I still think he wants Lufthansa, as it would give U the equivalent of 5th freedom rights in both Asia and Europe.novaqt said:
Ual Ceo: Us Skies Need Deregulation
- Thread starter Fly
- Start date
WorldTraveler
Corn Field
- Dec 5, 2003
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Since there seems to be an ongoing fascination, there has to be one basic condition that must be met in order for consolidation among the legacies to begin and that is that there have to at least one carrier that is in good financial shape and at least another that is weak enough that they cannot remain as a viable competitor. At the present time, AA is the only carrier that is in a decent enough position to acquire someone and US is the only carrier that could not succesfully reorganize as a standalone company.
So far, AA has expressed no interest in buying any domestic carrier unless potentially it is NW with their Pacific presence. Carriers in bankruptcy will not be purchased as long as they can be successfully restructured. It is very likely that DL and NW can successfully restructure which means they have control over their futures. Hostile takeovers never work in the airline industry or any other service business and it is highly unlikely that any legacy airline would attempt one unless they are considerably backed into a corner that threatens their existence - not just keeps them out of a region they want to serve.
So far, AA has expressed no interest in buying any domestic carrier unless potentially it is NW with their Pacific presence. Carriers in bankruptcy will not be purchased as long as they can be successfully restructured. It is very likely that DL and NW can successfully restructure which means they have control over their futures. Hostile takeovers never work in the airline industry or any other service business and it is highly unlikely that any legacy airline would attempt one unless they are considerably backed into a corner that threatens their existence - not just keeps them out of a region they want to serve.
dc3fanatic,
It's going to be years before you see any significant movement on legislation to roll back foreign ownership/investment in U.S. airlines, if ever. This industry doesn't have that kind of time. That's why you'll see UA acquire another carrier or be acquired itself.
It's becoming more obvious with each passing week that this industry needs to consolidate to survive and prosper. Major airline CEO's need to step up the lobbying efforts to encourage the Federal Government to recognize the vital importance a thriving airline industry has on our economy and stop putting up political road-blocks to consolidation. I think that has a better chance of happening before you see any change on international investment/ownership.
My opinion is that in terms of networks, the best combination is either UA/CO or UA/DL. But you have to believe that some combination is going to happen. There is no longer an alternative. As oil prices climb higher, more pressure is put on the revenue side to offset those prices. And with too many U.S. airlines, the ability to raise fares is limited. How much more can airlines take from employees? You can only go to that well so many times.
So I would look for UA to start sniffing around for dance partners once we emerge from Ch. 11 and get into the late Spring/early Summer period of 2006. The airlines that wait too long are the ones who will be left without a chair when the music stops.
It's going to be years before you see any significant movement on legislation to roll back foreign ownership/investment in U.S. airlines, if ever. This industry doesn't have that kind of time. That's why you'll see UA acquire another carrier or be acquired itself.
It's becoming more obvious with each passing week that this industry needs to consolidate to survive and prosper. Major airline CEO's need to step up the lobbying efforts to encourage the Federal Government to recognize the vital importance a thriving airline industry has on our economy and stop putting up political road-blocks to consolidation. I think that has a better chance of happening before you see any change on international investment/ownership.
My opinion is that in terms of networks, the best combination is either UA/CO or UA/DL. But you have to believe that some combination is going to happen. There is no longer an alternative. As oil prices climb higher, more pressure is put on the revenue side to offset those prices. And with too many U.S. airlines, the ability to raise fares is limited. How much more can airlines take from employees? You can only go to that well so many times.
So I would look for UA to start sniffing around for dance partners once we emerge from Ch. 11 and get into the late Spring/early Summer period of 2006. The airlines that wait too long are the ones who will be left without a chair when the music stops.
WorldTraveler,
I disagree with your opinion that AA is in decent enough shape to acquire someone right now. No way. AA will be in Chapter 11. It's only a question of when. There is no way they will be able to compete with legacy carriers that have shed major amounts of debt, eliminated pensions and dramatically reduced labor costs, aircraft leases, overhead, etc. Maybe they could with only UA in Ch. 11. But now with DL and NW in Ch. 11, AA knows it's only a matter of time before they're forced to restructure. How else will they be able to turn their balance sheet around and offset increasing fuel costs.
