United Orders 4 Boeing 787-9's and 25 EMB-175
07-22-2018, 11:34 AM
#221
Gets Weekends Off
Joined APC: Dec 2007
Posts: 118
I'm not one that is big on regulation but in this case it is needed. The way to fix outsourcing is to regulate that the company doing the outsourcing is RESPONSIBLE for the product. I can't stand it when I hear guys complain that we take the hit for a Skywest or Mesa mistake. We should take the hit and be financially responsible for them just like we are our own. If we were would would be thinking long and hard about who flies what.
07-22-2018, 11:50 AM
#222
Banned
Joined APC: Aug 2015
Position: 737
Posts: 257
That's EXACTLY what this article says: https://www.flightglobal.com/news/ar...l-jets-450485/
Not only does UAL management state that mainline RJs don't work, Laderman stuck another stake into SNBs by stating that adding another fleet type adds complexity - another button they'll press when asking for loosening scope.
That's all BS. They can make SNBs work at mainline, but I'm of the mind that we return the 'favor' by not negotiating SNB rates in the new contract. That makes it even more painful as scope choke tightens if there's no payscale for new SNBs when they finally decide they want SNBs.
Not only does UAL management state that mainline RJs don't work, Laderman stuck another stake into SNBs by stating that adding another fleet type adds complexity - another button they'll press when asking for loosening scope.
That's all BS. They can make SNBs work at mainline, but I'm of the mind that we return the 'favor' by not negotiating SNB rates in the new contract. That makes it even more painful as scope choke tightens if there's no payscale for new SNBs when they finally decide they want SNBs.
07-22-2018, 12:08 PM
#223
Gets Weekends Off
Joined APC: Mar 2006
Position: guppy CA
Posts: 5,171
I think you're Confused on what a Small Narrow body is. Per our contract a SNB is a E190/195 or a CS100 (A220). The Article is saying 175s don't work at Mainline. Nowhere in the article does it say they won't buy a SNB (100 seater) for mainline despite it adding "complexity". That is the ONLY path way to getting more 76 seat RJs that they desperately want. Scope Choke is working and Im confident we'll see some form of 100 seat jet here at United in the not to distant future.
In that context, your previous response doesn't make much sense. So you're stating that senior management is stating that they'll be buying SNBs, eh? Please post an article stating such.
If you don't have a link stating explicitly that they're buying SNBs, there's no need to negotiate rates. It's a waste of negotiating capital and would give us greater leverage when they're finally ready to buy a SNB.
07-22-2018, 12:11 PM
#224
Gets Weekends Off
Joined APC: Nov 2009
Posts: 5,244
That's EXACTLY what this article says: https://www.flightglobal.com/news/ar...l-jets-450485/
Not only does UAL management state that mainline RJs don't work, Laderman stuck another stake into SNBs by stating that adding another fleet type adds complexity - another button they'll press when asking for loosening scope.
That's all BS. They can make SNBs work at mainline, but I'm of the mind that we return the 'favor' by not negotiating SNB rates in the new contract. That makes it even more painful as scope choke tightens if there's no payscale for new SNBs when they finally decide they want SNBs.
Not only does UAL management state that mainline RJs don't work, Laderman stuck another stake into SNBs by stating that adding another fleet type adds complexity - another button they'll press when asking for loosening scope.
That's all BS. They can make SNBs work at mainline, but I'm of the mind that we return the 'favor' by not negotiating SNB rates in the new contract. That makes it even more painful as scope choke tightens if there's no payscale for new SNBs when they finally decide they want SNBs.
Michael Linenberg
Hi. Scott to go back to Hunter’s question about flying regionals at mainline, you ran through some math. Presumably that was for the 76 seaters. And my question I guess is now that you’ve done a lot of work on the network and I know various people at United have said that either you’re looking at 100 seaters or you’re not looking at 100 seaters. And now with this A220 seemingly gaining legitimacy in the marketplace and I do – I think your predecessors at United did do a lot of work on C-series. Like how do you think about the possibility of a 100-seater or maybe it’s 110 or 120-seater and does that airplane then have a role within mainline? And I’m not talking about an A319 or 737-700. I’m really talking about like an E195 or what would be the A220.
