Are We

novaqt

Senior
Aug 20, 2002
488
0
Are we about to see Wolf's big dream of United and USAirways being merged together in Bankruptcy Court? [;)]
 

Bear96

Veteran
Aug 20, 2002
2,926
122
Not if the unions come to their senses and do what it takes to make this a viable company on its own.
 

spillNspoil

Newbie
Aug 19, 2002
13
0
Let me first say that nothing would surprise me. However, I don't think the proper planets are aligned to combine UA and US, even in bankruptcy court. You're talking about a power-keg waiting to explode. If you think morale and motivation are low now, just try forcing a merger down everyone's throat via Ch. 11. I think that would be a serious mistake in judgement. The only way I could see it happening would be to somehow get the employees to willingly endorse it. Good luck. Once bitten, twice shy!
 
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chipmunn

Guest
Novaqt:

There is reason to believe UA & US have held discussions within the past two months regarding a deeper relationship. It's unclear how a corporate combination would unfold that could be dependent on whether or not UA files for a formal reorganization.

The federal loan guarantee program guidelines have language that permits the combined funds to be used for M&A activity. In addition, there have been some unusual events surrounding the UA-US code share application that hint at government intervention in industry-wide restructuring with the plans specifics confidential. In fact, both UA & US asked the DOT to not disclose their code share plans and the DOT rejected the ACAA, DL, & AA request for an "open" docket.

This would indicate there is more to the story or why would the new code share partners have asked for no disclosure, the ACAA request an open docket, and the regulators rejected the request?

If the Bush Administration decides the best way to fix the industry's collapse is consolidation, the ATSB has extraordinary authority and could withhold federal loan guarantees and insist they are used for M&A. Recently Frank Costello, senior partner of Washington aviation law firm Zuckert, Scoutt & Rasenberger said, "The current liquidity crisis cannot be resolved to the satisfaction of all of the board (ATSB) without addressing long-term structural problems. The regulations seem to be drafted around solving these problems." If the loan guarantee board decides in favor of consolidation as the best way to protect the taxpayers investment, "There is nothing left for Justice to do. Most antitrust concerns will have been blown away," he said.

During UA's strategic review of the last failed merger management believed the combined business enterprise would generate an additional $1.6 to $1.9 billion per year in incremental revenue. Clearly Mullin, Carty, & Bethune recognize the economic powerhouse that would be created by combining UA-US and that is why they have responded with their three-way code-share plan and are seeking to kill the UA-US deal.

Again, the ATSB has unusual and extraordinary authority and it remains to be seen whether or not they will use it, but there are "different" discussions occuring in Washington.

Chip
 

AOG-N-IT

Veteran
Aug 19, 2002
1,132
1
www.usaviation.com
Without any intention of trying to insult the good people of UA in any fashion....or belittle my own interests in U. Talk about a comedy of errors..should this even become a fleeting thought. I think we all realize that in this case , Two "Negatives , do not make a positive. Hopefully the proposed "Codeshare" will provide benefits to both of our airlines....but merging one problem with another makes no common sense at all. The fact that this failed during the supposed "Best of Times" , should illuminate this situation as something not to do. I wish you good people all the best with your new CEO....hopefully both U and UA will emerge from the current down turns in the economy and industry....I think both groups will be better served by getting thier individual houses in order...then working together , without merging. This will hopefully keep more people on the payroll....as opposed to consolidation and replication of jobs. ......I think we all know what that will cause.[:0]
 
U

UAL24

Guest
Those of you that think management wouldn't try this merger because it would be stupid and anger employees seem to have forgotten the previous 24 years of airline management. They don't ever consider employee well being in their business models. The planets are lining up in this universe of merger mania. I predict first quarter 03 they will dip their toes into Lake Merger and test the waters. That said there is a lot of potential there for a business model in a perfect world. They will however show their greed and try to trample all over working people. If we don't play ball then they will whipsaw us with all of the express carriers who are willing to work for basically minimum wage and no benefits.
 
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chipmunn

Guest
UA24:

UA & US certainly have their problems and UA's path is very similar to our restructuring efforts at US.

Will something happen between UA & US? Maybe, maybe not.

I believe before any transaction could occur the parties need to know if Glenn Tilton can prevent UA’s potential bankruptcy. UA's ERP and whether or not it will include a formal reorganization must be answered first.

Interestingly, the DOT's informal review of the UA-US code share plan was extended until September 23, but the regulators refused to open a docket on the carriers' request to form an alliance, despite the urging by the Air Carrier Association of America (ACAA) in Docket OST-02-12986.

