UAL Mulls Hub Closures & Pacific routes

Sean1999 Ram Air TA · 02-25-2003, 12:17 AM

Dow Jones Business News
UAL Mulls Hub Closures in Reorganization
Monday February 24, 7:55 pm ET
By Erik Ahlberg

CHICAGO -- An executive for UAL Corp. (NYSE:UAL - News) said Monday that the airline is mulling the closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan.

Senior Vice President Gregory T. Taylor said in court testimony that UAL, parent of United Airlines, was asked by its board of directors to consider the hub closures as an alternative. The board also asked the company to look into the possible sale of the airline's Pacific operations, he said.

Separately, the judge overseeing UAL's bankruptcy case here denied Atlantic Coast Airlines Holdings Inc.'s (ACAI) motion to force UAL to assume or reject a contract between the two companies.

Atlantic Coast, of Dulles, Va., provides regional airline service for UAL under the United Express brand. United Express generates about 85% of Atlantic Coast's revenue.

Among other things, the contract calls for Atlantic Coast to add 47 regional jets and retire 30 older turboprop planes by April 2004 at a total cost of $940 million.

Attorneys for Atlantic Coast said that such capital spending, particularly without any assurances from United, put an undue financial burden on the company.

But attorneys for UAL said that the company shouldn't have to make any decisions about the Atlantic Coast contract because of the evolving nature of the reorganization plan.

In his ruling, Judge Eugene R. Wedoff said that United's need to keep its reorganization free of any early obligations was greater than Atlantic Coast's need to have answers about the contract. He said that Atlantic Coast still has a number of options, including negotiating new terms with the planes' manufacturer, Bombardier Inc. (BBD.B)

In court testimony, Atlantic Coast Chief Financial Officer Richard J. Surratt said the uncertainty surrounding UAL could make it difficult to obtain outside financing for the new planes.

Though the company has one of the best balance sheets in the industry with $ 189 million in cash and $44 million in deposits, that position could be threatened by the burden of the upgrades, he said.

He declined to comment on the judge's ruling after the hearing.

UAL's Taylor said UAL's reorganization plan is still very much in the formative stages. The company continues to evaluate several options in addition to the creation of a new, low-cost airline, he said.

TL925 · 02-25-2003, 12:44 AM

If United is forced to sell off its Pacific Routes, liquidation can't be too far behind. Sounds similar to Pan Am selling their Atlantic routes to Delta.

Scott · 02-25-2003, 01:13 AM

That's purely speculative bull***** aimed squarely at union factions opposed to CERTAIN elements of the "low cost carrier". Truthfully, none of the unions oppose this concept, but will fight the massive layoffs that will result in "hiring off the street" in favor of the secondary carrier.

1:400 Man · 02-25-2003, 11:38 AM

Quote:

Originally posted by TL925
If United is forced to sell off its Pacific Routes, liquidation can't be too far behind. Sounds similar to Pan Am selling their Atlantic routes to Delta.

Pan Am didn't sell their pacific routes to Delta, they sold them to United Airlines.

02-25-2003, 12:00 PM

He said the ATLANTIC routes which Pan Am sold to Delta and American ....

Northwest would love the Pacific routes ... seems to me that Dulles airport has always been a problem for United .. to far out not enough passenger traffic.

Chansen · 02-25-2003, 12:08 PM

Most and some of the gates held at Pier's A and B will be greatly effected and the whole automated baggage system for which UAL took off of the hands of the City of Denver. Pier or Concourse B is for the most part UAL with exception to Air Canada, Skywest and Air Wisconsin. Paying for such system also I think has brought them down. I can see the selling of Denver hub even if it is bad. Hanger Facilities are here too! A large one at that.

Tracon Doug · 02-25-2003, 12:24 PM

Quote:

Originally posted by Presidential
... seems to me that Dulles airport has always been a problem for United .. to far out not enough passenger traffic.

Huh? Dulles has more passenger traffic than National and Baltimore combined......

02-25-2003, 01:22 PM

Quote:

Originally posted by Presidential
He said the ATLANTIC routes which Pan Am sold to Delta and American ....

Northwest would love the Pacific routes ... seems to me that Dulles airport has always been a problem for United .. to far out not enough passenger traffic.

Pan Am sold its London-Heathrow routes to United & its Continental European routes to Delta.

TWA sold its London-Heathrow routes to American before being bought out completely.

