What parts of UAL will end up with USAir?

Argento,

About an hour ago i posted i was giving up on this board. Realize i hold the minority view on truth around here.

Then after all this time, you come back to life. Where ya been man, have missed your insight on this U mess.
 
Since resolution of
the ALPA pension issue appears to be the only remaining obstacle to USAir''s emergence from Chapter 11 (and a reasonably sound bet can be made that a resolution favorable to emergence will be had), the next most logical topic for dissection now would seem to be what parts of the UAL wreckage can/will USAir salvage for itself? Specifically, can/will USAir acquire the UAL Airbus fleet? Gates/slots/routes out of ORD or DEN? What about the LHR authority? And can/will RSA make funds available for these adventures? (Indeed, will RSA be required to fund these acquisitions in order to protect its basic investment?) And, of course, can it be assumed that the equipment can come over to USAir without any of the current UAL employment obligations?
Let''s talk about it!
 
Per the Bermuda II Bilateral treaty with the Brits, only AA and UA have the authority to fly to and from LHR. And if you know anything about the history of negotiations with the Brits on a new bilateral US getting LHR authority without giving something substantial back to the Brits this will not happen
 
Try this. Texas Pacific Group becomes the DIP for UAL, Bonderman hires Dave as CEO to perform his BK magic, U becomes the low cost carrier for UAL, Bronner gets international service and equity in the now #1 carrier. Wolf does his victory dance, a dream come true. As for the workers, hang on and enjoy the ride.
 
I agree. I think that any thing is possible or plausible. There may not be alot of money in airline corporate board rooms, but there's money out there and some of it is not that bright. So, there are dollars out there ready to go into some kind of interesting transaction. And I don't think it's morally wrong or intellectually bankrupt to speculate about these things.. just keep it on the US bulletin board

Having said that, I don't think that any significant portions of UAL will come to U without UAL employees.

Furthermore, I can't help but think that it's not that great of an idea for U. Yes, I understand the network benefits and I do think that international connections (Star Membership) is important to U. I'd recommend pursuing as little of UAL as is good for U's fleet rationalization and membership in the Star Alliance.

Let the other carriers turn themselves into even more remote, cumbersome, HMO-like organizations AND make them pay for the privelege. Let the other carriers get the headaches and employee issues. Sure, you'll miss out on LHR and NRT and whatever.

But U can focus on being simpler, nimbler and most responsive to its customers. So, take as little of UAL as will get U into Star, hook up with Am West and pursue growth opportunities that represent value for the FUTURE of the airline industry, not the PAST.
 
RowunderDCA wrote:

Having said that, I don't think that any significant portions of UAL will come to U without UAL employees.

DCAflyer replies:

I can't think of any scenario involving a M&A transaction where UAL employees would be part of the package. I don't think Dave want's UAL employees here. DAL certainly won't take union-strong labor groups. Perhaps some sort of partial transaction with CAL would work. AA has demonstrated their willingness to screw anybody who dares suggest that seniority be merged. I just don't see a lot of OAL's standing in line to pick up UAL in its entirety... lock, stock and barrel as it were. Their best hope is to remain intact and maybe shed some of their assets (preferably to U, for their benefit and ours).

I do believe we likely see some movement along these lines shortly after we emerge from C-11. I believe if we take over some of their routs, it will likely involve RJ flying until the economy picks up. Time will tell, but considering that we are scheduled to emerge from C-11 five weeks from today, and Bonner has indicated his willingness to fund the purchase of UAL assets if they are favorable to our business, AND... THE BIG AND... OAL's aren't in a position to pick up UAL assets since their own employees would be loathe to approve concessions to fund the purchase of UAL assets, I would venture to say that we may hear big news later in the year... perhaps as soon as April or May.
 
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On 2/24/2003 12:22:38 PM DCAflyer wrote:

I believe if we take over some of their routs, it will likely involve RJ flying until the economy picks up. Time will tell, but considering ....... AND... THE BIG AND... OAL's aren't in a position to pick up UAL assets since their own employees would be loathe to approve concessions to fund the purchase of UAL assets, I would venture to say that we may hear big news later in the year... perhaps as soon as April or May.
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oooooooooh, plausible AND interesting.
 
