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Lufthansa Interested In Buying United Stake?  
User currently offlineLufthanseatLAX From United States of America, joined May 2005, 14 posts, RR: 0
Posted (9 years 1 month 5 days 1 hour ago) and read 7748 times:

The big news at Star Alliance water-cooler for the past few weeks is that United is wanting to combine with another airline. Of course as we know, the USAirways deal fell through which everyone seems pleased about. There was talk about United absorbing Continental, but now it seems Lufthansa is interested in purchasing as much of UA as possible under U.S. law which I believe is 49%. This combination seems very much encouraged by United employees.

29 replies: All unread, showing first 25:
 
User currently offlineSNATH From United States of America, joined Mar 2004, 3246 posts, RR: 22
Reply 1, posted (9 years 1 month 5 days 1 hour ago) and read 7723 times:

Let me be the first (of many) to ask: source?

Tony



Nikon: we don't want more pixels, we want better pixels.
User currently offlineHZ747300 From Hong Kong, joined Mar 2004, 1677 posts, RR: 1
Reply 2, posted (9 years 1 month 5 days 1 hour ago) and read 7659 times:
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49% of all stock, 25% of voting stock. That leaves little room for influence. The people at the water cooler in the Star Alliance must living in a fantasy land.

I think BA tried owning the max allowable of a US airline once. But you should change the title of your post, people will think you are mentally defective.



Keep on truckin'...
User currently offlineShenzhen From United States of America, joined Jun 2003, 1710 posts, RR: 2
Reply 3, posted (9 years 1 month 5 days 1 hour ago) and read 7640 times:

What the heck are they putting in the water cooler.... certainly not water  Smile

User currently offlineSA7700 From South Africa, joined Dec 2003, 3431 posts, RR: 25
Reply 4, posted (9 years 1 month 5 days ago) and read 7565 times:
AIRLINERS.NET CREW
HEAD MODERATOR

First of all Lufthanseatlax, welcome to A.net! I hope you have a great time here.
Guys and Girls, please give the new member a break, we all make mistakes one time or another.


Rgds

SA7700

PS: Don't mind the bashing, it happens times and again. Unfortunately for you, at the very beginning, but it will blow over.



When you are doing stuff that nobody has done before, there is no manual – Kevin McCloud (Grand Designs)
User currently offlineShenzhen From United States of America, joined Jun 2003, 1710 posts, RR: 2
Reply 5, posted (9 years 1 month 5 days ago) and read 7559 times:

I think that is would be in Lufthansa's interest to ensure that UAL receives any cash infusion that would be required to keep them out of liquidation, but..... they better be willing to write it off as they may not get anything in return if it ever got to that point.

Cheers


User currently offlineN754PR From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 1 month 5 days ago) and read 7491 times:

Well, one way or another UA will go down unless someone steps in.

User currently offlineBostonGuy From United States of America, joined Jul 2000, 514 posts, RR: 7
Reply 7, posted (9 years 1 month 4 days 22 hours ago) and read 6942 times:

Quoting LufthanseatLAX (Thread starter):
The big news at Star Alliance water-cooler for the past few weeks is that United is wanting to combine with another airline.

And a lone sailor who falls overboard wants to be rescued. Doesn't mean a Coast Guard cutter is nearby.

Quoting LufthanseatLAX (Thread starter):
but now it seems Lufthansa is interested in purchasing as much of UA as possible under U.S. law which I believe is 49%. This combination seems very much encouraged by United employees.

There are frequently elements of truth in the majority of water cooler rumors. Wouldn't surprise me if UA desperately wants a white knight and LH is drooling over select UA pieces that might become available in a liquidation sale.

My advice to UA employees is to spend less time around the Star Alliance water cooler and more time polishing the old resumé.

Of course, the water cooler rumors sure are fun!


User currently offlinePanHAM From Germany, joined May 2005, 9389 posts, RR: 29
Reply 8, posted (9 years 1 month 4 days 21 hours ago) and read 6934 times:

Mr, Mayrhber would be grilled, roasted and sliced and not necessarily in that order at the next year's AGM if he would make a mistake like that. Besides, the brain behind Star Alliance, Weber is Chairman of the Board who would have to approve such a deal and he for surfe would not sign that. It always has been the intention to form an alliance without buying or exchanging shares between the partners.

Swiss is an exception and has to be seen the same way Air Dolomiti was bought, this was to strenghten the market base in the home markets of these carriers (Air Dolomiti is also an important feeder, making "Monaco" (MUC) the best Italian hub airport. Swiss was an occasion and not too expensive, LH could pay that from petty cash and the overall exposure is not that big, if Swiss fails they write off 300 Million Euros or so but gain that back from syphoning off traffic from a (then) unserved market. So. these are othjer stories.

