LCC: No Merger this year.

[737 Pylt]

I guess Dougie's fresh out of dance partners!

Full Story HERE!

Friday, May 30, 2008 - 10:31 AM EDT


US Airways CEO tells employees there will be no merger this year

US Airways Group Inc. CEO Doug Parker said Friday in a letter to employees that he does not expect the airline to merge with any others this year.
The announcement comes at the end of a week when published reports said a merger between Tempe-based US Airways (NYSE:LCC) and Elk Grove, Ill.-based United Airlines was off. Top executives from both airlines reportedly met Thursday, and called off any possibility of a merger in the near term. The two airlines have been in merger discussions for two months.
Parker's letter to employees says, "after much work and many conversations with other airlines, we have come to the conclusion that consolidation involving US Airways will not occur at this time."
With fuel prices skyrocketing, Parker left the door open for future mergers and/or acquisitions.
"This is not to say that something won't occur in the future - as you know I strongly believe that consolidation is required in our industry and that US Airways would benefit from participating. Rather it is simply unlikely that anything will happen in 2008 as our industry continues to struggle with how to function in a world with $130/bbl oil prices."
United employees were notified that the deal is off.

 

[Fubijaakr]

Good. Don't want a good legacy like UAL going down the LCC rathole.

 

[Deadalus]

Good. Don't want a good legacy like UAL going down the LCC rathole.

I'd have to agree. The East pilots have doomed this airline to the end. We could have seen 30% pay raises and a merger with United that would have stabilized things in the long run. I've never seen a bigger bunch of losers. The good thing about liquadating is it will put these morons out flipping burgers where they should be.

 

[Colonel Savage]

I'd have to agree. The East pilots have doomed this airline to the end..... The good thing about liquadating is it will put these morons out flipping burgers where they should be.

You think if LCC liquidates that it will be the east's fault? How?

 

[eaglesview]

I'd have to agree. The East pilots have doomed this airline to the end. We could have seen 30% pay raises and a merger with United that would have stabilized things in the long run. I've never seen a bigger bunch of losers. The good thing about liquadating is it will put these morons out flipping burgers where they should be.

Didn't you post "USAir in bad shape UAL even worse" in another post? Hats off to the east for not accepting a rediculous list.

 

[Green]

You think if LCC liquidates that it will be the east's fault? How?

because one of the stated reasons for the deal souring was the labor problems and lack of integration at LCC. The interested parties thought that another delayed integration would kill the synergies. Obviously the east pilots are 100% behind the failure to integrate as they refuse to abide by there previous agreement in regards to binding arbitration and refused to negotiate a joint contract without the west capitulating.

They can claim it wasn't fair all they want but the reality is that we would have a joint contract and a combined airline if it wasn't for the East guys and gals....'seniority matters' 'capture our attrition' etc etc

 

[PlaneDrvr]

because one of the stated reasons for the deal souring was the labor problems and lack of integration at LCC. The interested parties thought that another delayed integration would kill the synergies. Obviously the east pilots are 100% behind the failure to integrate as they refuse to abide by there previous agreement in regards to binding arbitration and refused to negotiate a joint contract without the west capitulating.

They can claim it wasn't fair all they want but the reality is that we would have a joint contract and a combined airline if it wasn't for the East guys and gals....'seniority matters' 'capture our attrition' etc etc

Well, I don't want to get in the middle of your 'east vs. west' pi$$ing contest; however, I think to a large degree, the 'labor integration' thing was used mostly as an excuse. I believe the main reason that no deal was possible was that they could not find an outside investor to pony up $1.0-1.5 Bil. to invest in the combined company to cover most of the integration cost. Would YOU invest money in an airline right now???

Don't get me wrong, I do accept the labor integration thing was a consideration, especially with labor holding 2 seats on the UAL board, and emphasizing those issues, but outside money was the real issue.

Also, not sure if it is the best time, in the airline business cycle for a merger. We are currently at the 'peak' of the airline cycle, and I believe the best time for a merger is when the industry 'bottoms' in the cycle, or begins the 'upswing' as it is much easier to absorb and cover the 'integration costs.'

We'll see what happens with the DL/NWA merger, and I seriously think the integration costs, integration problems, etc. could end up dragging the new combined company down, depending on how bad (deep and how long) the coming 'economic downturn/recession' will be and how high oil goes. Like I said, we'll see.

PD

 

[Colonel Savage]

"...however, I think to a large degree, the 'labor integration' thing was used mostly as an excuse. I believe the main reason that no deal was possible was that they could not find an outside investor to pony up $1.0-1.5 Bil."

PD-

Awfully unfair for UAL to blame labor (the east pilots) and fuel all that acrimony if they weren't the cause, isn't it? If the real fear was LCC's financials, UAL's inability to secure a loan, or overwhelming integration problems (sans labor) they should have just said so. I think it was a witch's brew of all the above, which is certianly fair enough.

Bargin hunting at the bottom of a business cycle is sound strategy if the hunter is strong and prey is weak, but that is not the case here. Parker tried bottom fishing with USAir in '05 from a weak position and now has a very unsucuessful merger on his hands. Best to merge when times are better, and the prey is healthier (albeit more expensive) and create more of those lauded "synergies" management loves to pontificate about, than to merge under duress and wind up with a bigger loser.

 

[B-J-J Fighter]

I hope there is ample supply of baby formula tampons and vagasil on the market for the East pilots.

 

[B-J-J Fighter]

I hope there is ample supply of baby formula tampons and vagasil on the market for the East pilots.

This should be the title of a thread....

 

[Tweaker]

That makes little to no sense, amigo.

 

[Deadalus]

Didn't you post "USAir in bad shape UAL even worse" in another post? Hats off to the east for not accepting a rediculous list.

With spelling like that what are you some twelve year old on dad's computer? "rediculous" now that's funny.

 

[eaglesview]

With spelling like that what are you some twelve year old on dad's computer? "rediculous" now that's funny.

Yeah you caught me with a misspelled word, good for you. The rest of us will notice you had no real answer.
PS. I’m almost twelve and a half!!

 

[Deadalus]

Yeah you caught me with a misspelled word, good for you. The rest of us will notice you had no real answer.
PS. I’m almost twelve and a half!!

I guess I'll have to spell it out reeeaaaallll slowwwwwllly. We would have been better off together UAL/LCC. The East however would have surely screwed things up by trying to screw the UAL pilots. They're(UAL) better off without that even though they'll probably beat us into bankruptcy. Was that sssloooooooooow ennoooouggghhh.

 

[eaglesview]

I guess I'll have to spell it out reeeaaaallll slowwwwwllly. We would have been better off together UAL/LCC. The East however would have surely screwed things up by trying to screw the UAL pilots. They're(UAL) better off without that even though they'll probably beat us into bankruptcy. Was that sssloooooooooow ennoooouggghhh.

OK My turn to talk reeeaaaal sloooow. As a UAL employee thank god the deal is off. We don’t want any part of LCC or that ridiculous NIC which is a major issue.