23 July 2008

United Cuts 100 Aircraft 7,000 jobs but not enough

.......Says the Professor

OK so United is shocking everyone with its dramatic cuts for the fall. 100 Aircraft (all its B737s and a few widebodies) and 7,000 staff.

However the Professor is going to say it's not enough.

Using our standard review of publicly available data - we believe that the number should be closer to 13,000 staff cuts. (FTEs).

This would only enable United to stay at the same rates as it is today. The metric I am using is employees per plane. So from our analysis the cuts do not do the job of reducing the red ink.

Let me drill into the numbers a little further. United is second only to Northwest in reducing its maintenance workers. (Down nearly 70% 2000 to 2007). Thus even if it outsourced all its maintenance it would not make a big enough dent in its employee numbers and of course it would not lower the costs that significantly. So just cutting for the sake of cutting needs a pretty decent plan.

So message to Mr Tilton - if you want to improve your numbers go back to the drawing board and cut more - OR change the model. Oh yes and if you gave back some of your Chapter 11 exit cash bonus that would be nice.

Message to everyone else - its not cutting its changing the model.



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