Eagle757shark
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Report: US Airways discussing merger with United
Wednesday, April 16, 2008
By Dan Fitzpatrick, Pittsburgh Post-Gazette
US Airways and United Airlines are discussing a potential merger, according to a report this morning in The Wall Street Journal.
US Airways Chief Executive Officer Doug Parker, in a message to employees today, did not confirm or deny the Journal report or a separate Dallas Morning News article suggesting "we might make a good merger partner" for American Airlines, saying he could not comment on "any specific discussions or transaction." But he also reiterated his support for further consolidation among U.S. airlines.
"Rest assured, if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is in the best interests of our employees and our airline," he said.
The speculation about a US Airways-United hook-up comes just a day after Atlanta-based Delta Air Lines and Minneapolis-based Northwest Airlines Corp. unveiled their proposed union and promised to create the world's largest airline. There also is new speculation about a United-Continental Airlines Inc. union. Yesterday, the chief executive officer of Houston-based Continental said the company would review its "strategic alternatives."
United and US Airways have discussed a tie-up before. In 2000, the U.S. Justice Department nixed a proposed merger on antitrust grounds. Later, when David Siegel was CEO of US Airways, the carrier considered a takeover of United after emerging from its first bankruptcy as a way of remaining competitive. The option was code-named "Project Minnow," with US Airways as the small fish gobbling the bigger one. In the end, US Airways decided to merge with Tempe, Ariz.-based America West Airlines.
Last year, US Airways attempted an unsuccessful takeover bid for Delta.
A US Airways-United combination is considered a "more remote possibility" when compared to the prospect of United-Continental, according to the Journal. However, United and US Airways have been talking for "over a month," according to the newspaper, with proposed cost savings that "could be at least as attractive as synergies in a United-Continental linkup" and potentially higher than the $1 billion Northwest and Delta expect to save as part of their merger.
Mr. Parker, in his message to employees, argued that "we can't ignore what's happening in the world around us. Oil has risen to over $113 per barrel and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues." The Delta-Northwest combination "potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable."
"Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provdies long-term stability for our employees."
US Airways still employs about 2,000 people in the Pittsburgh area, down from about 12,000 before 9/11, and remains the largest carrier at Pittsburgh International Airport.
Wednesday, April 16, 2008
By Dan Fitzpatrick, Pittsburgh Post-Gazette
US Airways and United Airlines are discussing a potential merger, according to a report this morning in The Wall Street Journal.
US Airways Chief Executive Officer Doug Parker, in a message to employees today, did not confirm or deny the Journal report or a separate Dallas Morning News article suggesting "we might make a good merger partner" for American Airlines, saying he could not comment on "any specific discussions or transaction." But he also reiterated his support for further consolidation among U.S. airlines.
"Rest assured, if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is in the best interests of our employees and our airline," he said.
The speculation about a US Airways-United hook-up comes just a day after Atlanta-based Delta Air Lines and Minneapolis-based Northwest Airlines Corp. unveiled their proposed union and promised to create the world's largest airline. There also is new speculation about a United-Continental Airlines Inc. union. Yesterday, the chief executive officer of Houston-based Continental said the company would review its "strategic alternatives."
United and US Airways have discussed a tie-up before. In 2000, the U.S. Justice Department nixed a proposed merger on antitrust grounds. Later, when David Siegel was CEO of US Airways, the carrier considered a takeover of United after emerging from its first bankruptcy as a way of remaining competitive. The option was code-named "Project Minnow," with US Airways as the small fish gobbling the bigger one. In the end, US Airways decided to merge with Tempe, Ariz.-based America West Airlines.
Last year, US Airways attempted an unsuccessful takeover bid for Delta.
A US Airways-United combination is considered a "more remote possibility" when compared to the prospect of United-Continental, according to the Journal. However, United and US Airways have been talking for "over a month," according to the newspaper, with proposed cost savings that "could be at least as attractive as synergies in a United-Continental linkup" and potentially higher than the $1 billion Northwest and Delta expect to save as part of their merger.
Mr. Parker, in his message to employees, argued that "we can't ignore what's happening in the world around us. Oil has risen to over $113 per barrel and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues." The Delta-Northwest combination "potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable."
"Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provdies long-term stability for our employees."
US Airways still employs about 2,000 people in the Pittsburgh area, down from about 12,000 before 9/11, and remains the largest carrier at Pittsburgh International Airport.
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