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Old May 2, 2008 | 7:51 pm
  #150  
cepheid
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Originally Posted by FCfree
If the planes are full and United is charging more per ticket than Southwest, then why is Southwest making money while United is losing money?
Because "making money" = income minus expenses. Very clearly, UA's expenses are quite high. You are absolutely correct that UA needs to trim its expenses significantly, although there are obviously limits to what can be accomplished without pretty much just liquidating the company and starting over. My point is that lowering airfare and removing fees will reduce UA's income, not increase it, and therefore will make UA's problems even worse.

UA's problem isn't that planes aren't full, it's that even with full planes, expenses are too high. The answer lies not in reducing airfare, which is apparently not necessary given the load factors, but rather in cutting expenses (not just by cutting costs blatantly, but also by reworking various expense items to streamline them and make them more cost-efficient rather than simply trimming them). But, there's a limit to what can be done. Most of your suggestions can be boiled down to, "Turn it into WN." That's just not possible without essentially liquidating the company first, and this thread is about fixing UA without liquidating the company.

(I should also point out that, IIRC, UA actually made a profit during a few quarters last year. The fact that it lost money in Q1 is no surprise, as it is traditionally a bad quarter for legacies.)
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