Ciro
Topic Author
Posts: 639
Joined: Mon Aug 16, 1999 5:00 pm

United American Airlines?

Tue Sep 21, 2004 7:33 pm

Dear all,

I am certainly aware of all the anti-trust constraints, however it should not be very far away the possibility to join American and United Airlines in a single entity.

That would create, by far, the most powerful airline in the world; covering the most important routes as well as the major airport hubs in the US.

Of course, such merging move could not be as radical... A proposed code-sharing plan, following Continental - Delta - Northwest's path, would do it fine.

It could also create a unique opportunity to let American to join Star Alliance. From what I have heard, there are quite a lot of pessimism going on with Oneworld nowadays.

Finally, going back to that anti-trust topic, the low-cost sector in the US is progressing in a way that it can soon have a much greater chunks of the domestic market divided among the 5 or so largest airlines from this segment. It still quite fragmented, but nevertheless, consolidation will be required among all the players, including the big legacy guys.

Cheers!

The fastest way to become a millionaire in the airline business is to start as a billionaire.
 
777ER
Crew
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RE: United American Airlines?

Tue Sep 21, 2004 7:50 pm

Well for starters it would be VERY anti-competitive. It would also create the biggest and most powerful airline in terms of finances in the US which would mean the other legacy carriers would have no hope, unless they also merged with a competitior. It would give the LCCs a real run for their money.
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Algoz
Posts: 119
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RE: United American Airlines?

Tue Sep 21, 2004 8:30 pm

A UA/CO merger would make more sense geographically in my opinion. American is a direct competitor for UA whereas CO would compliment, especially in the case of international flying.
 
broke
Posts: 1299
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RE: United American Airlines?

Tue Sep 21, 2004 9:40 pm

A direct merger results in the liabilities of the weaker partner being assumed by the new company. There is no good financial reason why American and United should merge. If United are not to survive, it would leave a void that would rapidly be filled by other operators. The only area where this void would last any time at all is on the international routes where frequencies are limited and require bilateral governmental approval.
The big operators are so large now that they are extremely difficult to manage efficiently, especially with the typical management style of total control by a central management core.
A cooperative management style, a la Southwest, is rare and everyone wants to be like Southwest in everyway but the one that is the core of their success.
 
codeshare
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RE: United American Airlines?

Tue Sep 21, 2004 9:53 pm

Wouldn't the merger of UA or AA with US be more suitable?
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HlywdCatft
Posts: 5232
Joined: Mon Jan 29, 2001 6:21 am

RE: United American Airlines?

Tue Sep 21, 2004 10:33 pm

Its kind of funny how there is only one American that posted on this so far.

UA and AA would not be allowed like was said, the two largest carriers would put everyone else out of business. AA really had to pull some strings just to take over TWA.

Algoz, UA and CO wouldnt work either for many reasons...

A. Who would take over who? UA is under Ch.11
B. No fleet commonality other than the 757-200 and the 777-200
C. Northwest still has some say what Continental does I believe stemming from their part ownership back in the 90s

If CO were to merge with anyone it would probably be Delta, and neither airline are in the position to merge with the other. I highly doubt the government would allow that merger anyway.
 
Cessna172RG
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RE: United American Airlines?

Tue Sep 21, 2004 11:22 pm

"B. No fleet commonality other than the 757-200 and the 777-200"

Well, there's a bit more than that.

The 777-200 for sure...
The 757, yes...
CO and UA both operate the 767, however CO operates the -200 variant where United operates the -300 (if not the -200 as well).
Continental and United both operate the 737-500 and the 737-300.


That's just a minor detail.

Not sure what would come of such a merger, however, let alone if it were to take place. More likely than not, one of the two (AA or UA) will fail and the other will dominate before the other buys one out. I just can't see either one of the carriers giving in and getting "mushy" with the other to agitate a joining of forces.

Then again, in the cartoons, we often hear "if you can't beat 'em, join em."
Save the whales...for dinner!!!
 
LMP737
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RE: United American Airlines?

