Acquisition By Another Airline Best Solution

[crazyincanton]

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

I am beyond the point of "just having a job." More reduced wages, benefits, and working conditions? Sorry. Everyone has their breaking point. Each individual will decide where to draw the line. My line is already in the sand and I am ready for whatever consequences may occur.

 

[ktflyhome]

CrazyinCanton: I am with you whole heartedly. Enough is enough. I too am ready and the sooner the better.

And for those of you like the Captain who want to say "if you're that miserable than quit". Get over yourselves already.

First we gotta be like Southwest, then we gotta be like Jetblue, now we gotta be like American West.....Who is NEXT???????

It reminds me of the song: They're coming to get you, haha, hehe,hoho,haha and take you to the Funny Farm.... :angry:

 

[Prince of PAWOBs]

America West already has a small operation out of PIT, being handled by (drum roll, please) Continental. Express, if it stayed in it's current form at PIT, would become a huge operation. The bonus for USE employees (readSA) at PIT would be the potential to become CO employees at a higher rate of pay.

So, maybe PIT csa's wouldn't have too much to worry about if such a thing happened. And, maybe the ACAA is counting on such a thing happening, and that's why the improvements in the area around PIT are happening now.

Working for America West: Probably not a thought to relish.

Working for Continental handling flights for America West: Hmm.....there are worse things.

 

[ktflyhome]

Sorry, Prince, but you are not making any sense to me. <_<

 

[funguy2]

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.

Why would America West have the desire?

America West's CASM is 7.59 cents. US Airways CASM, after two rounds of employee concessions is 11.68 cents. Even if US Airways get to America West contracts, as USA320Pilot says is US Airways management's goal, that would get US Airways CASM to 9.68 cents according to managemet, who says 2 cents CASM from the employees). That means that America West would have to find that other two cents of CASM, which US Airways management cannot seem to find, in order to maintain their CASM advantage.

Yes, there are route and fleet synergies behind this proposal. But I don't see why America West, or any other airline for that matter, would want to buy US Airways problems.

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.

If any other airline, bid on and did not win US Airways assets during Liquidation, are they really any worse off? Yes, they would have missed a potential opportunity, which is not optimal, but that opportunity comes at a much lower risk to the acquiring company than trying to merge with a semi-functioning US Airways, warts and all.

 

[funguy2]

America West already has a small operation out of PIT, being handled by (drum roll, please) Continental. Express, if it stayed in it's current form at PIT, would become a huge operation. The bonus for USE employees (readSA) at PIT would be the potential to become CO employees at a higher rate of pay.

So, maybe PIT csa's wouldn't have too much to worry about if such a thing happened. And, maybe the ACAA is counting on such a thing happening, and that's why the improvements in the area around PIT are happening now.

Working for America West: Probably not a thought to relish.

Working for Continental handling flights for America West: Hmm.....there are worse things.

If America West acquired a hub in PIT, I am sure they would staff it with their own people.

Today, America West has one PIT flight, which is plenty small for an outsource. So you think America West is handled by CO at PHX and LAS?

 

[Prince of PAWOBs]

Good point, Funguy. I hadn't considered that.

But, as I pointed out, I would think that an express agent would rather work for Continental than America West. And who's to say that America West wouldn't continue using CO to run a PIT operation? It might be less headache to let the contractor run the show while America West reaps the profit.

Hey, that sounds a lot like what's going on right now at US.

Ktfly, sorry if my post was hard to follow. Sometimes I get a thought and just let it take me where it will go. My mindset was, "What if ACAA already knows who is planning to come here and they are using their contacts in other state agencies to get things moving improvement-wise in and around the airport?" I was just throwing an idea out there like a baited hook. You never know what you might catch. The possibility of a pre-existing operation taking over Express at PIT was one of those flitting thoughts I had.

 

[MrAeroMan]

Why would America West have the desire?

America West's CASM is 7.59 cents. US Airways CASM, after two rounds of employee concessions is 11.68 cents. Even if US Airways get to America West contracts, as USA320Pilot says is US Airways management's goal, that would get US Airways CASM to 9.68 cents according to managemet, who says 2 cents CASM from the employees). That means that America West would have to find that other two cents of CASM, which US Airways management cannot seem to find, in order to maintain their CASM advantage.


America West wouldn't necessarily have to find two cents of CASM to wring out of the operation. Their costs are already low and their "Other" column isn't the same as UAIR's. You're merging two balance sheets instead of just one piece of the operation. Would their costs go up? Maybe, but with their contracts, additional flying, fare structure and new route structure I'm sure they could more than make up for the costs with additional revenue. In fact, their costs may even go down given the additional flying the UAIR a/c would do.


Yes, there are route and fleet synergies behind this proposal. But I don't see why America West, or any other airline for that matter, would want to buy US Airways problems.

Who said they'd take the problems with them? They could acquire the assets and then staff as they see fit. I'm sure they would take on some UAIR people but not in the numbers most think. The problems of labor unrest, loan convenances etc would be ancient history and are unique to UAIR in this case.


