kbuf737
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Could A USAirways America West Merger Work?

Mon Jan 12, 2004 4:51 am

What does everyone think?

Strong east coast and west coast operations merging together could mean the saving graces for both airlines. Granted there is more than just route structures involved but, a strong network and base of passengers could lead to better and brighter futures.
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luv2fly
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 4:56 am

Even tho HP is in better shape both financially and also in the public eye, I do not believe either one is in any position to merge right now.
You can cut the irony with a knife
 
worldtraveler
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:03 am

Those of you who suggest that HP will set up shop in one of US' hubs seem to forget that HP still has a gov't backed loan outstanding (I believe F9 is the only carrier that has repaid its gov't loan). The feds are not likely to allow HP to buy any other carriers assets (as co-signer they have that right) until HP repays or restructures the loans to remove the US gov't as a guarantor.
 
SlamClick
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:13 am

The US Government already disapproved merger prospects for US because they would have been monopolistic.

Yes, that same US Government that allowed Boeing to buy McDonnell-Douglas its last remaining competition and allowed a merger between two oil companies each of which, pre-merger, had an office Christmas party budget that exceeded the gross revenues of US and UA.

US is likely to be euthanized for NOT being based in Texas.

I might be kidding about this.
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PVD757
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:18 am

I have ALWAYS thought that they would match up great. On paper, it's awesome, but in their checkbooks and on wall street, not so good. If there was a way to pull it off, I think it would be sweet. 737's, 32S', 757's, Mesa = lots of commonality. HP survives with WN in LAS and PHX because of it's low costs, US would immediately ruin that. If HP would BUY US and adopt their cost structure and trim the fat from US's assets, it could work.
 
capt078
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:20 am

worldtraveler: while a conditiion of the loans is that the government has additional oversight of america west's operations, i do not think a proposal to acquire us airways would be blocked by the federal government any more because of the loans. while your mentioning of the loans is appropriate and relavent, i think your assertion that "The feds are not likely to allow HP to buy any other carriers assets" is mistaken. in fact, i would think that the feds would be in favor of this transaction more than that of another purchaser because then the government would have oversight over the newly formed larger carrier. also, do not forget that to get the loans, america west had to prove it had a business model designed to facilitate the repayment of these loans; a possible indication of a well run and potentially successful operation.

slamclick: the fact that the gov't turned down the merger between ua/us cannot be considered analogous to america west and us airways. the ua/us merger was disallowed because of the monopolistic pressence the new carrier would have had on the east coast. america west has virtually no east coast traffic, and us airways has no west coast traffic (except those flying transcontinentally), so the anti-trust issues become moot.
 
yegbey01
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:24 am

The problem is that they will have no hub in the middle of the country. They will be a east-west corridor traffic only will serve the north-south traffic on both east and west coats.

The middle of the country..... what will they do there
 
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mariner
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:27 am

It is a condition of US Airways deal with the ATSB that the airline cannot merge with anyone until the amount owed (ATSB) is less than $500 million.

Presently, it is $900 million (ATSB), with little hope of any serious reduction soon, barring an asset sale.

So - US can't buy HP. Could HP buy US?

It is highly unlikely that the ATSB would approve of a merger between US and HP, because HP would have to assume US's debt.

This would put HP's debt on the ATSB backed loans at around $1.4 billion. Since US also owes other money, the debt load for HP would be very high.

cheers

mariner
aeternum nauta
 
graham697
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:29 am

They could takeover UAs DEN hub, IF they fall or buy out Frontier. I really doubt the US gov would care, but I do doubt it would ever happen due to the cash needed. You never know though, one day at Gatwick you may see a HP A330 rolling down the runway!  Nuts


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SlamClick
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:31 am

Capt078

I guess my sarcasm needs work. The USG's vision of a monopoly is clearly subject to some factor other than actual squashing power over the competition. This is evidenced by the Boeing-McDoug acquisition and the Exxon-Mobil merger.

Perhaps that factor is campaign contributions? Perhaps it is based on the applicants having bigger legal staff than the USG? Anyway, it has squat to do with monopolies.

