US/UA Merger Master Thread

[767jetz]

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

Wrong. We have minimum block hours, which the company is already at. You can't fly those hours by chopping routes and parking airplanes. Sure you can increase utilization, but aircraft utilization is already pretty much maxed out also.

So dream on with regard to cuts coming from the UA side. Any potential merger will be required to shed some routes and assets to gain approval, just like last time with the creation of DC Air. Cuts will come from where they make the most sense, if at all. And in that case, the international operation will survive and the domestic capacity will be trimmed, which would most likely come predominantly from the USAirways side, since most of UA's domestic capacity is structured to feed the international operation.

This whole idea that cuts can't come from the USAirways side because of your min fleet size so they must come from UA is a pipe dream. (Again.) Whether it is fleet size or min block hours, it's all the same. But the cuts would have to come from somewhere. So they will come from where they make the most sense. Just like a "no furlough clause," fleet size will not survive a merger. Perhaps a pre-packaged US bankruptcy.

But don't get your undies bunched up yet, because a US/UA merger is far from being imminent.

 

[767jetz]

This is reposted from another thread...


Turbulent times

ANALYSIS | Unions ready to shoot down United merger plan with US Airways

May 8, 2008

United Airlines' powerful unions are not happy. And that is sure to further complicate an already hugely complicated situation for United CEO Glenn Tilton as he attempts to chart a course for the beleaguered carrier, which watched oil inch toward $125 a barrel Wednesday (it settled at $123.53).

In recent days, hyperventilating journalists who have been covering United's rumored consolidation efforts for months shifted focus after Continental Airlines said "no" to a stunned United. Without missing a beat and despite no on-the-record confirmations, they began insisting a United merger with a very tattered US Airways was but days away. And as has also been the case for months, United hasn't formally confirmed any merger talks, though there obviously has been plenty of discussion related to that topic.

If Tilton is indeed hell-bent on cutting a last-ditch deal with US Airways, one of the most poorly regarded (and poorly performing) of all the legacy carriers still operating domestically, United's CEO is going to have to contend with -- and ultimately win over -- three contentious, powerful and upset United unions, namely its pilots, mechanics and flight attendants.

Just how unhappy are they? Very, apparently. In a detailed statement issued Wednesday, Steve Wallach, chairman of the United Master Executive Council of the Air Line Pilots Association, said his union has "serious concerns that the highly touted financial benefits to be derived from such a merger [with US Airways] are unlikely to be achieved because those benefits are based on assumptions that have no basis in reality." Wallach went on to say "a merger with US Airways should be a last resort and not a first choice for United."

We're told the mechanics and flight attendants are in full agreement with the anti-US Airways merger stance of Wallach and his pilots union. Wallach, by the way, also sits on United's board of directors and presumably is privy to many of the particulars about whatever consolidation talks have gone on thus far.

United spokeswoman Jean Medina would not comment on any rumored merger talks with US Airways or the status of those discussions, but she insisted the unions would absolutely be consulted about a proposed consolidation deal before it is consummated. We sure hope so. Because without the unions on board, a merger-obsessed United surely won't get very far along in any deal it wishes to make happen.

 

[767jetz]

Excerpt from Steve Wallach. Captain Wallach is not only the UAL MEC Chairman but also holds a seat on UA's Board of Directors.
----------------------------------------------------------------------

Statement by Captain Steve Wallach,
Chairman of the United Master Executive Council
Of the Air Line Pilots Association,
Regarding Financial Impact of Possible Merger
Between United Airlines and US Airways​

May 7, 2008

“We are aware of continued speculation in the media of a possible merger between United Airlines (Nasdaq:UAUA) and US Airways (NYSE:LCC) and have serious concerns that the highly-touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality. We therefore believe that a merger with US Airways should be a last resort and not a first choice for United.

“First, much of the financial benefit of a merger occurs because the merged carrier takes traffic away from other carriers. With United and US Airways unlikely to be the first to fully implement their merger, it is more likely that this ‘first to merge benefit’ would accrue to a completed Northwest and Delta merger.

“Second, much of the anticipated costs savings from a merger are expected to come from an ‘optimization of the fleet’ and the integration of operations. Given the current chaotic labor situation at US Airways, this integration and the resulting cost savings are unlikely to occur at any time in the near term, if at all.

“Third, the transaction is touted as providing significant cash to the merged carrier. However, we are concerned that continued high fuel costs and the significant integration costs incurred in a merger could deplete cash reserves before the benefits of the transaction are realized sometime in the future.

“We continue to believe that the ‘execution risks’ are far greater than assumed. America West and US Airways have been unable to integrate after two and a half years, and there is no solution in sight. In fact, labor conditions at US Airways have worsened. If United and US Airways were to merge, there could not be any integration of operations until ALPA is recertified following a new election, and this could take at least a year. Once recertified, integration of the pilot seniority lists and negotiation of a new agreement will take at a minimum one and a half to two years and conceivably as long as four. Following integration, full fleet optimization likely will take an additional one to two years. In other words, the merger could take as long as six to seven years, and under the best of circumstances, at least four years to complete. During this interim period there would be minimal, if any, cost savings and financial benefits to the merged entity.