In their DOT code share filing UA-UA asked for the filing to not be publicly disclosed, which indicated there could be more to their application, otherwise why would there be a need to keep the information confidential?

Meanwhile, DL & AA backed the ACAA request for both the UA & US ATSB applications and code share plans to have a docketed proceeding with full disclosure; however, the DOT declined the request to discuss details of the UA-US application and have kept the review on the front burner. Why would Norm Mineta have done this?

Recently, the Washington Post reported under the terms of the Texas Pacific Group (TPG) - US Airways agreement after September 23, US is free to consider other offers from other interested parties. This is the same day that the DOT's code share review is complete. Is there something to this date or is it coincidental?

Finally, the UA-US code share plan does not include joint pricing, scheduling, and sales functions, which is expected to eliminate antitrust concerns, but to my knowledge, DL, NW, & CO have not made the same concession. This point in itself, is a major difference between the two proposal's.

Chip
 

UAL777flyer

Veteran
Aug 20, 2002
730
0
GG,

You're correct. The first ERP proposal for UA ALPA contained restrictions on merging with/acquiring US Airways. However, that ERP is now dead. Who knows what will happen now? But I just think that an attempt to use Ch. 11 to force a merger of UA/US would be a big mistake. I'm well aware of all the upside in terms of network coverage, FF base, etc., etc. But it would be extremely acromonious for the employees, at a time when both carriers need to increase morale and hope for their disenfranchised work forces. And at a delicate time like this for both companies, if the employees aren't willing to support a merger, HUGE problems will develop that could sound the death knell for the combined airline. I'm completely in favor of the codeshare, but another merger attempt would be foolhardy in my opinion. One of Tilton's toughest tasks is to erase the sour taste in the mouths of employees over the failures of recent senior leaders at UA. If he tries to orchestrate a merger, the employees will simply lump him into the same Goodwin/Dutta category and the honeymoon will be over. I sincerely hope Tilton is smarter than that.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
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On 9/4/2002 11:15:16 AM

GG,

You're correct. The first ERP proposal for UA ALPA contained restrictions on merging with/acquiring US Airways. However, that ERP is now dead. Who knows what will happen now? But I just think that an attempt to use Ch. 11 to force a merger of UA/US would be a big mistake.
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The merger restriction were in the first ERP, as part of the code sharing agreement, but they were taken out at the request of the MEC. They were then pasted independantly of the ERP with the merger agreement, so they are now in effect.
 
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chipmunn

Guest
UAL777flyer:

Since the merger termination the two carrier's have completed most of the planned post merger heavy restructuring. The airlines have:

1. Aligned their fleets to be identical by type, except for nine A-330s, which can easily be returned to the owners per the bankruptcy code. Each company operates B-737s, A-320 family, B-757, and B-767 aircraft. No other major airlines have virtually identical fleet types.

2. Adjusted their route networks and downsized their operations reducing over lap and antitrust issues.

3. Signed a code share agreement, which was ratified by both ALPA MEC's.

4. Reached an agreement where US have received a formal invitation to join the Star Alliance.

5. Both have filed for the ATSB loan guarantee, where specific language states the funds can be used for M&A activity. The OMB rules state, "If loan funds are to be used to purchase an existing firm (or the substantial assets of an existing firm), the business plan of the combined entity shall contain a discussion of the way in which any required regulatory or judicial approvals will be obtained, including antitrust approval for any proposed acquisition." (By the way, I understand the combined airline loan guarantee funds can be used for M&A activity).

6. The airlines have asked that their code share and loan guarantee applications be keep confidential by the DOT, DOJ, and ATSB. Why? Per DOT Docket OST-02-12986, the ACAA request co-sponsored by DL & AA formally asked the regulators to suspend the proceedings and to open the docket for a public review; however, the DOT declined the request. With over 100 code share agreements in the U.S. and the DOT never opposing one, why did the DOT not grant the ACAA and DL-AA request? If there is nothing going on, why not let the review be made public knowledge per established protocol?

7. Greg Taylor, former US senior vice president of planning, who held the same position with UA in the 90s, recently left US and went back to UA in the same capacity. If the two airlines were going to see some type of corporate combination, who would be better than Taylor, with his in-depth knowledge of both airlines, to advise the parties on how to proceed?

8. UA's restructuring plan seems to copy the program implemented by Siegel. Is there collusion and has US advised UA on the ATSB process, or are the similarities coincidental?

9. On Wednesday, August 27, US changed its ticketing policies, domestic consolidators, corporate discount programs, paper ticket charge, and pricing changes. Less than 24 hours later, UA announced similar plans. Could UA have known about the changes, to be the first airline to match the US program, or was it coincidental the partners implemented their changes within 24 hours of one another?