Every airline merger I have watched in the last 25 years has resulted in the immediate dismantling of one company's routes in a specific geographic region.
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InnocuousFox
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:38 am

This is simple enough... it doesn't matter if it could work... it's not going to be allowed to happen until HP get their own act together.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
 
PVD757
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:40 am

yegbay01: I agree that the mid-continent would be somewhat a hole, but look at where their presence would be: transcon, NE to Florida (low yield, buts lots of demand, hence my "costs" comments from my previous post), huge presence in some serious cities like PHL, LAS, PHX, LGA, BOS, DCA, etc. Having a good network doesn't mean service to every city, but HP could use the "fat" from US and fill in the missing pieces, where needed/warranted by good economic decisions and practices.
 
kbuf737
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 6:03 am

I agree that it could work with the east/west coast presence of both airlines. They could be hub focused on the coasts and then run point to point east-west routes where demand and profitablity could be the highest. It is unfortunate that neither is in the position to take the other over, because it would potentially be a strong carrier. I cant imagine what the name would be though?

USWest?
AmericaAirways?
USAirwest?

Callsign?
USCACTUS? Smile/happy/getting dizzy


The tower? Rapunzel!!!!!!
 
aa757first
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 6:05 am

I bet the America West name would disappear to become US Airways.

AAndrew
 
Bluewave 707
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 6:52 am

Why would the purchasing airline get rid of it's own name? America West should keep its name.
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cloudy
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 7:09 am

These airlines are sufficiently different in culture that a merger would be a nightmare. Mergers are hard on the best of airlines in the best of times, even when the two airlines are closely related in business model, labor practices, etc. USairways until recently had one of the highest cost per available seat mile in the country, and America west had one of the lowest. The labor practices, pay rates and unions in the two companies are about as polar opposite as any two airlines in the country.

The result would be the likely death of both airlines.
 
aa757first
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 7:21 am

Why would the purchasing airline get rid of it's own name? America West should keep its name.

Because US Airways probably has more brand-recognition than America West. They are known in Europe and the Caribbean, where America West has zero service. Its been done before, ValuJet and AirTran. Also, in the banking industry, I'm pretty sure First Union purchased Wachovia

AAndrew
 
capt078
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 8:06 am

Aa757first: you beat me to it, i was just going to mention airtran and valuejet. there's nothing wrong with the america west name, but us airways is a name almost every household in america (particularly the east coast) recognizes. furthermore, while some airlines get away with it (eg northwest and southwest), it certainly would be better to have a name that does not present the impression that it is limited to just one region. us airways sounds like a national, transcontinental name.
 
LHR001
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 8:07 am

America West has a much stronger name recognition on the West Coast, Hawaii, Aalaska and Mexico... You are forgetting that the US Airways name is still very closely associated to the US Air name which stood to confront many silly airline crashes and incidents. America West has in all of its 20 year history, had not one fatal accident! If the two were to merge there would be a much greater chance that the combined airlines would hold tight to the idea of a new name, afterall combined it would be a new and totally different airline.

Looking at the bases... Pittsburgh would be lost in the shuffle. Boston would be pondered off to American, Delta, Jet Blue or Northwest. The Shuttle sold to either American or Delta.. whomever has a more attractive price.. DCA would prove a hefty monitary return if the slots were sold to the highest bidder. Which in most cases would probably be a toss up between anyone. In the end you would have a base structure looking like LAS, PHX, PHL, and CLT!
New routes would be opened to bridge LAS and PHX to Europe. Routes such as LAS-LGW, LAS-CDG, LAS-FRA, LAS-FCO (Las Vegas surely would not have these frequencies on a daily basis... However, the demand for the international traffic is very strong in this market). PHX-LGW, PHX-CDG, PHX-FRA, PHX-AMS.

The fleets would easily be intertwined. America West 757-200, 737-300, 737-200, A320, A319. US Airways 767-200, 757-200, 737-400, 737-300, A330, A321, A320, A319. In the end the fleet would probably be based apon A330, A321, A320, and A319 types. Both America West and US Airways are very interested in the groth prospects using the A321! The A321 is due to replace the America West 757! The Boeing 737-400, 737-300, and 737-200 would have lack of commonality. The Boeing 767-200 is becoming aged!

The frequent flier programs are both very successful and would prove an enormous clientele base for the new airline. Flight Fund has several hundred thousand members. Dividened Miles has the same. The benefits would be outstanding. The question being is who or what alliance would be formed? More than likely One World... Reason being that America West is cosy with British Airways and US Air was at one time British Airways partner in the U.S. American would have plenty to gain by the addition of all of the West Coast code sharing they could gain via America West!

