Industry Consolidation?

[USA320Pilot]

737nCh11:

737nCh11 said: 'So in other words you can't think for yourself. You seem content to let journalists lead you down the primrose path."

USA320Pilot: Nope, I find out information from company, union, news media, analyst, and consultant sources. My point is simple -- Dow Jones -- the owner of the Wall Street Journal simply confirmed what I have been saying all these months. It's no different than when David Brooner said in multiple interviews that he was interested in acquiring United assets for US Airways.

By the way, if US Airways is successful in its "Transformation Plan" I understand some for of the UCT could still occur. Will it? I do not know but it's not off of the table.

On Friday ALPA MEC Chairman Captain Bill Pollock said, "I expect this Transformation Plan, if properly implemented, to solve US Airways’ structural and operational problems while achieving profitability. It must allow US Airways to evolve, survive and prosper in an industry that is facing increasing competition by the low cost carriers that are clearly preferred by both our business and leisure passengers."

By the way, what's your opinion of the USA Today report that Federal officials have been lobbied more quietly on another sensitive topic: airline consolidation? US Airways has been building a case in Washington that an airline merger wouldn't be a bad thing. "We've been very frank with regulators and legislators that consolidation is the inevitable next step," says US Airways executive Chris Chiames.

Regards,

USA320Pilot

 

[Fly]

USA320Pilot Posted on May 17 2004, 10:04 PM

US Airways and United have tried to merge twice

Twice?!? I remember once (it was shot down)....do you suppose the second time was in your bed? BTW, "a failed attempt to merge with UAL Corp." is not quite the same as "US Airways was seeking to acquire all or parts of United Airlines". Not even close. Little FYI, you must have $$$ to buy United Airlines.....USAir is ready to file BK again, not buy another airline with more old employees.


Suggestion: go check out other airline forums, they pretty much sum up the future for you USA320Pilot

 

[Busdrvr]

"My point is last month Dow Jones reiterated what I said on this website that US Airways was seeking to acquire all or parts of United Airlines, presumably with RSA providing the financing."


"Last month Dow Jones Newswires said the reason US Airways emerged from bankruptcy early was to merge with United."

So which was it? was U looking to "merge" with UAL or were they looking to "aquire all or part"? There IS a diff you know. If true, it proves one simple fact, U IS BEING RUN BY A GROUP OF COMPLETE IDIOTS!!! I can say I'd like to buy the Taj Mahal, but do I really have the ability? Is my statement credible? Is it for sale? would you consider me a fool for even suggesting I could do it?

 

[Fly]

There's a house down the street that just went up for $1.7 million. I think I'd like to aquire all or part of it.

 

[USA320Pilot]

Fly:

United Airlines attempted to acquire US Airways in 1995 and then again in 2000.

In regard to the UCT, ICT, or merger, the companies have discussed different options as market conditions changed. The industry has had many significant cyclical and permanent market changes: the September 11 attacks, the sluggish economy, increased security costs, skyrocketing fuel prices, and yield deterioration due to Internet booking and relentless LCC expansion.

It's unclear if a deal will unfold with United and I hope one does not occur for US Airways' sake. After all of their cuts, United lost more money in the first quarter than any airline in the world and they cannot hedge (which is probably a bad idea now to buy futures and/or options). The company has said its 2004 fuel expense will exceed its ATSB application forecast by over $450 million in 2004 and today jet fuel spiked to $1.19 per gallon, with the highest prices on the West Coast.

I believe it would be in US Airways' best interests to dump United -- both as a M&A candidate and code share partner -- and move on with other M&A options since the USA Today reiterated last Friday what I have been reporting that Federal officials have been lobbied more quietly on another sensitive topic: airline consolidation. Faced with the possibility of financial failure, US Airways has been building a case in Washington that an airline merger wouldn't be a bad thing. "We've been very frank with regulators and legislators that consolidation is the inevitable next step," says US Airways executive Chris Chiames.

By the way, if US Airways can successfully restructure David Bronner has said numerous times RSA would acquire another airline for US Airways or the assets of another carrier.

Regards,

USA320Pilot

 

[USA320Pilot]

Fly:

Thanks for the professional and informative post. With all due respect, you can do better than that.

Regards,

USA320Pilot

 

[BoeingBoy]

Seems easy enough to settle.....

1) post a link or the text of the DJ's article so we can all see if they said that the reason for emerging from BK was to merge with UAL OR if they ran a wire story that quoted an unnamed aviation source that claimed that.

2) post a link or the text of a filing with the SEC or any other government body concerning a merger attempt between UAL and US in 2000.

Jim

 

[Fly]

You know what I find amazing? Your ability to fool yourself into believing that somehow US Air is on top of the world and going to acquire, merge, buy, consume, etc. anything. United would have to be the easiest airline to acquire if money were available, BUT IT's NOT!

 

[USA320Pilot]

BoeingBoy:

BoeingBoy said: 1) post a link or the text of the DJ's article so we can all see if they said that the reason for emerging from BK was to merge with UAL OR if they ran a wire story that quoted an unnamed aviation source that claimed that.

USA320Pilot responds: Click here

BoeingBoy said: 2) post a link or the text of a filing with the SEC or any other government body concerning a merger attempt between UAL and US in 2000.

USA320Pilot responds: You have got to be kidding right. Are you stating that US Airways and United did not try to merge a few years ago?

