Us Airways Searches For Cash

[BoeingBoy]

"Talk about some sort of a combination between US Airways and America West Airlines, the seventh and eighth largest carriers in the United States, continues to surface despite refusals by either company to lend credence to the speculation."

Talk about America West, US Airways link heats up

Jim

 

[funguy2]

Hey USA320Pilot:

You're super secret upper management sources didn't tell you about this?

Hmmmm.....

Good thing we have public sources...

 

[usair_begins_with_u]

I dont see this happening... Maybe US Airways is faking a possible merger story to get other potential suitors to move faster... Im sure HP would like some of Uair's EC presence, but like many others have repeated, HP doesn't have the cash, and their stock holders would not want that kind of risk.. Though..... I could see a third party stepping in, financing a fake merger, and then proceed to sell off the pieces of Uair HP doesnt want. The result, HP gets first dibs at Uair, and the third party gets a nice chunk of the new improved HP with an EC presence. Hmmm thats gives you something to think about.

 

[USA320Pilot]

Funguy2:

Everybody knew about a potential deal with America West, but it’s going to be driven by a third party, if it occurs at all.

The latest speculation started last week when J.P. Morgan airline analyst Jamie Baker fueled the latest round of rumors in a research note when he referred to "early speculation" about a proposed "linkage" between US Airways and America West. Some of this is due to Doug Parker’s continued public reference to M&A activity.

However, do you remember when I said multiple times during the past couple of week’s that US Airways’ M&A activity investment banker was J.P. Morgan. How could that be and I am surprised you did not pick this up from your public sources, especially since Baker made his comments. Did you forget or were your public sources inaccurate, again?

Then last Saturday the Arizona Republic wrote a column on a potential corporate combination followed by a similar story in today's Pittsburgh Post-Gazette, which are both speculative.

As I have said, M&A modeling is on going and I believe the industry will consolidate. US Airways continues to hold equity investment discussions and it will be interesting to see how this shakes out.

Meanwhile, I have talked with US Airways marketing and planning personnel and later tonight, I will comment on problems with a US Airways-America West combination. Remember, US Airways tried merging East and West Coast airline's in 1988 and failed -- there is a fundamental route problem with this. Can you explain why?

Regards,

USA320Pilot

 

[aafsc]

The problem with an America West/USAir merger is that it will be the same as with PSA. Heavy on the North-South routes on both coasts with no strong East-West hub in between to connect the route systems.

 

[funguy2]

The problem with an America West/USAir merger is that it will be the same as with PSA. Heavy on the North-South routes on both coasts with no strong East-West hub in between to connect the route systems.

[post="261918"][/post]​

This is actually false. AWA has a pretty strong East-West network, relative to PSA. The furthest east PSA flew was ABQ. AWA flies to BOS, JFK, DCA, and Florida.

Also, I believe when AWA entered the transcon market, they said part of the rationale was because they had a lot of folks connecting in PHX and LAS who were travelling between BOS/JFK/DCA/IAD to LAX area and SFO area.

 

[whlinder]

Since we're playing hypothetical HP/US mergers out in our heads, anyone care to guess what will happen to the slots at DCA? HP's are the 'beyond perimeter' slots that might not transfer if US is the surviving entity, as TW's slot did not transfer to AA. Though the transactions would be different, I wouldn't be surprised to see some action by the DOT taking slots away from HP/US, particularly those precious beyond perimeter ones.

 

[hp_fa]

Im sure HP would like some of Uair's EC presence, but like many others have repeated, HP doesn't have the cash, and their stock holders would not want that kind of risk..  Though.....  I could see a third party stepping in, financing a fake merger, and then proceed to sell off the pieces of Uair HP doesnt want.  The result, HP gets first dibs at Uair, and the third party gets a nice chunk of the new improved HP with an EC presence.  Hmmm thats gives you something to think about.

[post="261911"][/post]​

Texas Pacific Group has voting control of AWA through their "A" shares, which hold 50:1 voting rights over the Class "B" (common) shares. So if TPG wants to do this thy have all the votes they need already.