Buying shares in a company that is Union infested and unable to reach a cost base that allows them to operate profitable would be insane.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 9, posted (9 years 1 month 4 days 20 hours ago) and read 6738 times:

Quoting LufthanseatLAX (Thread starter):
There was talk about United absorbing Continental, but now it seems Lufthansa is interested in purchasing as much of UA as possible under U.S. law which I believe is 49%. This combination seems very much encouraged by United employees.

Continental backed by Boeing, GE and other investors and with the support of UAL's creditors is going to absorb UAL, Lufthansa can invest in UAL but cannot control the carrier.

http://www.forbes.com/services/2005/...0816airlines.html?partner=yahootix

[Edited 2005-08-19 16:18:44]


Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineHoya From United States of America, joined Jun 2004, 407 posts, RR: 0
Reply 10, posted (9 years 1 month 4 days 20 hours ago) and read 6681 times:

Don't discount this rumor as something idiotic and a mistake. This LH buyout is actually quite possible, if not likely. LH and UA have a very strong relationship, especially since they were the founding members of the Star Alliance. It's in LH's interest to keep UA alive. If UA fails, who will LH have as its U.S. partner? I don't think the new US/HP would cut it as they're trying to becoming a large LCC.

Don't forget that UA's Tilton had strongly lobbied Congress this past year to lift the limit on foreign ownership of US airlines. There were many press releases with Tilton stating that consolidation is the future and that the current limit hurts american airlines' competitiveness. With Tilton trying to push for the scrapping of that limit, it's safe to conclude that UA is trying to court a foreign entity, most likely LH.



Hoya Saxa!!
User currently offlineRabenschlag From Germany, joined Oct 2000, 1007 posts, RR: 0
Reply 11, posted (9 years 1 month 4 days 20 hours ago) and read 6598 times:

whats the rationale behind preventing foreign buyouts?

why for airlines but not for a carmaker?

and isnt that a huge biasing factor in the airlines market? so all the US based companies have to be afraid of is being bought by a US competitor.


User currently offlineIADLHR From Italy, joined Apr 2005, 735 posts, RR: 0
Reply 12, posted (9 years 1 month 4 days 19 hours ago) and read 6527 times:

Hoya,

Very, very, very, well said. I could not agree more. Spending a lot of time in Germany and in DC,I can tell you that what you said is absolutely true!!!!!!!!!

LufthansatLAX,

Friends of mine who work in various places in FRA and DC have been hearing thos water cooler rumors for quite some time now. However, in recent months, they have increased.

There might possibly, perhaps, maybe be some interest in the US Govt in letting this happen. People might be more interested in letting this happen as there is already an openskies with US/Germany. I say this because there would be a lot of politicians and people in power that would have to explain why their districts and states lost air service and thousands of innocent people also lost jobs.

To everyone else under no circumstances would I be so out right dismissive of such a possibility of this happening. I am not saying with absolute certainity that this will happen. It is just that there is a much, much better chance of it happening than people might realize. Stay tuned!!!!!!!!


User currently offlineIkramerica From United States of America, joined May 2005, 21532 posts, RR: 59
Reply 13, posted (9 years 1 month 4 days 19 hours ago) and read 6314 times:

I still think that UA, DL and/or NW will have to broken up and sold in pieces, as at least one can't survive as is. Even if one were to merge with a more viable airline, there would be some massive divestiture to make it financial viable and to pass anti-trust. Everyone seems to think of mergers or "buyouts" or what have you as a 100% deal, but that's not usually the case in many industries if the players are so large.

I could see a company like CO "merging" with SOME of UA, but UA would sell off ALL the A32X aircraft as part of a TED spinoff to a venture capital/private investment firm creating a low cost carrier based in DEN with hubs in LAX, ORD and NYC, and I could also see some of the European network sold off to somebody else. The LHR rights are valuable to an American carrier as are a few other routes, but not all of it. Wonder if LH could take over the the bulk of the non-LHR european A/C and route authorities (maybe using a US subsidiary so as to be able to operate non-Germany flights). CO could acquire Asia and LHR routes and expand ops in the west via LAX and SFO, etc.



