United Pilots' Chief Opposes New Carrier

Sean1999 Ram Air TA · 02-25-2003, 12:20 AM

Associated Press
United Pilots' Chief Opposes New Carrier
Monday February 24, 7:10 pm ET
By Dave Carpenter, AP Business Writer
United Pilots' Chief Voices Strong Opposition to Low-Cost Carrier

CHICAGO (AP) -- United Airlines' pilots union reiterated strong opposition Monday to the company's proposal for a low-cost carrier even as United pushed ahead with the concept by naming an official in charge of it.

In the latest sign of dissent within bankrupt United over starting a discount airline, pilots' union chief Paul Whiteford sent CEO Glenn Tilton a letter saying the sides are "miles apart" on the planned carrier "with no progress in sight."

Meanwhile, a United executive told a bankruptcy court judge that the airline is looking into the possible closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan, Dow Jones Newswires reported. Senior vice president Gregory Taylor said the company was asked by its board of directors to consider the hub closures as an alternative, along with the possible sale of the airline's Pacific operations.

Company spokesman Joe Hopkins, asked to comment on the testimony, insisted that United has no intention of closing any of its five hubs and is exploring various restructuring alternatives at the request of the creditors' committee that oversees it in bankruptcy. Tilton has told employees repeatedly that he wants to keep all the hubs.

If Tilton's current strategy fails to gain the backing of labor, creditors and the bankruptcy court, however, the world's second-largest airline would have to scramble to put together another plan in order to avoid liquidation.

Other investment firms reportedly have held exploratory talks with members of the creditors' committee about possible financial stakes in United in the future. One includes Texas Pacific Group, a Fort Worth-based private equity firm, according to people familiar with the matter.

Texas Pacific declined to comment, and United attempted to downplay the talks. "Equity financing is essential to United and our significant constituent groups, including our unions, as we successfully exit Chapter 11," the company said in a statement. "Conversations with interested parties continue and will continue to take place."

Whiteford, who represents United's 9,000 pilots, disputed Tilton's numerous recent statements that the Air Line Pilots Association and the company are in general agreement on the elements of United's restructuring.

"Let me be clear: ALPA and the company do not share a common vision for a low-cost carrier," he said. "We question the business wisdom of the concept; we are concerned about the execution risk inherent in your program, and we are fundamentally and unequivocally opposed to any separate airline entity within United that operates under a separate labor agreement, seniority list or corporate structure."

"We are miles apart on this issue -- and several others -- with no progress in sight," Whiteford said in the letter, which was sent to other union leaders.

United had no immediate response.

Specific plans for the low-fare carrier, including a name and launch date, are being worked out. But in the latest evidence that management is intent on going ahead with the airline -- code-named Starfish -- the company announced on a recorded hot line that 19-year United veteran Sean Donohue will be vice president in charge of the low-cost carrier along with another executive from outside the company who has yet to be selected.

United plans to shift about a third of its capacity to the separate airline in order to better compete against discount rivals such as Southwest Airlines and JetBlue on many of its routes.

Despite the poor track record for such carriers, Tilton has told employees in a series of recent meetings that the market has changed and that creating a discount airline is the only way for United to avoid shrinking significantly, including giving up routes and laying off thousands more workers.

Besides having the goal of making United more competitive, the carrier's creation would help the company reach its stated objective of lowering annual labor costs by $2.56 billion. United can seek to have its strategy and terms imposed on the unions in bankruptcy court -- a process it says it plans to proceed with on March 17 -- but at risk of alienating workers.

Like the pilots, the flight attendants' union has resisted the low-fare carrier concept, concerned about jobs, seniority and whether it makes good business sense. The flight attendants plan to issue their own contract proposals later this week.

The machinists' union has refrained from public comment on the concept. But Randy Canale, president of the union district representing baggage handlers and public contact workers, told members earlier this month that the separate carrier "could prove to be the only viable alternative to a competitively irrelevant, shrinking UAL" -- United's parent company.

