United for sale

I would not count on a merger, however UA has demonstrated a willingness to sell assets that are not central to its strengths. I.E. JFK-London to Delta.

Does anyone know of anything that UA may have that would be of interest in any of our focus cities or hubs?

I have heard in the past that many legacies have very old authorities that are not active but that they still own and reserve the right to use.
 
Does anyone know of anything that UA may have that would be of interest in any of our focus cities or hubs?

Their outstanding employees.
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United Reportedly Hires Bank on Strategy

United Reportedly Hires Investment Bank to Review Strategy Amid Merger Speculation

CHICAGO -- Speculation that United Airlines may be destined for an eventual merger with another U.S. carrier intensified Monday with its reported hiring of Goldman Sachs & Co. to explore strategic options.

United, a unit of UAL Corp., has been advocating more industry consolidation for years under CEO Glenn Tilton and is in better position since leaving bankruptcy in February to take part in it.

The report Monday by Crain's Chicago Business that United had hired an investment banker appeared to add credence to widespread industry talk that it could merge with a carrier such as Continental Airlines or Delta Air Lines.

"It seems to show that United is serious about looking further into it -- it's not just remarks by the CEO," said Standard and Poor's Corp. analyst Philip Baggaley.

Most observers and airlines think industry consolidation is likely at some point, but it's been hard to predict when and with whom.

Goldman is expected to help United assess the value of its domestic and international holdings, advise it on sales or purchases of domestic or international routes and scout for mergers, according to Crain's, citing unidentified people close to United.

United declined comment. "We don't comment on rumors or speculation," spokeswoman Jean Medina said.

Goldman Sachs spokeswoman Andrea Rachman said the New York investment bank also declined comment.

Shares in UAL rose 63 cents, or 2.3 percent, to close at $28.45 on the Nasdaq Stock Market.

Tilton has been increasingly signaling the possible involvement of United, the nation's second-largest carrier, in industry consolidation. He said in Chicago last week that the company is on solid footing to participate in the merger and acquisition market following three years of restructuring in bankruptcy, which ended in February.

He has not speculated on which airlines might come into play, but has said repeatedly that United will consider opportunities that arise.

"As we emerge from a difficult five years, it is time for us to begin to seize new opportunities," he said Monday in a speech to a transportation conference in Memphis. "United fully intends to expand our global reach to compete in the worlds fastest-growing markets."

Continental Airlines Inc., parent of the fifth-largest U.S. carrier, has long been considered a good potential partner for United because of a complementary route network. Delta Air Lines Inc., currently restructuring in bankruptcy, has been speculated about for similar reasons. Either merger would create the largest U.S. airline.

Michael Roach, consultant with the Roach and Sbarra airline consultancy, said US Airways Group Inc. could also make sense as a partner, even though United was rejected in its 2000 bid to acquire US Airways for $4.3 billion cash and $7.3 billion in debt.

A pairing with AMR Corp.'s American Airlines, meanwhile, doesn't make sense because it likely would be scuttled by antitrust regulators as too big, he said. Likewise, Northwest Airlines Corp. would be a problem because United and Northwest control Pacific routes.

Northwest also may be able to block any United-Continental pairing under a November 2000 agreement with Continental that gives it the right to block certain business combinations.

Roach sees a deal of some kind as likely within the next 12 to 18 months, depending on airlines overcoming regulatory and other obstacles.

"There's a lot of impetus for consolidation in the industry," he said. "But these deals are incredibly complicated, both to negotiate and to put together."

The only merger in the past five years occurred last year with America West's acquisition of the bankrupt former US Airways.
 
US Arways Files Automatic Shelf Registration on Form S-3 - October 4, 2006

Why did US Airways do it?

According to an internal employee memo, "As we all know, the airline industry is quite volatile and market conditions can change significantly - literally overnight. The flexibility that a shelf registration statement provides is a way to mitigate some of the timing risk that companies are faced with when they need to quickly raise additional capital. Taking these considerations into account, our management team wanted the flexibility that a shelf registration provides."

Click here for more information.

Regards,

USA320Pilot
 
Yeah, US filed a shelf registration so it could buy UA. Or at least the valuable parts of UA. Uh-huh.

Rolleyes to the 100th power.
 
Unlike Project Minnow, which I reported before the news media, where according to the news media reported former US Airways CEO Dave Siegel and United Executives wokred on a plan to "cquire United Airlines, the nation's No. 2 carrier. That option was code-named 'Project Minnow,' with US Airways as the small fish gobbling the bigger one."

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I believe that airline executives are discussing different M&A scenarios and I have no idea how this will unfold.

