Why UA is Ready to Unite

chucky

Senior
Sep 13, 2006
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Why United Is Ready to Unite
The airline is struggling. But finding another carrier willing to cement a merger may be problematic
by Dean Foust





When news broke in mid-November that New York hedge fund Pardus Capital Management was pushing United Airlines (UAUA) and Delta Air Lines (DAL)—two carriers in which it's a big investor—to consider a merger, Delta Chief Executive Richard Anderson quickly dampened expectations of any deal. That United CEO Glenn Tilton didn't step up to discourage such talk wasn't surprising, because no other airline executive probably has more of an urge to merge right now. "He's been perfuming United for sale" ever since it emerged from bankruptcy, says industry consultant Michael Boyd.

United and its parent, UAL, are in a real jam. And a sale may be the best option for the iconic airline, which, under the ownership of aviation pioneer William Boeing, flew the first commercial flights, in 1930. United, like many other carriers, filed for bankruptcy after the 2001 terrorist attacks. But it missed a major opportunity in Chapter 11 to remake itself into an airline that could compete with both low-cost carriers at home and foreign airlines abroad, industry experts say.

"The Road Home"
United emerged from bankruptcy in early 2006, yet it is saddled with relatively high debt, and its profit margin, 2% over the last 12 months, remains one of the thinnest in the industry, not even half US Airways Group's (LCC) 4.4% or Southwest Airlines' (LUV) 6.1%. "They didn't push as hard in bankruptcy to transform the business model, and they've been playing catch-up ever since," says Stuart Klaskin, an airline industry consultant in Coral Gables, Fla. "And it's clear that Tilton now believes a merger is the road home."

One sign of that is United's extended pause on fleet expansion. While other carriers have begun placing orders for new planes, the Chicago company says it plans to rely on its existing fleet of 460 jets until 2015 or 2016. By then the planes will be 20 years old, on average. While United executives say they're simply waiting until the next generation of fuel-efficient, narrow-body jets hits the market, industry insiders believe Tilton (who wasn't available for comment) knows that loading up on pricey plane orders could lessen United's appeal to other carriers.

At the same time, Tilton is exploring asset sales that would lower United's debt and make it a more attractive partner. The $20 billion carrier is exploring the spin-off of its frequent-flier program, Mileage Plus, which Bear Stearns (BSC) analyst Frank Boroch calls "perhaps the most underappreciated asset at UAL," with a standalone value of $7.5 billion. That's 50% more than UAL's current market value.

It's also looking into the sale of a partial stake in its maintenance operations and perhaps its cargo business to private-equity investors. That would raise billions of dollars in cash, strip down United to its core assets—planes and routes—and make it more enticing to a suitor. Even if no buyer emerges, Tilton could still deliver investors a return comparable to a buyout. Some Street analysts believe that UAL shares, now trading at around 38, would be worth 80 after all the spin-offs, and 90 in a buyout. "I think Tilton is determined to make sure United isn't left standing on the street corner," notes Robert Mann, an airline consultant in Port Washington, N.Y. "If he can't sell off the airline whole, he can do it in pieces."


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And a sale may be the best option for the iconic airline, which, under the ownership of aviation pioneer William Boeing, flew the first commercial flights, in 1930.
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Whatever happened to fact checking?

Let's see, by 1930 both Imperial Airways (BA's ancestor) and Air France were already flying to various parts of their respective nations' then-vast colonial holdings, while in this country even some of UAL's predecessor companies (National Air Transport, Varney/Boeing Air Transport, Pacific Air Transport) had been in the air for a couple of years already flying the Air Mail and the occasional adventurous passenger.
Western Air Express and Northwest Airways had both been flying since 1926, and the various companies that would eventually form AA, EA, and TWA, among others, were also already in the air.
Tony Janus' St. Petersburg-Tampa Airboat line had been flying passengers way back in the mid-teens.

The only memorable event of 1930 as far as commercial aviation in the US goes is that it was the year of the later-infamous 'spoils conference' in whic the PMG (Postmaster General) twisted arms and forced 'shotgun marriages' between smaller and larger, better-capitalized carriers so that a cohesive system of Air Mail routes could be established throughout the nation.

A glaring factual error such as this always makes the entire article suspect...
 
Since it looks like(more and more) that ZERO mergers will happen(Overcapacity in the Industry will be "cleansed" via the LAW of the JUNGLE), Glen Tilton looks to be on a fast(ang getting FASTER) track of being the "ruination" of a Great Company, with many great employees .

"Oh My...(Donttouchthebeauty)..........Oh My" :shock: :shock:
 
Since it looks like(more and more) that ZERO mergers will happen(Overcapacity in the Industry will be "cleansed" via the LAW of the JUNGLE), Glen Tilton looks to be on a fast(ang getting FASTER) track of being the "ruination" of a Great Company, with many great employees .