Tue Sep 21, 2004 11:30 pm

I can think of nothing that would be as disastorous for both companies than a merger. Besides, it's highly doubtful that the government would allow the merger of the number one and number two airlines to take place anyway.

Even though both AA and UAL operate the 757, 767 and 777 they are powered by different engines. Another headache to contend with.
Never take financial advice from co-workers.
 
aa777jr
Posts: 2269
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RE: United American Airlines?

Wed Sep 22, 2004 12:01 am

That has monopoly written all over it, plus UA is in Chp11 headed for Chp7, why would AA wanna do something like that to its balance sheet?

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
NYCAAer
Posts: 601
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RE: United American Airlines?

Wed Sep 22, 2004 12:25 am

A combined AA-UA would most likely be forced to give up slots at ORD and LHR, 2 airports that neither would want lose any market share.

I could see a merger between CO and NW in terms of their route structures, but they operate different equipment, so it wouldn't work. Maybe a CO-DL merger, which was looked at by both carriers a while back.
 
NWAskyteam
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RE: United American Airlines?

Wed Sep 22, 2004 12:45 am

Major airline mergers in the US are a thing of the past. They are incredibly complex and costly to pull off. It would most likely be a a big compnay swallowing up a small company ala AA-Reno Air.
 
trickijedi
Posts: 3201
Joined: Sun May 13, 2001 4:35 pm

RE: United American Airlines?

Wed Sep 22, 2004 12:50 am

Check out this thread. http://www.airliners.net/discussions/general_aviation/read.main/1715192/4/ You may find it of interest.
Its better to be on the ground wishing you were in the air than be in the air wishing you were on the ground. Fly safe!
 
nzblue
Posts: 563
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RE: United American Airlines?

Wed Sep 22, 2004 2:45 am

That has monopoly written all over it, plus UA is in Chp11 headed for Chp7, why would AA wanna do something like that to its balance sheet?

I'm sorry....since when has it been confirmed that UA is headed for Chapter Seven?  Yeah sure

NZblue
It's an entirely different kind of flying; all together.
 
sfointern
Posts: 1104
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RE: United American Airlines?

Wed Sep 22, 2004 3:37 am

Man, that'd be horrible for us consumers. We need competition! It keeps prices down! It keeps quality up!!
 
warszawa
Posts: 549
Joined: Fri Nov 07, 2003 11:37 am

RE: United American Airlines?

Wed Sep 22, 2004 5:18 am

Keep in mind:

CO 757s = RR Engines, UA = PW, AA = RR
CO 772 = GE Engines, UA = PW, AA = RR
CO 762 = GE Engines, UA = PW, AA = GE
UA 763 = PW Engines, AA = GE

Not only that... but the differences in the aircraft between each airline ( UAL = 737's and A319's/320's versus CO's 737 NG's, versus AA's hundreds of MD-8X's )

Would never happen, thats a guarantee.
Flying a plane is no diff. from riding a bicycle. Its just a lot harder to put baseball cards in the spokes. -'Airplane'
 
jrodri1
Posts: 6
Joined: Sun Jul 25, 2004 9:04 am

RE: United American Airlines?

Wed Sep 22, 2004 5:36 am

Financially....

1) UA in Ch.11 still means that anyone buying/merging (CO or AA) would inherit some of the liabilities (why would anyone do this?).

2) Best way to overcome this is to do an asset acquisition (possibly during liquidation in Ch. 7). In such a sale, all liabilities (except for some very specific liabilities) are bought "free and clear" of any further liens through a 363 asset sale.

Summary: UA and US business plans unlikely to hold under debtholder pressure, who are probably inclined to recover some $$ through an asset sale if situation further deteriorates (as currently happening).
 
AAplatnumflier
Posts: 958
Joined: Wed Sep 15, 2004 1:40 pm

RE: United American Airlines?

Wed Sep 22, 2004 7:40 am

what would the airplane look like? would it be the american colors or the united colors?
 
N1120A
Posts: 26468
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RE: United American Airlines?

