What's Next for US?

[Kittyhawk]

Once again, US merging with any of these "rinky-dink" carriers isn't going to put them where they need/want to be. It's like K-Mart buying a chain of local 5 &10's to level their playing field with Walmart. All of the airlines mentioned are good, but they are all smaller domestic localized carriers. They would add something to the US network, but not what we need to be on the level of DL or the new UA. Other than B6 having Airbus equipment that US can buy anyway, they offer nothing to US at all. As I said before, AA is the only merger partner left for US if they want to combine and play ball with the other two "Big Boys" in town. Not saying that AA wants to do this, but they along with US are about the only two left that can merge if either wants to move up their market share.

I fear what your saying is inevitable and right to a degree. I just don't like AA labor relations and finacial strengh (not that ours is the best). I feel we can absorb a Hawiian Air for the pacific routes and a Jet Blue to rebuild our New York and Boston presence (assuming we are successful with the DL slot swap). That would still put us behind American in size, but we can keep our dignity that AA would almost certainly strip us of.

 

[Travelpro72]

ALL of these new "mega carriers" have HUGE domestic operations which feed their international. If US merged with B6 it would give US a bigger domestic presence to feed their int'l. To the comment of the government not allowing a US/B6 merger due to market share, I doubt it. Look at the size of the "new" UA, DL and AA in JFK. Merging with B6 would give US the ability to connect passengers to Star carriers in JFK while also feeding their operations at their other key airport and hubs. US and B6 also have the same fleet types with the 320 and 190. Granted the B6 engines are not CFM but neither are ANY of the west airbus family so no big deal there. You cut out overlap and grow the airline with your new "bigger" customer base. How did CO get so big domestically? Mergers in the past right? RIGHT! ! ! I think it CAN be done and seems to me the easiest solution besides standing idle while others pass US by.

 

[SparrowHawk]

It kind of came to me last night. Here's what I think US neeeds/should do to maximize shareholder value. Several points:

A merger with AA now is from a position of weakness and the only ones who benefit are those at the top who get a nice pay day and a new rocking chair as there is no way in hell Arpey is letting Parker have the helm.

A merger at this time does NOT resolve the nagging pilot issue which has likely been the cause of the failure to merge up to this point. I think early into the post merger era Parker had a shot at resolving this issues but it is now likely in the hands of the courts and it looks like another year or two of wrangling unless Parker throws money at the problem, which right now he really doesn't have.

Operations continue to improve and as long as that is happening things will improve financially. Same for Product! While many of us may not like the product at least now it's much more clearly defined than at anytime post merger.

With all of the above stated In my never to be humble opinion US Airways should do the following:

For the next 18-24 months, continue to improve operations and define product. I'll leave the debate as to what the product should be to others. US needs a clearly defined product and marketing message.

Stop being "Cheap" and look for ways to drive structural cost out of the business. Employee productivity is the name of the game and there are many ways to accomplish tasks. US needs to become a leaner, meaner organization even if it means more P2P flying. If you're paying low wages and still have high costs then you're wasting money someplace.

Labor Relations HAS to improve as it is one of the key elements in raising productivity. One need only look to pre merger CO for proof that a relatively happy workforce can yield superior results at the bottom line and with customer satisfaction

IMO the reason you continue to do all of the above is in preparation for a possible future as a merger partner or standalone airline. As a company you want as many options as possible at your disposal. A strengthened balance sheet, coupled with clear product definition, beter Labor Relations, Pilot squabble settled gives US the ability to be the Aquirer instead of the Aquiree.

To use Smisek's unfortunate comment, US needs a celebrity make over.

US with a strong balance sheet, reduced debt and 4 to 6 profitable quarters puts itself in position to go after B6, F9, NK, AS and pretty mush any of the smaller players and to get better terms if AA makes sense in the near term. Sorry folks but I don't care if you had Jesus Christ hisself runing it the CO/UA merger has just as many minefields as any prior airline merger and US being in Star can exploit that to help with all of the above challenges they face. Done right I think US Airways COULD operate as a stand alone entity for as long as it desires. However they need forceful leadership that IMO has not really shown itself although you could argue that Isom has excelled at his piece of the pie.

