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No UA/US Merger  
User currently offlineFokkerf28 From United States of America, joined Feb 2004, 152 posts, RR: 1
Posted (6 years 3 months 2 weeks 6 days 21 hours ago) and read 4977 times:
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Apparently no merger with UA.

An Important Message from CEO Doug Parker
May 30, 2008



Fellow Employee:



As you know, we have been assessing our strategic options over the last several months and there has been much speculation about our airline and consolidation. With fuel in the $130 range, I thought it would be helpful to let you know where we are at this point. Hopefully that will help to relieve some of the anxiety created by rumors.



After much work and many conversations with other airlines, we have come to the conclusion that consolidation involving US Airways will not occur at this time. This is not to say that something won’t occur in the future – as you know I strongly believe that consolidation is required in our industry and that US Airways would benefit from participating. Rather it is simply unlikely that anything will happen in 2008 as our industry continues to struggle with how to function in a world with $130/bbl oil prices.



This environment, while challenging, is not one that we did not anticipate. We are doing a great job of taking care of our customers and we are well prepared to withstand the current environment. Thanks to your hard work, we are #1 in on-time performance so far in 2008 and have great momentum as we head into the summer. We have more cash relative to size than most of our peers and have fewer obligations coming due in the next few years.



While we are prepared for this environment, we, like all airlines, need to adapt our plans and business models in light of much higher fuel prices. We are working a number of initiatives and you’ll hear more about them in the weeks and months ahead.



In the meantime, please keep up the great work. We’re running one of the best airlines in the country and our customers are noticing. That is extremely important in this environment. Thank you for your continual commitment to our passengers and to US Airways.

38 replies: All unread, showing first 25:
 
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 1, posted (6 years 3 months 2 weeks 6 days 21 hours ago) and read 4962 times:

Well, if DL/NW can pull it off, they will have a huge advantage, as no one else seems able or willing to consolidate. This is good news for UA, now the board should fire all the top mgmt and replace them with people comitted to making UAL a successful company

User currently offlineKarlB737 From United States of America, joined Mar 2004, 3105 posts, RR: 10
Reply 2, posted (6 years 3 months 2 weeks 6 days 21 hours ago) and read 4916 times:

Courtesy: Pittsburgh Post-Gazette

United-USAirways Merger Collapses

"United Airlines Chief Executive Officer Glenn Tilton informed US Airways Chief Executive Officer Doug Parker yesterday that United is not interested in a merger "for now," according to a source familiar with the meeting."

http://www.post-gazette.com/pg/08151/886096-28.stm


User currently offlineSquid From , joined Dec 1969, posts, RR:
Reply 3, posted (6 years 3 months 2 weeks 6 days 21 hours ago) and read 4906 times:

Am I the only one who really didn't see the benifits of merging United with US Airways in the first place? Consolidation mast happen, and more importantly, capacity must be drawn done some, but merging these two really wouldn't solve anything for either one. Really, the only real valuable parts of UA Aiways is their PHL hub, and is the cost and headache of a merger really worth that? I think UAL should wait out this mess for awhile, and if/when oil hits $150 per barrel, they should call Continental again. Once oil goes high enough, Continental may rethink their position, and then in the long run, US Airways will just go out of business on their own.

User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 4, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4823 times:

In related news, US and UA both had their credit ratings cut.

(From Reuters via Airwise yesterday Sad


May 29, 2008
Fitch Ratings on Thursday cut US Airways deeper into junk, citing the growing likelihood of a cash shortfall later this year or in early 2009 due to rising crude and jet fuel prices.

Fitch also said it revised its outlook on United Airlines to negative from stable, which means the likely direction for its rating over the next one or two years is down.

Both actions have been driven by deteriorating operating margins as US airlines struggle to cut costs after fuel prices have more than doubled since the start of 2007.

Fitch cut US Airways rating to "CCC," the eighth lowest junk rating, from "B-minus." The outlook is negative.

"Given the dramatic rise in energy prices and limits on the amount of additional domestic capacity that the airline can remove to respond to the fuel challenge, Fitch believes that the potential for a liquidity squeeze in late 2008 or early 2009 has increased significantly," the agency said.

The downgrade also reflects US Airways' limited flexibility in raising additional cash through asset sales or new financings, it added.

Rising crude oil and jet fuel prices will also put increasing pressure on United's profit margins and its ability to generate cash this year, potentially forcing the carrier to consider asset sales or new financing to shore up liquidity.

Fitch said each 10 cent increase in the average price of jet fuel increases US Airways' annual mainline operating costs by USD$120 million, and its cash position will erode by the first quarter unless fuel prices decline.

