United’s bankruptcy – Comment by Jeremy Skidmore
I was recently in the US and turned on a television to hear an amazing news report: “United Airlines has filed for Chapter 11 bankruptcy, but its flight schedules will not be affected.”
In the UK, that would be a contradiction in terms, but in the US there is a different system.
When a company is in a total mess, it is allowed to file for bankruptcy and carry on operating while it keeps creditors at arms length and tries to sort out its problems.
And boy, has United got problems.
The airline is losing a mind-boggling $20 million a day and has been tagged the biggest business failure in US aviation history.
There’s a certain irony in airline being able to escape the harsh realities of the free market after forcing travel agents to accept them with commission cuts.
Of course, United has had to deal with extraordinary circumstances – no one predicted the September 11 attacks or the subsequent fall-out.
And United is a US institution which most people would like to see continue flying.
Let’s hope that it gets its house in order quickly.
United has some extraordinary labour costs and rules. Some pilots on $300,000 a year are able to take long holidays as part of their contracts and a fully-licensed mechanic, earning around $100,000 a year, is at the gate every time a plane pushes off.
These issues need to be addressed and unprofitable routes cut if United is not to go the way of Pan Am and TWA.
And if United does pull through, let’s hope it remembers those agents who are currently trying to reassure their customers that they should still book with the airline.
What’s your view? Write to us and let us know.
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Read previous comments by Jeremy:
12-Dec-2002 The role of independent agents – Comment by Jeremy Skidmore
03-Dec-2002 Anyone got any good news? – Comment by Jeremy Skidmore
26-Nov-2002 Comment: Agent consortia should join, says Jeremy Skidmore
20-Nov-2002 Comment: Winter Bookings, by Jeremy Skidmore
13-Nov-2002 Comment: Timeshare and Resort Conference
05-Nov-2002 Comment: MyTravel
23-Oct-2002 Comment: The ABTA Convention
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