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American / United Merger Proposal  
User currently offlineJMV From United States of America, joined Jan 2000, 241 posts, RR: 1
Posted (9 years 12 months 5 hours ago) and read 11887 times:

Just came across this while reading another thread. This Robert Agnew of Morton Beyer & Agnew is proposing AA and UA merger.

http://www.speednews.com/stw/default.html See article titled "MBA: American Airlines Should Take Over United"

With all due respect to Mr. Agnew, it is my opinion that the merger of those two carriers would simply result in both going out of business. I don't think AA's financial condition from an ongoing operational standpoint is strong enough to absorb the failing financial situation at UA, not to mention taking on the additional merger-related costs associated with union contracts, seniority issues, disparity of equipment and redundancies of systems (which carry a cost to eliminate).

The only ones that would benefit from this merger would be the consultants that try to make it work, followed by the bankruptcy lawyers that would shut this CF down.


Google begins where my brain ends! ©
62 replies: All unread, showing first 25:
 
User currently offlineNwcoflyer From United States of America, joined Jun 2003, 690 posts, RR: 14
Reply 1, posted (9 years 12 months 5 hours ago) and read 11685 times:

JMV, You are right! This guy is crazy. AA couldn't absorb all of UA's debt and problems. It has peltny of it's own to get through.

Plus the government would never let it happen. It would be so anti-competitive. I honestly don't believe that this guy is serious.



The New American is arriving.
User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 17
Reply 2, posted (9 years 12 months 5 hours ago) and read 11680 times:

American + United = The US-based version of Aeroflot


Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlineIowa744fan From United States of America, joined Apr 2004, 931 posts, RR: 1
Reply 3, posted (9 years 12 months 4 hours ago) and read 11627 times:

Agreed, the government would never let this happen.

However, it is interesting to think about. The two systems surprisingly would fit somewhat well together. Obviously, ORD could be combined with UA. AA's next two main hubs of DFW and MIA are both in areas that UA does not have a significant presence. AA would finally have the Asia presence, and UA would have their larger European presence. Just imagine an ORD where almost all of the central terminal area (1, 2, 3) is one airline! Like I said, never going to happen. Just amusing to think about it a second. Perhaps this guy has been hanging out with Ricky Williams a bit recently!


User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 17
Reply 4, posted (9 years 12 months 4 hours ago) and read 11587 times:

Iowa-Think about all of the different fleet types too...

AA: S80, 738, 757, 762, 763, 300, 772
UA: 735, 319, 733, 320, 757, 762, 763, 772, 744

Anybody want to try to run such a convoluted operation? I don't think Bill Gates could successfully dip his entire life's savings into saving that one...



Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 5, posted (9 years 12 months 4 hours ago) and read 11548 times:

While I agree this wont happen, there has been plenty of talk of super mergers recently due to the fact that the current situation is unsustainable for virtually all airlines in the US. The government cannot help everyone, and if there is another 9.11 type attack, then none of the US carriers will survive it. Therefore, if the government is going to step in and do something to keep the existence of air travel going, it would be easier to work with less carriers. The network of UA/AA is large enough to do this, where as many of the others are not vast enough to cope with the entire country alone.

User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 6, posted (9 years 12 months 4 hours ago) and read 11538 times:

Combined, they would become the old Aeroflot of the U.S.S.R. with all the a/c varieties and the sheer # of a/c. Okay, much smaller than the old Aeroflot. . .but still very large.


Ding! You are now free to keep supporting Frontier.
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13547 posts, RR: 62
Reply 7, posted (9 years 12 months 3 hours ago) and read 11381 times:
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If AA wants any part of UA, they'll purchase them before UA goes "Tango-Uniform" or wait in hopes of a discount price at a Chapter 7 liquidation auction.

There is no way that AA is interested in assuming UA's debt, contracts, and employees. This article is yet another shining example of how all the newly-minted Wharton or Thunderbird MBAs in the world don't know the first thing about running an airline



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineUal777contrail From , joined Dec 1969, posts, RR:
Reply 8, posted (9 years 12 months 3 hours ago) and read 11342 times:

The only thing that would change is AA would then have some class, and be a real airline.

