UAL and IAM reach TA

MAK

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Good news for a change.

CHICAGO -- United Airlines announced a tentative contract agreement with the union representing its 12,800 mechanics and aircraft cleaners on Monday, less than 36 hours before a strike deadline.

The International Association of Machinists and Aerospace Workers confirmed the tentative settlement. Details were not immediately disclosed.

The announcement came on the fourth day of urgent talks following the mechanics' rejection of United's contract offer last Tuesday. The mechanics were preparing to walk off the job at 12:01 p.m. EST Tuesday if no settlement were reached.

"Our negotiating team and United's labor committee of the board of directors have accepted the terms of the IAM's proposal," Jack Creighton, chairman and chief executive of United parent UAL Corp., said in a prepared statement. "With the agreement, our customers can be confident that United will continue to operate without disruption."

Despite Creighton's repeated assurances that he was confident an agreement would be reached, United had acknowledged a decline in bookings for the coming days, reflecting public fears of a shutdown.

Negotiators for the two sides held talks through the weekend in a hotel in suburban Rosemont, Ill., near both O'Hare International Airport and UAL headquarters.

Mechanics over the weekend began removing their tool boxes and personal belongings from United maintenance centers in preparation for a strike.

The airline said the International Association of Machinists will forward details to membership for a vote within the next two weeks.

United said the tentative deal means its jets will continue to operate without disruption.
Copyright © 2002, The Associated Press
 

Gordo

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Could be the begining of UAL's comeback. Hopefully the seat belt sign can come off soon as we begin to get out of this moderate chop we've been in and return to smooth skies.
 

Humty72

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That is some good news.. .Hopefully the ride becomes a little smoother for everybody. :D
 

Boz

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Hopefully one down and one more to go with the ground troops. Lets just hope there is no surprises here.
 

publisher

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other post

See the other United posts..... there is little good news here guys.

United cannot have a strike and remain a viable entity.

United had to sign something so they can move on to the concession stage.

If no concessions, Chapter 11 almost a certainty.

Chapter 11, some breathing room but nothing good happening.

Like Eastern, Pan American, and TWA, this could be the demise of a once proud entity.
 

RueterF16

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I agree

Publisher, I have to agree with you on this one. United is far from out of trouble. They still aren't generating enough revenue to break even and on top of that they are going to need concessions across the board to come back to their previous state. I don't think we'll see the United we saw five or six years ago, not for a while...
 

Ualexpress

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I feel that I must comment on the previous two posts. Even though I do not work for UAL I do work for United express and I feel that I read enough about the industry and I worked in the industry during the last downturn 10 years ago. I really feel that the press is undeservedly making UAL look worse than it actually is. First of all UAL is a ESOP copmany and Wall Street HATES the fact that employees own 55% of the stock. Almost every analyst that reports on United makes it sound as if they are a sinking ship when they are really no worse shape than some of their competitors. Now some facts:

1. One indicator that is used by many on these boards to state the fact that UAL is in trouble is their Market Capitilazation. UAL's Market Cap is around $755 miilon while many of it's competetor's market cap is more than double than that. The $755 million figure DOES NOT include the ESOP shares that equal 55% of the outstanding shares. If those shares are included then presto UAL's market share is close to that of it's rivals.

2.Labor Costs. This is the same old diatribe that Wall Street likes to point out. Fact, Delta pilots make more than United pilots. The United mechanics are by far the lowest paid mechanics in the industry and not by a little bit but by a long ways (until they vote their new contract in). The fact that their pay will go up does not deny the fact that Ual still saved money during the last 5 months from their mechanics, even with the retro pay. Flight Attendents are not the highest paid FAs in the industry, Delta is. Finally 30,000 ramp workers and gate agents are still at 1994 wages and have yet to reach an agreement with the company. So as you can see Ual's labor costs are not in serious need of adjustment. If they are why aren't Delta and AMR asking for concessions. If you look at percentage of total costs UAL's labor costs are less than AMR.

3. Jack Brace announced that United has greatly started to see daily cash burn start to come down (at least before bookings decreased because of the strike threat, but that will come back shortly). Cash burn was below 5 million a day. Yet you don't hear the press report that one. As revenue increases, as it should as the economy slowly recovers and the summer travel season is coming, that number will decrease more.

