Posts Tagged ‘United’

Qantas’ chief Geoff Dixon will step down next month with US $8.5 million (Australian $11.92 million) package this year which is still less than $10.3 million that United’s Glen Tilton received in 2007. But it does make Mr Dixon the second highest paid airline head! It is interesting to note that his compensation is much higher than the other US, European and Asian heads.

The compensation of $11.92 million includes $3 million cash bonus and $6.4 million in share based payments ($ = Australian $ here).

This seems to be really surprising for Qantas Employees, esp. when the airline is going through –

  • 1500 layoffs by Christmas of 2008
  • 3% cap on wage raises
  • Global airline industry demand weakening?
  • Higher costs due to high cost of fuel?

I do understand the need for paying big $$$ to CEOs when the industry and the airline is performing excellently (like in 2007). But in current times with 1500 layoffs, etc. the compensation does not make any sense. Does anyone check executive compensations and contracts?

From The Age

Qantas declared in May this year that it was freezing senior
executive pay in response to high fuel prices, just two months before
the airline announced the job cuts.

Mr Dixon’s latest salary beats even the pay packet of Gerard Arpey,
the head of AMR Corporation, which runs the world’s largest commercial
carrier, American Airlines.

Mr Arpey’s total pay was $US4.6 million in 2007, including a base salary of $US656,000 and stock awards of $US3.1 million.

The Australian also trumps the $US7.73 million Northwest Airlines
paid its boss, Douglas Steenland, in 2007, and the $US7.31 million
Continental gave its chief executive, Larry Kellner. US Airways, the
fifth-largest airline in the US, paid CEO and chairman Douglas Parker a
package of $US5.4 million, including a base salary of $US550,000.

British Airways’ boss Willie Walsh pocketed £701,000 ($A1.57
million) for the year to March. He turned down a £700,000 bonus after a
disastrous opening of Heathrow’s Terminal 5 in London.

Air France-KLM paid chief executive and chairman Jean-Cyril Spinetta
€1.39 million ($A2.5 million) for the year to March, which included
€750,000 salary.

Europe’s second-largest airline, Lufthansa, gave its chief, Wolfgang
Mayrhuber, €2.4 million in 2007, including a €1.4 million bonus.

Singapore Airlines paid its boss, Chew Choon Seng, about $S3.5 million ($A3.2 million) for the year to March 31.


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United Airlines increased the second bag fees to $50 citing high cost of fuel. The fees will start for tickets bough beginning Tuesday September 16th 2008 for travel beginning November 10th 2008 in US or to/from Canada, Puerto Rico and US Virgin Islands.

The fees will not apply to –
1. First/Business Class
2. Premier frequent fliers
3. Active duty military personnel

Funny but hasn’t the crude oil being going down on downward trend from a high of $147 a barrel to almost $96 a barrel? Do we assume that United Airlines has hedged itself at a higher oil price?

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United Airlines had earlier announced plans to stop providing complimentary meals on transatlantic flights in economy class. The idea was to let passengers either bring their own meal or “Buy on Board”.

But today, United finally heard the consumers and announced that it has dropped its plans to charge for meals on the transatlantic flights. It is one thing to charge for meals on domestic flights, but charging for meals on a 8+ hour transatlantic flight is ridiculous. Do you expect me to bring dinner and breakfast for the whole family?

Questions for United Airlines for the dropped plan –
1. Did they realize the logistics in stocking for “Buy on Board” flight on a transatlantic flight?
2. Could they have made sure to arrange for special meal requests?
3. How much does it cost for meals on a transatlantic flight? What percentage of the total ticket price?

I am glad they dropped it, since it looked like a business blunder!

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Unions hate management and management hates union. Both tend to believe that they are entirely responsible in running the company. Both also seem to have entirely different view on how the airline should be run and how each one of them should be paid. Since 2000, the airlines have gone from bad to worse, with negative cash flow and worse union-management relations.

