United Airlines -UA Thread

[Isan]

United Airlines launches Historic US - Vietnam Service via Hong Kong

United Airlines today launched the first scheduled flight of a U.S. airline to Vietnam in almost 30 years.

“Today's launch of direct service to Vietnam marks an historic step in the relationship between the United States and Vietnam,” said Glenn Tilton, United’s chairman, president and chief executive officer. “The flight illustrates United's unsurpassed leadership in the Asia-Pacific market and comes at a time when Vietnam is experiencing robust economic growth and increased travel demand.”

“Decades of economic renovation have transformed Vietnam into a lively market of 80 million hard-working and talented people,” said Ambassador Chien Tam Nguyen, the Vietnamese ambassador to the United States. “Being one of the safest tourist destinations and fastest-growing economies in the world, Vietnam is an ideal place to visit and do business. On behalf of the Socialist Republic of Vietnam, I welcome direct air service and the closer economic and cultural ties between our two countries that will surely result, thus furthering the understanding, friendship and mutually beneficial cooperation between them.”

“Today's direct service marks a new beginning for a relationship that holds tremendous potential,” said the U.S. ambassador to Vietnam Michael Marine. “Vietnam is a dynamic emerging market for the United States, and United's service will enable us to enhance trade and tourism to the benefit of both nations.”

United now serves 12 Asia-Pacific destinations, with more on the way. Nonstop service from San Francisco to Nagoya, Japan, is scheduled to begin in March 2005, and United is seeking the right to provide daily service between Guangzhou, China, and San Francisco in spring 2005.

United Flight 869 departed San Francisco at 12:10 p.m. on Dec. 9 and arrives in Hong Kong at 7:00 p.m. on Dec. 10. The continuing flight will depart Hong Kong at 8:55 p.m. and arrive in Ho Chi Minh City at 10:25 p.m. Beginning Dec. 11, United Flight 862 will depart Ho Chi Minh City at 6:20 a.m. and arrive in Hong Kong at 9:45 a.m. The continuing flight will depart Hong Kong at 12:50 p.m. and arrive in San Francisco at 8:25 a.m. the same day.

[Isan]

Customers traveling on international trips that include both United Airlines and All Nippon Airways (ANA) operated flights will be able to use just one electronic ticket (e-ticket) for all trip segments. Individual ANA and United tickets for departure, return and multi-city segments will no longer be required.

"E-ticketing is essential for ensuring efficient customer service. E-ticketing is becoming the industry standard in ticket reservations and United remains at the forefront of the transition from paper tickets," said Mark Schwab, United vice president-Pacific.

United has already launched similar agreements with the Star Alliance carriers Air Canada and Lufthansa. ANA is the third step toward the completion of a global project which will soon enable customers to travel on the entire Star Alliance network with just one e-ticket.

[Isan]

December 15, 2004

UAL, parent of bankrupt United Airlines, will suffer a USD$725 million operating loss in 2005 unless it can wring additional savings from its labor force, according to documents the airline filed with federal regulators on Wednesday.

That loss contrasts with a USD$1.27 billion profit the carrier had projected earlier. United on Wednesday also forecast a USD$26 million operating profit in 2006, down from earlier projections for a profit of USD$1.72 billion.

United is negotiating with its unions to cut labor costs by USD$725 million beyond the USD$2.56 billion it already won in concessions early in its bankruptcy process. The carrier has asked a bankruptcy judge to consider canceling its union contracts to save money.

"United risks being unable to reorganize without additional labor cost reductions," the company said in the filing. "Failure to secure the proposed cost reductions would jeopardize United's future."

The documents United filed with the US Securities and Exchange Commission were also filed with the bankruptcy court before a hearing scheduled for Friday. The airline has been operating in bankruptcy for two years.

United said that without labor savings beginning in mid-January, its cash balance would fall below USD$900 million and remain below that level through most of the first and second quarters of 2005.

It projected its cash balance by May would fall below the USD$750 million minimum threshold outlined in the terms of its bankruptcy financing.

The outlook beyond early 2005 is no more promising, United said. Without canceling and replacing its pension plans and cutting labor costs by an additional USD$725 million per year, the carrier said it would burn through more than USD$1 billion in cash each year until it runs out of cash.

