What does UAL have to do to Survive?

[JetPilot500]

Ok, fine. Since many people on this board seem to think that employee concessions are not necessary at UAL, what is the solution? Since I don't work at UAL, I don't have a first hand perspective of things, so I would love to hear some ideas from others.


What do you think needs to happen for UAL to survive?


Thanks,
JetPilot500

 

[AAflyer]

Jetpilot,

I do not think everyone is advocating not taking concessions. If a company is bleeding it will help temporarily, but the model needs to change, like I said in another post, the boys at UAL could fly for free and United would still bleed money, so how much do you give. If you are to give, wouldn't you like to see a business plan, a new foundation to build on, not just cut labor costs and hope the economy rebounds.

Now to answer your question, that is the 2 billion dollar question. I think if one of us could answer it, we would end up being very rich. Some ideas;

I think we should get away from banks of flight on a hub and spoke system

Focus on some point to point flying, with mainline jets, or develop the market with RJs.

I think the fare system needs to be changed to suit our current economic weather. The need for a first class or premium service on certain flights may not even be worthwhile.

Fleet simplification, for maintenance and crew training as well as scheduling. The majors can not fly one type aircraft, but they don't need to fly 8 either.

Just a few thoughts.

AAflyer

 

[JetPilot500]

Now to answer your question, that is the 2 billion dollar question. I think if one of us could answer it, we would end up being very rich.

AAflyer,

Good Post. I don't think there is any one answer to solving the airline crisis. But a dollar here, or a million there will add up. I think employee concessions will need to be a part of that, in addition to some of your suggestions.

I too believe that fleet simplification is the KEY to any successful air transportation operation (135 and 121). A fleet of CRJ, B737, B757/767 and B777 could really streamline an airline and cover all the bases with strech and shrink versions of each. (I suppose you could substitute Airbus in place of Boeing if you wanted)

Just curious, how do you think 'getting rid of banks of flights on a hub and spoke system' will help? I saw that AA is doing this, and I am curious about the benefits.

JetPilot500

 

[Frank Bama]

Management wants $780 million from the pilot group, and $100 million from the flight attendants. Although there are 3 times as many FA's. I know the wages overall are dramitically different, but it still made me think.

 

[Chas]

wondering

The difference is that the F/A's were sold out by the crappy AFA and are stuck with a 10 year contract with very little if any wage increases . Proportionately making less and getting less raises than the others .
The mechanics were high on crack threatening to strike just 2 months ago . Putting a "gun to the head" of UAL Mgt
The Dumb thing is that all these employee stock holders are losing $ in there stocks so giving up some salary may reward them through the back door by hopefully raising the stock value . I currently own $5,000 in UAL stock which may wind up worthless . All purchased through my rokerage account ( I am not a UAL employee)


As far as fleet Simplication UAL was pressured to buy Air bus in order to get landing slots in France ( This is what I was told ) . Chas

 

[altimaklr]

United pilots need to wake up and realize their (the companies) performance is not industry leading and they don't deserve industry leading compensation. Pilot pay can make a huge difference on the bottom line, at least short term, even if pilots don't like to admit it. In a pilot group with 10,000 pilots each flying 840 hours a year, each dollar of pay/yr represents $8.4 million dollars of cost.

United needs to get it's CASM down in other ways too. Smarter schedule planning including longer layovers and less peaking is a reality in this market. Reducing first class cabins are also a must, that's one reason CRJ's have so much better economics on low-end routes.

Getting RASM up may not be possible, but at least don't let it go lower. Fighting HP and WN is not a smart move, UAL will never match their CASM and the RASM on those routes is very thin. Alienating business passengers must be minimized. Reducing extras may be necessary, but rationalizing the fare structure could help keep business pax.

Fleet rationalization- this is longer term, but eventually getting rid of the 737's would save $. Going to 321's instead of 757's would be a good move too.

-Sean

 

[General Lee]

Sean,

I think you are correct, and there is another way to drum up some much needed cash: sell your Heathrow landing slots.
I know an airline that would love to buy them: Delta.

Getting rid of the 747-400's would be beneficial, there is just too much capacity and not enough pax demand. Yes, I know the 744 carries a lot of cargo, but the 777 can also carry a lot of cargo and is better suited for today's markets. There may be a couple routes that warrant a 744, but not enough for the whole fleet.

Bye Bye-----General Lee

 

[altimaklr]

Lee- you're right on the 744's, I love them, but it would be a nice decrease in capacity to replace them with new/existing 777's. The routes that support a 747 can either be supplemented with additional service, or just reduced capacity. Using brand new 777's on Hawaii flights seems a little wasteful, why not stick the older (and less appealing to pax) 767's and let the 777's do the intl work.. like AA does.

As far as the LHR slots, I think that would be a huge mistake. LHR slots are like gold. Sure, DL would like them, but could they use them? Bermuda 2 doesn't allow ATL-LHR, and DL doesn't have a strong presence in LAX or SFO, two popular UA LHR routes.

-Sean

 

[publisher]

right

Right, let's change the model.

OK, for starters let's shed ourselves of a few things. Like everything than is not one model, lets get rid of labor contracts, international routes that are not profitable, aircraft that are not profitable, gates we will not need. etc.

The inability to change fast because of burdensome contracts is what kills large elephants. Not only labor contracts by the way.

 

[General Lee]

Sean,

Delta wants those LHR slots badly. They have a hub at JFK, with the largest amount of INTL flights over the Atlantic, more than any other carrier. They have something like 19 767-300ERs or 777's to everywhere in Europe---including Moscow, Istanbul, Athens, Barcelona----you get my drift? LHR would be the crown jewel. The JFK--LGW business traffic isn't there. They want LHR.
And, Delta is building a new $400 million terminal at BOS (While Furloughing pilots...?)---and they used to go to LGW from there, but couldn't compete for the business pax because BA, UA, and AA fly from BOS---LHR.

There is some good news on that front, though. I read on Yahoo
aviation finance last week that the British Govt is considering allowing two additional carriers to have LHR slots in 2003, and two more in 2004 (a cargo carrier could be one of those carriers too), which would eliminate buying them at all. I guess BMI---
British Midland, is pressuring their own Govt because they have a lot of their own slots and new A330's, but can't fly them from LHR----only Manchester to ORD and IAD. I think Delta will be healthy enough and strong enough to be chosen by the US Govt to get slots, and then watch out.

Also, the publisher is right. When things are going down hill, you cant leave out any options. Pan Am and TWA had to sell the slots
to try to stop their demise. And, if UAL declares Chap 11, some creditors may want them to sell those slots to pay up debts.

I hope it all works out for everyone, but I sure would like to see Delta at LHR.


Bye Bye---General Lee