Industry Consolidation?

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chipmunn

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On October 22 US Airways chief executive officer Dave Siegel told employees in his weekly recorded message that skepticism is building to the DL, NW, and CO alliance and said members of congress are building opposition to the deal.
Specifically, Senators Specter and Santorum wrote the DOT objecting to the deal and the Air Carrier of Association of America (ACAA), made up of seven low cost airlines led by Southwest & America West, have asked regulators to use the full 150-day process to review the proposed alliance.
The second 30-day DOT three-way alliance review is now underway and will expire on November 21. The DOT said it would consider the ACAA request, but there are now reports the DOT is set to reject the three-way code share proposal.
If the DOT does reject the trilateral alliance, this would put significant added pressures on DL, NW, and CO revenues, which could led NW to make an acquisition offer for some or all of US, to respond to the UA-US code share threat.
Reports inside of NW indicate CEO Richard Anderson is obsessed with the idea of adding the US PHL and CLT hubs to the Eagan-based carrier's network and NW previously expressed interest in obtaining the NW Shuttle.
It's unclear of whether or not any possible corporate transaction between NW & US will materialize, but there have been previous discussions between the carriers.
Meanwhile, UA reported on September 30 it had $1.996 billion in cash, for the traditionally strong third quarter had a cash burn rate of $7 million per day, and its cash burn rate would increase in the fourth quarter. Today UA had to pay a scheduled $41 million public debt payment, debt likely unable to be deferred according to S&P credit analyst Phil Baggaley, and presumably had an October cash burn rate of about $10 million per day. The burn rate and debt payment should put the November 1 cash balance at about $1.645 billion. Furthermore, the company has a $375 million debt payment due on November 17, which it may be able to defer, to German state-owned bank KfW, who also owns 17 rejected US EETCs. It is my understanding KfW was one of the major players unwilling to renegotiate US' leases to market rates, forcing Siegel to file for a formal reorganization.
Rueters reported on October 25 that November 17 is critical day for the Elk Grove Township-based carrier because UA may be forced into a Chapter 11 bankruptcy filing if it cannot make the payment. Several sources familiar with the matter said the bank may be willing to give the No. 2. U.S. carrier about a month or more extension, particularly if it looks to be making progress on labor talks and securing a U.S. government-backed loan. Negotiations with KfW are ongoing, sources said.
As of today, there are no UA labor accords with the AFA making a modest proposal; however, reports within UA indicate the AFA is not pushing the offer and is not holding employee Economic Recovery Program (ERP) union road shows with its rank-and-file membership.
Chip
 
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chipmunn

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Blueskies, all of major the airlines have engaged their political delegations to lobby the Bush Administration to either approve or reject the proposed three-way alliance. The trilateral alliance will have unprecedented scope and could equal the size of AA, UA, & US together, if UA files for bankruptcy.

It will be interesting to see how events unfold.

Chip
 

LDKIAM

Member
Oct 29, 2002
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[P]Chip Wrote:[BR][FONT style=BACKGROUND-COLOR: #ffff00][STRONG][EM]On December 22 [/EM][/STRONG][/FONT]US Airways chief executive officer Dave Siegel told employees in his weekly recorded message that skepticism is building to the DL, NW, and CO alliance and said members of congress are building opposition to the deal.[/P]
[P]Are we seeing into the future or writing future company press releases? [BR][/P]
 
This is truely laughable! Sources close to NWA ( myself ) have been informed that there is SIGNIFICANT progress on final approval of the alliance. Furthermore, NWA has only EVER been interested in PHL and NEVER in CLT. (read) MEM. My prediction is that the NW,DAL,CAL alliance WILL be APPROVED. And then we will begin to see real fallout for the airline industry. Mark my words...
 
[P][FONT style=BACKGROUND-COLOR: #98c4e8]Fankly gentelmen, I don't want to see U break up...or ANY other airline. It is disheartening to see this happening. A little verbal bravado amongst us is fun at times. However, I also know that there are lots of families out there. To think of a parent out of a job with little ones is a sobering thought. I pray that we will wake up next week and there will be NO threat of WAR with ANY nation. And the economy has started to rocket north![/FONT][/P]
 