UAL linked its forecast for a 2005 operating loss to high jet fuel prices, low yields and increased competition from low-cost carriers. United said in October it expected jet fuel costs to be USD$1.2 billion more in 2004 than projected at the end of 2003.

From 2004 to 2010, United projects a USD$7.2 billion increase over its prior fuel cost estimations due to price increases.

(Reuters)

[Isan]

December 14, 2004

The pilots union at United Airlines on Tuesday said its negotiators have reached a tentative contract deal with the bankrupt airline.

Leaders of the Air Line Pilots Association will attend a special meeting in Chicago on Thursday to review the deal, spokesman Captain Herb Hunter said. He said the union would not disclose any details about the deal until its leaders meet to discuss it.

"The negotiating committee and the company have reached a tentative agreement," Hunter said. "The (union's Master Executive Council) will come into town and discuss that on Thursday, and we'll decide what we're going to do then."

If union leaders approve the deal, it would be put to the membership for a vote.

United has been seeking another round of big concessions from its unionized workers as part of its effort to emerge from bankruptcy after two years under court protection from creditors.

It won USD$2.56 billion in concessions from its unions earlier in the bankruptcy process, but has said it needs another USD$725 million from labor, including USD$191 million from pilots, to attract crucial financing it needs to exit Chapter 11.

A spokeswoman for United said the company was pleased to have reached the tentative agreement with ALPA but would not comment on the terms of the deal.

United said on Monday its salaried employees would take pay cuts of 4 percent, while pay of management employees would be reduced by 6 percent and that of officers by 8 percent. The company hopes the move, combined with benefit changes and productivity enhancements, will save it USD$112 million a year.

(Reuters)

[beijinggreg]

I've been a regular United customer for more than a decade now, and i must say the state of the airline is in poor shape these days. The service has never been stellar, and has actually declined considerably in the last 5 years. I've sent comments to them and have gotten the un-impressive "we'll try to do better" reply. The last decent flight i had was HK-Chicago, and that was only because the stewardesses were Asian. The service was considerably better than on the return trip. Am not sure it's possible, but if I were US airlines (and European ones for that matter), i would invert the current practice of using like 80% American steward staff and 20% the other countries staff, in that case Hong Kong. The cost savings alone would make it meaningful; add to that teh service improvement and you've got yourself a business plan. Look at Emirates and Qatar, most of their steward staff are from europe, NA and asia. And look at Dragon Airlines and Cathay, mostly british, OZ and NZ pilots. HK is a unique case, i know.

Next thing i'd do is turn the majority of my domestic flights into "Low Cost Carrier" class, with a small-ish business class. And i'd outsource most of the food, if i served it at all, to brand-known food companies like subway, et al. i imagine a lot of passengers are like me where they stigmatize airline food, reducing the degree of customer "perceived" satisfaction, even if the food is edible, which it often isn't. I rarely even try it nowadays. IF you outsource it with a recoknized brand as they are experimenting with now, it sort of ditributes the accountability for the airline. And if the food is well received, you get some kudos for that.

International flights can make money, but US carriers are not hacking it versus the asian carriers, or the European ones for that matter, on service. And domestic airlines can obviously succeed, but the LCC format seems to be the way to go. I know that there is scarcely any route i might fly in the continental US othe rthan maybe Seattle-East Coast where i'd pay more for anything other than a comfortable seat and a friendly stewardess. International flights are a different story where i'd trade my spleen for a business class seat on a 14 hour flight.

Anyway, head hunters aren't ringing my phone off the hook for airline CEO jobs, but just some ruminations i've had....

[Isan]

I agreed with U

The sv is really suck more than decade

SFO & ORD ground staffs were mostly hostile especially but don't know WHY

Might be it was the worst US based airlines in the world

[Isan]

December 17, 2004

Leaders of the United Airlines pilots' union have approved a tentative contract with the bankrupt carrier and agreed not to fight UAL's bid to scrap the group's pension plan, the Wall Street Journal reported on Friday.

As part of the agreement, once it emerges from bankruptcy protection, United parent UAL would issue USD$550 million in convertible notes to the union, Stephen Presser, the union's investment banker, told the newspaper.