Gerry Laderman
Mike, it’s Gerry. I’ll take that question. My team coordinates the analysis of all the options we have on the fleet going forward working with Andrew’s team and Greg Hart’s team. So it’s a complicated question on how we manage the fleet. We’ve never actually stopped looking at that small narrowbody question. We’ve looked at it a few years ago, decided it’s not the time. We continue to look at it. I want to be cautious in my comments so I don’t have a line of manufacturers waiting for me outside this room when we’re done with the call, so I’m not going to tell you too much about what we’re looking at when but I would say that it’s always true that everything’s on the table. One caveat to think about though and this goes for that category or really any category of fleet which is complexity. And we’re getting much better at really understanding the cost of complexity of operating multiple fleet types. But there may be a case where there’s a particular aircraft that’s just perfect for a route but if that means bringing in a new fleet type, you’ve got to burden that with all the cost associated with that. So we’re pretty conscious about that as well. So as we make decisions on fleet, we’ll let you know. But from small narrowbody to large widebody we continue to look at every part of the fleet.
Hi. Scott to go back to Hunter’s question about flying regionals at mainline, you ran through some math. Presumably that was for the 76 seaters. And my question I guess is now that you’ve done a lot of work on the network and I know various people at United have said that either you’re looking at 100 seaters or you’re not looking at 100 seaters. And now with this A220 seemingly gaining legitimacy in the marketplace and I do – I think your predecessors at United did do a lot of work on C-series. Like how do you think about the possibility of a 100-seater or maybe it’s 110 or 120-seater and does that airplane then have a role within mainline? And I’m not talking about an A319 or 737-700. I’m really talking about like an E195 or what would be the A220.
Gerry Laderman
Mike, it’s Gerry. I’ll take that question. My team coordinates the analysis of all the options we have on the fleet going forward working with Andrew’s team and Greg Hart’s team. So it’s a complicated question on how we manage the fleet. We’ve never actually stopped looking at that small narrowbody question. We’ve looked at it a few years ago, decided it’s not the time. We continue to look at it. I want to be cautious in my comments so I don’t have a line of manufacturers waiting for me outside this room when we’re done with the call, so I’m not going to tell you too much about what we’re looking at when but I would say that it’s always true that everything’s on the table. One caveat to think about though and this goes for that category or really any category of fleet which is complexity. And we’re getting much better at really understanding the cost of complexity of operating multiple fleet types. But there may be a case where there’s a particular aircraft that’s just perfect for a route but if that means bringing in a new fleet type, you’ve got to burden that with all the cost associated with that. So we’re pretty conscious about that as well. So as we make decisions on fleet, we’ll let you know. But from small narrowbody to large widebody we continue to look at every part of the fleet.
Hunter Keay
Great. Thanks. And then a question for Scott. What are some of the advantages and disadvantages of operating large gauge RJs in-house with your own pilots as opposed to third-party agreements?
Scott Kirby
Well, it’s simple. It’s economics. The issue is all about economics. And one of the things that all of us here at United and I personally am proud of over the last five or six years is what we’ve been able to do with pay for our employees. And they went through an awful lot in the decade or so following 9/11 and it’s been great to have contracts with the kind of pay raises at least and then that [indiscernible] no one would have thought was possible. And I’m really proud of that and happy for people and they deserve it. What that means, however, is we have a cost structure that simply doesn’t work on small airplanes. We need to spread those costs out over a larger number of seats. I’ve been trying to spread them out over 70 or 80 seats. It simply doesn’t work. And flying a regional jet at the mainline is north of $1 million per year per airplane and these are airplanes that generate $9 million, $10 million in revenue and make 8%, 9% margins. And so you can do the math. You take an airplane that’s nicely profitable and you turn it unprofitable with that kind of cost structure. And so it’s purely about economics. The great news is, is that we’re growing the mainline. What our employees really care about is opportunity for them to fly big airplanes, fly widebody and fly large narrowbody. And our growth plan is designed to do just that. I think that United Airlines – I get asked – as an ex-Air Force guy, I occasionally get asked by people in the Air Force a recommendation on what airline to go fly at and I can honestly tell them and have been that the best and fastest carrier growth opportunities for pilots is at United Airlines because we are growing the mainline and we have opportunity to continue the grow plan and growing out our Mid-Continent hubs. And that’s what’s important to our pilots and that’s what we’re focused on delivering for them.
Great. Thanks. And then a question for Scott. What are some of the advantages and disadvantages of operating large gauge RJs in-house with your own pilots as opposed to third-party agreements?
