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Topic: AC-UA Merger?
Username: Iloveboeing
Posted 2007-12-23 15:56:08 and read 3658 times.

The topic was brought up in the AC-UA 787 thread, so I though I'd start up a thread devoted to the topic. If the American and Canadian governments would abolish the foreign ownership laws, could an AC-UA merger work?

I think it could. AC has really turned itself around in the past few years. They have a new, transparent fare structure, similar to WN, which could be applied at UA. The UA management really want to merge with somebody, so why not a Star Alliance partner?

The UA employees might like being under the Canadian management. Unlike UA in bankruptcy, AC didn't eliminate pensions and they limited pay cuts and layoffs. If they could apply the same techniques in the USA, the UA employees might be happier.

The fleets are similar. UA and AC both using the A320 family and they could order more to replace UA's older 737s. They could order more 787s to replace UA's 767s. They could also order 748s and/or A380s. They could upgrade the IFE fleet-wide and have PTVs and XM Satellite Radio. A merged AC-UA would be a powerful force in the world airline industry.

What does everyone else think?

Topic: RE: AC-UA Merger?
Username: Avt007
Posted 2007-12-23 16:04:09 and read 3630 times.



Quoting Iloveboeing (Thread starter):
If the American and Canadian governments would abolish the foreign ownership laws, could an AC-UA merger work?

That's a mighty big "if". Can you see American politicians voting so that a foreign airline could take control of an American one? There are so many issues that would work against this, I don't where to start.

Topic: RE: AC-UA Merger?
Username: Iloveboeing
Posted 2007-12-23 16:08:16 and read 3613 times.



Quoting Avt007 (Reply 1):

That's a mighty big "if". Can you see American politicians voting so that a foreign airline could take control of an American one? There are so many issues that would work against this, I don't where to start.

Well, as long as the Democrats have control of Congress, then it is a definite no. But couldn't it be like Air France-KLM (which, I think, has French-Dutch ownership) and a merged AC-UA could be under Canadian-American ownership?

Topic: RE: AC-UA Merger?
Username: BP1
Posted 2007-12-23 16:09:59 and read 3613 times.

Friends,

As this is being talked about, it would be a fantastic merger for both airlines and for both countries. However, let us not forget about the 25% ownership rule and the cabotage issue in Canada with a foreign flagged carrier flying inter-Canada flights too. Please show us how that could be overcome with these two carriers and we could get potentially start going somewhere, otherwise...

Regards,
BP1

Topic: RE: AC-UA Merger?
Username: EvilForce
Posted 2007-12-23 16:10:38 and read 3602 times.

I guess I don't see any benefits outweighing the challenges personally. Why deal with multiple unions across national boundaries? Besides, honestly what would United have to offer Air Canada other than sheer size? Bigger isn't always better. Also why deal with the Yank govt. with the inane security laws? Right now being a Canadian airline comes with some built in business. People wishing to simply fly thru a country like Canada or the USA on their way from Asia to Europe, currently have to deal with US Immigration and the State Dept, just to connect thru our airports. Why deal with that when you can just fly Air Canada thru Toronto or Vancouver and not need to deal with the hassle?

I guess I just see zero benefit to buying United. At least Air Canada buying them, that is.

Topic: RE: AC-UA Merger?
Username: Sebring
Posted 2007-12-23 21:00:08 and read 3246 times.

The concept at present would be unworkable. AC or UA could invest in each other up to the limit each country allows, as an investment and to cement their codesharing agreement, but you could not get complete integration.

Topic: RE: AC-UA Merger?
Username: AC772
Posted 2007-12-23 21:04:30 and read 3234 times.

All I have to say is which livery would they keep?
Both have just recently updated and changed.
I love AC and UA!
AC772  biggrin 

Topic: RE: AC-UA Merger?
Username: DeltaL1011man
Posted 2007-12-23 21:07:44 and read 3227 times.



Quoting Iloveboeing (Thread starter):
The topic was brought up in the AC-UA 787 thread, so I though I'd start up a thread devoted to the topic. If the American and Canadian governments would abolish the foreign ownership laws, could an AC-UA merger work?

wont ever happen

Topic: RE: AC-UA Merger?
Username: Eddieho
Posted 2007-12-23 21:12:30 and read 3204 times.

Theres a lot that benefits companies behind a merger

1. Tax benefits..... from depreciation and loss carryforwards (theres plenty of that)
2. Economies of scale / maintenance
3. Marketing aspects

Also, a merger doesnt necessarily have to be a merger of shares. Air Canada for example, can sell all its assets to UA, which would be one type of a merger.

Topic: RE: AC-UA Merger?
Username: Sebring
Posted 2007-12-23 21:49:08 and read 3146 times.



