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United CFO Rainey Implies Certain Elites were "Over Entitled".

United CFO Rainey Implies Certain Elites were "Over Entitled".

Old Jun 3, 2013, 12:25 am
  #1636  
 
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Originally Posted by UnitedConnection

Had a phone agent openly use the word "entitled" when I called to make a (legal) change to an award reservation that he refused since SHARES wouldn't auto price. Sad this is apparently now permeating the culture at all levels.
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Some posters incorrectly believe that John Rainey was "called on the carpet" so to speak for his outrageous remark ("over entitled") to a group of investors concerning UA elites.

To the contrary, Rainey is one of the architects of the demotions to the frequent flier program and, as chief financial officer of UA, approved the demotions that put those "over entitled" elites in their place.

Despite the continuing exodus of former loyal UA customers, Rainey and Smisek appear to believe that their joint decision to ignore customer loyalty and ignore lifetime promises and gut the frequent flier program were good business decisions.

One must ask, how much of the one and one-half billion dollars in losses UA has reported since the demotions were announced are associated with the strange business model now in place at UA.
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dgcpaphd is offline  
Old Jun 4, 2013, 9:45 am
  #1637  
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Originally Posted by dgcpaphd
One must ask, how much of the one and one-half billion dollars in losses UA has reported since the demotions were announced are associated with the strange business model now in place at UA.
Obviously none, because they make no mistakes. A lot of losses were due to the impact of the 787, ya know. The others were a down economy and "growing pains" from the PSS cutover. Don't ya know?
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Old Jun 4, 2013, 9:59 am
  #1638  
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Originally Posted by Superguy
Obviously none, because they make no mistakes. A lot of losses were due to the impact of the 787, ya know. The others were a down economy and "growing pains" from the PSS cutover. Don't ya know?
Don't forget the ever popular, it's the government's fault.
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Old Jun 4, 2013, 10:27 am
  #1639  
 
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Yikes! What did he say exactly?

Originally Posted by UnitedConnection
Had a phone agent openly use the word "entitled" when I called to make a (legal) change to an award reservation that he refused since SHARES wouldn't auto price. Sad this is apparently now permeating the culture at all levels.
malgudi is offline  
Old Jun 4, 2013, 10:30 am
  #1640  
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Originally Posted by UnitedConnection
Had a phone agent openly use the word "entitled" when I called to make a (legal) change to an award reservation that he refused since SHARES wouldn't auto price. Sad this is apparently now permeating the culture at all levels.

Indeed. Management sets the tone for any culture.
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Old Jun 11, 2013, 11:08 am
  #1641  
 
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Originally Posted by dgcpaphd
Some posters incorrectly believe that John Rainey was "called on the carpet" so to speak for his outrageous remark ("over entitled") to a group of investors concerning UA elites.

To the contrary, Rainey is one of the architects of the demotions to the frequent flier program and, as chief financial officer of UA, approved the demotions that put those "over entitled" elites in their place.

Despite the continuing exodus of former loyal UA customers, Rainey and Smisek appear to believe that their joint decision to ignore customer loyalty and ignore lifetime promises and gut the frequent flier program were good business decisions.

One must ask, how much of the one and one-half billion dollars in losses UA has reported since the demotions were announced are associated with the strange business model now in place at UA.
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While I agree with your sentiments from a passenger's perspective, since the UA stock has been on a fairly consistent year-long upswing and has effectively doubled since last July, I can see why shareholders and investors are happy with the Smisek strategy. Of course, how long will it persist?
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Old Jun 11, 2013, 11:16 am
  #1642  
 
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Originally Posted by Always Flyin
While I agree with your sentiments from a passenger's perspective, since the UA stock has been on a fairly consistent year-long upswing and has effectively doubled since last July, I can see why shareholders and investors are happy with the Smisek strategy. Of course, how long will it persist?
The entire stock market is at an all-time high. To some extent, UA has risen with the tide that has caused most stocks to rise. We need to look at UA stock performance relative both to the broader market and to it's competitors. Looking merely at the gain in UA stock price against its own price when the economy was worse doesn't tell us anything.

It also appears to be the case that they have made many decisions to increase short term profitability at the potential expense of long term value.
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Old Jun 11, 2013, 1:04 pm
  #1643  
 
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Originally Posted by mitchmu
The entire stock market is at an all-time high. To some extent, UA has risen with the tide that has caused most stocks to rise. We need to look at UA stock performance relative both to the broader market and to it's competitors. Looking merely at the gain in UA stock price against its own price when the economy was worse doesn't tell us anything.

It also appears to be the case that they have made many decisions to increase short term profitability at the potential expense of long term value.
I don't think one can successfully argue that, "a rising tide lifts all boats," applies to long-term trends in stock prices. While many stock prices may be correlated to short-term market moves, fundamentals will almost certainly underlay 6-12 month trends. Said another way: if UAL keeps trending up, investors must see something different than FlyerTalk.
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Old Jun 11, 2013, 2:01 pm
  #1644  
 
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Originally Posted by fly18725
I don't think one can successfully argue that, "a rising tide lifts all boats," applies to long-term trends in stock prices. While many stock prices may be correlated to short-term market moves, fundamentals will almost certainly underlay 6-12 month trends. Said another way: if UAL keeps trending up, investors must see something different than FlyerTalk.
I believe, in an armchair quarterback kind of way, that investors look at DL two years ahead of UA on the merger cycle, and what DL has achieved.

Then look at UA and correlate future performance based upon the belief that UA can 'catch up' to DL over the next year or two.

