FriendlySkies From United States of America, joined Aug 2004, 4072 posts, RR: 5 Reply 1, posted (8 years 6 months 3 weeks 6 days 9 hours ago) and read 5123 times:
When it fails miserably, that "problem" of overcapacity will be fixed.
I don't want to see either fail, but I honestly don't think HP has anything useful to gain from this. They're just taking on a crapload of debt and ensuring several losses while the new company is trimmed and sorted out.
Commavia From United States of America, joined Apr 2005, 10607 posts, RR: 62 Reply 2, posted (8 years 6 months 3 weeks 6 days 8 hours ago) and read 5108 times:
Quoting FriendlySkies (Reply 1): When it fails miserably, that "problem" of overcapacity will be fixed.
Couldn't have said it better myself. The HP-US merger is going to be such a disaster that the collapse of the combined company will help out both the overcapacity and pricing power problem the other airlines face today.
Quoting FriendlySkies (Reply 1): I don't want to see either fail, but I honestly don't think HP has anything useful to gain from this.
Neither do I, but you are completely right. Neither HP or US win in this scenario, but HP loses much more. They will be taking on the financial train wreck of US, along with its enormously complex and costly operations and atrocious labor relations and low employee morale (both of which, I might add, are quite understandable).
Flyboyaz From , joined Dec 1969, posts, RR: Reply 3, posted (8 years 6 months 3 weeks 6 days 8 hours ago) and read 5086 times:
There's a lot to gain for HP like expansion on the east coast, Caribbean, and Europe. US gains by getting better management (certainly more dedicated and stable than what they have now), and a strong presence in the west and Mexico.
First of all HP is NOT acquiring anyone...the 2 airlines are looking to merge, which means combining forces (and resources). They will combine the debt of each and share the burden. The advantage of US merging with HP, is that HP has had a much better time at recovering from 9/11. We were profitable for all of 2003 and bits and pieces in between. Our management has a lot more business savvy than their's.
HP management will not put themselves in a situation where the only outcome will be failure...how dumb is that? There is no way for even them to tell what will actually happen. But believe me they are a whole lot smarter than any of us here in this forum and see things entirely different. That's why I think at first they will try an extensive code share, giving US more time to get their costs more comparable to ours, making for a smoother transition. I can almost guarantee it will not be rushed like AA/TW was. That would be suicide.
RIOJANEIRO From United States of America, joined Dec 2000, 121 posts, RR: 0 Reply 4, posted (8 years 6 months 3 weeks 6 days 8 hours ago) and read 5088 times:
What does HP have to gain from this merger :
1. Increased market share/presence on the East Coast markets
2. Highly marketable leisure markets such as the Caribbean/Europe which increase the appeal for its frequent flyer program
3. ETOPS aircraft, as well as widebody aircraft which *could* be used on HP's pesky 'dual-ops' high-demand routes such as LAX, SAN, and LAS.
4. Access to important business destinations such as LGA, BOS, and DCA. (currently slot-restricted(DCA) or restricted via LGA perimeter rule)
5. Increased name/brand recognition with a US Airways name.
What does HP have to lose from this merger :
1. IMO, most important, bitter employees and an extremely treacherous merging of work groups at both airlines.
2. More aircraft, less fleet commonality
3. Debt (mainly through ATSB loans, etc)
4. Added costs/synergy issues brought in by a legacy carrier : FF clubs, FC perks, code-sharing costs, SHARES/Sabre programming transitions, training costs, liability issues on either side.
As an HP employee, I hope that this deal does not go through immediately, at least for the time being. HP's mentality of a low-cost carrier has been entrenched in the workforce after the fare simplification over 3 years ago, and I don't think that US is at this point yet. Unless there is a plan in place to radically restructure US Airways, cut employee wages to LCC levels, and cut frills on their side, I see it as a mess trying to integrate our two vastly different cultures. Of course, if something like this happens, I will welcome the US employees, obviously, but I hope they understand that our business plan has been working for the past 3 years and we need to stick to it in order to survive long-term.