My goodness people. Are you dreaming? U can't even pay for the Airbus' they already possess and your talking about aquiring UAL's remnants. How about clearing one hurdle at a time? Baby steps that's the key...Paging Dr. Leo Marvin (What About Bob).
 
Airknocker wrote:

Try this. Texas Pacific Group becomes the DIP for UAL, Bonderman hires Dave as CEO to perform his BK magic, U becomes the low cost carrier for UAL, Bronner gets international service and equity in the now #1 carrier. Wolf does his victory dance, a dream come true. As for the workers, hang on and enjoy the ride.


DCAflyer replies:

Won't happen! I don't know about other labor groups, but at least with the FA's, as part of the concessions we gave, in the event of a merger or acquisition, FA wages (and I believe benes) revert to pre-concession book. I believe other LG's have "me-too" clauses attached to the FA restructuring agreement. The companies (U and UAL) will operate as seperate entities for a long time to come unless one company (UAL) is merged into/acquired by another company (U).
 
Argento-

I was just throwing in my two cents regarding your question:

"And, of course, can it be assumed that the equipment can come over to USAir without any of the current UAL employment obligations?"

However, I understand the my phrasing can be interpreted in at least two ways.

I meant to say that U should think twice about pursuing a transaction that would be so large as to obligate U to take UAL employees, precisely, because such a transaction would be potentially problematic for several reasons. Honestly, I was presuming that labor union protocals might require such integration within unions (UALPA-UAALPA, UAFA-UAAFA, etc) I was not considering traditional Chap 7. (I am recalling lots of distress regarding UAL/PanAm and DL/PanAM) Maintaining good karma, as irrelevant as it is in the business world, might suggest that U wouldn't leave UAL employees without some entry to U employment, if U were to acquire assets as extensive as UAL's airbus fleet. However, I wish all the best to all employees of U and UAL, understanding that corporate disruption of this scale to be very challenging to employees personally.
 
I dont think anyone is looking for U to "take over the world", or even all of United Airlines for that matter. However, a major airline with little route overlap and some useful assets is on the verge of liquidation. RSA has even said they might be interested. At other boards, people "pick apart" US Airways all the time, even pre Ch.11. Thats what discussion boards are for! Not all of us want to discuss the pilot pension. And anyone who's been in the industry for two minutes knows that anything can, and will happen.
While a UA demise could be harmful to U in the short run, it certainly wouldnt hurt our transatlantic gateway or our Washington National and Charlotte operations. If there are 10 seats right now for 7 people, after UA is gone there would be 6 seats for 7 passengers. We would get a lot of former UA passengers, especially if we honoured Mileage Plus and joined Star Alliance. Also, I dont think anyone would disagree that U needs to have a presence in the Western part of the US.
 
RowunderDCA:

Who said anything about UAL employees?? If USAir can acquire the existing UAL Airbus fleet and use it to equip and hub DEN and ORD, sans existing UAL employees, it ought to be a huge plus for USAir and provide a huge post-bankruptcy boost. (I am assuming that the equipment will be available out of UAL's Ch. 7 liquidation w/o any employment obligation). LHR rights would likewise be a plus (but would likely require additional equipment and could come at a steep auction price -- if conducted before the BK judge).

The UAL fragmentation scenario that is assumed now in all of this is a condition almost certain to occur -- and probably is the best thing for the industry. The bad news for USAir in this is not only the additional capital requirements for the acquisitions that will be imposed on its own still fragile financial structure, but the significant revenue losses that it will incur solely because of the demise of its code-share partner. Those losses probably can't be replaced even if its own system radically expands as a consequence. Moreover, some of those code-share revs relate to UAL's "crown-jewel" Pacific division, which almost certainly will go to Delta (likely with SFO as well).