Of all the things to worry about... the Wookie has no pants.
User currently offlineFlyinTLow From Germany, joined Oct 2004, 521 posts, RR: 0
Reply 14, posted (9 years 1 month 4 days 18 hours ago) and read 6226 times:

Quoting PanHAM (Reply 8):
Mr, Mayrhber would be grilled, roasted and sliced and not necessarily in that order at the next year's AGM if he would make a mistake like that. Besides, the brain behind Star Alliance, Weber is Chairman of the Board who would have to approve such a deal and he for surfe would not sign that. It always has been the intention to form an alliance without buying or exchanging shares between the partners.

Swiss is an exception and has to be seen the same way Air Dolomiti was bought, this was to strenghten the market base in the home markets of these carriers (Air Dolomiti is also an important feeder, making "Monaco" (MUC) the best Italian hub airport. Swiss was an occasion and not too expensive, LH could pay that from petty cash and the overall exposure is not that big, if Swiss fails they write off 300 Million Euros or so but gain that back from syphoning off traffic from a (then) unserved market. So. these are othjer stories.

Buying shares in a company that is Union infested and unable to reach a cost base that allows them to operate profitable would be insane.

Absolutly have to agree with PanHAM. As interesting as this might make the aviation world, I just don't think anything like this will happen.

1. It is LH policy to not invest in other airlines and to buy up stakes but more to form agreements and alliances. Air Dolomiti and Swiss, as said before, were major exceptions. And I think the world learned from the history of Swiss that it's not always a good idea to invest in every possible airline there is.

2. UA is by far a bigger airline than Air Dolomiti or Swiss. It has more aircraft, more workers, more destinations, larger operations. The risk in taking over an airline like that would be gigantic, nothing I see Lufthansa taking.

3. Swiss and Air Dolomiti were home turf. Their operations are being turned into feeders for the LH network again. With UA, they would have to organize another airline on another continent that is far from being their turf.

Cheers,

Thilo



- When dreams take flight, follow them -
User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 15, posted (9 years 1 month 4 days 18 hours ago) and read 6023 times:

It's also possible LH will wait for a new management group (Bethune) to come in with other large investors such as Boeing, GE and support the CO/UAL takeover.

LH would then gain CO as a Star partner.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineSemsem From Israel, joined Jul 2005, 1779 posts, RR: 3
Reply 16, posted (9 years 1 month 4 days 18 hours ago) and read 5965 times:

Why would Lufthansa buy a stake in an airline that is in deep financial doo dah?

User currently offlineBuslover From Germany, joined Jan 2004, 109 posts, RR: 0
Reply 17, posted (9 years 1 month 4 days 17 hours ago) and read 5775 times:

Let's get Austrian first


The best airplane is the one you fly
User currently offlineVORFMD From Austria, joined Feb 2005, 331 posts, RR: 0
Reply 18, posted (9 years 1 month 4 days 17 hours ago) and read 5684 times:

Quoting Buslover (Reply 17):
Let's get Austrian first

You think they can get it ?


User currently offlineIcelandair From Iceland, joined Jun 2005, 84 posts, RR: 0
Reply 19, posted (9 years 1 month 4 days 15 hours ago) and read 5344 times:

I agree with Buslover. Lufthansa - especially Mr. Mayrhuber repeatedly said that they were interested in merging (I guess in the sense of buying out) with another airline. As there are already strong links between AUA Group and Lufthansa this seems like a logic pick to me. And I believe that SAS could be next given that they continue to operate profitably. But give this at least another year or so and see what the Swiss merger goes like.


http://www.flugbegleiter.net/
User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 84
Reply 20, posted (9 years 1 month 4 days 15 hours ago) and read 5301 times:

Quoting Ikramerica (Reply 13):
I could see a company like CO "merging" with SOME of UA, but UA would sell off ALL the A32X aircraft as part of a TED spinoff to a venture capital/private investment firm creating a low cost carrier based in DEN with hubs in LAX, ORD and NYC, and I could also see some of the European network sold off to somebody else.

And then the new CO/UA would fly what?

N


User currently offlineYyz717 From Canada, joined Sep 2001, 16281 posts, RR: 56
Reply 21, posted (9 years 1 month 4 days 15 hours ago) and read 5257 times:

This would be a BAD strategic move, to say the least. UA has still not emerged from Chap 11, and there is no indication of robust earnings potential upon their eventual emergence given their acrimonious union/mgmt issues as well as still-high unit costs and a mgmt team that is not very adept. I fail to see any profit flow to LH from such a move, or any addl revenue synergies.

The EU airline map is changing rapidly. Ryanair will come to challenge LH in the coming 5-7 years like no other airline has. LH would be best placed to preserve its cash and fight the EU battle before investing in bankrupt and inefficient US legacy carriers.

My analytical rant of the hour.