ITRADE

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/1/2002 12:59:32 PM Blueskies/400 UpperDeck wrote:
[P]This is truely laughable! Sources close to NWA ( myself ) have been informed that there is SIGNIFICANT progress on final approval of the alliance. Furthermore, NWA has only EVER been interested in PHL and NEVER in CLT. (read) MEM. My prediction is that the NW,DAL,CAL alliance WILL be APPROVED. And then we will begin to see real fallout for the airline industry. Mark my words... [/P]----------------[/BLOCKQUOTE]
[P][/P]
[P]Who says a fragmentation scenario wouldn't take place with NW in for a major chunk?[/P]
[P]NW steps up and offers $$$ for all the A-320 family craft, the A-330s, the PHL hub and maybe the Shuttle routes.[/P]
[P]CO takes the 737-300s and takes CLT.[/P]
[P]AA flights NW for the Shuttle.[/P]
[P]Sorry, but PIT withers on the vine and dies a slow hub death.[/P]
 
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chipmunn

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LDKIAM, ooops, thanks, it should havd read October 22, last Friday.

Thanks for the catch.

Chip
 
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chipmunn

Guest
A tranaction with UA is still in the picture, but who knows if it will occur.

Chip
 

UAL777flyer

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Aug 20, 2002
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My opinion is that the CO/NW/DL alliance will be approved, but with SIGNIFICANT carve-outs. Given that, would it still be worthwhile for them to pursue it? Only time will tell.
 

avek00

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Aug 28, 2002
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While you may indeed be correct Chip, the info. that I continue to receive suggests an imminent APPROVAL of DL/CO/NW, with conditions similar to those imposed on UA/US.

I also have to take issue with Richard Anderson's obsession with US Airways. Simply put, with the possible exception of US' PHL operation, Richard is not obsessed with US or the East Coast. A major NW presence within the East would have a deleterious effect on the company's business and revenue models.

Gordon Bethune, OTOH, is HIGHLY interested in parts of US, but is too poor to do anything about it.
 

AgMedallion

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Aug 31, 2002
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[blockquote]
----------------
On 11/1/2002 2:09:11 PM Blueskies/400 UpperDeck wrote:


[FONT style="BACKGROUND-COLOR: #98c4e8"]Fankly gentelmen, I don't want to see U break up...or ANY other airline. It is disheartening to see this happening. A little verbal bravado amongst us is fun at times. However, I also know that there are lots of families out there. To think of a parent out of a job with little ones is a sobering thought----------------
[/blockquote]

Actually, with their experience, I would think that many U employees could find work with the acquiring airlines. After all, someone has to serve on the flight crews, maintain the planes, work the counters and gates, etc. Of course, this would be at newbie wages and might involve relocations, but at least they'd be with an airline run by more competent mgt than what they have now...hence a more secure future. With 20/20 hindsight, many should have made the switch 10 years ago. On the other hand, only those wearing rose-colored glasses and totally ignoring the monumental mistakes made by Colodny, Seth, and W&G (aka Dumb and Dumber) are shocked at what's happening to US Airways. An airline staffed with good, hard working people, but run by idiots.
 

usfliboi

Veteran
Aug 20, 2002
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I see an approval as well... I dont see any buying anytime soon.. Who knows what 2 yrs from now hold though !
 

Boomer

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Aug 20, 2002
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[blockquote]
----------------
On 11/1/2002 1:07:20 PM chipmunn wrote:

Blueskies, all of major the airlines have engaged their political delegations to lobby the Bush Administration to either approve or reject the proposed three-way alliance. The trilateral alliance will have unprecedented scope and could equal the size of AA, UA, & US together, if UA files for bankruptcy.

It will be interesting to see how events unfold.

Chip

----------------
[/blockquote]

Chipper,
Perhaps UAL-U-AA will request the same sort of codeshare approval.
DAL-CAL-NWAC v. UAL-U-AA

That would sure lead to a little consolidation.

HEY, It could happen...
 

Eris

Member
Nov 1, 2002
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[blockquote]
----------------
On 11/1/2002 1:07:20 PM chipmunn wrote:

Blueskies, all of major the airlines have engaged their political delegations to lobby the Bush Administration to either approve or reject the proposed three-way alliance. The trilateral alliance will have unprecedented scope and could equal the size of AA, UA, & US together, if UA files for bankruptcy.

It will be interesting to see how events unfold.

Chip

----------------
[/blockquote]


Well... since the Crystal Palace pundits were unable to successfully lobby to secure a sign off of $60 per share...I hope they have been practicing fast talk.



Being full of hot air is a good thing... without the appearance of being so.

--Rule number one in “Recreational Ballooning for Dummies
 
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chipmunn

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The information I wrote to start this thread is what I have heard from informed people; however, in my opinion the DOT will approve the three-way alliance. I agree there will be signigicant restrictions, especially between hubs and the four New York metropolitan area airports.

Chip
 

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