UAL Where are they at?

[T-Bags]

"UAL has the cost structuring to compete with the LCC's.....I'm sorry but I can't grasp that."

what part don't you understand? Our lease costs are likely cheaper than SWA's. We don't farm out as much heavy Mx to the lowest bidder, but we have cut the Mech pay roll in half. Our pilots now make about the same (and will make less while SWA gets annual pay increases), and fly larger jets with more seats for the same pay. I'm sure we pay about the same for gas in the same city. About the only thing left is F/A's, and it's looking like by the end of the current "disagreement" with SWA, you will match or surpass UAL's.

You set the bar, and now you are too big to ignore. the majors WILL match your costs, or die. simple as that. I just wish the bar had been set higher.

 

[crashpad]

Airline attributes loss of DIA passengers to flight cuts, use of regional jets

By Heather Draper, Rocky Mountain News
October 4, 2003

United Airlines' mainline jets flew about 173,000 fewer passengers through Denver International Airport in August than they did in August 2002, according to DIA statistics released Friday.

United flew 1.79 million DIA passengers in August, down nearly 9 percent from 1.97 million in August last year, DIA statistics show.

Competitor Frontier Airlines, on the other hand, flew about 145,000 more passengers through DIA in August than it did the year before, a nearly 40 percent increase.

Overall, passenger traffic at DIA was up 1.8 percent in August to 3.59 million from 3.52 million last year.

United spokesman Jeff Green said the downturn in United's passenger numbers reflects the Chicago-based carrier's reduced flight schedule and increased use of regional jets. He noted that United's load factor, or percentage of seats filled, was 81 percent in August compared with 76 percent last year.

"Our capacity is down almost 9 percent - to have the year-over-year traffic numbers down 9 percent and our capacity down 9 percent shows really good management of the schedule," Green said.

Some industry analysts say the numbers also reflect Denver-based Frontier's continuing success at chipping away at United's market share at DIA.

"Frontier has done a really good job in Denver, taking a lot of the local market away (from United)," said Darryl Jenkins, director of the aviation institute at George Washington University.

DIA reported that Frontier controlled 14.49 percent of the Denver market in August, up from 10.51 percent in August last year. United had a 51.08 percent market share in August, versus 56.37 percent in August 2002.

"Competitors have surrounded United and pulled traffic off its connecting hubs," said Kevin Mitchell, president of the Business Travel Coalition. "Where customers have choices, apparently they are exercising them."

Green said United's reduced schedule and increase in smaller regional jets are both part of parent UAL Corp.'s efforts to cut costs. UAL has been operating under bankruptcy protection since December 2002.

"Everybody is downsizing their jets," George Washington's Jenkins said. "Think of it this way - big plane, big loss; small plane, small loss."

 

[Falcon Jet 1]

T-bags,
Even if all of the labor costs were identical, Swa would still operate at a lower csm,because of the utilization is about 30 % higher per aircraft, number of employees less per aircraft, own aprrox. 80 % of the aircraft, fuel hedging(which is also associated with a strong cash position, which enables them to do this), executive salaries that are miniscule compared to UAL top management. Anybody else want ot add on feel free.

 

[MDP727]

In a recent conversation I was told United now the lowest casm amongst the carriers, I wondered how this could be. So I went to the united website and looking under the financial links until I found the last SCC filing from United. This is a document that has to tell the facts, especially after the corporate scandals in the last few years. United airlines CASM was reported at 9.45%. Still after all the concessions, give backs, and everything else they've mustered up over there to save the ship. In order to compete with any LCC this will have to reduce significantly. Example, at ATA our CASM is 6.88%. I know SWA is close or matches that as well as the others. To drop your CASM 3 cents is huge! Lets use a 1000 mile trip for example. ATA's cost to operate a 737-8 on this trip would be 11.90 per mile or 11,900.00. At this cost on one leg you could sell tickets for 68.00(if you fill the plane) and make money. I'm not sure how many a United 737 holds but just for arguments sake lets call it 160 pax (I think it's less). That equats to 15.40 per mile to move thier 737. Hence a 1000 mile trip 15,000.00$. Now this same trip would cost 94.00 per ticket to break even if you filled the airplane.