4. Cash on hand. 2.6 billion as of Dec. 31st. The most of any airline. Deep Pockets. Add this to the 750 million gained by refinacing aircraft leases and things don't look any worse than Ual's competitors.

5. Finally, RueterF16 I beleve you don't have the facts (as most people don't when they don't research something) when you state UAL "won't be the airline it was five or six years ago". Fact, even after cutting nearly 100 aircraft from their fleet on October 31, United is STILL larger than it was five OR six years ago. And United will gain 24 airbus aircraft this year helping to regain some of the 100 aircraft parked in the desert. in 1996 United had about 7800 pilots. They now have about +/- 9500 pilots after 844 on the street. Even if UAL furloughs a total of 1100 as announced (900 less than announced in October) they would still have about 1400 more pilots than five or six years ago.

6. United is finally realizing they can not shrink into profitability and have begun to add more flights starting in April. United has cut about 23% of costs but because of those cuts they lost nearly 37% of revenue. This has been proven over and over again in the high fixed cost world of the airline industry. Especially 10 years ago during the last round of bankruptcies. Look at CAL 10 years ago, they had one of the lowest payscales in the industry, but they still couldn't avoid a SECOND bankruptcy. When Bethune came in 1994 he restored the airlines performance and revenue quicky increased (and therefore so did profits). Now granted he has had the advantage of lower wages over the last few years, but many of the unions are coming up for renegotiations of their contracts and he will lose some of those advantages when they are settled. That is the reason he has bashing United's high labor costs, he would love to see wages come down at United and others so the bar is set lower.

7. I am not saying the unions won't take concessions, I think Creighton will really have to sell his point. But if he is able to get the unions to take a temporary pay cut, then I thin United would be better positioned than any other airline in the industry. What I am also saying if they don't take concessions they won't be any worse off than the other airlines in the industry. IMHO
 

publisher

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UAL

Frankly I hope you are right in your assessment, UALexpress.

If you are, they certainly went through some terrible situations and did well.

The bottom line for me is that they blew a pile trying to merge with Airways, went off doing the Avolar thing, signed a terrible labor contract, and, are in the ludicrous position of giving in to a mechanic contract so they can get the concessions they need later.

From a business traveler standpoint, I am not sure they ever recovered the market share they lost during the pilot mess.

To me they already are not the airline they were. Time will tell if they live up to your expectations.
 

Ualexpress

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publisher,

I agree with your assesment that Ual has lost market share due to their problems the past couple of years, but this is a recoverable situation if they make the right moves and settle all labor disputes. This should finally afford them years of stability, something they need badly. Back in 1998 NWA had the same problems. All of their union contracts came due at once and this created their own summer of hell which culminated in a two week strike by their pilots. Now they are doing very well considering. Granted times were better.

The bottom line is management made some very poor choices. The biggest by far was going after US Airways, especially considering it was still negotiating open contracts. They spent all their time and effort on the merger and neglected the day to day operations of the airline. Employees were PISSED and management knew it. When you own 55% of the company yet have no input on how it should be run the outcome is what happened in 2000. If the company had listened to their employees and not gone after US Airways, not done Avolar, and negotiated in good faith with their employees these contracts would have been settled long ago and this discussion would not even be happening. Creighton (the new CEO) has even admitted this. He was on the board at the time and is sorry he voted yes for the merger. If the merger had gone through UAL would most definetly be Chapter 11 right now.

Operationally UAL is doing very well with their completion factor and on-time arrivals (cutting 20% helps). Hopefully as contracts are settled and the industry stabilizes things will greatly improve.
 

publisher

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See new post

In five months,
United's traffic has shrunk by, on average, a quarter,
fares are down and two of its fleets lie mothballed in the
middle of the Mojave Desert. Meanwhile, it has been begging
senior pilots, who can earn close to $300,000 a year, to
sit home and collect a full 80 percent of their pay for
doing nothing; otherwise, they can remain on the premises,
though inactive, at full pay. This is why by the end of
2002 United stands to lose every penny it made in the
previous five years -- and why bankruptcy for one of the
nation's largest and most venerable airlines looms as a
real possibility.