In addition, I know it sounds childish, but adopting the 'US Airways' name over America West will certainly give US employees an ego trip, and will be indirectly viewed as the 'better' of the two airlines, I believe. It will be sad to see the America West name go, however, I think the best solution would be to create a new name altogether, therefore both work groups are equal in giving up their proper names.
It will certainly be an interesting day when I start seeing black and red planes lined up at Terminal 4 in Phoenix and the absense of our CactusJets is really felt. (not to mention that black paint won't keep those planes cool worth sh#t on the PHX tarmac! )
Flyboyaz From , joined Dec 1969, posts, RR: Reply 5, posted (8 years 6 months 3 weeks 6 days 8 hours ago) and read 5053 times:
Quoting RIOJANEIRO (Reply 4): In addition, I know it sounds childish, but adopting the 'US Airways' name over America West will certainly give US employees an ego trip, and will be indirectly viewed as the 'better' of the two airlines, I believe.
Yes big time! It's happened before...of course the classic example is AA/TW. I have a friend that is a FA for CO and he was originally hired by New York Air. He said even to this day when he talks to people in payroll or human resources...they refer to him as coming from New York Air.
Tatfsn From United States of America, joined May 2005, 25 posts, RR: 4 Reply 6, posted (8 years 6 months 3 weeks 6 days 8 hours ago) and read 5048 times:
I have to agree with the skeptics, I'm afraid. The complexities of the merger itself, putting aside the advantages and disadvantages, will cost millions in tangible and intangible costs. Neither of the carriers, it seems to me, has much margin for error (especially not US Airways).
Combine that with the uncertainties as far as fuel prices, and the situation in the Middle East, and the rather muscular and aggressive ambitions of Southwest (which will certainly take advantage of any missteps during the proposed merger); it is hard to see how the risks of such a move could be justified for HP.
US Airways probably has little to lose; America West, potentially everything.
How many truly successful and painless airline mergers have occurred in recent times, and even when most of the players in the industry have been flush with cash?
In any case, best wishes, and best of luck, to the folks at both airlines. I'll be delighted if I'm wrong!!!
Jaybird From United States of America, joined Mar 2001, 121 posts, RR: 0 Reply 7, posted (8 years 6 months 3 weeks 6 days 4 hours ago) and read 4958 times:
USAirways doesn't have a good history with mergers or acquisitions. No matter what it's being called - I still see this as the mouse (HP) swallowing the elephant (US) .. huge case of indigestion .. and the loss (at some point) of the America West name .. and possibly taking down both airlines. Which is a shame 'cuz HP has been working hard to get it's operational and financial act together. Seeing US go, aside from my personal feelings (good ones) dating back to Mohawk and Allegheny, and without taking into account the loss of jobs, would probably be a good thing for the industry. It's not just taking seats out of the market - you almost could see fares and yields rise a bit. Sure, there's a lot of competition left on the east coast - but you know those vultures have been circling for a LONG time and keeping the pressure on US. So if given a "vote" - I'd rather see HP stay and grow on their own - and see US close up shop. Then again, I'd also like to see the price of fuel drop in half and everyone start making money again .. but that's not likely to happen in the near future.
Justapassenger From United States of America, joined Dec 2004, 95 posts, RR: 0 Reply 8, posted (8 years 6 months 3 weeks 5 days 23 hours ago) and read 4910 times:
Code share until US is in acceptable shape!
I certainly agree that US, in its present condition, would drag HP down. However, according to this article, HP would not merge with US until it got its costs in line. In the meantime they would code share.
According to the article:
“"The deal is more or less done and will be announced next week," said the source on condition of anonymity. "It will most likely be done in stages, possibly as a code-share first."
Staging the deal would give US Airways more time to further align its costs with America West, a goal the seventh-largest airline has expressed since entering bankruptcy in September for the second time in two years.”
