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CNN Live Saturday
Interview With Tom Parsons
Aired December 07, 2002 - 14:48 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: The world's largest air carrier is asking its workers to forego pay raises next year. American Airlines is trying to stem massive losses. The company lost nearly $3 billion this year. American says canceling raises will help the company recoup some $130 million. American says it needs to save $4 billion to stay in business. Plans to meet at least half of that through layoffs, buying less equipment, and cutting back on service.
Another cash-strapped airline may be seeking bankruptcy protection soon. United Airlines is discussing plans to file for Chapter 11 reorganization. What does this mean for ticket holders and how is it likely to affect you? Well, Tom Parsons with bestfares.com joins us now from Dallas, Texas. Hi, Tom.
TOM PARSONS, BESTFARES.COM: Good afternoon.
PHILLIPS: All right, so what do you think? Will United Airlines definitely file for bankruptcy?
PARSONS: I think it's sooner than later. And it could be as early as tomorrow, maybe tomorrow afternoon, tomorrow evening. They have about $1 billion in cash less than we think -- $1 billion sounds like a lot of money, but not for an airline that size. But again, they, and they've got about $1 billion worth of debt, too. So do you pay everybody or do you file bankruptcy? So there is a good chance we will see a bankruptcy some time, either tomorrow or real soon.
PHILLIPS: And how -- how will that bankruptcy affect consumers and how quickly?
PARSONS: Well, again, if you have a ticket this holiday, don't worry about it. I mean, they have probably about another $1.5 billion in debtor possessions coming to them almost immediately. This airline will be around for I would say for not only just a year, it will be around for several years. And so if you are holding a ticket with -- with United this holiday holiday season, you can go to sleep and have good dreams, because you're probably -- the only reason you may not get to your destination is we have storms like we had this week.
PHILLIPS: Well, you wonder too, if it was money issues, if maintenance records are kept up with, and it's -- basically is it safe to fly on these aircraft if they're making cutbacks and there is a lack of money, you worry about that?
PARSONS: Of course, we all worry about that. But every airline in America has money problems right now. We just saw a report on American. They too are losing hundreds of millions a year, not a year, but for every quarter. Delta, U.S. Airways, Continental, Northwest, all of them are having monetary problems, and that's why we depend on those pilots -- that's why they get the big bucks. Believe me, they don't get in those planes if think they're unsafe, and also we have to depend on the U.S. government.
But I think United has a very strong mechanic crew and people are going to -- they have to try to keep those planes safe.
PHILLIPS: Well, how long -- you were saying a couple of years. If it files for bankruptcy, then the planes can keep flying for a few years. And then what could happen after that? Do you think United Airlines will be bought by another airline? What do you foresee?
PARSONS: I don't know. United is a big gorilla. They are very big. They are the second largest airline in the world. I do see this -- I mean, they will become -- because of this bankruptcy, they will probably become more of a mean, lean flying machine that they wanted to be. They will cut more routes, they will cut other items from their -- the number of employees in this company is going to be much smaller than they wanted to be, and that -- and the people who are going to get hurt the most are going to be employees and also the creditors.
But here's the problem I see right now. As we get to March or April of 2003, the total number of flights and seats that we have out there compared to two years, March of 2001, could be as much as 20, 25 percent less. If the demand for -- for air travel increases, and yet the supply is not there, then we could be facing some humungous increases in airfares just because of the supply and demand. Today we have been spoiled for 15 months with bargain basement deals. I mean, I can't believe the number of deals we are seeing flying in my office daily. But I think those will start drying up if the supply becomes -- or the demand becomes bigger than the supply. And that could happen for summer 2003.
PHILLIPS: Tom Parsons, Bestfares.com. Thanks, Tom.
PARSONS: Thank you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired December 7, 2002 - 14:48 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: The world's largest air carrier is asking its workers to forego pay raises next year. American Airlines is trying to stem massive losses. The company lost nearly $3 billion this year. American says canceling raises will help the company recoup some $130 million. American says it needs to save $4 billion to stay in business. Plans to meet at least half of that through layoffs, buying less equipment, and cutting back on service.
Another cash-strapped airline may be seeking bankruptcy protection soon. United Airlines is discussing plans to file for Chapter 11 reorganization. What does this mean for ticket holders and how is it likely to affect you? Well, Tom Parsons with bestfares.com joins us now from Dallas, Texas. Hi, Tom.
TOM PARSONS, BESTFARES.COM: Good afternoon.
PHILLIPS: All right, so what do you think? Will United Airlines definitely file for bankruptcy?
PARSONS: I think it's sooner than later. And it could be as early as tomorrow, maybe tomorrow afternoon, tomorrow evening. They have about $1 billion in cash less than we think -- $1 billion sounds like a lot of money, but not for an airline that size. But again, they, and they've got about $1 billion worth of debt, too. So do you pay everybody or do you file bankruptcy? So there is a good chance we will see a bankruptcy some time, either tomorrow or real soon.
PHILLIPS: And how -- how will that bankruptcy affect consumers and how quickly?
PARSONS: Well, again, if you have a ticket this holiday, don't worry about it. I mean, they have probably about another $1.5 billion in debtor possessions coming to them almost immediately. This airline will be around for I would say for not only just a year, it will be around for several years. And so if you are holding a ticket with -- with United this holiday holiday season, you can go to sleep and have good dreams, because you're probably -- the only reason you may not get to your destination is we have storms like we had this week.
PHILLIPS: Well, you wonder too, if it was money issues, if maintenance records are kept up with, and it's -- basically is it safe to fly on these aircraft if they're making cutbacks and there is a lack of money, you worry about that?
PARSONS: Of course, we all worry about that. But every airline in America has money problems right now. We just saw a report on American. They too are losing hundreds of millions a year, not a year, but for every quarter. Delta, U.S. Airways, Continental, Northwest, all of them are having monetary problems, and that's why we depend on those pilots -- that's why they get the big bucks. Believe me, they don't get in those planes if think they're unsafe, and also we have to depend on the U.S. government.
But I think United has a very strong mechanic crew and people are going to -- they have to try to keep those planes safe.
PHILLIPS: Well, how long -- you were saying a couple of years. If it files for bankruptcy, then the planes can keep flying for a few years. And then what could happen after that? Do you think United Airlines will be bought by another airline? What do you foresee?
PARSONS: I don't know. United is a big gorilla. They are very big. They are the second largest airline in the world. I do see this -- I mean, they will become -- because of this bankruptcy, they will probably become more of a mean, lean flying machine that they wanted to be. They will cut more routes, they will cut other items from their -- the number of employees in this company is going to be much smaller than they wanted to be, and that -- and the people who are going to get hurt the most are going to be employees and also the creditors.
But here's the problem I see right now. As we get to March or April of 2003, the total number of flights and seats that we have out there compared to two years, March of 2001, could be as much as 20, 25 percent less. If the demand for -- for air travel increases, and yet the supply is not there, then we could be facing some humungous increases in airfares just because of the supply and demand. Today we have been spoiled for 15 months with bargain basement deals. I mean, I can't believe the number of deals we are seeing flying in my office daily. But I think those will start drying up if the supply becomes -- or the demand becomes bigger than the supply. And that could happen for summer 2003.
PHILLIPS: Tom Parsons, Bestfares.com. Thanks, Tom.
PARSONS: Thank you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