I also believe we'll see CO in Ch. 11 before long. That's why UA is in a key position. They're about to come out the other side of the Ch. 11 tunnel. While DL and NW are struggling with the continual distractions of reorganizing themselves, and while AA and CO continue the one-legged dance to preserve the cash they have left, UA will be able to capitalize in the marketplace and start sticking it to everybody who wrote them off over the last three years. Make no mistake about it. UA will be a force to be reckoned with competitively. But they'll also now be in a position to examine strategic opportunities to leverage that strength and ensure their long-term survival. More consolidation is coming folks. This industry simply will not survive without it.
I disagree with your opinion that AA is in decent enough shape to acquire someone right now. No way. AA will be in Chapter 11. It's only a question of when. There is no way they will be able to compete with legacy carriers that have shed major amounts of debt, eliminated pensions and dramatically reduced labor costs, aircraft leases, overhead, etc. Maybe they could with only UA in Ch. 11. But now with DL and NW in Ch. 11, AA knows it's only a matter of time before they're forced to restructure. How else will they be able to turn their balance sheet around and offset increasing fuel costs.
I also believe we'll see CO in Ch. 11 before long. That's why UA is in a key position. They're about to come out the other side of the Ch. 11 tunnel. While DL and NW are struggling with the continual distractions of reorganizing themselves, and while AA and CO continue the one-legged dance to preserve the cash they have left, UA will be able to capitalize in the marketplace and start sticking it to everybody who wrote them off over the last three years. Make no mistake about it. UA will be a force to be reckoned with competitively. But they'll also now be in a position to examine strategic opportunities to leverage that strength and ensure their long-term survival. More consolidation is coming folks. This industry simply will not survive without it.
KCFlyer
Veteran
What's to keep NWA and DAL from dragging their feet in BK for the next three years. Cut some here, cut some there until they are the "force to be reconed with competively"?JungleClone said:
Borescope said:
absolutely nothing, except for the possibility that UAL will be gaining some of their market share during the process. More importantly, I think both NWA and DAL WANT to be part of a merger.
Busdrvr said:
+++++++++++++++++++++++++++++++++++++++++++++++++++++
WELL,
(Speaking only with regard for NW), BIG RED is more than welcome, to hitch their wagon up to AA, and "ride along" !!!
NH/BB's
WorldTraveler said:
Are you sure about that? Several financial analysts are saying Delta may never emerge from BK. They say Delta may have no choice, except to go Chapter 7.
KCFlyer
Veteran
I always thought that in a deregulated market, the strong survive, the weak die, even if the current weak are the formerly strong. I sort of view bankrutpcy court protection as a big form of "regulation" - hence, if deregulation were to be "complete", the airlines would not be using bankruptcy court as a place to "level the playing field".Busdrvr said:Succinct, to the point, and utterly without merit
Care to elaborate?
[post="304987"][/post]
KCFlyer said:
Not that I disagree with the above statement but taken in context of earlier ones...you say Ual shoulnd't even be around today. Fine. But then you have to go back and wipe out every other airline that had entered BK before us. Some even twice or more (Continental, TWA, USAir, Braniff)
Don't you think if those carriers had ceased to exist rather than restructure, UAL might never have had to go BK in the first place? (same for Delta or Northwest)
DC
And to further the above point, you'd have to add back to UAL's balance sheet (and every other carrier for that matter) the BILLIONS and BILLIONS of dollars that UAL has lost competing against carriers in bankruptcy or in quasi-bankruptcy over the past two or three decades.
UALDC737 said:
Good reply. You beat me to it. Add NWA to the list since they stayed in business due to help from the Minn govt. In addition, without BK laws, many of the things done in BK would still get done. lease rates and contracts would surely still get renegotiated (when the alternative is considered). And in a fully deregulated industry AMR, DAL, and UAL (the remaining megacarriers still in business after the above mentioned airlines were gone) could have all rented a nice big conference room in Chicago years ago to coordinate (colude) the destruction of the airline that has driven down salaries, fares and class in the industry. I don't think Herbie could have survived that 20 years ago.
