The Financial Times indicated yesterday afternoon that “US Airways and United are in merger discussions. United in turn is considering its own options in consolidation, including a combination with US Airways,†the people said.
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There has been a lot of buzz within CHQ the past two week’s and some indication to ALPA that the Tempe-based company was in advanced M&A talks, although the airline US Airways’ “executive suite†was in talks with was not disclosed.
Six major points surrounding a potential US Airways-United merger:
- Both companies are members of the Star Alliance, whereas Continental is not. This could permit US Airways, United, and its alliance partners to receive antitrust alliance immunity like Delta and Northwest have with their alliance partners in their merger.
- US Airways and United’s fleets would largely be compatible with US Airways moving towards virtually an all Airbus operation. According to a report released yesterday by Fitch Ratings, “compared with the other network carriers, US Airways' near-term cash obligations tied to debt maturities are relatively low. Debt maturities do not rise above $145 million in any year prior to 2014, when the company's secured term loan comes due. Debt levels will likely rise over the next several years, however, as the airline continues to overhaul its fleet and take delivery of new Embraer and Airbus aircraft. US Airways currently has 148 aircraft on firm order, more than any other legacy carrier, with 19 deliveries (14 Embraer E190s and five Airbus A320-family aircraft) scheduled in 2008. US Airways plans to use the new aircraft largely to replace retiring aircraft, primarily Boeing 737s and 767s, although it could also use new aircraft to grow capacity somewhat, if needed. Deliveries stretch out to 2017 and include 22 of Airbus's future A350-XWB wide body aircraft. Cash capital spending (net of financings) is forecast to be $385 million in 2008.â€
- In 2000 Stephan Wolf held a meeting with US Airways’ PIT-based pilots. At that meeting Wolf told attendees that United’s E&FA Department’s merger review indicated a US Airways-United merger would generate an additional $1.9 billion in revenue, which could be why the WSJ indicated “the (US Airways-United) synergies would also be "meaningfully higher" than the $1 billion-plus in annual revenue and cost savings number that Northwest and Delta have said they expect to generate in a merger.â€
- There has been some urgency surrounding labor talks with the IAM Mechanics ratifying their new joint contract and the IAM Fleet Service and IAM Maintenance Trainers recently agreeing to a TA. US Airways already has joint contracts with the CWA, TWU-Dispatchers, TWU-Simulator Engineers, and the TWU Ground School Instructors.
- The only labor groups without a new labor agreement or TA are the pilots and flight attendants. I believe tomorrow’s pilot representational vote result will determine how the company will proceed with the pilots and probably the flight attendants to reach new agreements.
- After discussion with a US Airways ALPA MEC member a US Airways – United merger would end the representational dispute between ALPA and USAPA. Why? The NMB will be required to hold another election if United and US Airways merge and USAPA wins the election because you cannot have two unions representing same class and craft. ALPA would win the new election, if it does not win the election tomorrow, because the United and America West pilots would hold the voting majority. This would probably cause the Nicolau Award to be implemented, but the parties would still need to deal with pilot seniority integration issues, but now the US Airways East pilots would be afforded the opportunity to deal with fences and restrictions because the Transition Agreement would remain in place.
Regards,
USA320Pilot