I don't know if DP and SK have the testosterone or the desire to be bold leaders, however if they want an absolute GIANT payday I think that payday comes from having a rock solid operation from head to toe, a clear vision as a standalone and if the right opportunity(s) comes along then US is in a position to be the lead dog.

I can see a bright future for US, but it starts with a committment to being a well run free standing airline. Everything good stems from that premise

 

[Travelpro72]

And THAT folks is the POST OF THE DAY! ! ! !

 

[signals]

Read this! Concentrate on this: But United executives were uncomfortable with the requirement that because US Airways pilots have a change of control provision in their contract, the deal would have to be structured in a way that US Airways acquired United, said the people, who could not be named because they were not authorized to speak about the negotiations.

So basically US has to merge with an airline that is in worse financial shape than US Airways. Why would a financially sound AA want a crumbling US other than a loss and write-off? Otherwise if US goes back to bankruptcy there will be a lot of airlines bidding on it. Since I learned something from the WN/Republic bid of F9, I have a feeling that many airlines including LUV will put a bid for US. This would probably kill, imho, the change of control provision because U were bought rather than merged. So sue me if my analysis is wrong

 

[SparrowHawk]

Read this! Concentrate on this: But United executives were uncomfortable with the requirement that because US Airways pilots have a change of control provision in their contract, the deal would have to be structured in a way that US Airways acquired United, said the people, who could not be named because they were not authorized to speak about the negotiations.

So basically US has to merge with an airline that is in worse financial shape than US Airways. Why would a financially sound AA want a crumbling US other than a loss and write-off? Otherwise if US goes back to bankruptcy there will be a lot of airlines bidding on it. Since I learned something from the WN/Republic bid of F9, I have a feeling that many airlines including LUV will put a bid for US. This would probably kill, imho, the change of control provision because U were bought rather than merged. So sue me if my analysis is wrong

Which is WHY I wrote the above post. Short term (18-24 months) US is essentially unmergable with any significantly sized or financially sound airline.

 

[wings396]

ALL of these new "mega carriers" have HUGE domestic operations which feed their international. If US merged with B6 it would give US a bigger domestic presence to feed their int'l. To the comment of the government not allowing a US/B6 merger due to market share, I doubt it. Look at the size of the "new" UA, DL and AA in JFK. Merging with B6 would give US the ability to connect passengers to Star carriers in JFK while also feeding their operations at their other key airport and hubs. US and B6 also have the same fleet types with the 320 and 190. Granted the B6 engines are not CFM but neither are ANY of the west airbus family so no big deal there. You cut out overlap and grow the airline with your new "bigger" customer base. How did CO get so big domestically? Mergers in the past right? RIGHT! ! ! I think it CAN be done and seems to me the easiest solution besides standing idle while others pass US by.

That isn't true, B6 would do nothing to feed the US system. Unless we move their operation to PHL (not needed), or we fire-up an International operation at JFK their is zero benefit with them. With DL and AA already having a large presence at JFK, that wouldn't be a viable operation either. While it is nice to feed the Star members, that isn't the primary goal of the US operation. The only places that US needs to be fed are PHL and CLT, and they do that on their own.

 

[wings396]

Which is WHY I wrote the above post. Short term (18-24 months) US is essentially unmergable with any significantly sized or financially sound airline.

AA can file for BK ridding themselves of their debt, then US can arrange financing to buy them out of BK. No COC will take place if US buys AA, then Parker can choose to use the AA name instead of US....Pretty much the same way HP/US went down. Not saying that I want AA to file for BK, but anything can happen these days to make a deal happen.
Nothing saying that Arpey wont stay at the helm given that Parker was willing to make a deal with UA that would have kept Tinton as the CEO. FWIW, I would have no problem with Arpey being in charge. I know many over at AA don't care for him, but then again no CEO is going to be popular with all of the negative things that have taken place with this industry over the past few years. I recall watching that documentary called
" A week inside American Airlines" The show was very informative, especially to those outside of the industry.

 

[SparrowHawk]

AA can file for BK ridding themselves of their debt, then US can arrange financing to buy them out of BK. No COC will take place if US buys AA, then Parker can choose to use the AA name instead of US....Pretty much the same way HP/US went down. Not saying that I want AA to file for BK, but anything can happen these days to make a deal happen.

