Could Us Airways Merge?
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FrugalFlyerv2.0
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While RSA has money, I think Bronner can make a better (or wiser?) investment with the RSA money than the airline industry.Chip Munn said:
And, I'm no merger expert, but I think that given the recent U/UAL 'history' from a few years ago - a U/UAL merger at this time would make the Continental/Frontier/NewYorkAir/PeoplExpress merger of the 1980's look like a walk in the park - regardless of who purchases what assets.
Just my $0.02
airlineorphan
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On merger obstacles or the lack thereof (not a prediction of the likelihood of a merger):
Though it might seem true on the surface of it all, a lack of cash or a weak financial position is not an insurmountable obstacle to a merger between two companies. There are plenty of options for mergers for cash-strapped companies, and in some ways, some pressures towards consolidation.
There is the stock swap option: That's how the Air France-KLM merger was done. Alitalia will probably join that merger using the same method in 2004.
Also, if those with investment capital want a consolidation (towards the end of reducing capacity and increasing economies of scale), the money can be made available.
Whether Chip is correct on his merger musings or not, it's quite likely that some game is a-foot. The Mesa-ACA imbroglio certainly looks bigger than what meets the eye, as far as I'm concerned.
Everyone who has noted that an operational merger would end up being a major mess is correct, but the Air France-KLM merger has not been done as an operational merger. They merged into a holding company which hovers above the two operations. So seniority integration and the like is being skirted at those companies. Somewhere down the line, there may be an operational combination, but for now, it appears they are planning to primarily merge the management of the operations in what may look a lot like a code-share between two subsidiaries.
Of course, it can be assumed that the needs and concerns of employees (including the dutifully stated goal of "preserving as many jobs as we can") are last on the list of priorities of whatever strage brew is being concocted.
Happy Halloween!
In solidarity,
-Airlineorphan
Will "Dave" dress up again this year? :disguise: :disguise: :disguise:
Though it might seem true on the surface of it all, a lack of cash or a weak financial position is not an insurmountable obstacle to a merger between two companies. There are plenty of options for mergers for cash-strapped companies, and in some ways, some pressures towards consolidation.
There is the stock swap option: That's how the Air France-KLM merger was done. Alitalia will probably join that merger using the same method in 2004.
Also, if those with investment capital want a consolidation (towards the end of reducing capacity and increasing economies of scale), the money can be made available.
Whether Chip is correct on his merger musings or not, it's quite likely that some game is a-foot. The Mesa-ACA imbroglio certainly looks bigger than what meets the eye, as far as I'm concerned.
Everyone who has noted that an operational merger would end up being a major mess is correct, but the Air France-KLM merger has not been done as an operational merger. They merged into a holding company which hovers above the two operations. So seniority integration and the like is being skirted at those companies. Somewhere down the line, there may be an operational combination, but for now, it appears they are planning to primarily merge the management of the operations in what may look a lot like a code-share between two subsidiaries.
Of course, it can be assumed that the needs and concerns of employees (including the dutifully stated goal of "preserving as many jobs as we can") are last on the list of priorities of whatever strage brew is being concocted.
Happy Halloween!
In solidarity,
-Airlineorphan
Will "Dave" dress up again this year? :disguise: :disguise: :disguise:
OP
USA320Pilot
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I was just wondering, who is dreaming....
Well my message board friends, it's time for me to take my kids out for Halloween. Have a good night and I'll see you on Sunday.
Regards,
Chip
Well my message board friends, it's time for me to take my kids out for Halloween. Have a good night and I'll see you on Sunday.
Regards,
Chip
Chip,Chip Munn said:
What I don't understand is why you take every little word from Siegel or Bronner so seriously? You seem to think that every thing these guys say is the biblical truth. Most of the speeches are just brainstorming sessions and nothing more. All CEO's give these type of speeches and with all kinds of grand assesments and plans....most of which never come to fruition.
Coud U and UAL merge sometime down the line? It's certainly possible, but far from a guarantee.
Will the merger be successful? Probably not. In the history of this industry (and many other industries), mergers don't work. Merger's historically have not driven down costs. In fact, just the opposite has happened. Maybe UAL and U would be different, but given the current management teams I doubt it.
Right now, neither carrier is in a position to merge. U and UAL need to worry about fixing their own problems (hint: its not just a cost problem).
As for who would be the succesor if a merger occured, I tend to think UAL would have the upper hand. While U may have gotten a head start getting through BK, in the last few months UAL has done far more to recover while U has been stagnant. Not to mention that UAL has a lot of valuable assets to bank on while U has very little of value (even the crown jewel of PHL is turning into an LCC haven).
