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USA320Pilot
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Bear96:
The industry and corporate fundamentals have rapidly changed since United and US Airways called off their last merger attempt on July 27, 2001. September 11, the dot.com meltdown, stock market crash, sluggish economy, bankruptcy, SARS, the Iraqi War, LCC expansion, Internet booking, and skyrocketing fuel prices have all changed the game.
Here's what we know for sure:
1. David Brooner has publicly said four times he is interested in acquiring United assets.
2. Dave Siegel has publicly stated in speeches and in internal communications US Airways will be involved in a corporate transaction.
3. Airline analysts and industry observers like Mike Boyd, Philip Baggaley, Ray Neidl, William Lauer, Gary Chase and others have said US Airways and United could be involved in a deal.
4. Richard Branson has said on two occasions he is involved in discussions with US Airways about Virgin USA.
5. Yesterday Standard & Poor's credit analyst Philip Baggaley indicated the best option for US Airways is to be involved in a merger or a corporate transaction. "Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways," Baggaley said.
6. Ben Baldanza has let it be known inside of CCY that his desire is for US Airways to acquire United, keep the corporate headquarters in the Washington area, keep the current US Airways paint scheme and word mark, and call the combined business entity United Airlines or United Airways.
7. On April 20 Dow Jones News Service reported "Siegel chose to get out of bankruptcy as soon as possible in a failed attempt to merge with UAL Corp.," which I know to be a true statement.
Will a deal occur? I believe one will for US Airways in the not-so-distant future, but with the uncertainty surrounding the industry, competitors, and United and US Airways, it is still uncertain what the final form will be. I suspect one of the reasons the Arlington-based airline is realigning its network is pre-merger planning to more easily integrate with another carrier that has more western market share and to consolidate strength(s).
Interestingly, yesterday Reuters reported there are many private equity firms right now looking at the airline sector. Hummmm???? I'm unsure of the final format because there are so many moving pieces, but one thing I do know, with airline balance sheets in their current condition it's going to take venture capital to pull off a deal, which is something US Airways currently has immediate access to with its chairman of the board having deep pockets and M&A interest.
Respectfully,
USA320Pilot
The industry and corporate fundamentals have rapidly changed since United and US Airways called off their last merger attempt on July 27, 2001. September 11, the dot.com meltdown, stock market crash, sluggish economy, bankruptcy, SARS, the Iraqi War, LCC expansion, Internet booking, and skyrocketing fuel prices have all changed the game.
Here's what we know for sure:
1. David Brooner has publicly said four times he is interested in acquiring United assets.
2. Dave Siegel has publicly stated in speeches and in internal communications US Airways will be involved in a corporate transaction.
3. Airline analysts and industry observers like Mike Boyd, Philip Baggaley, Ray Neidl, William Lauer, Gary Chase and others have said US Airways and United could be involved in a deal.
4. Richard Branson has said on two occasions he is involved in discussions with US Airways about Virgin USA.
5. Yesterday Standard & Poor's credit analyst Philip Baggaley indicated the best option for US Airways is to be involved in a merger or a corporate transaction. "Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways," Baggaley said.
6. Ben Baldanza has let it be known inside of CCY that his desire is for US Airways to acquire United, keep the corporate headquarters in the Washington area, keep the current US Airways paint scheme and word mark, and call the combined business entity United Airlines or United Airways.
7. On April 20 Dow Jones News Service reported "Siegel chose to get out of bankruptcy as soon as possible in a failed attempt to merge with UAL Corp.," which I know to be a true statement.
Will a deal occur? I believe one will for US Airways in the not-so-distant future, but with the uncertainty surrounding the industry, competitors, and United and US Airways, it is still uncertain what the final form will be. I suspect one of the reasons the Arlington-based airline is realigning its network is pre-merger planning to more easily integrate with another carrier that has more western market share and to consolidate strength(s).
Interestingly, yesterday Reuters reported there are many private equity firms right now looking at the airline sector. Hummmm???? I'm unsure of the final format because there are so many moving pieces, but one thing I do know, with airline balance sheets in their current condition it's going to take venture capital to pull off a deal, which is something US Airways currently has immediate access to with its chairman of the board having deep pockets and M&A interest.
