Negotiations....
06-07-2012, 12:51 PM
#21
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Joined APC: Feb 2011
Posts: 3,866
BY RAFAEL BERNAL
JUNE 06, 2012
United Continental Holdings Inc. is entering the last phase of a long and sometimes painful integration period. The largest airline in the United States, created through the marriage of air giants Continental Airlines Inc. and UAL Corp., still faces significant challenges but is viewed with optimism by most analysts.
“Maintain a positive long-term view, but expect a bumpy next couple of Qs,” writes Michael Linenberg of Deutsche Bank AG. Merger news still dominates the stage at United, but the company faces new challenges as the possibility of making decisions as an integrated unit becomes a reality.
Overriding United's first-quarter loss of $271 million (perhaps because revenue improved), analysts estimate earnings per share of $4.16 for 2012, a far cry from $2.26 in 2011. The consensus target price for the stock is $31.50, sharply higher than Wednesday's close of $23.53. 52-week high is $25.84. Most analysts rate the stock a buy or a hold.
For the full year 2011 the airline reported earnings of $1.8 billion, up 86.7 percent from 2010's $976 million, which was burdened by merger costs and lingering expenses related to United's long Chapter 11 bankruptcy process.
The 2010 merger between Houston-based Continental and Chicago-based United was the result of pressures faced by the airline industry in the wake of the 2008 financial crisis. Two years after merger announcement, one of the last steps to full integration was completed with the adoption of a single reservation system on March 4. Technical glitches plagued the first week of system use, leading to flight delays and stranded passengers. Much like the merger that caused it, the reservation system got off to a rocky start but soon managed takeoff.
Commercially, systems integration meant the Continental name disappeared entirely, although its tail livery was adopted by all United aircraft. In terms of operations, the customer service move ties in with a major regulatory stepping-stone--receiving a single operating certificate from the FAA--and, crucially, advancements in union negotiations towards an integrated labor force.
Amid the optimism, however, there is caution because, as Linenberg puts it, “it will still take a few Qs for United to get past the majority of its merger-related headwinds.”
Among the challenges the airline faces is competition from low-cost air service providers. At the center of this is a tiff over international air travel from Continental’s former hub, Houston. Competitor Southwest Airlines Co. recently announced its intention to provide international service from Houston’s William P. Hobby Airport, the city’s second biggest airport after George Bush Intercontinental. The move triggered concerns at United, which controls an 80 percent market share of international flights from Houston.
The resulting row involved the Houston City Council and threats of labor cuts at Bush Intercontinental, but provided United a stage to test its leverage as the nation’s largest airline. However, its push was not enough to stop Houston from voting to open up international flights at Hobby, a move finalized earlier this month. United responded by announcing layoffs, suspending expansion plans at Bush and cancelling a planned nonstop flight to New Zealand.
While all airlines face fuel price volatility as a major risk, United must also cope with risks related to its integration process, and not all analysts are sanguine about this. Jamie Baker, an analyst at JP Morgan, which rates United stock overweight, writes in a report, “Should the UAL/CAL merger prove more costly than expected, due to, e.g., extended difficulties in labor negotiations, our view on UAL may be negatively impacted.”
Analysts agree on one positive industry-wide outlook: demand remains strong. In that respect, United has a strong advantage because of its access to two major airlines’ worth of markets. Linenberg writes, “in the June Q, United will redeploy 15% of its mainline departures from weaker to stronger demand markets and accelerate the strategy in the fall and winter.”
United Airlines shows strong potential, nears end of merger pains
JUNE 06, 2012
United Continental Holdings Inc. is entering the last phase of a long and sometimes painful integration period. The largest airline in the United States, created through the marriage of air giants Continental Airlines Inc. and UAL Corp., still faces significant challenges but is viewed with optimism by most analysts.
“Maintain a positive long-term view, but expect a bumpy next couple of Qs,” writes Michael Linenberg of Deutsche Bank AG. Merger news still dominates the stage at United, but the company faces new challenges as the possibility of making decisions as an integrated unit becomes a reality.
Overriding United's first-quarter loss of $271 million (perhaps because revenue improved), analysts estimate earnings per share of $4.16 for 2012, a far cry from $2.26 in 2011. The consensus target price for the stock is $31.50, sharply higher than Wednesday's close of $23.53. 52-week high is $25.84. Most analysts rate the stock a buy or a hold.
For the full year 2011 the airline reported earnings of $1.8 billion, up 86.7 percent from 2010's $976 million, which was burdened by merger costs and lingering expenses related to United's long Chapter 11 bankruptcy process.