UAL shares rose 4 cents to close at $1.10 on the New York Stock Exchange.

www.united.com

Scott · 02-25-2003, 01:18 AM

This is becoming posture vs posture! None of the unions oppose the concept of a low cost carrier. What IS objectionable is the notion that massive layoffs will take place, followed by substantial hiring "off the street" to staff said airline. We want one seniority list, though a 2-tier wage scale is inevitable. Essentially, the United "family" must remain intact, though the junior employees will be faced with an initially lower wage scale. Far preferrable to unemployment. Believe me, management is not about to voluntarily begin splitting the airline.

Sean1999 Ram Air TA · 02-26-2003, 01:38 AM

Scott Thanks for the info ? for ya was U30 pilots on a B scale I thought I read that they were then integrated back to mainline scale the last year or so of U30 ops.

Sean

Travelin' Man · 02-26-2003, 02:21 AM

Scott, wouldn't it be simpler at this point to just restructure the entire airline instead of creating a so called airline within an airline? I mean it is confusing enough when I buy a United ticket to only find out that I am actually flying Air Wisconsin or Mesa. Now to add another layer like Starfish or Squishfish makes me wonder WTF Tilton is thinking.

No one has pulled off this concept before and the Shuttle by United was a total joke. All I remember was crowded flights that were far from being anything but inexpensive. Tilton is going to spend hundreds of millions to start this carrier when this money can be applied directly to the existing carrier instead.

I mean, what exactly is wrong with the existing UAL? Last time I flew it wasn't that bad. Service has improved, and the planes were full. UAL has great routes and hubs, and for the most part can and should make money. I even am starting to like the new price structure. A step in the right direction.

I would rather see UAL renegotiate labor contracts, standardize their fleet with fewer types of aircraft (get rid of them Airbus POS), and return to fundementals like quality customer service for ALL paying passengers.

Scott · 02-26-2003, 03:46 PM

T-Man, I do agree, and so do the unions. They will agree to a Starfish, Charlie Tuna, Blowfish, Suckerfish, Goldfish, or whatever it takes! You are correct in that is less a service or demand problem than a cost-containment issue. For some reason Tilton believes integrating a low-cost-carrier within the mainline will cheapen the marketability of the "premium" products of business/first class. What it will do is create a sub-entity with dramatically lower seat-mile costs. And lowering those costs is the only route to survival.

Tracon Doug · 02-26-2003, 04:10 PM

Well Scott, let's hope they don't name it Dogfish or Go Fish..........

What a mess. I wish you guys all the best.

Scott · 02-26-2003, 04:41 PM

Thanks Doug, gotta give you a bit of variety besides the "sky nAAzi" call-sign!

Sean, the original Shuttle had a thinly disguised "B" scale. The pilots earned 7.5% less per hour.... however productivity was greater due to quicker turns and less down-time. Consequently, the average pilot flew a few more hours per month but earned the same pay.

02-26-2003, 10:49 PM

I read somewhere that Starfish is only the code name for the project because it is deceptively beautiful & destroys its prey.

Glenn Tilton stated he didn't know why it was nicknamed Starfish, but I'm glad that's not the real name. The name, still as yet to be determined, will include "United" somewhere in the title.

surreal · 02-28-2003, 02:28 AM

ROFL at an airline that is still in chapter 11 starting an airline. . .

Scott · 02-28-2003, 10:53 AM

It is your laugh that is "surreal"! Ch. 11 is a REORGANIZATION effort, not an excuse to hibernate and ignore competitive forces.
The sub-airline will require little capital; existing aircraft, facilities, maintenance, and most likely personnel will be utilized.