Sadly, current UAL employees don't appear to have much of a future with their own airline; and they certainly wouldn't seem to have a future with another one.
 
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On 2/24/2003 2:01:24 PM argentomaranello wrote:

If USAir can acquire the existing UAL Airbus fleet and use it to equip and hub DEN and ORD, sans existing UAL employees, it ought to be a huge plus for USAir and provide a huge post-bankruptcy boost.
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I see a few problems with your suggestion that US acquire UA's Airbus fleet and take over UA's ORD and DEN hubs. First, there is a mismatch between the Airbus fleet size at UA (currently about 140 or so aircraft, split in about a 2-to-1 ratio between A320s and A319s) and the current number of departures at UA's two largest hubs (about 850 daily combined). This equates to an average of about 6 departures per day per former UA Airbus aircraft, a number that IMHO is unrealistic given the amount of UA's current medium- to long-haul flying in ORD-west and DEN-east markets. So unless you expect US to significantly curtail the current UA flying from ORD and DEN (but if so, why pick up the hubs?), I believe that US would also need to acquire 50-75 of UA's B737-300/500 aircraft (or pull some similar parked US aircraft out of the desert) for some of the shorter-haul routes like ORD-DTW/MSP/STL and DEN-ABQ/OKC/SLC, to name a few.

Second, what do you propose that US do to replace UA's current long-haul nonstop international flying from ORD (it's not an issue for ORD-Canada/Mexico/Caribbean service or at DEN) that now uses B747-400s (NRT/HKG), B777-200s (LHR/FRA/GRU/NRT) and/or B767-300ERs (LHR/CDG/AMS)? Would you drop some or all of these long-haul flights? While I wouldn't expect US to pick up any of the 747s, nothing in US' current fleet will do ORD-NRT/HKG nonstop and the A330-300s would be hard-pressed to do ORD-GRU nonstop (and maybe even ORD-Europe, especially westbound). I believe that US would need to acquire some of UA's B777s if it is going to continue to serve these routes. Otherwise, US will cede these routes to AA and various foreign-flag carriers, diminishing to value of the ORD hub.

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On 2/24/2003 2:01:24 PM argentomaranello wrote:

LHR rights would likewise be a plus (but would likely require additional equipment and could come at a steep auction price -- if conducted before the BK judge).
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While LHR rights would clearly be a plus for US, you are absolutely right that such rights would not come cheaply. IMHO, US would almost certainly be in a bidding war with CO and DL which, as you note, would not be easy given US' likely immediate post-bankruptcy financial state. Moreover, assuming that bilateral issues are resolved with the U.K., what would US do with all of UA's LHR slots? US can offer nonstop LHR service at only one of its three current hubs (PHL) plus ORD if it picks up that hub. BOS might also make sense. But what then? Even assuming that US operates 3 PHL-LHR, 3 ORD-LHR and 1 BOS-LHR flights, IIRC that still leaves enough former UA LHR slots for 9 more round trips. Furthermore, there is a strong chance that the DOT will require the airline that acquires UA's LHR rights to continue to operate at least 2 daily flights to LHR from one of the NYC airports, and a similar number to LHR from both IAD and SFO where UA is now the only domestic carrier (against BA and Virgin) in those large markets. Although this might not actually be that bad of an overall LHR service pattern, assuming US does indeed operate the NYC/IAD-LHR routes (given the carrier's strength in both New York and Washington) and sell the SFO-LHR slots to AA, it places most of US' new LHR service at locations that are not its hubs. The issue is whether or not US could operate this new LHR service in a competitive and profitable manner.

Finally, while I think it's still much too early for US to be contemplating which of UA's assets it would acquire after it emerges from bankruptcy (see, for example, the threads about a possible shutdown of US if the pilots' pension issue is not resolved by March 31), let's at least play the game intelligently and come to some logical conclusions.
 
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On 2/24/2003 10:07:09 AM whatkindoffreshhell wrote:

Another folly thread about US taking over the world.

US should remain focused on their current market advantages rather than coveting thy neighbor's wife...
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LOL..how true.