AA767400 From United States of America, joined Jan 2001, 2282 posts, RR: 25 Reply 9, posted (8 years 6 months 3 weeks 5 days 22 hours ago) and read 4884 times:
Quoting Flyboyaz (Reply 5): It's happened before...of course the classic example is AA/TW. I have a friend that is a FA for CO and he was originally hired by New York Air.
Yes but that was CO/NYAIR, not AA/TW. Either way you look at it, mergers or acquisitions and not pretty deals.
USair/PSA/Piedmont/Allegheny,AA/TW/AIRCal/QQ,NW/Republic,CO/PeopleEX/NYair/TX,DL/WA/NE, These are all major deals that always bring with them conflict and every airline here has dealt with it, and yes even AA/TW but they are far from the only "classic examples".
Flyboyaz From , joined Dec 1969, posts, RR: Reply 13, posted (8 years 6 months 3 weeks 5 days 21 hours ago) and read 4828 times:
Quoting AA767400 (Reply 9): and yes even AA/TW but they are far from the only "classic examples".
It's the most recent example, that's why I stated it. TW employees got screwed majorly in that deal. I know a couple that worked for TW and they got laid off after being with the company for almost 20 years and there are AA employees in my station with only 5 years that are still working...doesn't sound very fair to me.
Xkorpyoh From United States of America, joined Oct 2004, 813 posts, RR: 0 Reply 14, posted (8 years 6 months 3 weeks 5 days 21 hours ago) and read 4827 times:
I think HP did a great job transition from legacy to LCC. I hope they could do the same with US, but they are much larger with a more complex route system and a different corporate culture (full of disgruntled employees that are tired of giving in and might be reluctant to drastic changes).
It is still puzzling to me that HP is the one initiating this. I thought they were in a road to recovery and this will not make things easier.
Yyz717 From Canada, joined Sep 2001, 16109 posts, RR: 57 Reply 17, posted (8 years 6 months 3 weeks 5 days 14 hours ago) and read 4606 times:
I see far more disadvantages than advantages. HP is probably looking for another foray into a midwest or eastern hub after pulling back from CMH. However, a link up with a thoroughly inefficient, badly managed airline such as US with a militant workforce and a non-complementary fleet is completely illogical. Not to mention the mgmt time and attention that will be diverted to the amalgamation.
The success of LCC's & the failure of the legacy carriers should demonstrate to HP that size is not a panacea to profit.
HP is marginally profitable as is and seems to be on the right track with its cautious slow growth. Why screw that up?
Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
Dutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 58 Reply 18, posted (8 years 6 months 3 weeks 5 days 14 hours ago) and read 4591 times:
America West did a good job at turning itself around over the past few years - and the goal is to apply all of the lessons that HP learned to US Airways: the result is supposed to be a nationwide LCC that has a hope of competing with Southwest. I am not optimistic but I can understand the logic.
Intergrating two airlines is a very difficult and sometimes costly project, very few airline merger stories end with the words "and everyone lived happily everafter." There are huge cultural differences between the US and HP working enviornments and, if this deal has a chance of working out, those differences must be resolved. US still operates like a legacy carrier - HP has turned itself into a LCC - are the employees of US ready to adapt to the LCC culture? I dont know, but its not going to be easy.
I am also concerned with the route system - US with its hubs and emphasis on the east coast and HP with its hubs and emphasis on the west coast - with not a lot happening in the middle of the country - its unclear whether this will work. I remember when US took over PSA, I remember when AA took over AirCal, and I also remember when Republic took over Hughes AirWest - all east coast carriers that suddenly had an operation on the west coast and none of those mergers really worked out. Nothing is left of the former route systems of PSA, AirCal and AirWest and only one airline benefited from those deals - that being Southwest. I understand that this case is supposed to be different, its a merger and not a take over and the HP management is supposed to be in control when its over with, but the result will still be 2 uncoordinated route systems on opposite sides of the country.
I am shocked that the management over at HP wants to get involved with the US situation - maybe they see something that I (and a lot of other people) dont.
