This article and the numbers that the company has generated are exactly why I don't agree with the first article. US is a viable airline without a merger of any kind. The points raised in the first article were flawed, at best.
Why US need a merger
- Thread starter damajagua
- Start date
I don't even want to think about the nightmare that integration would create
- Thread Starter
- #18
I hear what you are saying. But if I am not mistaken the current management at US is only interested in merging
the company with one of the big three.
I doubt US will merger a with anything else.
Just my opinion.
SparrowHawk
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You are correct that DP & SK have publically stated that US would not be looking to merge with LCC's or smaller airlines. If you're buying something yourself do you tell the Salesperson "I only want the red car" NO!, Any good buyer knows to keep what they actually want as closely guarded as possible. When I heard DP & SK say what they did regarding mergers, right away I thought "Smokescreen". Some points to consider.
US is headed to an all Airbuss fleet with the exception of the 757 platform which will ultimately lower costs. They also have EMB175/190 family aircraft. So let's look and see who is out there with Airbus and EMB fleet types. I count a total of three carriers.
Jet Blue - A320 & EMB-190
Spirit - A320/321
Republic/Frontier/Midwest - A319/320, EMB 190/175/170/145
Spirit has a network to the carribean as we speak. All Airbus Fleet. Bill Franke is the money guy at NK. Don't know how his relationship with HP Mgmt is now. But it's instant lift to markets US doesn't currently serve. 40 A/C airline could be easily swallowed.
Jet Blue - Offers a hub at JFK, how US would leverage that I'm not sure. Identical Fleet types except possibly for power on the Airbus. Aquisition of Jet Blue eliminates a competitor on the east coast helping to restore the traditional revenue premuim that has been eroding for US while at the same time incressing US's East Coast dominance.
Republic- As before good hub positioning, good working relationship with US already. Significant fleet compatability.
If I were Doug and the profit numbers continue I'd go after all three in the following order.
Spirit is the smallest and therefore easiest, plus it gives me something I don't already have and that's more Carribean & South American coverage. With Spirit's gates in FLL you can still use that as a focus city or bring the flights to CLT doesn't really matter except for the O & D numbers out of FLL for the South American/Carribean flights. If they're strong you leave it be.
Jet Blue or Republic comes next depending on price. I'm thinking Republic due to LH's investment in B6 might create a problem. Republic brings the DEN & Milwaukie Hubs which allows US to have the lift required to become dominant domestically, Jet Blue brings JFK which is in keeping with the whole "Beach Front Property" approach and increseases East Coast dominance. Remember 75% of the population lives east of the Mississippi. Not to mention Star Alliance customers.
Do these aquisitions over the next five years and by that time US will have a superior domestic route structure, Caribbean and South American Dominance estavlished just in time for the arrival of the A350 which would allow US to retire the 757's and have an all Airbus/EMB fleet and be positioned with the A350 deliveries to exploit opportunies in the Pacific Rim as they arise.
To me, US merging with CO/UA, NW/DL or AA is nothing more than an opportunity for the current Management team to cash out at the expense of the 33,000 who currently work for US. A better path in my mind would be to actually accept the challenge, motivate the work force and go out buy some airlines and kick some major league arse!
If foreign ownership rules are ever relaxed, I see US merging with an international carrier, likely LH.
However, I think the next best option is to participate in a JV with UA-LH-etc. Say what you will about Parker and friends, but US does seem to be getting its house in order with a clear strategic plan. (Whether you agree with the plan or not is another matter.)
However, I think the next best option is to participate in a JV with UA-LH-etc. Say what you will about Parker and friends, but US does seem to be getting its house in order with a clear strategic plan. (Whether you agree with the plan or not is another matter.)
JFK Fleet Service
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Fleet commonality isn't the be all end all deal breaker it's being made out to be.Prior to the NW purchase, DL hadn't seen an Airbus on the property since their short lived experiment with A310's inherited from Pan Am.Now the combined airline operates a sizable Airbus fleet in the midst of numerous Boeing and DC/MD products.
SparrowHawk
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No it's not the be all, end all. However if we look at the most succesful airline (WN) what is one of the first things you notice? Common fleet. My point is if you're pulling out your wallet why not take fleet type into consideration. In the case of Republic and Spirit they provide coverage of areas where US is weak (SA & Midwest) and B6 gives them a good hub in a prime locale.
Republic also has a hub in Milwaukee which I think is inside the perimeter for both DCA & LGA further increasing their value. LGA & DCA to Milwaukee then off to anyplace in the Midwest. IMO slow and steady wins the race. US can sit on the sidelines and build cash and aquire what interests them as they go along. There is no rush they're making money and likely to for a while.
