Conversation With Lakefeild On Thurs In Clt

[avek00]

"No legacy airline can afford much of anything else at this point and they surely can't support an LBO; they can't pay their current bills, let alone something that adds more debt."

BINGO!

The legacy airlines *badly* want to merge, but the financial hurdles simply can't be overcome. None of the legacies has a market capitalization of $2 billion, let alone the ability to raise that much for integration costs or even CONTINUED OPERATIONS of the existing company. Given the wacky fundamentals of the industry, there's no reason for fresh investors to put their money in the airline business when money can be made elsewhere with greater returns and less risk. US' recent experience with equity financing bears witness to this - all of the money pledged to US thus far has come from sources already chained to the airline - no one currently unattached to US is willing to touch the airline with a 10-foot pole.

And of course, we haven't even touched the issue of LABOR integration...

 

[etops1]

Etops1

Do you have a spelling problem or what??? Also, what are you smoking?? Did you dream you were sitting and having a chat with Lakefield?? I can't imagine Lakefield talking about things United.

I have always thought UA and U would merge somehow, but with today's fuel prices, it may take take alot longer to come up with a strike price.

[post="259033"][/post]​

ain't smoking a damn thing. wish i were. and sorry for the spelling. i guess i type too fast and forget to use spellcheck. and i surely was not dreaming . we were talking at the end of the c concourse in clt . lakefeild was waiting to board a flt to rsw at around 10 am or so .he was flying on a 737. as for the united talk , its all true . he kept mentioning united. you want to beleive it or not its up too you . we spoke about things other than ual as well . but i guess the ual thing is what's getting the attention. look i don't mean to stir the pot . i am just posting what i thought was an interesting convo with bruce. i have no reason to b/s anyone. i kinda agree with what pitbull said. lakefeild did not sound like a leader to me. he sounded like someone who knows nothing about the airline industry and knows only what his executives tell him. he is a money guy . not an airline guy. was i impressed by him? not really . but i could tell that he was a no b/s kind of guy. when he speakes he sounds like he is scared and aslo looks like he is scared . i remember when i approached him to say hello as he was sitting , he jumped up as if i scared the living daylights out of him and immedeatly extended his hand so that i could shake it. anyway, enough .i am tired of justifying this to you people. you want too beleive it go ahead. you don't , be my guest.

 

[calibrator]

ain't smoking a damn

[post="259039"][/post]​

E-T if you post on these boards you better have Teflon coating for skin and if you don't, then don't post. Life is like this board, many want a piece of you and the others want you dead because you show or have something they envy, courage to speak and neurons between your ears that make others react.

 

[etops1]

E-T if you post on these boards you better have Teflon coating for skin and if you don't, then don't post. Life is like this board, many want a piece of you and the others want you dead because you show or have something they envy, courage to speak and neurons between your ears that make others react.

[post="259041"][/post]​

thanks for the advice , well taken B)

 

[767jetz]

you want to beleive it or not its up too you .

[post="259039"][/post]​

I for one believe you and thank you for the honest delivery of your experience.

While your spelling may be off, you sound much more sincere and believable than a certain captain who claims to get his info from secret sources and CEO's on the jumpseat.

 

[whlinder]

If a legacy merger happens, I think (and I would hope) that the combination will not be handled in the same manner as AA/TW. I think you will see future mergers handled in the way that AF/KL are merging. I doubt integration costs will come in a 2 billion if handled in that manner, though certainly integration costs in a merger will require cash that the U.S. legacies don't have.

 

[RowUnderDCA]

I would think that you'd merge support functions first: starting with corporate; IT services; sales and marketing; loyalty and amenity programs; reservations; ground handling underwing, over-wing non-pax, and then pax; then aircraft maintenance; then cabin crew. Do it very slowly.

 

[avek00]

The integration costs are more or less unavoidable - the only real choice that can be made is whether to take them immediately (ala AA/TWA) or else spread the costs out over time (AF/KL). It could take three years to integrate, or ten years, but either way, there's $1.5-2.5B that's going to find its way to the pisser, whether the merger is a success or failure...

 

[Fly]

I believe there will be some sort of merger but I doubt it will be the type of mergers we've seen in the past. I highly doubt that UAL will honor the returning of US furloughees either.

 

[700UW]

If there is a merger, the US contracts contain Mohawk/Allegheny Labor Provision Protections, they have to be honored in a merger.

