I am not here to shoot United Airlines or its employees, but the fact is the two companies have been trying to integrate since 1995. I do not like it any more than any body else, but it's true.
The point of this thread was to discuss US Airways and senior management's desire to enter into some form of M&A activity -- with the thought that US Airways and America West may extend their reach as the first business competition to restructure into a truly competitive network airline/LCC hybrid airline. But, whenever United is discussed, certain United employees come out of the woodwork disputing everything I say, regardless of the point.
For example, I have said repeatedly that United is going to have trouble with the loan guarantee and even mentioned it again today and guess what, so did the New York Times.
Earlier today the Times reported the chief executive of United Airlines, Glenn F. Tilton, is, meanwhile, conducting a dogged campaign to win public support for his company's application for $1.6 billion in loan guarantees from the government. United has been in bankruptcy protection since December 2002, after its first application, for a $1.8 billion package, was rejected by the Air Transportation Stabilization Board.
The board has no deadline for deciding on United's request, but the airline expects a ruling soon.
Rival airlines complain in particular about the case of United Airlines. One competitor circulated an analysis this week disputing United's claim in its second application that it had achieved $2.5 billion a year in labor-cost savings; the analysis says that United has fallen $800 million short, in part because it has not saved as much on pension contributions as it expected, despite legislation meant specifically to help it.
United said that it stood by its reckoning of the savings and that it would post an operating profit in 2005 (a goal
pushed back from this year) and a net profit in 2006.
There is also the question of political influence. The Congressional district represented by J. Dennis Hastert, the speaker of the House, is in Illinois, United's home state, and Mr. Hastert has spent months lobbying tirelessly for United's application. United executives and employees donated $10,200 to Mr. Hastert's 2002 re-election campaign, according to Opensecrets.org, a Web site that tracks political contributions.
"There's an immense amount of political pressure being applied,'' said Senator Peter G. Fitzgerald of Illinois, who like Mr. Hastert is a Republican. Senator Fitzgerald cast the only vote against the bailout package in the Senate in 2001.
The political atmosphere surrounding the United application "is exactly why we don't want the government bailing out individual businesses," Mr. Reich said. "The politics take over." Instead, he said, "there is a perfectly logical and economically sound process that airlines can use, and that's reorganization under bankruptcy."
Similarly, there is
no guarantee that United, which has so far kept its global route structure largely intact in bankruptcy, can
escape having to make more cuts even if its application is approved.
United said recently that it expected its cost for jet fuel to be $450 million higher this year than it forecast in the business plan submitted to the loan board in December. Because it is in bankruptcy, the airline has been unable to hedge its fuel costs with futures contracts, and the pension-cost relief under the new law, considered crucial to its loan application, will be
eaten into by the fuel bills.
See Story
USA320Pilot concludes: Who first wrote on this board many of the points listed in the New York Times column? Again, I take no special pleasure in bringing painful news to United supporters and simply report the news to the best of my knowledge, but I am tired of people "shooting the messenger". Thus, why is every US Airways M&A thread hijacked by United employees? The purpose of this thread was to discuss reports that US Airways and America West may integrate and boom -- the United employees hijack the thread with unprofessional comments and language. Again, I want nothing to do with United Airlines and I wish nothing negative to happen to the company, However, my principal concern is the well being of US Airways and all of its stakeholders.
Respectfully,
USA320Pilot
