United removing 100 planes and reducing capacity 14%!

[chipmaster]

http://www.marketwatch.com/news/story/united-airlines-cuts-up-1600/story.aspx?guid=%7B4176C00C%2DBDBB%2D4ECB%2D963A%2DDF7B0050CF12%7D

 

The impact of oil is becoming more and more a reality

 

Looks like they are shooting to remove as much as 18% capacity by 2009 :eek:

[pms4104]

in today's Chicago Tribune, it was announced that the planes being targeted for withdrawal are a slew of 737's and some 747's.

 

Yesterday, in the Business section of the same paper, aviation analysts stated that with the United/U.S. Air talks now tabled, United can and will focus on running an airline rather than operating a potential merger partner.

 

Indeed, with the domestic capacity cuts announced by the variious airlines, the pricing scenario will turn into a real supply-and-demand issue. And prices will continue to rise. We bought our AA tix for December a week or so ago ... the next day, fares went up $10 and by today another $50. Our return flight is right before Christmas, so that may explain some of the pricing change, but I don't see any relief any time soon. And, should there be any bankruptcy and/or liquidations, the surviving carriers will charge even more.

 

We understand the reality with any and all purchases in our personal life ... groceries, gas, etc. just keep climbing higher and higher.

[Globaliser]

... the pricing scenario will turn into a real supply-and-demand issue. And prices will continue to rise. ... And, should there be any bankruptcy and/or liquidations, the surviving carriers will charge even more.

In the deregulated air travel market, pricing has always been a supply-and-demand issue. The trouble is that until now, there has been far too much supply for the demand. This sort of action - together with one or two liquidations - is exactly what the industry needs, to get prices back up to more sustainable levels.

 

But it definitely hurts those of us who are at the buying end.

[pms4104]

Announced on tonight's news ... United plans to fold its low-cost Ted, reconfigure the former Ted planes with a First Class section, and use them on their United service.

[pms4104]

In the deregulated air travel market, pricing has always been a supply-and-demand issue. The trouble is that until now, there has been far too much supply for the demand. This sort of action - together with one or two liquidations - is exactly what the industry needs, to get prices back up to more sustainable levels.

 

But it definitely hurts those of us who are at the buying end.

Agreed ... supply and demand need to be better balanced. The higher prices hopefully will stabilize the carriers who are able to adapt to today's new realities.

 

Yep, I don't like paying significantly more for air ... and I would guess the increases will impact everyone but most seriously those who, years ago, could afford only to ride the Greyhound buses to their destination. So, it actually could become a more pleasant flying experience in the future.

[nho9504]

Announced on tonight's news ... United plans to fold its low-cost Ted, reconfigure the former Ted planes with a First Class section, and use them on their United service.

 

At least there is some silverlining in this. Being in FLL/MIA if we fly United, Ted is our only option. It is extremely annoying that even when holding an international business class ticket, the segment between FLL/IAD, or FLL/ORD, must be on Ted.

 

Delta has folded its Song long ago. It is about time United to get rid of Ted.

[kenish]

At least there is some silverlining in this. Being in FLL/MIA if we fly United, Ted is our only option. It is extremely annoying that even when holding an international business class ticket, the segment between FLL/IAD, or FLL/ORD, must be on Ted.

 

Delta has folded its Song long ago. It is about time United to get rid of Ted.

 

Be careful what you wish for. Most traffic into FLL is fare-conscious leisure travelers, which is why Ted is the only choice. MIA is a hub right down the road and can easily shoulder FLL passengers. Don't be shocked if UA abandons FLL completely. :eek:

[JJPNYC]

Living in Denver, this is something that UA should've done about 6 months ago. But instead Glenn Tilton was too busy trying to merge with someone, anyone, that he wasn't focusing on the daily operations of the airline.

 

Now that it is clear that no one wants to merge with United, why would they hook up with such an albatross?, they have no option but to look inward and try to fix their own mess.

[chipmaster]

Living in Denver, this is something that UA should've done about 6 months ago. But instead Glenn Tilton was too busy trying to merge with someone, anyone, that he wasn't focusing on the daily operations of the airline.

 

Now that it is clear that no one wants to merge with United, why would they hook up with such an albatross?, they have no option but to look inward and try to fix their own mess.

 

Somehow the executives at all the majors think that merger and larger will result in some magical economies of scale.

 

The reality of it all right now is that all the majors are big enough that all the standard overheads like executives, logistics, marketing, reservations, etc. etc. are already large enough to have the required economies of scale. There is NO silver bullet in mergers.

 

The real thing they need to tackle is their pricing structure isn't consistent with getting the revenue they need with their current flight schedules. The real thing they don't like to do is to cut flights and people and downsize and increase prices. By most measures success is growth, and even at the expense of profits growth in the past has been the key to later profits. This time around it won't be the case, oil will NOT fall back to 50 bucks and the last one standing won't be able to clean up as everyone including SW is hurting.

[mics pics]

What will be interesting is how much capacity will drop when all the 737's are gone, and the Ted Airbuses are out of service getting re-configured for first class. That will really drop capacity...albeit temporarily.

