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THE TIMES LEADER
www.timesleader.com
United Continental to make headlines in 2012
By GREGORY KARP Chicago Tribune
While 2012 is likely to feature a variety of dramatic airline news stories, if only because most years in the volatile and hypercompetitive industry beget drama, some of the biggest developments will come from the world’s largest airline, United Continental Holdings Inc. of Chicago. Behind the scenes, the company will attempt to merge United’s and Continental’s reservation computer systems, a huge and perilous undertaking. It will also be the first North American airline to take delivery of the Boeing 787 Dreamliner, considered a game-changing aircraft for fuel efficiency and passenger comfort. Perhaps most important, the company will roll up its sleeves and try to hammer out labor contracts with several of its unions, including the feisty pilots union that has been highly critical of the airline in recent months. Developments elsewhere in the airline industry will include American Airlines making its way through bankruptcy protection, potentially cutting some service in Chicago and elsewhere. Already, American shelved its connector flights from Wilkes-Barre/Scranton International to Chicago. There’s also the little matter of the sluggish U.S. and world economies with which the airline industry’s fate is tied. But fliers will also see more cabin amenities, such as Internet access, power supply in seats and high-tech video choices for movies and television shows onboard. For United Airlines customers, the change they might notice first will come when the company combines its reservation systems. That change is slated to happen in the first quarter of 2012. After the switch, Continental.com will go away, and travelers no longer will be able book flights online there. Continental as an airline technically ceased to exist after the company received Federal Aviation Administration approval on Nov. 30 to operate as a single airline, called United Airlines. But since then, the company has been operating two airline nameplates, United and Continental, until it can combine computer systems that run its book-
BUSINESS AGENDA OSHA’S IMPACT ON RESIDENTIAL CONSTRUCTION: Jan. 10, 9-1 1 a.m., Greater Hazleton Chamber of Commerce, 20 W. Broad St. Information on how OSHA regulations affect residential contractors. Chamber members $25; nonmembers, $30 non members, includes materials and continental breakfast. Reservations required online at www.hazletonchamber.org, by calling 455-1509 or by email at jferry@hazletonchamber.org. CEO LUZERNE ROUNDTABLE: Jan. 12, 1 1 a.m.-1 p.m., Top of the 80s, Hazleton. Robert T. Sweet, economist and managing director of MTB Investment Advisors, will discuss the economic outlook for 2012 and the outlook for capital markets. $36 for Northeast Pennsylvania Manufacturers and Employers Association members; $72 for non-members, includes lunch. To register, call 622-0992 or email kreeser@maea.biz. OSHA TRAINING IN GENERAL INDUSTRY: Jan. 12-13, 9 a.m.-2:30 p.m., Greater Hazleton Chamber of Commerce, 20 W. Broad St. For general industry workers, supervisors, safety managers, or other individuals responsible for safety in their organizations. Chamber members $175 members; nonmembers, $225, includes training materials and lunch. Send announcements of upcoming events by e-mail to tlbusiness@timesleader.com; by mail to Business Agenda, Times Leader, 15 N. Main St., Wilkes-Barre, PA 18711 or by fax to 829-5537. Include a contact phone number and e-mail address. The submission deadline is Wednesday for publication on Sunday.