If the gov. wouldnt let UA/US merge, they wontlet UAL and AA merge.

UAL 777 CONTRAIL


User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 9, posted (9 years 12 months 3 hours ago) and read 11322 times:

"There is no way that AA is interested in assuming UA's debt, contracts, and employees."

The "and employees" part I'm sure that all former TWA employees would back your statement up 100%.



Ding! You are now free to keep supporting Frontier.
User currently offlineAa777flyer From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 12 months 3 hours ago) and read 11304 times:

Today is not April 1st is it? Ok just checking. What the heck is that guy thinking, not only does AA not have the money to buy UA, but AA has enough of its own problems to fight for its own survival. The DOT would never approve it, the transition would be the biggest CF in the world. The different fleet types, different engine types on the same types (757,777 at UA at PW the 757 and 777 at AA are RR).....I would be willing to bet my lunch this will never happen. AA MAY buy some bits and pieces of UA if they ever do liquidate which I dont think will happen.

User currently offlineAa777flyer From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 12 months 3 hours ago) and read 11263 times:

Here I cut the article so it is easier to read!

As one of the foremost aviation consulting firms, Morten Beyer & Agnew (mba) this week proposed the merger of United Airlines and American Airlines as the only practical solution to the financial problems of both airlines.

"We propose that American take over United, as the stronger of the two carriers and the one who possesses the more successful management", said Chairman Morten Beyer. "United is burdened by its huge unfunded pension liability, continuing heavy losses despite its bankruptcy and cost reduction efforts, and has thrice been refused government loan guarantees required to fund its recovery."

Mr. Robert Agnew, President of MBA, pointed out that American's balance sheet is stronger than United's, with $3.853 billion in cash compared to $2.226 billion at United, and stockholder's equity only minus $122 million compared to minus $6.624 billion at United.

"It is obvious that Major U.S. carriers face a dim financial future as they battle the steady growth of low cost competitors, ruinous competition among themselves, and relentless cost pressure from labor unions, rising fuel expense, and the costs of maintaining their inefficient hub-and-spoke route systems," Mr. Beyer said. "A major impediment to a merger of United and American may lie in DOT and DOJ concerns over the anti trust implication of such a combination, but we believe there is no realistic alternative if we are to avoid the liquidation of United and the resulting adverse consequences to our air transportation system," stated Mr. Agnew.

"We have always had the doctrine of saving failed corporations, including airlines, through merger, the most recent being American's takeover of TWA," stated Mr. Agnew. "We see the following major advantages to a merger of the two carriers:

American will become the dominant international carrier between the U.S. and all areas of the world,
The merger will save the jobs of many of United's 80,000 employees and possibly as many as 200,000 airport, servicing, and other employees,
Service will be maintained over United's extensive domestic route system and preserve competition with other Major carriers,
Wasteful competition between United and American will be eliminated in major markets and excess capacity reduced,
The investment and financing in both carriers' extensive fleets will be preserved,
As American has more employees, its unions and their better labor relations will prevail,
As American has the stronger management, progress in overcoming the merger's problems should be swift and effective,
The combination of station facilities, headquarters staff, and real estate will save hundreds of millions in unneeded duplication, and
A buy-out by American will no doubt be the best deal that United's creditors will ever get," Mr. Agnew concluded.
"What with the IAM suing to get the appointment of a trustee for United and the continued financial failure of the carrier, it is high time to take decisive action. We believe that the prospects of a merged company and the combined assets are sufficient to support the estimated $10.0 billion in additional equity and loans required to support the merger," Mr. Beyer concluded.




Just a question....What is Stock Holder Equity?


User currently onlineAaron747 From Japan, joined Aug 2003, 8103 posts, RR: 26
Reply 12, posted (9 years 12 months 3 hours ago) and read 11191 times:

The only thing that would change is AA would then have some class, and be a real airline

get over yourself.



If you need someone to blame / throw a rock in the air / you'll hit someone guilty
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13547 posts, RR: 62
Reply 13, posted (9 years 12 months 3 hours ago) and read 11116 times:
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The "and employees" part I'm sure that all former TWA employees would back your statement up 100%.

Oh spare me. I'm getting really tired of former TW employees whining about AA.

