RUMOR ALERT: US/UA merger "inevitable"...

[Furloughd4now]

How bout $265 RT CLT/SFO? Good reason the Big bus is oversold

 

[BoeingBoy]

The 5% of the elites may contribute 14% of the revenue. But doesn't that mean the non-elites are contributing 86% of the revenue? you can always fill up a plane in standard coach and still be profitable (See Frontier, Southwest, Airtran, JetBlue, etc.), but can you ever fill a first class only plane full? I doubt it.

Do the math and you'll see that filling the plane with more of that 95% doesn't lead to profitability...unless an airline has the low costs of the true lcc's you listed. FWIW, neither US nor UA have costs as low as those carriers, hence the need for a core of elites.

Elites (a misnomer since what really counts are the high yield business passengers) are necessary for a legacy airline to continue to exist. Likewise the infrequent or low yield frequent passenger are necessary - as you say, they fill the remainder of the seats and provide additional revenue. Losing part of either segment is a death knell for a legacy carrier.

Elites are important. And if United and LCC merge, I highly highly doubt the majority of elites would leave simply for the reason that Airways would bring United to lower standards. As if United had any...

Again, do the math. It doesn't take the loss of a majority of higher yield passengers to be unprofitable. Take US' ala carte fees, which are supposed to generate over $400 million/year in revenue. 1.5% of that top 5% leaving would cost US that much or more in lost revenue - that's less than a third of those high yield elites you're so tired of hearing about.

Jim

 

[BajaBabe]

Oh say it is so !! . I would be twirling around and just be sosososososo HAPPY. Do you think that they would allow me to go on the negotiating team?????????

 

[TheGreatOz]

Merger's have to happen, as someone posted earlier... " I really don't care who my paycheck says its from, as long as I get a paycheck"

Many visitors have been comming to the Sandcastle within the last couple months, and Doug and Scott have been unusually quite ( there are big doins brewin!). One thing that I haven't noticed is anyone commenting on the proposed gate swaps in LGA/DCA with Delta? Could this be laying the groundwork with UA? Doug is the golden boy on Wall Street he knows how to raise the cash even in these troubled times.

All indicators are leaning towards LLC being the acquiring company and accepting the UA branding. UA still has more items to sell off to remain afloat, however their outside contract vendor's are really draining the resources... very similiar to what happend with Legacy USAirways. US has begun a very aggressive push to bring things inhouse...even to the wholly owned subsidiaries... may not be good for business but makes the bottom line look stronger. UA on the other hand is hamstrung to such a degree that their outside vendor contracts may be the downfall and the ouster of their present CEO, which is a perfect situation for LLC. This is how AWA grabbed US.

 

[whatkindoffreshhell]

"Pay no attention to that man behind the curtain Dor-a-thee!"

Fascinating deluge of responses to a supposed eavesdropping of Tilton's phone conversation.

Nothing has changed, only the bankers & lawyers will prosper from a US-UA combination. Customers will suffer and the shell game extended until the Obamarama folks print more money for another bailout.

Welcome back to the board OZ!

 

[SS255]

I'm not doubting all that Boeingboy. What I'm doubting is that the elites would leave United in droves if United and LCC merged. If people do try to avoid United because they merged with Airways, well then. They're waisting their time and probably money.

I don't believe that elites will leave in droves strictly because of a US/UA merger. If Tilton remains as CEO, I doubt that the newly merged airline will see that much of a defection. Obviously some people would bail at the mere thought of having to deal with the headaches of flying on a newly-merged carrier, regardless of who is CEO. My feeling is that if Doug Parker remains as CEO, the perception among UA elites is that he will turn it into HP (i.e. rip out the closets and IFE, charge for UGS, do away with E+, and force UA onto Qik/Shares), as he did with the old US. Whether or not that would be his intention is not really the issue -- it's the perception of US. We have seen it happen at US, so what's to stop it from happening at UA if the same management team is in charge?

