WSJ - US/UAL merger talks "becoming very serious"

[waveflyer]

Really?
You have your opinion, but it's not naive-
don't think that doug and tilton aren't figuring how to use the merger feuds to their advantage.

It won't be to the advantage of ANY work group

 

[Raoul Duke]

Why would any pilot group want to avoid a situation where another pilot group gets a raise. That mentality is part of the problem in my opinion. To much, "I'm in pull up the rope."

what does pilot groups have to do with it? I mean why wouldnt Doug and Glen sit down and say "well there is this snap back on the east contract so we are not going to merge them, we are only going to merge the west to get around it".

 

[eaglesview]

what does pilot groups have to do with it? I mean why wouldnt Doug and Glen sit down and say "well there is this snap back on the east contract so we are not going to merge them, we are only going to merge the west to get around it".

Well I see what you are getting at however from a business standpoint why would you merge with just the West in order to secure PHX and leave PHL, CLT, DCA,Europe and the Carribean on the table. I would venture to say that would cost more than a snap back. In reality our wages need to be snapping back anyway. Last I lookes us (UAL) and USAir are the bottom feeders when it comes to wages.

 

[Hpilot]

Well I see what you are getting at however from a business standpoint why would you merge with just the West in order to secure PHX and leave PHL, CLT, DCA,Europe and the Carribean on the table. I would venture to say that would cost more than a snap back. In reality our wages need to be snapping back anyway. Last I lookes us (UAL) and USAir are the bottom feeders when it comes to wages.

A stock swap with US as the aquiring airline would keep the snap back from being triggered.

 

[whymeworry?]

UAL's stock is up, what? 3-400% since last year? What are the chances the stock maintains altitude until the close of the deal. It's an airline stock, folks. Saddled with debt, a future of never-ending losses, no new aircraft any time soon. The deal won't work w/o i-bankers cash and both UAL and LCC have way too much debt to attract any cash at this point.

I don't see how the deal will get off the ground. Not at this time anyway.

But stranger things have happened.

CAL will do just fine going it alone vs. being forced into an un-happy marriage. Remember, they are already part of the Star Alliance, and the desired dance partner. It's not like UAL is going to steam-roll a JV partner w/o taking heat form the other alliance anchor tenants (ANA/ LH/ TG, et al).

 

[scoreboardII]

you underestimate the power of GE capital and leasing who wants, nay who needs those engines to be flown so they can pay down the principle. GE will cut some sweet deals so they don't take it in the face.

 

[Captzaahlie]

bump.....

 

[General Lee]

I disagree with this. UAL has always been relatively weak on the east coast. No amount of tinkering with IAD has ever fixed this.

LCC brings a top 5 O&D market (PHL), along with a solid connecting hub with a reasonable, if not spectacular catchement area (CLT) and a very decent market share up and down the east coast. Add in a reasonable number of European destinations along with good number of Carribean destinations, and you really have something worth looking at.

It would provide UAL with something they never really had...a SOLID east coast presence. They could move all the N/S connecting traffic to CLT, and focus on DCA for O&D, and that would alieviate most of the DOJ worries.

CAL would be a better choice, because it would blanket both Europe and the Pacific, and it provides the #1 O&D NYC. OTOH, it does't provide the east coast blanket that LCC does, and you're left trying to make east coast connections through EWR rather than the relatively central and fair weathered CLT.

IMHO, LCC is a very viable choice. CAL is in the unenviable position of either jumping in and dealing with UAL or becoming a distant #4. Damned if they do, damned if they dont.

Nu

If CAL doesn't go with UAL, look for them to try for AK next to give them some sort of West Coast presence. And what would happen then most likely? DL trying to C%^$ block them. Southwest will throw their hat in the ring also, but they have way too much overlap to be taken seriously.


Bye Bye---General Lee

 

[whymeworry?]

you underestimate the power of GE capital and leasing who wants, nay who needs those engines to be flown so they can pay down the principle. GE will cut some sweet deals so they don't take it in the face.

I wouldn't be so sure about GE's enthusiasm. There is a reason the stock has been a lackluster performer during the latest market rally. GE has a solid balance sheet with tons of cash. But GE Capital has been burned badly by the financial meltdown. I think they're going to be s conservative as all the other banks out there. There have been many articles about GE over the past year addressing their over-extention in the financial markets.

