Merger with LCC in the spring

[maddogdriver]

I don't post here often but like to check out the latest gossip from time to time. (member since 04). This board has gone down the tubes and this bozo named Rubble (and others) is reason I won't check out this site anymore.....waste of time.

 

[Rubble]

Maddog:

BOZO?

This is one of your posts:

"For those who don't think it won't/can't happen, just look at K-Mart just over a year ago....fresh out of Chpt 11. A merger/aquisition depends ENTIRELY on where/who investors want to put their money. Don't rule out anything"

What makes your opinion so much better?

I told people 6 months prior to Chapter 11 that it was going to happen, everyone said, " No that won't happen to United."
When we went into bankruptcy I said, "Our pensions are gone", everyone said, "No that won't happen, the employees won't allow it, they'll revolt.
The reality is that even to this day United employees have it too good- otherwise they would leave, it is that simple.
There was no revolt and there isn't gonna be any.
Tilton has a $40M incentive to merge the airline or otherwise increase and release the equity to the shareholders, hence the asset sale.
Would you walk away from $40M? If DAL or CAL aren't willing to deal then he will have to find another way to make it happen. Why do you think UAUA is giving $250 in dividends to its shareholders. Are you so ignorant to believe that it was actually to increase the number of investors? This was a simple way to give the executives and the institutional investors a nice Christmas bonus without having to call it a Christmas bonus. That way the ignorant employees won't notice. Tilton has 381,076 shares and that equates to a $826,935 dividend, I mean bonus.

One way or another this airline will be merged or sold off.

 

[Fly]

Tilton said he is merging for quite a while.........so what are you posting that is news?

 

[North by Northwest]

LCC was interested in merging w/ DAL and that failed. Animals don't stop hunting even thought they failed- they're still hungry.
Delta is not interested in merging but they maybe interested in a buying Pacific routes.
Tilton is simply interested in filling his pockets one more time. The only factor for him is: How can I do that and get out?
The only synergies that matter are the one regarding anti-trust issues. The business models themselves, are far as sustaining entities, are irrelevant.
Why would anyone want to go through the merger process with the battered unionized employees of United? Just look at the USA/AWE mess- and thats "small potatoes" compared to United.
The most likely scenario is to sell off United in parts. The first process has already started. Selling the F.F. program and the SFO MX base. In a year or two the AMFA union would become "hero's" for going along with it as opposed to everyone being on the street.
Next is to sell real estate with say a 5 yr. lease. Then the mega deal that goes something like this:

Delta goes it alone and buys United's Pacific routes, or course that includes some aircraft too.
The lucrative Atlantic slots get sold to the highest bidder, including the aircraft- this is more of a disposal move than anything else as the 787 is coming on-line.
U.S. Airways drops the Star Alliance and merges with NWA- remember, they're still hungry and they have almost no INTL ops. Sorry Detroit- you go bye bye.
Jetblue buys many of United's A320's and becomes the major Star Alliance airline for the U.S. Yes, they will need financing but they will get it. This deal is too good for the Star Alliance carriers to pass on as they get all the INTL traffic to the U.S. They would increase their flights out of SFO, PDX, ORD and IAD. Why PDX? Lufthansa.
AAL moves into Terminal 1 at ORD. Frontier survives as they become the major player in DEN. Growth opportunities expand in San Francisco and everyone has a piece a is the case in LAX.
I'll let you fill in the rest.

That statement alone is proof enough for you not to quick your day job. Clearly, you don't have a clue as to the operational facts of today's aviation.

As for DTW, one of the newest most advanced 35 million people a year airports in the world...going bye bye? Not really something someone with an inkling of aviation would say. On top of being the #1 Hub of an airline with the best balance sheet in the industry (that's what you look for when gathering whom can buy what, and whom). I would venture to say NW is positioned to do what ever it wants to do...with the cash, Golden share, and route structure to do it. Balance Sheet/Pacific Division/Golden Share/68 Dreamliners/Biggest profit (raped from it's employees of course).

 

[Cosmo]

I know it's been two weeks since this was posted but I've been away for the holidays and needed to check a few "FACTS" myself once I returned home.

Here are the FACTS:
1. IAD does Not have more runways than PHL.

You are correct -- I forgot about the limited use, 5,000 foot runway 8/26 at PHL and got ahead of myself regarding the new 9,400 foot runway 1L/19R at IAD, which will open during the second half of this year (at which point the current runway 1L/19R will re-designated as 1C/19C). At that time, both PHL and IAD will have four runways, although IAD will have triple simultaneous independent arrivals/departures, a capability that PHL can only dream about.

2. IAD's Annual Domestic O&D is almost 8 Million LESS than PHL.

Not to quibble, but the actual difference in domestic O&D (for the year ended June 30, 2007, the most recent data available) is just under 7 million, but that's OK.

3. IAD's International O&D is only 1M more than PHL AND is shared by approximately 17 international (Europe/Asia) carriers. PHL's Internaional O&D is shared by 3 international (Europe/Asia) carriers.

