United Airlines Out of Bankruptcy

To quote Frank Costanza, “I’m back, baby!”. United Airlines exited bankruptcy protection today.  I suppose that should be cause for celebration, as many (most?) people doubted the legacy carrier would even make it this far.

Don’t get me wrong, I’m hoping for the best.  United is a historic airline — it was founded by Boeing and has ties to the earliest days of aviation.  But my gut feeling is that UAL’s prospects are still murky at best.

For one thing, unions are going to be putting the screws to the barely-in-the-black finances almost immediately.

Several of United’s unions, still stinging from steep pay cuts and other concessions in bankruptcy, issued statements putting management on notice that they expect to see better results for all their sacrifices. “With bankruptcy behind us, there are no more excuses, no room for error and no second chances,” said Mark Bathurst, head of the pilots’ union.

To my ears, “better results” means restoring the pay cuts that have allowed the airline to exit bankruptcy in the first place.  If United were to report “better results”, the unions would push that much harder for more money, making it impossible for the company to get ahead.

I’m a pilot, so I know what these guys are worth.  I wouldn’t begrudge them a six figure salary.  I just don’t see where the money will come from.  Whether the company got into trouble because of management incompetence or some other factor, it is where it is.  Unless an airline is in bankruptcy, they have little recourse against a strike.  Simply surviving seems a best case scenario for the foreseeable future.

A friend works for Northwest and is certain that airline’s pilots will be going on strike — a move that will likely force a shutdown.  With so many other airlines on the ropes, United is going to be facing tough times, not to mention a very poor reputation, even by industry standards.

United used to offer some of the best customer service, but the cuts have eliminated much of what made flying the “friendly skies” special in the first place.  UAL still has some advantages, though.  Their frequent flier program, for example.  I take advantage of that through the United Visa card, and have built up enough points for several free round-trip tickets anywhere in the United States.

The more time I spend in this industry, the less I understand how any airline can make money.  I see GA singles going for $300 an hour, King Air charters at $3,000, and bizjets at more than twice that.  A 737 with 100 passengers at $200 per seat is only bringing in $20,000.  Between fuel , landing fees, maintenance, crew salaries, insurance, and capital costs, I just don’t see how any airline ever made money, even when times were good.

  2 comments for “United Airlines Out of Bankruptcy

  1. John
    February 2, 2006 at 1:28 pm

    A friend who is a furloughed United pilot is set to return to the airline. He told me that in addition to paying passengers, they made money on cargo that they carried. Especially if they were carrying US mail. Go figure.

    Best of luck to United.

  2. Ron
    February 2, 2006 at 3:51 pm

    Yes, I gather that mail contracts are some of the most lucrative for the airlines. It probably doesn’t hurt that cargo never complains or asks for refunds, vouchers, food, or lodging.

    No wonder some of the happiest pilots seem to be flying freight. 🙂

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