 

[Redmeat]

A stock swap with US as the aquiring airline would keep the snap back from being triggered.

The latest WSJ article stated that United would be the surviving entity.

Check this out...

http://www.philly.com/inquirer/business/20100413_Continental_expected_to_make_United_bid.html


Continental expected to make United bid

By Linda Loyd
Inquirer Staff Writer
A Wall Street analyst expects Continental Airlines to bid to acquire United Airlines, after reports that United and US Airways were in merger talks.
Stifel Nicolaus airline analyst Hunter Keay said in a client note Monday that a United-US Airways merger is "a suboptimal scenario" because of pilot labor issues, revenue risks, and "problems with regulatory review due to higher domestic overlap" on routes United and US Airways have in common.
"We expect Continental to respond to reported United-US Airways merger plans with a bid for United," Keay wrote, "partly as a defensive maneuver. . . .We expect Continental to respond relatively quickly." Keay said he had no knowledge of merger negotiations or discussions between Continental and United.......( I didn't paste the whole article...link is above).


So how does all this play out if Continental and UA hook up? Does this send the rest of the players scrambling for a dance partner?

Who ends up SOL when the merger musical chairs come to a stop?

 

[TWA Dude]

The latest WSJ article stated that United would be the surviving entity.

Certainly the United name would survive but the surviving entity isn't so obvious. AWA was the acquiring carrier (for accounting purposes) and thus the surviving entity yet the US Airways name was chosen. Lots of accounting tricks can be played and Parker is a finance man.

 

[Metrojet]

Certainly the United name would survive but the surviving entity isn't so obvious. AWA was the acquiring carrier (for accounting purposes) and thus the surviving entity yet the US Airways name was chosen. Lots of accounting tricks can be played and Parker is a finance man.

Dude -

So your finally agreeing that it was an accounting trick that AWA used to merge with US - no cash out of pocket - So I guess that continuos loop of "We (AWA) bought you(US)" and saved your butts is finally put to rest as being false!

Metrojet

 

[becket]

Well I see what you are getting at however from a business standpoint why would you merge with just the West in order to secure PHX and leave PHL, CLT, DCA,Europe and the Carribean on the table.

Easy. Get the East to amend the COC language, accept that the only raise they'll ever see is through a joint contract. If they're unwilling, which is a virtual certainty given the level of psychosis that exists over there, simply merge UAL and the West. Grow the UAL side and start dismantling the east with furloughs and replace them with the new UAL.

 

[bizicmo]

if United and USair merger would that make Cal the junior partner of star alliance? and if so how is that any different then being the junior partner of the skyteam alliance, the reason why they left skyteam? Or so they say.

 

[Marko Ramius]

Well I see what you are getting at however from a business standpoint why would you merge with just the West in order to secure PHX and leave PHL, CLT, DCA,Europe and the Carribean on the table. I would venture to say that would cost more than a snap back. In reality our wages need to be snapping back anyway. Last I lookes us (UAL) and USAir are the bottom feeders when it comes to wages.

Playing along with this line of thinking, since Parker has chosen to ignore the Transition Agreement at will thus far, what exactly makes people think he wouldn't do so again if he can't get USAPA to fall on their own swords? Furlough the pilots that they actually want to move to the new company on the East side. Then open up 'West' bases in PHL, CLT, DCA, etc and use the West contract language that allowed them to open LAS with only current and qualified pilots while announcing a recall on the West side of things. Then say that United isn't purchasing the remaining East assets in the deal. A pure bs move? Sure, but it's not like such things are new the history of this business, and I'm sure a group of real lawyers could hatch up something smoother than my FI version. Even the threat of such a scenario could be enough to get USAPA to play ball on several things. At the very least I doubt they have enough financial and legal resources to fight this along with the other fires, one of many facts you chose to ignore when it comes to your zeal for making USAPA, UAPA.