LHR001
 
727LOVER
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 9:45 am

Texas International bought Continental, right?
I feel woozy....what did you put in that Pudding Pop?
 
aa757first
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 9:58 am

America West has a much stronger name recognition on the West Coast, Hawaii, Aalaska and Mexico...

Hawaii: HP served Hawaii for three years. They ended service to HNL in September 1992. HP currently serves Hawaii via a codeshare with HA, like US codeshares with UA.
Alaska: Never served.
Mexico: This is true, but US Airways serves the Caribbean and Europe, where HP has never served. Doesn't flying America West to Philadelphia from Paris seem a bit odd?

AAndrew
 
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 5:54 pm

"Alaska: Never served"

HP has served Alaska in the past with seasonal service from Phoenix, after 9/11 the seasonal summer route was dropped. I worked the ANC flights numerous times during the summer of 2001 in PHX as a HP ramper. It was usually operated with a A319 and in the 1999 season was at times operated with a 757. It generally ran late June through mid-October. So yes HP has served Alaska.
 
Prinair
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 6:15 pm

Old dinosaurs that refuse to evolve should be left to die....

It will never happen... HP is has evolved into an efficient and profitable airline. They are still working on fixing and upgrading their customer service and route structure. It is evolving into a well managed airline.

US...this is just a huge old beast that refuses to change. It should be left to die in peace....

By the way, HP did serve Alaska.... I have flown on their PHX-ANC A319 service several times (last time Aug01).
PRINAIR : Puerto Rico International Airlines
 
Paddy
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 7:28 pm

Old dinosaurs that refuse to evolve should be left to die....

I agree. While my sympathies go out to the employees who will be affected, US's cancer is far too advanced to waste any more time or money on it. I think Bronner and Morgan Stanley are going to realize this and begin the fire sale sometime later this year or early next year. Even if US could be made to survive, it would be better for the industry if the relatively healthier airlines absorbed its assets. Back to the topic though, I don't see a merger happening. Period. No other airlines are in a position to take on that sort of an obligation, for obvious reasons. An HP/US merger is a great idea in theory but simply can't and won't happen in reality. Also, US is far too big of a mess to be attractive intact. As for who will pick up the assests, thats way too complicated an issue for most of us to even begin to figure out. There are so many variables. Same with what will happen to ex-US hubs. PIT will likely get burned but PHL and CLT are anybody's guess. One thing we can safely assume is that both Philadelphia and Charlotte will have plenty of service regardless of whether or not another airline picks them up as hubs. And in reference to the thread on the Charlotte topic: anyone who thinks that Charlotte is dependent on its status as a US hub for adequate service is clueless. So anyway, this US Airways dinosaur will become extinct and the others will benefit from it in the long run.

 
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EA CO AS
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RE: Could A USAirways America West Merger Work?

Mon Jan 12, 2004 10:44 pm

America West has a much stronger name recognition on the West Coast, Hawaii, Aalaska and Mexico...

Actually, US has a strong name recognition on the West Coast thanks to their ill-advised purchase of PSA. Granted, they downsized their West Coast operations dramatically once WN started moving in, but it's laughable to say that their name isn't recognized as a major brand on the West Coast.

"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
elwood64151
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 12:16 am

merger between two oil companies each of which, pre-merger, had an office Christmas party budget that exceeded the gross revenues of US and UA.


An office Christmas Party budget over $7 billion? I highly doubt it. The largest company in the world, Wal-Mart, had sales of about $260 billion in 2002 (maybe a little more). Exxon-Mobil (one of the largest oil companies in the world) had sales in 2002 of just over $150 billion. $7 billion would just about eat up all the profits from either of those two companies.



While both airlines have complimentary route structures, I would worry more about the companies' cultures. How is US different from HP on a corporate, employee, and customer service level? HP's culture is that of an LCC, which is why they couldn't make it work as a full-service carrier. US is a Major Carrier, and I doubt their employees would be willing to work in an LCC environment.