02-25-2003, 12:20 AM	#1
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	United Pilots' Chief Opposes New Carrier Associated Press United Pilots' Chief Opposes New Carrier Monday February 24, 7:10 pm ET By Dave Carpenter, AP Business Writer United Pilots' Chief Voices Strong Opposition to Low-Cost Carrier CHICAGO (AP) -- United Airlines' pilots union reiterated strong opposition Monday to the company's proposal for a low-cost carrier even as United pushed ahead with the concept by naming an official in charge of it. In the latest sign of dissent within bankrupt United over starting a discount airline, pilots' union chief Paul Whiteford sent CEO Glenn Tilton a letter saying the sides are "miles apart" on the planned carrier "with no progress in sight." Meanwhile, a United executive told a bankruptcy court judge that the airline is looking into the possible closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan, Dow Jones Newswires reported. Senior vice president Gregory Taylor said the company was asked by its board of directors to consider the hub closures as an alternative, along with the possible sale of the airline's Pacific operations. Company spokesman Joe Hopkins, asked to comment on the testimony, insisted that United has no intention of closing any of its five hubs and is exploring various restructuring alternatives at the request of the creditors' committee that oversees it in bankruptcy. Tilton has told employees repeatedly that he wants to keep all the hubs. If Tilton's current strategy fails to gain the backing of labor, creditors and the bankruptcy court, however, the world's second-largest airline would have to scramble to put together another plan in order to avoid liquidation. Other investment firms reportedly have held exploratory talks with members of the creditors' committee about possible financial stakes in United in the future. One includes Texas Pacific Group, a Fort Worth-based private equity firm, according to people familiar with the matter. Texas Pacific declined to comment, and United attempted to downplay the talks. "Equity financing is essential to United and our significant constituent groups, including our unions, as we successfully exit Chapter 11," the company said in a statement. "Conversations with interested parties continue and will continue to take place." Whiteford, who represents United's 9,000 pilots, disputed Tilton's numerous recent statements that the Air Line Pilots Association and the company are in general agreement on the elements of United's restructuring. "Let me be clear: ALPA and the company do not share a common vision for a low-cost carrier," he said. "We question the business wisdom of the concept; we are concerned about the execution risk inherent in your program, and we are fundamentally and unequivocally opposed to any separate airline entity within United that operates under a separate labor agreement, seniority list or corporate structure." "We are miles apart on this issue -- and several others -- with no progress in sight," Whiteford said in the letter, which was sent to other union leaders. United had no immediate response. Specific plans for the low-fare carrier, including a name and launch date, are being worked out. But in the latest evidence that management is intent on going ahead with the airline -- code-named Starfish -- the company announced on a recorded hot line that 19-year United veteran Sean Donohue will be vice president in charge of the low-cost carrier along with another executive from outside the company who has yet to be selected. United plans to shift about a third of its capacity to the separate airline in order to better compete against discount rivals such as Southwest Airlines and JetBlue on many of its routes. Despite the poor track record for such carriers, Tilton has told employees in a series of recent meetings that the market has changed and that creating a discount airline is the only way for United to avoid shrinking significantly, including giving up routes and laying off thousands more workers. Besides having the goal of making United more competitive, the carrier's creation would help the company reach its stated objective of lowering annual labor costs by $2.56 billion. United can seek to have its strategy and terms imposed on the unions in bankruptcy court -- a process it says it plans to proceed with on March 17 -- but at risk of alienating workers. Like the pilots, the flight attendants' union has resisted the low-fare carrier concept, concerned about jobs, seniority and whether it makes good business sense. The flight attendants plan to issue their own contract proposals later this week. The machinists' union has refrained from public comment on the concept. But Randy Canale, president of the union district representing baggage handlers and public contact workers, told members earlier this month that the separate carrier "could prove to be the only viable alternative to a competitively irrelevant, shrinking UAL" -- United's parent company. UAL shares rose 4 cents to close at $1.10 on the New York Stock Exchange. www.united.com __________________ United Airlines Historian and Memorabilia Collector WAHS Member