The 2010 merger between Houston-based Continental and Chicago-based United was the result of pressures faced by the airline industry in the wake of the 2008 financial crisis. Two years after merger announcement, one of the last steps to full integration was completed with the adoption of a single reservation system on March 4. Technical glitches plagued the first week of system use, leading to flight delays and stranded passengers. Much like the merger that caused it, the reservation system got off to a rocky start but soon managed takeoff.
Commercially, systems integration meant the Continental name disappeared entirely, although its tail livery was adopted by all United aircraft. In terms of operations, the customer service move ties in with a major regulatory stepping-stone--receiving a single operating certificate from the FAA--and, crucially, advancements in union negotiations towards an integrated labor force.
Amid the optimism, however, there is caution because, as Linenberg puts it, “it will still take a few Qs for United to get past the majority of its merger-related headwinds.”
Among the challenges the airline faces is competition from low-cost air service providers. At the center of this is a tiff over international air travel from Continental’s former hub, Houston. Competitor Southwest Airlines Co. recently announced its intention to provide international service from Houston’s William P. Hobby Airport, the city’s second biggest airport after George Bush Intercontinental. The move triggered concerns at United, which controls an 80 percent market share of international flights from Houston.
The resulting row involved the Houston City Council and threats of labor cuts at Bush Intercontinental, but provided United a stage to test its leverage as the nation’s largest airline. However, its push was not enough to stop Houston from voting to open up international flights at Hobby, a move finalized earlier this month. United responded by announcing layoffs, suspending expansion plans at Bush and cancelling a planned nonstop flight to New Zealand.
While all airlines face fuel price volatility as a major risk, United must also cope with risks related to its integration process, and not all analysts are sanguine about this. Jamie Baker, an analyst at JP Morgan, which rates United stock overweight, writes in a report, “Should the UAL/CAL merger prove more costly than expected, due to, e.g., extended difficulties in labor negotiations, our view on UAL may be negatively impacted.”
Analysts agree on one positive industry-wide outlook: demand remains strong. In that respect, United has a strong advantage because of its access to two major airlines’ worth of markets. Linenberg writes, “in the June Q, United will redeploy 15% of its mainline departures from weaker to stronger demand markets and accelerate the strategy in the fall and winter.”
United Airlines shows strong potential, nears end of merger pains
06-07-2012, 12:52 PM
#22
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Joined APC: Feb 2011
Posts: 3,866
“Should the UAL/CAL merger prove more costly than expected, due to, e.g., extended difficulties in labor negotiations, our view on UAL may be negatively impacted.”
Last edited by APC225; 06-07-2012 at 01:11 PM.
06-07-2012, 01:11 PM
#23
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Joined APC: Feb 2011
Posts: 3,866
CHICAGO, June 7, 2012 /PRNewswire/ -- United Airlines announced today that the company has reached a tentative agreement with the Association of Flight Attendants (AFA) covering flight attendants from the company's Continental subsidiary, almost three months ahead of the contract's amendable date.
The agreement extends the current collective bargaining agreement for a term of 28 months beyond its September 1, 2012, amendable date.*Flight attendants will vote on the agreement in the coming weeks.
"We are pleased this agreement will be out for ratification almost three months ahead of the amendable date," said Sam Risoli, senior vice president of inflight.*"I want to recognize the subsidiary Continental AFA Master Executive Council and representatives of the negotiating committee for their intense and successful efforts to secure this agreement for their members in advance of entering into joint contract negotiations alongside their subsidiary United counterparts."
Flight attendants from the company's United subsidiary ratified a new four-year contract in February 2012.
Mike Bonds, executive vice president of human resources and labor relations of United, noted that, "While we are focused on achieving joint collective bargaining agreements covering the integrated flight attendant workgroup and other workgroups, it's also important to be fair to our co-workers in the short term as we transition into the complex process of joint negotiations.*Agreements that are fair to co-workers and fair to the company – like those we've achieved with the AFA – move us forward towards finalizing our merger and fully integrating airline operations to the benefit of our co-workers,*customers and other stakeholders. This agreement demonstrates the importance and positive results of our working together culture, and we want to thank the AFA for their good faith and hard work in getting this agreement done in such a timely manner."
The agreement extends the current collective bargaining agreement for a term of 28 months beyond its September 1, 2012, amendable date.*Flight attendants will vote on the agreement in the coming weeks.
"We are pleased this agreement will be out for ratification almost three months ahead of the amendable date," said Sam Risoli, senior vice president of inflight.*"I want to recognize the subsidiary Continental AFA Master Executive Council and representatives of the negotiating committee for their intense and successful efforts to secure this agreement for their members in advance of entering into joint contract negotiations alongside their subsidiary United counterparts."
Flight attendants from the company's United subsidiary ratified a new four-year contract in February 2012.