True but do you really think Wall Street is going to back that play? If so how do the money guys get their big payday? Hey maybe somebody knows more than I do. Well I hope somebody does because otherwise we're all in trouble

 

[nycbusdriver]

If anyone things AA would merge or buy US Airways they are in for the surprise of their life. Ask any TWA employee that was STL how that deal sent down. Agents, FA, Ramp, Mechanics that did keep their job were tacked onto the bottom of the AA seniority. So if you had 35 years with TWA and you moved over to AA you would be under all AA employees system wide. AA would tear US Airways apart little by little. AA owns American Eagle so the express carriers would probably dealt with the same. So Piedmont and PSA would be mergered into AA. Not a pretty picture.

Years ago when TWA opened up YYZ, I was at a travel agent meeting at the top of the Toronto Tower and many of the travel agents said AA should be NA. NAZI AIR instead of American Airlines.

While this is all true, it can't happen that way again. There is this little thing called a federal law that was passed since then that precludes this type of abuse. The TWA flight attendants lobbied for it and made it happen so that other airline employees would never have to endure what they did at the hands of American Airlines.

This must be the tenth time I've had to bring up this recent law on these message boards, yet this story keeps on rearing its (admittedly) ugly head. It can;t happen like that ever again. Thank you TWA flight attendants for fixing this flaw in the system.

 

[beachboy]

While this is all true, it can't happen that way again. There is this little thing called a federal law that was passed since then that precludes this type of abuse. The TWA flight attendants lobbied for it and made it happen so that other airline employees would never have to endure what they did at the hands of American Airlines.

This must be the tenth time I've had to bring up this recent law on these message boards, yet this story keeps on rearing its (admittedly) ugly head. It can;t happen like that ever again. Thank you TWA flight attendants for fixing this flaw in the system.

It's the McCaskill-Bond Law. Let never what happed with TWA/AA happen again. Disgusting. That said AA just traded the StAApler for a Slotted Spoon.

http://webcache.googleusercontent.com/search?q=cache:g70QL1JrBiEJ:https://crewroom.alpa.org/ual/DesktopModules/ViewDocument.aspx%3FDocumentID%3D42056+mccaskill+bond+law+airline&cd=1&hl=en&ct=clnk&gl=us

 

[Travelpro72]

A US merger with AA would be just that. Slotting. Anyone wonder what kind of "fair" slotting would occur? :blink: I don't even want to THINK about it.

 

[UALbagboy]

AA could very possibly file BK, and void all contracts.

You can't just go into BK to void contracts. There are now laws against this.

 

[700UW]

Our CBAs for the IAM at US were abrogated, all the company has to do is follow section 1113 and they can still get the court to void the CBAs.

 

[FM2436]

Oberstar Urges Rejection Of UAL-CO Merger

House Transportation and Infrastructure Committee Chairman Rep. Jim Oberstar (D-Minn.) announced his opposition to the proposed merger between United and Continental.

Oberstar wrote to the Justice Dept. last week, asking officials to reject the merger on antitrust grounds. "I strongly urge the Department of Justice to demonstrate its commitment to vigorous antitrust enforcement and healthy competition in the airline industry by disapproving the proposed merger between United Airlines and Continental Airlines," he stated.

Oberstar said that the proposed merger "is another step in the overall consolidation of domestic and international air service, bringing with it corresponding reductions in competition, consumer choice, and service to smaller, underserved communities." He added that "such mergers serve to spur even more consolidation in the industry.

"If United and Continental merge, another domino in a chain of mergers will fall, and there will be strong pressure for further consolidation," Oberstar said. "As I predicted when I wrote your predecessor in 2008 on the Delta-Northwest merger, approval of that merger created conditions that have persuaded Delta's competitors to pursue their own combinations. The United-Continental transaction is the latest, but it likely will not be the last."

Oberstar urged Justice to consider three primary issues in its review of the merger:

· Whether the transaction presents a reasonable possibility that further consolidation activity among competing carriers will follow;

· Whether, to avail itself of the potential benefits of the transaction, the combined carrier is likely to substantially eliminate capacity in such a way as to eliminate travel options between any city-pairs; and

· Whether the transaction would alter the structure of the U.S. airline industry in such a way as to permit the three largest carriers to create or enhance market power or to facilitate its exercise in either the domestic or the international marketplace.