Leaked: US and UA in merger talks for over a month

[smoot4208]

I find it hard to believe we would sell the shuttle off...that actually is very profitable. We would only sell that if the DOT or DOJ made us. No way we would do that now

 

[USA320Pilot]

If a US Airways-United deal proceeds I believe US Airways will be the acquiring airline and United shareholders will get US Airways stock without a cash outlay similar in scope to the Delta-Northwest deal.

Furthermore, the two companies know what the DOJ requirements were to complete the 2000 merger attempt. To head off anti-trust concerns you could see some asset divestitures to Continental such as DCA/LGA slots. During the 2000 merger attempt Continental wrote a letter to US Airways’ “executive suiteâ€￾ offering to buy DCA slots.

Continental's cash position is strong and their Q1 loss was $80 million. However, United lost about $6 million per day or a staggering Q1 loss of $537 million. United reported they had $2.9 billion cahs on hand, but their cash burn rate is enormous. In fact, to help calm investor concern the company issued a press release today "reporting it was in compliance with its credit agreements. If United was in such good shape why would they need to release this press release?

See release.

As far as the Shuttle I would be surprised to see this asset sold. With AMR Eagle and Delta/Northwest operating in the market there is plenty of competition on the routes.

As far as pilot group numbers, if my memory serves me correctly the NMB said US Airways had 3,543 eligible voters and the AWA pilots had 1,770 voters for a total US Airways pilot group of 5,313 pilots. I believe United has about 7,700 pilots; therefore, the total pilot group would be slightly over 12,000 pilots.

Furthermore, if these two carriers combine the NMB would order another representational election and there would be about 7,700 ALPA and 5,300 USAPA voters; however, from the recent representational election results about 2,300 USAPA people would likely vote for ALPA.

In the morning US Airways will announce its Q1 financial results, it will hold its analyst/media conference call, and its State of the Airline meeting with employees. I believe we will hear more about the company's plans going forward and we could hear about M&A activity before the end of the week.

Regards,

USA320Pilot

 

[LGA Fleet Service]

If a US Airways-United deal proceeds I believe US Airways will be the acquiring airline and United shareholders will get US Airways stock without a cash outlay similar in scope to the Delta-Northwest deal.

With UAUA trading at $13.95 and LCC at $6.25 I'm having a hard time believing UA shareholders of any size will be lining up to make that deal.Especially the institutional holders like Pardus,they're fans of 'Buy low, sell high', not 'Buy high, sell low'.


The rest of the industry has watched Parker try to jam square pegs into round holes these past few years with no success,and I'm fairly certain there isn't a board of directors in the business that would accept his offer,much less his phone call.

Project Minnow indeed.

 

[767jetz]

With UAUA trading at $13.95 and LCC at $6.25 I'm having a hard time believing UA shareholders of any size will be lining up to make that deal.Especially the institutional holders like Pardus,they're fans of 'Buy low, sell high', not 'Buy high, sell low'.


The rest of the industry has watched Parker try to jam square pegs into round holes these past few years with no success,and I'm fairly certain there isn't a board of directors in the business that would accept his offer,much less his phone call.

Project Minnow indeed.

I agree 100%. I guess we'll have to wait until tomorrow to see. But IMO the money is still favoring a CO/UA deal, with US on the sideline, or possibly carved up between, CO/UA, AA, and NW/DL.

No one wants to touch the train wreck Parker created.

 

[UWCactus]

Though I rarely listen to the news, the local PHX news is reporting a possible UA/US merger. That was part of the business report on the morning newscast.

 

[crusher]

The question of what would US bring to a merger with UA is pretty simple when you ask the questions , Who is the dominant carrier in almost every airport along the east coast? Like it or not it is US. Throw in PHL which alone boards more int"l pax than all carriers combined at IAD , and you can see we do have quite abit of value. Where is most of the money in the country generated? The east coast. Where is the most profitable area of the country for any airline? The east coast. Where in the UAL network is their biggest hole? The east coast. and more specifically the northeast and the south. Who has a more complimentary fleet? US.

 

[leprechaun]

No one wants to touch the train wreck Parker created.

Now he'll have a bigger train to play with. Don't say bad things about your new boss.

 

[767jetz]

AP news story today about NW/DL defending their merger in Washington. Notice the following quote:

""We have an antitrust division that approves mergers left and right," Conyers said. If Delta-Northwest is approved, he expressed concerned that it will "result in a cascade of other mergers," including Continental Airlines-United Airlines and American Airlines-US Airways and lead to three mega-carriers competing only against each other.