The IAM, AFA, CWA, TWU or AMFA dont have a clause that the TWU contracts contained.

 

[deltawatch]

lakefeild did not sound like a leader to me. he sounded like someone who knows nothing about the airline industry and knows only what his executives tell him. he is a money guy . not an airline guy. was i impressed by him? not really . but i could tell that he was a no b/s kind of guy. when he speakes he sounds like he is scared and aslo looks like he is scared . i remember when i approached him to say hello as he was sitting , he jumped up as if i scared the living daylights out of him and immedeatly extended his hand so that i could shake it.

[post="259039"][/post]​

I like the way Mr. Lakefield sounds. God knows we have had enough B/S'ers around here to last a life time. Just because he respected and spoke to you like an equal doesn’t mean he’s scared, sounds like he not an arrogant SOB. Right now we need a money guy. We have been sweet talked by AA, BA and UA, they all ended up screwing us. I like what he’s done to UA. He let them know that if they don’t deal with us now they are going to have a hard time getting what they want once we are gone. Republic and Air Wisconsin are going to get the prime slots.

 

[LGA / 037]

The phrase "leveraged buyout" comes to mind. I'm no corporate finance expert, but, hypothetically, I could envisage scenarios like creating a new solvent 3rd company, that acquires (for a nominal amount) and then takes on the debt (restructured and renegotiated) for U and UAL. As I say, I'm no expert, so 1001 reasons why that might not be the mechanism, but I'm sure there are mechanisms possible other than UAL corp shelling out money and assuming the debt of U


This is an interesting scenerio. This isnt that common on Wall Street but did happen yesterday between Sun Gard Data Systems and Silver Lake Partners for $10.8 Billion ( See todays Wall Street Jornal Sec C-5) A bigger leveraged buyout was done to RJR Nabisco a few years back. Could it work for UAL and UAIRQ ? Possibly even with the combination of America West ? Consolidation is inevitable so any opinions how a "leverage buyout " could work ?

 

[Fly]

That may be true 700 but if you ask the active people if they want a job or if they are willing to walk away, I bet you get a resounding 'WORK' reply. This should be interesting.

Perhaps they'll just take part of the airline (like they did with PanAm) and then only take part of the employees too (like they did with PanAm) Anyone who didn't fall into the 'part' group, had to apply as a new hire.

 

[700UW]

I believe the laws have changed since then, if assets are transfered the employees are suppose to go also.

 

[funguy2]

Just a few points:

1.

As I have said for the past 3 years, US Airways and United Airlines have held different corporate combination talks with different scenarios. The different scenarios could have had either company the surviving business entity, such as when David Bronner said he was interested in buying United assets for US Airways.

Actually, USA320Pilot discussed, at length, why UAL could not be the surviving entity, including that UAL was fictiously missing DIP covenents, and that RSA would inject more money into US Airways to make it happen. Etops1's account "verifies" that US and UA have been talking (although US has probably been talking to anyone who will listen...), but that doesn't make his past statements more true. He was still wrong about RSA's injecting cash and UAL's missed DIP targets.

2.

If there is a merger, the US contracts contain Mohawk/Allegheny Labor Provision Protections, they have to be honored in a merger.

The IAM, AFA, CWA, TWU or AMFA dont have a clause that the TWU contracts contained.

What exactly are these provisions? It would seem to me that 30 year old, pre-deregulation labor agreements would be almost irrelevant to the competitive situation today. This would seem to be a potentially deadly clause, depending on what they contain. Can you elaberate please?

3. Combining two bankrupt companies will not make a profitable one. Still. While some economies of scale could be acheived (i.e. one Corp HQ vs two), both companies already have acheived many economies of scale (i.e. most aircraft fleets reach economies of scale at around 25-30 aircraft... This would help US's B767 fleet, but not the A330 fleet... All other fleets are already there...) Lastly, if UAL acquires US Airways, I believe (and correct me if I am wrong) UAL has higher labor rates than US Airways currently has. This would increase costs from their current, levels, not decrease them.

4. Furthermore, this does nothing to help the industry overcapacity. Unless UAL buys US Airways in order to shut down some portions of its system, industry overcapacity will remain, lack of pricing power will remain, high fuel costs will remain. In otherwords, not much changes. And in this environment UAL, US Airways, nor a combination of the two, can be profitable.

5. It sounds like, from Etops1's comments, that US Airways has until June... Certainly, unless the world changes overnight, these problems will not even be close to a solution in 2 to 3 months!