UA pilots, get those resumes updated!!

Little Bubba

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FROM CAL's BOARD....

Some comments from Gordon on Friday in IAH crew room:

-We will return to profitablility by March currently still at 3 mil/day loss.

-ALL airplane deliveries will continue as planned through March...then after March it was going to be a question of how we're doing for future deliveries.

-Doesn't like BA/AA even a little bit. I know...needless to say right?

-Doesn't see United coming out of their current problems, bankruptcy assured according to CAL's financial guru's. Was pretty emphatic that UAL would not be able to stay out of some kind of bankruptcy protection no matter what.

-US Air same thing.
:eek: :eek:
 

TurboS7

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I see UAL going down and taking USair with it, at least to Chapter 11, after that who knows.
 

ifly4food

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If Mr Bethune and his "gurus" are so good, than why is Continental still furloughing pilots and losing $3 mil per day? Is even United hemmoraging cash that badly?
Seems to me that pre 9-1-1 UAL was still a bigger and more profitable operation than CAL.
And Mr Bethune, of all people, should know that Ch 11 doesn't mean much. How many had Continental had before he took over?
 
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TurboS7

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Load factors are a disaster, this whole thing is really nasty. United is loosing millions per day. It is so bad that a strike by the mechanics might not be a bad thing. Remember that UAL is basically a east west airline, the majority of their carriage is business travel. Their are no rainbow's on the horizon.....Remember Panam and Eastern, one went all over the world, the other carried more passengers per year than any airline in the world. Once things are turned to caous the ability of these monsters to operate goes down, which results in awesome losses.
 

chperplt

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Everyone keeps saying that US Air is going to file BK or drop off the planet.

Wolf says that revenue needs to pick up quickly or else.. Wolf also said in his December update that the company will have between 900 million and 1 billion in cash sitting in the bank at years end.

I'm not a business major, but how can a company be in such dire straights if they have that kind of cash in the bank??

Can anyone explain this to me?
 

skydiverdriver

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Stephen Wolf has a long history of getting airlines ready to be sold. Perhaps that is what is up his sleeve.
 

publisher

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problems

Youy have to remember that you have fixed and variable costs.

When you reduce flying 20%, you may be able to reduce some of your variable costs like fuel and employees, but a good deal of your captial costs remain. You still have buildings, aircraft, and leases for which you still have a payment.

You may still be paying for that parked aircraft etc and now the remaining flying has to cover those costs. Over time, you could remove some of these costs by selling a building, a computer, an aircraft, but it does not happen quickly, especially in times like this.

While cash remaining seems like a huge number to us, the fact is that there is tremendous cash flows going on at one of the major carriers from today and future ticket sales etc.
 

scottm

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If Mr Bethune and his "gurus" are so good, than why is Continental still furloughing pilots and losing $3 mil per day? Is even United hemmoraging cash that badly?
Actually CAL is not furloughing anymore. The total numbers ended up being 800 give or take a few displaced from their original position. This is not the total number of furloughs. About 300+ have flowed back to CALEX. Management from Calex announced plans to recall in the third quarter, I expect sooner but they are playing the conservative side. CAL has said no recalls in 2002 but again, better to say later than earlier, then they look like heros. We are apparently still losing about 3 million a day but are expecting a profit by March. There will be a substantial loss in the next quarter as well. I am not sure what United is losing a day but I know it is more than 3 million, much bigger operation, larger route structure, more planes, and employees.
I for one think United will be around to stay wih the govt bailout and expectations of the market to swing in 2002. I hope they do because they are a great airline and employ great people. Lets keep United in buisness and the competition for jobs down.
scottm
 

snowback

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An airline going into Chapter 11 bankruptcy, especially one the size of United, is bad for all airlines. While all the other airlines are competing for business and making their usual payments, an airline in Chapter 11 is protected from it's creditors to a large degree. This includes fuel contracts, aircraft lessors, parts suppliers, and the abrogation of union contracts. It makes it difficult for non-protected airlines to compete and earn money.
 

ifly4food

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That's an interesting spin I hadn't thought of. So in other words, a Ch. 11 for UAL would actually be good for United and bad for the others as opposed to the other way around?
 

TurboS7

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The only problem with Chapter 11 is that the courts control your destiny, but it is a great tool when things start going bad. CO has used it many times, I had 5,000 shares of stock and they deemed it worthless did a quick atahupe and all I had was a tax write off. They transfered all the assets and started new again under a new trade name, all approved by the courts.
 

Jetpup

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Yep, it could be “good” for United, but like TurboS7 postd, the courts control your destiny.

