<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Plato90s:
I also think UA needs to shrink its network. Profitable carriers like Southwest and Alaska operate routes that make money. UA and other majors operate routes because they can. If JFK-LAX is profitable for 1 airline, 3 others try to jump in. The route isn't profitable for 4 airlines at once, but none of the 4 will bow out. </font>
I echo the response of gglockner above, but I would also point out that if you think the labor negotiations have been fun up until now, just wait to see how a significant shrinkage of the network will play.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Plato90s:
There's a sense of the pursuit of revenue instead of profits, which was the same attitude that drove lots of dot-com's and telecoms out of business. I've never worked at an airline, but I saw enough of that kind of "revenue at all costs" attitude first-hand at the other 2 categories described above. </font>
I think the point you are making is market share at all cost, not necessarily revenue at all cost – equally perilous of course, but that was the argument of the .coms and telecoms as well as part of the rationale for an integrated airline network. Remember, forget profit, it is all about eyeballs!!!!!
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Plato90s:
With these 2 premises as the basis of my thinking, I don't see a way for UA to be restructured into a profitable enterprise. It'll continue to be a money-burning machine and pouring more cash into it isn't really the most rational thing. </font>
If this is really true, then AA, DL and company also have fatally flawed business plans – here we come Greyhound
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Plato90s:
If I were a tin-hearted bean-counter, cold calculation would lead me to liquidate UAL. Unsecured creditors, including shareholders, as well as UA employees would be screwed, but there's enough value in UA's corpse to pay off its secured creditors.</font>
Since when are shareholders unsecured creditors? At this stage in the process the existing shareholders are treated by the court as a life form just slightly below pond scum.
Re the secured creditors – they do not get paid off – they get their collateral back. I doubt rather strongly there are any UCC filings out there for UA that are blanket in nature (other than the DIP facility of course!!) These obligations are non-recourse and your collateral is your security – if that collateral is worth less today than when you lent against it – OOPS – SORRY.
For what it is worth, I really do believe that a “full service” integrated network carrier in the US will liquidate in the next 5 years – it may even be UA but I think it will take another trip to the bankruptcy alter for that to happen.