How Soon Before The Merger?

[Pylit]

I heard from an unreliable source not long ago (in a Ford Galaxy, far, far away...),
a rumor of a merger between America West and US.
Let's face it, US's name is M.U.D. with the traveling public in the east, and is an invisible entity on the west coast. My source said the merger would create a new airline called "New World Airways" with the alliance star on the tail, and the alliance generic black 'n white paint scheme (the golden parachute over the world tail logo was taken already by CO...)
The newly created airline would pick up hubs in PHX (the fastest growing city in the USA), and LAS (neck and neck with PHX) connecting them with the major population and business centers along the east coast.
The two airlines provide a synergy in their route systems for east-west traffic, and would provide the alliance with increased west coast feed to the pacific (UAL) and east coast feed to the Carribean and Europe (US). It also completes the Central/Latin American triangle with feed from the west coast and PHX to those destinations. UAL would benefit, too. This union would eliminate their need to keep their low-cost Ted unit, enabling a further downsizing but preserving their long-haul feed through the alliance.
This also povides a convenient exit point for upper US mgmt, replete with the lavish bonuses, severance, travel, and pension packages for a job well done...
IMHO, I do not see a US-UAL merge. The labor groups ultimately are not compatible, and UAL is fickle. Just look at their history of attempted M&A's (Frontier comes to mind....).
Anybody else hear about this one? I heard our mgmt called this "plan b"...

😉

 

[A320 Driver]

I guess USA320pilot is licking his chops thinking of getting that left seat 777 at UAL.
U = Boat anchor on bottom of sea
UAL = Boat anchor on the way down

U + UAL = . . . . well, whatever it is, is doesn't float.

[post="241310"][/post]​

Well put. If any U pilot thinks he could come out on top of a seniority integration, he's been hitting the bong too often.


A320 Driver

 

[jcavinato]

In the history of transportation mergers in all modes, and airlines in particular, two weak ones combining almost never came out stronger. The only people who win are the financial firms and law outfits that charge both companies outrageous fees to handle the transaction. They walk away with money, and this is cash that both airlines could have sorely used on their own.

A major point in it is that the surviving management team always underestimates and under reports at the start all the transitional costs. One of the biggest is the handling of two seniority lists for every group. Closure costs of gates and hangers nearly all have buyout lease costs. The hurdle costs are just too much.

USAirways does have a viable brand name and perhaps the most attract livery scheme, but it is a nearly perfectly competitive industry now and the most valuable things are physical assets that would be available not the company as a whole.


I don't think a merger or viable one is in the future. My emotional side says I hope so, but my rational side says no.

 

[jcavinato]

As logical as it sounds, PHX is a busy place, lots of enplanements and all, but with Southwest and America West slugging it out, it does not leave sufficient margin in the pricing for anyone else to make money in its market. Heck, I'm paying $140 r/t PHX-ORD midweek on American. Prior to 9/11 this was a $1,500 fare. I don't know how anyone makes any money in the PXH market other than the airport administration (fees and rents), terminal food courts, red caps and parking firms.

 

[mweiss]

...the former UAL attempt to acquire US Airways would have generated an extra $1.9 billion per year in combined revenue.

[post="241287"][/post]​

Honestly, who cares about the amount of revenue? What matters is the amount of profit. There is scant evidence that combining the two companies would reduce unit costs to a profitable level.

 

[delldude]

maybe bring MAA mainline and make the U name go away......??????

 

[Justaramper]

700..
You can also flip the coin and look at the other side. What happens when you put 2 airlines together that are making money {US/PI in 1989}..?

That's right...You lose money


It all comes back to square one...Management

 

[USA320Pilot]

700UW said: "And the $1.9 Billion figure was before 9/11 happened and fuel prices rose. "

USA320Pilot comments: Your point is valid regarding pre-9/11, but fule prices are independent of revenue.

UseYourHead said: "Looks nice, UAL pilots will look good in it! With grandfathering on that type, we would never fly it and thats okay 🙂"

USA320Pilot comments: Agreed.

USA320Pilot concludes: For those that dispute a corporate combination is again being discussed, I suggest you contact J. P. Morgan's investment banking (IB) department. Will something happen? Maybe, maybe not, but it's being discussed again on Wall Street.

Regards,

USA320Pilot

 

[Bear96]

USA320Pilot concludes: For those that dispute a corporate combination is again being discussed, I suggest you contact J. P. Morgan's investment banking (IB) department. Will something happen? Maybe, maybe not, but it's being discussed again on Wall Street.

Regards,

USA320Pilot

[post="241350"][/post]​

I knew it wouldn't take long to come up with a name.

UCT, ICT, now CC: the corporate combination.

 

[Rico]

Well, the fact reamins that the enviroment is unstable. In such times in the past airlines have historically either consolidated or acquired assets from other carriers.

So the idea is not that far fetched, but at the same time much of the current allure of US Airways is not just the labor concessions that were obtained, rather the savings that can be obtained from retooling our company into a point to point/high productivity carrier.

IMO it is until we can do so, prove the concept of "Legacy turned LCC", and validate the business plan somewhat that we would be in a position to make such acquisitions.

Not saying impossible, just saying it seems more probable later on.

 

[jcavinato]

The history of investment banking is little different than stock brokerage, lawyers, and funeral directors -- they only make money when there is a transaction, a change, a move. Their incentives are to maximize these kinds of events.

Just because Morgan might be interested, it does not mean that it is for the good of anyone but themselves and the venture groups they put together around a possible transaction. These firms have a history of making money when firms die as much as when they merge, grow.

There were about 20 such budding interests around the first Braniff, PanAm, and Eastern. I was there. I was involved in a leased 727 which we got away from the company about an hour before management went to court at ten minutes after midnight before the plane got snagged in months of bankruptcy court clearance of the other aircraft.

 

[Rico]

I think the more rational approach would be a growth of the UA/US code share, much like CAL did when retooling their own carrier back in the 90's.

At that point they developed the working relationship with AWA, and used it to further cost costs and increase market presense.

Such moves would make financial sense even in our current state. IMO the midwest is a ripe source of new revenue for the CLT hub, and great pool of established customers for O+D markets like DCA/LGA/BOS. UAL has already expressed an interest in downsizing domestic operations.

Having a passenger travel direct to DCA from DSM (for example) on a UA code would accomplish such, and be far more competitive that having them connect thru ORD, then over to IAD, to then travel an hour into the town...

That would make sense for each carrier at this time, rather than the UA idea of only increased RJ usage to replace United mainline flying on their current routes. It maintains revenue that each carrier needs, and is far more attractive an option to our passengers.

 

[USA320Pilot]

I personally do not want to see a corporate transaction with United or anybody else for that matter. US Airways is on the path to become the first legacy carrier to transform itself into a successful low cost airline and I want to see internal growth/success.

Every other network carrier is behind US Airways in its restructuring and I personally do not want this company and its employees having to deal with another airline's problems.

With that said, the venture capitalists are circling around CCY and WHQ, just like they are in DFW.

See Story

Regards,

USA320Pilot

 

[usairways_vote_NO]

USA320Pilot concludes:

[post="241350"][/post]​

So when you conclude something what exatly does that mean? End of discussion? You are the expert and above everyone else and you had taken in (I use "take in" very lightly and with a laugh to boot) and issued your expert undisputable opinion (fact in your own mind?) on the matter and thats that "it is what I say"?

 

[Fly]

US Airways is on the path to become the first legacy carrier to transform itself into a successful low cost airline and I want to see internal growth/success.

[post="241375"][/post]​

You are a laugh a minute! U and UAL are on life support fella. They aren't expected to live.