The pilots could then sell the notes in the capital market to raise money that would make up some of the shortfall they would experience because of the termination of their defined-benefit pension plan, he added.

Negotiators for the Air Line Pilots Association (ALPA) reached the tentative contract deal earlier this week but did not disclose details at the time. Leaders of the union attended a meeting on Thursday to review the deal and approved it, the Journal reported.

The five year agreement -- which would save United about USD$180 million to USD$190 million more a year -- will go to ALPA's membership for a vote early next month, the Journal said.

The pilots' concession over the pension plan could become a model for the industry, the paper added, quoting Presser as saying that "it could be replicated for other work groups."

The agreement only applies to active pilots, not those who are retired, according to the Journal.

(Reuters)

I agree with the other two opinions of United Airlines' current status.

I flew from Los Angeles to Hong Kong this past June, with a layover in Tokyo. Their fleet of 747-400s are unsanitary at best and haven't been updated since they were introduced in the 80s. Even business and first class looked antiquated. Not a single amenity is offered in Coach, and the crampt 3-4-3 seating configuration creates an atmosphere resembling more like a third-world refugee transport than a commercial airline.

On an American Airlines flight from Los Angeles to Chicago, (Also a deteriorating "legacy" carrier), I talked with other passengers of international flights who flew on non-US airlines. In coach on All Nippon Airways, individual TVs are standard, including closed circuit channels that display signals from external cameras mounted on the plane, including cockpit views. (Sorry, but I drool at that thought being such an aircraft fanatic ). And on Quantas, not only are individual tvs standard, but so are built-in video games and seat-to-seat text messaging!

When I fly internationally in the future, I'm flying foreign carriers.

[Nick in Atlanta]

US carriers are way behind many foreign carriers on international flights, especially in Coach. No personal entertainment equipment like movies and video games. In business class there are no seats that recline 180 degrees, etc. US airlines are lucky that most Americans fly them internationally because they want to stay with a name they're familiar with.

I actually went with United on that trip because they were the cheapest by a couple hundred bucks. Now I know why...

[Isan]

United Airlines (UA) introduced a new livery on 18Feb04.



And some @ here UA on its 80~~90's

Nice pics! I'm glad both United and Northwest are ditching the mostly gray-colored livery. And to think the old gray was a "step up" for United from their disco-era orange/red/blue paint scheme...

[Isan]

December 17, 2004

United Airlines has begun approaching potential lenders with its revamped business plan for financing to leave bankruptcy, the company said on Friday.

United said in an update to the US Bankruptcy Court for the Northern District of Illinois that it has established a framework for presenting its business plan to capital markets, but offered no additional details.

United said consulting firm Bridge Associates had completed its review of the airline's business plan and found it feasible. Chief Financial Officer Jake Brace added that cost cuts proposed by the carrier so far appear to be enough to attract the needed investors.

"Those (cuts) will be sufficient to produce a viable business plan, which will be able to be financed," Brace told reporters after a bankruptcy court hearing in Chicago.

The airline, operating under Chapter 11 protection from creditors since December 2002, has said it needs to cut union and non union labor costs by USD$725 million a year beyond the USD$2.56 billion in concessions it won from unions earlier in the bankruptcy process.

United said earlier this week that it will post a USD$725 million operating loss in 2005 unless it can wring additional labor savings.

The carrier has asked Judge Eugene Wedoff for permission to cancel union contracts if voluntary cost-cutting agreements cannot be achieved by mid-January. The company also wants to terminate union pension plans to save money.

The airline and the leaders of its pilots union represented by the Air Line Pilots Association reached a giveback deal this week worth an estimated USD$180 million yearly for five years.

The agreement, which includes pay and benefit reductions, must still be considered by the full membership of 6,400 pilots.

According to the agreement, the pilots will not fight the company's plan to scrap its pension plan and replace it with a cheaper one if the court determines removing the benefit is required to exit bankruptcy.

In exchange, pilots will receive USD$550 million in convertible notes that can be sold to make up some of the shortfall from a less generous pension, the agreement showed.

