installing a competitive United Business Cabin, expand IFE for Economy, and "refresh" international First) are going to do the job? If you are talking about these product enhancements specifically to take care of its best customers, then you are talking about a multi million dollar investment to "cater" to its best customers.

Forgive me if I say that this is a rather short sided answer. It only deals with the small percentage of the customer base which pays for the high fares. The problem with that is that only a small percentage of the passenger base pays those fares. I agree with your point about IFE in Economy, however, there has to be a ZERO sum investment in IFE. That has to drive the type of IFE that gets put in the domestic and international fleets.

I suggest you may wish to take a big step back and re read my post above, look at the bigger problem and then look at it again. You will see that it is not just looking at the higher class of flyer. I agree, United needs to do a better job of taking care of their Elite flyers, but they need to spend more time working on the products that will attract the 60% of the passengers who are going to be paying the bulk of the fares.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
rj777
Posts: 1807
Joined: Sat Dec 02, 2000 1:47 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 1:37 pm

If only there were a million more like Gordon Bethune...........
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 1:39 pm

Quoting KC135TopBoom (Reply 15):
IF he should turn UA into a profitable company, he will be in very high demand and will be able to write his own paychecks. He will have earned it.

He's ALREADY earned it. The man was one of the most brilliant CEOs Texaco had, and has a history of overachievement.

United sucks. He's having a hard time fixing it, but at least he's stuck by. If I were him, I'd have bailed for that house in Florida.

N
 
scotron11
Posts: 1432
Joined: Tue Feb 10, 2004 4:54 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 3:10 pm

Quoting Incitatus (Reply 22):

Denial at UA seems to go all the way to the top. What are they announcing next?

Hopefully a reorganization plan! Also they have to figure out how to grow top line revenue. No, I don't believe they will exit this year, maybe early next year. As to profits? A bit iffy that one!

Do pigs fly?
 
User avatar
mariner
Posts: 19473
Joined: Fri Nov 23, 2001 7:29 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 3:15 pm

Quoting Gigneil (Reply 25):
He's having a hard time fixing it, but at least he's stuck by. If I were him, I'd have bailed for that house in Florida.

I would have, too.

The point remains, if he can bring United out of bk, he can write his own tiicket for his next job.

Since he wasn't from an airline background, I would guess that his biggest problem has been all the advice he was given when he first came to United, by all the old airline hands.

cheers

mariner
aeternum nauta
 
zvezda
Posts: 8886
Joined: Sat Aug 28, 2004 8:48 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 3:59 pm

Quoting Mariner (Reply 27):

The point remains, if he can bring United out of bk, he can write his own tiicket for his next job.

If Tilton fails to bring UA out of bankruptcy, he can still write his own ticket for his next job. He has already proven himself. The mess at UA is clearly not of his making and it may have been beyond what any CEO could overcome. Once it was sinking, no skipper could have saved the Titantic. I'm amazed that Tilton's kept UA afloat as long as he has. When he took over, I thought it unlikely that UA would survive another 18 months. I was wrong.
 
baw716
Posts: 1463
Joined: Thu Nov 20, 2003 7:02 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 4:03 pm

Mariner is right on point. Tilton may be a great guy, but if he is taking advice from the boneheads at UAL who have been running the company into the toilet for the past 20 years, who are STILL giving him advice, by the way, then he gets what he deserves.

In my book, he doesn't deserve much respect. The first thing he should have done is analysed the situation and seen that the principal problem was the management themselves. He didn't bring in anyone from the outside to advise him on the airline; he took his advice from the UAL guys. Not smart in a company that is doing very poorly financially.

Anyway, I have said my piece in excruciating detail above. I have made my case for UAs bad analysis and or making the analysis meet the conclusion they want to make, which is that the business customer is the be all/end all to the solution of United's revenue problems. This is fundamentally flawed thinking.

Yes, it is true that business travelers will provide a better even flow of revenue due the fact that their travel patters are not as seasonally driven as the leisure traveler and due to the fact that the likelihood is that they will pay a slightly higher fare than the leisure traveler will still put focus on the business traveler as the driver of airline travel. This said, with capacity high and fares for walk up travel on the transcon flights as low as $300 one way, a business person can walk up, pay $300 and upgrade to Business Class with an upgrade coupon. How much is that going to destroy the yield of United PS product, as an example?