02-25-2003, 02:21 PM

Quote:

Originally posted by Tracon Doug
Huh? Dulles has more passenger traffic than National and Baltimore combined......

b u l l s h i t!!

..... for 2001 BWI captured 39.6 percent of the Baltimore/Washington market in 2001, edging out Washington's Dulles International Airport, which took in 34.7 percent, and Washington National Airport, which captured 25.6 percent.

Dulles
2001 Total Passenger Traffic was 18,002,319
2002 Total Passenger Traffic was 13,145,607

BWI
2001 Total Passenger Traffic was 20,360,000
2002 Total Passenger Traffic was 17,487,935 (Thru Nov)

Regan Nat'l
2001 Total Passenger Traffic was 13,265,387
2001 Total Passenger Traffic was 12,881,601

tjwgrr · 02-25-2003, 02:52 PM

Quote:

Originally posted by Sean1999 Ram Air TA
The board also asked the company to look into the possible sale of the airline's Pacific operations, he said.

This sounds all too familiar...............the beginning of the end.

A glimpse of the future?

Sentinel Chicken · 02-25-2003, 06:30 PM

I thought that both United and Northwest have "fifth freedom rights" out of Tokyo/NRT, so wouldn't Northwest purchasing United's routes in the Pacific be redundant?

Bigger prize in the event of a fire sale is Heathrow access, but someone's gonna have to pony up the cash for both the route authorities and the slots. I remember reading somewhere that runs in the neighborhood of $1 billion.

And if we go to open skies between the US and Europe, all's not lost, at least there's still the slots...assuming United wants to make a deal, of course.

Travelin' Man · 02-25-2003, 11:46 PM

The only way UAL will be shutiing those cherry hubs is if they go out of business.

Tracon Doug · 02-26-2003, 12:15 AM

I dunno T-Man, the new Denver Int'l has been more like Federico Pena White Elephant Int'l, hasn't it? I think it would have been a little more attractive had Continental stayed......

But, I dunno, maybe not.

Denver has, however, for better or worse, remained a "hub" of sorts for United for a long time.

Scott · 02-26-2003, 12:25 AM

I find it humorous that snippets of propaganda, rumor, and public posturing engender conclusions of doom. The most cynical airline analysts conclude that UAL has largely a cost disadvantage, not a debilitated route structure. Do not assume it will be dismembered and parceled to NW, CO, AA, and DL.
Despite news to the contrary, UA mgmt and unions are negotiating at this moment.

02-26-2003, 12:26 AM

If anything, Denver is a good geographical position for a hub. You can fan out routes all over the West from DIA. Nothing has been done yet, so we'll see what UAL does.

Sean1999 Ram Air TA · 02-26-2003, 01:43 AM

Almost reminds me of the 80's when Management was playing to the press to gain an advantage against the employees. Then again who can believe the press anyway they are always looking for something to report.

Sean

02-25-2003, 12:17 AM	#1
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	UAL Mulls Hub Closures & Pacific routes Dow Jones Business News UAL Mulls Hub Closures in Reorganization Monday February 24, 7:55 pm ET By Erik Ahlberg CHICAGO -- An executive for UAL Corp. (NYSE:UAL - News) said Monday that the airline is mulling the closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan. Senior Vice President Gregory T. Taylor said in court testimony that UAL, parent of United Airlines, was asked by its board of directors to consider the hub closures as an alternative. The board also asked the company to look into the possible sale of the airline's Pacific operations, he said. Separately, the judge overseeing UAL's bankruptcy case here denied Atlantic Coast Airlines Holdings Inc.'s (ACAI) motion to force UAL to assume or reject a contract between the two companies. Atlantic Coast, of Dulles, Va., provides regional airline service for UAL under the United Express brand. United Express generates about 85% of Atlantic Coast's revenue. Among other things, the contract calls for Atlantic Coast to add 47 regional jets and retire 30 older turboprop planes by April 2004 at a total cost of $940 million. Attorneys for Atlantic Coast said that such capital spending, particularly without any assurances from United, put an undue financial burden on the company. But attorneys for UAL said that the company shouldn't have to make any decisions about the Atlantic Coast contract because of the evolving nature of the reorganization plan. In his ruling, Judge Eugene R. Wedoff said that United's need to keep its reorganization free of any early obligations was greater than Atlantic Coast's need to have answers about the contract. He said that Atlantic Coast still has a number of options, including negotiating new terms with the planes' manufacturer, Bombardier Inc. (BBD.B) In court testimony, Atlantic Coast Chief Financial Officer Richard J. Surratt said the uncertainty surrounding UAL could make it difficult to obtain outside financing for the new planes. Though the company has one of the best balance sheets in the industry with $ 189 million in cash and $44 million in deposits, that position could be threatened by the burden of the upgrades, he said. He declined to comment on the judge's ruling after the hearing. UAL's Taylor said UAL's reorganization plan is still very much in the formative stages. The company continues to evaluate several options in addition to the creation of a new, low-cost airline, he said. __________________ United Airlines Historian and Memorabilia Collector WAHS Member

