Whitesnake/Here I Go Again ,Merger Mania

Taipan

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Aug 20, 2002
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Posted by the UalDude on your friendly yahoo UAL message board
Everyone calm down...this is all about ESOP II. The USAIR codeshare with UAL to commence in January is really just a prelude to a UAL/USAIR merger and stock swap/ESOP II to include all UAL/USAIR employees...duration is 6 years and will include early retirement packages for senior employees of both airlines. Included in the package is the maximum legal cash infusion from our Star Alliance partners via stock purchase/foreign ownership provisions. Pilots will take a 22% paycut, IAM-10%, and AFA-5%. The resultant corporation will be jointly owned by employees of both airlines and our foreign airline alliance partners (which, incidently, will open the doors for cabotage/RJ issues for both U.S. carriers). The resultant stock price value will then be around $65/share.
Of course just one persons opinion with a little new twist to it,I did think the Star Alliance article of last week was interesting, and I am still looking for Air Canadas 600 million they owe us to be deposited in are (UAL) bank account soon
 
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On 10/28/2002 7:54:58 PM Blueskies/400 UpperDeck wrote:

Had a look at Air Canada's finances lately? They are not in a position to help anyone financially.
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Granted Air Canada does have a large debt load, tough domestic low fare competition and certainly does not have an unlimited cash supply on hand, AC did post a 3Q profit of 125 million. Certainly AC by itself cannot save UAL, but I'm sure UAL can use whatever help AC has to offer.
 
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On 10/28/2002 7:32:29 PM Taipan wrote:

Of course just one persons opinion with a little new twist to it,I did think the Star Alliance article of last week was interesting, and I am still looking for Air Canadas 600 million they owe us to be deposited in are (UAL) bank account soon
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I don't know about UA/UA merger and ESOP v2.0, but I think that some Star Alliance carriers might step up to the plate and assist UAL (about time). Maybe they are starting to realize / grasp the significance of UAL to the Star Alliance? Recently, Robert Milton (CEO of Air Canada) said something to the effect that AC is considering helping out UAL. Here's the quote from the The Globe and Mail, Oct. 26, 2002:

Mr. Milton also said Air Canada is considering providing support to UAL Corp.'s United Airlines, a Star Alliance partner, which is seeking $2-billion (U.S.) in financing to avoid bankruptcy protection. United is the second-largest airline in the United States and its CEO, Glenn Tilton, has been approaching Star Alliance members for assistance.

I've spoken to Glenn Tilton. We had a good chat, Mr. Milton said. We are going to look to be supportive to the extent we can.

He would not say what kind of support Air Canada is considering but said the relationship between the airlines goes well beyond simply transferring passengers, and includes sharing ground crews and engine maintenance services.
 
I wouldnt call it help I would call it you have 30 days to buy back your A340s or Tony Soprano will be coming over to see you
 
Here's a story from the WSJ. They are profitable again and the Canadian market has recovered. They have lots of debt though. The assitance UA gave to AC was the only positive impact Goodwin had during his short tenure.

Air Canada's Outlook Clears,
But Industry Concerns Linger

By JOEL BAGLOLE
Staff Reporter of THE WALL STREET JOURNAL

OTTAWA -- After three turbulence-filled years, Air Canada is once again gaining altitude.

In contrast to most major U.S. airlines, Canada's dominant carrier is finally on the mend from the decline in air travel following last year's terrorist attacks on the U.S. -- and it is recovering from its bumpy merger with former rival Canadian Airlines. Analysts who had been writing off Air Canada a year ago, now say they are cautiously optimistic about its prospects.

After racking up net losses for three straight quarters, Air Canada was the only major international carrier in North America to post profit for this year's second and third quarters.

The company Friday reported third-quarter net income of 125 million Canadian dollars (US$79.9 million), or 91 Canadian cents a share, compared with a year-earlier loss of C$903 million. Excluding various items, earnings were C$37 million, compared with a year-earlier loss of C$447 million. Revenue rose 6%, to C$2.75 billion from C$2.59 billion.

