Rivals unlikely to exploit United's woes
By Dan Reed
USA Today
Even if United Airlines files for bankruptcy protection, its competitors won't necessarily be circling overhead, waiting to pick its bones clean.
Some Web sites for information on schedules and news about United and other airlines: United Airlines' site for flight information, news releases and changes in policies. Consumer site with news updates, information on other airlines' policies in event of a United bankruptcy, general tips and travel advice. • www.flyertalk.com and www.webflyer.com Information on frequent-flier programs Views on air travel from travel expert Joe Brancatelli, information for business travelers and useful links.
"Day-to-day operations are funded out of cash flow, and that goes on whether the company files Chapter 11 or not," says Ron Kuhlman, vice president of Unisys R2A, an industry consulting firm in Hayward, Calif. "For now, nothing much should change."
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It's been 20 years since a major airline filed a Chapter 11 bankruptcy and simply stopped flying. Braniff International waited until it was out of cash before filing in May 1982. Its over-night collapse enabled American and Delta to solidify their new hubs at Dallas/Fort Worth, and Eastern Airlines became the dominant carrier in Kansas City.
If United files for Chapter 11, it probably won't operate 100 percent of its pre-bankruptcy schedule, but it's likely to be tweaking. The carrier has trimmed about 25 percent from its pre-Sept. 11, 2001, schedule and plans to cut an additional 6 percent in first-quarter 2003.
Most rival airlines couldn't take advantage of United's weakness, anyway. "It's not like the other airlines are in great financial shape themselves and able to pounce at a moment's notice," says J.P. Morgan Chase analyst Jamie Baker.
Small increases in service on a handful of keenly competitive routes might be in order. But Baker discounts the possibility of big moves like American's quick establishment of a Miami hub in the late 1980s after Eastern's Chapter 11 bankruptcy.
The one exception could be discount king Southwest Airlines. As the only carrier to remain profitable since the terror attacks, Southwest has the financial strength and momentum to jump into new markets.
But even Southwest's performance has been hurt by the industry downturn. And its executives aren't eager to spend money to get market share quickly that they think they'll get eventually anyway.
One fear other carriers have in a bankruptcy is a fare war. But Baker says that hasn't happened with
US Airways, which entered Chapter 11 in August, and it's unlikely to happen with United, which hasn't lost a lot of passengers despite months of publicity about its problems.
Besides, Kuhlman says, prices are as low as they've been in a decade. "How much lower can they go?"
