USA320Pilot said:
Only one offer was ever made... Maybe they have talked before or since, but nothing has become of it. Just because I talk to a realtor does not mean I tried to buy a house.
And yet these things are by no means static or permanent. If the BA/US Airways relationship of 15 years ago had successfully continued, US Airways would be part of the oneworld alliance, and we'd probably be talking about a US/AA UCT/ICT/whatever. The point... codeshares, and even equity investments, guarantee not much, because it can change, and quickly.
Furthermore, AA and HP both have code-share relationships with BA, and yet AA probably isn't trying to acquire HP and vice versa. The code-share relationship between UA and US is an attempt by each to extend their network without investing in aircraft/facilities/etc. If other more suitable partners came along, the relationship would likely break up... Like what happened with US and BA all those years ago.
Two guys who no longer work for the company. If a line pilot asked me, the CEO of an airline, about a merger... I would say the same thing... Probably just to avoid the question or get ALPA riled up. Particularly in an unofficial setting. Even in certain official settings, you do not tell the pilots, or any employees, from whom you are trying to extract enormous concessions, that the plan is really to sell out, and potentially sell out your careers like AA/TW. Just because someone speaks doesn't mean they are truthful... Particularly during negotiations.
Just because people are talking doesn't mean anything will happen. You claim US Airways and United tried twice to merge... And yet there was only ever one official offer... Thus far, that means they are 1 for 2 on moving forward with the idea... I am sure the normal percentage is probably like 1 in 100 merger ideas studied by an airline actually occur.
Tilton also said that UAL would be the airline acquring, not the airline acquired. Do you really want to use him as an expert witness?
Just because both companies are "in play" doesn't mean they are set up to merge. "In play" could mean that Southwest will buy United and jetBlue will buy US Airways. Naturally, since both companies are in BK court, their fates are really in the hands of BK judges, whose job is to secure the most return for as many creditors as possible. That situation automatically puts both companies "in play". Bruce Lakefield didn't need to tell me that.
In summary, both parties are probably talking to a lot of people about various scenarios all of which may or not involve a merger.
What economies of scale? Studies I've read suggest that aircraft fleets reach economies of scale around 25-30 aircraft. The only economies of scale would come from combining US Airways B767's into UAL's 767 fleet, and presumably replacing the A330's with other aircraft more common to UAL's long-haul fleet.
Otherwise, economies of scale come from removing duplicative executives. Even middle-management will be hard to cut... Let's take revenue management. Presumably, US Airways and United have the right number of managers/analysts/employees in their revenue management groups to handle the number of flights they offer. A combined U/UAL may be able to eliminate one of the two "VP's of Revenue Management", but unless shrink operations dramatically, they will still need a similar number of managers/analysts/worker bees. This can probably be said for almost every employee group in the company.
Another way to "increase economies of scale" would be to eliminate duplicative parts of the route network... However, in the case of U/UAL, I don't see much of this happening, since the point would be to increase network options. I could see some tweaking, but by and large, I don't think we would see IAD hub closed in favor or DCA, or vice versa.
Maybe, part of the reason this hasn't already occured, is that combining the economies of scale between U and UAL just isn't that valuable?
The same for US Airways... Its called exit financing. Its essentially recapitalizing the airline by declaring the old stock worthless and issuing new stock to the creditors. Just because a transaction is being worked on does not automatically make it a merger.
A combined U/UAL would have had an operating loss of $285mil during the month of January... Even if "economies of scale" reduces the loss by 20%, its hard to get excited about a $228mil loss during one month!
Economies of scale can work, and lower costs... In this case, there needs to be a more compelling reason to put the two together... And I personally, just don't think there is one.