Respectfully,
USA320Pilot
That's all well and good (any idiot can observe in vague general terms that there are major changes going on the industry and that in a few years the industry will not look like it does today and there will be consolidation, etc.), but I was concetrating more on YOUR SPECIFIC statement within the last week or so that a U/UA merger was dead and U was now looking at NW. This week you are back to the U/UA deal. So which is it? Or are you maybe for once willing to admit you have no secret insights to what is going on, or are any better than anoyone else at predicting the future. (Seigel's resignation kinda snuck up on you, didn't it.)
Keep trying... one of these days something you predict will by some chance miracle come true and I am sure you will be trumpeting it to no end. Good on ya!
Keep trying... one of these days something you predict will by some chance miracle come true and I am sure you will be trumpeting it to no end. Good on ya!
USA320Pilot
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Bear96:
It's clear that you do not have a good judge of time. Maybe instead of "popping off" you should do some research.
In regard to Siegel's departure, was I surprised, just like Dave Siegel was surprised when he went to the Board meeting to present to new business plan only to find out that David Bronner thought it had become a good time for Siegel to resign.
US Airways management has made it perfectly clear US Airways will be involved in a corporate transaction and has tried to complete a number of deals since 1992,
1992 - BA, TW, US
1994 - US, TW
1995 - US/AA & US/US
2000 - US/AA & US/UA
2003 - US/UA
When US Airways contracted Morgan Stanley to look at assets sales and/or M&A activity, Northwest approached the investment banker about a deal with US.
Will it occur? I do not know.
Could things change? Yep.
Could UA or US liquidate? Absolutely.
Meanwhile, today I talked with a leading Wall Street Airline Analyst who said something is up with US Airways on the M&A front, but the company has a number of options.
In the case of UA, that's not so. In fact, without the ATSB it could be an equity investment that saves the airline, which will require much, much deeper cuts similar in scope to what US has and will experience.
Regardless, it will be interesting watching this unfold and next week will we see the fireworks start when US announces its new business plan and its intention to drop fares by 40%. Bear, what do you think that will do to carriers who have not yet restructured or who have restrucuted and will lose more than $300 million in the first quarter?
Respectfully,
USA320Pilot
It's clear that you do not have a good judge of time. Maybe instead of "popping off" you should do some research.
In regard to Siegel's departure, was I surprised, just like Dave Siegel was surprised when he went to the Board meeting to present to new business plan only to find out that David Bronner thought it had become a good time for Siegel to resign.
US Airways management has made it perfectly clear US Airways will be involved in a corporate transaction and has tried to complete a number of deals since 1992,
1992 - BA, TW, US
1994 - US, TW
1995 - US/AA & US/US
2000 - US/AA & US/UA
2003 - US/UA
When US Airways contracted Morgan Stanley to look at assets sales and/or M&A activity, Northwest approached the investment banker about a deal with US.
Will it occur? I do not know.
Could things change? Yep.
Could UA or US liquidate? Absolutely.
Meanwhile, today I talked with a leading Wall Street Airline Analyst who said something is up with US Airways on the M&A front, but the company has a number of options.
In the case of UA, that's not so. In fact, without the ATSB it could be an equity investment that saves the airline, which will require much, much deeper cuts similar in scope to what US has and will experience.
Regardless, it will be interesting watching this unfold and next week will we see the fireworks start when US announces its new business plan and its intention to drop fares by 40%. Bear, what do you think that will do to carriers who have not yet restructured or who have restrucuted and will lose more than $300 million in the first quarter?
Respectfully,
USA320Pilot
ClueByFour
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That (at 40% fare reduction) sounds like an interesting game of chicken with the unions, but it's really spin: it will probably only apply in PHL. No real news there, since it's really just matching LUV's fares.USA320Pilot said:
If it is applied across the board (unlikely) it better work quickly: US has about $270 million to burn before the cash position bounces off the ATSB covenants.
UA, FWIW, has faced stiffer competition from LCCs than US has, for years.