Cosmo
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This statement is not totally correct -- United is paying current landing fees and a significant amount of aircraft and other leases, as can be seen from looking at the numbers in the carrier's press release (here) with the 3rd quarter financial data. As for the other things, United is still serving LAX, SFO, DEN, ORD and JFK/LGA/EWR, so the carrier can't owe those cities too much or it would have been evicted already from one or more of those airports.Chip Munn said:
To back up your claim that "United is not paying all of its bills", please tell us the amount that United did not pay during the 3rd quarter (and be sure not to count principal payments on the municipal bonds and the EETCs because that doesn't affect the income statement). That way we can then better compare United's "real" results with those recorded by US Airways.
Cosmo
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Chip:
You didn't answer my questions from a post I made earlier today that took issue with some of your statements. So here are the questions again:
1.) If United is so "constrained" for cash, why is it selling only a small fraction of its shareholding in Orbitz?
2.) If United can get a $2 billion ATSB loan, even if it comes with the condition that there must be a merger with US Airways, why wouldn't United then simply buy US Airways with the money and thus be the surviving carrier (remember, the loan would be to United, not US Airways)? Your assumption that United would simply hand the ATSB's $2 billion to US Airways and say "Buy us!" strains logic to the breaking point.
You didn't answer my questions from a post I made earlier today that took issue with some of your statements. So here are the questions again:
1.) If United is so "constrained" for cash, why is it selling only a small fraction of its shareholding in Orbitz?
2.) If United can get a $2 billion ATSB loan, even if it comes with the condition that there must be a merger with US Airways, why wouldn't United then simply buy US Airways with the money and thus be the surviving carrier (remember, the loan would be to United, not US Airways)? Your assumption that United would simply hand the ATSB's $2 billion to US Airways and say "Buy us!" strains logic to the breaking point.
767jetz
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OK everyone. Incase you all missed it, pay attention here...Chip Munn said:
All of Chip's UCT, ICT, PIT hub negotiations etc. were supposedly based on "informed sources."
Chip just admitted in a previous thread that he believes the UCT is now dead. (surprise, surprise!) So we can all conclude that his sources were wrong, or at least are no longer accurate. (I prefer the former)
Chip now also admits that the merger discussion is purely his opinion.
So Chip, if your informed sources were wrong, why should anyone believe that your personal strategic analysis will be any more accurate.
And no I'm not shooting the messenger.
I think it's time to take off the rose colored glasses, and start looking at things with a more realsitic perspective.
767jetz
firstamendment
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AA191, I take it with AA in your screen name, you might work for American Airlines? Oh yeah, I'm sure the employees at US are licking their chops for AA to buy us and staple our names to the bottom.AA191 said:
Thanks...but NO THANKS.
firstamendment
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Shakashaka said:
Could you please give me a reliable source, quote, or link that refers to the RSA questioning of their US investment? I would really like to see that. I keep up with these things and have seen nothing.
1. UAL might be restricted from selling the entire stake by various covenants and other obligations entered into when Orbitz was created. Additionally, UAL could stand to benefit from subseqent Orbitz sales if the Orbitz stock should rise in value in the future.Cosmo said:
2. United cannot buy US for several reasons. First and foremost, the UAL creditors would have a fit over reorganization money being diverted from them towards a purchase of US. Second, UAL would have no choice but to pay cash for US, as the current UAL equity has no value. Third, no US shareholder in his or her right mind would seriously consider a proposal from a bankrupt company, restructuring progressnotwithstanding.
As Chip mentioned, it is far easier from a legal and practical standpoint for US to acquire UA (though I fully expect that the enlarged airline would take United's name). I'm not saying that a merger is in the works, but should wedding bells ring, it makes far more sense for US to be the "survivor" (though its name would likely go away) than UA.
UAL will have "equity shares" right after emergence. But your conclusion really makes a lot of sense AVEK, one airline made a quarterly operating profit while still in BK, without all of the cost cuts in place. the other LOST money (operationally) despite already realizing all the benefits of restructuring. And you contend the money losers would be the survivor.....right.... 
.
.
OP
USA320Pilot
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It's much easier to cut your loses in bankruptcy when you do not pay your bills, such as the municipal bonds at all of United's hubs except Dulles.
In fact, I bet if US Airways did not pay its bills at its hubs it would have been profitable.
United cannot emerge from bankruptcy without an asset sale because nobody will lend them money.
US Airways had exit financing lined up before it filed, however, here we are nearly 11 months after United's filing and it still does not have exit financing. How come?
Judge Wedoff did not give United the requested second six month extension to have the sole right to file a POR and instead granted five months. The second extension expires in early March, thus United has four short months, to fix four key problems: the municipal bond issue at the UCT airports, the pension, EETCs, and the Dulles/Mesa/ACA fiasco.