 

[Ty Webb]

Don't try logic with Mr. Tea Bags . . . . . he's like the 16 year-old who hasn't even discovered yet how little he knows . . . as a result, he thinks he knows everything.

How else would you explain his choice of a board name . . . a euphemism for a particulary disgusting homosexual activity. . . . .

But, what do I know, anyway? I am just a yoke and throttle operator "without the credentials to leave AirTran" according to this genius.

 

[T-Bags]

Ty,
Sorry i didn't realize my screen name had Homo implications.. After all, don't women have tongues to? But if you are a self proclaimed expert on homosexual activities, then I'll defer to your expertice.

As to UAL's CASM,
The point "never will be's" like Ty miss in the whole "accounting" picture is that UAL current reports ALL obligations on the balance sheet and in filings UNTIL that obligation goes away. whether or not the bill gets paid is IRRELEVANT. So if we haven't made a lease payment on a guppy for 6 months, IT'S STILL PART OF OPERATING COSTS. Only AFTER the cost is negotiated down is that cost taken away.
I think the context of the "lowest" cost operator WRT UAL is that they will have the lowest cost on a given route. Who cares what it costs to go to AMA when you are trying to get to DEN. I would also assume those costs are adjusted for seating configuration. If UAL operates a 757 cheaper than DAL, but DAL has more seats, then the CASM at DAL may be lower, even though UAL operates that jet more cheaply. But who cares if the differant seating configuration may result in more revenue at UAL (more F/C seats). Each route is differant so it's a fluid situation, but suffice it to say that UAL's direct operating cost to fly a given jet on an equivelant route is/will be the lowest among all the network carriers.
As to SWA's lower CASM, I actually think SWA's (not considered network carrier although over 25% over pax are connecting traffic) will be lower, but again, lower CASM just for the sake of lower CASM is pure folly. For example, SWA's reported load factor for the SLC-PDX route is below 50%. wouldn't it make sense to have a slightly higher CASM on a smaller, higher load, jet? UAL could fly it's jets all night long empty and really get the CASM's down, but that wouldn't make much sense.

 

[T-Bags]

Oh and "Ty",
would you please indicate ONE operating cost that other airlines report that UAL doesn't? Please just one will do. Lease payments? wrong, Depreciation? wrong, Pension obligations? wrong, Fuel? wrong, gate rental? wrong. I'm sure there are quite a few reputable community colleges in Atlanta that can get you up to speed.

 

[skykid]

MDP727, good point - remember that the huge labor concessions didn't even take affect until Summer and most of the savings on mx are coming on gradually. I also think people misunderstand how expensive this Ch11 and 1110 process is - you just have to look at the monthly filings to see that.

SWA GUY - if you are getting your info from the guy next to you in the cockpit or one of the city newspapers (esp in Denver!) that report on a 4th grade level, I can see where it would be hard to grasp. The concessions UAL got are simply unbelievable, and were achieved in part thanks to the very real possibility of Ch7 in Mar/Apr with the war and SARS. Take care.

 

[Ty Webb]

How about your retirement money, fool?


Want some more?

How about $14 Billion dollars worth of debts your company owes to others?

As for my education, background, skills and abilities- I'll put them up against yours, any day.

 

[T-Bags]

Ty, there you go, showing your ignorance once again. actuarial pension obligations are listed right there under wages, EVEN WHEN THEY AREN'T BEING PAID. those with intelligence above that of a snail, can then look to the cash flow statement to determine if money was actually added to the fund. As a matter of fact, UAL changed its' pension assumption to reflect a more conservative 8.5% rate of return, so pension costs, as a percentage of "wage" costs is actually HIGHER than in past years. Try again... (BTW, your ignorance is embarrassing)

"How about $14 Billion dollars worth of debts your company owes to others?"

Uh, once again you are "ill informed" every dollar of debt we own is right there on the balance sheet. However, brainiac "debt" doesn't show up in "operating profit". Not at UAL, not at DAL, not at Valuscab. Please, go check out a book or something... Care to embarrass yourself again?

"As for my education, background, skills and abilities- I'll put them up against yours, any day."

Now you've got me laughing so hard I'm about to break a rib. bet you turned down all the real airlines, plus a few jobs on Wall Street. Of course your understanding of accounting would have put you in good company at Enron...