Fitch said US Airways had USD$2.1 billion of unrestricted cash and investments at the end of the first quarter. It also has a USD$1.6 billion secured term loan with a minimum liquidity covenant of USD$1.25 billion.

The rating agency said it could further downgrade US Airways in the coming months if a continuation of adverse fuel price trends and weak unit revenue growth increases the likelihood that the airline will breach its term loan liquidity covenant.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16865 posts, RR: 51
Reply 5, posted (6 years 3 months 2 weeks 6 days 21 hours ago) and read 4824 times:



Quoting EXAAUADL (Reply 1):
Well, if DL/NW can pull it off, they will have a huge advantage

It's not yet know whether it will be an advantage or a disadvantage, the ever increasing fuel costs are quickly eroding the benefits of consolidation. Which is why no one besides DL/NWA is willing to make the deal, it will either prove a life saver for DL/NWA putting themselves in an enviable position or it will hasten the demise of both of them. Time will tell.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 6, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4640 times:



Quoting Squid (Reply 3):
Really, the only real valuable parts of UA Aiways is their PHL hub, and is the cost and headache of a merger really worth that?

I think UA wants CLT, not PHL


User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 31
Reply 7, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4585 times:

The business reporter on the radio this morning in Dallas said United and US Airways are such poor risks for long term success that he expects the next announcement to be exploring a merger with Earl Scheib.

[Edited 2008-05-30 07:32:09]

User currently offlineLGAtoIND From United States of America, joined Jan 2005, 490 posts, RR: 1
Reply 8, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4587 times:

That is good news, as I was never for a UA/US merger. IMHO, the best thing that UA could do would be to form an alliance with CO.

User currently offlineAvek00 From United States of America, joined Oct 2004, 4381 posts, RR: 19
Reply 9, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4440 times:

1. The airline industry continues to consolidate before our very eyes, with the exit of weaker market players and the planned or likely significant capacity cutbacks of the stronger carriers.

2. Merger mania was largely Wall Street-inspired hype from the start.

3. None of the legacies will have their problems solved by a merger. In fact, mergers will exacerbate already-existing financial problems, and create new operational and labor difficulties.

4. The above being said, I fully expect some realignment amongst carriers to occur, with at least one pair of legacies seeking a global ATI agreement to coordinate worldwide operations.



Live life to the fullest.
User currently offlineTVNWZ From United States of America, joined Feb 2006, 2388 posts, RR: 2
Reply 10, posted (6 years 3 months 2 weeks 6 days 20 hours ago) and read 4388 times:



Quoting STT757 (Reply 5):
It's not yet know whether it will be an advantage or a disadvantage, the ever increasing fuel costs are quickly eroding the benefits of consolidation. Which is why no one besides DL/NWA is willing to make the deal, it will either prove a life saver for DL/NWA putting themselves in an enviable position or it will hasten the demise of both of them. Time will tell.

In my oipinion, the DL/NW merger is a different animal. That deal is about economics of scale--not consolidation of routes or removal of seats on overlapping routes. I believe there are only some 19 overlapping routes where the two airlines compete between the two city pairs. If the economics of scale do not work, then you will see DL merge yet again, but this time it will be the bought party, not the buying party.


User currently offlineImapilotaz From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 4300 times:



Quoting TVNWZ (Reply 10):
In my oipinion, the DL/NW merger is a different animal. That deal is about economics of scale--not consolidation of routes or removal of seats on overlapping routes. I believe there are only some 19 overlapping routes where the two airlines compete between the two city pairs.

This is the precise reason why it will fail unless they change their attitude and gut overlapping hubs. MEM & CVG have to be demolished. There is no reason to keep the exact same connecting opportunities from places like BHM over both ATL & MEM. Removing the MEM connection will allow for higher loadfactors and higher yields as you squeeze out the lowest paying pax.

If they think they can leave everything as it is now, DL & NW will cease to exist in a $100 barrel fuel environment. Especially as the number of passengers shrink as fares rise and the economy gets worse.


User currently offlineMcdu From United States of America, joined Apr 2005, 1466 posts, RR: 17
Reply 12, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 4162 times:



Quoting Imapilotaz (Reply 11):
This is the precise reason why it will fail unless they change their attitude and gut overlapping hubs. MEM & CVG have to be demolished. There is no reason to keep the exact same connecting opportunities from places like BHM over both ATL & MEM. Removing the MEM connection will allow for higher loadfactors and higher yields as you squeeze out the lowest paying pax.