Actually, IAD's reported international O&D is only slightly more than PHL's reported international O&D (by 13.6% -- DOT confidentiality rules prevent me from giving out the actual numbers). But I believe you are actually referring to total enplaned/deplaned international passengers which, according to each airport's website, has IAD leading by about 1.5 million annual passengers.

4. Total Passengers (Current 12 Month Period): IAD = 18.2M, PHL = 27.7M

I don't know where you got the IAD number shown above but it's wrong. According to the MWAA website for IAD (see the link here), the IAD total for the 12 months ended October 2007 was just under 24.7 million. So the comparison is much closer than you implied.

5. PHL's International facilities (Terminal "A") are far superior to IAD's. If you don't know that, you've never used both.

You're right, I've never used Terminal A at PHL. From what I've read, it's probably more or less comparable to Concourse B at IAD. But UA uses the "temporary" Concourse C/D at IAD, which I'm sure is considerably inferior to PHL's Terminal A. That said, however, most passengers couldn't care less as long as they get a low fare. And I think the corrected total passenger numbers immediately above prove that point.

Now, why would a money hungry airline choose IAD again? Please don't fall back on ATC delays (at PHL) - it's in the noise, is the "cost of doing business" in the NE and EWR and JFK are typically more delay proned that PHL (DOT).

Ah, here's where it gets really interesting. This is the real reason I believe that IAD would win any comparison with PHL if a UA/US merger were to occur (which I strongly don't think it will) -- IAD has much higher local traffic yields than PHL. While PHL has over 50% more total O&D traffic than IAD, IAD nonetheless has 2% more O&D revenues than PHL. And this discrepancy is even more pronounced when looking only at the reported international O&D data (which doesn't include foreign carriers), where IAD has almost 14% more passengers but a whopping 105% more O&D revenues. The overall reported international yield at IAD is 16% higher than at PHL despite a 55% longer average trip length at IAD.

Let's drill down further by comparing UA's O&D data at IAD with US' O&D data at PHL. Domestically, US carries about 1.4 million (or 27%) more O&D passengers at PHL than UA carries at IAD, but UA actually records a $4.4 million (or 0.4%) higher level of O&D revenues at IAD than US sees at PHL since UA gets a 27% higher average fare at IAD than US gets at PHL. But the international arena is where US at PHL really gets clobbered when compared with UA at IAD. While UA gets almost 21% more international passengers, it records a staggering 181% more international revenues as IAD yields are 18% higher despite a 98% longer average trip length than US gets at PHL (remember, yields usually drop as trip lengths get longer). A similar, though less extreme, phenomenon exists when looking at O&D traffic and revenues to Europe, where UA and US have the largest service overlap yet where UA carries almost 50% more traffic from IAD, records over twice as much revenues as US at PHL, and achieves a 37% higher local yield at IAD. And these kinds of results are repeated in specific markets from each carrier's hub. I could go on and on describing the revenue-generating supremacy of UA's IAD hub vs. US' PHL hub, especially in international markets, but I think you get the picture now.

This also helps to explain why IAD has so many foreign carriers and PHL doesn't, as you note in your point 3 above. You seem to imply that it is a bad thing, at least for the hub carrier, but I disagree. These carriers understand IAD's strong revenue-generating capability as well as UA does, and their presence at IAD actually serves to draw even more foreign carriers. In 2007 alone, EI, IB, CM and QR all started service at IAD, and I understand that AI, TK, MS and CA (all current or future Star Alliance members) plus AV and EK are seriously considering coming to IAD in 2008 or 2009 as well. In short, the more Star Alliance carriers at IAD, IMHO the better it will be for UA and its hub there.

And as for the ATC issues, saying it's a "cost of doing business" doesn't make the ATC environment at PHL any better. Besides, if you can earn much more revenue per passenger at IAD and thus avoid the need to incur that "cost of doing business" at PHL, why wouldn't you?

And how would you propose that UA divest itself from the firm contractual order with Airbus for 332s, 350s and possibly 340s?

That's easy -- take delivery of the planes and then immediately re-sell them. Airbus wouldn't be very happy, but the A330-200s and A350s are hot commodities right now and even the A340s could be sold at the right price. The buyer might actually be Boeing, taking the Airbus planes in trade for a massive B777/B787/B747-8 order from UA, like Boeing did a few years ago in a deal with SQ. While this is all merely speculation, UA should nonetheless be able to move the contracted Airbus planes without a great deal of difficulty.

Further, you ignore the very good possiblity that it would be US buying UA - not the other way round.

IMHO, there's not a chance of this happening. With both Tilton and Parker talking about consolidation almost constantly, the fact that a UA/US merger (no matter who would be doing the buying) has not already been announced leads me to believe that it won't happen. Of course, this industry is always full of surprises, so I suppose one should never say "never". But that said, IMHO I still don't see a UA/US merger happening.

 

[wasone]

As much as United wants a merger, even they will not go with the disaster called LCC.

Hey guys, a new airline has thrown it's hat into the merger ring.. Air Mexico. Word has it they are expanding very fast in the U.S. and the food is great!

