Talks get serious between UAL/CO- Where is US in all this?

[Richard]

The topic of a merger is already being discussed. There is no need for another thread.

 

[700UW]

Wow, they really pulled down, ok what about overlapped flights from EWR and IAD?

 

[deltawatch]

How about these guys?

Air Canada flies into the black, stock soars
By Jeffrey Jones

CALGARY, Alberta, Feb 7 (Reuters) - Air Canada (ACa.TO: Quote, Profile, Research) flew into the black in the fourth quarter as it added passengers in a healthy domestic market and cut non-fuel costs, the country's dominant airline said on Thursday.

Air Canada executives said they expect revenues in the coming months to remain positive at home and even in the United States, where the economy has been drifting into a downturn and airlines are moving toward mergers.

"We're still seeing very strong Canadian demand," Chief Executive Montie Brewer told analysts. "The market's grown quite a bit over the last three years and the trend's continuing."

The outlook and unexpectedly profitable fourth quarter -- helped by the replacement of older jets with more fuel-efficient Boeing 777s -- sparked hefty stock gains.

Air Canada A-series shares gained C$1.47, or nearly 18 percent, to C$9.66 on the Toronto Stock Exchange.

They had dropped 57 percent in the past year as some analysts forecast a weaker environment and investors worried about more shares coming on the market when parent ACE Aviation Holdings (ACEa.TO: Quote, Profile, Research) parts with its remaining 75 percent stake.

"The move today is due to people maybe realizing that the stock was kind of oversold," Versant Partners analyst Cameron Doerksen said. "There's still this question mark about what ACE is going to do, but I think the results show the fundamentals of the company aren't going to pot."

 

[PHL]

Wow, they really pulled down, ok what about overlapped flights from EWR and IAD?

I would think those markets are far enough apart. Nobody raised a stink about LCC and the PHX-LAS proximity.

I guess the same question could be raised about CLE and ORD, although that would be one dealing mainly with domestic routes.

The thing about NYC is that the market is well served be a large variety of carriers, and that keeps it competitive. I don't know that insisting UA divest IAD would help unless another carrier was ready to launch operations there. Otherwise, IAD and the DC metro area would be without good intl. options.

 

[Bear96]

Wow, they really pulled down, ok what about overlapped flights from EWR and IAD?

What about them . . . NYC and DC are hardly a single market.

 

[FlyUs]

Exactly. AA can afford to sit this out. LCC, not so much. LCC simply doesn't have the international presence to be of any real value to anyone.
Parker wanted consolidation. Looks like he is going to get his wish with one big exception of course. He isn't going to be a participant.
You have to wonder if this whole scenario wasn't part of his reasoning last year with the failed DL takevover. The two airlines had a gross amount of overlap but the attempt would have accomplished two major tasks. It would have eliminated his biggest competitor and it would have instantly given him a pawn in any future consolidation board games.

Don't be certain that AA will sit this one out. If they do, all is not lost. US and AA will benefit from reduced competiton and possible DOJ give backs from an UA/CO and DL/NW merger. LCC may not have the "internation presence" you refer to but it does have the only other true southeast hub in the country that would fit quite nicely in the AA network. US is an 11 billion dollar company and those numbers maybe too hard to ignore.

 

[bigbusboy]

Don't be certain that AA will sit this one out. If they do, all is not lost. US and AA will benefit from reduced competiton and possible DOJ give backs from an UA/CO and DL/NW merger. LCC may not have the "internation presence" you refer to but it does have the only other true southeast hub in the country that would fit quite nicely in the AA network. US is an 11 billion dollar company and those numbers maybe too hard to ignore.

Very good points. Back in the early '90s when we were wet-leasing flights for BA and code-sharing with AA, there was much speculation from Wall Street and analysts about US and AA eventually merging. Some were saying it wasn't if but when and how much sense it would make. The one question I haven't seen anyone ask yet is: What assets might have to be sold off in a DL/NW merger or in a UA/CO merger? The only ones that come to my mind right now are the A330s at NW. I can't think of anything from a UA/CO merger except for a few gates here and there.

 

[RowUnderDCA]

I would think those markets are far enough apart. Nobody raised a stink about LCC and the PHX-LAS proximity.

I guess the same question could be raised about CLE and ORD, although that would be one dealing mainly with domestic routes.

The thing about NYC is that the market is well served be a large variety of carriers, and that keeps it competitive. I don't know that insisting UA divest IAD would help unless another carrier was ready to launch operations there. Otherwise, IAD and the DC metro area would be without good intl. options.

There are three mergers that would require very little or no redundancies:

UA/CO

NW/US

NW/CO: CLE probably downsized.

However, the management would look to find efficiencies and hopefully trim capacity.

 

[RowUnderDCA]

Don't be certain that AA will sit this one out. If they do, all is not lost. US and AA will benefit from reduced competiton and possible DOJ give backs from an UA/CO and DL/NW merger. LCC may not have the "internation presence" you refer to but it does have the only other true southeast hub in the country that would fit quite nicely in the AA network. US is an 11 billion dollar company and those numbers maybe too hard to ignore.

I just don't see why AA would want much more from US than CLT, DCA, BOS? and the Shuttle..... and some expanded presence at LAS and PHX. But would they want a full-blown hub at PHX? maybe.