Wed Sep 22, 2004 8:01 am

If AA bought UA, the livery might stay the same, as AA has the oldest surviving US airline livery. Then again, this would never happen. The DOT would not let UA and US merge, there is no chance at AA and UA. Beyond that, there are no real financial benefits to it
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
Tango-Bravo
Posts: 2887
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RE: United American Airlines?

Wed Sep 22, 2004 8:07 am

That would create, by far, the most powerful airline in the world; covering the most important routes as well as the major airport hubs in the US.

Wrong....!!! what it would create is an even more unwieldy, unmanageable, out-of-control monstosity than each of the individual airlines have already become in their present forms. It would be the most powerful airline in the world only to the extent the U.S. government would bail it out (courtesy of taxpayers) and rescue it from the inexorable tendency for the hypothetical United American Airlines to implode and collapse under its own weight.
 
DfwRevolution
Posts: 8652
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RE: United American Airlines?

Wed Sep 22, 2004 8:11 am

I am certainly aware of all the anti-trust constraints, however it should not be very far away the possibility to join American and United Airlines in a single entity.

If you think that... you are sorely mistaken. Not a chance in *hell*.... did I emphasis that enough  Big grin

-Why would AA take on UA's debt just as they are becoming financially stable?
-Why would two companies with radically different fleets merge?

It's just *totally* irrationaly.

Finally, going back to that anti-trust topic, the low-cost sector in the US is progressing in a way that it can soon have a much greater chunks of the domestic market divided among the 5 or so largest airlines from this segment.

Remains to be seen, but AA and CO are proving that major carries can make a profit in volite market conditions, and as they get stronger and stronger, they will be in a much better position to fight the LCCs.

LCCs won't take over the world, AA won't take over the world. There will be a balance, and IMO, it has been artifically infalted in the direction of the LCCs... AA has trimmed down and will slowly start taking back its customers.
 
zrs70
Posts: 3352
Joined: Sun Dec 10, 2000 4:08 am

RE: United American Airlines?

Wed Sep 22, 2004 8:35 am

While everyone talks about fleet commonality, I don't recall any merger where fleet commonality was truly a factor. Mind you, it SHOULD ideally be considered. But it has never been a true factor.
17 year airliners.net vet! 2000-2016
 
AZjetgeek
Posts: 229
Joined: Thu Jul 22, 2004 1:53 am

RE: United American Airlines?

Wed Sep 22, 2004 8:37 am

A UA-AA merger has as much chance of occurring as a snowball has of surviving a day in Phoenix in July.

Those who say it's anti-competitive are correct, but let's not forget that we're dealing with an administration in Washington, D.C. that LOVES big business. Anti-competitive mergers were allowed left and right under Reagan (Sec of Trans Elizabeth Dole). The tie-in is that Reagan was also a supporter of big business - the bigger, the better.

That having been said, UA would likely have to emerge from Chapt 11 before it would become an attractive "target" for AA. AA was crying financial tears within the past several months. Merging with UA might drag down both legacy carriers. I say "might" because it's not always easy to tell when an airline is being truthful about its fiscal health.

Even if all conditions were in favor of such a merger, I would certainly oppose it. The United States does not need a "super airline". It needs airlines that are focused as much on providing great service and amicable relationships with employees as they are of the bottom line.
Long live the RJ!
 
ltbewr
Posts: 12498
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RE: United American Airlines?

Wed Sep 22, 2004 8:42 am

The only way I could see this is if there was to be another 9/11 like disaster involving airlines like multiple suricide hijackings, multiple a/c blown up with bombs or ground to air missles or the destruction of a significant area of a city by WMD's (chemical/nuclear/bio). Then the govenment in effect would take over the airlines for a period of time, force mergers, consolidate airlines and provide significant subsidies to keep a certain level of service to keep the economy going.
 
airways6max
Posts: 474
Joined: Sat Aug 09, 2003 6:22 am

UA And AA Merger

Wed Sep 22, 2004 9:03 am

I don't think a UA/AA merger is in the cards. They essentially have identical route networks--however I note that UA has a more extensive Pacific network than AA but a merger between the two would not be in the cards. Nor would a UA/CO merger--again, too much similarity of networks. US is up its ears in debt and no airline would want to assume this much debt. They'll wait around for US to go under and then snap up its assets.
 