Didn't take long for the furloughs to kick in. My co-workers started getting their notices today, effective July 6. :(

Contracts are all up in 2009. Should be interesting to see what happens then, IF we are still around by then.

[nho9504]

Be careful what you wish for. Most traffic into FLL is fare-conscious leisure travelers, which is why Ted is the only choice. MIA is a hub right down the road and can easily shoulder FLL passengers. Don't be shocked if UA abandons FLL completely. :eek:

 

UA flies TED from MIA also. UA is just not a factor in South Florida market where AA and DL are the majors and JetBlue, Southwest, Airtran and Spirit fight it out for their shares in the discount airlines arena.

 

Not to worry - there are enough competitors flying in/out FLL, which is almost always cheaper than MIA.

 

I just bought tickets FLL/SFO via DFW on AA, travelling the first week of Sept, mid-week, for $240 all-in. That is a dirt cheap fare.

[nho9504]

What will be interesting is how much capacity will drop when all the 737's are gone, and the Ted Airbuses are out of service getting re-configured for first class. That will really drop capacity...albeit temporarily.

Didn't take long for the furloughs to kick in. My co-workers started getting their notices today, effective July 6. :(

Contracts are all up in 2009. Should be interesting to see what happens then, IF we are still around by then.

 

Since you sound like you are UA employee, if I may ask you a question - Isn't UA an "employee-owned" airline? What would happen if UA merge with another airline? I know the UA / US merger is called off now, and CO turned down UA's offer (rumor is CO may defect from Skyteam to join Star Alliance). But if there is a merger, how would the employee ownership change?

 

We have a relative who was an UA mechanic - he had been furloughed for the longest time, like since the late 90's. He did not lose his UA employee status until 2 years ago. All the while, he was not working, but he tended his family's rental properties (in SFO area), and the family flew on his UA employee benefits in longhaul FIRST CLASS at least once a year, plus numerous domestic trips. I dont know what to say, when his wife said they always bid on international FIRST CLASS for their travel and always get it. I understand they only paid a couple hundreds per trip on UA F... On their last trip, they gathered enough Family and Friend's passes to fly FIRST CLASS to Beijing... No wonder you often read about UA FFers complained about the "Nonrevenues" taking up F seats.

[mics pics]

United is no longer employee owned. The employee stock ownership plan (ESOP) ended in 2000. Then, all of the stock we acquired through that was liquidated in the Chapter 11 bankruptcy filing back in 2002.

If United merged with another airline, the biggest issue would be with the employees of both airlines and merging the seniority lists. The unions of both airlines and the merge candidates have all voiced very strong negative opinions. Ask any ex-Reno Air or TWA employee what that's like. It's not good.

I'm not sure how the mechanic furloughs worked. I was a non-management, non-union employee when I was furloughed in 2004. I was given non-revenue, standby pass travel until December 31, 2005. Then it ended. Maybe that's what he received? I know United was trying to make amends somehow with the furloughed employees. I don't remember furloughs/layoffs in the late 90s but I was furloughed back in 1993 with no pass travel benefits. The mass layoffs after September 11 did have pass benefit packages.

He must have tons of seniority to be getting first class on a standby ticket. I know the frequent fliers complain about non-revenue, but on United, employee standbys are bottom dwellers. Revenue standbys and upgrades get on board first, then pilots and flight attendants who are deadheading to an assignment. According to their contracts, they are required to get first class if they are deadheading to a flying assignment if the trip is longer than a certain amount of hours. I don't know exact details since I'm no longer familiar with those contracts. After all the revenue passengers and positive space non revenue passengers are boarded, employees are boarded next, in seniority order. Retired go first, then active with most time on down to least. Then parents of employees, then the 'buddy passes.'

Flying on a buddy pass would suck. I don't even tell people I have them because I've spent too much time sleeping in airports and I don't want to subject friends or family to that hell.

I don't know how he had that much luck, I really don't. Next month I have 20 years with United and just last year I had to buy a one way coach ticket home for nearly $1800 because I wasn't going to be seeing a seat on an airplane, even in the toilet. Definitely not in first class.

Oh yeah, I'm stupid and in 2006 after two years of furlough came back, took a 43% pay cut, and went from full time in my old job to part time in the job I am in now. I'm happy though, making $10.70/hr with lots of seniority is better than what many in this economy are suffering through. So the good old days of airline employees getting paid the big bucks and traveling the world are just a fantasy. Especially as the planes get fuller. I wouldn't wish standby travel on anyone and have bought full fare tickets for all my upcoming cruises.

Whew, did that answer your questions and comments? :)

[SelectSys]

supply and demand need to be better balanced. The higher prices hopefully will stabilize the carriers who are able to adapt to today's new realities.

 

Unfortunately until oil prices stabilize, it will be tough to bring in supply and demand into balance. It seems that a new market reality is being experienced on a daily basis by the airlines.

 

Yep, I don't like paying significantly more for air ... and I would guess the increases will impact everyone but most seriously those who, years ago, could afford only to ride the Greyhound buses to their destination. So, it actually could become a more pleasant flying experience in the future.

 

I am just curious to see how you believe flying might become more pleasant as prices go up. Are you expecting airlines to raise service levels, increase seat pitch, eliminate baggage fees, etc?