02-25-2003, 01:18 AM	#2
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	This is becoming posture vs posture! None of the unions oppose the concept of a low cost carrier. What IS objectionable is the notion that massive layoffs will take place, followed by substantial hiring "off the street" to staff said airline. We want one seniority list, though a 2-tier wage scale is inevitable. Essentially, the United "family" must remain intact, though the junior employees will be faced with an initially lower wage scale. Far preferrable to unemployment. Believe me, management is not about to voluntarily begin splitting the airline. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

02-26-2003, 01:38 AM	#3
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	Scott Thanks for the info ? for ya was U30 pilots on a B scale I thought I read that they were then integrated back to mainline scale the last year or so of U30 ops. Sean __________________ United Airlines Historian and Memorabilia Collector WAHS Member

02-26-2003, 03:46 PM	#5
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	T-Man, I do agree, and so do the unions. They will agree to a Starfish, Charlie Tuna, Blowfish, Suckerfish, Goldfish, or whatever it takes! You are correct in that is less a service or demand problem than a cost-containment issue. For some reason Tilton believes integrating a low-cost-carrier within the mainline will cheapen the marketability of the "premium" products of business/first class. What it will do is create a sub-entity with dramatically lower seat-mile costs. And lowering those costs is the only route to survival. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

02-26-2003, 04:10 PM	#6
Tracon Doug Vector For Spacing Join Date: Mar 2000 Location: Portland, Oregon Age: 51 Posts: 857	Well Scott, let's hope they don't name it Dogfish or Go Fish.......... What a mess. I wish you guys all the best. __________________ Piss On Noise Abatement! Doug Kenaga Portland TRACON Dallas/Fort Worth TRACON SoCal TRACON Los Angeles TRACON

02-26-2003, 02:21 AM	#4
Travelin' Man Insane Collector Join Date: May 2000 Location: Aspen USA!!! Posts: 1,919	Scott, wouldn't it be simpler at this point to just restructure the entire airline instead of creating a so called airline within an airline? I mean it is confusing enough when I buy a United ticket to only find out that I am actually flying Air Wisconsin or Mesa. Now to add another layer like Starfish or Squishfish makes me wonder WTF Tilton is thinking. No one has pulled off this concept before and the Shuttle by United was a total joke. All I remember was crowded flights that were far from being anything but inexpensive. Tilton is going to spend hundreds of millions to start this carrier when this money can be applied directly to the existing carrier instead. I mean, what exactly is wrong with the existing UAL? Last time I flew it wasn't that bad. Service has improved, and the planes were full. UAL has great routes and hubs, and for the most part can and should make money. I even am starting to like the new price structure. A step in the right direction. I would rather see UAL renegotiate labor contracts, standardize their fleet with fewer types of aircraft (get rid of them Airbus POS), and return to fundementals like quality customer service for ALL paying passengers.

02-26-2003, 04:41 PM	#7
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	Thanks Doug, gotta give you a bit of variety besides the "sky nAAzi" call-sign! Sean, the original Shuttle had a thinly disguised "B" scale. The pilots earned 7.5% less per hour.... however productivity was greater due to quicker turns and less down-time. Consequently, the average pilot flew a few more hours per month but earned the same pay. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

02-26-2003, 10:49 PM	#8
NYCAAer Guest Posts: n/a	I read somewhere that Starfish is only the code name for the project because it is deceptively beautiful & destroys its prey. Glenn Tilton stated he didn't know why it was nicknamed Starfish, but I'm glad that's not the real name. The name, still as yet to be determined, will include "United" somewhere in the title.

02-28-2003, 02:28 AM	#9
surreal WX guru Join Date: Jun 2002 Location: Atlanta Age: 24 Posts: 846	ROFL at an airline that is still in chapter 11 starting an airline. . .

02-28-2003, 10:53 AM	#10
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	It is your laugh that is "surreal"! Ch. 11 is a REORGANIZATION effort, not an excuse to hibernate and ignore competitive forces. The sub-airline will require little capital; existing aircraft, facilities, maintenance, and most likely personnel will be utilized. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

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