PlaneSmart From New Zealand, joined Dec 2004, 739 posts, RR: 0 Reply 19, posted (8 years 6 months 3 weeks 5 days 14 hours ago) and read 4589 times:
If it was a straight merger or takeover, thread comments would be correct regarding unsuitability.
But US comes with a dowry of loan and creditor forgiveness, new funding and lease packages, plus the one-off opportunity to cherry pick the best staff and let the rest go.
When you look at America West's history, the management team have a wealth of experience when it comes to market conditions, ownership & competition.
Finally, by this time next year, we will have fewer, mega carriers operating in the USA, some with substantial foreign ownership. Those with the best long-term prospects will be bigger and have global partnerships.
Commavia From United States of America, joined Apr 2005, 10607 posts, RR: 62 Reply 20, posted (8 years 6 months 3 weeks 5 days 14 hours ago) and read 4579 times:
Quoting PlaneSmart (Reply 19): But US comes with a dowry of loan and creditor forgiveness, new funding and lease packages, plus the one-off opportunity to cherry pick the best staff and let the rest go.
It isn't just the money problems and debt that HP will inherit -- it is also a ridiculously high per-seat cost structure, complex operations and systems, very senior staff and probably the worst employee morale in the industry. No amount of management experience or genius will be able to overcome all these.
Quoting PlaneSmart (Reply 19): Finally, by this time next year, we will have fewer, mega carriers operating in the USA, some with substantial foreign ownership.
The only US carrier I could see with any foreign ownership, let alone "substantially," is UA, who might get a cash infusion from LH. However, barring ice crystals forming in hell, US politics pretty much guarantees that no foreign entity will be able to own more than 25% of voting shares in any US carrier any time soon.
TxAgKuwait From United States of America, joined Aug 1999, 1803 posts, RR: 45 Reply 21, posted (8 years 6 months 3 weeks 5 days 14 hours ago) and read 4758 times:
USAirways, nee' Allegheny, merged with Lake Central first, then Mohawk. The Piedmont and PSa acquisitions came pretty close to each other. Then they threw out every good thing Piedmont did in favor of "the USAir way." They cut flights and raised fares in California intrastate markets once owned by PSA and watched with some dismay when Southwest took the traffic away. Ultimately, USAirways closed up shop (for all practical purposes) on the west coast, leaving absolutely nothing to show for their PSA purchase.
No, they have a pretty sorry track record with mergers and acquisitions.
Now, what does America West bring to the table? A lot of people thing they have an incredibly strong position in the west. Truth is, it's not bad. But would I call it a dominant position in the west? Hardly.....
Let's look at traffic in America West's two hubs - Las Vegas and Phoenix. Here's the last DOT data I can get from their website (O&D passengers).
What I've done is taken the markets that generate > 100 psgrs per day.
In Phoenix, there are 68 markets that meet that criteria. WN is the market share leaser in 34 of them and HP is the market share leader in 17.
In las vegas, there are 86 markets > 100 psgrs per day. In those markets, WN is the leader in 40 and HP is the leader in 3.
Here's the data. My conclusion is HP certainly has a presence in the west but it is in no way, shape, or form a dominant carrier.
Ever see the old "South park" episode where they are trying to breed an elephant with a pig.....some want little pig sized elephants to keep as pets, others want huge elphant sized pigs for some ham sandwiches and pork chops.
Some think a US+HP lash up will give you a nationwide carrier with HP's LCC type costs. Nobody is thinking that what you might end up with is a dysfunctional carrier that is not dominant anywhere but has costs closer to USAirways.
The employee integration alone is going to be very acrimonious.