The company's 8,300 management and salaried nonunion workers are also taking pay cuts worth USD$112 million per year beginning in January.

United did not identify potential lenders it was approaching, but Brace said they include current investors both on and off Wall Street.

The airline plans to boost its international capacity by 15 percent next year and cut domestic capacity by 12 percent. To maintain domestic service after shrinking its mainline fleet, United plans to make greater use of express partners.

But Bridge raised certain conditions that were not publicized. Union groups sought an independent analysis of the company's business plan. Brace said an executive summary of the plan may be made public soon.

The company's biggest outstanding issue remains its drive to cut costs enough to operate domestically and internationally and satisfy potential investors.

(Reuters)

[Stamford Island]

I personally prefer United's old gray livery...the new one looks so low-cost...yes I knew they are trying to keep costs low, but why not just leave the planes in the old grey colour scheme, which looks more elegent...

to chime in on UA's poor amenities in their fleet of 747-400's, even JAL flights from HK to Tokyo had multiple MOvie channels, audio, forward/downward view cameras, videogame in coach. I fly the ORD-HKG all the time, I guess i'm used to it. My friend flies chicago/Beijing and said they use 777's and they get Individual tv's in coach.

[beijinggreg]

i agree about United's old gray livery...looked quite business class, whereas most airlines go for the "holiday" look and colors. the new one looks like a downgrade to me..maybe indicative of where this airline is going, or already is.

Regarding the BJS-ORD flight, it's the best i've flown with united. But the service is still lacking. Yes, they have the tvs, and it's a 777. But it's ALWAYS jammed. you've got to book months in advance to get on it, and you pay when you do. I'm flying BJS-ORD late january, and i cannot get a ticket as of today.

[Isan]

I prefered the old one, look elegence than the new livery although seems to that youngish & energetically in frankly

[hkskyline]

Carrier off course for restructuring:
UA blames high fuel costs, low yields and intense competition for its failure to meet its targets
By CAROLINE DANIEL
20 December 2004
Financial Times

When United Airlines entered bankruptcy protection in November 2002 it pledged to complete its restructuring and emerge leaner and fitter within 18 months.

Two years on, however, a regulatory filing last week highlighted how far it remains from that goal. The filing also showed how its restructuring achievements had been eroded by high fuel prices, low yields and intense competition.

There are signs that United's management has finally understood the scale of the task ahead. Restructuring efforts, cost-cutting targets, pace of change and willingness to tackle the pensions termination issue accelerated this summer after it was turned down for a government loan.

However, despite taking more aggressive action, the company has little room for manoeuvre if events such as fuel prices, labour unrest or court decisions turn against it.

The filing indicated why the Airline Transportation Stabilisation Board rejected United's request for a loan guarantee.

United's December 2003 business plan projected an operating loss in 2004 of Dollars 137m in the first quarter, operating profits of Dollars 278m in the second, and Dollars 515m of profits in the third.

Actual results have obliterated that optimism. United said earnings in the first nine months were Dollars 940m below those forecasts. Its ATSB application forecast fourth-quarter profits of Dollars 161m, against its current estimates of losses of Dollars 520m.

Its cash forecasts were also inaccurate. United had hoped to end the year with cash of Dollars 2bn. Now it expects liquidity of only half that amount come December 31, which will only decrease in the lean winter months.

United blamed its errors principally on fuel costs, which are Dollars 1.2bn higher than it expected. Revenues were also lower by Dollars 275m and earnings from United Express, a key subsidiary, Dollars 175m below expectations.

The poor state of the balance sheet has raised doubts over whether United can convince investors to provide what it says it needs: Dollars 2bn in exit financing to leave bankruptcy protection.

There are signs its management has become more conservative in its forecasting. Delta has pinned its hopes of avoiding bankruptcy on falling fuel prices. United has now ditched its old belief that oil would cost Dollars 30 a barrel and is assuming the fuel's current highs will drop to Dollars 38 a barrel by 2010.

If it can survive that long, and if oil prices fall, the upside for potential investors could be huge. Nevertheless, United must first address a more immediate liquidity crisis.

It has already breached several covenants on its debtor in possession (DIP) financing. New conditions require it not to fall below cash of Dollars 750m - a dangerously low level for a large airline, as United admits.