Quoting Eddieho (Reply 8):

Also, a merger doesnt necessarily have to be a merger of shares. Air Canada for example, can sell all its assets to UA, which would be one type of a merger.

I don't think you've thought this through very well. How would AC operate within Canada if it didn't have any assets? And Canada wouldn't allow UA to operate domestic services in Canada and the US would not allow the same by a Canadian owned carrier.

Topic: AC//777-200LR New Delivery 11/30
Username: FLYACYYZ
Posted 2007-12-24 04:54:45 and read 2951 times.

Heaven forbid!!!!! It'll never happen.

Topic: RE: AC-UA Merger?
Username: Bobnwa
Posted 2007-12-24 04:56:32 and read 2949 times.



Quoting AC772 (Reply 6):
All I have to say is which livery would they keep?
Both have just recently updated and changed.
I love AC and UA!
AC772

The livery would be issue number 13,724 of things to be considered in a merger. The type of coffee to serve in the cafeteria would be ahead of it.

Topic: RE: AC-UA Merger?
Username: JoeCanuck
Posted 2007-12-24 06:31:42 and read 2838 times.

'Tis to laugh...just because we're a bunch of seal clubbing lumberjacks who drive dog teams and live in igloos, it doesn't mean we're going to fall for that kind of sucker bet...

Topic: RE: AC-UA Merger?
Username: PVG
Posted 2007-12-24 06:39:43 and read 2820 times.



Quoting BP1 (Reply 3):
However, let us not forget about the 25% ownership rule and the cabotage issue in Canada with a foreign flagged carrier flying inter-Canada flights too. Please show us how that could be overcome with these two carriers and we could get potentially start going somewhere, otherwise...

that would be the quid-pro-quo. Canada would say, you let AC be the majority shareholder in AC/UA and we'll open the market to allow unregulated flights by US carriers into Canada and vice-versa.

Topic: RE: AC-UA Merger?
Username: Avek00
Posted 2007-12-24 07:18:49 and read 2731 times.



Quoting Iloveboeing (Thread starter):
I think it could. AC has really turned itself around in the past few years. They have a new, transparent fare structure, similar to WN, which could be applied at UA. The UA management really want to merge with somebody, so why not a Star Alliance partner?

The UA employees might like being under the Canadian management. Unlike UA in bankruptcy, AC didn't eliminate pensions and they limited pay cuts and layoffs. If they could apply the same techniques in the USA, the UA employees might be happier.

To be quite honest, merging AC and UA would solve neither airline's problems. In fact, it would exacerbate them immensely.

Topic: RE: AC-UA Merger?
Username: Socalfive
Posted 2007-12-24 07:42:15 and read 2672 times.

Discussing this must mean we are running painfully low on subject matter. It'll never happen.

Topic: RE: AC-UA Merger?
Username: Bmacleod
Posted 2007-12-24 07:52:44 and read 2654 times.

Quoting Iloveboeing (Thread starter):
The fleets are similar.

UA doesn't have the 777-300ER, A321, A330 or the A340 for that matter. Nor does AC have 737s, 744s or 757s.

Commonality only lies in 772s, 767s, A320 family, EMB-175s, and CRJs.

To says the fleets are similar is a bit of a stretch.

Quoting Iloveboeing (Thread starter):
They could also order 748s and/or A380s.

     

The day UA can afford the A380 will be the day Boeing relaunches the Sonic Cruiser.

As for AC they are very content with 77Ws and have no use for anything larger unless their Asian-Pacific market increases dramatically.

[Edited 2007-12-24 08:00:50]

Topic: RE: AC-UA Merger?
Username: Threepoint
Posted 2007-12-24 16:10:04 and read 2183 times.



Quoting Sebring (Reply 5):
he concept at present would be unworkable.... you could not get complete integration.



Quoting DeltaL1011man (Reply 7):
wont ever happen



Quoting FLYACYYZ (Reply 10):
Heaven forbid!!!!! It'll never happen.



Quoting Socalfive (Reply 15):
It'll never happen.

I agree with the above posts, but come on guys, instead of stating the negative, post some valid reasons as to WHY not. The posts in replies 2, 3 and 4 gave a few good reasons; let's expand upon them, introduce new ones, or refrain from raining on the doomed parade.

Quoting Sebring (Reply 9):
And Canada wouldn't allow UA to operate domestic services in Canada and the US would not allow the same by a Canadian owned carrier.

Right now, yes. But in the 2nd sentence of the original post, the assumption was put forth that the two federal governments had resolved that sticking point. I believe this is an exercise in a hypothetical business case rather than identifying obvious political barriers.