 

[hp_fa]

Funguy2:

Meanwhile, I have talked with US Airways marketing and planning personnel and later tonight, I will comment on problems with a US Airways-America West combination. Remember, US Airways tried merging East and West Coast airline's in 1988 and failed -- there is a fundamental route problem with this. Can you explain why?  

Regards,

USA320Pilot

[post="261915"][/post]​

You are assuming that U will be the surviving airline.

HP has been getting nice compliments from frequent fliers coming to us from legacy carriers, including U. Why would the stronger carrier (HP) want any US Airways signage on anything after what management at U has done to their employees and has unfortunately filtered down to the passenger's experience with U?

Also, before anyone starts comparing U and HP in regards to first class amenities, HP indeed do more of a business class then the first class one thinks of when thinking of the glamour days. However, it works just fine for us and we do have an awful lot of happy customers who have migrated to us from other carriers.

BTW, Doug Parker is on record as having said that any deal that might occur will not be at the expense of HP employees. Since U has people with much more seniority then HP, any straight merger and integration would indeed harm HP employees. Therefore, I don't think that scenario will occur since Mr, Parker has never, as far as I know, lied to the workforce during his reign as CEO. What is more likely, in my opinion, is that if a deal were to happen that HP would get airplanes, gates and slots. U employees would be required to apply to HP and be given preferential status as applicants.

 

[hp_fa]

This is actually false. AWA has a pretty strong East-West network, relative to PSA. The furthest east PSA flew was ABQ. AWA flies to BOS, JFK, DCA, and Florida.

[post="261920"][/post]​

HP serves domestic eastern cities of BOS, BDL, JFK, EWR, PHL, BWI, DCA, IAD, RDU, ATL, TPA, MCO, FLL and MIA nonstop from PHX. They serve the same cities nonstop from LAS with the exception of BDL.

There are also nonstops from LAX to/from BOS and JFK.

 

[aafsc]

This is actually false. AWA has a pretty strong East-West network, relative to PSA. The furthest east PSA flew was ABQ. AWA flies to BOS, JFK, DCA, and Florida.

Also, I believe when AWA entered the transcon market, they said part of the rationale was because they had a lot of folks connecting in PHX and LAS who were travelling between BOS/JFK/DCA/IAD to LAX area and SFO area.

[post="261920"][/post]​

I stand corrected, you are right they do fly to these city as to where PSA did not. I guess what I was thinking was that neither airline has a large hub in the middle of the country like AA(DFW, ORD, STL) or UA (DEN, ORD), but instead their hubs are bunched up on or near the coasts AW (PHX, LAS) and US (PHL, CLT).

 

[dfw79]

I just did a quick overlay of the two route maps...yes the US map is really old (Toledo is still on there with several other now dead cities). As far as the western part of the country...the only cities left without any service (assuming the UAL code-share would be killed right away)...are Eureka, CA, Redmond, OR, and Pasco, WA. There would be several new markets in the southwest and the relationship with Hawaiian would help overcome any Hawaiian service issues. Moving into the great plains and rocky mountain states...Steamboat Springs, Vail, Gunnison, and Montrose, CO would be left without service along with Lincoln, NE and Tulsa. The BigSky code-share would add nearly a dozen new cities in Montana and North Dakota. Moving into the Miss River Valley and Midwest...cities that would be lost would be Green Bay, Appleton, Madison, Cedar Rapids, Quad Cities, Springfield (MO), and then South Bend and Ft. Wayne (not sure if these are UA code-shares now or not).

So really the impact network wide wouldn't hurt domestically at all. I think the pinch would come on the international network but the Star partners should come into play there. America West also adds a significant amount of new destinations in Mexico that aren't currently there.

A lot of the domestic route short falls will probably be made up with the partners at Air Wisky, Republic, PDT/PSA, and Mesa/Air Midwest. I would be a tad concerned with the lack of a midwest focus operation to allow passengers there to connect in a closer city instead of going to PHL or PHX.