NUMBERS FOR LAS VEGAS:
city city dist psgrs avgfare yield lgst car mkt share
LAS NYC 2248 5241 $168 7.50 CO 26.9
CHI LAS 1521 4754 $121 7.93 WN 26.5
LAS LAX 236 3753 $76 32.08 WN 52.0
LAS PHX 256 2552 $72 27.96 WN 78.0
LAS OAK 407 2249 $104 25.49 WN 79.3
LAS SEA 866 2190 $115 13.29 AS 58.8
BUR LAS 223 2088 $75 33.44 WN 90.8
LAS SAN 258 2078 $82 31.97 WN 81.5
DFW LAS 1067 2048 $128 12.00 AA 52.7
DTW LAS 1750 1864 $133 7.59 NW 55.1
LAS PHL 2176 1839 $137 6.30 US 49.4
LAS SJC 386 1686 $99 25.66 WN 61.6
ATL LAS 1747 1483 $164 9.40 DL 61.6
DEN LAS 629 1457 $126 19.98 UA 39.4
LAS SFO 414 1417 $114 27.60 UA 50.0
LAS RNO 345 1399 $84 24.29 WN 91.8
LAS SMF 397 1397 $106 26.62 WN 75.3
HOU LAS 1243 1314 $160 12.87 CO 56.9
LAS SNA 226 1297 $83 36.54 HP 55.0
BOS LAS 2381 1292 $149 6.24 HP 37.2
LAS PDX 762 1269 $117 15.33 AS 51.8
BWI LAS 2106 1261 $152 7.22 HP 34.1
LAS MSP 1300 1237 $135 10.37 NW 51.9
IND LAS 1591 1186 $116 7.30 TZ 62.3
LAS ONT 197 1149 $71 36.11 WN 94.0
LAS WAS 2089 1064 $175 8.38 UA 39.9
CLE LAS 1825 1041 $149 8.16 CO 67.8
LAS SLC 368 908 $92 25.04 WN 66.3
LAS PIT 1910 860 $140 7.33 US 62.9
CMH LAS 1772 853 $133 7.49 WN 39.5
MCI LAS 1140 836 $143 12.52 WN 76.3
LAS MKE 1524 805 $130 8.56 YX 56.0
LAS MCO 2039 789 $161 7.90 DL 42.9
FLL LAS 2174 784 $155 7.11 DL 45.0
LAS TPA 1984 725 $145 7.29 WN 29.8
LAS STL 1372 719 $153 11.14 AA 51.9
LAS SAT 1069 651 $143 13.41 WN 67.8
AUS LAS 1090 621 $138 12.68 WN 65.6
ABQ LAS 487 586 $119 24.52 WN 94.1
LAS TUS 365 585 $75 20.68 WN 87.1
LAS LGB 231 531 $68 29.41 B6 100.0
BDL LAS 2298 508 $152 6.62 WN 36.9
LAS OMA 1099 497 $133 12.12 WN 70.1
LAS RDU 2027 497 $151 7.45 WN 32.7
ELP LAS 584 477 $106 18.10 WN 77.4
LAS MIA 2175 469 $174 7.99 AA 63.6
CLT LAS 1917 435 $168 8.79 US 51.8
LAS MSY 1501 429 $147 9.81 WN 46.1
LAS BNA 1588 425 $162 10.22 WN 76.3
BUF LAS 1987 409 $151 7.59 WN 44.2
COS LAS 604 321 $119 19.69 G4 57.5
LAS ORF 2155 284 $165 7.66 WN 46.3
DSM LAS 1216 275 $127 10.45 G4 59.8
LAS PVD 2363 267 $163 6.88 WN 43.1
LAS GEG 806 260 $140 17.33 WN 52.9
ALB LAS 2237 259 $165 7.36 WN 55.1
LAS MHT 2356 252 $161 6.82 WN 69.1
LAS SDF 1624 246 $161 9.89 WN 67.0
BOI LAS 520 242 $110 21.18 WN 87.4
JAX LAS 1965 230 $162 8.22 DL 43.1
LAS OKC 987 229 $162 16.37 WN 32.8
LAS TUL 1076 226 $163 15.11 WN 74.0
LAS ICT 987 213 $125 12.62 G4 75.9
GRR LAS 1643 210 $154 9.35 NW 62.4
BHM LAS 1618 195 $166 10.23 WN 70.5
LAS PIA 1413 194 $126 8.95 G4 90.5
DAY LAS 1701 192 $146 8.60 DL 31.2
CVG LAS 1678 191 $213 12.70 DL 86.1
LAS MEM 1416 191 $199 14.06 NW 55.1
LAS ISP 2283 186 $134 5.88 WN 87.4
FAT LAS 258 185 $92 35.50 G4 82.8
FNL LAS 628 185 $101 16.07 G4 100.0
LAS PBI 2158 177 $160 7.44 DL 43.7
LAN LAS 1689 169 $134 7.94 G4 85.4
LAS TPA 1978 162 $120 6.08 TZ 99.9
LAS LIT 1295 155 $177 13.68 WN 58.6
CDR LAS 1320 146 $125 9.43 G4 83.6
LAS ROC 2041 139 $165 8.07 UA 23.2
RSW LAS 2070 128 $172 8.30 DL 35.6
LAS MAF 796 123 $124 15.56 WN 98.0
LAS SYR 2120 120 $177 8.36 US 19.5
AMA LAS 758 115 $128 16.86 WN 97.4
GSO LAS 1960 115 $189 9.66 DL 55.9