 

[eaglesview]

Playing along with this line of thinking, since Parker has chosen to ignore the Transition Agreement at will thus far, what exactly makes people think he wouldn't do so again if he can't get USAPA to fall on their own swords? Furlough the pilots that they actually want to move to the new company on the East side. Then open up 'West' bases in PHL, CLT, DCA, etc and use the West contract language that allowed them to open LAS with only current and qualified pilots while announcing a recall on the West side of things. Then say that United isn't purchasing the remaining East assets in the deal. A pure bs move? Sure, but it's not like such things are new the history of this business, and I'm sure a group of real lawyers could hatch up something smoother than my FI version. Even the threat of such a scenario could be enough to get USAPA to play ball on several things. At the very least I doubt they have enough financial and legal resources to fight this along with the other fires, one of many facts you chose to ignore when it comes to your zeal for making USAPA, UAPA.

I am having a hard time following this post. However it sounds as though you are proposing that UAL ALPA would go along with throwing another pilot group "under the bus." I highly doubt that.

I don't want to make present day USAPA anything, but ALPA being replaced with "UAPA", a hypothetical name, I have no problem with.

 

[NuGuy]

If CAL doesn't go with UAL, look for them to try for AK next to give them some sort of West Coast presence. And what would happen then most likely? DL trying to C%^$ block them. Southwest will throw their hat in the ring also, but they have way too much overlap to be taken seriously.


Bye Bye---General Lee

SWA could blow DALs "west coast feed solution" out of the water with what they have in the petty cash box. It would put two of the "four corners" in serious peril.

IMHO, DAL is in a panic to build a war chest for a future acquisition, thus the very agressive manner they are paying down debt. They get to get the debt down to a managable level to fund what comes next.

It's not a matter of if, it's a matter of when. CAL, AMR, SWA are all trolling for the west coast and they are gunning for DAL.

CAL WON'T be left as a distant #4. AMR wants payback for the JAL fiasco. SWA is OUT of low hanging domestic destinations, and has to put on their big boy pants and get in the sand box with the rest of us.

UAL and LCC actually compliment each other fairly well. This is the best option for DAL, ATM.

Nu

 

[Yuppyguppy]

Um...What exactly does LCC bring to the table besides CLT? PHL is too close to IAD

 

[32drvr]

Again? Seriously? Didn't the execs make enough money the first time this merger didn't work out? Geez....

 

[TWA Dude]

So your finally agreeing that it was an accounting trick that AWA used to merge with US - no cash out of pocket - So I guess that continuos loop of "We (AWA) bought you(US)" and saved your butts is finally put to rest as being false!

There wasn't any "trick" involved, just routine accounting, but the rest of your statement I agree with (and have stated so since the beginning).

 

[Marko Ramius]

I am having a hard time following this post. However it sounds as though you are proposing that UAL ALPA would go along with throwing another pilot group "under the bus." I highly doubt that.

I don't want to make present day USAPA anything, but ALPA being replaced with "UAPA", a hypothetical name, I have no problem with.

I didn't say anything about UAL ALPA. I was just throwing out a loose scenario for Doogie to try and merge with UAL taking the assets he wants along with the West contract that avoids the snapback. I'm sure others can come up with more nefarious scenarios. You asked why UAL would only want the 'West' and not the 'East' assets, I'm just saying that it may not be as simple as that. I'm not sure UAL ALPA could do anything more about that then they could about which and how many pilots were to be siphoned off to AA in the 2000 deal. A lot of AAA pilots and assets were declared to be excess to that deal by Goodwin, and with AA also acquiring TWA at the same time a blood bath was likely.

As for 'UAPA', careful what you wish for. You can change the name but the combined group will still have the same people who drove USAPA fighting for a voice big time, along with the AWA group, and pretty much all of the 2172. That's a serious cocktail brew, and I'll bet my point about financial and legal resources would be an issue as well. I don't think you'd argue that ALPA has more money than the independents, yet when take a look at the individual MEC accounts. Many are already drawing more from national than they are bringing in, and I'm not just talking regionals here.

 

[Hamburger]

That's about as good of a deal as tying an anchor to an albatross.

 

[satpak77]

I guess one observation from all of this is the seniority list issue has been a "nonissue" reference the CEO's talking merger. They ain't loosing any sleep over the lists, not that I can tell.