NWDC10
Posts: 904
Joined: Sat Dec 20, 2003 10:15 am

RE: United American Airlines?

Wed Sep 22, 2004 9:23 am

It won't happen. I like the name United American Airlines though. United won't buy American by the way. I was just mentioning i like the name United American. Robert NWDC10
 
ua777222
Posts: 2987
Joined: Mon Dec 22, 2003 11:23 am

RE: United American Airlines?

Wed Sep 22, 2004 9:32 am

Ahhh what a dream. With their common fleets (777,757,767,737) and SA)">AA's American Hubs and SA)">UA's International destinations..............

I think SA)">AA would steer away from that as much as possible b/c this is one reason why all the other majors are sitting at the bank wondering why they are out of $$. SA)">AA has found a way to work the way they do and I think this kind of merger would be very hard to manage. Though this would make them the biggest biggest airline in talks of fleet and other numbers it would also impact the agreements they already have in place. If SA)">UA were to step out of the Star Alliance then there would be no presence of it in the US. US Doesn't help in the alliance much so this would be a major bust for SA)">UA and the SA.

Just my 0.02

Thanks again.

UA777222
"It wasn't raining when Noah built the ark."
 
WindowSeat
Posts: 1200
Joined: Tue Sep 23, 2003 3:01 am

RE: United American Airlines?

Wed Sep 22, 2004 9:47 am



Man, that'd be horrible for us consumers. We need competition! It keeps prices down! It keeps quality up!!

unfortunately, with the new 'wise' economy, it is not possible to sustain these many major networks as there are currently, and some have to go. Even with that, there will be plenty of competetion to keep the prices low.

As for the quality part, what exactly are you talking about? You'd be hard pressed to find economy inflight services of a poorer quality than the current ones offerred on most airlines in the US.

cheers



I'm all in favour of keeping dangerous weapons out of the hands of fools. Let's start with keyboards.
 
NWDC10
Posts: 904
Joined: Sat Dec 20, 2003 10:15 am

RE: United American Airlines?

Wed Sep 22, 2004 10:56 am

I do belive airline quality service is poor EXCEPT for QX. I ALWAYS have the best service from them. Robert NWDC10
 
HlywdCatft
Posts: 5232
Joined: Mon Jan 29, 2001 6:21 am

RE: United American Airlines?

Wed Sep 22, 2004 11:53 am

A good part of the reason that AA is suffering right now is its take over of a very much in debt TWA. If AA took over United, it would wipe AA out and we'd have neither airline left.
 
NWDC10
Posts: 904
Joined: Sat Dec 20, 2003 10:15 am

RE: United American Airlines?

Wed Sep 22, 2004 11:58 am

UA would be a very heavy anchor for AA. Both would probably go down. AA would not be able to stay afloat if they bought UA. Robert NWDC10
 
ckfred
Posts: 4763
Joined: Wed Apr 25, 2001 12:50 pm

RE: United American Airlines?

Wed Sep 22, 2004 12:48 pm

First of all, there is absolutely no way that DOT and DOJ approve a AA/UA merger. The merged carrier would control 88% of the traffic at ORD. SFO and LAX would become fortress hubs, as well.

Further, airline mergers in the past generally haven't worked well for one reason or another. The only merger that has worked reasonably well is Delta/Western, and SLC certainly won't be as large next year as it was when Western was a separate carrier.

AA's mergers with Air Cal, QQ, and TW have not worked nearly as well as hoped. Merging the seniority lists would be a nightmare, and there is no commonality between the fleets.

If UA were to put any assets for sale, such as Asian or European routes, slots at LHR, or productions slots with Boeing, I could see AA expressing interest. But that's about it.
 
ifly2eat
Posts: 190
Joined: Tue Apr 29, 2008 12:18 am

RE: United American Airlines?

