UA/UA merger?

[Busdrvr]

[blockquote]
----------------
On 9/21/2002 6:44:14 PM oldiebutgoody wrote:

Then what are they afraid of? You know they are afraid of something, or there wouldn't be so much antagonism toward U. U/UAL is an ALMOST perfect match, as far as airlines go. Only the UAL guys who are afraid of losing something are against it. Even the other majors fear the potential impact of such a combination.
----------------
[/blockquote]


we were afraid of the severe financial impact of paying $60 per share, assuming all the debt, the unfunded pension liability, the, contrary to popular perception, fleet mismatch. Basically all those things that put U in BK. We'd have all our current probs PLUS all of yours PLUS $4 billion MORE in debt that we would have had to pay the, now stiffed, U shareholders. It appears, in this case, them inmates WERE right, U would have bankrupted us LONG ago. Even the ALPA financial advisor that thought it would be a positive transaction, now acknowledges that he DOJs rejection of the deal save our rear ends.

 

[AOG-N-IT]

Boy!!....The amount of energy that's being wasted on this thread could Power Up New York City for a month. The issues are very simple. Both UA and US have alot of issues to get worked out individually. Thinking in combined terms , beyond the proposed Codeshare Agreement , is frankly INSANE. Why would the combination of two problematic companies sound inviting? I think both companies need to work past thier individual woes....and persue the benefits of the codeshare. Beyond that....you would be creating an abomination beyond anyones wildest nightmare. Too bad that the same amount of energy isn't being used or applied to what's actually wrong with our individual circumstances.....Hopefully Dave is thinking in those terms? , unlike Wolf and Goodwin did.

 

[Retired1]

AOG-N-IT---------I agree with everything you said. This is pretty much the same as UAL777flyer has been saying too.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 1052 AM Retired1 wrote:

Oldie---It would have to be a pretty unique transaction. Dont you think when they started to put the seniority lists together that there would be blood and guts all over the place? Especially in these troubled times? I think U is on the way back but UAL hasnt even put a plan out there yet that i can see.
----------------
[/blockquote]
There you go, worrying about yourself first. That's why both U and UAL, along with other majors, are in the fix they're in. It makes for some real convoluted business plans when not only profits, expenses, and business plans have to be considered. Throw employee seniority, fences, LPPs and other issues into the mix, and you wind up with a merger ala U+PI+PSA. It's no wonder airline mergers haven't worked in the past (for the most part). Employees have got to realize that making the company stronger, through merger, code share or unique corporate transaction is actually good for them in the long term, so short term givebacks are necessary to make it work. I think that U employees probably understand this now, but UAL and others are far from the realization. The industry is in deep trouble, and I would bet that in a couple of years it looks TOTALLY different from today. The only question is who will make it (I wouldn't bet on ANY airline right now, and I guess Wall Street agrees), and who won't. U's immediate plunge into the depths of chapter 11 may actually give it a better chance of survival, since the deep cuts necessary have already largely been implemented. Others may (probably will) follow U into chapter 11, but labor strife may seriously impact their ability to emerge. I still believe that U and UAL have something up their sleeve, and only time will tell exactly what that is.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 135 AM AOG-N-IT wrote:

Boy!!....The amount of energy that's being wasted on this thread could "Power Up" New York City for a month. The issues are very simple. Both UA and US have alot of issues to get worked out individually. Thinking in combined terms , beyond the proposed "Codeshare Agreement" , is frankly INSANE. Why would the combination of two problematic companies sound inviting? I think both companies need to work past thier individual woes....and persue the benefits of the codeshare. Beyond that....you would be creating an abomination beyond anyones wildest nightmare. Too bad that the same amount of energy isn't being used or applied to what's actually wrong with our individual circumstances.....Hopefully Dave is thinking in those terms? , unlike Wolf and Goodwin did.
----------------
[/blockquote]
WRONG! the reason to combine in some form (a code share is great, but FAR from a permanent solution) is to prevent either or both companies from finding another suitor. What would happen to U if UAL just up and decided to combine in some form with Delta or NW? U would be DONE! Consequently, what if U decides to go with NW, or even AMR, thus shutting UAL out of the east coast? Some kind of permanent agreement needs to be hammered out, whether it's a merger or unique corporate transaction. No one disagrees that UAL would likely have paid too much at $60/share, but premiums are often paid in such transactions. I believe that Mr. Goodwin had the best of intentions, and if the economy hadn't faltered he may have been able to work it out (except that the tail wouldn't let the dog conduct corporate business). U and UAL both have serious problems, but U is well on the way to solving most of theirs. The UAL BOD learned from their previous error and WILL go chapter 11, if for no other reason than to restructure the BOD and cancel the debt of the employee shareholders. I'd put money on it![img src='http://www.usaviation.com/idealbb/images/smilies/11.gif']