US Airways, which is half United's size, recently said that Dollars 400m-Dollars 500m was the minimum cash limit for comfortable liquidity.

To avoid a liquidity crisis, United argues, it must gain Dollars 725m of additional labour cuts by mid-January, or face breaching DIP covenants.

It has warned that without consensual deals it will impose the cuts by invoking section 1113c of the bankruptcy code. That threat has provoked labour unease. The flight attendants' union has threatened chaos if it tears up existing contracts. The pilots' union has been more conciliatory.

However, without significant cuts in labour costs, United has warned that its cash would fall below Dollars 900m in the first and second quarters, and in May would fall below the critical Dollars 750m level.

Union strikes would only accelerate, not avert, the inevitable cuts.

But even with the cuts, its future remains uncertain. For employees, that means pension terminations are increasingly likely.

United said maintaining them would burn more than Dollars 1bn a year until it ran out of cash. It warned that minimum cash funding would be Dollars 4.2bn between 2005 and 2008, which would pose impossible burdens on its hopes of exiting bankruptcy.

The filing suggests efforts by the Pension Benefit Guarantee Corporation, which last week called on the court to demand that United pay Dollars 900m in overdue pension liabilities, will go nowhere. Indeed, those payments would plunge United below its required cash levels, triggering its collapse.

It looks like United's chances of continuing in Chapter 11 bankruptcy protection, let alone exiting it, depend heavily on what happens in the bankruptcy court over the next few months.

[Isan]

December 20, 2004

United Airlines' business plan for exiting bankruptcy is feasible but not a sure thing even if the airline achieves its cost cutting goals, an independent analysis of the company's strategy showed on Monday.

An executive summary of the confidential six week review by Bridge Associates found, after reviewing internal company and other documents and proposed cost cuts, that the airline's plan for stepping out of court protection next year is doable under certain conditions.

United says it has begun shopping its updated business plan to its potential lenders.

But the analysis cautioned that a combination of risks, including failure by the carrier to obtain USD$725 million in new union and non-union cost cuts by mid-January, could hurt the airline's chances of executing its strategy.

United adopted the Bridge review after pressure from unions, specifically the International Association of Machinists and the Association of Flight Attendants.

Jean Medina, a UAL spokeswoman, said the report validated the company's business plan. But the flight attendants noted the plan was vulnerable.

"The report speaks to more than labor cost savings and states that every area of the plan's cost savings and revenue enhancements are subject to external and execution risks," said AFA spokeswoman Sara Nelson Dela Cruz.

The report noted that any spike in fuel prices or higher interest rates could adversely impact United's current plan for all-debt exit financing even if its cost cuts were in place.

"Lending institutions may be unable to attract sufficient participants to complete such a financing and permit the company to emerge from Chapter 11 by mid-2005," the analysis showed.

No details of the company's revamped business plan were provided in the summary briefly outlined by the airline in bankruptcy court on Friday.

The airline has said it plans to shrink its mainline fleet, boost capacity on international service and shift some domestic flying onto its express partners.

United has been in bankruptcy for two years. The entire industry has been buffeted by soaring fuel costs and soft revenue.

The biggest airlines, including United, have also faced stiff competition from low-cost rivals.

(Reuters)

[Isan]

December 21, 2004

UAL, parent of bankrupt United Airlines, on Tuesday reported a November net loss of USD$87 million, including a USD$158 million gain from the sale of Orbitz shares and USD$20 million of reorganization expenses.

United, which is required to file a monthly operating report with the bankruptcy court, said its operating loss for the month was USD$188 million.

"Due to harsh industry conditions, we must urgently implement additional cost reduction initiatives so that the durable, long-lasting savings required are in place by mid-January," said Chief Financial Officer Jake Brace.

UAL, operating under Chapter 11 protection from creditors since December 2002, has said it needs to cut union and non union labor costs by USD$725 million a year beyond the USD$2.56 billion in concessions it won from unions earlier in the bankruptcy process.

UAL ended the month with a cash balance of about USD$2.4 billion, which included USD$843 million in restricted cash. The cash balance increased approximately USD$97 million during the month of November.

(Reuters