The union-management relationships for United Airlines are no exceptions. Recently, United Airlines’ union and management were in news for court battle with the airline suing ALPA (Air Line Pilots Association) over illegal work practices.

Charges are as follows –

  • Orchestrating work slowdown since 2006
  • Flurry of sick days taken by junior pilots in late July 2006 causing 329 flight cancellations over 8 days while disrupting 36,000 passengers
  • Sharp increase in maintenance-related delays ordered by pilots over the past year
  • Sharp increase in fuel consumption over the past year.

ALPA denies all charges. “The pilots union countered that United was alleging a broader pattern
of abuse because it couldn’t prove the charge that had caused it to
seek an emergency court order in the first place: that ALPA had
directed the flurry of sick days taken by junior pilots likely to lose
their jobs at the summer’s end.”
(from here).

On a separate note, ALPA is trying to oust United’s Chief Executive Glenn Tilton. They have a website by his name – http://www.glenntilton.com/ with the punch line “Glenn Tilton Must Go – United Pilots Ask Your Help in Removing an Incapable Leader”.


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In 2004, due to pressure from Federal Aviation Administration (FAA) airlines at Chicago’s O’Hare Airport, nation’s second busiest airport, had to limit the number of landings from 100 to 88 per hour. FAA on Monday June 16th 2008 announced that it s going to remove the cap saying that “new runways will reduce congestion at the airport”.

Currently due to record high fuel prices, most of the airlines are cutting back capacity and hence the lift does not seem to benefit any airline. At worse, other airlines like Virgin America and Southwest Airlines which still have a growth plan might end up back filing the capacity cuts.

American Airlines is Disappointed

From Dallas News

“We had asked to
keep the caps on another year in order to see if that action would make
O’Hare operate with acceptable dependability for an extended period
before the FAA increased the number of operations.”

Any Good for the Passengers?
From Chicago Tribune

Yet, to the likely dismay of weary air travelers, the decision is
unlikely to lead to less crowded planes or fewer flight delays, despite
the opening of a new runway in November that Chicago contends will
boost the airport’s capacity.”

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Couple of weeks back American Airlines announced that it will start charging $15 for first check bag. In the last couple of two weeks, two other airlines – US Airways and United Airlines have announced their adoption of the checked bags.

So, now the policy stands like this –

  • 1 Bag$15 each way
  • 2 Bags$40 each way ($15 + $25)

Details on First Bag Policies –

United Airlines
Despite announcing the last, United Airlines will start charging $15 per first bag for tickets bought on or after Friday June 13th 2008. The charge is for “travel within the 50 United States, Puerto Rico, the U.S. Virgin Islands and Canada”. Exceptions – “traveling in United First® or United Business®”, “a Global ServicesSM, Mileage Plus® 1K®, Premier Executive®, Premier® or Premier Associate® member”, “a Star Alliance® Gold or Silver member” or military personnel traveling on orders. More here.

American Airlines
They start charging on tickets on domestic flights bought on or after June 15th 2008. All AAdvantage Executive Platinum, AAdvantage Platinum, AAdvantage Gold members and people buying full-fare coach ticket or business tickets are exempt from this charge. Important Part – “The service fee is based on your status and class of ticketed cabin at time of check in.”. All Questions – here.

US Airways
Their start date is July 9th 2008. All Dividend Miles Preferred members (and more) of its frequent flier club are exempt. US Airways will also charge for flights to/from Canada, Latin America and Caribbean. All Questions – click here.

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United Air announced today that it will reduce its fleet by 100 planes by 2009 and cut 1400-1600 jobs. The cut has been attributed to rising fuel costs. This seems to be the first big cost cutting initiative that the airline has made after the failed merger talks with US Airways.

Earlier IATA had mentioned that they forecast a US$6.1 million loss for the global airline industry due to soaring fuel prices.

From CNN

United, owned by UAL Corp., said it was culling 94 B737s and six B747s from its fleet. The airline
is getting rid of its entire fleet of B737s, which it identified as its
“oldest and least fuel-efficient” planes.”

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