Possible UA/US Merger Thread III

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Richard

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Dec 15, 2005
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OK,

Let's continue the discussion of a possible merger between UA and US HERE.

There will be no more warnings--any attempts to hijack the thread will be dealt with in immediate suspensions.

Thank you.
 
i have to wonder, the longer that UA and US keep talking, or supponsely talking, the more I think it wont be a done deal and i hope for all US sake that a merger dont happen
 
i have to wonder, the longer that UA and US keep talking, or supponsely talking, the more I think it wont be a done deal and i hope for all US sake that a merger dont happen
i have to admit, i am getting a little skepticale myself. an announcement was supposed to be made last week.
 
whlinder said:
I had seen the 3bil figure tossed around for a Mileage Plus valuation and didn't think UA had 3bil of other unencumbered assets.

I'm kind of curious how much asset valuations on airlines have changed as the price of oil has risen.

Note this quote:

UAUA has passionately advertised the fact that it has approximately $3 billion in unencumbered assets. The company has significant untapped value in its pool of unencumbered aircraft (110 in total, worth perhaps $2 billion) and spare parts/engines (could be worth another <$1 billion)

This is the $3 Billion in unencumbered assets referred to. Mileage plus, the SFO maintenance facility, etc. are all additional assets that could generate a large amount of capital if necessary. This would happen long before any consideration of selling off slots, routes, or other assets central to the core of UA's primary business.

Compare this to the situation at US:
LCC owns 25 unencumbered E190s worth approximately $500 million dollars which it has said it could sell or refinance to bolster liquidity. Additionally, LCC has valuable DCA slots (worth <$75 million, $2 million per slot).

A sale to United is much discussed and seemingly likely.

LCC has the option, as do others, to engage in a forward mileage sale.

Given LCC's relative absence of material liquidity levers, we actually ascribe a slightly higher Ch11 probability to LCC than to AMR and UAUA in this scenario (mirroring our thoughts on NWA).

In reference to the US/UA merger discussion, it has been hypothesized by some that UA is on the brink of a bankruptcy and in fact it would be a "prepackaged deal" in order for US to purchase UA. This is obviously not the case, since bankruptcy is about liquidity and annual financial performance, not individual quarter results. Each airline has specific metrics throughout the course of the entire fiscal year that effect overall performance.

This all plays into the potential merger scenario with US because it illustrates who brings what to the table, what the financial community (ie: investors) are looking at, who/what is driving the terms of any negotiations.
 
Not to bring a union issue into the merger thread but it's a factor to a degree. I don't see how we can do a three way negotiation as far as the flight attendants go. Throw the whole pilot integration and the USAPA/ALPA issue in and I get a tremendous headache just thinking about it. We at US certainly have our issues and so does United operationally. I'm starting to think that the two will simply equal one giant disaster. It really IS a mess. Things seem to be a bit quiet on the merger front right now huh?
 
hey richard what about you? are you allowed as a moderator to post your opinions? if so what do you think about this potential merger?
 
hey richard what about you? are you allowed as a moderator to post your opinions? if so what do you think about this potential merger?

Moderators are supposed to remain neutral regarding issues on these boards. While I do have my opinions, I choose to observe the rules and not share them...

Oh...observing the rules.....now there's a concept.

Keep on topic ETOPS and please stop looking for trouble.

Thanks.
 
Moderators are supposed to remain neutral regarding issues on these boards. While I do have my opinions, I choose to observe the rules and not share them...

Oh...observing the rules.....now there's a concept.

Keep on topic ETOPS and please stop looking for trouble.

Thanks.
not lookin for trouble . just asking a valid question. and you gave me a valid answer. have a good day richie .
 
i have to admit, i am getting a little skepticale myself. an announcement was supposed to be made last week.

Several articles had mentioned the UA Board was meeting last Thursday to vote whether they should continue to consider the merger. Were the results of that vote ever made public?
 
I still think when the chips finally fall, it will be something completely different from all the speculation that’s been going on, with NW being a part of it.

Seems like every 6 or 7 years or so United has a new management team and they eventually get around to thinking how nice it would be to plug US Airways' east coast presence into United's worldwide network. But do you really need a chicken farm when all you want are a dozen eggs? And now's not the best time to declare WW III on your unions.
 
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