If any other airline, bid on and did not win US Airways assets during Liquidation, are they really any worse off? Yes, they would have missed a potential opportunity, which is not optimal, but that opportunity comes at a much lower risk to the acquiring company than trying to merge with a semi-functioning US Airways, warts and all.

You don't think the East Coast franchise UAIR has is optimal? The franchise UAIR has is very attractive to a lot of carriers that don't have that same franchise. Merging isn't in the cards. It would be an asset purchase and it would end there. Would they need people to run the operation? Sure but not everyone at UAIR would go along.
Take CLT for instance. Let's say they purchase that operation. Most likely they would retain some of the existing management if not long term then at least short term to help get the operation up and running. My guess they would be long term as CLT is very well run by some of UAIR's most capable management team. During the transition time they could interview and hire whoever they wanted. They could but don't have to offer them their seniority and bring them in on their scales wherever they would fall. Could something else happen? Sure, anything can happen at this point.

 

[funguy2]

Mr AeroMan:

I'll stand by my statement that America West would need to reduce non-Labor CASM, as US Airways would need to do alone as an independent. I will give you the fact that if America West did acquire US Airways (whole or part) that America West would probably actually make a decision, rather than the "wait-and-see" game US Airways seems to play. That in itself would save some costs.

And you are right. Given the shorter stage lengths of US Airways, combined costs would increase, and presumably RASM too. Also, US Airways penetration of high cost markets like NYC vs. America West would increase costs... But, as we discussed the other day in another thread, Southwest's costs, adjusted to Ameirca West's stage length, are 2 cents/ASM less than America West. For US Airways, being 2cents above Southwest CASM, stage adjusted, would be a huge success, but may not be sustainable forever.

If merged as an operating entity, I presume a fair number of US Airways would have to go with the deal. Otherwise, the former US Airways flying would temporarily be reduced or suspended as new enployees are hired, trained, etc. If that occurs, the value of acquiring a functioning US Airways prior to liquidation would vanish. So, I think a fair number of employees would be involved in such a deal. And these employees still discuss whether they came from Allegheny, Piedmont, or PSA (the originals). So I find it hard to believe "they won't carry their past with them".

I think US Airways has some strengths that other carriers might wish to acquire. It also has weaknesses. However, if America West was outbid on a US Airways purchase, chances are that America West would be just fine. So, ok, lets say America West makes a bid for the CLT hub, and sufficient people, planes, and support systems to go with it. Fine. Now lets say they get outbid by CO for the CLT hub. Has America West been materially harmed? No. Would America West been better off having acquired CLT? Probably yes. But if they don't, does it change the world for America West? I don't think so. They would continue to execute their non-merge with US Airways plans, whatever they

 

[MrAeroMan]

I agree with you, America West would be just fine without UAIR and in some respects much better. You're right about the employees also and I doubt they'd have any problem staffing any of the assets they might potentially purchase. If they thought for one NY second that they would they'd drop the whole purchase. One thing clear is they wouldn't want to drop any service while they staff up. Given the additional lift I would love to see the numbers. I would venture to say they'd probably even drop their costs to around 6.5 cents to 7.0 cents. Just my 2 cents but like I said I'd love to see the numbers.

 

[jbragg476]

Guys... let's face it.... Any dealings with a merger with America West went out the door when RSA outbid TPG. Face it... America West doesn't need our problems and we have the Star Alliance as well as the United/US Air codeshare agreement that helps to complement our lack of West Coast routes and destinations.
I hope no one is banking their retirement on this merger rumor like some pilots I know who thought they would get rich quick on a $60.00 a share UA stock buyout.
(but hey... with the stock below $3.00 a share... you could blow your money on other worthless things too)

Get over any America West/US Airways merger..... I can practically guarantee that won't happen with RSA in charge. Another bankruptcy... yes.... HP/US merger...hell no!

 

[colorado_cowboy]

If the majority of the employees are going to take concessions that puts them near the poverty level or furloughed without a guarantee of severence pay how do you think their going to vote?

 

[ClueByFour]

Folks, if you think PIT has it bad now, if US goes under CLT won't have it any better. The O&D is lower, and the other legacy carriers are already shrinking/shedding hubs.

 

[Columbia blue]

Given the two airlines route systems, it would be interesting to see. An asset sale seems more likely than a merger though. You would think RSA would be thrilled to shed their US Airways investment for a deal that would get them out, cash (more or less) intact. Other problems, such as labor would be more difficult to solve. You can bet however, on an AWA purchase that a good sized part of the Crystal City mgmt. would be out the door rather quickly. The crystal city hdqs. as well, which would save some cash.

 

[crazyincanton]

If the majority of the employees are going to take concessions that puts them near the poverty level or furloughed without a guarantee of severence pay how do you think their going to vote?

Exactly. That's why you see the pilots running to the table first. They have the farthest to fall. With the money they make and the opportunity, or lack there of, for similar employment, I don't blame them. But the rest of us? Our fall is not as steep, and neither is our climb back. That is why people are saying enough is enough. They can keep giving these inept executives that we hire millions, yet they want to keep sticking their hands in my pockets? Don't think so.