Topic: RE: AC-UA Merger?
Username: Alias1024
Posted 2007-12-24 16:23:17 and read 2155 times.

The only way I could see it being allowed is if the two are kept separate like AF/KL. People in the US aren't going to be very happy if Air Canada suddenly has hubs in ORD, SFO, LAX, DEN, and IAD. Likewise, Canadians will be up in arms if the Air Canada name disappears and United picks up YYZ, YVR, and YUL hubs.

Quoting Iloveboeing (Thread starter):
They could upgrade the IFE fleet-wide and have PTVs and XM Satellite Radio.

Given the ever increasing number of people who travel with an laptop computer, iPod, or other MP3 player, I think XM Satellite Radio would be a gigantic waste of money in the very near future.

Topic: RE: AC-UA Merger?
Username: Avek00
Posted 2007-12-24 16:59:33 and read 2101 times.



Quoting Threepoint (Reply 17):
I agree with the above posts, but come on guys, instead of stating the negative, post some valid reasons as to WHY not. The posts in replies 2, 3 and 4 gave a few good reasons; let's expand upon them, introduce new ones, or refrain from raining on the doomed parade.

1. Labor.

2. No material revenue synergies beyond those already realized by the carriers in their existing alliance.

3. Labor.

4. No material cost synergies beyond those already realized by the carriers in their existing alliance.

5. Labor.

6. Costs of acquisition and integration (realistically, even the "cheapest" integration of UA and AC would run at least $2 BILLION dollars separate and apart from any costs of acqusition) would prove prohibitive, and even in a best-case scenario, would leave the merged carrier financially fragile for a half-decade or more.

7. Labor.

8. When carriers focus on merging, attention to customer service becomes peripheral at best to the airline's manangement. We've seen this time and again, with the AC/CP merger, the US/HP merger being recent examples.

9. Labor.

10. Even if the USA and Canadian governments approve a merger, the combined airline would face difficulties around the world because Canada has far fewer Open Skies agreements than the USA, and few of the USA agreements would allow 7th Freedom flying by a USA carrier from Canada to a third country.

Topic: RE: AC-UA Merger?
Username: Bmacleod
Posted 2007-12-24 19:45:05 and read 1968 times.

AveKOO,

Don't mean to be perplexed here but is there a point to having LABOR mentioned five times?  confused 

Topic: RE: AC-UA Merger?
Username: Jamincan
Posted 2007-12-24 20:03:36 and read 1938 times.



Quoting Bmacleod (Reply 20):
AveKOO,

Don't mean to be perplexed here but is there a point to having LABOR mentioned five times? confused

I think he means to emphasize how important an issue it is.

Topic: RE: AC-UA Merger?
Username: VonRichtofen
Posted 2007-12-24 20:11:44 and read 1929 times.



Quoting Iloveboeing (Thread starter):
Unlike UA in bankruptcy, AC didn't eliminate pensions

That's because eliminating pensions is illegal in Canada.

Topic: RE: AC-UA Merger?
Username: Boeing744
Posted 2007-12-25 01:15:19 and read 1793 times.

Another big obstacle would be the language laws concerning AC being a bilingual company. There's no way that UA would be able to make all their FA's multilingual to meet these laws assuming they stayed the same.

Quoting Avek00 (Reply 19):
1. Labor.

2. No material revenue synergies beyond those already realized by the carriers in their existing alliance.

3. Labor.

4. No material cost synergies beyond those already realized by the carriers in their existing alliance.

5. Labor.

6. Costs of acquisition and integration (realistically, even the "cheapest" integration of UA and AC would run at least $2 BILLION dollars separate and apart from any costs of acqusition) would prove prohibitive, and even in a best-case scenario, would leave the merged carrier financially fragile for a half-decade or more.

7. Labor.

8. When carriers focus on merging, attention to customer service becomes peripheral at best to the airline's manangement. We've seen this time and again, with the AC/CP merger, the US/HP merger being recent examples.

9. Labor.

10. Even if the USA and Canadian governments approve a merger, the combined airline would face difficulties around the world because Canada has far fewer Open Skies agreements than the USA, and few of the USA agreements would allow 7th Freedom flying by a USA carrier from Canada to a third country.

Yes, except in Canada numbers 1, 3, 5, 7 and 9 would be Labour.

See? It would just never work!  Silly

Topic: RE: AC-UA Merger?
Username: RP TPA
Posted 2007-12-25 05:11:15 and read 1747 times.

You left out a few VERY IMPORTANT items off of that list:

Quoting Bobnwa (Reply 11):
The livery would be issue number 13,724 of things to be considered in a merger. The type of coffee to serve in the cafeteria would be ahead of it.


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