You have hit the nail on the head. When people use the "overlapping" routes argument in mergers that is a complete fallacy. You are still trying to get the same pax from the same non-hub cities to a destination. In the case of DL and NW there will be what I think could be termed "severe" contraction of hub cities. CVG/MEM are the most obvious but I think DL will also scale back SLC and or the LAX operations.


User currently offlineAloha717200 From United States of America, joined Aug 2003, 4500 posts, RR: 15
Reply 13, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 4143 times:

I'm relieved that this merger did not happen. Good to see that the flying U will continue to fly!

User currently offlineTVNWZ From United States of America, joined Feb 2006, 2388 posts, RR: 2
Reply 14, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 4065 times:



Quoting Imapilotaz (Reply 11):
This is the precise reason why it will fail unless they change their attitude and gut overlapping hubs. MEM & CVG have to be demolished.

I do not see both these hubs surviving and either one could take the extra capacity caused by the others closure. Ultimataely, companies need to grow to remain viable. Contraction is only a short term solution, not a long term strategy for success. For every seat a legacy gives up, eventually an upstart (ie Jet Blue, AirTran, Southwest type airline) will consolidate all that cut capacity and find a business. That in turn will get us back to where we are today. You have to grow to survive.

Quoting Imapilotaz (Reply 11):
If they think they can leave everything as it is now, DL & NW will cease to exist in a $100 barrel fuel environment. Especially as the number of passengers shrink as fares rise and the economy gets worse.

I believe this would be short lived. Ulltiimately, air travel will grow as everyone adjusts to the higher fares. If not, and it goes as you suggest, the country is in bigger trouble than the airline industry.


User currently offlineGsosbee From United States of America, joined Jan 2005, 825 posts, RR: 0
Reply 15, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 4012 times:



Quoting EXAAUADL (Reply 1):
This is good news for UA, now the board should fire all the top mgmt and replace them with people comitted to making UAL a successful company

Tilton has been one of the chief advocates for consolidation and basically lead everyone to believe that he wanted to consolidate and then leave.

Now however he seems to want to rule - which would be a killer as if he was top CEO material, Chevron would have never let him go. Unfortunately he controls the UA Board so nothing is going to happen that he doesn't want to happen.


User currently offlineAAH732UAL From , joined Dec 1969, posts, RR:
Reply 16, posted (6 years 3 months 2 weeks 6 days 19 hours ago) and read 3927 times:

Great job Glenn, can't close another one!

But this is good b/c UAL was acting like PanAm in the late 80ies and USAir would have been UA's National.


User currently offlineNwab787techops From United States of America, joined Feb 2006, 219 posts, RR: 0
Reply 17, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3764 times:



Quoting AAH732UAL (Reply 16):
But this is good b/c UAL was acting like PanAm in the late 80ies and USAir would have been UA's National.

Couldn't we see UA good out the same way PanAm did? Also, this is airline #2 that ran from a UAL Merger after looking at the balance sheet.


User currently offlineUnited1 From United States of America, joined Oct 2003, 5951 posts, RR: 9
Reply 18, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3764 times:

And in related news CO says they may leave SkyTeam....

http://www.marketwatch.com/News/Stor...8224-278C747353E9%7d&siteid=yhoof2



Semper Fi - PowerPoint makes us stupid.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 19, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3739 times:



Quoting AAH732UAL (Reply 16):
Great job Glenn, can't close another one!

Seems he didn't want to close it...does it occur to you maybe it wasn't in UA's best interest to close the deal?

Your animosity towards Tilton is fairly obvious, but it ostensibly seems as if its precluding you from making some rational thought out comments.



"Up the Irons!"
User currently offlineUnited1 From United States of America, joined Oct 2003, 5951 posts, RR: 9
Reply 20, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3690 times:



Quoting Nwab787techops (Reply 17):
this is airline #2 that ran from a UAL Merger after looking at the balance sheet.

Actually UA decided against the merger, US wanted it to go forward.



Semper Fi - PowerPoint makes us stupid.
User currently offlineAAH732UAL From , joined Dec 1969, posts, RR:
Reply 21, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3607 times:



Quoting Jacobin777 (Reply 19):

Seems he didn't want to close it...does it occur to you maybe it wasn't in UA's best interest to close the deal?

Your animosity towards Tilton is fairly obvious, but it ostensibly seems as if its precluding you from making some rational thought out comments.

Good for Glenn, actually did something smart this time


User currently offlineCommavia From United States of America, joined Apr 2005, 11604 posts, RR: 61
Reply 22, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3607 times:



Quoting EXAAUADL (Reply 1):
Well, if DL/NW can pull it off, they will have a huge advantage, as no one else seems able or willing to consolidate.