The third-quarter results are particularly encouraging in the context of the crisis facing the North American airline industry, said Robert Milton, president and chief executive.

A year ago, the Montreal carrier was among the most hobbled in the industry. Some of its bonds were trading at less than half their face value, and analysts were speculating that it could be headed for a bankruptcy-protection filing. Its battered stock fell to as low as C$1.64 a share. Air Canada's stock was at C$5.57, up 12 Canadian cents, in Friday trading on the Toronto Stock Exchange.

Air Canada's obviously done some things right, says Nicholas Morton, managing director at Toronto brokerage firm RBC Capital Markets.

The airline still faces challenges. Fuel prices are rising, the international travel market remains tepid and lucrative business travel has yet to return. Critics still balk at the airline's dominant position in Canada and complain of poor service. And a possible bankruptcy-protection filing by UAL Corp.'s United Airlines looms over Air Canada: The two carriers are part of the Star Alliance code-sharing pact, from which Air Canada draws C$600 million in annual revenue.

UAL is in talks with Air Canada and other Star Alliance partners about possible loans or other aid. Air Canada spokeswoman Laura Cooke declined to comment on United's situation.

Concerns also persist about Air Canada's C$12.5 billion in long-term debt, a burden that ballooned when the company acquired Canadian Airlines in 2000. But Air Canada has resolved several other internal problems resulting from its acquisition of the debt-laden airline, while also reacting successfully to a drop in demand over the past two years, analysts say.

Air Canada has merged the unions of the two carriers and reached collective agreements with all its unions except the flight attendants. (Collective bargaining with the flight attendants is now under way). Air Canada has pared 7,000 employees from its work force, removed 61 aircraft from service -- cutting its fleet to 234 planes -- and reduced costs by moving to electronic tickets and cutting travel-agent commissions.

In January, Air Canada will be released from conditions the government imposed on its acquisition of Canadian Airlines that forced it to provide service to remote communities for three years on unprofitable routes. And with Air Canada's market share down to 73% from 85% in 2000, following the start-up or expansion of several small airlines, the government has eased its crackdown on Air Canada's market dominance.

Air Canada's come a long way in the last few years, Canadian Transport Minister David Collenette says. Considering we had a difficult merger of Air Canada and Canadian Airlines, and 9/11, I'd say competition now isn't that bad.

The Canadian market hasn't been as affected by last year's terrorist attacks as the U.S. market. Analysts say this explains why Air Canada's traffic rose 3% in this year's first nine months, while traffic at major U.S. carriers fell 8.3% in the same period. At profitable WestJet Airlines, a nimble discount carrier that controls 20% of Canada's market, traffic is up 53% year to date, due partly to an expansion of its fleet. Also, Air Canada and WestJet, of Calgary, Alberta, haven't engaged in the aggressive price cutting that has eroded revenue at U.S. carriers.

Air Canada thinks its subbrand strategy is crucial to its long-term viability. Air Canada this summer started four niche airlines, such as Tango, a low-cost, low-fare national carrier, and Zip, a low-fare carrier based in western Canada. Air Canada says Tango achieved an 81.4% load factor -- percentage of seats filled -- in the third quarter, compared with a 76.7% load factor for the company overall. The carrier says it is considering starting several more subbrands, focused on everything from cargo service to business travel.

Moving to low-fare domestic service has enabled Air Canada to reconfigure planes, removing empty business-class seats and expanding coach seating. This has enabled it to cut costs by, for example, no longer providing meals on flights.

Write to Joel Baglole at [email protected]
 
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On 10/28/2002 9:28:49 PM UAL777flyer wrote:

Once bitten, twice shy.
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Help! Between the above and the title of this thread, I'm having '80s 'hair band' flashbacks! Visions of Tawny Kitean sprawled seductively on a UAL plane...
 
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On 10/29/2002 5:30:33 PM mga707 wrote:

Help! Between the above and the title of this thread, I'm having '80s 'hair band' flashbacks! Visions of Tawny Kitean sprawled seductively on a UAL plane...


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LOL [img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']