UAL - speechless

[Michael]

United gives CEO payraise.
http://blogs.usatoday.com/sky/2006/10/tilton.html

Isn't this the same United us taxpayers bailed out a few years ago?
Isn't this the same United that cut pilots pay and benifits?
Isn't this the same United that went through bankruptcy?

Here's an idea, instead of paying the CEO all that money, why dont you give me back my money I paid in for bailing your a$$ out!

unbelievable.

 

[SkyHog]

They went bankrupt for a reason.

Sorry Greg, no offense.

 

[gkainz]

-pretty much what my neighbor said - he's a retired United Captain. Lots of fun watching your retirement go down the toilet and then have the SOBs at the top get a raise.

 

[woodstock]

who allowed this to happen? is there any recourse against the BOD?

 

[mikea]

who allowed this to happen? is there any recourse against the BOD?

Sure. Vote against the slate and show up at the stock holders meeting.

Any stock holder can make a guaranteed losing proposal that goes out on the ballot so you can get attention that way. You should see the gadflies that buy one share in every company and make proposals and go from meeting to meeting for entertainment.

That will be moot because they will have lined up the 51% they need from the institutional investors who are happy with their buds on the board and the way the stock performs. At least mere mortals can vent, for a very limited time, at the meeting.

 

[Greg Bockelman]

who allowed this to happen? is there any recourse against the BOD?

Nope! Unless the shareholders get involved and the problem with that is that most are institutional investors that applaude such things.

 

[mdreger]

The FAA's current project is for it to be run more like a business. I hope this isn't the business model they are emulating.

 

[flyersfan31]

I'm an MBA, and absolutely pro-business all the way.

That being said, these guys sure have balls. What is it about airline and auto industry execs in particular that leads them to get these mega-contracts while the $50k/yr mechanics and $20k/yr flight attendants are having 10-20% paycuts (or worse) and pension elimination foisted upon them in the name of "saving the company?"

Options grants (if not back-dated) are fine. If the CEO takes $1 salary and full risk on honest options, fine. I believe Lee Iacocca did that (but I may be wrong.) But a $200k raise, come on, have a little sensitivity here fellas!! Great, the company did well for a year!

A true leader waits until the men are fed before he eats his meal.

 

[mikea]

Options grants (if not back-dated) are fine. If the CEO takes $1 salary and full risk on honest options, fine. I believe Lee Iacocca did that (but I may be wrong.) But a $200k raise, come on, have a little sensitivity here fellas!! Great, the company did well for a year!

A true leader waits until the men are fed before he eats his meal.

Steve Jobs got $1 salary when he came back to Apple, too. He was already a mega-millionaire. When Apple started its latest rocket run the board made sure to take care of Steve. Evidently they also back-dated some options.

Iacocca was eventually compensated, too. They both deserved the pay.

 

[Henning]

Steve Jobs got $1 salary when he came back to Apple, too. He was already a mega-millionaire. When Apple started its latest rocket run the board made sure to take care of Steve. Evidently they also back-dated some options.

Iacocca was eventually compensated, too. They both deserved the pay.

I always thought the Chrysler bailout was funny. The govt took the second best battle tank to assure the bailout would work. That the M1 had a fatal flaw of eating the turbine in 2 hrs of desert conditions didn't seem to matter since the war they were designed for was going to be on European soil, that worked out.... Luckily the real mechanics in the field figured out how to overcome the problem with some stockings. Sheesh....

 

[jshawley]

My friend pumps gas part time at the FBO. He's a retired United left-seater. I don't want to be around him when he hears about this. And I won't blame him.

Jim

 

[wsuffa]

For those who don't see Crain's Chicago business, apparently United is putting themselves up for sale. "Explore alternatives to maximize shareholder value".

http://chicagobusiness.com/cgi-bin/mag/article.pl?article_id=26509&bt=UNited&arc=n&searchType=all

 

[Henning]

For those who don't see Crain's Chicago business, apparently United is putting themselves up for sale. "Explore alternatives to maximize shareholder value".

http://chicagobusiness.com/cgi-bin/mag/article.pl?article_id=26509&bt=UNited&arc=n&searchType=all

What, the employees no longer want to own the business?