All of us who post on this board know the strides which US has made in the past few months after being burned by all of the customer-unfriendly decisions which they made over the course of 3 1/2 years. Whatever their motivation was, they do deserve a lot of credit for what they have accomplished in a few months' time. It is very likely that Doug would fold US into UA, instead of the other way around, and do the merger right. But the US brand has been tainted so badly among high revenue flyers that I really think it will give a lot of UA's bread-and-butter customers pause for thought if they had even the slightest doubts about Doug's intentions.

Those of you who doubt my words can follow the UA forum in Flyertalk if a merger is announced.

I care about the future of US and its employees, and will support any move which will make it a healthier carrier -- regardless of the name or who is CEO. I only hope that whatever is in store for this airline is in the best interests of employees and customers alike.

 

[hp_fa]

Nothing has changed, only the bankers & lawyers will prosper from a US-UA combination.

I agree with that.

 

[Travelpro72]

Does anyone truly believe that the management team at US and the merging, acquirer or acquired airlines management team would feel threatened by employee integration? Really? Truly? Just look around. If US is going to be involved with a merger or whatever they WILL NOT take any groups displeasure into account. For those that feel their employee group would bring an airline to it's knees are purely delusional. What's meant to be will be employees be damned.

 

[hp_fa]

Does anyone truly believe that the management team at US and the merging, acquirer or acquired airlines management team would feel threatened by employee integration?

Yes, at least as far as the pilots are concerned.

 

[Itestwell]

Yes, at least as far as the pilots are concerned.

Oh, please. Absolutely not true. The company is LOVING all of the infighting that the pilots (and to some extent, the FA's), are conducting. The Company is sitting back, laughing there rears off at the amount of money they are saving by not settling these labor contracts! Tick tock, day by day, money in the bank! If they could keep this infighting going indefinitely, they would! Hell, we're already doing well operationally, and the Company is getting this operational reliability for pennies on the labor dollar! It's briliant, if you ask me!

I agree with Trav. I highly doubt a group of disgruntled, senior pilots and their rogue Union are going to affect an impending merger whatsoever. It's not even a blip on the "consideration" screen. The company is too busy laughing.

 

[hp_fa]

Oh, please. Absolutely not true. The company is LOVING all of the infighting that the pilots (and to some extent, the FA's), are conducting.

The question was concerning the company and any merger airline. While, for non-merger purposes, the company may be enjoying the pilots internal issues I think that it would be a negative factor in the view of any merger partner. So, based on the entire question as asked, I say "yes".

 

[autofixer]

Not to mention the UA pilots are not the spineless wimps that we LCC pilots are.

 

[Itestwell]

The question was concerning the company and any merger airline. While, for non-merger purposes, the company may be enjoying the pilots internal issues I think that it would be a negative factor in the view of any merger partner. So, based on the entire question as asked, I say "yes".

No, the question was concerning the company being threatened by a labor integration, and you said the company would be fearful, "as far as the pilots are concerned".

I responded that the Company would not be concerned with a small group of senior, older pilots being disgruntled, with a rogue Union, when they are trying to put together a multi billion dollar Company. It would not even be a blip on the merger radar screen.

 

[hp_fa]

No, the question was concerning the company being threatened by a labor integration, and you said the company would be fearful, "as far as the pilots are concerned"

Here is the question.

Does anyone truly believe that the management team at US and the merging, acquirer or acquired airlines management team would feel threatened by employee integration?

 

[Itestwell]

Here is the question.

Yes. And? Your response , which is what I actually responded to, was yes, "as far as the pilots are concerned." I disagreed. What are you arguing about?

And, to add to my response, not only would the company not care, I am sure the acquiring airline (AA? UA?) and their pilot union couldn't care less, either. USAir pilots would be such a minority, it wouldn't even be worth getting upset about.

(FWIW, I'll go on record as saying nothing is happening merger wise, anyway. The credit markets are closed, and USAir is hocked to the hills.)