Wed Sep 22, 2004 1:40 pm

And tomorrow we can discuss "what if the sun rises in the west and sets in the east." Really people don't you have better things to do with your time?
Fly the friendly skys and stay out of mine.
 
andrewuber
Posts: 2142
Joined: Tue Jul 22, 2003 10:45 am

RE: United American Airlines?

Wed Sep 22, 2004 1:41 pm

AA / UA merger? Isn't that kinda like merging Alabama and Auburn? Or perhaps the NY Yankess and the Florida Marlins?

Hmmmmm
I'd rather shoot BAD_MOTIVE
 
Ciro
Topic Author
Posts: 639
Joined: Mon Aug 16, 1999 5:00 pm

RE: United American Airlines?

Sat Sep 25, 2004 6:33 am

This is a little article to spice the conversation a little bit.

http://www.speednews.com/stw/default.html

See article titled "MBA: American Airlines Should Take Over United"


Cheers!


The fastest way to become a millionaire in the airline business is to start as a billionaire.
 
Ciro
Topic Author
Posts: 639
Joined: Mon Aug 16, 1999 5:00 pm

RE: United American Airlines?

Tue Sep 28, 2004 8:33 pm

After all, this was not such a "crazy, non-sense" postings.


From: http://www.speednews.com/stw/default.html

"MBA: American Airlines Should Take Over United"

As one of the foremost aviation consulting firms, Morten Beyer & Agnew (mba) this week proposed the merger of United Airlines and American Airlines as the only practical solution to the financial problems of both airlines.

"We propose that American take over United, as the stronger of the two carriers and the one who possesses the more successful management", said Chairman Morten Beyer. "United is burdened by its huge unfunded pension liability, continuing heavy losses despite its bankruptcy and cost reduction efforts, and has thrice been refused government loan guarantees required to fund its recovery."

Mr. Robert Agnew, President of MBA, pointed out that American's balance sheet is stronger than United's, with $3.853 billion in cash compared to $2.226 billion at United, and stockholder's equity only minus $122 million compared to minus $6.624 billion at United.

"It is obvious that Major U.S. carriers face a dim financial future as they battle the steady growth of low cost competitors, ruinous competition among themselves, and relentless cost pressure from labor unions, rising fuel expense, and the costs of maintaining their inefficient hub-and-spoke route systems," Mr. Beyer said. "A major impediment to a merger of United and American may lie in DOT and DOJ concerns over the anti trust implication of such a combination, but we believe there is no realistic alternative if we are to avoid the liquidation of United and the resulting adverse consequences to our air transportation system," stated Mr. Agnew.

"We have always had the doctrine of saving failed corporations, including airlines, through merger, the most recent being American's takeover of TWA," stated Mr. Agnew. "We see the following major advantages to a merger of the two carriers:

1. American will become the dominant international carrier between the U.S. and all areas of the world, 2. The merger will save the jobs of many of United's 80,000 employees and possibly as many as 200,000 airport, servicing, and other employees, 3. Service will be maintained over United's extensive domestic route system and preserve competition with other Major carriers, 4. Wasteful competition between United and American will be eliminated in major markets and excess capacity reduced, 5. The investment and financing in both carriers' extensive fleets will be preserved, 6. As American has more employees, its unions and their better labor relations will prevail, 7. As American has the stronger management, progress in overcoming the merger's problems should be swift and effective, 8. The combination of station facilities, headquarters staff, and real estate will save hundreds of millions in unneeded duplication, and 9. A buy-out by American will no doubt be the best deal that United's creditors will ever get," Mr. Agnew concluded.

"What with the IAM suing to get the appointment of a trustee for United and the continued financial failure of the carrier, it is high time to take decisive action. We believe that the prospects of a merged company and the combined assets are sufficient to support the estimated $10.0 billion in additional equity and loans required to support the merger," Mr. Beyer concluded.
The fastest way to become a millionaire in the airline business is to start as a billionaire.

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