"Oh My...(Donttouchthebeauty)..........Oh My" :shock: :shock:

NHBB, we'll see - but like I said, it doesn't bother me.. I don't need UAL like you must have AA for your viability... If UAL falls, so will AA.. This article is wrong in so many ways, AA is doing the same thing, so is US and DAL. THey are all "considering" spin offs to lower debt and raise cash.. This is old news, and you will believe anything I guess, better watch out for those articles about AA and its labor unrest, I'm guessing a couple hours of a strike would put AA 6 feet under... Get ready - if UAL makes it through the next year, AA will be the one in extreme trouble, don't spout off too fast, it will come back to bite ya!!!
 
I have to assume you received business and your math degree from the same correspondence course. NHBB doesn't need AA for anything any more. He is retired. As for your belief that a failure of UAL will some how send AA under is a joke, but who could possibly expect less from you. In fact a UAL failure would strengthen AA and DAL and Cal. News flash only UAL has hired a firm to pimp its self out.
 
NHBB, we'll see - but like I said, it doesn't bother me.. I don't need UAL like you must have AA for your viability... If UAL falls, so will AA.. This article is wrong in so many ways, AA is doing the same thing, so is US and DAL. THey are all "considering" spin offs to lower debt and raise cash.. This is old news, and you will believe anything I guess, better watch out for those articles about AA and its labor unrest, I'm guessing a couple hours of a strike would put AA 6 feet under... Get ready - if UAL makes it through the next year, AA will be the one in extreme trouble, don't spout off too fast, it will come back to bite ya!!!

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beauty,
It's comments like (some) of these(by you) That have me STRONGLY believing that you know JACK SH!T about this Industry ! :angry:

Ever wonder why AAers are by "far and away" THE most AAROGANT people in this Industry ?? :rolleyes:

Well for starters, a lot of us "cut our teeth" during the CRANDALL regime, something a novice observer of this Industry would know !..............beauty ????????? :shock:

Secondly, potential, and NOT SO potential Labor Strife, is NOTHING new to AAers.........................IT's IN OUR FRIGGIN" DNA !!

So, beauty...................you just learned 2 basics about AA/AAers.
Don't say you were never told. :closedeyes:
 
NHBB, we'll see - but like I said, it doesn't bother me.. I don't need UAL like you must have AA for your viability... If UAL falls, so will AA.. This article is wrong in so many ways, AA is doing the same thing, so is US and DAL. THey are all "considering" spin offs to lower debt and raise cash.. This is old news, and you will believe anything I guess, better watch out for those articles about AA and its labor unrest, I'm guessing a couple hours of a strike would put AA 6 feet under... Get ready - if UAL makes it through the next year, AA will be the one in extreme trouble, don't spout off too fast, it will come back to bite ya!!!
Indications are that UAL Corp. The parent of United Airlines, remains open to the idea of a merger with another carrier, accord to a Business Week report. Saddled with one of the thinnest profit margins in the industry, Chicago-based UAL is exploring asset sales as well as spinning off Mileage Plus, its frequent-flier program, as a way of becoming more attractive as a prospective merger partner, the magazine reported in its Dec. 3 issue. Moreover, United's on record as saying it plans to rely on its existing fleet of 460 jets until 2015 or 2016 -- at a time when rival carriers have been busy placing orders for new aircraft. One potential merger candidate, Delta Air Lines Inc., shot down talk of doing a deal with UAL earlier this month, but investors and analysts remain of the view that Delta's the most logical choice for UAL and Chief Executive Glenn Tilton, followed by U.S. Airways Group. Tilton wasn't available for comment, Business Week reported.

(Reuters) - UAL Corp parent of the No. 2 U.S. carrier United Airlines, is keen for a possible merger, according to an article in the Dec 3 edition of BusinessWeek that cited industry experts.

Pardus Capital Management, a New York-based hedge fund, which owns a stake in both UAL and Delta Air Lines is pushing for a merger of the second and third largest U.S. carriers, according to recent media reports.

United and its parent UAL are in a real jam and a sale may be the best option for the airline, which is saddled with relatively high debt and wafer thin profit margins said the BusinessWeek report.

"They didn't push as hard in bankruptcy to transform the business model, and they've been playing catch-up ever since ... It's clear that Tilton (UAL's CEO Glenn Tilton) now believes a merger is the road home," airline industry consultant Stuart Klaskin said in the article.

United, along with many of its peers, filed for bankruptcy following the September 11 attacks in 2001. It emerged from bankruptcy in 2006.
 
Beauty,

You are killing me! :lol:


United is obviously trying to find a dance partner. If they had a CEO who wanted to run the airline, there would probably be nothing much to worry about. But that is not the case. United has no one running the operation, that spells trouble.

