Awa/us/ual?

[funguy2]

Ok, so I am supposed to believe that the DOJ would allow an HP-US-UA merger? One which would create a system with the following hubs/focus cities:

West: LAX/SFO/PHX/LAS/DEN
Central: ORD
East: PHL/CLT/BOS/LGA/DCA/IAD

If I am counting right, that's 12 hubs/focus cities. DOJ will never allow... And, what happened to having PHL and PIT hubs too close...

If UAL were to liquidate, I think an ORD hub would be a "stunning" addition to HP-US, no doubt about it. But I don't think that UAL will liquidate. And if it did, I think that HP-US would have to bid an incredible amount of cash to win the ORD assets (I think CO and DL would be bidding on ORD as well).

Furthermore, it other combinations seems much, much more plausible... Like a DL-CO merger, where CLE is dropped as a hub (in favor of keeping CVG), and DL's transatlantic ops get combined into CO's EWR hub. An AA-AS or NW-AS or DL-AS merger all seem plausible. A CO-NW merger also seems plausibe, again ending CLE's hub (this time in favor DTW) and ending MEM as a hub (in favor ot IAH). Even UA-CO seems a better match.

Just my opinion.

 

[USA320Pilot]

Funguy2:

In regard to antitrust issues the difference today for every legacy carrier, not just those in bankruptcy like US Airways & United, is that they're all failing. Pension plans and energy prices are changing fundamentals and financial losses are still happening. Thus, an argument could be made for the Justice Department to approve a merger per the "failing carrier" guideline, regardless of the antitrust issues.

Right now I would be surprised to see the new US Airways make an attempt to acquire United or vice versa. A 3-way merger creates a lot of duplication of resources, but with two of the companies in bankruptcy excess facilities and aircraft could easily be rejected.

US Airways has eliminated a lot of resources in anticipation of the merger such as the PIT training facilities, the PIT reservation facility, some PIT hangars, in the future CCY, probably the "fee for service" contracts with Mesa and TSA, and about 60 aircraft. This could not easily occur unless a company is in bankruptcy.

Having said that management has told ALPA at both US Airways and America West that the financial community brokered the proposed merger and if the financial community wants a 3-way merger between US Airways, America West, and United -- then I believe it will likely happen.

Regards,

USA320Pilot

 

[funguy2]

A couple of points:
1. While a "failing firm" argument could be made, I believe the concentration of too much power into one firm would still be troubling... Particularly in the WAS area (even with FLYI in existence) and in the Pacific Time Zone.

2. Its an unfair characterization to say the "financial community" brokered the current HP-US deal. GECAS brokered the deal and GECAS/HP has found some partners willing to help out... PAR, for example, has publicly stated many times that it has been quite please with its investments in HP, and likes the management. The other two investment firms have relationships to PAR, from what I've read. This is hardly representative of the "financial community".

The Airbus loan is clearly from the fact that GECAS, US, and HP all have working relationships with Airbus.

My recollection is that the "financial community" is generally neutral to negative on the proposed merger, as evidenced by stock and debt downgrades recently issued. For example, on May 20th (day after merger announcement) Moody's lowered AWA's credit reading to "negative" from "stable". And a quick check of Yahoo shows that most analysts rate the stock as "neutral" (usually mergers offers create a "buy" rating).

I would also note that airline investing "heavy-weight" TPG is reducing its participation in the sector with this transaction. And RSA, which became a player with its controlling interest in US after BK#1 is also backing away.

(Incidently, I would gamble a guess that TPG will get involved in UAL when the time is right...)

But, don't let the facts stand in your way.

 

[USA320Pilot]

Funguy2:

All of your points could be valid and nobody truly knows whether or not they would work out that way. However, your last comment makes you sound like 700UW.

1. I suspect the failing carrier guideline could apply due to deteriorating fundamentals.

2. The financial community comment was broad, however, US Airways' key creditors urged the company to seek a M&A partner.

3. I agree the Airbus loan was due to a "personal interest", however, the aircraft manufacturer is not going to throw away money.

4. Yes, many analysts are skeptical of the merger.

5. In regard to TPG and RSA's involvement, I really do not know what's in their minds, at this point. RSA has said it will not invest more, but then qualifed their comment and RPG supports the merger and will obtain about $6 million in fees.

Regards,

USA320Pilot

 

[eolesen]

UAL's E&FA department believed in 2000 that the last merger attempt would boost UA & US' annual revenue by $1.9 billion per year.

In addition to the revenue benefits, Wolf said United's E&FA department believed there would be significant cost cuts due to the combined business enterprise realizing economies of scale, but he did not offer a figure.

[post="276402"][/post]​

Isn't this the same UAL E&FA department who said:

a) the ESOP was alternative compensation
b) their pension obligations were properly funded
c) the first business plan they presented to the ATSB was sound
d) the second business plan they presented to the ATSB was sound
e) the business plan they continue to present to Judge Wydoff is sound

Sorry, but five strikes, you're out.

My apologies if it offends anyone that I don't place a lot of faith in UAL's finance group....