 

[Henning]

For those who don't see Crain's Chicago business, apparently United is putting themselves up for sale. "Explore alternatives to maximize shareholder value".

http://chicagobusiness.com/cgi-bin/mag/article.pl?article_id=26509&bt=UNited&arc=n&searchType=all

Looking at the track record of United and especially Southwest, Maybe Southwest could strike a deal, bring over their management and make a real go of being a Flag Carrier.

 

[Greg Bockelman]

What, the employees no longer want to own the business?

I hope you are joking, Henning, because stockholders really are not owners. Besides, all that went down the toilet with the bankruptcy.

 

[Greg Bockelman]

Looking at the track record of United and especially Southwest, Maybe Southwest could strike a deal, bring over their management and make a real go of being a Flag Carrier.

Maybe so, but if SWA was in the flag carrier business all along, I wonder if they would have been doing as well as they are now.

 

[Henning]

I hope you are joking, Henning, because stockholders really are not owners. Besides, all that went down the toilet with the bankruptcy.

Yeah, sorry I didn't use a sarcasm smiley .

 

[Henning]

Maybe so, but if SWA was in the flag carrier business all along, I wonder if they would have been doing as well as they are now.

I seriously doubt they would have, but now is not then. They have gained a good bit of experience since then at running an airline, and have consistently expanded their services. Cutting there teeth, so to speak, on a limited scale, they may now have the experience to step up to the plate. I can't see Delta doing a better job, how many times they been through bankruptcy in the past two decades? Continental, well, we won't go into how Continental formed, I doubt there will be any love in the breakrooms at least amongst senior pilots who were there for the whole Eastern debacle. I'm sure there are still a few former Eastern pilots flying for UAL.

I think SWA may be the best deal, if they are willing even. I think that union & employee attitude would have a large roll in their desire & the outcome, but I can't see to much rank and file objection. The only airline crews & mechanics that I talk to who are happy with their deal work for SWA. SWA's management I consider the best in the industry, and it didn't get that way by screwing people over, it came from good decision making and a respect and fairness for it's employees.

 

[wsuffa]

I can't see Delta doing a better job, how many times they been through bankruptcy in the past two decades?

I can't see Delta doing any better at this point, either. Delta is in it's first trip (ever) into Chapt. 11. Until the Ron Allen years, Delta was used as a business-school case study model of a very well managed business. The purchase of Pan Am was their downfall, IMHO. Acquisitions often look great on paper, but the post-acq. integration is a huge downfall. (disclosure: I've worked professionally on a number of these, and my approach to M&A is to look at the integration/operational issues first, before the financial analysis is anywhere close to done. I've seen a number of cases where folks really screw the pooch on acquisitions.).

Continental, well, we won't go into how Continental formed, I doubt there will be any love in the breakrooms at least amongst senior pilots who were there for the whole Eastern debacle. I'm sure there are still a few former Eastern pilots flying for UAL.

Texas Air ring a bell?

I think SWA may be the best deal, if they are willing even. I think that union & employee attitude would have a large roll in their desire & the outcome, but I can't see to much rank and file objection. The only airline crews & mechanics that I talk to who are happy with their deal work for SWA. SWA's management I consider the best in the industry, and it didn't get that way by screwing people over, it came from good decision making and a respect and fairness for it's employees.

SWA is truly facing new challenges now that their growth potential is flattening out. The employees who were compensated in fast-growing stock and options will find that growth limited in the future. SWA is now, like it or not, a big carrier. "Disruptive" entrants into a market become "normal" when the market shifts to become more like them. Once you get to a certain size in a market that's not growing fast, your ability to grow by stealing market share becomes limited.

My $0.02.

 

[Henning]

SWA is truly facing new challenges now that their growth potential is flattening out. The employees who were compensated in fast-growing stock and options will find that growth limited in the future. SWA is now, like it or not, a big carrier. "Disruptive" entrants into a market become "normal" when the market shifts to become more like them. Once you get to a certain size in a market that's not growing fast, your ability to grow by stealing market share becomes limited.

My $0.02.

And that's all part of why I think it would be a good deal. SWA needs somewhere to go, and UAL needs someone to take over. There was more to SWA than peanuts and crackers and dumping first class.

 

[wsuffa]

And that's all part of why I think it would be a good deal. SWA needs somewhere to go, and UAL needs someone to take over. There was more to SWA than peanuts and crackers and dumping first class.

Yeah, there was. But it's well recognized within SWA that there are huge challenges in managing the company.