Respectfully,

USA320Pilot

 

[TheLarkAscending]

USA320Pilot responds: Click here

USA320Pilot responds: You have got to be kidding right. Are you stating that US Airways and United did not try to merge a few years ago?

The whole thing was according to one industry source. My oh my, just imagine with a great deal of poetic license whom that may have been and where they gathered that questionable information. Give me a freakin' break! Unnamed industry source could be just about anyone. I know a college kid that works as an airline consultant. That, by journalistic definition, could be an unnamed industry source. I'd quit using that as an example of a proved reason US emerged early. It isn't very credible, and as we know you're all about credibility.

Did you ever hear the expression "Give them a button and they'll spin you a coat"?

You epitomize that yarn weaving expression to a T, 320.

Just for the record, I'm certain Jim was simply attempting to point out that since you don't intend to go tit for tat with all these people (although you do and you were), he was expressing, politely, a way for you to substantiate your claims without the forgone tit for tat garbage I'd just suffered through looking for real information. :angry:

 

[geo1004]

Wow. You guys are a bunch of kids. Why not let someone/anyone post an opinion or a link and leave it at that? Take it for what it is worth. If you think it's bunk than move on. All of this "where is the PROOF crap" is a waste. Some people didn't learn to play nice when they were in kindergarten!

 

[PITMTC]

Thank you geo1004, you are not alone on this one.

 

[RowUnderDCA]

Wow. You guys are a bunch of kids. Why not let someone/anyone post an opinion or a link and leave it at that? Take it for what it is worth. If you think it's bunk than move on. All of this "where is the PROOF crap" is a waste. Some people didn't learn to play nice when they were in kindergarten!

Hear. Hear.

 

[BillLumbergh]

No personal attacks. You've already been warned about namecalling.

Final warning.

 

[funguy2]

Listen folks, this is a forum, a place for debate. The best debates have informed viewpoints, and some credible information backing those viewpoints.

I for one, don't necesarily believe the revisionist history about one industry source calling US Airways emergence based on a merger with US Airways. However, its possible that somebody thought that could be a possible side benefit of early emergence. As it turns out, it didn't matter in terms of a merger anyway, but it did matter in terms of US Airways getting its "ducks in a row". That is clearly evident now.

Second, just because Dow Jones reports something, does not mean its true. And Dow Jones' crystal ball is no clearer than anyone elses. Let's break it down:

Federal officials have been lobbied more quietly on another sensitive topic: airline consolidation. Faced with the possibility of financial failure, US Airways has been building a case in Washington that an airline merger wouldn't be a bad thing.

"We've been very frank with regulators and legislators that consolidation is the inevitable next step," says US Airways executive Chris Chiames.

US Airways is in far worse shape than it was three years ago when Justice nixed its deal with United, citing the likelihood of higher fares and reduced competition. The airline hasn't made money since leaving bankruptcy protection last year. Its CEO and chief financial officer recently resigned, and the airline suggested in a securities filing this month that it might be headed back into Chapter 11.

In the case of US Airways, a prospective buyer could use the "failing firm" argument to win Justice's approval. That means the company being acquired can't survive on its own, and letting it disappear from the marketplace would be worse for consumers than a merger. In the only big airline acquisition in recent years, American Airlines used that defense against antitrust action when it bought TWA in 2001. TWA was entering bankruptcy court for the third time.

Questions:

1. What "federal officials"? DOJ? DOT? FAA? ATSB? The junior senator from Iowa?

2. "Consolidation is the next step". Well consolidation in the form of a merger may be in the best interests of US Airways stakeholders - shareholders, employees, management, etc, however, so far there is very little evidence that anyone wants to buy them whole. A few months ago, US Airways solicited bids for parts of the whole of its operation. It got four offers for relatively small parts of its operation. Not exactly a ringing endorsement that there are a lot of BUYERS out there.... And afterall, somebody must BUY in order for US Airways to SELL.

Also, I will again note that consolidation can occur by the liquidation of US Airways. Not a particularly attractive option for US Airways, but a much less expensive way for the rest of the industry to deal with it.

3. The fact that US Airways is trying to parade itself around as a "failing firm" does not bode well for investors or management. While it is true, management has had many, many, many missed opportunities to ensure that this company was not a "failing firm". TWA was a "failing firm" for many years before its acquistion by AMR. However, one of the reasons, in my opinion, that AMR bought TWA was that it was paired down to only a productive part... the STL hub. JFK had been dismantled, fleets rationalized etc. US Airways is VERY FAR from being as simplified as TWA was, when it was acquired as a failing firm.

Additionally, the AMR-TWA announcement surprised the entire industry. Could somebody use the "failing firm" clause to buy US Airways? Yeah, sure. Does that mean there is anybody out there who wants to? I doubt it. The industry generally recognizes that there is too much high cost capacity out there... So why buy additional high-cost capacity?

If US Airways goes to liquidation, I think you'll see a battle for certain assets, but I don't think anybody is crazy enough to buy it whole and try to fix it. "Failing firm" clause or not. UAL is certainly in no position to acquire US Airways, or vice versa. Lastly, US Airways parading itself around as a "failing firm" will not encourage S&P (or was it Moody's) from removing the ATSB loan restrictions associated to the "going concern" clause. IIRC, the unrestricted cash on hand requirement could drop from $700mil to $500mil if the credit agency (sorry, I forget which one) removed the "going concern" clause.