bseller

Easiest question in the world!!

Answer: File for bankruptcy protection.

Dave

BearX220

Oh, God, you're probably right. And misuse BK to dodge obligations while ramping up the complaining about how government regulation and taxes are killing them.

fly18725

I think there are some fundamental structural differences between cruise lines, hotels, and airlines. Ignoring labor, regulations, franchise and ownership structures and trying to make a blanket comparison is he pinnacle of oversimplification.

halls120

So you really think that Smisek understands the competitive landscape, and that his actions did nothing to drive United to the bottom of customer service rankings or make policies that lead to extremely poor operational performance? That all of United's current problems are due to factors beyond his control?

fly18725

I hope that's a rhetorical question, because it is unrelated to what I posted.

bocastephen

Oh, he understands it clearly - it's just that he doesn't care. He is achieving the metrics that matter to the board and Wall Street, while planes are full, capacity is trimmed, competition is swept away, and he can actively and illegally collude with other airlines to keep capacity low and fares high - the latter will hopefully soon blow up and splatter all over the industry if the DoJ does what it's suppose to.

The UA of today is not a product of incompetence, it's a result of deliberate planning to take advantage of lower costs and almost non-existent competition.

Alpha Golf

+1 This exactly.

raehl311

That depends if you believe there is an implied federal guarantee that the fund will be bailed out if it becomes insolvent.

cerealmarketer

I would say UA had a better first class product than AA.

But at no point in the last 10 years has it had a better first class product than Cathay, ANA, Singapore, Air France, or any Gulf carrier.

It took 12 years to catch up with BA and even start to add flat beds to Business.

US carriers have lagged for a long time as first class has been upgrade class and served accordingly.

UA and AA peaked in quality around the mid to late 90s. And it's been a painful road down since.

What this cycle reminds me of is the 1994-2000 Greenwald / Goodwin era. Back then United made record profits after a terrible period of losses but they were not a cohesive, reliable operation - it was simply riding a broader aviation recovery.

Greenwald was labeled a hero by the Street but they made the employee ownership mistake, took on too much debt for the massive 777 order, and simply rode the broader wave - leaving them terribly exposed when their unions asked for more and their core HVF market - California - turned hard in 2001. 40% of their revenue was from California at one point.

I would put Goodwin's multimillion cash parachute while the carrier was on the brink of liquidation in the tone deaf department - and that was the board's fault, not his.

And the problems from 20 years ago continue to haunt the airline. Blame the unions, blame management. But it was the biggest debacle in US aviation history.

My fear is there is something systemic about United and its workforce that eats management alive whenever there is a whiff of profitability.

At least they and the industry have kept leverage well below what it was back then.

JBord

Exactly. And this is why the board is happy and Smisek isn't in any danger. Had the economy worsened, it might be a different story now. By the time the environment changes, he'll have made his money and gladly make way for the next CEO.

cerealmarketer

There is precedent for a management team being forced out during 'good' times.

Dick Ferris in 1987 lost the support of the Street and the unions when he created Allegis and tried to turn UA into a technology company.

And Steven Wolf in 1994 when the employees decided to buy out the airline.

But so far this team has stuck to aviation knitting.

bocastephen

I think the only way management is going out will depend on the price collusion scandal. If the airline lobby forces the govt to throw up some dust, stomp and clap, then go away, nothing will change...but if the investigation has its own legs and results in quantifiable issues that result in heavy sanctions and perhaps even criminal investigations, then Smisek and team could be out for no other reason than the board covering its own behind.

Plus we still have the Chairman's Flight scandal to work through with possible criminal charges down the road.

iflyuaaa

exactly!!!! people on this board don't seem to understand that the UA of today is not an accident. they choose not to invest in on time performance or good service because they don't feel they get a financial return on it. fares are high and planes are full, so why bother to spend money. smisek may be a genius. everyone here complains yet keeps flying them and giving smij money.

fly747first

So untrue. For those of us who aren't in the fortress hubs, it has been very easy to stop flying UA. My company pulled its contracts out of UA nearly two years ago and I know many others that have done the same. Every now and then we may have to fly UA due to a pure timing issue, but 99% of our business is going to AA, B6, and DL.

Bottom line, UA is still profitable because there is little competition after so many mergers and capacity has been drastically cut, but make no mistake, UA still isn't and I'm certain will not be nearly as profitable as its competitors.

Why, thank you.

ExtonUS

I will regret the loss of first class but it does seem that none of the US carriers will keep that as a long term model. I guess US based companies just throw the executives on private airlines instead of springing for F like Europeans? Or maybe all the US airlines are nuts and there really is a domestic market for an airline with a true first class international offering.

In any case what I wonder is if the continued improvements in J class hard product will open space in the middle for a 'premium economy' that effectively overtakes J? I know the bean counters at every company I have worked at would probably jump at putting us into $2-3k barcalounger over a $6-9k J class seat.