Don't count your chickens until they're hatched.

Here's the story: LINK

 

[RowUnderDCA]

MUST....pant pant........ GRASP..... pant... pant pant.........STRAWS

Although I have no idea what will happen. I think almost anything is possible these days.

 

[Cosmo]

United reported they had $2.9 billion cash on hand, but their cash burn rate is enormous.

I see that the misrepresentation of United's financial situation is starting again.

To correct the quoted statement above with some facts, United had a negative cash flow of $80 million during the first quarter of 2008, or a daily burn rate of about $880,000. This was due in part to a debt pre-payment of $250 million during the quarter. Had that debt pre-payment not been made, United would have had a positive cash flow of $170 million during the quarter. And the carrier's unrestricted cash balance was $2.92 billion. When added to its restricted cash of $730 million, United's total cash amounted to $3.65 billion.

In contrast, US Airways reported a first quarter 2008 negative cash flow of $167 million or a daily burn rate of more than $1.8 million, all without any reduction in the carrier's debt level. As a result, US Airways' unrestricted cash total was a little less than $2.4 billion.

While it is certainly clear that neither United nor US Airways gave a stellar financial performance during the first quarter of 2008, I believe that these numbers put a different perspective on which of those two carriers is in a stronger financial position at the moment.

Edited to correct US Airways' unrestricted cash amount.

 

[767jetz]

While it is certainly clear that neither United nor US Airways gave a stellar financial performance during the first quarter of 2008, I believe that these numbers put a different perspective on which of those two carriers is in a stronger financial position at the moment.

Good to see you are here to add some rational interpretation to the financial numbers. Keep up the good work!

 

[gaucho99]

I see that the misrepresentation of United's financial situation is starting again.

To correct the quoted statement above with some facts, United had a negative cash flow of $80 million during the first quarter of 2008, or a daily burn rate of about $880,000. This was due in part to a debt pre-payment of $250 million during the quarter. Had that debt pre-payment not been made, United would have had a positive cash flow of $170 million during the quarter. And the carrier's unrestricted cash balance was $2.92 billion. When added to its restricted cash of $730 million, United's total cash amounted to $3.65 billion.

In contrast, US Airways reported a first quarter 2008 negative cash flow of $167 million or a daily burn rate of more than $1.8 million, all without any reduction in the carrier's debt level. As a result, US Airways' unrestricted cash total was a little less than $2.1 billion.

While it is certainly clear that neither United nor US Airways gave a stellar financial performance during the first quarter of 2008, I believe that these numbers put a different perspective on which of those two carriers is in a stronger financial position at the moment.

I'm not sure your information is accurate. Are you saying UA would have been profitable had they not paid the $250 million dollar debt pre payment?

In any event, one way to judge an airline's financial position is by their cash on hand as a percent of their last 12 month's revenues. Of the six Legacy carriers, US has the second best position and UA the second worse:

1. NW - 29.0
2. US - 24.0
3. AA - 21.3
4. CO - 18.3
5. UA - 17.8
6. DL - 14.4

Certainly other factors are involved, but if you're looking at which airlines might be getting into trouble soon, you can start from the bottom and work up. US is situated pretty well while UA is not.

 

[EMBFA]

I hope it happens just so 'Fly' and '767jetz' can finally become part of their favorite airline, and call their favorite forum their own.

 

[jimntx]

As Mark Twain once said, "There are lies. There are damn lies. And then there are statistics."

It's interesting how a number of posters take one item from tons of financial data or create an item by multiplying/dividing/adding/subtracting unrelated data and comes up with a complete measure of a company's health.

Cosmo did not say that UA would have been profitable if the debt payment had not been made. He said that UA would have been cash flow positive for the quarter if the debt had not been paid. Cash flow and profit are two entirely different things.

Under generally accepted accounting standards (FASB), debt payment/pre-payment does not count toward profit/loss, but it does affect cash flow.

 

[Fly]

I hope it happens just so 'Fly' and '767jetz' can finally become part of their favorite airline, and call their favorite forum their own.

Actally, if it does happen, I want to fly with you. If you are anyhing like your online persona, it will be one wickedly fun layover. Cheers!

Just to meet some of the people here would be a blast.