“We also believe that it is unrealistic to assume that the merger will receive Department of Justice approval. Nothing has changed since 2001 when the DOJ raised objections, and there are additional concerns over a possible reduction in coast-to-coast competition, especially the Washington, DC to Los Angeles and San Francisco routes.

“We are apparently not alone in recognizing the challenges in a United/US Airways merger. Gary C. Kelly, chief executive of Southwest Airlines, was noted as saying in a published report that he relished the prospect of the two hub-and-spoke carriers cutting back flights to reduce costs and also the likelihood that such a merger could result in a period of operational chaos for the combined airlines.

“Moreover, we believe there are a number of operational issues at United that need to be addressed, and that it is a mistake to sit idly by waiting for a merger to bail us out."

“As pilots we have a unique perspective and would welcome the opportunity to participate in the strengthening of our airline. We are prepared to speak with management about ideas that are focused on improving United’s core business, including expanding our international network, enhancing our strategic alliances, adding 90-100 seat aircraft and other refleeting opportunities, as well as other ways to reduce operating costs to strengthen our airline’s stand-alone position. We are proud to be United pilots and want to do all that we can to help our airline retain its stature and leadership position in the industry.â€￾

 

[KTM300]

3 consecutive posts.....looks a little desperate about something!

 

[767jetz]

3 consecutive posts.....looks a little desperate about something!

Ummmm... Or maybe I just don't spend all day on this forum and submit my posts all at once?

 

[USA320Pilot]

US Airways/United merger could be good news or bad news for region

According to IAM spokesman Bill Freiberger, at last week's Labor Coaltion meeting Doug Paker told union officials that if a merger with United were to happen (he spoke in the hypothetical and did not confirm ongoing talks), the CEO would handle it differently than the 2005 union of the old US Airways and American West Airlines -- a combination still hampered by labor integration problems. Instead of waiting years for workers from rival airlines to hammer out a single contract, he said he would automatically grant the highest-cost contract among the two.

See Story

Regards,

USA320Pilot

 

[Fly]

US Airways/United merger could be good news or bad news for region

Wow, that's profound. :blink:

 

[nycbusdriver]

From the Pittsburgh Post-Gazette: ""..we [Senators Specter and Casey] are encouraged by a recent statement by company President Scott Kirby in which he indicates that 'we have no plans to make further cuts in Pittsburgh.' "

Yes. We have no plans today. But who knows what tomorrow may bring?

 

[USA320Pilot]

This is the fifth merger attempt between the two companies in the past 13 years. There was the 1995 attempt where United’s unions interfered with the process due to the ESOP, the 2000 attempt where United’s AFA placed the final nail in the coffin of the propsed, the 2002 UCT discussion with Stephan Wolf and Jim Goodwin, the 2003 “Project Minnow" or ICT discussions between Dave Siegel and United management , and now the current widely reported discussions.

My question is why do these two companies talk merger every couple of years with different people sitting in the "executive suites"?

This time United is in serious financial trouble with the Chicago-based carrier losing about $6 million per day in Q1 and needing financial relief from its lenders.

According to today’s Wall Street Journal, “UAL has been trying to buy time to put into effect its recovery plan. The company said this week its lenders approved a waiver of the so-called fixed-charge coverage ratio covenant on its credit line through the first quarter of 2009. In return, UAL pledged to raise its minimum unrestricted cash balance to $1 billion from $750 million. The ratio requires that its cash flow and certain cash expenses remain within a certain band. UAL had $2.9 billion of unrestricted cash on March 31.â€

And, according to today’s Pittsburgh Post-Gazette, “IAM spokesman Bill Freiberger, at last week's Labor Coaltion meeting Doug Paker told union officials that if a merger with United were to happen (he spoke in the hypothetical and did not confirm ongoing talks), the CEO would handle it differently than the 2005 union of the old US Airways and American West Airlines -- a combination still hampered by labor integration problems. Instead of waiting years for workers from rival airlines to hammer out a single contract, he said he would automatically grant the highest-cost contract among the two.â€

See Story

Therefore, the option for United’s ALPA MEC and their other unions too...is to merge and in the case of the pilot group obtain about a 14% since Doug Parker told the Labor Coalition last week that he would “automatically grant the highest-cost contract among the twoâ€, and integrate seniority lists per the per McCaskill-Bond amendment per last December’s Appropriations Bill or possibly re-enter bankruptcy if some Wall Street anlyst predictions are correct and the company has only $1.3 billion cash on hand by the end of 2009 if this prediction comes true.

According to Reuters, "Continental called off talks with United because of United's weak financial condition and a feeling that a merger would risk its own financial health."