02-25-2003, 01:13 AM	#3
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	That's purely speculative bull***** aimed squarely at union factions opposed to CERTAIN elements of the "low cost carrier". Truthfully, none of the unions oppose this concept, but will fight the massive layoffs that will result in "hiring off the street" in favor of the secondary carrier. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

02-25-2003, 12:08 PM	#6
Chansen Complete Wacko! Join Date: Oct 2000 Location: Parker, CO Posts: 3,041	Bad for Denver! Most and some of the gates held at Pier's A and B will be greatly effected and the whole automated baggage system for which UAL took off of the hands of the City of Denver. Pier or Concourse B is for the most part UAL with exception to Air Canada, Skywest and Air Wisconsin. Paying for such system also I think has brought them down. I can see the selling of Denver hub even if it is bad. Hanger Facilities are here too! A large one at that.

02-25-2003, 06:30 PM	#11
Sentinel Chicken Go-Getters Go Ozark Join Date: Jan 2001 Location: DFW/THE GREAT STATE OF TEXAS Posts: 4,167	I thought that both United and Northwest have "fifth freedom rights" out of Tokyo/NRT, so wouldn't Northwest purchasing United's routes in the Pacific be redundant? Bigger prize in the event of a fire sale is Heathrow access, but someone's gonna have to pony up the cash for both the route authorities and the slots. I remember reading somewhere that runs in the neighborhood of $1 billion. And if we go to open skies between the US and Europe, all's not lost, at least there's still the slots...assuming United wants to make a deal, of course. __________________ *Piss on noise abatement!*

02-26-2003, 12:15 AM	#13
Tracon Doug Vector For Spacing Join Date: Mar 2000 Location: Portland, Oregon Age: 51 Posts: 857	I dunno T-Man, the new Denver Int'l has been more like Federico Pena White Elephant Int'l, hasn't it? I think it would have been a little more attractive had Continental stayed...... But, I dunno, maybe not. Denver has, however, for better or worse, remained a "hub" of sorts for United for a long time. __________________ Piss On Noise Abatement! Doug Kenaga Portland TRACON Dallas/Fort Worth TRACON SoCal TRACON Los Angeles TRACON

02-25-2003, 12:44 AM	#2
TL925 Master Collector Join Date: Jul 2000 Location: London Age: 26 Posts: 529	If United is forced to sell off its Pacific Routes, liquidation can't be too far behind. Sounds similar to Pan Am selling their Atlantic routes to Delta.

02-25-2003, 12:00 PM	#5
Presidential Guest Posts: n/a	He said the ATLANTIC routes which Pan Am sold to Delta and American .... Northwest would love the Pacific routes ... seems to me that Dulles airport has always been a problem for United .. to far out not enough passenger traffic.

02-25-2003, 11:46 PM	#12
Travelin' Man Insane Collector Join Date: May 2000 Location: Aspen USA!!! Posts: 1,919	The only way UAL will be shutiing those cherry hubs is if they go out of business.

02-26-2003, 12:25 AM	#14
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	I find it humorous that snippets of propaganda, rumor, and public posturing engender conclusions of doom. The most cynical airline analysts conclude that UAL has largely a cost disadvantage, not a debilitated route structure. Do not assume it will be dismembered and parceled to NW, CO, AA, and DL. Despite news to the contrary, UA mgmt and unions are negotiating at this moment. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

02-26-2003, 12:26 AM	#15
NYCAAer Guest Posts: n/a	If anything, Denver is a good geographical position for a hub. You can fan out routes all over the West from DIA. Nothing has been done yet, so we'll see what UAL does.

02-26-2003, 01:43 AM	#16
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	Almost reminds me of the 80's when Management was playing to the press to gain an advantage against the employees. Then again who can believe the press anyway they are always looking for something to report. Sean __________________ United Airlines Historian and Memorabilia Collector WAHS Member

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