Don't confuse the different types of bankruptcy (or "chapters" from the federal code – 7, 9, and 11 in particular) - there are different "levels" of bankruptcy and different results. Filing for bankruptcy doesn't necessarily mean going out of business - it can just mean reorganization and credit protection, debt relief, etc. Other airlines have gone into and then “emerged from” bankruptcy protection – and that may be the key word – protection. At it’s lowest levels, filing for bankruptcy affords a company protection while it gets it’s financial act together, subject to court approval – and as snowback posted, that may give them certain competitive advantages (as well as some disadvantages). For everyone who believes that the airlines are using 9-11 as an excuse, bankruptcy gives even greater latitudes.

For the record, Continental along with US Airways were the only majors (besides SWA, which is pretty much a given) with an operating profit at the time of 9-11 - all the other majors were already losing money and contracting. United may be “massive”, but that doesn’t have a thing to do with profitability – just look at jetBlue or AirTran to see where money’s being made consistently, then look to American, Delta, and United to see where it’s being lost. Based on CAL’s performance since he’s been there, it would be hard to argue that Bethune doesn’t know what he's talking about.

So while CAL may be losing millions per day, so are all the other majors (again, except SWA – just assume everything is “except SWA”) – we’re supposed to be losing more than a million every day at AMR. Part of that is intentional in that ticket prices are being kept very low through the end of the year in order to build up load factor; in some cases the fares are so low that we couldn’t profit even with a 100% load factor. It does appear to be working, in that in general people are flying again, though not quite to the levels of six months ago – but here we’ve had days with an 80% load factor. The industry needs to get through the holidays with as many people flying as possible – it’s the last big travel period until the summer, so it’s our last chance to get large numbers of people on the planes and to (hopefully) get them comfortable with flying again. After New Year’s, expect fares to start back up, and some of the operating losses will shrink of disappear. I would think CAL would be one of the leaders when it does happen – they’ve really reinvented themselves and are very much an “airline of choice” among the traveling public.

Publisher also brought up a key point with fixed and variable costs – running an airline is in general a variable income/fixed cost business – the cost of flying a B767 from NYC to SFO is essentially the same whether there’s one person aboard, or 250 – the income varies greatly, but the costs are pretty much constant. The industry has manipulated/restricted income somewhat with low ticket prices, hedging their bets on a relatively quick recovery, and trying to maintain market share.

At some levels the industry has been able to reduce costs, but it’s not as simple as it may seem. For example, one method is to use smaller planes to match smaller loads – replace a B767 with a B757 on the NYC to SFO flight. That reduces some costs, but the company is still making payments on that parked B767, so while we’ve saved on fuel and cabin crew expenses we’re still making payments on the aircraft that is not generating any income – not a good business idea. We could try to terminate the leases on these surplus aircraft, but there’s usually a stiff financial penalty with that, and besides, we’ll want those aircraft back when business picks up, so that’s not generally a good idea – especially if the industry downturn is short.

Of course there are some ways to do this that are obvious – deferring deliveries of new aircraft, and accelerating retirements of older planes; some of this was happening before 9-11, but the process has picked up. That at least avoids actually parking a productive (and expensive) aircraft and that’s what we’ve seen, especially with the B727 which has all but disappeared from the majors over the last two months, except for NWA, of course, which has in recent years tended to buck the trend of the other airlines and hang on to older aircraft they feel are productive.

On the crew level, furloughing also doesn’t save as much as it appears – since the bottom of the list gets furloughed, and they’re earning the least – compare a $50K FO to a $250K CA and it becomes apparent that a 20% reduction in pilots won’t save 20% in labor costs. Couple that with the costs to retrain all the pilots bumped during a displacement, and then to retrain them during a recall, and it may actually cost a company more if the furlough is short than to just retain the pilots. I think that’s what we’re seeing; as the airlines start to become (very) cautiously optimistic about a recovery, their trying to avoid any more furloughs and the expense and bad feelings that go with them – mostly the expense, I imagine.

So even though most airlines have contracted flying by about 20%, their expenses have not shrunk by as much; on the other side of the balance sheet, load factors are still down from their pre-9-11 levels on sharply discounted tickets.

Getting back to United, from what I’ve read their loads have not come back as much as the other majors – a mechanic’s strike is the last thing they need right now – just the threat is enough to drive down loads even more, since no one will want to book a flight if they think it will probably be cancelled.

As to US Airways, unlike UAL at least they were making an operating profit prior to 9-11 but still losing a ton of money due to their debt payments, and in the wake of 9-11 that’s gotten even worse. US Airways has a massive debt, and very few unencumbered aircraft or engines – that $1B won’t last very long if the creditors come knocking on the door. US Airways is making less than expenses, before even getting to their loan payments. Since most of their aircraft are already encumbered they have very little collateral to arrange loans – the low value of their stock ($6) makes it difficult to generate outside financing.