USA320Pilot:
All of your quotes and "facts" do not prove anything. Nowhere in there, other than the statement about the wishes and desires Baldenza, does anything state with certainty that US Airways will be the acquiring or controlling party in a merger. Unfortunately, US Airways needs this merger, and is running out of cash/time to fix its business model or be acquired. With $278mil unrestricted, US Airways could not even afford America West or Alaska, let alone UAL.
Dr. Bronner has also stated that he will not throw money around to acquire a bunch of loss producing assets... Sounds like a mixed message, at best, to me.
And I would like a Bentley, a Maui beach home, an African Safari, and tea with the Queen of England. However, wanting something to happen and having the ability to make it happen are completely separate issues. Would US Airways want to acquire UAL? Maybe. Do they have the ability to do it? No.
Do I agree with Dave that consolidation is coming. I sure do. Do I believe that US Airways will be a part of it. Yes I do. However, I believe it is far more likely that US Airways participation will be in the form of asset sales and shrinking rather than acquiring anything more than fuel hedges... At least for the next 5-7 years or so.
You know, Morgan Stanley was retained in order to potentially SELL US Airways, whole or in parts. Morgan Stanley was not retained in order to acquire new assets.
All of your quotes and "facts" do not prove anything. Nowhere in there, other than the statement about the wishes and desires Baldenza, does anything state with certainty that US Airways will be the acquiring or controlling party in a merger. Unfortunately, US Airways needs this merger, and is running out of cash/time to fix its business model or be acquired. With $278mil unrestricted, US Airways could not even afford America West or Alaska, let alone UAL.
Dr. Bronner has also stated that he will not throw money around to acquire a bunch of loss producing assets... Sounds like a mixed message, at best, to me.
And I would like a Bentley, a Maui beach home, an African Safari, and tea with the Queen of England. However, wanting something to happen and having the ability to make it happen are completely separate issues. Would US Airways want to acquire UAL? Maybe. Do they have the ability to do it? No.
Do I agree with Dave that consolidation is coming. I sure do. Do I believe that US Airways will be a part of it. Yes I do. However, I believe it is far more likely that US Airways participation will be in the form of asset sales and shrinking rather than acquiring anything more than fuel hedges... At least for the next 5-7 years or so.
You know, Morgan Stanley was retained in order to potentially SELL US Airways, whole or in parts. Morgan Stanley was not retained in order to acquire new assets.
USA320Pilot
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On May 10 PSA's CRJ-700 authorization should increase from 25 to 60 jets with a 50-50 J4J split. This will make the subsidiary more marketable for sale because of the J4J clause and increased 70-seat delivery positions.
Regards,
USA320Pilot
Regards,
USA320Pilot
BoeingBoy
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FWIW, UAL announced their restructuring progress today. Here's some tidbits:
1Q operating loss of $211M - just over 1/3 of 1Q03's $602M.
1Q net loss of $459M - excluding 1-time & restructuring charges $316M
Pax unit revenue up 14% - industry leading.
Unit costs down 11%, excluding fuel down 14%.
In March, made an operating profit and cash increased $77M
In March, met DIP covenants (again) and made 2 of 5 payments on DIP loan.
Jim
1Q operating loss of $211M - just over 1/3 of 1Q03's $602M.
1Q net loss of $459M - excluding 1-time & restructuring charges $316M
Pax unit revenue up 14% - industry leading.
Unit costs down 11%, excluding fuel down 14%.
In March, made an operating profit and cash increased $77M
In March, met DIP covenants (again) and made 2 of 5 payments on DIP loan.
Jim
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BoeingBoy:BoeingBoy said:
Actually, United made only one DIP payment of $60 million during the first quarter; the second payment was made in April and will be reflected in the carrier's April and second quarter cash flow reports.
But IMHO United's most impressive result in the first quarter was its "positive operating cash flow of over $4 million per day" (according to the press release). If you do the math, that's over $360 million for the quarter. Plus, if the $60 million DIP payment in March and the $63 million IAM retro payment in January are removed from the calculation, United's positive cash flow from ongoing operations during the quarter totalled roughly $500 million. To quote Adam Sandler from SNL, "Not too shabby."
DOA@Airport
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US fares in several Eastern NC markets have already dropped by 42%. Significant reductions began in February.ClueByFour said:
