Industry Consolidation?

PineyBob said:
What is wrong with UA as a code share? Please elaborate?
As far as a certain USA320pilot is concerned, we haven't liquidated yet. That's what is wrong.
 
Geez, the self-interest dressed up as objective logic is knee deep in here. What a load!

Obivious:

Some or one poster still thinks that there is a business plan/cost structure that is acheivable that will unlock financing for U to grow and expand and maybe be involved in a merger/acquisition. Since, I don't know the numbers, I guess this is possible, but maybe it isn't depending on how deep U is in and whether the employees are willing to take the bet that concessions will improve their medium-term employment prospects or not.

Many posters want U to fragment and for its labor groups to NOT have any hope in the future so as not to lower the bar for collective bargaining agreements. Fragmenting U would NOT be a huge disruption to the industry structure.

However, UAL is still in bankruptcy
a liquidation of UAL would be politically difficult for the Bush Administration (at least symbolically)
U has a VERY unique Chairman, who might be willing to try to save jobs. (I have no idea, but he's unusual and I think the only reason U is still here in this form)
If, I MEAN IF, there is a 'tipping point' where U labor is willing to go and that WILL open the flood gates of financing, then the world will turn for U and they, HP and or UAL or NWA or Branson or who knows might be willing to see some kind of combo. Some or one poster here does seem to hold out that possibility. Maybe it would be good for U employees, maybe not.

In any case, reading these posts has become tiresome because they do not address the ideas but rather the rhetoric and the motivation. At least U3230 is consistent with presenting ideas, even if he does tend to present them as fact. The rest of you ARE getting just as redundent and information poor and idea poor in your posts.
 
USA320Pilot said:
By the way, who first reported on this message board, before the news became public, that UAL may not qualify for the loan guarantee?

Regards,

USA320Pilot
Ummm... Except for the fact that the "news" that UAL does not qualify for an ATSB Loan has never been made public...

The article you posted reports on the OPINION of one Senator from Illinois. He may have an informed OPINION, but he still does not have the final say. There has been no public ATSB ruling on the matter. The Senator quoted has no seat on the ATSB Board. The only people who get decide if UAL qualifies for the loan are:

Edward M. Gramlich, from the Federal Reserve
Brian C. Roseboro, from the Dept of Treasury
Jeffrey N. Shane, from the Dept of Transportation

David M. Walker, from the GAO, is a non-voting member.

I don't see any senators from Illinois on that list.
 
700UW said:
Eastern never made it out of bankruptcy, so prepare for the end, and you could take a lesson in trade unionism from EAL's demise where they all stood strong and did not take Lorenzo's crap and the courts even removed him from EAL and banned him from ever running or owning an airline again. But hey, who are you to ever use the facts and the truth.
700,

This is not EAL, nor Lorenzo, it is a shift in the fundimentals of the airline industry.

Do you believe that US Airways employees, burning the airline to ground over round 3 will stop this trend?

Have you missed the news? The ALPA action, to remove Seigel and Cohen worked, and new management is here. They r trying to work with us.

Is there anyone on the planet, who you would rally behind? Pounding your chest over this senario would simply show union ignorance....

IMHO
 
UseYourHead said:
700,

This is not EAL, nor Lorenzo, it is a shift in the fundimentals of the airline industry.

Do you believe that US Airways employees, burning the airline to ground over round 3 will stop this trend?

Have you missed the news? The ALPA action, to remove Seigel and Cohen worked, and new management is here. They r trying to work with us.

Is there anyone on the planet, who you would rally behind? Pounding your chest over this senario would simply show union ignorance....

IMHO
Do you know this is not Lakefield's plan, it is Siegel's plan, nothing has changed except the band leader, plain and simple.

Ignorance? This management team has openly lied to its employees and violated the very same contracts they agreed too. They cannot be trusted at all and they have proved that beyond a reasonable doubt.

Maybe you are the one who is ignorant.
 
