Lufthansa merger????

737nCH11

Senior
Mar 4, 2003
395
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O.K. This is so far out in left field that I almost didn''t post it. Someone on the American board said they saw an article about Ual and Lufthansa merging. Anybody else see this?
 
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On 3/28/2003 8:29:27 PM 737nCH11 wrote:

O.K. This is so far out in left field that I almost didn''t post it. Someone on the American board said they saw an article about Ual and Lufthansa merging. Anybody else see this?

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March 28, 2003
UAL pact mentions merger option
By Paul Merrion

To exit bankruptcy, United Airlines is allowing for the possibility of a merger with another airline, according to the terms of a tentative labor cost-savings agreement reached Thursday with its pilots union.
In addition to a 30% pay cut and creation of a low-cost carrier subsidiary, the proposed agreement provides that certain rights of the pilots will be preserved “if the company’s and the bankruptcy investor’s airline operations are merged.â€

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Several other provisions of the proposed contract obtained by Crain’s Chicago Business also spell out how different parts of the contract, such as seniority rights, would be affected by a merger with another air carrier.

Pilots would also retain a seat on UAL''s board of directors under the terms of the agreement.

Representatives of the Air Line Pilots Assn. (ALPA) and UAL Corp., United’s Elk Grove Township-based parent, declined comment on details of the agreement or the possibility of a merger with another airline. The proposed agreement needs to be ratified by union members before it goes into effect.

In a statement yesterday announcing the accord, United said it would produce $1.1 billion of the $2.56 billion in annual labor cost savings it is seeking from its unions.

“This agreement helps provide the flexibility United needs to strengthen our business, compete where we choose, and become a resilient, profitable company that can offer stable jobs on a sustainable basis,†according to Glenn Tilton, UAL’s chairman, president and CEO.

Up in the air

Industry experts say it is hard to tell whether United and its pilots expect the most likely outcome will be a merger with another carrier or whether the pilot’s contract merely needed to allow for that possibility.

The 57-page agreement also give pilots the right of first refusal to make a competing offer for the bankrupt carrier “at such time and under such circumstances as the board of directors of UAL or the company reasonably determines to be consistent with its or their fiduciary duties.â€

Experts say the most likely merger partner among airlines would be a foreign carrier, such as Germany’s Deutsche Lufthansa AG, United’s Star Alliance partner. But limits on foreign ownership, currently at 25%, would raise another set of issues that would have to be overcome.

“Certainly no domestic carrier wants them or has the money,†says Darryl Jenkins, director of the Aviation Institute at George Washington University.

Low-cost compromise

While the pilots union has bitterly opposed the creation of a separate subsidiary with lower pay scales and different work rules, the agreement allows for the establishment of a low cost carrier with a significant compromise: the discount carrier, internally codenamed “Starfish,†will use union pilots with the same pay and seniority rights as the mainline carrier’s pilots.

In the section on “Low Cost Operations (LCO),†the proposed agreement says that United Airlines (UA) “will perform all the flying in or for the LCO, utilizing UA pilots on the UA seniority list under the terms and conditions of the UA pilots’ collective bargaining agreement.â€

This represents a substantial compromise by United’s management, which has maintained that it needed separate, lower pay scales in order to create a cost structure that would be competitive with discount carriers, such as Dallas-based Southwest Airlines Co.

The agreement does provide for some changes in work rules “to maximize efficiency†for the low cost carrier.


Note This possiblity has surfaced in numerous reports, goverment likly will relax to some degree foriegn ownership rules, only industry with arcane restrictions on capital.
 
Old Chipper is gonna have a field day with this one over on the US Air board.
 
Once again an industry "expert" adds 2 + 2 and gets 5. This is nothing more than pilots covering their posteriors. Contract 2000 also had provisions for UA purchasing another airline as well as successorship rules if UA is bought. This tentative probably has more specific wording due to the fact that we are a bankrupt company, but again, it is purely good sense to cover all possiblities so one is not caught with one''s pants down. I''d caution everyone not to drawn vast conclusions or brace for any "corporate transactions" from a few sentences in the contract.

This is another prime example of a reporter reaching for straws in an attempt to fill a news story.
 
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On 3/29/2003 2:57:12 PM 767jetz wrote:

Once again an industry "expert" adds 2 + 2 and gets 5. This is nothing more than pilots covering their posteriors. Contract 2000 also had provisions for UA purchasing another airline as well as successorship rules if UA is bought. This tentative probably has more specific wording due to the fact that we are a bankrupt company, but again, it is purely good sense to cover all possiblities so one is not caught with one''s pants down. I''d caution everyone not to drawn vast conclusions or brace for any "corporate transactions" from a few sentences in the contract.

This is another prime example of a reporter reaching for straws in an attempt to fill a news story.

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How is the wording on this TA different than C2K?

While it is completely gutted, I thought that C2K was still in effect after the TA. That is, other than the changes made by the TA.