 

[Elevation]

I don't know why some people are so pro merger. Are they thinking the last few sucked so the next one has gotta to be the "one" where my job turns into airline bliss? Maybe they have a inferiority complex and have to work at the biggest airline to have a feeling of self worth? Probably the drunk excitement of a merger for most employees but the morning after is not worth it.

The best thing that could happen is US buy a small percent of the discarded Airbus capacity that comes into the market and begin some organic growth, while the industry realigns capacity which will be good for employees and the bottom line.

 

[bigbusboy]

I just don't see why AA would want much more from US than CLT, DCA, BOS? and the Shuttle..... and some expanded presence at LAS and PHX. But would they want a full-blown hub at PHX? maybe.

One more item they would get that I might add is the elimination of a competitor. Or, in airline lingo, consolidation. This reason alone is the $$$ driving the merger mania. It seems to be the only way left to generate new revenues since ticket prices aren't rising fast enough to keep up with fuel.

 

[FlyUs]

Very good points. Back in the early '90s when we were wet-leasing flights for BA and code-sharing with AA, there was much speculation from Wall Street and analysts about US and AA eventually merging. Some were saying it wasn't if but when and how much sense it would make. The one question I haven't seen anyone ask yet is: What assets might have to be sold off in a DL/NW merger or in a UA/CO merger? The only ones that come to my mind right now are the A330s at NW. I can't think of anything from a UA/CO merger except for a few gates here and there.

Cleveland might be a good place to set up shop if it is divested for a UA/CO merger. One thing for sure, it's going to get awfully interesting this year in the aviation industry. As difficult as it is, consolidation needs to happen.

 

[necigrad]

Canale just said tonight that it's UA/CO and US will pick up flights to avoid anti trust isues. Of course he also said he will deny saying that if he's asked, and his lips were in fact moving so he might have been lying out of his ass.

Now it's public knowledge so I'm free to act on this info, should I choose.

 

[deltawatch]

How about these guys?

Air Canada flies into the black, stock soars
By Jeffrey Jones

CALGARY, Alberta, Feb 7 (Reuters) - Air Canada (ACa.TO: Quote, Profile, Research) flew into the black in the fourth quarter as it added passengers in a healthy domestic market and cut non-fuel costs, the country's dominant airline said on Thursday.

Air Canada executives said they expect revenues in the coming months to remain positive at home and even in the United States, where the economy has been drifting into a downturn and airlines are moving toward mergers.

"We're still seeing very strong Canadian demand," Chief Executive Montie Brewer told analysts. "The market's grown quite a bit over the last three years and the trend's continuing."

The outlook and unexpectedly profitable fourth quarter -- helped by the replacement of older jets with more fuel-efficient Boeing 777s -- sparked hefty stock gains.

Air Canada A-series shares gained C$1.47, or nearly 18 percent, to C$9.66 on the Toronto Stock Exchange.

They had dropped 57 percent in the past year as some analysts forecast a weaker environment and investors worried about more shares coming on the market when parent ACE Aviation Holdings (ACEa.TO: Quote, Profile, Research) parts with its remaining 75 percent stake.

"The move today is due to people maybe realizing that the stock was kind of oversold," Versant Partners analyst Cameron Doerksen said. "There's still this question mark about what ACE is going to do, but I think the results show the fundamentals of the company aren't going to pot."

Yepper .... AC wants in

Air Canada owner approached on U.S. mergers: CEO
Friday February 8, 10:26 am ET


CALGARY, Alberta (Reuters) - ACE Aviation Holdings (Toronto:ACEA.TO - News), majority owner of Air Canada (Toronto:ACA.TO - News), has been approached by private equity players and pension funds on ways that Air Canada could join the U.S. airline consolidation wave, ACE Chief Executive Robert Milton said on Friday.

Milton said a weak Air Canada share price has prompted ACE to consider other options for boosting value beyond its preferred plan of winding down the holding company and distributing its remaining 75 percent interest in the airline, the country's biggest.

"In my view, as I watch the U.S. airlines scurrying around to merge, anybody that actually ties up with Air Canada gets a unique piece of geography relative to the way the U.S. guys would split it up," Milton said in a conference call.

"So there has been dialogue with the U.S. space looking to change, and I don't think it's inconceivable that Air Canada could be part of it and I think it would make a lot of sense for a U.S. airline to look at Air Canada."

In recent days, it has been reported that Delta Air Lines (NYSEAL - News) and Northwest Airlines Corp (NYSE:NWA - News) could announce a merger as early as next week and that United Airlines (NasdaqGS:UAUA - News) and Continental Airlines Corp (NYSE:CAL - News) are in the early stages of talks.

ACE executives have been expecting to wind up the holding company by around the middle of this year, but Milton said international pressure on airline stocks may affect that schedule.

He said he had not talked to Ottawa about proposing changes to federal legislation that limits foreign ownership in a Canadian airline to 25 percent. However, it may not be necessary for foreign private equity to get involved, he said.

"I think that there's plenty of money in Canada," Milton said.

Air Canada shares were up 6 percent at C$10.25 on the Toronto Stock Exchange on Friday morning. ACE rose 2 percent to C$22.71.

 

[deltawatch]

AC has a lot of International flights ....