What I do know is this:

1. The AP reported on September 22 following three years of "hard work" with financial restructuring in bankruptcy, UAL, parent of United Airlines, now is on solid footing to participate in the merger and acquisition market, CEO Glenn Tilton told reporters at the Executives' Club of Chicago.

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2. News agencies Speculated that United may be destined for an eventual merger with another U.S. carrier intensified Monday with its reported hiring of Goldman Sachs & Co. to explore strategic options. Goldman is expected to help United assess the value of its domestic and international holdings, advise it on sales or purchases of domestic or international routes and scout for mergers, according to Crain's, citing unidentified people close to United.

See Story

3. Want to marry Continental? Ask Northwest first - "But any consolidation involving Continental would be complicated by the relationship between it and Northwest. Northwest holds a so-called 'golden share' in Continental, which gives it the right to block mergers involving the Houston-based carrier, according to Continental filings with the Securities and Exchange Commission."

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4. Continental Airlines Inc. CEO Larry Kellner said Monday that his company has no plans to merge with another carrier despite industry speculation it could join forces with United Airlines.

See Story

5. According to the Chicago Tribune, ss (Glenn) Tilton charts United's future course, the big question emerges: Would United be an acquiring airline or a takeover target?

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6. In a report titled "Such A Deal: United Is Now "Officially" For Sale", airline analyst and consultant Mike Boyd reported, "It's official. United Airlines is now on the block. The For Sale sign is posted. United employees: If you thought going through bankruptcy was a fun ride, a merger will be the emotional and financial equivalent of a supersonic dash through Disneyland's Pirates of The Caribbean. 'Cept in this case the Pirates win. You lose. As will communities and airports around the nation. United grandly announced today that it had hired an investment bank to, as was stated in perfect Airlinese in Crain's Chicago Business: " ...explore a range of strategic options, including possible mergers with other carriers..." Which means, United management appears to have tossed in the towel in regard to moving United forward as an airline system (not that they ever had a towel in the first place) and is trying to merge the airline and then get out."

See Story

7. Boyd continued, "As another ominous sign, United officials have been quoted using the surefire buzzword that usually indicates that strategic planning is now on the shelf in place of fast gains: they've used the term: increase shareholder value. Not "competitive value." Not "airline value," but shareholder value, which means increasing the price of stock certificates, not necessarily the value of the airline as a vibrant, growing entity. It's often a term that indicates the management goal is to simply get stock price up, not necessarily increase the competitive value of the airline."

See Story

8. According to the Rocky Mountain News, Tiltions new employment "deal sets his salary at $850,000, but he'll also likely get at least $3.4 million in long- term stock awards annually, according to documents filed with the Securities and Exchange Commission."

See Story

9. US Arways Files Automatic Shelf Registration on Form S-3 - October 4, 2006 Why did US Airways do it? According to an internal employee memo, "As we all know, the airline industry is quite volatile and market conditions can change significantly - literally overnight. The flexibility that a shelf registration statement provides is a way to mitigate some of the timing risk that companies are faced with when they need to quickly raise additional capital. Taking these considerations into account, our management team wanted the flexibility that a shelf registration provides."

USA320Pilot comments: Interestingly, Glenn Tilton just negotiated a new employment contract, with meaningful incentive pay (stock and/or stock options). The Crains and other news agencies reported United hired Goldman Sachs as an investment banker to explore strategic options to enhance "shareholder value". What new shareholder could see thier personal holdings see a significant capital gain if he sold some or part of United? Glenn Tilton with his new contract, which was announced about the same time as the firm hired the IB.

I do not have any specific information this time on what may or may not occur in industry M&A or fragmentation strategic transaction(s). It appears from the News Media that United is in play, Tilton could obtain meaningful incentive pay of United is sold in whole or in part, because according to some reports it may sell the airline and/or assets or it could acquire an airline or its assets.

I personally do not believe US Airways and United will merge because US Airways CEO Doug Parker has indicated he wants to be involved in a M&A activity with a bankruptcy carrier because of special advantages such as rejecting unwanted leases/financial contracts. However, US Airways has positioned itself "to quickly raise additional capital", if necessary, according to a letter provided to employees this week.

Finally, US Airways has just created an ability to obtain a very large sum of money to go on top of its $3.3 billion in cash and it will be interesting to see what, if anything, unfolds.

Regards,

USA320Pilot
 
Even more interesting....United has more money than that. Perhaps they are interested in buying parts of US. Nah, there is nothing to want there. They are looking at a merger, the same as US, but with a bk carrier.

Sorry USA320, you will never fly that 747.
 

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