USAIRWAYS321
Topic Author
Posts: 1708
Joined: Wed Jul 11, 2001 4:31 pm

A Thought On How US/UA Could Get Around Merger Ban

Sat Oct 19, 2002 10:43 am

I was thinking the other day, and came up with an interesting way that US Airways and United Airlines could get around the US Justice Department's ban on a merger of the two...

Assuming US Airways joins Star Alliance, which is very likely to happen next year, all of the current member airlines could purchase a stake in US Airways, as is fairly common with alliances. All of those 14 airlines combined would own a pretty hefty share of US, and since UA is in the country, they could get a larger stake than the others. Then all of the members could sell their shares to UA, buy more, do the same, and eventually get United to own more than 50% of US Airways, and then United could integrate US into their system. In my opinion, our government is stupid enough not to notice or simply look the other way while this occured.

I am a huge US Airways fan, as evidenced by my nick, and definately do not want to see US get swallowed up by United, but I view this as something that could possibly happen. What do you guys think?

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aamd11
Posts: 867
Joined: Sat Nov 17, 2001 11:54 am

RE: A Thought On How US/UA Could Get Around Merger Ban

Sat Oct 19, 2002 10:54 am

Well, maybe the government is a bit preoccupied at this time. maybe it would work.
Chances of it happening? i'd say very slim.
It all assumes the other airlines will want to stump up some cash to buy part of US, will they be willing to do that?
And even then, would it get clearance from competition authorities?
I think AA would have something to say about it, maybe just bring it to someones attention.

Who knows.

Maybe we will see neither airline this time next year.
We just dont know.

Regards,
A^A MD-11
 
Guest

RE: A Thought On How US/UA Could Get Around Merger Ban

Sat Oct 19, 2002 1:14 pm

Won't work, it would still need to be approved by the DOJ for one airline to take up a certain percentage of another airline. And there are many politicians who won't allow it(In AZ, GA, TX, OH, etc.), coupled with the fact that foreign companies can't own more than 25% of an airline at any one time.
 
United Airline
Posts: 8782
Joined: Wed Jan 10, 2001 5:24 pm

RE: A Thought On How US/UA Could Get Around Merger Ban

Sat Oct 19, 2002 2:05 pm

You never know...... According to an Analyst at Morgan Stanley Dean Witter, it is 'possible' that United might come up with a new plan to merge with US Airways in the future.

I STRONGLY doubt that this will happen anytime soon, if ever.  Smile
 
ouboy79
Posts: 4114
Joined: Sun Nov 18, 2001 1:48 pm

RE: A Thought On How US/UA Could Get Around Merger Ban

Sun Oct 20, 2002 1:45 am

Something to keep in mind. ATSB funs CAN be used for mergers & aquisitions. The ATSB CAN recommend that a M&A take place as part of the loan approval requirements. RSA will own nearly 38% of US Airways after the reorganization. RSA is also backed up with a value of over $24 billion. UA will be bankrupt by mid-January unless something happens with in weeks. Who knows where we go from here. UA could pick up assets of US, or visa versa. STAR could also pool funds together to invest in a lower-cost US Airways and position them to grow (through internal or M&A means) in the US.
 
DeltaSFO
Posts: 2407
Joined: Fri Nov 03, 2000 11:22 am

RE: A Thought On How US/UA Could Get Around Merger Ban

Sun Oct 20, 2002 4:24 am

Only on airliners.net would I find a post like this.
It's a new day. Every moment matters. Now, more than ever.
 
ORD Boy 2
Posts: 298
Joined: Fri Aug 25, 2000 12:25 pm

RE: A Thought On How US/UA Could Get Around Merger

Sun Oct 20, 2002 1:59 pm

It is an interesting senario
 
USAFHummer
Posts: 10261
Joined: Thu May 18, 2000 12:22 pm

RE: A Thought On How US/UA Could Get Around Merger Ban

Mon Oct 21, 2002 2:11 am

Slightly off topic...whats this about US joining Star? Is it confirmed...does it have anything to do with the US/UA c/s agreement? This is a new rumor for me...

Greg
Chief A.net college football stadium self-pic guru
 
aamd11
Posts: 867
Joined: Sat Nov 17, 2001 11:54 am

RE: A Thought On How US/UA Could Get Around Merger Ban

Mon Oct 21, 2002 4:04 am

Its just one mans speculation.
It is pure speculation from forum members!
Based manily upon the UA/US codeshare deal thing.

Nothing confirmed, just speculation/rumours

Regards,
A^A MD-11
 
USAIRWAYS321
Topic Author
Posts: 1708
Joined: Wed Jul 11, 2001 4:31 pm

RE: A Thought On How US/UA Could Get Around Merger Ban

Mon Oct 21, 2002 7:08 am

Regarding US Airways joining Star, and Aamd11's comments, this is on United's website:

"Will US Airways join the Star Alliance?
Our agreement has a provision that provides for United supporting US Airways membership in the Star Alliance. US Airways cannot join Star until it has implemented 90 percent of its code share with United, or 12 months after the code-share agreement is in place."


And this is on US Airways' website:

"When will US Airways become a full member of the Star Alliance?
US Airways' first priority is to implement a successful code share with United, in both U.S. and international markets. Once this program is well underway, a process will begin to allow US Airways to become a member of the Star Alliance, a global alliance of airlines that includes Air Canada, Air New Zealand, ANA, Austrian, bmi british midland, Lauda, Lufthansa, Mexicana, SAS, Singapore, THAI, Tyrolean, and Varig in addition to United. This process should begin in the second year of US Airways' relationship with United."


So, as you can see, it is not, as Aamd11, said:
"Its just one mans speculation. It is pure speculation from forum members!"

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cloudy
Posts: 1613
Joined: Sat Apr 06, 2002 3:23 pm

RE: A Thought On How US/UA Could Get Around Merger Ban

Tue Oct 22, 2002 5:27 pm

To summarize -

Codeshare - not only likely or rumored but actually planned and announced.

Merger - unlikely. There are huge initial costs to a merger. Merger costs were a factor in Continental's bankruptcy, and they are a thorn in A&A's side today now that it has swallowed up TWA's assets. Mergers also introduce allot of labor issues that are a pain to deal with - like deciding where employees of the acquired carrier will show up on the seniority lists.

New costs and labor issues are the last thing United and UsAir need at this time. Merger issues would end up being the anvil that broke the camels back - resulting in the liquidation of both carriers.

The merger scheme described, even if legal, would result in allot of litigation. Litigation is like war - really bloody, time consuming and expensive even if you are right and end up winning. This is another thing United does not need right now.
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: A Thought On How US/UA Could Get Around Merger Ban

Wed Oct 23, 2002 1:55 am

This would be illegal. To be an air carrier, a company must meet certain citizenship requirements: certain amount of voting must be held by US citizens, the officers of the company must be US citizens, and so on. The deal would not work at the outset. Even if the foreign carriers held less than 50% collectively and then tried to sell it to UA, yes even the government would notice.
 
Guest

RE: A Thought On How US/UA Could Get Around Merger Ban

Wed Oct 23, 2002 5:20 am

For those that saw McCain on SNL last week(In the Meet the Press sketch):

>>our government is stupid enough not to notice<<

then I'll call them and remind them.

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