US/UA Merger Master Thread

[hp_fa]

My gut tells me that ** if ** there is a merger than PHL takes a big hit and PHX takes a substantial hit.

 

[Elevation]

The only people benefiting from a UA/US merger is SWA. US/UA can merge there hearts away but they cannot compete casm vs casm against SWA. You say "but we have international flights" how long do you really think it's gonna be before the capacity is increased by all airlines and fare war breaks out? Atlantic is already showing weakness due to high capacity, it's just a matter of time. Bottom line is if this merger is to work costs must be closer than they are today with SWA. The only thing saving the east right now is constrained airports at PHL,ORD,EWR,JFK,DCA and ATL etc. When gate space and airport expansion at some of these airports are complete, SWA will eventually be there in big numbers and then what? Someday you have to stop running and fight.

 

[pit_needs_help]

Until the hedging becomes more equal,or gone, it will be difficult/impossible to get to WN's cost. Even they would be losing money the last few quarters without the hedges.

 

[luvthe9]

My gut tells me that ** if ** there is a merger than PHL takes a big hit and PHX takes a substantial hit.

PHL would take very little if any, and would actually expand big time internationally, UAL would or could do the far east flying along with Hawaii. I bet west would become focus cites, UAL needs the east coast and Europe they already have the west. As Parker said the west "yields are weak". Lets hope this merge does not happen.

 

[zethya]

WIth this week's changes in UA's Executive structure and some (more) very recent Press purported leaks, I am now leaning (a little) toward a potential UA acquisition of US (stock swap), rather than the other way round. Doesn't necessarily mean Parker wouldn't be the surviving CEO, but it would seem to imply that the majority, if any, downsizing could be at the US end of the deal. If that is the case, an obvious very big ? has to be whether PHX and DEN would remain Hubs - it would seem that one has to be eliminated. IAD and PHL, regardless, would likely be retained as major profit centers with some overlap adjustments. CLT IMO is an unknown because of 2 questions, would the "new" UA really want to set up a cut throat competition with the "new" DL's ATL hub 200 miles to the South, especially with today's fuel prices; and would they want to transfer significant IAD international and domestic connecting traffic to CLT to build it to the required competitive level? The positive for CLT of course is the cost of doing business versus IAD. It may have been a very wise strategic move on WN's part to move into both PHL and IAD, for IF there is a UA/US downsize, they (WN) could come out the big winner - both Domestically and Internationally, especially at PHL.

 

[elixir]

As much as I hate to say this, the reality is that PHX and LAS would turn into focus cities, at BEST...The O & D traffic on the West COAST...the real COAST far outweighs what revenue PHX could garner...and LAS would be a "entertainment" focus (seasonal) at best.

What you guys better start thinking about is this: in the evnt of a UAL/LCC deal....the UAL overhead will swamp LCC unless they get real about the true profit-centers in the system....which are without question the East Coast markets.

Now, a bean counter will have already made up his mind. What goes, vs. what stays....it's a no-brainer.

I sure wish East and West could make peace before some serious decisions get made about "profit centers" in the GLOBAL picture.

 

[Pacemaker]

As much as I hate to say this, the reality is that PHX and LAS would turn into focus cities, at BEST...The O & D traffic on the West COAST...the real COAST far outweighs what revenue PHX could garner...and LAS would be a "entertainment" focus (seasonal) at best.

Not quite sure what you mean here - are you talking O & D in numbers of pax or are you talking yield per pax?

Top US airports for domestic O & D, total pax, 2006 data

1. LAS 33.1 million
6. PHX 24.5 million
13. PHL 17.6 million
22. DCA 13.9 million

Only the top 30 markets were listed, CLT is not among them.

If you're talking yield then PHL & DCA would probably rank much higher and LAS/PHX lower.

 

[nycbusdriver]

There are many on this board that think the UAL/US merger is a bad thing. I for one don't think so. Merging the two would create a massive route structure that would rival anyones.

I think without some real visionary leadership (which neither company seems to have right now,) the massive route structure would be more of a massive headache than not.

WIth this week's changes in UA's Executive structure and some (more) very recent Press purported leaks, I am now leaning (a little) toward a potential UA acquisition of US (stock swap), rather than the other way round. Doesn't necessarily mean Parker wouldn't be the surviving CEO, but it would seem to imply that the majority, if any, downsizing could be at the US end of the deal.

The downsizing will have to come from UAL. Both the east and west USAirways pilots' contract have minimum fleet requirements, and the company is only within about a half dozen airplanes of those minimum numbers. There is little likelihood that the USAirways pilots, even though they are at each others throats right now, would give any concessions on the contractual fleet size.

UAL, on the other hand, has no minimum fleet size requirement in their pilots' contract to the best of my knowledge.

With costs out of control (mostly due to fuel but also due to poor management) and a handsome half billion dollar quarterly loss, I think UAL will go into a prepackaged Chapter 11 as part of the merger deal. It's Parker's modus operandi, i.e. do all your "right sizing" with the help of a federal judge.

 

[dexter]

OH GOLLY----Another identity crisis for all of us. After all these years of merging I am beginning to feel like a "foster child". To think we have to go through this all over again......and again......and again......

 

[Elevation]

As much as I hate to say this, the reality is that PHX and LAS would turn into focus cities, at BEST...The O & D traffic on the West COAST...the real COAST far outweighs what revenue PHX could garner...and LAS would be a "entertainment" focus (seasonal) at best.

1.DEN would see the brunt of a west coast contraction in my opinion,due to several reasons.
2.LAS is already a focus/seasonal city in reality. Microscopic pilot base, no FA's based there.
3.O&D is not as important as yields.

