There is nothing new here, but...

[ebwgs]

New link to article
(Moderator note: This new link was provided by etops1 last night. I copied it here to the first post in the thread. The original link has expired at Yahoo finance.)

This news--if you want to call it news--dates back to the mid 90s when Greenwald and Scofield were running UAL and US. As Paul Harvey would've said, we all know "the rest of the story." I am not one who is stuck on the UA/US merger fantasy. And to many it has looked like it would be a UA/CO merger since CO entered the Star Alliance. But I must admit that, since the DOT ruling on the DL/US slot deal the thought has crossed my mind that a Plan B for Parker and Co. could very well involve a transaction with UA. When the DL slot deal was first announced I thought that was the end for the UAL speculation. But the DOT ruling may have put it back on the table.

There is no doubt that if something were to happen the DOT would require some divestiture of DCA assets. But, when I think of divesting some DCA assets relative to a UA transaction, I think it could happen. United has a major hub at Dulles. A combined UA/US can better absorb some asset divestiture at DCA than US can on it's own. Once again, this is an old topic, but relative to the recent DOT ruling are there any thoughts as to re-thinking a possible union of UA and US?

 

[BoeingBoy]

relative to the recent DOT ruling are there any thoughts as to re-thinking a possible union of UA and US?

I would think ATI approval of UA/CO/etc would make a merger between UA and CO relatively easy to get by the DOT- they'll be all but officially merged in a year or two anyway. Then there's the question of what US offers UA that CO doesn't - really nothing no matter whether you're talking about European, South American, or Caribbean routes. The Shuttle and the slots to operate it is the only thing I can really think of and that isn't the cash cow it once was.

Remember that while Parker is outspoken on consolidation, he's also on record as saying that the best merger partner is an airline in bankruptcy - like US and then DL were. That gives the combo the ability to easily shed unsecured debt, airplanes, facilities, etc via the merger partner in bankruptcy. So short of someone else filing chapter 11 I think US is going to be the wallflower when it comes to mergers among the big airlines.

So take that and $5 and you can buy a Starbucks.

Jim

 

[bigbusboy]

So short of someone else filing chapter 11 I think US is going to be the wallflower when it comes to mergers among the big airlines.


Jim

When asked why US Airways was not approaching another carrier, Kerr said: "It's difficult for the No. 5 player to make a move on No. 1 through 4."

Jim is right and I also think Tempe knows it too.

 

[ebwgs]

I get your points, but thus far CO has steadfastly resisted a merger. I know there has been lots of speculation about them possibly merging with UAL since they entered Star, but IIRC they never considered merging with any of their Skyteam partners while they were in that alliance. I grant that times have changed. Although their current CEO may have publically expressed an openess to exploring the possibility, opposition to mergers seems to be imbedded in the CO corporate DNA. This could be an interesting year.

 

[bigbusboy]

Here goes my $0.02. The only part or parts of UA that CO may have interest in are ORD and LAX/SFO. Even ORD is questionable since virtually all of the resulting company would overlap AA-ORD/IAH and EWR for CO vs. AA's ORD/DFW and JFK. They may not want to take on that level of competition. If UA were willing to break up however (the Vatican ordaining women has a better chance), then I'm sure CO would be more than willing to merge/aquire some of the parts. In a US/UA merger much of UA would bring value to US, but the only value US would bring is CLT. The resulting company would probably shed PHX/PHL and possibly DEN; hence, DP's consolidation. As the article eluded to though, Derrick Kerr (sp?), CFO for US, said this would be a tough sell for the number 5 to make a move like this on numbers 1-4. And with the unions being what they are at both US and UA (pilots), it's not going to happen.

 

[ebwgs]

I find it interesting that Kerr mentions that, unlike UA, US is not interested in merging with a foreign carrier because US Airways feels that the domestic market is too fragmented. If so, then perhaps a Plan C could include partnering with a smaller carrier with a significant domestic presence. I wonder who that may be. :unsure:

 

[700UW]

Under US law a US based carrier cannot merge with a foreign controlled airline

 

[Travelpro72]

I still have Jetblue in my mind. US taking over Jetblue would rid a competitor, give US a strong presence in JFK which does NOT compete for the same traffic as PHL as far as I can see. It would give US a bigger Caribbean presence, more a/c and a larger domestic presence. Isn't domestic "where it's at" these days? It would also give US a bigger domestic presence in turn having the ability to feed more passengers to their international flights. Jetblue also would bring an extremely complimentary fleet with the A320 and E190. Lufthansa having invested in Jetblue and being a heavy hitter in Star could help things along possibly. Wasn't the US move for DL all about overlap and taking out a competitor?

 

[exB717Flyer]

Remember that while Parker is outspoken on consolidation, he's also on record as saying that the best merger partner is an airline in bankruptcy...

Also don't forget an airline can be 'convinced' to enter chapter 11 for the express purpose of a merger/acquisition. That's what AA had TWA to do in 2001.

 

[BoeingBoy]

Isn't domestic "where it's at" these days?

A year ago it was, but the future is still uncertain. The international, and specifically TA, dropped first and fastest when the world economy turned south, but is recovering sooner and stronger as the economy seems to be recovering. For example, ATA announced that domestic yield was up 0.6% in Jan vs Jan 09 while TA was up 3%. Both are still below fall 2008 and it's anybody's guess if the recovery will continue or falter, so "where it's at" can change relatively quickly - certainly quicker than an airline can adjust.

Jim

 

[Art at ISP]

First of all, Doug Parker doesn't even have a Plan A, let alone a Plan B.....

That said, I believe US will only take part in a merger as part of a pre-packaged bankruptcy, selling off the desirable pieces if there are any left at the time. The ineptness of management and the shoddy treatment of employees and customers by US management has removed any value that US had in a combination...not to mention the labor issues with the pilots. US could have been a powerhouse unto itself, but did not have management with a direction or the skillset required to run an airline. There is more to this business than managing by spreadsheet.

I realize all airlines have issues today, but US is by far the weakest legacy, and their impersonation of an LCC does not cut it with anyone....least not their former customers.

At the end of the day, I see UA/CO, which MAY pick at the pieces of US, leaving one strong US Mega Carrier in Star--I don't think there is any need for 3 US carriers in Star, there are a surprising number of people in high places who agree with that statement.

CO's new CEO Jeff Smisek has publicly stated he will look at a merger if it is good for his company...however as opposed to Doug Parker, Jeff DOES consider his employees and customers as assets rather than liabilities, meaning he is concerned about how such a transaction would affect them as well. I think part of CO's reluctance to consider a merger in past was due to Larry Kellner who was opposed to it, but as it was already said, things have changed.

Regarding TooHot's comments, that entitlement attitude is anachronistic-there is no place for it in today's world, and it has been responsible for much of the labor problems we have faced as a nation. You have next to nothing to say about whether a merger takes place or not, so as long as you have a job with decent conditions and a good management team (CO), sit back and enjoy the ride.

I have the same advice for US--I do not think they control their own destiny any longer at this point.

When all is said and done, I see one maybe US carriers in Star, and I do think UA/CO will happen sometime within the next 18 months.

My best to you all from 37000 feet above the midwest. Those of you who are working in the northeast tomorrow pleas be safe.

 

[ebwgs]

Under US law a US based carrier cannot merge with a foreign controlled airline

I am well aware of the fact that a foreign carrier is limited to a maximum 25% of an american carrier. However, that could change.

First of all, Doug Parker doesn't even have a Plan A, let alone a Plan B.....

That said, I believe US will only take part in a merger as part of a pre-packaged bankruptcy, selling off the desirable pieces if there are any left at the time. The ineptness of management and the shoddy treatment of employees and customers by US management has removed any value that US had in a combination...not to mention the labor issues with the pilots. US could have been a powerhouse unto itself, but did not have management with a direction or the skillset required to run an airline. There is more to this business than managing by spreadsheet.

I realize all airlines have issues today, but US is by far the weakest legacy, and their impersonation of an LCC does not cut it with anyone....least not their former customers.

At the end of the day, I see UA/CO, which MAY pick at the pieces of US, leaving one strong US Mega Carrier in Star--I don't think there is any need for 3 US carriers in Star, there are a surprising number of people in high places who agree with that statement.

You may very well be right. I've been waiting for you to be right on this point for several years now. I know that you are a former frequent flyer who feels forsaken by the current management, and given some of the decisions they've made, you're justified in feeling that way. You and every other former frequent flyer and employee--past or present--who has an axe to grind with US for whatever reason may very well be correct in predicting the eventual demise of this company. And if it does fail you're entitled to the measure of satisfaction that you may gain from your prediction, and then hopefully you can move on and direct your clairvoyance elsewhere.

But it hasn't failed yet. And I hope you're wrong. This company, to the surprise of many and to the chagrin of others remarkably is still in business. Who knows what the economy will do, fuel prices, Iran or what other unforseen event that could adversely impact our company. But until then, I think a safe bet would be to maintain a wait and see attitude about our eventual fate instead of a cocksure belief that this company will fail. For the sake of your clairvoyance and that of the other "people in high places" I'd hate to be having this same conversation several years from now.

2010 should be an interesting year for this industry going forward.

 

[Pacemaker]

Slots & gates @ DCA. MAYBE the PHL hub if it fits in with any potential aquirer's route network.

As usual no talk anywhere except on this board. The employees figure we're not on their radar screen.

Not enough here for a full-blown deal. CAL + UAL, and AMR & the rest divvy up the scraps.

 

[CallawayGolf]

First of all, Doug Parker doesn't even have a Plan A, let alone a Plan B.....

The ineptness of management

Let’s see I’m sure you must be right. Let’s look at Doug’s career

Doug graduated with an MBA in 1986 and joined AA for five years before taking a VP job at NW. He spent four years there before taking the SVP/CFO job at AWA. He then spent six years at AWA with increasing levels of responsibility until he was promoted to Chairman, CEO and President of one of the nation’s ten largest airlines. Fifteen years to get to the top and another nine years so far at the top.

Doug had been CEO for ten days when 9/11 occurred and managed to work with creditors and the federal government to avoid bankruptcy – a fate which most the largest carriers were unable to avoid once or even twice during the same time period. He also successfully managed an operational turn-around of AWA and gaining them accolades from local PHX media for going from “worst to firstâ€.

In 2005 he orchestrated the buy-out/merger of US Airways and integrated the operations of the two carriers all while making record profits in 2006 and 2007. When operational performance faltered in 2007 following the death of US’ COO he brought in a new COO and created more focused management teams to address the poor performance areas. Following the changes US ran the best on-time airline in 2008 in comparison to its hub & spoke peers and also made substantial improvements in baggage handling. Those improvements continued into 2009 and 2010 even though the competition was padding their block times in order to compete in the on-time arena.

When fuel prices tripled in 2008 and the economy hit a massive recession, Doug and the management team took the steps necessary to bring in more revenue to cover out-of-control fuels costs and also managed to keep the airline financially solvent when many of its critics had them on death’s door.

So it took Doug nine years to make SVP in airline industry and just six more years until he made Chairman and CEO. He has proven his ability to make a strong profit in the good years and persevere in two of the toughest times ever to hit the airline industry. He has shown he can manage to turn around an operationally struggling airline and put it at the top of its peers. And which CEO of the big five airline plus WN has the greatest longevity in their position?
Doug Parker (US) , 2001
Glenn Tilton (UA), 2002
Gerard Arpey (AA), 2004
Richard Anderson (DL), 2007
Jeff Smisek (CO), 2008
Gary Kelly (WN), 2008

Care to tell us just how successful you have been running a multi-billion dollar corporation? Or perhaps you can tell us just how successful FFOCUS has been in achieving whatever goals and objectives you have. If forcing a management change at US is part of that goal I would say FFOCUS has been a total failure.

 

[700UW]

He didnt arrange the merger, that would have been Bruce Lakefield and John Luth from Seabury Associates, US/EAST arranged the financing, not HP.