Mike Bonds, executive vice president of human resources and labor relations of United, noted that, "While we are focused on achieving joint collective bargaining agreements covering the integrated flight attendant workgroup and other workgroups, it's also important to be fair to our co-workers in the short term as we transition into the complex process of joint negotiations.*Agreements that are fair to co-workers and fair to the company – like those we've achieved with the AFA – move us forward towards finalizing our merger and fully integrating airline operations to the benefit of our co-workers,*customers and other stakeholders. This agreement demonstrates the importance and positive results of our working together culture, and we want to thank the AFA for their good faith and hard work in getting this agreement done in such a timely manner."
06-07-2012, 01:18 PM
#24
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Joined APC: Feb 2011
Posts: 3,866
"While we are focused on achieving joint collective bargaining agreements covering the integrated flight attendant workgroup and other workgroups, it's also important to be fair to our co-workers in the short term as we transition into the complex process of joint negotiations. Agreements that are fair to co-workers and fair to the company – like those we've achieved with the AFA – move us forward towards finalizing our merger and fully integrating airline operations to the benefit of our co-workers, customers and other stakeholders.
This agreement demonstrates the importance and positive results of our working together culture, and we want to thank the AFA for their good faith and hard work in getting this agreement done in such a timely manner."
06-07-2012, 03:23 PM
#26
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Joined APC: Nov 2010
Posts: 3,071
Remember, the jcbas UCH is negotiating are far more complex than Smizek's contract slid across the mahogany table. They are most definitely more complex than the bankruptcy contract shoved up my left nostril in a matter of months. Dare I delve into the fairness issues?
Keep saying it enough and it becomes true.
Keep saying it enough and it becomes true.
06-08-2012, 02:20 AM
#27
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Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
Mike Bonds, executive vice president of human resources and labor relations of United, noted that, "While we are focused on achieving joint collective bargaining agreements covering the integrated flight attendant workgroup and other workgroups, it's also important to be fair to our co-workers in the short term as we transition into the complex process of joint negotiations.
WTH? Is Mikey TRYING to pi$$ us off? Maybe he is, with the injunction and all, I don't know. But what a slap in the face. FAIR??? how about the 3+ and 2+ years CAL and UAL pilots have been without a contract??? F### Mikey.
Sled
WTH? Is Mikey TRYING to pi$$ us off? Maybe he is, with the injunction and all, I don't know. But what a slap in the face. FAIR??? how about the 3+ and 2+ years CAL and UAL pilots have been without a contract??? F### Mikey.
Sled
Last edited by jsled; 06-08-2012 at 02:55 AM.
06-08-2012, 03:06 AM
#28
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Joined APC: Nov 2010
Posts: 3,071
They don't care if we are ****ed off. They rationalize it and then implement a bigger whip. Those whips are coming. It's up to the pilots to do what is right and not bend to fear and threats.
I'm not advocating the "right thing" as trying to disrupt the operation. That is the wrong tactic. My issue is when a legitimate maintenance or dispatch conflict arises, be a Captain. There are some First Officers who will need to stand up as well.
We all know the fairness issue is directed at targeted audiences. It's a wordsmith way to gloss over the subject while at the same time pit employee groups against each other.
I'm not advocating the "right thing" as trying to disrupt the operation. That is the wrong tactic. My issue is when a legitimate maintenance or dispatch conflict arises, be a Captain. There are some First Officers who will need to stand up as well.
We all know the fairness issue is directed at targeted audiences. It's a wordsmith way to gloss over the subject while at the same time pit employee groups against each other.
Last edited by SpecialTracking; 06-08-2012 at 03:15 AM. Reason: Added paragraph
06-08-2012, 04:33 AM
#29
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Joined APC: Jul 2011
Position: Aeronca Champ
Posts: 120
Mike Bonds, executive vice president of human resources and labor relations of United, noted that, "While we are focused on achieving joint collective bargaining agreements covering the integrated flight attendant workgroup and other workgroups, it's also important to be fair to our co-workers in the short term as we transition into the complex process of joint negotiations.
WTH? Is Mikey TRYING to pi$$ us off? Maybe he is, with the injunction and all, I don't know. But what a slap in the face. FAIR??? how about the 3+ and 2+ years CAL and UAL pilots have been without a contract??? F### Mikey.
Sled
WTH? Is Mikey TRYING to pi$$ us off? Maybe he is, with the injunction and all, I don't know. But what a slap in the face. FAIR??? how about the 3+ and 2+ years CAL and UAL pilots have been without a contract??? F### Mikey.
Sled
SCOPE, NO OPEN SKIES... The only acceptable contract, regardless of pay rates
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