Neil



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineStevenUhl777 From , joined Dec 1969, posts, RR:
Reply 22, posted (9 years 1 month 4 days 15 hours ago) and read 5237 times:

Quoting Ikramerica (Reply 13):
I could see a company like CO "merging" with SOME of UA, but UA would sell off ALL the A32X aircraft as part of a TED spinoff to a venture capital/private investment firm creating a low cost carrier based in DEN with hubs in LAX, ORD and NYC, and I could also see some of the European network sold off to somebody else. The LHR rights are valuable to an American carrier

Huh? So what would be the point of CO merging with UA, then? Bethune and CO have been saying for a long time they want the LHR slots. Without them, why bother?


User currently offlineSearpqx From Netherlands, joined Jun 2000, 4344 posts, RR: 10
Reply 23, posted (9 years 1 month 4 days 15 hours ago) and read 5111 times:

LH has a strategic interest in having a secure and stable US partner, so I could see them providing some investment, but nothing close to a buyout. History and common sense go against it. To date every significant purchase of stock by a foreign carrier has resulted in friction between the purchaser and the US carrier (including KL & NW) and in all but one case this eventually led to the foreign airline dumping all of their stock and termination of the relationship.

As noted, US law limits foreign ownership to 25%/49% voting/total stock. While the idea of raising or eliminating those limits has been floated from time to time, every indication is that it would be a bruising political battle, something the current administration probably isn't eager to add to their plate at the moment.

So while I'd never say never in this industry, I wouldn't hold me breath for more than a loan or secured credit facility in the short term.



"The two most common elements in the universe are Hydrogen and stupidity"
User currently offlineIkramerica From United States of America, joined May 2005, 21532 posts, RR: 59
Reply 24, posted (9 years 1 month 4 days 15 hours ago) and read 5114 times:

Quoting Ikramerica (Reply 13):
and NYC

Should have said IAD, not NYC.

Quoting Gigneil (Reply 20):
And then the new CO/UA would fly what?

UA has a large fleet of Boeing aircraft that CO also flies (though some with the wrong engines):
733
735
752 PW
772 PW
772ER PW

They also have 763ER and 744 with PW. I could see CO adding some of the 744s to the fleet if they had the routes to fly them (LHR, SYD, MEL), and probably unloading the 763ER in favor of keeping the 772s. And by adding a large fleet of all PW aircraft, even though CO flies GE and RR, with a number as large as that, servicing the PW engines should be fine (considering they would likely hire over all UA mechanics they could and keep maintenance bases where they are now for UA).

UAL have a large pacific route structure, an NRT hub, as well as LHR rights and routes and CDG slots, etc. This is what CO would want to have (fleet and routes), the whole reason they would consider any kind of merger anyway. They would also be able to expand west coast ops if they could take over the aircraft and infrastructure of T7-8 at LAX (and bring COPA along) and give T6 to whoever buys TED (and DL could keep their gates if they are still around and not shrunk), take part of SFO. Have no idea if they would have interest in ORD or IAD (possibly another airline would want those operations), and they pulled out of DEN years ago by you never know if there is a case to keep a regional hub there.

CO is not interested in a low cost subsidiary nor a large fleet of 145 A320/319 aircraft if they also have a fleet of up to 160 733/735s to absorb until they are retired, but there is no doubt that independent investment groups could see a real business case for TED, with bases already established and aircraft already configured and/or in the fleet. And a fleet of 150 planes with an established route structure, airport space, etc. would be a very desirable airline to operate.

Not sure about the UAex fleet with their CRJs and 146s, but the 145s fit into the COex fleet, and the E170 would be an interesting mainline addition to CO. I suppose you could see COex based CRJs based on the west coast to keep fleet simplified, with E170s connecting small western cities with IAH. There's obviously a ton to work out, but there is also real interest in doing so.



Of all the things to worry about... the Wookie has no pants.
25 UAMAYBACH1239 : 29% Is the max that can be held by a foreign carrier and or Government.
26 Baw716 : LH can only purchase 29% of UA. If the valuation of the airline is only around $174M, 29% of that is peanuts. However, with that 29%, the question bec
27 Gigneil : 49% is the correct number. 25% of voting shares, and 49% of total shares. N
28 Lijnden : AF and Delta KLM and NWA AF-KLM and Continental BA and somewhat AA and Lufthansa? In order to keep in line with AF-KLM and BA, Lufthansa's own future
29 Post contains images UnitedTristar : UA has actually been operationally profitable since March. If you look at the quarterly loss this last quarter, its a paper loss. Most of which will
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