Talk of US combining with UA fails to consider the timing of how it will all happen. Although the UA board is very quiet on the subject, news reports indicate that the ATSB continues to collect information and drag out making a decision. Given that countries around the world are not willing to step in to bail out their airlines, the US will not step in to bail out UAL on the terms of the ATSB loan. UA and US employees both think there will be some sort of combination between the two. Most industry analysts are far less certain of the survival of either, with particular focus on US. Further, there will be outcries around the world if either UA or US acquires each other given that UA could only do it with an ATSB loan and US has one at the present. However, the ATSB is dragging out the decision making process because what it least wants to do is say no to UA in this environment. We are now down to 5 months and change away from elections; it is entirely possible a decision could come after the elections but before the changing of the guard in Washington. US doesn’t have five months to wait for the POSSIBILITY that UAL will fail and the even less likely scenario that US will have money or an investor willing to buy parts of UA.

It is highly possible that US will fail before a UAL ATSB decision is made and then separately that UAL will not their loan guarantee. UAL will not likely liquidate but they will have to entertain asset sales or a much more dramatic restructuring of their business model. Either way, its probably more likely than not that US will have passed into history by then.

The poll elsewhere on this board re: US survivability is unbelievable. Not sure how many of the voters are employees (maybe someone could put a poll out there and ask that only US employees vote in it) but there isn’t much hope for a company if a large number of people have given up already. For many long-term airline people, there is a point where moving on to another industry makes as much sense as bailing out of the airline industry. I suspect many US employees are pretty close to if not there already; as the economy improves but the airline industry does not, there is less and less incentive for people to stay in the airline industry.

US and UA employees should focus solely on survival on their own. There are precious few examples of successful mergers (from an employee standpoint of both companies) in the airline industry and none have occurred between even one sick airline, let alone between two.
 
USA320Pilot said:
Today The US Airways Board of Directors approved a compensation package for President and Chief Executive Officer Bruce Lakefield that was designed to be in line with CEO compensation at low-cost carriers Air Tran, America West, JetBlue and Southwest. Lakefield's base salary will be $425,000, which is the median base salary of the CEOs at AirTran, America West, JetBlue and Southwest.
Now, not that this is at all USA320's fault, but the company reporting $425,000 as the median base salary (judging from 2003 numbers) of the CEO's at LUV, AWA, JBLU, and AAI is purely fiction.

The numbers from the respective companies' proxy statements for 2003 are as follows (and again, we're speaking of CEO base salary, not including bonuses):
David Neeleman (JBLU): $200,000
Jim Parker (LUV): $330,773
Joe Leonard (AAI): $400,000
Douglas Parker (AWA): $550,000

Averaging the middle two to get the median results in $365,400, not $425,000. The average is $370,200, so he should have taken the average. Even including "other" compensation won't get the median up to $425,000, since Jim Parker was still under $400K including that and Joe Leonard had no "other" compensation. Herb made $450,000 last year but he's the Chairman of the Board, NOT the CEO.

You don't want to include Frontier's CEO since that drops the median down to Jim Parker's salary. I suppose that one could argue that Lakefield should get Doug Parker's salary of $550K since US Airways is trying to get to AWA's labor costs.

As for consolidation, I can't see any of the network carriers wanting to pick up UAIR as a whole in light of the industry's current situation. Everyone's trying to conserve cash and hopefully make it back to profitability in another year (if fuel comes down and the economy doesn't tank). Any potential acquirer would be saddled with UAIR's substantial debt (and the other airlines don't need any more debt!) as well as the most senior workforce in the industry, not to mention the fact that US Airways isn't making money with its current route structure. I suspect that most of the other network carriers would be more than happy to see UAIR liquidate and pick up assets like slots or gate leases at certain airports (and perhaps some of the newer aircraft) in a Chapter 7 auction.