As far as who buys who. HP has the stronger model...US has the bigger network...its a crap shoot. I just can't see myself flying on "America West" from Philadelphia to Rome. I would highly expect a name change to be part of any merger - though the US Airways name may be kept...who knows. There are pros and cons to both names.

Time to sit back and watch this industry finally consolidate like its been needing to do for so long.

 

[aafsc]

Since we're playing hypothetical HP/US mergers out in our heads, anyone care to guess what will happen to the slots at DCA? HP's are the 'beyond perimeter' slots that might not transfer if US is the surviving entity, as TW's slot did not transfer to AA. Though the transactions would be different, I wouldn't be surprised to see some action by the DOT taking slots away from HP/US, particularly those precious beyond perimeter ones.

[post="261922"][/post]​

In my opinion, if it is a merger (one company acquiring another as a whole) they will be allowed to keep all the slots. In the AA/TWA transaction, AA was not allowed to keep the LAX-DCA route because the transaction was an asset sale and not a corporate merger (legally and financially speaking). If it had been a true corporate merger (AA buying TWA Inc. as a whole), then AA would have been able to keep LAX-DCA.

 

[TechBoy]

Since we're playing hypothetical HP/US mergers out in our heads, anyone care to guess what will happen to the slots at DCA? HP's are the 'beyond perimeter' slots that might not transfer if US is the surviving entity, as TW's slot did not transfer to AA. Though the transactions would be different, I wouldn't be surprised to see some action by the DOT taking slots away from HP/US, particularly those precious beyond perimeter ones.

[post="261922"][/post]​

What makes you think that US would buy HP? US is in BK and hasn't a spare penny or investor. HP is close to breakeven. IF this happens, there is little doubt that it will be HP buying US. They may keep the US name, but follow the money to see who buys whom.

 

[funguy2]

Everybody knew about a potential deal with America West, but it’s going to be driven by a third party, if it occurs at all.

...

Meanwhile, I have talked with US Airways marketing and planning personnel and later tonight, I will comment on problems with a US Airways-America West combination. Remember, US Airways tried merging East and West Coast airline's in 1988 and failed -- there is a fundamental route problem with this. Can you explain why?  

On point 1, you were quoting Glenn Tilton's comments regarding industry consolidation as recently as last week, and implying they were related to the "UCT". I believe you said, "Why else would [Tilton] say that?" Secondly, until this thread, the concept of a merger or UCT with America West has never eminated from your posts. Period. To say that you informed us that US Airways is working with JP Morgan is pointless. Anyone can presumably look through the BK documents to find out who US Airways has hired as a consultant. How come the AZ Republic and PIT Review-Journal knew about the before you did? Maybe your super secret sources aren't so good? To say that "everybody" knew is ludicrous. "Everybody knows" that everything is available for the right price. It doesn't mean anything will happen. The point is, you fashion your self as the all-knowing predictor, and yet you have not mentioned this previously. Either you held something back (doubtful) or you were out of the loop.

On point 2, I won't go so far as to say an HP-US link-up would be successful... However, AWA is no PSA, as has already been pointed out. PSA had a largely regional point-to-point / North-South network, with the most easterly destination of ABQ. AWA has a fairly comprehensive East-West network, and is a decent player in the transcon market (mostly on a connection basis). Furthermore, there is some fleet commonalities with the 737's and 757's, as I understand it, but the airbus fleets have different engines, is what I seem to recall from earlier threads on the topic... But not the complete mis-match that occured between PSA and US Air (where US Air took on two new fleet types).

The advantage of such a link up is that the remaining carrier would be able to effectively fly from the middle of country to both coasts. However, the liabilities of two ATSB-backed loans, other heavy debt burdens by both carriers, and the general over-capacity malaise of the industry are all HUGE obstacles to overcome. I would expect that a third party would have to get involved (probably TPG given their interest in HP and their previous interest in US) in order to make this happen. But even so, it still seems unlikely.