 

[Retired1]

Oldie---It would have to be a pretty unique transaction. Dont you think when they started to put the seniority lists together that there would be blood and guts all over the place? Especially in these troubled times? I think U is on the way back but UAL hasnt even put a plan out there yet that i can see.

 

[argentomaranello]

Let me synthesize the two emerging theories about any future for USAir and UAL deeper or beyond the announced codeshare. The first school of thought now suggests that all of the behind-the-scenes overtures, the ones being conducted at the highest levels, are really part of an elaborate ruse designed to shake the UAL unions to their senses and cause them to supply that carrier with sufficient wage concessions to effectively restructure, either in or out of bankruptcy. Then, presumably, any further prattle about this very distasteful (to them) unique corporate transaction could be dispatched into oblivion. On the other hand, the second theory holds that some new deal between UAL and USAir is inevitable because, but for such a combo, NWAC will swoop in and grab USAir for itself thereby permanently disadvantaging UAL (not only in relation to UAL's domestic operation, owing to the loss of USAir's east coast dominance, but, perish the thought, its Pacific and Asian operation -- perhaps even more importantly -- since NWAC could then dominate eastern US traffic bound for Asia and vice-versa). This essentially defensive (for UAL) concern would presumably not permit it to walk away from the unique corporate transaction so quickly. The real question then is whether either or these ideas are valid, or are they both actualy on the mark. I've suggested that UAL's current governance structure (with which it will be saddled through most of the course of its own bankruptcy, no matter whether that process actually changes that structure) would probably not admit of any truly effective remedy for those of its current problems that are rooted in excessive employmnent costs, consequently I tend to reject the first of these notions. As to the second, NWAC's interest has been persistent and is currently undeniable; but would that spectre be sufficient to push UAL into the unique corporate transaction given UAL's obvious preoccupation with its own parochial employment concerns? Maybe . . . but likely not.

What remains is what CHIP had been posting about consistently: a unique corporate transaction hammared out somewhere in the halls of power down in Washington and implemented by and through the ATSB. Will it happen? Maybe. But its most effective opponents won't be UAL's unions or the oft-written about (on this board) concerns for UAL's corporate culture or the sensabilities of its workforce, rather, the most capable and motivated opponents will be Don Carty, Leo Mullin, Gordon Bethune and Richard Anderson (and their assembled political allies). In a strange way, this is really a 2000 redux -- the enemies of UAL/U were able to mobilize UAL's unions to do much of their own dirty work.

 

[Boomer]

My un-educated guess:

Cross equity ownership arrangement between U and UAL leaving one as the others feeder (ala AA and AE) the difference will be that in addition to 400+ RJ's there will be mainline size jets doing high frequency flying. Both airlines will remain independent but will require the other to survive.

The arrangement would probably be fee based on headcounts.

The reason for that type of arrangement rather than a merger would be to prevent the reversion in wages called for in some of the U concession agreements (change in control of the carrier) and to prevent wage bracket creep to former levels in those years when pax fares return to normal and contracts are due.

For my guess to come true the UAL Pilots(and the other labor groups) have to give up or fail to obtain a contractual definition of allowable feeder operations as a condition for concessions and must not obtain fragmentation triggers that would be tripped by the restructuring.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 4:43:06 PM Boomer wrote:

My un-educated guess:

Cross equity ownership arrangement between U and UAL leaving one as the others feeder (ala AA and AE) the difference will be that in addition to 400+ RJ's there will be mainline size jets doing high frequency flying. Both airlines will remain independent but will require the other to survive.

The arrangement would probably be fee based on headcounts.

The reason for that type of arrangement rather than a merger would be to prevent the reversion in wages called for in some of the U concession agreements (change in control of the carrier) and to prevent wage bracket creep to former levels in those years when pax fares return to normal and contracts are due.

For my guess to come true the UAL Pilots(and the other labor groups) have to give up or fail to obtain a contractual definition of allowable feeder operations as a condition for concessions and must not obtain fragmentation triggers that would be tripped by the restructuring.


----------------
[/blockquote]
Sounds like another reason to go chapter 11...

 

[Busdrvr]

[blockquote]
----------------
On 9/22/2002 4:48:18 PM oldiebutgoody wrote:

Sounds like another reason to go chapter 11...
----------------
[/blockquote]

What a great idea! Anytime your financial obligations or contracts get in the way of what you want to do, just declare BK! Just think how much cheaper cars would be if Ford, GM and DC just declared BK to abrogate all the contracts and debt. No matter what industry your in, just think of the savings you could realize if you declared BK and got rid of pesky things like retirement plans and pay scales! As a matter of fact, you could use it to take away pretty much ALL of the retirement funds in America! Just look at AL. Fabulous idea! Just declare BK and get rid of all the equity on wall street and get rid of all those corporate governance rules. Of course all those folks that saved an invested for retirement would be destitute, but who cares, you would have the freedom for your company to do whatever it wants!

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 6:51:15 PM Busdrvr wrote:

[blockquote]
----------------
On 9/22/2002 4:48:18 PM oldiebutgoody wrote:

Sounds like another reason to go chapter 11...
----------------
[/blockquote]

What a great idea! Anytime your financial obligations or contracts get in the way of what you want to do, just declare BK! Just think how much cheaper cars would be if Ford, GM and DC just declared BK to abrogate all the contracts and debt. No matter what industry your in, just think of the savings you could realize if you declared BK and got rid of pesky things like retirement plans and pay scales! As a matter of fact, you could use it to take away pretty much ALL of the retirement funds in America! Just look at AL. Fabulous idea! Just declare BK and get rid of all the equity on wall street and get rid of all those corporate governance rules. Of course all those folks that saved an invested for retirement would be destitute, but who cares, you would have the freedom for your company to do whatever it wants!

----------------
[/blockquote]
I wouldn't do it, but I'll bet MORE airlines than just U will. And UAL is a prime candidate. Maybe if UAL's CEO and BOD are honest they'll prepare like U's management did, so that retirement plans and select debt will continue to get paid. If not, good luck! The bottom line is that ALL groups will need to cooperate, just like they did in U's restructuring (so far). Sounds to me from reading the UAL board that groups like the IAM are greatly opposed to cuts, and expect ALPA to take them but spare their paychecks. Ain't gonna happen, so Chapter 11 is VERY likely. Shoot the messenger if you must, but it won't change UAL's plight. No company wants to go chapter 11, but in the case of most airlines the financial structures are based on economics which will probably never exist again. By the way, my thoughts on retirement funds which invest in things as risky as airlines is that they get what they deserve.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 7:09:44 PM Busdrvr wrote:

[blockquote]
----------------
On 9/22/2002 710 PM oldiebutgoody wrote:

No company wants to go chapter 11, but in the case of most airlines the financial structures are based on economics which will probably never exist again. By the way, my thoughts on retirement funds which invest in things as risky as airlines is that they get what they deserve.
----------------
[/blockquote]


What makes you think hub and spoke airlines are obsolete? they thout that the last time the market took a dump. BTW, what is a safe industry to invest in? Since 1997 taxation on airlines has DOUBLED (see string titled not everyone has suffered). the quickest way to return the industry to profitability is for the government to quit making duck soup with our goose.

----------------
[/blockquote]
You need to read my remarks closer. Nowhere did I say obsolete. I said that the economics have changed, and likely permanently. I can tell that you must work for UAL and are in deep denial of your company's current situation. I wish you and your compatriots well; the reality will be evident soon enough. It's apparent to me that Dave & Company prepared well for this chapter 11 stuff, and it looks like U may survive. I'm still waiting for the other shoe to drop, as I don't feel that the job cuts and painful stuff is over. When I see numbers like SW flying 25% more planes for more hours per day than U with only a third of the mechanics, I know our system must change. I don't think that UAL's numbers are a lot better than U's in the waste category, so I'd expect some serious change. As I've said before, this gravy train we call the airline industry is changed forever. Those that adapt will survive; those that don't will be added to a long list including airlines like Pan Am and Braniff. No one thought they would go away either. Folks at UAL need to understand that if it happens, chapter 11 is an OPPORTUNITY for your company to fix a lot of economic problems and make itself and stronger competitor in the future. That's good for the company and whatever employees and investors are left.
By the way, pension funds should ONLY be invested in grade A securities. I know of NO airlines in that category. Government bonds, municipal securities, etc. would qualify, along with bonds which are backed by collateral (EETCs, etc). If people wish to gamble, it should NOT be with pension funds.

 

[Busdrvr]

[blockquote]
----------------
On 9/22/2002 710 PM oldiebutgoody wrote:

No company wants to go chapter 11, but in the case of most airlines the financial structures are based on economics which will probably never exist again. By the way, my thoughts on retirement funds which invest in things as risky as airlines is that they get what they deserve.
----------------
[/blockquote]


What makes you think hub and spoke airlines are obsolete? they thout that the last time the market took a dump. BTW, what is a safe industry to invest in? Since 1997 taxation on airlines has DOUBLED (see string titled not everyone has suffered). the quickest way to return the industry to profitability is for the government to quit making duck soup with our goose.

 

[oldiebutgoody]

[blockquote]
----------------
On 9/22/2002 8:03:43 PM Busdrvr wrote:

[blockquote]
----------------
On 9/22/2002 7:41:00 PM oldiebutgoody wrote:

By the way, pension funds should ONLY be invested in grade A securities. I know of NO airlines in that category. Government bonds, municipal securities, etc. would qualify, along with bonds which are backed by collateral (EETCs, etc). If people wish to gamble, it should NOT be with pension funds.
----------------
[/blockquote]

Glad you don't manage my retirement fund. That 2% or so interest rate would pay real dividends . the stock market is not a "gamble" any more than buying Muni bonds is. There are countries out there that devalue currency and default on bonds. What makes you so sure that the US will never have a financial crisis that destroys the value of our bonds? BTW, a couple point rise in interest rates has a HUGE negative effect on the value of a ten year bond.
----------------
[/blockquote]
There are hundreds of thousands of folks out there that WISH they had 2% per year for the last couple of years. I have a 401k and invest in SOME higher risk stuff, but if U had invested my retirement fund in airline stocks I'd be fit to be tied. Retirement funds need to be secure; investing in high risk securities with money that has to be there is STUPID! US savings bonds are as secure as the US government; the ONLY way to lose money investing in them is if the gov't collapses. If it does, we have far worse problems than getting our retirement money! The government has OTHER securities which are NOT as secure, and pay higher yields. They tend to be FAR more secure than stocks. These are the types of thing that retirement funds SHOULD invest in. I agree that historically the stock market has had the greatest yields over the long term, but it does have peaks and valleys like all investments.

 

[Busdrvr]

[blockquote]
----------------
On 9/22/2002 7:41:00 PM oldiebutgoody wrote:

By the way, pension funds should ONLY be invested in grade A securities. I know of NO airlines in that category. Government bonds, municipal securities, etc. would qualify, along with bonds which are backed by collateral (EETCs, etc). If people wish to gamble, it should NOT be with pension funds.
----------------
[/blockquote]

Glad you don't manage my retirement fund. That 2% or so interest rate would pay real dividends