There has to be fundamental change to their thinking. Until that happens, United won't make money. period. I have made my case above. Either you agree or not. But my analysis is based on UAs own data. How much more proof do you need?

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
cairo
Posts: 889
Joined: Mon Jun 06, 2005 2:41 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 4:26 pm

BAW716, great posts!

If everyone here posted so intelligently based on experience and evidence, this site would bring quality posters out of the woodwork. I'd support a forum that was restricted to those of a certain age, job experience and intelligent posting ability. I agree with most of what you say about UA, most of your facts are accurate and your opinions are thoughtful. It brought me back here after years of absence.

However,

Quoting Baw716 (Reply 14):
in which capacity far outweighs demand

Demand is not outweighed by capacity. Most legacies have showed record load factors recently. I think you just slightly misspoke when you said this (and weren't just repeating what your dad told you or what you "learned" in econ class today as is typical here), but it isn't that supply is bigger than demand, it is the issue of supply meeting demand at what price? WN's load factors are nothing special and falling slightly, yet they alone make a profit. They use a simple concept: every route must be profitable on its own and every flight is priced for profitability. What the hell is UA doing? Can't they SIMPLIFY and simply not fly a route, sell a ticket, or upgrade someone to F unless it brings them a profit? Instead they're into some complicated thing about trying to capture all of the alleged 6 types of flyers, or at least the top 3 of the 6??? They've made basic transportation more complicated than it is.

I don't have all the answers for UA, but I do see things that have worked elsewhere.

UA with 60000 employees and 466 planes is 128 employees per plane. Southwest has half as many employees and about 424 planes, or about 75 employees per plane. In fact, WN makes a point of keeping this figure at about 75 because of the excessive bloat they've seen in other carriers. What the hell is UA doing with enough employees per plane to fill up the plane? Some will say UA needs these employees because they fly bigger planes further. Well, maybe a few more employees, yes, but 53 more? UA isn't really doing, on average, much different than what WN is doing, in terms of flying: their stage length average is only 1300 miles, compared to WN's 750. You need 53 extra employees per plane to fly 500 extra miles? You'd think WN would need extra employees due to higher utilization, but this isn't the case.

Like all legacies, UA can't get away from the idea that enhancing their hub is going to save them. Or that there is a mysterious 'business traveler' out there who pays a lot more for perks. This won't work anymore. As you suggested, many will pay a bit more for value, but not many will pay a lot more. The top 25 cities in the US can support point to point service to the other top 24, yet UA (and the rest of the legacies) still insist on running everyone through a hub. Sure, you need a hub for secondary markets, but unless you are going to a UA hub most of us have no need to fly UA over any other hub carrier. Same with other legacies - why do they give up virtually every top 25 market that is not their hub?

Thanks BAW716 for the well researched post where your opinions rest mostly on facts and experience.

CAIRO


statistics in my post quoted form
http://www.southwest.com/about_swa/press/prindex.html
http://www.united.com/page/framedpage/0,6837,1376,00.html
 
Gabrielz
Posts: 114
Joined: Wed May 26, 2004 3:36 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 6:09 pm

Quoting Baw716 (Reply 23):
Forgive me if I say that this is a rather short sided answer

Baw716: what exactly is a "short sided" answer, anyway?

 
incitatus
Posts: 3380
Joined: Wed Feb 09, 2005 1:49 am

RE: Tilton: UA Exit In Fall, Profit In '06

Mon Jun 06, 2005 10:55 pm

Quoting Cairo (Reply 30):
Some will say UA needs these employees because they fly bigger planes further.

Handling an airplane on the ground is labor intensive.
So: Short flights means need for more heads. Longer flights means fewer heads.
I do not consume Murdoch products including the Wall Street Journal
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Tue Jun 07, 2005 12:02 am

Quoting Mariner (Reply 27):

Since he wasn't from an airline background, I would guess that his biggest problem has been all the advice he was given when he first came to United, by all the old airline hands.

Mariner, I actually agree with you here.

Nice thoughts Baw716... I would suggest that if you feel so compelled to help try and fix United, then come back to work for us, or work for one of our consulting vendors...
no wire hangers!
 
slider
Posts: 7617
Joined: Wed Feb 25, 2004 11:42 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Tue Jun 07, 2005 12:33 am

Tilton is rockin' the ganj if he thinks UAL has a chance in hell of adhering to that timeline.