Again, I understand the parties have held discussions on a deeper relationship, but with each airline having multiple problems, it's unclear whether or not any further integration could occur. However, dependent on individual restructurings, if the carriers try to integrate, I'm not sure UA would be the survivor. It could be US under Siegel's leadership. In bankruptcy, all bets are off, not to mention there is ATSB language to force consolidation, or the Board could decide to withohold funds to any opposition.

Will the Board elect this option? I do not know, but they have the power to force a merger or withold loan guarantees until their demands are met.

By the way, if the UA pilot group did not believe a corporate combination was possible, why would ALPA have included pre-nuptial seniority language in the ERP?

Chip
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
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On 9/5/2002 1:18:39 AM

UAL777flyer:

"1. Aligned their fleets to be identical by type, except for nine A-330s, which can easily be returned to the owners per the bankruptcy code. Each company operates B-737s, A-320 family, B-757, and B-767 aircraft. No other major airlines have virtually identical fleet types."

737s have differant cockpits, A320s diff engines, 757s diff engs Us are also very old, 767s UAL is considering canning old 767-200s. Same fleet types in name only.

"3. Signed a code share agreement, which was ratified by both ALPA MEC's.

4. Reached an agreement where US have received a formal invitation to join the Star Alliance."

Why bring you into star a couple years from now if we're planning on "merging" soon?

"5. Both have filed for the ATSB loan guarantee, where specific language states the funds can be used for M&A activity. The OMB rules state, "If loan funds are to be used to purchase an existing firm (or the substantial assets of an existing firm), the business plan of the combined entity shall contain a discussion of the way in which any required regulatory or judicial approvals will be obtained, including antitrust approval for any proposed acquisition." (By the way, I understand the combined airline loan guarantee funds can be used for M&A activity)."

The ATSB isn't paying any attention to the law, why should you?

"7. Greg Taylor, former US senior vice president of planning, who held the same position with UA in the 90s, recently left US and went back to UA in the same capacity. If the two airlines were going to see some type of corporate combination, who would be better than Taylor, with his in-depth knowledge of both airlines, to advise the parties on how to proceed?"

Wow, that's a couple really good bullets on a resume...I led UAL and Us demise.

"9. On Wednesday, August 27, US changed its ticketing policies, domestic consolidators, corporate discount programs, paper ticket charge, and pricing changes. Less than 24 hours later, UA announced similar plans. Could UA have known about the changes, to be the first airline to match the US program, or was it coincidental the partners implemented their changes within 24 hours of one another?"

It's funny how that works. I still havent figured out how we all come up with essentially the same fares in the same markets within minutes of each other. I think it's voodoo.

"Again, I understand the parties have held discussions on a deeper relationship, but with each airline having multiple problems, it's unclear whether or not any further integration could occur. However, dependent on individual restructurings, if the carriers try to integrate, I'm not sure UA would be the survivor. It could be US under Siegel's leadership."

Now THATS a good one. AMR should have stuck with the TWA name and put that pilot guy in charge too...

"In bankruptcy, all bets are off, not to mention there is ATSB language to force consolidation, or the Board could decide to withohold funds to any opposition."

Not real confident in the board anyway. UAL may fix a few problems and procede without the board. Airbus might be willing to finance a few of the "unencombered" jets we have in exchange for a nice new order, with appropriate cost savings to bring our cost below AMR by about 10%.

"Will the Board elect this option? I do not know, but they have the power to force a merger or withold loan guarantees until their demands are met."

Screw the board.

"By the way, if the UA pilot group did not believe a corporate combination was possible, why would ALPA have included pre-nuptial seniority language in the ERP?"

It is a possibility. So before you get giddy again about your 570 seniority number, re-read the prenup.


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UAL777flyer

Veteran
Aug 20, 2002
730
0
Chip,

I'm well aware of all that you outlined. However, I think some of it is just plain coincidence. I think trying to use the bankruptcy court to make a second attempt at a UA/US merger would be a mistake. While I'm aware of the benefits in terms of route network, FF base, city presence, etc., the cost in terms of employees would be HUGE. UA employees still have a sour taste in their mouths over the last merger attempt, which many believe is the biggest reason we're in this mess. We've just brought in a new CEO who is vowing to work with employees and bridge a mutual relationship that will turn this company around. If Tilton were to make an attempt at a merger with US, the employees would immediately lump him into the Goodwin/Dutta category and any willingness to support and work with him would be gone. I would hope he is not that foolish.

Let us get ourselves restructured, preferably outside of bankruptcy. And then hopefully the economy and industry climate will be ripe for internal growth again. Especially with all the folks we have on the street on furlough.