FACT - without AA, TW wouldn't have made it out of the year 2000, let alone survived 9/11.

FACT - AA was under NO OBLIGATION WHATSOEVER to hire TW employees

FACT - the vast majority of TW employees hired by AA received pay increases over what their TW salaries were






"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineFA4UA From United States of America, joined Nov 2003, 812 posts, RR: 20
Reply 14, posted (9 years 12 months 2 hours ago) and read 11095 times:

Alright... who's passing out the crazy pills?

I read this and I laughed, I cried, and then I felt ill.

a cold day in hell....


FA4UA



The debate continues... Starwood or Hyatt... which is better
User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 15, posted (9 years 12 months 2 hours ago) and read 11096 times:

I would look at a merger of AA and UA as the 2004 version of the PanAm and National merger, only on a much larger scale.

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
User currently offlineMoman From United States of America, joined Aug 2004, 1054 posts, RR: 4
Reply 16, posted (9 years 12 months 2 hours ago) and read 10995 times:

EA_CO_AS

"FACT - without AA, TW wouldn't have made it out of the year 2000, let alone survived 9/11."

TWA made it out of 2000 alone, the merger/buyout/sellout whatever you want to call it was announced in Jan 2001 and completed later that year.

"FACT - AA was under NO OBLIGATION WHATSOEVER to hire TW employees"
This might be true, but they did say they would maintain a vast majority of TWA's route network, (which they have done to some extent) which implies that they would need some TWA employees to run the route network, unless they planned on shutting down AA's route network and only running TWA's (and no one was thinking they would do that!) or hiring new employees (which to my knowledge they have not done).

I don't think too many TWA employees are complaining anymore. Most are without jobs and complaining isn't going to get their jobs back. I believe that many AA employees did not want the TWA employees, hence the problems integrating the seniority lists. My neighbor works for AA and used to complain about how "TWA employees are stealing AA blind", etc, etc, so it's not only the TWA employees who are complaining. The people of Missouri are complaining because AA has not held to their word with the TWA merger. Sen. Bond (R-MO) held hearings about the TWA-AA merger trying to sort why TWA was taking the brunt of the cuts. Most of us understand that after 9/11 all cards were off the table but still.....

STL has been dealt a severe blow. I feel sorry for PIT right now.

Moman



AA Platinum Member - American Airlines Forever
User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 17, posted (9 years 12 months 2 hours ago) and read 10906 times:

"Oh spare me. I'm getting really tired of former TW employees whining about AA."

Right. A^A tried to do a wonderful job at integrating the TWA employees. . .please. Yeah sure

So really, spare us from this "they did everything they could" B.S. And besides, I really don't care if your "tired" of it. . .go fly a kite. . .or read a book on "fair" mergers and acquisitions (something that includes employee integration).  Yawn



Ding! You are now free to keep supporting Frontier.
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13547 posts, RR: 62
Reply 18, posted (9 years 12 months 1 hour ago) and read 10810 times:
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Right. A^A tried to do a wonderful job at integrating the TWA employees. . .please.

There you go again.

AA didn't try to integrate TW employees "fairly" because they didn't have to. End of story. TW employees are lucky they had jobs for as long as they did under AA.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineN6376m From , joined Dec 1969, posts, RR:
Reply 19, posted (9 years 12 months 1 hour ago) and read 10777 times:

Any acquisition of United would have to be done as part of a pre-packaged bankruptcy plan so most if not all of UAL's debt and contingent liabilities would immediately disappear.

Secondly, I really don't think the DoJ would hold up any airline merger right now. Given the fact that the LCC are eating the majors alive, I can't see how the government could in good faith stop a merger. At most, I could see them requiring the combined entity to divest itself of certain assets.



User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 20, posted (9 years 12 months ago) and read 10743 times:

"AA didn't try to integrate TW employees "fairly" because they didn't have to. End of story."

Therein lies the problem. This is why so many people had a problem with how it went down. Just because A^A "didn't have to" doesn't mean that they shouldn't have given more of an effort to show they are a respectable and ethical company. . .it would have been a good, no, a great time for some positive PR, but they took that idea and threw it out the window.

