Thanks to Adelaida for sending this one to us!

Author: Michael Boyd
Source: The Boyd Group/ASRC, Inc

After more than three long years, United Airlines will finally emerge from chapter 11 next week.

When all is considered, this is hardly an event that merits popping any champagne bottles. Or, even opening a Bud Light for that matter, except for a moment or two of escape from this Kafka-esque nightmare. In fact, the rank and file may need a stiff drink if they take a look at what could unfold for United as it stands today.

Point: It's entirely possible that the pain, the cuts, and the hurt aren't over for the employees who have carried United through the past 37 months.

Lots of Expensive Advice. And They're Going To Keep At It. Let's get the picture. For a record-book period of three years, United's senior management has had the airline wallowing in chapter 11 like a brontosaurus in a tar pit. In that time, this stellar team blew through a reported $370 million spent on lawyers and "advisors" hired to tell management what to do. That's $370 million for people to come from the outside to tell people on the inside how to manage. Sure, bankruptcy requires some legal advice. But $370 million bucks for lawyers and outside "advisors" doesn't indicate a management team that has its act together.

Meanwhile, employees have taken double-digit compensation cuts that make the early-90's ESOP deal look like chump change. Their original pensions are, for all intents and purposes, gone. Their pay is cut to the tune of 25% or more. Some current and retired United employees are literally having to sell their homes because they can no longer afford them. And thousands of former United employees are simply not there anymore.

The brain-dead academics will begin to chant that United now has huge cost advantages over its competitors. Wrong. What these clowns miss is that chapter 11 isn't the only way to get costs down.

Post-Chapter: No Real Cost Advantages. The brain-dead academics will begin to chant that United now has huge cost advantages over its competitors. Wrong. What these clowns miss is that chapter 11 isn't the only way to get costs down.

Next week, when United emerges out from under the protective cloak of the judge, it's essentially an airline with no significant competitive or cost advantages over its main competitors such as American or Continental, both of which have slashed costs without entirely slashing their employees' financial jugular.

United does have a world-class customer service team, which is the main reason that the carrier's still in business. But as far as operating advantages, it's at best just neck and neck with American.

In fact, there are some real clouds on the United horizon. Reportedly, the airline's financial wizards - the same ones in control before the airline did a one-and-a-half gainer into bankruptcy - have based the future on $50 oil. Wonderful wishful thinking, especially when one considers that crude closed on Friday at just under $69. Give or take, that would indicate that United is coming out of "chapter" with its fuel-cost estimates already about 30% out of whack.

Rewards For The Patricians. The Masses Can Sing The Blues. Based on this grand performance, that same senior management has awarded itself a cushy 8% of the company's stock, with an estimated average value equal to around $350,000 for each individual. (The CEO, reportedly, had a package that initially equaled $15 million.) Sure, it vests over a period of time, but it no doubt makes all of United's senior management "whole" from any pay or compensation cuts they suffered subsequent to the bankruptcy filing.

The rank-and-file, with their enormous compensation give-backs and sacked pension plan, have made possible this wonderful windfall for their glorious leaders.

And they might want to consider preparing for more of the same.

The Buzz-Words. What's been the continuing theme from the front office at United for the past several weeks? The buzz words are all there: "over-capacity" - "consolidation" - "the need for mergers."

Face it, those $370 million "advisors" have been busy slipping media crib sheets to UA's senior management. Conclusion: the folks at the top seem to be shopping United as a merger partner.

Aside from the parrots in the media who repeat whatever they're told, the fact is that airline mergers are an excellent mechanism to separate the haves from the have-nots.

Aside from the parrots in the media who repeat whatever they're told, the fact is that airline mergers are an excellent mechanism to separate the haves from the have-nots. More than that, mergers create the haves and the have-nots.

• The haves: Management, where in a merger situation, that company stock they just got could maybe translate into a nice condo in Park City.
• The haves: The advisors, who in some cases may have deals that actually pay them more if they can arrange a merger, as opposed to the airline simply emerging successfully from chapter 11.
• The have-nots: the smaller communities that will lose some or all of their air service. Where do you think reductions in capacity will ultimately manifest? With huge fleets of 100 to 150 seat airplanes coming on line in the LCC sector, it'll be Roanoke, not West Palm, that's going to take the hit. This stuff about how mergers will reduce capacity - at least where it's most "needed" - is nothing more than textbook urban legend.
• The big-time have-nots: United rank and file employees, whose hard work and shrunken pay envelopes have made all this possible for their management to pull off, get the bionic winkie in a merger. Remember, the sum of a merger is always less - much less - than the sum of the original parts.

No question, it's great for United to be out of bankruptcy. But we'd suggest employees hold off any celebrations until it becomes clear what the folks at the top are planning to do with the airline. As it stands now, they're not talking a great deal about long term strategic issues, like how they're going to whack American, or how the airline is planning to expand in Asia. On the other hand, there seems to be a big pre-occupation with merging the airline.

Chapter 11 was a nightmare for United's employees. If their management is planning to merge the airline, the next one may not be much better.