Posted on: Tuesday, February 25, 2003
United pilots resistant to discount carrier
By Dave Carpenter
Associated Press
CHICAGO — United Airlines' pilots union reiterated strong opposition yesterday to the company's proposal for a low-cost carrier even as United pushed ahead with the concept by naming an official in charge of it.
In the latest sign of dissent within bankrupt United over starting a discount airline, Paul Whiteford, chief of the pilots union, sent CEO Glenn Tilton a letter saying the sides are "miles apart" on the planned carrier, "with no progress in sight."
Meanwhile, a United executive told a bankruptcy court judge that the airline is looking into the possible closure of its hubs in Los Angeles, Denver and Washington as part of its reorganization plan, Dow Jones Newswires reported.
Senior vice president Gregory Taylor said the company was asked by its board of directors to consider the hub closures as an alternative, along with the possible sale of the airline's Pacific operations.
Company spokesman Joe Hopkins, asked to comment on the testimony, insisted that United has no intention of closing any of its five hubs and is exploring various restructuring alternatives at the request of the creditors' committee that oversees it in bankruptcy.
Tilton has told employees repeatedly that he wants to keep all the hubs.
If Tilton's strategy fails to gain the backing of labor, creditors and the bankruptcy court, however, the world's second-largest airline would have to scramble to put together another plan to avoid liquidation.
Other investment firms reportedly have held exploratory talks with members of the creditors' committee about possible financial stakes in United in the future. One includes Texas Pacific Group, a Fort Worth-based private equity firm, according to people familiar with the matter.
Texas Pacific declined to comment, and United attempted to downplay the talks.
Whiteford, who represents United's 9,000 pilots, disputed Tilton's numerous recent statements that the Air Line Pilots Association and the company are in general agreement on the elements of United's restructuring.
"Let me be clear: ALPA and the company do not share a common vision for a low-cost carrier," he said. "We question the business wisdom of the concept, we are concerned about the execution risk inherent in your program, and we are fundamentally and unequivocally opposed to any separate airline entity within United that operates under a separate labor agreement, seniority list or corporate structure."
United had no immediate response.
Specific plans for the low-fare carrier, including a name and launch date, are being worked out. But in the latest evidence that management is intent on going ahead with the airline — code-named Starfish — the company announced on a recorded hot line that 19-year United veteran Sean Donohue will be vice president in charge of the low-cost carrier along with another executive from outside the company who has yet to be selected.
United plans to shift about a third of its capacity to the separate airline to better compete against discount rivals such as Southwest Airlines and JetBlue on many of its routes.