I don't buy that premise, nor have I ever since that whole Delta-Northwest deal was announced.

I still fail to see how Delta+Northwest is going to derive any meaningful competitive advantage ("huge" or otherwise) from their merger.

That's not to say that I think the merger is a bad idea, or that it won't help, but I just don't see how it is going to help the two airlines in any appreciable way beyond the help other airlines will get in the next 12-18 months. And by "help," I mean that they would all benefit immensely from higher fares, lower capacity, and cheaper fuel - and none of those things (except maybe for lower capacity) would have anything to do with Delta+Northwest.

Quoting Squid (Reply 3):
Am I the only one who really didn't see the benifits of merging United with US Airways in the first place?

I think everyone saw the huge pitfalls except Doug Parker, who is in over his head and wants to offload this now-Tempefied airline.

Quoting Squid (Reply 3):
Really, the only real valuable parts of UA Aiways is their PHL hub

I disagree.

I think Philadelphia is actually the least valuable part of USAirways - long-term - on the East Coast. To any legacy airline who would buy or merge with USAirways, the entire Western (former America West) piece is absolutely worthless, and would be shut down almost immediately. For the East, Philadelphia is delay-plagued, congested and overcrowded, and faces strong and growing competition from several viable low-cost players (especially Southwest). On the other hand, Charlotte faces virtually 0 competition form low-cost players, serves a strong and growing region of the country, and has tons of room to expand, and LaGuardia and Reagan are slot-controlled and high-yielding, and serve to of the largest and most important business travel markets in the country.

Charlotte, LaGuardia and D.C. are the real valuable pieces of USAirways, in my opinion.

Quoting United1 (Reply 18):
And in related news CO says they may leave SkyTeam....

I think we'll see Continental and United link up in some sort of alliance, but short of a merger. It would make sense for both of them, especially since all of the network synergies they discussed through the merger could still be largely achieved, but without the actual hassle and difficulty of the merger.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 23, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3515 times:



Quoting AAH732UAL (Reply 21):

Quoting Jacobin777 (Reply 19):

Seems he didn't want to close it...does it occur to you maybe it wasn't in UA's best interest to close the deal?

Your animosity towards Tilton is fairly obvious, but it ostensibly seems as if its precluding you from making some rational thought out comments.

Good for Glenn, actually did something smart this time

In one line you're basically stating that he "blew" it and yet on the next line you state he did "something smart".....bit contradictory no?



"Up the Irons!"
User currently offlineAvek00 From United States of America, joined Oct 2004, 4381 posts, RR: 19
Reply 24, posted (6 years 3 months 2 weeks 6 days 18 hours ago) and read 3496 times:



Quoting United1 (Reply 18):

Continental said that the same day Delta and Northwest announced their merger, so it's not really "new".



Live life to the fullest.
25 AAH732UAL : Yes and No? Just like the double talk he gives to the employees See where I am going w/ this?
26 United1 : Totally agreed, I remember reading somewhere that 80% of the benefits of a merger could be achieved through an alliance. I have no idea how they are
27 Gsosbee : The advantage of the DL/NW deal will be their ability to rationalize routes and equipment. This will enable them to park a number of inefficient a/c
28 Mcdu : Oh no, not this again. I am not a Tiltonite but you do seem to lose the plot on just about every issue due to your unwavering hatred. I suppose you a
29 Post contains images AAH732UAL : No, he got it in 2006, want a link Yes my dislike for the man will taint any forum that has the remotest of dealings w/ the man. Sorry [Edited 2008-0
30 United1 : I don't know about revenue sharing but it sounds like ATI would be applied for.
31 ER757 : No Agreed, but apparently they didn't want it bad enough
32 Jacobin777 : It's easy to "pick and choose" his comments. He has the tough task of running a U.S. legacy carrier with majour headwinds. Tell me which one of the m
33 TN757Flyer : From everything I read, it was indeed the folks in Tempe pushing the merger. Any talk by Parker & Co. "shying" away from UA's balance sheet is just p
34 Mcdu : Those were stock "options". They were for somewhere around $35 a share. So he has the opportunity to buy $8 stock for $35 at this point. Why do you t
35 Live4peanuts : I am preparing for the worse, and hoping for the best. I can understand how many of you dislike US and that is totally understandable and you are enti
36 JoFMO : LH gave this quote in regards to to takeover of OS.
37 Mcdu : Let me say that I do not want to see you shut down. I wish you tailwinds and all the best. Personally I don't think we (UA) and US would have made a
38 77411 : It the merger is allowed to be kick into motion, DL will cut routes as needed. They are only talking the talk to get this merger approved. It would o
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