 

[JungleClone]

If the rumors are true about an imminent NW/DL merger announcement, depending on how CO responds, UA may have no choice but to jump in bed with LCC. Call it a marriage of convenience.

 

[767jetz]

If the rumors are true about an imminent NW/DL merger announcement, depending on how CO responds, UA may have no choice but to jump in bed with LCC. Call it a marriage of convenience.

If DL Merges with NW (or anyone other than UA for that matter), UA and CO will merge. LCC will be left on the sidelines. It is a well known fact that when LCC attempted a hostile takeover of DL, UA and CO pursued a defensive merger plan. When LCC was unsuccessful, UA and CO broke off talks.

This never ending obsession of a merger between United and USAirways is perplexing. Both Parker and Tilton have been talking up the consolidation theme for years. Both obviously want to dance with someone. If they wanted each other it would have happened by now.

The idea of a UAUA/LCC "merger of convenience" doesn't hold water because even if DL merged with someone else, there are better options available to UAUA than a marriage with LCC.

 

[NAPAUS]

KEEP USAIRWAYS MY USAIRWAYS

Better known as WHATAMESSAIRWAYS!!

 

[Rubble]

My previous post regarding the mergers was somewhat fanatical but I don't believe that just because DAL merges with NW, it will automatically set off a UA/CAL merger. I still think something "outta the box" is going to happen. Thats why I came up with the LLC/NW merger. As with the rest of you I'm not clairvoyant but keep in mind that Lufthansa just invested 300M into a non-Star Alliance carrier based on the east coast. Certainly this is the time to invest in the U.S. if your money is abroad but investing in a airline? No, there is more to this then just the lucrative U.S. dollar.
With $100/bbl. oil and weakening demand, especially for the next 6 months, not to mention higher unemployment I wouldn't be surprised if AA went into BK sometime this year to do some cleaning and dump/restructure A.E. Why? The restructuring they did was just a band-aid and the express market is bloated. Of course if they did, it would be a quick in & out unlike UA. At least UA has already refined their express operation with Chautauqua, Shuttle America, Mesa and Skywest.

 

[767jetz]

My previous post regarding the mergers was somewhat fanatical but I don't believe that just because DAL merges with NW, it will automatically set off a UA/CAL merger.

First of all, a DL/NW merger is a BIG IF. You talk as if it's a foregone conclusion. In fact, here is an article from Sunday stating that DL has postponed the proposed sale of Comair while it explores a merger with United Airlines. Link

I think it is pretty widely presumed that IF DL wants to merge, their first choice will be UA. However, IF they decide to merge with NW, then UA and CO will merge in order to stay competitive. As I said, it's already been discussed.

 

[JAMAKE1]

Here's my take, FWIW: Delta and United would make fine partners, however, my belief is that the two carriers are too entrenched in their respective alliances. I cannot fathom Delta severing its ties with AF-KLM, especially after having recently announced a joint-venture, nor can I fathom UA severing its ties with Lufthansa. UA and LH have a solid history together and I just cannot foresee that changing any time soon.

Continental is the stepchild of the Sky Team Alliance and does not have nearly the close working relationship with a European partner that AA, DL, NW, and UA have. So while DL and UA may seem like the best possible combination in terms of operating synergies, my best guess would be that their close relationships with their respective European partners would preclude a DL-UA deal from happening any time soon.

Although DL and NWA may not make for the most ideal combination, when you throw AF-KLM into the equation, a DL-NW deal would make sense. Having said all that, IF industry consolidation were to occur, then my bets are on DL and NW throwing the first punch by announcing a deal. As a defensive maneuver, CO and UA will announce a deal. A CO-LH-UA combination would make for a nice global airline powerhouse (as would a DL-NW-AF-KL combination).

I'm not sure what that would mean for AA and USAir, but a UA-US combination would not bring any significant value to the airlines' stakeholders, nor would it fill the gaps in the route network (South America). If I had my druthers, US would be kicked to the curb from the Star Alliance (no offense, but they tarnish the Star).

 

[spanglish]

As for DTW, one of the newest most advanced 35 million people a year airports in the world...going bye bye? Not really something someone with an inkling of aviation would say. On top of being the #1 Hub of an airline with the best balance sheet in the industry (that's what you look for when gathering whom can buy what, and whom).

Nobody thought PIT would go down the tubes, but look what happened. First US cut back service and now SWA is even cutting back on service. PIT was a #1 hub also.

 

[USCREW]

The talk of US and UA merging with US being the acquirer has really heated up lately. It's been mentioned on every trip for the past few weeks (by UA nonrevs too). I also heard of the merger details being 80% done and we might hear something on the 14th. 🙄

 

[767jetz]

The talk of US and UA merging with US being the acquirer has really heated up lately. It's been mentioned on every trip for the past few weeks (by UA nonrevs too). I also heard of the merger details being 80% done and we might hear something on the 14th. 🙄

YAAWWNN... Now back to your dreams...

These rumors you speak of are nothing but someone's fantasy.