See Story

Maybe the Houtson-based company knows something that United's unions and its rank-and-file employees do not know or do not want to realize. Maybe a merger with a pay raise is better than another bankrupty filing. It appears United's lenders are giving them self more protection against and possible default and there appears to be other concern about United's situation because according to Rueters, "Continental was connerned enought about United's finances to walk away from a deal."

Regards,

USA320Pilot

 

[sharktooth]

3.O&D is not as important as yields.

That makes little sense to me.

O&D contributes the most to yield, simply because multiple segment fliers tend to dilute yield, hub operations tend to be more expensive.

I am not sure you can successfully compare those two items. One seems to be a mechanism, the other, a result.

 

[Jimmy Neutron]

US Airways/United merger could be good news or bad news for region

According to IAM spokesman Bill Freiberger, at last week's Labor Coaltion meeting Doug Paker told union officials that if a merger with United were to happen (he spoke in the hypothetical and did not confirm ongoing talks), the CEO would handle it differently than the 2005 union of the old US Airways and American West Airlines -- a combination still hampered by labor integration problems. Instead of waiting years for workers from rival airlines to hammer out a single contract, he said he would automatically grant the highest-cost contract among the two.

See Story

Regards,

USA320Pilot

And if you believe that he will tell you another one.......

 

[USA320Pilot]

Airline shares walloped by $126 barrel of oil

See Story

U.S. airlines raise fuel surcharges - The three biggest U.S. carriers said Thursday they have again raised ticket prices, this time by $20 round trip, to recoup rapidly rising fuel costs. The increases by American Airlines, United Airlines and Delta Air Lines affect the carriers' fuel surcharges, which now total $130 round trip on many flights

See Story

Airline price increases may be close to hurting consumer demand

See Story

Regards,

USA320Pilot

 

[767jetz]

Maybe the Houtson-based company knows something that United's unions and its rank-and-file employees do not know or do not want to realize.

I doubt that. The UAL MEC Chairman holds a seat on the Board of Directors and is privy to any and all information available. He may be restricted in what he can reveal due to confidentiality agreements. But rest assured he knows more than you. He knows EXACTLY what is being talked about in the "executive suite."

How many seats does USAPA have on the board?

 

[wopr21]

US Airways/United merger could be good news or bad news for region

According to IAM spokesman Bill Freiberger, at last week's Labor Coaltion meeting Doug Paker told union officials that if a merger with United were to happen (he spoke in the hypothetical and did not confirm ongoing talks), the CEO would handle it differently than the 2005 union of the old US Airways and American West Airlines -- a combination still hampered by labor integration problems. Instead of waiting years for workers from rival airlines to hammer out a single contract, he said he would automatically grant the highest-cost contract among the two.

See Story

Regards,

USA320Pilot

What a concept. Thats what he should have done from the start of this mess. But no... he chose a different immoral path ,and here we are now so deeply angry at each other that these scars will never heal.

There is hope.. A new merger might give us all a fresh chance if management has taken these lessons to heart and does the right thing this time.

Looking forward to better days

wopr21

 

[USA320Pilot]

767jetz,

I agree that the UAL MEC Chairman knows more than most pilots, but he does not know all that occurs in Glenn Tilton's office. In the past US Airways' pilot's union has held Board positions and just like at most other companies labor is not told the entire story, regardless if they have a Board seat or not.

And, ss you likely know USAPA does not have a Board seat.

I believe consolidation and United's relentless interest in doing so is because of the company's financial position. The carrier had a $6 million per day financial loss in Q1, they needed to get financial lender waivers, and the future Wall Street analsyt cash projection is not good news.

Apparently United's E&FA department believes a merger between United and US Airways could provide the combined business enterprise signficant revenue and cost benefits.

On Monday, the Wall Street Journal reported that United and U.S. Airways had targeted about $1.5 billion in cost savings in the event of a merger. The carriers could announce a deal by as early as next week, the newspaper said, citing people familiar with the matter."

And CBS MarketWatch indicated, "Between redundancies in the asset base and in overheads, plus with the infusion of more efficient business processes, that magnitude of synergies might be accomplished solely on the cost side," said Robert Mann of R.W. Mann & Co., an airline consultancy. "In addition there would be revenue synergies from combining networks, customer bases and loyalty programs," he said.

See Story

With all the normal union tough talk and bravado the option for United’s ALPA MEC and their other unions too, with no other merger partner and both Delta and Continental shunning United...is to merge with US Airways and in the case of the pilot group obtain about a 14% since Doug Parker told the Labor Coalition last week that he would “automatically grant the highest-cost contract among the twoâ€￾, and integrate seniority lists per the per McCaskill-Bond amendment per last December’s Appropriations Bill or possibly re-enter bankruptcy if some Wall Street anlyst predictions are correct and the company has only $1.3 billion cash on hand by the end of 2009 if this prediction comes true.

Regards,

USA320Pilot