So while it might look good on paper, I think HP-US would be similar to AT&T-NCR or AOL-TimeWarner... The corporate cultures are just too different.
Those who fail to learn history are doomed to repeat it in summer school.
 
ti717
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:10 am

Yes, TI bought CO. Kept the CO name.
Sir, don't you think we should turn on the runway lights?" "No, that's just what there expecting us to do!"
 
jmc1975
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:19 am

A merger would never work due to the different cost structures and corporate philosophies. However, they would probably be the best match of any for an extensive code-share agreement.

.......
 
flyboyaz
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:20 am

Yikes that would make a mess! I doubt HP could buy the whole airline, I could imagine buying certain assets but not the whole thing. Besides that, US employees are heavily unionized and we at HP are not (at least not the passenger service agents). I doubt HP would want to take on that much more in payroll. They would buy the assets and rehire the employees at our own pay scale.

Years ago when Mr. Beauvais was still in control, he made bids to buy the Eastern shuttle (or Pan Am I can't remember), that might be a possibility since I hear we want slots in LGA and we are ramping up operations in BOS. Our current cost structure could support such high frequency short haul flights.

But as interesting as it sounds, our management is working cautiously with our money and I don't think they would want to make such a large expansion purchase. Our employees would freak! One agent at a recent town hall meeting criticized Mr. Parker for not giving us better pay and taking better care of us, while they are starting service to all these new cities/routes. That kind of purchase would certainly lower morale.

As far as US being known on the west coast....they were for sure, but they've been out of here for so long now, I doubt many people highly recognize them. I would say they are more infamous than anything. A good friend of mine refers to them as "the airline that killed PSA". He was a frequent PSA flier and didn't mind US buying them, but it only lasted a few years and they were gone. He wasn't too pleased to see Southwest take over CA's beloved PSA's routes. There is still alot of hatred here towards US concerning the PSA merger.

Joe
Tucson

[Edited 2004-01-12 17:26:29]
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elwood64151
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:26 am

Flyboyaz:

Your statemtn of mgt being cautious with money reminded me of something:

Most MBAs are taught to protect what they've got and increase value with a minimum of risk. That's great for poker if you're not so good at it. It sucks for business. The people who make money are the ones who take risks. Buying components of USAirways Shuttle could be exactly the risk HP needs to get out of the current funk that it's in.

I doubt it will happen, tho. Other carrier's are also chomping at the bit to try and get some of those assets.
Those who fail to learn history are doomed to repeat it in summer school.
 
flyboyaz
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:32 am

Very good point Elwood, and I believe they are doing just that by introducing the transcon flights...it's a starter anyhow. But until we continue to produce profits on a continued basis, I don't think they are willing to shell out that much cash...they are conservative with upgrading our equipment! That's a big joke at work, we just ordered some new keyboards and the ones they sent us were yellowed from age....we called them "New to you" equipment. We've ordered new boarding pass printers when they break and the ones they send us break within 2 days....ugh! We need a lot of internal upgrading before they decided to increase our size with an asset purchase.
Catch a ride on a smile!
 
elwood64151
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:37 am

Ouch! Well, at least your bag-tag printers can actually be used. At MCI, the entire time I worked for FL, we didn't know what printer to designate for our printers (you have to chose a printer by its ID number, and they were incorrect in the computer!).

The printers worked fine. So well, that one day someone in Rochester (who I met during my training, actually), printed the same bag tag from our printer eight times in ten minutes! I finally had to call ROC and tell her what was up.
Those who fail to learn history are doomed to repeat it in summer school.
 
flyboyaz
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:42 am

Hehe, well bag tag printers is another topic...we go through them like candy! All of our equipment needs upgrading..oh did I mention the ancient dot matrix printers that jam on a regular basis? We hold hands and say a prayer every morning at 430am that our equipment will work! lol
Catch a ride on a smile!
 
elwood64151
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 1:51 am

Sounds like the baggage office at MCI for USAir. They have IBMs from 1995 with Dot-Matrix printers that I'm sure are older.

Maybe a merger wouldn't be too injurious, after all!
Those who fail to learn history are doomed to repeat it in summer school.
 
necigrad
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RE: Could A USAirways America West Merger Work?

Tue Jan 13, 2004 11:39 am

RE: HP and the ATSB loan, no HP can't buy ANYTHING from US. The ATSB loan required a business plan (as was mentioned). For HP to deviate from that plan, they would need to pay back the same amount.

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