Scott Kirby
Well, it’s simple. It’s economics. The issue is all about economics. And one of the things that all of us here at United and I personally am proud of over the last five or six years is what we’ve been able to do with pay for our employees. And they went through an awful lot in the decade or so following 9/11 and it’s been great to have contracts with the kind of pay raises at least and then that [indiscernible] no one would have thought was possible. And I’m really proud of that and happy for people and they deserve it. What that means, however, is we have a cost structure that simply doesn’t work on small airplanes. We need to spread those costs out over a larger number of seats. I’ve been trying to spread them out over 70 or 80 seats. It simply doesn’t work. And flying a regional jet at the mainline is north of $1 million per year per airplane and these are airplanes that generate $9 million, $10 million in revenue and make 8%, 9% margins. And so you can do the math. You take an airplane that’s nicely profitable and you turn it unprofitable with that kind of cost structure. And so it’s purely about economics. The great news is, is that we’re growing the mainline. What our employees really care about is opportunity for them to fly big airplanes, fly widebody and fly large narrowbody. And our growth plan is designed to do just that. I think that United Airlines – I get asked – as an ex-Air Force guy, I occasionally get asked by people in the Air Force a recommendation on what airline to go fly at and I can honestly tell them and have been that the best and fastest carrier growth opportunities for pilots is at United Airlines because we are growing the mainline and we have opportunity to continue the grow plan and growing out our Mid-Continent hubs. And that’s what’s important to our pilots and that’s what we’re focused on delivering for them.
Here’s the full transcript but I would encourage everyone to just let the MEC and NC work. They know the score and what we will and will not allow.
07-22-2018, 12:24 PM
#225
Banned
Joined APC: Aug 2015
Position: 737
Posts: 257
Yep, I wrote my response too fast. I had already looked at section 3 well before posting.
In that context, your previous response doesn't make much sense. So you're stating that senior management is stating that they'll be buying SNBs, eh? Please post an article stating such.
If you don't have a link stating explicitly that they're buying SNBs, there's no need to negotiate rates. It's a waste of negotiating capital and would give us greater leverage when they're finally ready to buy a SNB.
In that context, your previous response doesn't make much sense. So you're stating that senior management is stating that they'll be buying SNBs, eh? Please post an article stating such.
If you don't have a link stating explicitly that they're buying SNBs, there's no need to negotiate rates. It's a waste of negotiating capital and would give us greater leverage when they're finally ready to buy a SNB.
We already have negotiated rates for them. The leverage we have is outlined section 1 . It’s working. They have no other path toward increasing regional feed. It would be silly and poor negotiating for them to come out in public and say they’re buying a 100 seater before the deal was done. We’re in a good position.
07-22-2018, 12:51 PM
#226
Gets Weekends Off
Joined APC: Mar 2006
Position: guppy CA
Posts: 5,171
We already have negotiated rates for them. The leverage we have is outlined section 1 . It’s working. They have no other path toward increasing regional feed. It would be silly and poor negotiating for them to come out in public and say they’re buying a 100 seater before the deal was done. We’re in a good position.
They've had the opportunity to buy an SNB for how many years now with negotiated rates? So why waste negotiating capital on C2019 for rates they don't look too interested in right now.
07-22-2018, 01:41 PM
#227
Gets Weekends Off
Joined APC: Aug 2013
Posts: 2,159
The only risk I see is engaging with them and talking about stuff we don't need to be talking about. It's like hostage negotiations. They just want to keep our ALPA reps talking.....
07-22-2018, 04:42 PM
#228
Banned
Joined APC: Mar 2018
Posts: 1,358
There is mileage to be gained during contract talks. They’ll talk about how they want to buy a bunch of whatever you want to hear if they just get scope relief. I wouldn’t expect much until a contract is signed. Since scope relief isn’t going to happen we can just enjoy the almost 200 max/used bus aircraft that are on the way. Let the bean counters decide if it makes financial sense to introduce a 100ish seat jet allowing more rj’s, or just buy max7 or 319 neo. Neither is selling well and could probably be had for a good price.
07-22-2018, 05:23 PM
#229
Gets Weekends Off
Joined APC: Nov 2009
Posts: 5,244
There is mileage to be gained during contract talks. They’ll talk about how they want to buy a bunch of whatever you want to hear if they just get scope relief. I wouldn’t expect much until a contract is signed. Since scope relief isn’t going to happen we can just enjoy the almost 200 max/used bus aircraft that are on the way. Let the bean counters decide if it makes financial sense to introduce a 100ish seat jet allowing more rj’s, or just buy max7 or 319 neo. Neither is selling well and could probably be had for a good price.
07-22-2018, 06:54 PM
#230
Gets Weekends Off
Joined APC: Mar 2017
Posts: 559
Further what Kirby said was that a an 80 seat at mainline isn’t AS proftiable as it is outsourced at 70 seats... Notice hes not saying 100 seaters aren’t profitable. They can also pull an 8-9% margin flying them at mainline, or get 0% margin being scope choked. The third option being a NSNB and allowing them more large RJs
Last edited by da42pilot; 07-22-2018 at 07:10 PM.