The value of PHL as a hub to a network carrier gradually diminishes as WN continues to expand there; there's nothing to sell now at PIT since US gave up most of its long-term leases (not to mention that everyone else has one or more hubs within 500 miles anyway). CLT might have some value if it could be sold as a functioning operation. Slots and gate leases at DCA, LGA, and BOS (no slots at BOS) are pretty much all that's left, and even the value of the Shuttle brand/slots has dropped with competition from Acela. I can't see the 737's finding a home with any U.S. carrier unless one of the 737 operators took them on a short-term (< 5 years) arrangement to give them enough planes to pick up some ex-US routes. The engines on the A320's are only compatible with NWA's fleet, and no one else in the U.S. operates the A321.
 
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I agree that US Airways will not be involved in M&A activity now, but as I have said, once the financial picture stablizes (presuming it does), then the company will enter into a corporate transaction.

Management continues to let this be known both publicly and within the company.

In regard to the United alliance, my issue is that the company may not survive and it may be better for US Airways to seek another partner sooner than later.

During its formal reoganization United has had some tough breaks such as SARS, the Iraqi War, and now fuel prices. All of these have hurt their financial performance and the buzz I am hearing is that the company will not qualify for the loan guarantee. If true a second loan guarante rejection will dramatically change industry dynamics.

Regards,

USA320Pilot
 
USA320Pilot, I give us less than six months. There will be no M&A with this airline. This airline is so close to being 'runway kill' that it will cause a feeding frenzy with competitors picking at US Airways carcass . Sad, but more real a scenerio than what you are posting.
 
USA320Pilot said:
During its formal reoganization United has had some tough breaks such as SARS, the Iraqi War, and now fuel prices. All of these have hurt their financial performance and the buzz I am hearing is that the company will not qualify for the loan guarantee. If true a second loan guarante rejection will dramatically change industry dynamics.
USA320Pilot:

I would have to agree with you here. I think the Senator had some good points, such as UAL's problems in 2004 are not directly related to 9/11/01. However, I am sure UAL's argument is the events of 9/11 exascerabated UAL's problems and that without 9/11, UAL would not be in its current state of affairs. Thus, while not directly related, 9/11 is indirectly related to the BK filing, thus the loan should be approved.

This is kind of a double-edged sword for a US Airways supporter to swing. US Airways was affected by 9/11 as much as any other airline, especially due to the extended closure of DCA. However, much like UAL, US Airways' largest problems were not created by 9/11: A high cost structure, uncompetitive fares, a mixed-bag of aircraft, a senior workforce, and other vestiges of the PI-PSA-US merger. Therefore, there was a great deal of "buzz" against the US Airways ATSB loan application at that time, and yet US Airways got unanimous approval for its loan guarantee. It seems hard to say that UAL does not deserve the loan on the basis of the same argument that secured the loan for US Airways.

However, a good argument for UAL to be denied by the ATSB is US Airways abysmal financial performance since securing the loan. While the ATSB did issue the loan to US Airways for reasons not all directly related to 9/11/01, it has hardly allowed US Airways to be successful. Thus, the ATSB should not be on the hook for two failing airlines vs. one. This was the basic premise of a Time Magazine article on the topic a few months back, comparing the "successful" ATSB loan to America West to the "unsuccessful" loan to US Airways. It was discussed in these forums at length.
 
New Branson airline must meet ownership rules-U.S.
Friday May 21, 9:56 am ET


PRAGUE, May 21 (Reuters) - A new U.S. airline planned by Richard Branson must meet U.S. regulations on foreign ownership for it to get off the ground, United States Transport Secretary Norman Mineta warned on Friday.

The British entrepreneur has yet to file a business proposal with U.S. federal regulators.

Speaking to reporters during a trip to Prague, Mineta said the Bush administration would like to relax rules that limit the equity stakes of overseas-based investors in U.S. airlines to 49 percent to spur investment, but that for the moment the usual rules applied.

"Since we require U.S. citizenship to own the majority interest in a U.S. airline, if Mr. Branson were to use his capital to establish a Virgin Express in the United States... the test he's going to have to be able to meet is, is it a U.S. citizen that controls the airline," Mineta said.

"If he is the source of that capital, then it seems to me he would not be able to meet that test."

LINK
 

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