Some numbers from the company’s own press releases paint a bleak picture – for the third quarter (which ends at the end of September, USA had an operating loss of $369M and a net loss of $433M; including “special charges” and the airline stabilization grant, the total loss for the 3Q was $766M; compared to those numbers, $1B is not a lot of money; and that $1B (which is actually forecast to be $8-900M) started out as $1.25B at the beginning of the 3Q in June. Compare this to the 2Q, where USA made a $20M operating profit but still had a net loss of $24M,and you can see where the numbers have become huge for a company that was already struggling. Of course, all the rest of the industry is got hammered as well, but they just didn’t come into this crisis with the debt that USA carries.

While the numbers for this quarter won’t be out until January, the numbers that are available don’t point to a recovery; for October, USA reported 33.6% fewer passengers (RPMs) on 24.5% fewer seats (ASMs) compared to the same month in 2000; in November the numbers were somewhat better, with a loss of 24.6% on RSMs compared to a reduction of only 16.2% in ASMs. Overall, load factor is coming back but is still down 7%, which, combined with the discounted ticket prices means income is still way off, and all those fixed expenses, including loan payments, are still mostly there.

Of course there’s a lot more to these numbers than just what I posted; full reports are available on the company site and are good reading, as they tell a lot more about the significance of different things, where the company is, and where they hope to be going.

Unfortunately there’s a good chance that USA will end up in some form of bankruptcy, and possibly UAL as well. The question is what form these companies will take when they come out. The “serious” media, such as the Wall Street Journal, the NY Times, and Aviation Week, all seem to consistently expect at least two majors to file (but not necessarily to fail). More and more it looks like these are the two most likely, along with America West and maybe Sun Country. As time goes on it seems that the rest of the industry, though still in trouble, is moving towards recovery.
 

Boz

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All speculation,

UAL is losing money at a rate that could destroy them, but for now the fact is they have downsized to become a stable carrier.

Yes, I speculate that they will furlough in MAR 02, but we simply have many internal problems that need to be settled and fixed so the company can move forward. As for CH.11 at this time, I feel it isn't even close, but if they don't control there problems they are going to resort to it and will be in trouble.

Avolar will be an interesting test to see how they will work together for the customers.

So basically I have no clue, I have no inside info, and can only dream of having a crystal ball to see what lies in store for all pilots and there carriers. But as many have pointed out there are many good guess out there.

Boz
 

HighSpeed

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ifly4food said:
Continental still furloughing pilots and losing $3 mil per day? Is even United hemmoraging cash that badly?
Seems to me that pre 9-1-1 UAL was still a bigger and more profitable operation than CAL.
Sorry man, but you are wrong. Continental was more profitable than UAL pre 9-11. And UAL is burnig cash at a much higher rate than CAL (albeit they have alot more to burn). Think about this - Comair made more of a profit than all of DAL Y2K.

CAL and Southwest were the only profitable airlines this year pre 9-11.
 

RueterF16

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Profitable Airlines

While Continental and SWA were the only profitable MAJOR airlines this year, Continental is still having problems. Hopefully they won't have to go through another bankruptcy to stay in business. But what do they have to lose, they've done it before and came out okay, why not go that route. As far as United scaling back to profitablility, that remains to be seen. I think, as do others, that if the IAM goes on strike, United will be in the hurt locker.


Best of luck to all and happy holidays
 

race#53

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Re: Profitable Airlines

RueterF16 said:
While Continental and SWA were the only profitable MAJOR airlines this year, Continental is still having problems. Hopefully they won't have to go through another bankruptcy to stay in business. But what do they have to lose, they've done it before and came out okay, why not go that route. As far as United scaling back to profitablility, that remains to be seen. I think, as do others, that if the IAM goes on strike, United will be in the hurt locker.


Best of luck to all and happy holidays
JetBlu speculation of other's problems is apparently OK?
 

njcapt

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Dang, how many pages did you have to go back to dredge that old post up?

Kind of interesting to see what everybody was saying about the industry two years ago, though, isn't it?
 

Super 80

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Well Vlad, I must say you are looking much better.

Sorry to see you're still unsaved.

Rail on brother against the wind.
 
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350DRIVER

I see UAL going down and taking USair with it, at least to Chapter 11, after that who knows.
I certainly would not count Airways out just yet. They have just signed what I believe to be a rather long term deal to remain in PIT. As for SWA overtaking them in PHL.? I am one of the many that would rather pay the extra money to fly on Airways versus getting stuck on a "flying Greyhound". Too many loyal Airways pax out there that are not going to switch. Time shall tell but I do see them being around for a long time to come.


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