There is an excellent post today reprinting an article from the NY Times or somewhere that hits it on the nail
 

P3-Adub

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Publisher

You might check your numbers. Believe everthing you read in the newspaper ? We all know how acurate they can be. Great discussion otherwise.
 

RueterF16

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UAL

UAL Express, I think you misunderstood my coment about United. I wasn't referring to their size or manpower, I was referring to there status. They will probably NEVER be te airline they were 5-6 years ago. The travelling public won't alow that to happen. I wish they could become wha thy once were but, they've put theirselves into a very very precarious position, and they will be very lucky to come out of it unscathed. You can have all the cash in the world but, if you're burning 3-5 million a day, that equates to 1-1.8 Billion a year. If they don't get their revenues up, they are short for the industry. I would hate to se them go the way of te dinosaur but, I think everyone that works there is going to have to make some great concessions or they won't have jobs.
 

RightBettor

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yA i nnnotticd

Remember,

Friends don't friends drink and post!
 

Ualexpress

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Rueter,

I think to assume that UAL will NEVER hold the same status as it did 5-6 years ago is going way too far out on a limb. You need to look no further than past airline history. CAL was the dredge of the industry for most of 1980s and early 1990s and they recovered to be one the best customer service orientated airlines in the industry. NWA went through a period in 1998 and 99 that included horrible service, a pilots strike and the snowstorm fiasco in which hundreds of people were stranded in their planes for up to 8 hours. It took a while but they also recovered nicely. United has one of the best hub and route structures in this country and is part of the best airline alliance in the world (Star Alliance). United needs a mangement team that can lead and that can restore customer and employee confidence.

To say that the only way UAL is going to survive is for the employees to take huge pay cuts does not solve United's biggest problem, restoring passenger confidence. The new CEO is well on his way to doing this (UALs is enjoying its best operational performance in years). Sure if you read The Wall Street Journal everyday you will begin to believe what you read even though much of the info is twisted and contrived and made to look as if the employees are the main problem at UAL. I am sure it is frustrating as an employee to watch your management single-handedly try to dismantle your airline and squander billions of dollars of money from the last round of concessions in 1994-2000 and then to read in the weeklies how it is your fault.

You also assume that revenue will not increase. Summer is coming (the busiest travel season) and travelers are returning. Paycuts will not bring passengers back and if passenger don't return then no amount of paycuts will save the airline. So I think UALs biggest obstacle is improving it's customer service and performance. If the employees give back I am sure there will be many stipulations and guaranteed snapbacks at a certain profit level or date.

I also read an article today stating that CAL was forecasting a loss for the year and is losing 2 million a day (CAL is half the size of United roughly) and is thinking of retiring permanently airplanes they had parked temporarily because of their situation. So are their employees, who are among the lowest paid among the majors, to take concessions too? Why is it that an airline that pays it's employees 30-40% less than the rest of the industry not making money? First the revenue is not there yet. Secondly, since CAL has been through bankruptcy their credit is worse than that of it rivals and pays much more for their aircraft and equiptment leases.

Time will tell, but I think it is too easy for people to make assesments on situations they read and hear through rumors. Especially in situations in which that person is not involved and has no vested interest.
 

ivauir

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but I think it is too easy for people to make assesments on situations they read and hear through rumors. Especially in situations in which that person is not involved and has no vested interest.
So people make better assesments when they have a vested interest?

Not that I totally disagree with your point ... it wasn't that long ago folks were lauding the UAL pilots for "raising the bar", and had the merger worked/we avoided 911, UAL probably would be top dog.

Unfortunatly, in the real world UAL may be in trouble. The status quo is no longer gonna cut it for UAL, wage concessions across the board is the kind of radical thing that might just be what it takes (didn't Lee Iacoca work for a dollar one year?) Of course that is not the only thing that might work and it wouldn't even work by itself. The bottom line (IMHO) is that, now, more than ever, adaptability is the key to success in this marketplace. UAL can be an industry leader again, but to those of us without a vested interest it doesn't look like they are on track yet.

One way or another, I think we are going to see quite a show!
 
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