 

[prechilill]

The downsizing will have to come from UAL. Both the east and west USAirways pilots' contract have minimum fleet requirements, and the company is only within about a half dozen airplanes of those minimum numbers. There is little likelihood that the USAirways pilots, even though they are at each others throats right now, would give any concessions on the contractual fleet size.

UAL, on the other hand, has no minimum fleet size requirement in their pilots' contract to the best of my knowledge.

Why do you assume fleet cuts have to happen before a merger? Parker can establish a merger without any cuts and wait until the pilots agree to a joint contract between UAL, USEast and USWest. The best way for Parker to get around your group's intransigence is to simply merge with UAL and hold a representation election. ALPA would reappear as the bargaining agent and then all bets are off as to where the cuts would occur. Since UAL is the golden child of their union I imagine USAirways would take the staffing cuts.
This assumes the bankers are ok with the merger. If they are, the only big obstacle Parker faces is getting the UAL pilots on board with a merger. I imagine he will be offering them protections, and without getting into the USAP mud slinging too much, I think Parker understands the weak position USAPA is in. They have no bargaining power and 1/3 of their members would jump at any opportunity to undermine that union. Fiction couldn't come up with a more entertaining story than what we find ourselves in today. The UAL pilots have all the power. Fotunately, I feel they are a reasonable group of professionals to deal with.

 

[nycbusdriver]

Why do you assume fleet cuts have to happen before a merger? Parker can establish a merger without any cuts and wait until the pilots agree to a joint contract between UAL, USEast and USWest. The best way for Parker to get around your group's intransigence is to simply merge with UAL and hold a representation election. ALPA would reappear as the bargaining agent and then all bets are off as to where the cuts would occur. Since UAL is the golden child of their union I imagine USAirways would take the staffing cuts.
This assumes the bankers are ok with the merger. If they are, the only big obstacle Parker faces is getting the UAL pilots on board with a merger. I imagine he will be offering them protections, and without getting into the USAP mud slinging too much, I think Parker understands the weak position USAPA is in. They have no bargaining power and 1/3 of their members would jump at any opportunity to undermine that union. Fiction couldn't come up with a more entertaining story than what we find ourselves in today. The UAL pilots have all the power. Fotunately, I feel they are a reasonable group of professionals to deal with.

If you think THIS merger is dragging on, how do you think the UAL merger will go? Do you think Parker (or whoever is CEO) will sustain the fleet size for a good 3 years with the price of fuel and lack of yield JUST because you dream it? Do you think the big stockholders will go for that? Dream on, westie. Up front part of the plan is to eliminate redundancy and reduce capacity to take advantage of the economies of scale. The reductions will have to come from someplace in the near term, and it can't be the US side. Even though it would be quite a jolly sight to see USAPA concede your westie min fleet requirement to help Parker out, I know USAPA would never even consider it.

 

[Sig]

I think without some real visionary leadership (which neither company seems to have right now,) the massive route structure would be more of a massive headache than not.

I think UAL will go into a prepackaged Chapter 11 as part of the merger deal. It's Parker's modus operandi, i.e. do all your "right sizing" with the help of a federal judge.

I think I think exactly how you think.

That makes (in my Dash-8 sized brain) a lot more sense than most things I've read on the topic.

 

[prechilill]

If you think THIS merger is dragging on, how do you think the UAL merger will go? Do you think Parker (or whoever is CEO) will sustain the fleet size for a good 3 years with the price of fuel and lack of yield JUST because you dream it? Do you think the big stockholders will go for that? Dream on, westie. Up front part of the plan is to eliminate redundancy and reduce capacity to take advantage of the economies of scale. The reductions will have to come from someplace in the near term, and it can't be the US side. Even though it would be quite a jolly sight to see USAPA concede your westie min fleet requirement to help Parker out, I know USAPA would never even consider it.

USAPA never would concede anything of the TA because they can't (including the arbitrated seniority list). Parker has probably learned a lot from your group's intransigence and with ALPA coming on the property again it would make the integration much easier since he sees how you guys operate. I would speculate he would appease the UAL pilots with any concerns since they will be the overwhelming majority when this plays out and it will be their union he will be dealing with once the UAL and AWA pilots vote ALPA as the bargaining agent again. You seem to believe this will take three years, but it has taken three years because our two unions messed around with fruitless negotiations, then mediation, and here we are one year after a lengthy arbitration. With UAL, the seniority list would be wrapped up in a few weeks along with applying for single carrier status which would automatically be prompted since two different unions are involved (unlike US and AWA).
By making the cuts before a merger Parker only makes it nearly impossible for the UAL pilots to buy off on his merger. All Parker has to do is wait until after the merger and then return airplanes as the leases come due, perhaps on an accelerates schedule. WIth UAL pilots running the show within one year after an integration, maybe they would allow CLT, PHX and BOS to be downsized. I do not know, it is all speculation at this point. However it seems apparent Doug Parker has learned a lot from the USEast intransigence this past three years and will be planning ahead for your group's protests to a merger. The path of least resistence is to cut the fleet after ALPA is back on the property (which, as I said, would be only a few weeks from merger consummation). Parker can wait a year, otherwise I think he knows he will not be able to sell the merger to the UAL pilots if most of them will be taking the hit- those guys have the numbers, the solidarity and the union support to capitalize on USAPA's pilots.

 

[USstew23]

Going with the "prepackaged Ch. 11" idea for UA: IF this merger were to happen and IF they were to re-enter ch. 11 wouldn't it give UA the ability to rid themselves of all of their RJ contracts? Lord knows we have enough damn RJ's at US to share with the entire industry and since we really can't break any of our contracts there would be quite enough to spread throughout the domestic system and not really have to shrink the mainline fleet as much as some think. Yes there is too much domestic capacity and I feel that most of it is at the regionals. They need to stop paying everybody else to fly our routes and take back the ability make a profit from it.