ings. Currently, those computer systems, which are the digital backbone of an airline, run on different brands of incompatible software. Airline officials chose to stick with Continental’s brand of booking software, called SHARES, sold by Hewlett-Packard. “That’s a very big deal for us because it will make the customer experience better than it is today,” said United Chief Executive Jeff Smisek, who has called United Continental “a technology company with wings.” “It will make our treating of the customers more seamless than it is today, because we have two separate sets of technology, and they don’t talk to each other.” It’s not all about software. It’s also about teaching United employees to use it. Such computer switchovers have not always gone smoothly. Virgin America switched to a new reservation system Oct. 28. It was plagued with glitches on its website and airport kiosks. Customers were outraged when they couldn’t change or cancel flights, choose seats or access their frequent-flier accounts. The airline was forced to issue blanket apologies and individual ones via Twitter. It hired extra people to handle all the customer problems. And US Airways had trouble in 2007 when it merged with America West. During that episode, merging the systems crashed check-in kiosks nationwide. “It was pretty ugly,” said Seth Kaplan, managing partner of Airline Weekly. “People would show up at the airport and not be able to check in for their flights. And planes were taking off empty because people couldn’t get their boarding passes and get through security.” United Continental in 2012 is scheduled to be the first North American airline to take delivery of a Boeing 787 Dreamliner, a twin-aisle plane that offers the best fuel economy and range for a craft its size and promises passengers far greater comfort. Smisek has called it a “truly gamechanging aircraft.” It’s expected to be in service during the second half of the year, and, all told, United expects to receive six 787s from Boeing in 2012. “It will be the only U.S. airline
MCT FILE PHOTO
Boeing Employees walk with an ANA 787 as it slowly moves towards the celebration during a driving rainstorm in Everett, Wash. Boeing handed over the key to the first Boeing 787 delivered to All Nippon Airways during a ceremony in front of the 787 factory in Everett.
flying them for a long time to come,” Kaplan said. “It will be years before anyone else in the U.S. has them.” Specifically, United claims it will be three years before the competition in North America has a Dreamliner. Boeing delivered the first 787 this year to Japan’s All Nippon Airways, which put it into service this month. The 787 is said to be the most technically advanced commercial aircraft ever built. The jet’s largely composite structure is lighter and promises greater fuel efficiency, which is a big deal for airlines. If it lives up to expectations, the Dreamliner would burn 20 percent less fuel than other midsize jets but boast the range of far larger aircraft. It would enable carriers to bypass airport hubs and directly connect city pairs that otherwise wouldn’t generate enough passenger traffic to fill bigger jets. For passengers, the plane has the industry’s largest windows and overhead bins. Quieter and
smoother-riding, the aircraft has wider aisles and seats, lower cabin pressure and cleaner air using a filtration system to remove offensive odors. The windows will be dimmable, via electrochromic window shades rather than physical pull-down shades. Perhaps the biggest challenge for United next year will be successfully negotiating labor contracts with its various unions, including pilots, flight attendants, mechanics, passenger service agents and ramp agents. The most difficult, and most costly, will likely be the pilots contract. The two sides have been negotiating for more than a year. Pilots, looking to recoup pay and benefits they lost in United’s bankruptcy from 2002 to 2006, have regularly staged informational pickets about not having a new contract. The Air Lines Pilots Association filed a federal lawsuit against United, complaining about poor cockpit training, although labor officials said the suit was about safety, not
their labor contract. The union lost that suit. “I certainly wouldn’t bet a lot of money on it getting done in 2012,” Kaplan said of the pilots’ contract. “They certainly don’t seem any closer now than when the companies merged. If anything, they seem further apart.” The company would receive financial benefits in having a joint pilots’ contract. It would allow the airline to mix United and Continental pilots in the same cockpits to achieve efficiencies, which can’t happen now. And there’s an intangible benefit to having harmony between pilots and management. The problem is, the unions, especially pilots, might ask for so much that the total cost would far surpass any efficiency savings the company would reap. Smisek said the company wants to seal deals with all the unions, including pilots. “We’re very committed to getting a deal with the pilots, but it has to be fair,” Smisek said. “I will
