Only Solution for United = Liquidation

[Matt Molnar]

Good article in BusinessWeek about the disaster that is United Airlines, from their never ending labor disputes, to the billions in losses they've racked up quarter after quarter, to begging US and CO to merge with them.

They reached a new low point last week: the total market value of the company sank to the same amount they've spent on lawyers and "consultants" since their 2002 bankruptcy filing...a miserable $335 million. Undoubtedly their planes alone are worth more than that. With no turnaround in sight, the only solution would seem to be selling it all off.

United Airlines: O'Hare Today, Gone Tomorrow (http://www.businessweek.com/magazine/content/08_34/b4096000437619.htm) [BusinessWeek]

[i_mizrahi]

I fully agree with the article.

Yet, there are many questions regarding the current U.S. airline industry: how well other airlines, such as U.S. Airways, are really doing? why have CO recently chose to allign with UA? how long can AA continue to operate an aging long-haul fleet without ordering new planes? why is it that European airlines make a profit where U.S. airlines lose (and don't give me the answer of "government subsidies"...)

And by the way, only two days ago I checked CO fares from EWR to LHR in November - $557!!!! how can it be with over $115 oil? something is wrong here.

Izhar

[ManniGee]

I do not know, if European airlines are doing so much better. Iberia ist struggling, Austrian is not making any profit, Swiss went bankrupt a few years ago, not to forget SABENA I do not know how SAS and FINAIR are doing. The big three, LH, BA and AF/KLM are making billions in profit...I guess, because they did their homework years ago. LH was in pretty bad shape 10 to 15 years ago, but with the help of all employees they managed to changed the whole airline within years. I were pretty bad years for all, but now they are fine.

[Matt Molnar]

European airlines took longer to hurt, but they are hurting now. The strength of their currency made fuel cost increases, sold in cheap US$, less painful. Fuel finally went up enough to sting them though, and now the European economy is slowing and the Euro is weakening, which is all bad news for their airlines.

[bonanzabucks]

Even Cathay Pacific lost money last quarter and they're almost always profitable and the bulk of their operations are in the "lucrative" Asia region. Oil is hurting everyone. BA's profits are way down too and they're generally considered the world's best-run airline.

Speaking of oil, the Washington Post reported today that the CFTC recently discovered that 81% of oil futures contracts traded on the NYMEX were done by speculators who were not receiving physical oil. This one Swiss company in particular, Vitol, traded 11% of the oil at NYMEX in July. They never took any delivery of a single barrel nor were they acting as middlemen for producers and buyers. This number is much higher than previous estimates and it could be higher still as the CFTC is collecting more data from traders. This is the same regulatory agency that clung to the Bush mantra that "supply and demand" were responsible for oil's ills. It's so laughable...or it would be if it didn't affect people's livelihoods. the CFTC is now saying that their initial report was just an interim and that they didn't have enough data back then. Bull****. Either they're really stupid and weren't doing their jobs or they knowingly looked the other way.

The scary thought is that this 81% is at NYMEX, which is the most "regulated" commodities market in the world. The London ICE exchange (which was founded by Goldman Sachs and Morgan Stanley -- the two investment banks with the largest stake in oil and the only ones who are feverishly bullish -- so they could avoid regulations), Dubai exchange and those in Singapore and Hong Kong are much less regulated and trade much more oil, so I'm sure speculators have an even greater share of the pie over there and have even more sway than they do here.

As for UAL, I read that they're going to start charging for meals on transatlantic flights out of IAD. They're just begging to go out of business with a business model like that. Where does Tilton come up with his ideas? Oh, I forgot that he used to work for Big Oil...

[i_mizrahi]

Even if all the above analysis about the European airlines were true, I can't imagine a European airline steeping so low as to charge its passengers for meals on TRANSATLANTIC FLIGHTS. This is the new policy from UA.

I just don't understand how LH keeps its alliance with UA. The whole concept of partnering with another airline is supposed to be on the basis of joint standards.