How Soon Before The Merger?

[motnot]

The problem with a HP-US merger, quite simply, is the US employees, particularly the seniority involved.

HP's finances are not bleak. Obviously, everyone is suffering, but HP is doing better than most. On the other hand, if the current lousy industry conditions continue, US will not emerge from bankruptcy in the summer, if at all.

HP is clearly looking for opportunities to grow, and Doug Parker has said he intends to make HP the premier LCC in the country. In my mind, HP is in smart-acquisition mode. Having lined up financing for a TZ deal shows that they are serious. But Parker also cares about his employees, I don't believe he'd sell them out. He's also in his early 40s, so I think he's planning to build himself an major airline to stick with.

My point is I think HP would be the acquirer if a deal with US were to ever happen. And, like I said, the seniority of US workers is an issue (not to mention all the furloughed employees). HP's would essentially be "stapled" if standard seniority integration were to be followed, and that seems untenable for an acquirer. The other MAJOR issue is that US employees have been through so much BAD stuff, HP might balk at getting together with such a demoralized workforce.

IF there were to be a HP-US merger -- and at this point, the odds seem remote -- the two companies would probably be run separately for a period of a couple years, but with a full codeshare and FF reciprocity. Given the age of US' workers, many would retire, and you'd even likely see buyouts offered to "weed out" the old, failed mindset among bitter workers.

In those couple years, you'd probably see all growth from the company come in the America West brand, even if places like PHL or CLT, because with a full FF linkup, your customers would know it's the same. Then, eventually, the two companies would be combined into one airline -- whichever brand management felt better about.

 

[Light Years]

HP are AFA so it would be a date of hire situation for F/As, which is the fairest way, and incidentally, the way US has always done it with PSA, Piedmont, and Shuttle Inc. If the F/A buyout gets as much interest as it's supposed to, all of the furloughees would be back and the airline would look alot like other airlines- some senior, some junior, unlike the Jurassic Park the mainline is now. Of course, if it were to happen and people got wind of it, alot fewer people would leave with the idea of having west coast bases again.

I think they would be a good fit- the major airline sized, network LCC. Utlized properly, it could be quite the competitor. From, say, an ORD or a DFW it could have service to PHL, PHX, CLT, LAX, LGA, DCA, LAS, BOS, FLL, and PIT. That's a pretty good network.

Aside from the vomit-inducing Flintstones livery and such, HP and US, especially now, offer a pretty similar product. Strong hubs (PHL CLT PHX) and focus cities in the biggest O&D cities in the nation like NYC and LA, business markets as well as leisure, and combine US's Carribbean/LatAm with HP's Mexico... Airbuses for long haul, Embraers and RJs for short haul (although way too much Mesa for my liking). It would truly be a US Airways.

Anyway, enough dreaming. US Airways can't buy a tin of beans at the moment.

 

[eolesen]

As much as AFA and ALPA blasted the AA/TW staple job, I don't know if HP's executive councilswould be quite so open to the idea of DOH for the merger with a less healthy carrier. Allegheny/Mohawk sounded fair 30 years ago, but given the ups and downs all of the 20+ year old carriers have seen, I don't see DOH ever happening again except when there's a true merger of equals.

And as dreamy as it sounds, HP/US wouldn't be a merger of equals.

That's why I think if anything happens, it will be an acquisition, just like ATA, TWA and Frontier I. Assets only, some employees survive with limited term fences to protect some of their seniority. But nowhere would I expect to see a scenario where all the employees go along for the ride.

 

[skyflyr69]

Don't be surprised if Airtran enters the picture................

 

[AA191]

?? What ??

 

[drifterreno]

As many posts in the past I am a retired US person working at HP. I have to say that I LOVE my job at HP. Incentives, free short and long term disability, vision free, and lower health payments. yES, they do seem similar with one major difference----management. Doug Parker is a truly great leader. He's aproachable and takes suggestions from employees and puts them to work. The VP's here are great also---Joe for one--gave up a birthday bash to make sure that those of us in Reno were given "snow days" When we were blasted this year. YEP you got it. I was even called at home and told not to come to work until I checked a special hot line to see if we were open---and then only come in if it was safe. Our supervisors then threw us a chili dinner for doing our best for coming in. AND then we were given a $50 per employee because we worked hard all year. New incentives include an extra $50 per month if we finish in the top 3 for on time departures and if we have fewer than 10 customer service complaints. That actually adds up to $100 more a month just for doing our job---and if we do it every month in the year---a $600 bonus. Whew I'm working as hard as I can. No I don't make as much per hour but it's actually a pleasure to go to work. The sups are kind and fun to work with and top management truly care about us. And of course Doug Parker has said he will not put his employees in jeapordy. Thanks Doug---good to be at a careing airline for a change.

 

[aafsc]

As much as AFA and ALPA blasted the AA/TW staple job, I don't know if HP's executive councilswould be quite so open to the idea of DOH for the merger with a less healthy carrier. Allegheny/Mohawk sounded fair 30 years ago, but given the ups and downs all of the 20+ year old carriers have seen, I don't see DOH ever happening again except when there's a true merger of equals.

And as dreamy as it sounds, HP/US wouldn't be a merger of equals.

That's why I think if anything happens, it will be an acquisition, just like ATA, TWA and Frontier I. Assets only, some employees survive with limited term fences to protect some of their seniority. But nowhere would I expect to see a scenario where all the employees go along for the ride.

[post="244112"][/post]​

I agree. There should only be dovetailing if the transaction is between two equals. TWA and AA were not equal. AA at the time had a net worth of almost $7.5 billion as to where TWA had a very negative net worth and was just about out of cash. Also TWA had hardly any "hard assets" to bring to the party. Contrast this when AA was talking to NW. If an AA/NW deal would have happened it is almost a certainty that the NW and AA people would have been dovetailed. The reasons are: 1. It would have been a true merger (from a legal and financial perspective) 2. NW would have brought some extremely valuable assets to the party (the Pacific routes, the Pacific freighter operation, excellent hubs in DTWand MSP (MEM is not all that great but NW put RJs in there) and their gates and slots in LGA and DCA. AS for net worths,both AA and NW now have negative net worths. So FM I concur with your assessment.