Which would lead you to believe that UA stock has plenty of upside.*

mitch: go read the DL forum (I am sure you do already) to see if that is the airline you want to fly. Yes, they do plenty of things well, but many others that are antagonizing their elites as well.

* I rarely buy individual stocks, and when I do they go down! I have not bought UAL, unless it is in one of my mutual funds.
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Old Jun 11, 2013, 2:22 pm
  #1645  
 
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Originally Posted by fly18725
I don't think one can successfully argue that, "a rising tide lifts all boats," applies to long-term trends in stock prices. While many stock prices may be correlated to short-term market moves, fundamentals will almost certainly underlay 6-12 month trends. Said another way: if UAL keeps trending up, investors must see something different than FlyerTalk.
Investors are seeing the increase in margins and drinking the cool-aid. What they're missing are the long term strategic implications of the short-sighted strategy to make UA more like RyanAir.

Originally Posted by LarkSFO
mitch: go read the DL forum (I am sure you do already) to see if that is the airline you want to fly. Yes, they do plenty of things well, but many others that are antagonizing their elites as well.
The only airline I'd commit to in exchange for the loyalty-based value proposition is AA.

AA makes no sense for me out of SFO.

DL seems great operationally but nobody has any illusions about their FF program.

Therefore, since there is no airline out of SFO that rewards my loyalty enough to justify the cost of attaining 1K equivalent, kayaking is the only rational strategy, in my estimation.

I'm probably going to shoot for Gold this year because I think the overall value proposition, especially as it relates to *A international, makes it worth the focus. Beyond that, I see no point.
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Old Jun 11, 2013, 3:15 pm
  #1646  
 
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Originally Posted by mitchmu
Therefore, since there is no airline out of SFO that rewards my loyalty enough to justify the cost of attaining 1K equivalent, kayaking is the only rational strategy, in my estimation.
mitch and Lark, the rational voices of FT! (out of SFO)
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Old Jun 11, 2013, 4:21 pm
  #1647  
 
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Originally Posted by mitchmu
Investors are seeing the increase in margins and drinking the cool-aid. What they're missing are the long term strategic implications of the short-sighted strategy to make UA more like RyanAir.
You may not appreciate its business model, but RyanAir is incredibly profitable and continues to have no difficulty attracting customers.

Domestic air travel is a commodity. Investing heavily to differentiate yourself on product is a good way for an airline to loose bundles of money.
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Old Jun 11, 2013, 4:46 pm
  #1648  
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Originally Posted by LarkSFO
mitch and Lark, the rational voices of FT! (out of SFO)
Although they may be rational voices without systemwide upgrades and 100% bonus miles in their possession now.
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Old Jun 11, 2013, 5:38 pm
  #1649  
 
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Originally Posted by fly18725
You may not appreciate its business model, but RyanAir is incredibly profitable and continues to have no difficulty attracting customers.

Domestic air travel is a commodity. Investing heavily to differentiate yourself on product is a good way for an airline to loose bundles of money.
Well, UA has lost my money. Many here are arguing that they've lost a lot of HVFs and that is the root cause for loss in pricing premium and PRASM.

So, I don't see how that's a win for them.

I don't appreciate the RyanAir business model and while I don't dispute they are profitable, I don't fly them. It works. But, it's not for everyone. There was a class of flyers on UA that has been pushed out by the RyanAir mentality. Time will tell if that was a good strategy.

Originally Posted by tom911
Although they may be rational voices without systemwide upgrades and 100% bonus miles in their possession now.
Yes. And, much happier without the hassles of trying and failing to use those upgrades and miles.
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Old Jun 12, 2013, 11:07 pm
  #1650  
 
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Originally Posted by Always Flyin

While I agree with your sentiments from a passenger's perspective, since the UA stock has been on a fairly consistent year-long upswing and has effectively doubled since last July, I can see why shareholders and investors are happy with the Smisek strategy. Of course, how long will it persist?
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Generally, the market value of a stock is influenced by psychological factors rather than financial income or losses of a corporation. This phenomenon likely explains why UA's stock is doing well, at the present time (and in the short run).

In the long run, despite the favorable price increase of the stock, eventually the enormous recent losses will be center most and the misleading statements often made by UA management will reach investors. When the losses and the misleading statements finally connect, the market price of the stock will drop if the losses continue (and they have and they will).

It is easy to confirm (via SEC reports), that UA has experienced enormous losses since the announcement of the demotions to programs and to services.

It is also easy to confirm that UA experienced a large exodus of former customers, as evidenced by a drop in ticket sales and acknowledged, publicly, by Smisek.

The above two events are not reflected in the stock price.

Smisek calls frequent news conferences and is often interviewed by various industry analysts concerning UA's performance. Smisek makes statements during those events that divert the listeners away from facts. He talks about his new shiny airplane and states that passengers that left UA will return, solely to fly on the Dreamliner. He also makes other claims but never focuses on the huge losses racked up by UA since his tenure began.

Apparently, Smisek has a charm that some people like and which stops listeners from checking facts against what he says.

One example of Smisek’s “charm” can be found in last week’s Chicago Tribune article
http://www.chicagotribune.com/busine...,4326536.story

After reading the article, I am surprised that no one challenged Smisek when he stated to the group “Mergers are tough, but we’re doing well.”

Clearly, considering that UA lost more than one and one-half BILLION dollars (just since the announcement of the demotions to programs and services), Smisek's statement is false.UA is not doing well.

The rest of Smisek's speech is filled with diversionary remarks that deflect away from the poor operational and financial results of UA over the past year and one-half.

When the false statements finally collide with UA's reported losses, the chickens will eventually come home to roost at UA and the stock will decline.
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