PullUp
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How would Delta, United, and American react if US bought Republic holdings? You do realize that US would be providing feed to the competition under this scenario. Kind of poetic, but highly unlikely. Mgmt has stated they want to merge with one of the big boys if they merge at all - for a good reason - domestic ops can be started and stopped at will. If you had a few spare airplanes and no where else to go, Millwaukee sounds pretty good. Bottom line is Republic doesn't have anything US can't do for itself, if it wanted to. Hell, most of the US Express routes were flown by mainline just a few years ago. Nope, if the money is to be spent, then Europe, Asia, or South America cities are the ticket - that is where the value is. And with any inevitable overlap domestically, maybe express flying could be cut back on and replaced by more mainline flying to feed the increased international operations.
Have a great day.
Dog Wonder
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How many articles has Ted Reed written about a USAirways merger since the last one?
Did he predict the US/HP merger?
Did he predict the DL/NW merger?
Did he predict the UA/CO merger?
When was the last time he guessed right?
Did he predict the US/HP merger?
Did he predict the DL/NW merger?
Did he predict the UA/CO merger?
When was the last time he guessed right?
JFK Fleet Service
Veteran
I'd say chances of Republic buying US were higher than US buying any of the three airlines listed,much less all three of them.
wings396
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I agree that having a common fleet type as does SWA is more cost effective, but it isn't as feasible at the other majors. As long as you keep common fleet types in a given zone of your system it can work to your advantage. This is what DL appears to be doing by using a given fleet type out of SLC etc...If US did merge with AA, the Airbus fleet could be utilized out of PHL and CLT with the Boeings being used out of ORD and DFW for an example. I'm not saying that there wouldn't be any flying done into certain cities with both types, but you can base either type out of any given crew base to maximize your crew utilization on common type rated A/C. It would take some good thought and planning, but it can work if done properly.
SparrowHawk
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I am certainly no airline expert. Good armchair quaterback? Yeah!
On this one I just don't see a benefit in a merger with AA or the other two combined carriers.
US is making money, AA has't for a while.
33,000 employees have jobs
Stock price is in good shape
Cash on hand is in good shape and getting better
Performance is improving operationally
Customer service lags IMO and will continue to do so.
US is slowly headed to an all Airbus carrier which will help with cost some.
IMO, US needs to keep earning a profit and looking for smaller opportunities, to essentially do what Republic did. Once they were a regional carrier pretty much like any other. Good financials and reasonably well run and POOF all the sudden they picked up Frontier and POOF again they scored Midwest and before anybody could say Holy Airplane Propeller Batman there they were a force to be dealt with. US can and should do the same thing. Over the next 3 to 5 years someone will go belly up and US can pick the carcass and grow on the cheap. IMO if US plays their cards correctly and stays away from a mega merger they could very quietly grow much larger and be a real force. The profit earned now must be used to prepare for a stand alone future. US IMO needs to grow domestically so that when the A350's start arriving they have the route structure to feed these planes to wherever they decide to fly them. I just don't see the current route structure being able to support serious expansion into the Pacific Rim
On this one I just don't see a benefit in a merger with AA or the other two combined carriers.
US is making money, AA has't for a while.
33,000 employees have jobs
Stock price is in good shape
Cash on hand is in good shape and getting better
Performance is improving operationally
Customer service lags IMO and will continue to do so.
US is slowly headed to an all Airbus carrier which will help with cost some.
IMO, US needs to keep earning a profit and looking for smaller opportunities, to essentially do what Republic did. Once they were a regional carrier pretty much like any other. Good financials and reasonably well run and POOF all the sudden they picked up Frontier and POOF again they scored Midwest and before anybody could say Holy Airplane Propeller Batman there they were a force to be dealt with. US can and should do the same thing. Over the next 3 to 5 years someone will go belly up and US can pick the carcass and grow on the cheap. IMO if US plays their cards correctly and stays away from a mega merger they could very quietly grow much larger and be a real force. The profit earned now must be used to prepare for a stand alone future. US IMO needs to grow domestically so that when the A350's start arriving they have the route structure to feed these planes to wherever they decide to fly them. I just don't see the current route structure being able to support serious expansion into the Pacific Rim
PullUp
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Republic has it's plate full right now, and for the forseeable future, with the digestion and integration of Frontier. Now they have to figure out how to fill seats on their own without a guaranteed 8% profit margin.
And while doing that, they'll have to merge workforces and bust the unions on the property.
That should keep them busy for a while.
Have a great day.
SparrowHawk
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Astute observation! Also why I think US needs to build cash and have the checkbook at the ready. If Republic falters, US can maybe scoop them up at a bargain basement price. He11 US is making money with 2 pilot groups bickering like school kids why not throw the Frontier, Mid West and Spirit pilots into the mix
Really could it be worse?
JFK Fleet Service
Veteran
SparrowHawk said:
How many majors have gone bankrupt and liquidated since 9/11? Been a whole slew of bankruptcies, but no one has ceased operations.
Waiting for someone to perish hasn't proven to be a viable strategy as there always seem to be employee groups who will take a paycut or three as well as hedge fund managers who will make a short term high stakes bet for a quick ROI.