Sure there was a lot of bad blood and stressed reltionships throughout the course of the merger between both airlines' employees. . .but other large cmpany mergers had these same dilemmas and they figured them out as fair as they could. . .usually seeking out several outsourced specialized consultant firms who specialize in this gray area of merging to companies. If A^A did anything like this, they should have asked for their money back and sued their consultant, and fired several of their own HR people. . .but it seems that the final outcome was pretty close to what A^A was expecting anyhow. At least that is what all reports on the merger seem to conclude. . .both federal and contributing outside editorials/investigative probes.



Ding! You are now free to keep supporting Frontier.
User currently offlinePlanemannyc From United States of America, joined Aug 2003, 1007 posts, RR: 8
Reply 21, posted (9 years 12 months ago) and read 10693 times:
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Coming back to the topic, I feel that even if the DOT would allow such a tie up, AA and UA would probably not want to merge for several compelling reasons, including some that have been voiced above:

a) lack of money by either carrier
b) fleet un-commonality
c) lack of trust for each other (these carriers have been at odds for decades)

Besides, the fastest growing competition comes from LCCs. A merger of these two would not necessarily address that threat. The domestic network of either is pretty much saturated. Sure, you can save some cost by cutting out overlapping routes, but the main question is how do you compete against the likes of Southwest, JetBlue and AirTran? I would think the competition from these are bigger concerns for AA or UA rather than a merger.

My $0.02

Best,

Wasim / Planemannyc


User currently offlineEA CO AS From United States of America, joined Nov 2001, 13547 posts, RR: 62
Reply 22, posted (9 years 12 months ago) and read 10672 times:
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Just because A^A "didn't have to" doesn't mean that they shouldn't have given more of an effort to show they are a respectable and ethical company. . .it would have been a good, no, a great time for some positive PR, but they took that idea and threw it out the window.


IMHO, the positive PR was there - in the fact that AA was saving nearly 20,000 employees from having to seek other jobs when TW (without AA's intervention) would have defaulted on a large note coming due.

AA opted to take on the employees for the goodwill it would provide, coupled with the fact that an already-trained workforce was better than ramping up a new one.

The thing to keep in mind is that integrating TW's employees in seniority order would have been unfair to AA employees, many of whom

  • Had once worked for TW but "saw the writing on the wall" and ditched their TW jobs and seniority to start over at AA, the more successful carrier

  • Would have been the first to bear the brunt of job cuts during downturns thanks to a merger they didn't ask for in the first place


  • In other words, AA employees had no upside here - they had everything to lose and nothing to gain, whereas TW's employees had nothing but upside. They had nothing to lose and everything to gain.



    "In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
    User currently offlineLMP737 From , joined Dec 1969, posts, RR:
    Reply 23, posted (9 years 12 months ago) and read 10560 times:

    If one thinks that integrating the AA/TWA employees was a near impossible task this would be a disaster from the outset. No that the government would allow it anyway.

    Let me tell you if I ever need an "aviation consulting" Morton Beyer & Agnew would be the last place I would call. To ever purpose something like this shows that they are on something!


    User currently offlineDAYFL From United States of America, joined Apr 2004, 127 posts, RR: 0
    Reply 24, posted (9 years 12 months ago) and read 10541 times:

    Never going to happen!