For someone who has only been flying for a couple years, you sure are a vocal one. (NHBB is retired, he has no worries but to come up with rebutals to your inane postings. You could learn a LOT by reading what he has to say.....actually you could learn a LOT by reading pretty much what everyone has to say. Here is my advice: Be Quiet, you are making not only all flight attendants look stupid but all United employees look foolish as well!)
 
Beauty,

You are killing me! :lol:


United is obviously trying to find a dance partner. If they had a CEO who wanted to run the airline, there would probably be nothing much to worry about. But that is not the case. United has no one running the operation, that spells trouble.

For someone who has only been flying for a couple years, you sure are a vocal one. (NHBB is retired, he has no worries but to come up with rebutals to your inane postings. You could learn a LOT by reading what he has to say.....actually you could learn a LOT by reading pretty much what everyone has to say. Here is my advice: Be Quiet, you are making not only all flight attendants look stupid but all United employees look foolish as well!)

Did I say UAL is not trying to find a dance partner FLY??? NO, Never!!! NHBB may be retired, and from what i gather you are as well.. How did your pension change after the BK fly???? Actually, in fact - it is NHBB telling me that I am the one that is correct NOT VICE VERSA!!! You guys like to post opinions and hatred all over the place, but when it comes down to facts, the cheeks are turned.. FLY, if you want to know what is going to happen to this company or any for that matter, you have to put yourself in someones shoes other than your own.. I am sorry that you think I am making a fool of you, but, your opinion is in fact, no more worthy than my own... and certainly no more factual... If you for one second think that all other airlines are "good to go" then you are sorely mistaken and very VERY foolish..The only difference is that our CEO is very vocal, and the others are not... In the end we will see what happens, but your bitter voice about what happened in BK speaks volumes.. I have been in this industry for a decade and your problem is paramount in this industry, you don't want to face reality and want to push the blame elsewhere, but yet, you, are the problem... You can piss and moan all you want, but when push comes to shove, the employees back down - if the other airlines and their CEOs want their employees to believe its a rosy winter out there, then so be it, but that is far from the case... Take the classic AAers for example, they will more than likely be asked for concessions again, when they are, they will be mad and huff and puff, but they are the same ones who come on this board (like yourself) and bash others, and talk about how AFA lowers standards, and they have to worry about "raising the bar" ... We will see how high it gets raised... Fly perhaps you can tell me what the profit margin is for AA and DAL ??? I would love for your knowledgeable self to tell me what it is..... Is it 7 or 8 percent how about just 5 percent?? Can you - tell me???
 
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beauty,
It's comments like (some) of these(by you) That have me STRONGLY believing that you know JACK SH!T about this Industry ! :angry:

Ever wonder why AAers are by "far and away" THE most AAROGANT people in this Industry ?? :rolleyes:




Well I wouldn't brag about being arrogant NHBB... Actually the majority of AAers that i know are VERY nice.. Of course there are the select few that are down right nasty.. We all have those, unfortunately, this post leads me to believe that your co-workers have a right to be arrogant... That is too bad for you, your slice of aluminum, is no better the next, in fact its alot worse in many cases.. Check out www.suitedreams.united.com NHBB.... Whoever buys will be inheriting a nice product without the arrogant TUDE NHBB... LOL, you are something special "in the HOT AIR".. :lol: :lol: :lol:
 
How did your pension change after the BK fly????
Not to worry fly already has a pension and will be paid by the PBGC.
You guys like to post opinions and hatred all over the place, but when it comes down to facts, the cheeks are turned.. FLY.
I wonder who does that sound like? look in a mirror for that answer.
I am sorry that you think I am making a fool of you, but, your opinion is in fact, no more worthy than my own...
On the contrary, flys opinion is well balanced and based inexperience and fact. You on the other hand seem to have a low tolerance for facts and reality.
If you for one second think that all other airlines are "good to go" then you are sorely mistaken and very VERY foolish..The only difference is that our CEO is very vocal, and the others are not...
UAL is the only one who hired a company to shop itself and its parts out to the industry
In the end we will see what happens, but your bitter voice about what happened in BK speaks volumes.. I have been in this industry for a decade
oh my goodness 10 whole years, explains how and why you think you know everything.
You can piss and moan all you want, but when push comes to shove, the employees back down - if the other airlines and their CEOs want their employees to believe its a rosy winter out there, then so be it, but that is far from the case... Take the classic AAers for example, they will more than likely be asked for concessions again,
Did you pull that one from your rear as well? I wonder when AA will get around in negotiations to telling us about the concessions. So far not a peep.
and talk about how AFA lowers standards, and they have to worry about "raising the bar" ... We will see how high it gets raised... Fly perhaps you can tell me what the profit margin is for AA and DAL ??? I would love for your knowledgeable self to tell me what it is..... Is it 7 or 8 percent how about just 5 percent?? Can you - tell me???
Well since you wrongly quoted this (see below) care to recheck your facts?
making more than any other US legacy and double AA profits.. The whole industry has a profit marging of 2-3 % not just UAL... I read an article on DAL the other day that said, DAL must do a deal b/c they aren't "doing as well as planned" and their estimated worth - value is only half of what was estimated.. LOL, now that took a genius to figure out...
 