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The deals came with big commitments to invest in the facilities. Geisinger said it would spend $159 million on capital projects at CMC; CHS agreed to invest $60 million over five years in facility and technology upgrades at Moses Taylor. The Geisinger expansion attracted the affiliated Geisinger Health Plan to Wilkes-Barre, where it said it would add 75 jobs. All the dealing left only Hazleton General Hospital and Marian Community Hospital in Carbondale unaffiliated with either of the two health care giants. Marian announced in December that it would close. Flooding swamps businesses Many area businesses suffered severe damage in floods caused by Tropical Storm Lee, perhaps none more than the low-lying Mark Plaza in Edwardsville. The 216,000square-foot complex, which prior to the flooding housed anchor stores Kmart and Redner’s Warehouse Market and six other businesses, took on at least 8 feet of water when the Susquehanna River crested on Sept 9. The shopping center remained shuttered three months later, and business owners said they’d heard little from the landlord, White Plains, N.Y.-based Acadia Realty Trust. Businesses in West Pittston, Plains, Plymouth Township and Shickshinny also were hard-hit, including such well-known shops as Jon L. Stopay Candies and Agolino’s restaurant, both of which reopened. But Wells Fargo said its branch in Shickshinny would not reopen, leaving the town with no local bank. Unemployment holds tight grip
not do it if it’s not fair to the company and fair to the co-workers. When we get to the point where we can reach such a deal, we will.” US Airways hasn’t reached that point. It merged with America West Airlines more than six years ago and still hasn’t struck a joint deal with the pilots union. “There’s precedent for these things getting really drawn out,” Kaplan said. “What US Airways has shown is it’s possible to run an airline without getting the groups together.” The recent bankruptcy of American Airlines, which is likely to see the airline significantly lower its labor costs, could also have an effect on United’s stance with unions. “United might be in a position to say to its workers, ‘Look, we just can’t give you what you’re asking because that would make us totally uncompetitive against this important competitor that now has much lower costs,’ ” Kaplan said.
BILL TARUTIS/FOR THE TIMES LEADER
Mark Plaza in Edwardsville was devastated by September’s flooding.
AIMEE DILGER/THE TIMES LEADER
Robert Peloso of Fortis Institue visited the Times Leader Job Fair in December to ask about work for his students.
In an up-and-down year for the local unemployment rate, the Scranton/Wilkes-Barre region maintained an unwelcome distinction as the worst place in Pennsylvania to get a job. The jobless rate in January was 9.1 percent in the labor market area that includes Luzerne, Lackawanna and Wyoming counties. Things looked better in April, when the rate fell to 8.4 percent, the lowest in two years. But a sharp uptick followed; by August
Marcellus Shale’s long reach Natural gas drillers have locked up hundreds of leases in Luzerne County, but the few experimental wells have thus far come up dry. That didn’t mean the booming industry had no effect here. Two proposed pipelines that would bring gas from northern counties to the Transco interstate pipeline in Dallas Township drew heated opposition, but in the end received approval. Wyoming Valley Sanitary Authority explored the possibility of building treatment facilities for “frack water,” but the proposed operator withdrew its proposal. Cate Street Capital said citizen opposition to the plant was the main factor in its decision, but equally important may have been the industry’s push to reuse as much water as possible. In December, Transco operator Williams announced plans to expand the capacity of its compressor station in Buck Township. Also in December, Clarks Summit-based Laser Northeast Gathering said it would sell its pipelines, contracts and easements to Williams for $750 million.
Theater block struggles Five years after completion, the University Corners complex in downtown Wilkes-Barre remained largely empty. WilkesBarre Movies14, the major tenant, continued to operate successfully, while most of the ground level retail spaces remained vacant. Adding uncertainty, Bill Geary, who in 2009 took ownership of AIMEE DILGER /THE TIMES LEADER three-fourths of the retail portion Wilkes-Barre Movies 14 anchors the University Corners complex. and assumed an $8.4 million mortgage note, filed for bankruptcy in May, listing $39.3 million in debts the rate jumped to 9.8 percent. As ple were working. “The overall march is in the and $724,984 in assets. Geary also the end of 2011 approached, the rate settled at 9.2 percent in both right direction, but the drum beat was accused of misappropriating October and November. Still, that is slow right now,” said Anthony funds at a Florida development was below the 9.8 percent in No- Liuzzo, director of the master of vember 2010, and 1,300 more peo- business administration program See TOP 10, Page 3D