    25 Moman : EA CO AS: You do bring up a good point on the employee integration but I still feel that, IMHO, regardless of if TWA was going to make it or not, AA n
    26 Gilesdavies : I dont how it compares in the US but if two companies of this size were in the UK there is a goverment regulatory body called "The Panel of Takeovers
    27 Moman : Gilesdavies: The US does have this kind of board, it is called the Federal Trade Commission. They, along with the Antitrust Dept of the Justice Dept h
    28 Wdleiser : If you ask me, I think if they did Merge United would be the name. I think to most of the world United is much better known and atleast to me is a sym
    29 Lanfan : I'm for it. Why not? Look at it from a business perspective. AA CEO Arpey himself said that it was not likely the industry can sustain growth in shar
    30 Indio66 : Where can I get some of the drugs this guy is taking!!
    31 Post contains images Ual777contrail : Isn't it sad when people who are suppose to be aviation experts are the dumbest in the industry? To even print this nonsense and have this be the 31st
    32 Ultrapig : I'm a bankruptcy lawyer as some of you know- This would be a gigantic mess impossible to do with union objections and objections of various creditor g
    33 AZjetgeek : Chance of a UA/AA merger equals "chance of a snowball in Phoenix in July". As one poster pointed out, there is a long history of bad blood between the
    34 Srbmod : AA/UA merger, never would happen; there are only two major airlines that I could see AA being involved in a merger with, Delta and Continental. The ch
    35 EA CO AS : AA got a sweetheart deal by TWA filing for bankruptcy so they could get the assets only, as noted by Sen. Christopher Bond. With all due respect, what
    36 LMP737 : Ual777contrail "The only thing that would change is AA would then have some class, and be a real airline" Is it me or do I detect a touch of bitternes
    37 Matt D : Three words: No f-ing way.
    38 Trickijedi : The only ones that would benefit from this merger would be the consultants that try to make it work, followed by the bankruptcy lawyers that would shu
    39 Milesrich : American + United The Penn Central of Airlines!
    40 Moman : EA CO AS I concur that AA did want STL and this was a strong reason for their purchase, but if AA only wanted STL wouldn't it have been cheaper just t
    41 FriendlySkies : This is the most idiotic and completely absurd statement I have ever heard. UA and AA merging......this guy needs a life, or needs to get out of the a
    42 Matt D : Americans purchase of TWA was little more than a mercy killing. Had that transaction not occurred, TWA most likely would've died within weeks if not d
    43 Cancidas : amazing, they still haven't learned from the first time around... no way AA/UA!
    44 Bill142 : United might as well go out of business rather then merging with AA. Alot of staff would probably get sacked and alot of aircraft would get sold. To m
    45 Aa777jr : Would like to see AA buy some UA 744s. That would be awesome! Go AA!!!
    46 Sllevin : The only thing UA has that AA would want is Asia. The other "crown jewel" is LHR access, which they already have. Everything else they already do, or
    47 Bobs89irocz : Aa777jr- Im sure everyone would love to see some 744 in the AA livery....i know i would. Thats just another "when hell freezes over" kinda thing. This
    48 ILSApproach : Too funny...............never happen. Imagine being held hostage for ticket prices at ORD!!
    49 Rwylie77 : Morton Beyer & Agnew have actually been very clever with this one - I'm sure they don't believe for a minute the contents of the report, but they knew
    50 Post contains images Cospn : Great !!! As long as they Release LHR Slots to CO and NW
    51 FLYSSC : Apparently, most of you consider this as impossible, but let's face the reality : All the major US airlines are in a critical situation. For years, an
    52 BeechNut : Two words come to mind when thinking about an AA/UA merger: Penn Central. For those not familiar, it was the fruit (and a rotten fruit at that) of the
    53 Stretch 8 : "UnitedAmerican Airlines" (Talk about one great big lousy carrier!)
    54 Post contains links and images JMV : American + United = Penn Central of the airlines ROTFLMAO! Absolutely dead on! I need to make a correction to my original post. The correct spelling o
    55 Pilotcoex : let them merge and have Frank Lorenzo as their CEO.
    56 Greg : Actually, EA CO AS is correct. TW had not turned a true operating profit in over ten years. You can debate forever whether it would have survived unti
    57 EA CO AS : America West some of the slots in LA, Virgin America some of the slots in SFO Actually, neither airport is slot-controlled, so there's nothing to sell
    58 Lindy field : Maybe I'm cynical and pessimistic, but after seeing what's happened to the commercial aviation industry since deregulation I can actually imagine this
    59 Kim777fan : I have just two words to say on such an idea: "Penn Central" Enough said. Kim
    60 Shuttledweller : I have some background in antitrust law, and there is no way that this merger would go through. The antitrust analysis focuses on routes that the merg
    61 Delta767300ER : I hope this would never happen. Like an above used said this would the the U.S. version of Aeroflot. Airfares would be sky high due to the lack of com
    62 AA7573E : @ UAL 777 Contrail Your heated rhetoric about AA having no class and not being a real airline is not only clearly wrong, but its so obviously slanted
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