Fly perhaps you can tell me what the profit margin is for AA and DAL ??? I would love for your knowledgeable self to tell me what it is..... Is it 7 or 8 percent how about just 5 percent?? Can you - tell me???

I have no idea, you know why? Because I could not care less. I never worked there. I do know that United "is still up to its eyeballs in debt, and boasts a miserable 2% profit margin over the past year." Not good Beauty. :down:


Link

So, how did someone as junior as yourself get the holiday weekend off? Are you sitting in the ORD crew lounge on standby? Enjoy those Des Moines turns! :lol:



Retired? Me? Darling, I'm way too young for that. I'm just too old to fly. B)
 
I have no idea, you know why? Because I could not care less. I never worked there. I do know that United "is still up to its eyeballs in debt, and boasts a miserable 2% profit margin over the past year." Not good Beauty. :down:


Link

So, how did someone as junior as yourself get the holiday weekend off? Are you sitting in the ORD crew lounge on standby? Enjoy those Des Moines turns! :lol:



Retired? Me? Darling, I'm way too young for that. I'm just too old to fly. B)


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Beauty,

(As FLY mentioned)................YOU ?..................DSM turns?................Reserve??

Yeah beauty, I'd love to know the answers to FLY's questions !



And speaking of FLY,............................"YOU don't have the GRAVITAS needed to "carry FLY's Overnight BAG" !!!!!

(Your gonna' LOVE working for DOUGWEISER) :shock: :shock: :shock:
 
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Beauty,

(As FLY mentioned)................YOU ?..................DSM turns?................Reserve??

Yeah beauty, I'd love to know the answers to FLY's questions !



And speaking of FLY,............................"YOU don't have the GRAVITAS needed to "carry FLY's Overnight BAG" !!!!!

(Your gonna' LOVE working for DOUGWEISER) :shock: :shock: :shock:


Actually NHBB, I have already worked for Dougwesier... I have spent a whole day working with Dougweiser and the Kirbster ( not much to brag about ) but none the less... Been there and done that.. No, Sorry I have the holiday off - I hold weekends and holidays off and I am not based in the typical ORD... That is too bad that you assume things, and that is one of your problems FLY... I don't do Des Moines turns, actualy, I have been to DSM only once in my career, and that was one that i traded into... Tasty cajun rest. there... yummmyyy... Anyhow, you obviously don't know much or you would know what my seniority would hold... You should however, know what the profit margins of your peers, that way you can compare... For you to paint a doom and gloom pic of UAL is absurd without knowing the facts, which obviously you don't.... and it is further obvious that you don't want to look up the facts to prove yourself wrong... FLY, I would suggest quit worrying about others making you look foolish and focus on your own rantings...
 
Actually NHBB, I have already worked for Dougwesier... I have spent a whole day working with Dougweiser and the Kirbster ( not much to brag about ) but none the less... Been there and done that..
That plus the time you sat near pat friend. Oh my the connections and the stories you must have from all those hours in the presence of greatness.


No, Sorry I have the holiday off - I hold weekends and holidays off and I am not based in the typical ORD...
Is there an un-typical Chicago? I have never been. Ten years in the business weekends and holidays off and not based in the typical ORD, equals express. As they say once express always express. Good for you.


That is too bad that you assume things, and that is one of your problems FLY... I don't do Des Moines turns, actualy, I have been to DSM only once in my career, and that was one that i traded into... Tasty cajun rest there... yummmyyy...
I guess they only run mostly mainline in to there and you dont get to DSM. Too bad for you, missing out on all that is cajun.


Anyhow, you obviously don't know much or you would know what my seniority would hold...
No not really I know FLY and she, well when she works its mainline and not express.


You should however, know what the profit margins of your peers, that way you can compare...
since you make the point to put it out there and obviously wrong as usual (no big surprise there) you should as well.


For you to paint a doom and gloom pic of UAL is absurd without knowing the facts, which obviously you don't.... and it is further obvious that you don't want to look up the facts to prove yourself wrong...
I haven't seen a post where fly was wrong, but I have seen several just today where you were, so as they say physician heal thy self.


FLY, I would suggest quit worrying about others making you look foolish and focus on your own rantings...
see line above.
 

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