Hello, this is Larry De Shon and welcome to a special edition of FLT-LINE. Today is Wednesday, August 14th.

Earlier today, the company issued a press release in response to feedback on our loan guarantee application with the Air Transportation Stabilization Board (ATSB).

As background, in CEO Jack Creighton’s, Aug. 12, Eye-On-UA message, he mentioned that the decision-makers across Washington gave us the feeling that we needed more participation from all of our stakeholders in our cost-cutting efforts.

We have now received confirmation from the ATSB that our recovery effort involving pilots, salaried and management employees is not enough to gain approval. They have advised that participation among all employee groups must be broader, deeper andlonger.

According to Jack, “The world has changed. Revenue isn’t coming back the way the industry expected. Demand isn’t returning, fares remain low and the industry is grappling with how to respond. We have determined that we must make improvements in our business plan to ensure we get the cost savings we need to compete in an industry that has fundamentally changed. And our conclusions are consistent with the feedback we’re
getting from Washington.”

Although we have implemented numerous cost saving initiatives, these efforts are not enough. In the upcoming days, the ATSB will tell us what we need to do to make our loan application a success. We will then present new cost-saving proposals to employee representatives and other stakeholders. We must further reduce our costs or the loan guarantee will not be approved.

Unlike other carriers, United must make significant debt payments in the fourth quarter.  These payments will severely impact our cash reserves. Additionally, we continue to lose money as a result of the weak revenue environment.

Now, with all of that said… we have 30 days to come to some conclusion with our stakeholders. Should we be unable to conclude discussions within 30 days, United will pursue a Chapter 11 bankruptcy filing. As we conduct discussions with our labor groups, we will simultaneously prepare for the potential of a bankruptcy filing this fall.

My management team and I have recently fallen under criticism by the AFA, as we have been talking openly and honestly with flight attendants about United’s financial situation.  Although we know we cannot negotiate directly with flight attendants, we can educate you on the facts of our company’s financial situation. The AFA represents your opinions to the company as it relates to the terms in the Collective Bargaining Agreement. Now, more than ever, is the time to bring your opinions forward to an AFA representative.  Representatives are available at all domiciles. If you’re not sure how to reach your local AFA, check the AFA bulletin board in the domicile for contact information.

One way or the other, we will reduce our costs including labor. Right now, for every dollar we earn, 52 cents is spent on labor costs. In today’s environment, we cannot survive with our current labor cost structure.

Whether our loan is approved or we file for bankruptcy protection, we will do whatever it takes to meet the needs of our customers for many years to come. This is an extremely difficult situation and we must all ask ourselves… what can I do to ensure the long-term success of United Airlines. This problem will not go away and we can no longer afford to be apathetic.

We are in this together! FLT-LINE, Jack Creighton’s weekly Eye-On-UA messages and NewsReal are great resources for obtaining late breaking company news. Your domicile’s management team is also available to provide you with information about the company’s situation.

In addition to running a great, dependable and safe airline… we must focus on how, together, we can ensure our company’s future success.