If the Denver Posts comments today (that United's planes are booked more fully and at higher fares than last year, analysts predict a fourth-quarter loss in the range of $400 million to $500 million," not including bankruptcy costs) come true, than United could be in deep, deep trouble by the first week in March when the POR must be filed, where the airline could lose about $1 billion in Q4 and Q1, not including bankruptcy costs.
With senior management of the two companies spending a lot of time together the past two weeks something is going to happen and I doubt a bankrupt company, who is forecast to lose an incredible amount of money, will have a POR in place in four short months.
Therefore, United will sell assets, but it's unclear what and if the deal will be a UCT, ICT, a derivative of the UCT/ICT, or an outright merger.
Regards,
Chip
B)
In fact, I bet if US Airways did not pay its bills at its hubs it would have been profitable.
United cannot emerge from bankruptcy without an asset sale because nobody will lend them money.
US Airways had exit financing lined up before it filed, however, here we are nearly 11 months after United's filing and it still does not have exit financing. How come?
Judge Wedoff did not give United the requested second six month extension to have the sole right to file a POR and instead granted five months. The second extension expires in early March, thus United has four short months, to fix four key problems: the municipal bond issue at the UCT airports, the pension, EETCs, and the Dulles/Mesa/ACA fiasco.
If the Denver Posts comments today (that United's planes are booked more fully and at higher fares than last year, analysts predict a fourth-quarter loss in the range of $400 million to $500 million," not including bankruptcy costs) come true, than United could be in deep, deep trouble by the first week in March when the POR must be filed, where the airline could lose about $1 billion in Q4 and Q1, not including bankruptcy costs.
With senior management of the two companies spending a lot of time together the past two weeks something is going to happen and I doubt a bankrupt company, who is forecast to lose an incredible amount of money, will have a POR in place in four short months.
Therefore, United will sell assets, but it's unclear what and if the deal will be a UCT, ICT, a derivative of the UCT/ICT, or an outright merger.
Regards,
Chip
B)
Light Years
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I do not think now is the time to even bother discussing this. Maybe at some point in the future, but right now the very idea of major network carriers PERIOD is under attack, as are the carriers themselves, and your jobs.
Four pages of a p**sing match, every time... I always find it amusing how people are about thier airlines. Its like your little brother, you can make fun of them but if someone else does they're dead. Having pride in ones company is great, but people whos identity is directly linked to thier employers route networks, assets, and financial stats have always disturbed me.
That said, for those who are putting so much emphasis on names and reputations, lets take a look at history...
"They'd never let Pan Am go under."
"United will always be a domestic airline."
"Our smile just got wider."
"They'd never let TWA go under."
"Southwest could never come out East."
"United- US Airways? It's a done deal."
"Regional jets are a novelty."
"US Airways will be gone by the start of 2003."
"We will treat TWA's employees fairly."
"Low fare carriers provide unsafe, poor service, on aging aircraft."
"British Airways and USAir, a match made in heaven."
"Trump Shuttle's really gonna take off, everything he touches turns to gold."
"They can't furlough us, it's in our contract."
"PeoplExpress, what a great airline- they're flying overseas now!"
"Nobody will fly AirTan, they know its ValuJet."
"JetBlue? They'll never be successful."
Its a crazy industry where the opposite of what anyone thinks is usually what happens. Which is why I say Shuttle America is buying United Airlines, US Airways will end up an exclusively an Inter-Asia airline, and Southwest will operate a standardized fleet of Airbus 340s.
Four pages of a p**sing match, every time... I always find it amusing how people are about thier airlines. Its like your little brother, you can make fun of them but if someone else does they're dead. Having pride in ones company is great, but people whos identity is directly linked to thier employers route networks, assets, and financial stats have always disturbed me.
That said, for those who are putting so much emphasis on names and reputations, lets take a look at history...
"They'd never let Pan Am go under."
"United will always be a domestic airline."
"Our smile just got wider."
"They'd never let TWA go under."
"Southwest could never come out East."
"United- US Airways? It's a done deal."
"Regional jets are a novelty."
"US Airways will be gone by the start of 2003."
"We will treat TWA's employees fairly."
"Low fare carriers provide unsafe, poor service, on aging aircraft."
"British Airways and USAir, a match made in heaven."
"Trump Shuttle's really gonna take off, everything he touches turns to gold."
"They can't furlough us, it's in our contract."
"PeoplExpress, what a great airline- they're flying overseas now!"
"Nobody will fly AirTan, they know its ValuJet."
"JetBlue? They'll never be successful."
Its a crazy industry where the opposite of what anyone thinks is usually what happens. Which is why I say Shuttle America is buying United Airlines, US Airways will end up an exclusively an Inter-Asia airline, and Southwest will operate a standardized fleet of Airbus 340s.
