Hi Blue:
Blue said: UAL arguably more pull in Wash.?
Chip comments: From a PAC perspective yes, I believe UAL does. In fact, reports indicate UA had the political power to complete the UA-US merger, if they had elected to complete the deal.
Blue comments: I do believe the Pres. is from Texas,(Cont.) no?
Chip comments: True, but CO has been through bankruptcy twice and according to Bethune & Anderson, their alliance provides each carrier with 4 percentage points for each airlines loan factor. UA-US want the same playing field.
Blue said: Delta carries more politicians up and down the East coast and throughout the South than U.
Chip comments: Each airline has approximately the same East Coast capacity when measured in ASMs. Could you show me a report that accurately states DL carries more ploiticians than US?
Blue asked: Do you really think that the airlines that showed financial restraint during the times of pleanty should be punished and forced to compete with those that go BK because of poor management.
Chip comments: I'm not sure I said this. September 11 changed the playing field and if I remember correctly, Mullin, Anderson, & Bethune all stood before Congress strongly lobbying for the ATSA. Moreover, each of these airlines accepted the federal grant, along with other carriers. Some airlines were impacted more by the events of September 11 than others due to the closure of Washington Reagan National, having large New York and Washington operations, and the problems associated with the security hassle due to a route network that is more focused on short haul. Could the federal government understand how they have burdened those carriers more affected by the terrorist attacks and are trying to level the playing field?
Blue said: Then emerge with a cost advantage.
Chip comments: Isn't this what CO did twice and then turned to NW for the alliance to prop itself up? Also notworthy, back in the 90's NW was on the verge of bankruptcy when it cut a last minute concession deal with its unions. The government recongized both NW & CO were both in trouble and permitted the alliance to proceed with an out of court settlement.
Blue said: So, what you seem to be saying is UAL and AMR can't compete with and entity that's larger than they are?
Chip comments: I do not believe I said this.
Blue said: The "Tri-Partite" will kill the U/UAL alliance.
Chip comments: Maybe, maybe not. I agree this is the intent when the combination would create a system with over 40 percent market share. In addition, the EWR, LGA, & JFK issue has signficant antitrust problems that may not be satisfactorily addressed because of the multiple monopoly routes, when the deal is viewed on a city-pair by city-pair basis. Nonetheless, there are reports from Crystal City that indicate the UA-US deal will proceed, however, that could always change.
Blue said: If it does not. It will kill it through sheer competion.
Chip comments: During the UA-US merger review I read one analyst report that said the merger would cause a revenue diversion of $450 million from DL, $250 million from AA (pre-TWA), and $250 million from NW per year in revenue. In addition, during a meeting Stephen Wolf had with his pilots earlier this year that I attended, Wolf said UA's internal review believed the merger would generate an additional $1.6 to $1.9 billion per year in additional revenue and AA's number were even higher. I suspect the alliance when fully integrated will create about $600 million per year in combined profits for UA-US. These two carriers simply want what NW & CO have enjoyed for years and is one reason why Mullin appears dtermined to try and kill off US.
Blue said: NWA, Delta, are by far two of the shrewdest managements in the industry.
Chip comments: I'm sure Carty, Bethune, Kelleher, & Siegel may take exception to your comment.
Chip