I think a linkup with UAL could kill SWA. Completely. There are huge cultural differences, and culture is the defining factor in the success of a merger. There are also significant overlaps in the route system, enough that it's not a clear strategic fit.

Take a look at USAir and America West. That was a very complementary merger, and it's still presenting big challenges on the integration. I think it will succeed in the end, but it won't be easy.

SWA would be a better match for somebody like VirginAtlantic that has the Europe route system. Domestically, JetBlue might be a possibility.

The other link-ups that make sense would put Midwest airlines with MaxJet for international service. Midwest is small, but has a unique product, as does MaxJet... they're similar in terms of product, so there's no branding or marketing issue. Likewise, CO and DL might make sense given that there's not a ton of overlap (although either the CVG or CLE hub would have to go). LIkewise, DL and NW or CO and NW could make sense.

I've done enough M&A transactions and integrations to say that I would recommend against a UA/SW transaction, were I evaluating the deal based on what I know today.

It may be that UA gets snapped up by a private equity group that's willing to take on the regulatory risk of trying to merge it with another group. The challenge there is that an airline is by nature highly leveraged, what with most of the aircraft being leased. Most PE groups like to cut costs, extract value, and lever the company up a lot to boost the equity value. UA's current structure makes that harder to do.

Those are my opinions based on my past corporate development work and M&A work. For a somewhat different take, this is an interesting perspective: http://www.aviationplanning.com/asrc1.htm#Hot Flash - September 25, 2006 (by the way, elsewhere on that page is a very to-the-point article on the TSA.)

 

[woodstock]

sounds reasonable to me Bill!

 

[flyersfan31]

SWA -- cash profit-sharing
UAL -- stock.

As an employee, I want da' cash! You can't pay bills with stock. Having flown all the airlines, I can say I prefer SWA. Friendly attendants, workers, etc. The boarding process can sometimes be a hassle, but you don't have to worry about being yelled at by someone.

Best story about SWA -- they had some dispute about their motto or ad tag line or something. Apparently a small commuter airline in the Southeast used the same one, or so they claimed. Instead of going to court, Herb Kelleher (60ish, chainsmoker) challenged their CEO (bodybuilder, 40ish) to an armwrestling match. Winner gets the rights to the slogan. They rented the Astrodome, brought in employees from both companies to watch. Guess who won the match? Guess who one the PR battle? Can't see any of the "majors" having the common-sense and sense of humor to even think about skipping the legal process.

Iacocca deserved his $$. For a while, I'd have said Jobs didn't, but then this iPod thing has turned out pretty well. Oh, but he had to backdate anyway. Greedy greedy greedy!

 

[Henning]

Best story about SWA -- they had some dispute about their motto or ad tag line or something. Apparently a small commuter airline in the Southeast used the same one, or so they claimed. Instead of going to court, Herb Kelleher (60ish, chainsmoker) challenged their CEO (bodybuilder, 40ish) to an armwrestling match. Winner gets the rights to the slogan. They rented the Astrodome, brought in employees from both companies to watch. Guess who won the match? Guess who one the PR battle? Can't see any of the "majors" having the common-sense and sense of humor to even think about skipping the legal process.

I always like the old peanut packs "Love Bites".

 

[mikea]

And that's all part of why I think it would be a good deal. SWA needs somewhere to go, and UAL needs someone to take over. There was more to SWA than peanuts and crackers and dumping first class.

Yeah. I just flew SWA.

I'm continually amazed how sunny the employees are. I watched as they dealt with each other the same friendly way, like when the flight attendant greeted the ramp guy restocking the galley. I'm sure they had never met, but maybe they see each other on the run every weekday.

That sunny disposition has to be the first thing SWA looks for in a recruit. You can teach the other skills needed. I'll bet they emphasize in training to treat everybody like that. Passengers like me do pick up on it.

If it wasn't for the needless stress of the cattle car boarding I have no doubt which airline I'd fly every time.

 

[wsuffa]

If it wasn't for the needless stress of the cattle car boarding I have no doubt which airline I'd fly every time.

Mike, after 2.7 million miles on major carriers (including 2+ million on Delta alone), I've recently taken to flying Midwest Airlines where I can.

No boarding stress, no stress wondering if an upgrade will clear, no stress of worrying about middle seats. And hot cookies.

Milwaukee is a hub for them. They don't fly everywhere, but if you can fly in their "signature service" planes, it's a nice ride.