Will An Alliance Help UA?

[chucky]

Can a Continental-United Alliance Do What a Merger Can’t?



But for United, this alliance idea has some drawbacks. For one thing, the airline industry is studded with alliances that haven’t prevented or ameliorated any of the problems currently plaguing beleaguered airlines who face mounting bills. And the distant relationships between airlines implied in an alliance means that the agreement can never really act as training wheels for a merger because it doesn’t engage the biggest issues in airline mergers: labor unions. On the one hand, that’s obviously the benefit of an alliance – to be able to grow revenues without dealing with a labor headache. But on the other hand, you can’t avoid the labor problem forever: United’s underlying problems – like those of its rivals – are the need to cut costs and reduce capacity. A merger might accomplish that. An alliance doesn’t.

 

[NewHampshire Black Bears]

In my opinion...Chucky DUDE, ....an alliance wont help UAL !

But I'm guessing that with "petrol" $$'s in the Ionisphere, that UAL's second qtr. results will tell a lot.

Should UA post anything NEAR a loss, like they did in Qtr. 1, or exceed it, I'd be "nervous" if I had a vested Interest in them..............................................And I Am NOT hoping that UAL fall on continuing hard times,...and I mean that very seriously !!

Qtr. 2 results, should be due in about 6 weeks.

 

[ohcaptainron]

In my opinion...Chucky DUDE, ....an alliance wont help UAL !

But I'm guessing that with "petrol" $$'s in the Ionisphere, that UAL's second qtr. results will tell a lot.

Should UA post anything NEAR a loss, like they did in Qtr. 1, or exceed it, I'd be "nervous" if I had a vested Interest in them..............................................And I Am NOT hoping that UAL fall on continuing hard times,...and I mean that very seriously !!

Qtr. 2 results, should be due in about 6 weeks.

The numbers that I've seen suggest a potential $750 million-1.5 B increase in revenue for the proposed alliance, how much of that gets to the bottom line is anybodies guess. But the real value would be in a future merger between the two companies, the alliance gives the parties a free look.

 

[Dave]

In my opinion...Chucky DUDE, ....an alliance wont help UAL !

But I'm guessing that with "petrol" $$'s in the Ionisphere, that UAL's second qtr. results will tell a lot.

Should UA post anything NEAR a loss, like they did in Qtr. 1, or exceed it, I'd be "nervous" if I had a vested Interest in them..............................................And I Am NOT hoping that UAL fall on continuing hard times,...and I mean that very seriously !!

Qtr. 2 results, should be due in about 6 weeks.

Of course we're going to post a loss. And so is every other airline. But I'd be a lot more nervous if we posted a loss and did not have an alliance in the works.

 

[767jetz]

But the real value would be in a future merger between the two companies, the alliance gives the parties a free look.

My thoughts exactly. That is why Tilton told Parker things or off "for now." He wants to pursue this alliance, with the "free look," and then see if he can rekindle a merger with CO. If that fails he will see what kind of shape USAirways is in, and decide where to go from there.

My guess is that once this alliance moves forward, and the industries financial landscape evolves, CO will be more interested in marriage. It will also give everyone a chance to let DL/NW be the guinea pigs and see how successful they're merger is.

 

[767jetz]

According to this article : S&P Picks , apparently they think an alliance between Co and UA will be very beneficial to CO. So I imagine the same is true for United.

"Upgrade reflects lower oil costs, share pullback and unconfirmed reports in the WSJ that CAL is near alliance with United Airlines, which we think could provide many advantages of a merger without integration headaches and labor disruption."

 

[Rubble]

When United dumps its 737 and 747 fleets, there will still be a need to fill the seats on the international flights. An alliance will help to solve this problem and at the same time further to groom United to be bought out. Anyone question WN's $600 mil loan now? Lots of cheap 737's out there. Maybe some east coast slots too.

 

[Cajun Flyer]

When United dumps its 737 and 747 fleets, there will still be a need to fill the seats on the international flights. An alliance will help to solve this problem and at the same time further to groom United to be bought out. Anyone question WN's $600 mil loan now? Lots of cheap 737's out there. Maybe some east coast slots too.

Do you think UA would allow SW to buy their 737's? Are they owned or leased? Just wondering because from what I recall the DC-9's that started Airtran/Valujet were all from Delta. That hasn't worked out so well for Delta and who wants to see SW gain more market share by getting cheap planes and adding capacity into the market that shouldn't be there. I just read that Airtran's capacity for May 08 over 07 was something like 16 - 18% higher. That extra capacity by low cost carriers is hurting us all.

 

[FWAAA]

Do you think UA would allow SW to buy their 737's? Are they owned or leased? Just wondering because from what I recall the DC-9's that started Airtran/Valujet were all from Delta. That hasn't worked out so well for Delta and who wants to see SW gain more market share by getting cheap planes and adding capacity into the market that shouldn't be there. I just read that Airtran's capacity for May 08 over 07 was something like 16 - 18% higher. That extra capacity by low cost carriers is hurting us all.

WN can get all the new 73Gs it wants from Boeing completely brand new, configured exactly the way WN wants them. Old crappy UA 733s and 735s are the last things WN would want or need. If UA parks them, they'll either fly in the third world or be made into beverage cans. They won't be painted Canyon Blue by WN.

I agree that the extra capacity from LCCs is hurting everyone. I don't think today's LCCs have any use for old legacy airplanes.

 

[767jetz]

I agree that the extra capacity from LCCs is hurting everyone. I don't think today's LCCs have any use for old legacy airplanes.

If LCC starts to park it's 737fleet, they will be in for some serious downsizing pain. However, IMO they will come to the same conclusion as most others and see the necessity at current fuel prices.

My guess is that once this alliance moves forward, and the industries financial landscape evolves, CO will be more interested in marriage. It will also give everyone a chance to let DL/NW be the guinea pigs and see how successful they're merger is.

With todays announcement that CO is parking older planes and reducing flights, it is clear that the landscape is shifting from even just a few months ago. IMO this only strengthens the chances of eventually (perhaps after the summer travel season when 3rd quarter results emerge) CO revisiting the merger possibilities. It's always easier to manage a combination after the downsizing occurs. Plus labor would be more likely to support it after enduring furloughs, in an effort to jump-start some growth.