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Posts: 2196
Joined: Wed May 19, 1999 8:04 am

UAL meger News with AW

Sat Feb 20, 1999 6:01 am

Here is some more news on the United Airlines merger with America West Airline that might happen.

My opionion is that United Airlines won't buy or merge with America West Airlines. No doubt United Airlines has the money to do it but it just doesn't make sense to buy America West Airlines with the Denver and San Francisco hub being so close to America West Las Vegas and Phoenix hubs. Also United Airlines already has the biggest west coast presense with Shuttle By United and United Express (SkyWest). But the new Airbus A319 and A320 aircraft America West is getting could go really good in United Airlines fleet also America West 757-200's. United Airlines already has a fleet of 98 757-200 aircraft. They are saying the A320 and A319's will be used for the Washington-Dulles expansion.

I think if there is an airline that would buy or merge with America West it is Continental Airlines because the two airlines already have a strong partnership and Continental Airlines doesn't really have a west coast presense. Also there is still word going around American and U.S Airways is looking at Alaska Airlines.

But I think Northwest Airlines, Alaska Airlines, Horizon Air, Continental Airlines and America West Airlines would make a good team together.

NEW YORK (CNNfn) - UAL Corp. reportedly has made a bid for America West Holdings Corp. in a move that could trigger a bidding war with rival Continental Airlines.
The No. 1 U.S. carrier made an undisclosed conditional cash offer for all of Phoenix-based America West (AWA), whose market capitalization is roughly $800 million, the Wall Street Journal reported Friday. A UAL spokesman declined comment.
The acquisition would bolster United's already high market share on the West Coast and add five hubs west of the Mississippi, but it could face substantial regulatory hurdles.
UAL (UAL) is just one of several companies looking at America West, the country's ninth- largest airline. Continental Airlines, which holds the right of first refusal to acquire a controlling stake in America West, likely will exercise that option, the Journal said.
Atlanta-based Delta Airlines also recently expressed interest in America West but, according to the paper, has "quietly" backed off.
"This is a small consolidation movement in the industry driven by two forces," said Julius Maldutis, an airline analyst with CIBC Oppenheimer. "One, as a defensive measure to protect your principal hub; Delta's purchase of Atlantic Southeast is a defensive measure to protect its hub in Atlanta. Second, it's a defensive measure to obtain traffic growth and flows, [such as] American's acquisition of Reno Air."
The deadline for bids to buy the airline reportedly expired Wednesday.
The battle for the carrier is complicated by demands from the investment group that owns a controlling stake in America West that the buyer purchase the company in its entirety, not just its Class A shares, which carry a 49 percent vote, the paper said.
That could result in a price tag of more than $1 billion, according to the Journal, and could take Continental (CAI.A) out of the running. However, Houston-based Continental may consider taking control of America West and operating the smaller airline as a separate unit, avoiding the costs of an acquisition and simultaneously boosting its revenue, the paper said.
Continental currently owns an 8 percent stake in America West and the two carriers have a marketing alliance.
"I think it's a risky maneuver," said Steven Lewins, an analyst with Gruntal &Co., "primarily because United does not have a presence in the southern tier and Phoenix is dominated by Southwest Airlines. I would suggest that United think long and hard about having a secondary hub so close to Denver, which is a big hub for them, although a tough one."
Posts: 955
Joined: Tue May 18, 1999 2:59 am

RE: UAL meger News with AW

Sat Feb 20, 1999 1:29 pm

United has already announced that they want to grow, especially out of Washington. By buying AWA, they'll eliminate a competitor in the west while bringing in new aircraft for the eastern expansion. I think AWA's days are numbered.

RE: UAL meger News with AW

Sat Feb 20, 1999 2:34 pm

I think UAL is going to put heavy stake in this bidding war primariliy for these reasons:

1) UAL needs the AWA planes NOW!

2) UAL's major strength is from the west coast and the rockies, while it has a little bit influence in the east coast. As a result, UAL will not let anybody to temper with its cash cow in the west, especially UAL is not yet standing firm enough in the east coast.

3) American is about to be the "new ruler" at JFK. Reno acquisation is going to strengthen AA's position in the west coast. As a result, American is going to have a great potential to swallow both east and west coast at the same time. That is definitely not acceptable to United. As a result, UAL has to use AWA to wage a slot war against AA at LAS, Reno, and Phoenix.

4) Continental is now the true ruler of EWR. It is also trying to bid for America West. If it succeed, Continental is going to swallow both east and west coast.

5) If UAL can swallow up AWA, UAL can increase its slots in many west coast cities, further solidify its position as the king of west coast.
Posts: 706
Joined: Wed Aug 25, 2004 5:07 pm

RE: UAL meger News with AW

Sat Feb 20, 1999 4:00 pm

Boy you guys shure know your stuff!
I agree with the last two guys! AWA days
are numbered! Remeber AWA has Airbus's
on order. I feel sorry for the people in PHX
that going to get screwed! I would have loved
to see CO buy AWA!!

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