There is still no plan for recovery, much less profitability. Fact.

Unless or until that happens, UA is simply living on borrowed time, floating along on liquidity and the (too) gracious whims of one bankruptcy judge in Wedoff.
 
halls120
Posts: 8724
Joined: Sun Jun 05, 2005 3:24 am

RE: Tilton: UA Exit In Fall, Profit In '06

Tue Jun 07, 2005 1:42 am

[quote=Cairo,reply=30]Like all legacies, UA can't get away from the idea that enhancing their hub is going to save them. /quote]

While I completely agree with your opinion on hubs, is it realistic to expect all the legacies to be able to eliminate that structure overnight? After all, how many years have they spent developing them?

Hubs are evil.  Wink Whenever possible, I avoid DFW, ORD, and ATL. Over the years I have experienced a number of horror stories relating to missed connections at each of those airports. So, on business travel, when I'm going to the west coast, UA is my first choice over DL or AA. If I'm going point to point somewhere else, UA and AA are currently equal choices (although this is beginning to change, since AA is removing "more room throughout coach" on many of its a/c). DL is a last resort (much to chagrin of my brother, a DL pilot) because I hate sitting with my knees in my chest for any longer than an hour. WN is not a factor for business travel, because BWI is too far away (and has horrible parking, a crowded terminal, and insane TSA lines), and I don't like the cattle car approach to boarding and seating.

For leisure travel, while I am somewhat price conscious, I tend to go UA even if they aren't the cheapest (but reasonably competitive), because I want to keep building miles, and because they reward customers who demonstrate loyalty. I've flown Ted, and it is a nice operation. Likewise, if I can avoid ATL, DFW, or ORD, I do, even if it is cheaper to go that route.

No, I'm not an UA employee, related to one, or a stockholder. However, I've flown 100K/per year over the past four years - 80K business, 20K leisure on average. I fly UA whenever possible for the following reasons - they are they are the largest carrier at my "home" airport (IAD); they have more nonstops to where I need to fly; legroom in economy plus for the times when I can't upgrade, and their customer service. I know that the latter will likely prompt some disbelief, but I've flown UA, AA, DL, WN, US, AF, SQ, LH, BA, OS, KM, NW, and AS, and I've found UA's service - CSR's and FA's - to be equal to all, and better than most. Let me give you some examples.

Two years ago, I was scheduled to fly from IAD to SAN for a business meeting. I couldn't leave the day before, so I needed to get the earliest flight possible, and reserved the first departure for ORD, connecting to SAN. When I called the night before to reconfirm, the CSR asked me why I wasn't on the nonstop to SAN. I told her that it arrived an hour later than the connecting flight. She then advised me that the connecting flight was likely going to be late, based on wx problems experienced at ORD over the previous few days, and I'd be better off on the nonstop. I switched, and she was right - I arrived in SAN ahead of the "earlier" connecting flight.

On my most recent business trip to LHR, my SO got to come with me. Upon arrival at IAD, I found that I'd been upgraded, but not my SO, since she's not premier executive. When I checked in at the gate, I asked if we could switch seats so she could enjoy the better seat. The CSR said no problem, but shortly before boarding, called me up to the podium and put both of us in business class.

Maybe UA only takes care of its premier customers this way, but in all of the UA flights over the past 10 years, I can't recall a single bad flight. If UA doesn't make it, life will surely go on, but I suspect a large number of customers will miss them.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
galapagapop
Posts: 864
Joined: Sat Feb 26, 2005 2:15 pm

RE: Tilton: UA Exit In Fall, Profit In '06

Tue Jun 07, 2005 11:24 am

 rotfl 
After just telling us for the umpteenth time that they will delay organization plans they now say profit in 06'  rotfl   rotfl   rotfl 

They just keep messing around with us and the investors but we had a 6 month hiatus of bi-weekly BS reports so I guess it eventually had to come back. Either way its funny.

Who is online

Users browsing this forum: 452QX, 743Flyer, 777Mech, airpearl, Baidu [Spider], bananaboy, bennett123, Bing [Bot], cm642, codc10, dcs921, deltairlines, DenverTed, filipinoavgeek, Google [Bot], GSOtoIND, Hayek, ikolkyo, Jetport, Newark727, Niteflyr, Qmans, rj1385, SFOT, trinidadeG, UA735WL, whywhyzee and 232 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos