Acquisition By Another Airline Best Solution

[deltawatch]

"Long-term prospects for US Airways remain difficult, given the company's limited route network and increasing exposure to low-cost competition. Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways."

LINK

 

[Just Plane Crazy]

"Long-term prospects for US Airways remain difficult, given the company's limited route network and increasing exposure to low-cost competition. Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways."

LINK

Don’t you think that being part of STAR is a broader alliance? They just became full member on May/04/04. I think that U will make it as long as the unions get their act together.

STAR 16 Airlines +755 airports +132 countries

Lufthansa Group Europe (W&E), Africa, Asia, America (N&S), Australia
Austrian Group Europe (W&E), Africa
South African Africa, Europe (W), Asia, America (N&S), Australia
SAS Europe (W&E), Asia, America (N)
Air Canada America, Asia, Europe (W)
Varig America (N&S), Europe (W), Africa
United/Ted America (N&S), Europe (W), Asia, Australia
USAir America (N), Europe (W)
Thai Airways Asia, Europe (W), America (N), Australia
Singapore Airlines Asia, America (N), Europe (W), Australia
Air New Zealand Asia, Europe (W), America (N), Australia
LOT Europe (W&E), America (N)
Asiana Asia, America (N), Europe (W)
BMI Europe (W), America (N)
ANA Asia, America (N), Europe (W)
Spanair Europe (W), Africa

 

[crazyincanton]

I think that U will make it as long as the unions get their act together.

We already have our act together-twice, if you're counting. How about management getting their act together?

 

[RWerksman]

It may be the best solution, but will it actually happen? I really, really, really doubt it.


Why?

1. Who has the means and the desire?
2. If it hasnt happened by now, it probably wont. (i.e. UA merger)
3. Why would you aquire it now when you can just wait it out, and buy at liquidation prices?


...just my gut feeling. I realize the reasons are not scientific.

 

[High Iron]

We already have our act together-twice, if you're counting. How about management getting their act together?

Bulls-eye. Short and sweet answer to kibbitzers who slept through the movie...

You'll really shake your head trying to debate armchair CEO's and teenage know-it-alls with most of the airliners.nuts [sic] crowd. Some no doubt have migrated here as well.

 

[MrAeroMan]

It may be the best solution, but will it actually happen? I really, really, really doubt it.


Why?

1. Who has the means and the desire?
2. If it hasnt happened by now, it probably wont. (i.e. UA merger)
3. Why would you aquire it now when you can just wait it out, and buy at liquidation prices?


...just my gut feeling. I realize the reasons are not scientific.

I think there's a very good chance it will happen and it will be a surprise announcement when it does.

1. Who has the means and the desire?

America West would be a prime candidate. Their new fare structure is working and would work well competing with B6 and LUV. Overlap of routes would be minimal but there would be integration issues ie engines on the Airbi....not sure the commonality but I think they're different. I'm sure they'd love to tap into CLT and the enormous growth opportunities a Southern hub could afford. I bet they'd even like to do a small operation out of PIT and lots of point to point out of PHL.

2. If it hasnt happened by now, it probably wont. (i.e. UA merger)

UAIR is probably dragging it's feet with any potential suitor as they're trying to give any chance they can for RSA to maximize their investment. If concession talks fail or bog down and it appears unlikely to achieve an agreement they'll be more likely to sell it off and cut their losses. Either way RSA makes money, just not as much as they would if it stayed together as one piece.

3. Why would you aquire it now when you can just wait it out, and buy at liquidation prices?

Anytime you're bidding against someone else there is a chance you can lose the assets to a higher bidder but if you're negotiating singularly with the seller you have a much better chance to get what you want. You may pay a little more but it might be worth it if the assets fit with your operation. It's a big risk to wait for a sale but you'd definitely save some money.

I also think that any asset sale would come at a great cost to the employees. I don't know America Wests starting pay but it's much lower than what UAIR employees make now and for that matter any airline that aquires the assets starting pay would be much less than is currently being paid.

 

[cavalier]

"Long-term prospects for US Airways remain difficult, given the company's limited route network and increasing exposure to low-cost competition.

It's like walking up to a raging forest fire with 100 foot high flames and carrying a baseball bat on your shoulder hoping to smash those flames out and save the forest.

 

[deltawatch]

CWA has in their contract; in the case of a merger with; or take over by another airline it's members get 100% of their seniorty with the combined companies or no deal. Could this be the reason Lakefield mentioned seniority???


CWA release 5/6/04 "although we were not told management's timeline for laying out specific concessions demands, they made no bones about the fact that they are looking at reductions in rates of pay, seniority, benefits, productivity, scope (subcontracting), and – specifically for passenger service – more automation at the airports. They also stated that their models for employee salaries and costs are JetBlue and America West (not Southwest!)."


CWA LEARDERS LIRKING, THE SENIORITY LANGUAGE SHOULD BE THE LAST THING WE GIVE UP!!!!!

 

[RowUnderDCA]

3. Why would you aquire it now when you can just wait it out, and buy at liquidation prices?

Anytime you're bidding against someone else there is a chance you can lose the assets to a higher bidder but if you're negotiating singularly with the seller you have a much better chance to get what you want. You may pay a little more but it might be worth it if the assets fit with your operation. It's a big risk to wait for a sale but you'd definitely save some money.

I also think that any asset sale would come at a great cost to the employees. I don't know America Wests starting pay but it's much lower than what UAIR employees make now and for that matter any airline that aquires the assets starting pay would be much less than is currently being paid.

What do you think about the value of pre-established alliance arrangements airplane orders and financing, etc? Might these things have sufficient value and increased value when taken as a whole, rather than piece by piece in liquidation. Just wondering. Of course, the value of these things would have to exceed the cost of the headaches.

But couldn't HP pretty easily purchase UAir and retain the alliances and aircraft orders? Or would it require extensive negotiation and headaches with the financiers and alliance partners?

I'm just thinking that these things could have some intangible value.

 

[Just Plane Crazy]

We already have our act together-twice, if you're counting. How about management getting their act together?

You wanted Siegel out and he is gone. The only thing that is constant is that management is at fault and no one else. Wake up and get real. The world is changing and you have to look at a different future.

Do you want a job? YES or NO. If you want one you have to adjust and that includes to look at how other airlines are making it and look at what you are doing different. If it includes that you have to outsource more than for the benefit of the the jobs that can be saved it has to be done.

Better have 80% of jobs saved than 100% of jobs lost.

 

[MrAeroMan]

CWA has in their contract; in the case of a merger with; or take over by another airline it's members get 100% of their seniorty with the combined companies or no deal.

Language is everything and if it only states a merger or take over by another airline you may not have any standing. Does it specifically state asset sales to many different entities? I would bet it doesn't and that is where they will get around that issue.

They could, in all reality, purchase the CLT hub as well as other assets, not the whole airline, and still not trigger that clause. The devil is in the details and that language might not hold water for the membership.

 

[hp_fa]

I believe that the unionized HP employees, who have gone through years of being the proverbial carpet under other major airlines feet, aren't going to be real thrilled in any deal that might cost them their jobs with any deal with US Airways.
Please don't tell me that we should be willing to be potentially unemployed for your benefit.

That said, if you are interested in a staple job with HP I don't think we would object.

 

[bofie]

I always thought that the routes of America West were most complimentary to those of U.

Their reputation among pax I know is pretty crummy, though.

 

[crazyincanton]

You wanted Siegel out and he is gone. The only thing that is constant is that management is at fault and no one else. Wake up and get real. The world is changing and you have to look at a different future.

Do you want a job? YES or NO. If you want one you have to adjust and that includes to look at how other airlines are making it and look at what you are doing different. If it includes that you have to outsource more than for the benefit of the the jobs that can be saved it has to be done.

Better have 80% of jobs saved than 100% of jobs lost.

As Fred Freshwater said: It is not the unions' job to save the company. We did our part. Do I want a job, YES. At a more reduced wage? NO.

 

[Just Plane Crazy]

As Fred Freshwater said: It is not the unions' job to save the company. We did our part. Do I want a job, YES. At a more reduced wage? NO.

Just as an example: Cockpit pay rates (A320) at JetBlue and America West are in average US$20 lower than at U. Just calculate the savings in that category.

JetBlue outsourcers more and I can’t speak for other groups but I think that their wages are lower than @ U too. So if it takes to get to the level of JetBlue in pay scales and to outsource some additional work and just concentrate on the core business (flying aircrafts from A to B in a safe, efficient and reliable way) I think U can pull it off.

At the end there are people who are not going to be happy but the majority will have a job.