LAS MLI 1377 115 $129 9.39 FL 44.5
LAS LBB 775 114 $130 16.74 WN 96.1
LAS LEX 1686 103 $164 9.75 DL 74.7
AA767400 From United States of America, joined Jan 2001, 2282 posts, RR: 25 Reply 22, posted (8 years 6 months 3 weeks 5 days 8 hours ago) and read 4429 times:
Quoting SHUPirate1 (Reply 11): Allegheny merged with USAir? That's funny...I don't seem to recall those airlines both being around at the same time...
I am wrong, you are right. I am a peasant and you are king. Now let me bow down to your superior knowledge. Did you get off on being right?
Quoting Flyboyaz (Reply 13): It's the most recent example, that's why I stated it. TW employees got screwed majorly in that deal. I know a couple that worked for TW and they got laid off after being with the company for almost 20 years and there are AA employees in my station with only 5 years that are still working...doesn't sound very fair to me.
FLAIRPORT From , joined Dec 1969, posts, RR: Reply 23, posted (8 years 6 months 3 weeks 5 days 7 hours ago) and read 4391 times:
why can't HP keep the USAirways name for its international and high density (higher profit) domestic routes and put America West on its other flights...USAirways would be the airline within an airline, but one the international routes, you can't go to a LCC model, and why change those few routes you are making money on? The LCC model is needed for less profitable routes. America West has a reputation for being a LCC and USAirways a legacy.
Also, what are the chances of HP/US dropping its PIT focus, FLL focus, and one of the 2 CLT/PHL?
Flyboyaz From , joined Dec 1969, posts, RR: Reply 24, posted (8 years 6 months 3 weeks 5 days 6 hours ago) and read 4380 times:
Quoting TxAgKuwait (Reply 21): Here's the data. My conclusion is HP certainly has a presence in the west but it is in no way, shape, or form a dominant carrier.
True to a point but a bit understated I would say. WN is the leader in some cities because they have more frequencies but not necessarily more pax. I was unable to get on a HP flight to LAX due to it being full...I got on a WN flight to LAX that left less than an hour later and it was only half full.
I would say we are a dominant carrier in the southwest more than the west in general, just because that's where most of our traffic goes. People in this area don't have that many choices of airlines. If you want to fly TUS-SAN you have WN, HP, and UA...that's it. Same goes for most other CA cities and some HP and UA are the only ones.
25 Hawk44: Everything that I have heard is that it will be a full on merge and not start with codeshares. I dunno how much you guys are making but I can assure y
26 Flyboyaz: Our CSR's were topping out at around $13 an hour and ramp at around $16 an hour. Since our new CEO came on in 2001, he lifted the cap on CSR's so they
27 PlanesNTrains: I think the comparison is between O&D versus connecting. His point was that HP may have the most passengers in PHX by virtue of a high number of conn