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UAUA
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What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:56 am

They allowed AA to takeover TWA but not the UA/US merger. Why? They had a few updates. If it went through what would have happened to UA?

Eventually UA merged with CO, AA merged with US and DL merged with NW.
My former profile name was United Airline.
 
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SCFlyer
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 4:53 am

UAUA wrote:
They allowed AA to takeover TWA but not the UA/US merger. Why? They had a few updates. If it went through what would have happened to UA?

Eventually UA merged with CO, AA merged with US and DL merged with NW.


It didn't happen because they said so and it didn't make any sense to them financially in the end.
 
Mboyle1988
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 4:54 am

And I also expected NW and CO to merge. That would have left AA and DL. Not sure that one would have been approved but boy what a network that would have been.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:07 am

SCFlyer wrote:
It didn't happen because they said so and it didn't make any sense to them financially in the end.

There's more to it than that; the USDOJ found it anti-competitive even with carve-outs.

Contrary to A.net lore, that in itself is not enough to immediately stop a merger.... but it can (and often does) make one prohibitively expensive, by tying it up in years of injunctions and litigation.

And that's exactly what happened here: both sides didn't see the benefit in fighting, so they called it off.




Mboyle1988 wrote:
That would have left AA and DL. Not sure that one would have been approved but boy what a network that would have been.

Can't tell if you're being sarcastic or not, but that actually would've been a rather troublesome move from a network status:
Two airlines with (at the time) significant operations in JFK, LGA, DFW, and BOS, struggling piecemeal at LAX and further up the west coast (SJC and PDX respectively).

There would've had to be tons of rationalization in New York, Boston, and Dallas in order to pass muster, just in time for the 2001 downturn to hit.
I myself, suspect a more prosaic motive... ~Thranduil
 
UAUA
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:26 am

Then why did they allow AA to buy TW?

And after a few years, all these merges took place.
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UAUA
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:26 am

I wonder what the aviation world would look like if UA took over US back then
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Prost
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:34 am

UAUA wrote:
Then why did they allow AA to buy TW?

And after a few years, all these merges took place.


Different administration’s DOJ viewed the competition differently.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:37 am

The CEOs of the other airlines whined too. And whined that UA shouldn’t get DIP financing in BK, then they decided to file BK too.

There’s the everyone else standard and then there’s the UA standard, and they’ve always had a target on their back.
 
UAUA
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 7:15 am

And I think UA was in big financial problems even before 9.11

They didn't have the money I guess?
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blacksoviet
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 7:19 am

If the merger was approved would they have kept flying the Fokker 100 a little longer?
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 7:42 am

A southeastern UA hub @ CLT became the same with AA at a later time due to the ruling by the DOJ.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 8:54 am

UAUA wrote:
Then why did they allow AA to buy TW?


Different circumstances I believe TW was on the verge of liquidation when the acquisition was approved. Not sure if it's just an urban legend, but I've heard anecdotes that TW didn't have enough cash on hand to complete payroll when AA took over.
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 9:57 am

The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


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jph7291
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 10:39 am

chepos wrote:
The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


Sent from my iPhone using Tapatalk



This was indeed the major sticking point. And do not forget USAir's substantial BWI obs at the time a la Metrojet. Overall, the proposed operation was seen as too East Coast-concentrated. And between CLT, IAD, DCA, BWI, PHL, PIT, LGA and to a lesser extent BOS, it is pretty hard to argue with that. Contrast that with the other airlines at the time...the only other major hub in between all of that would have been CO at EWR plus the very mediocre (then) operations of AA and DL at JFK/LGA.
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 10:53 am

UAUA wrote:
Then why did they allow AA to buy TW?

And after a few years, all these merges took place.


By 2001, TWA only had a single hub in STL and basically a focus city at JFK.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 11:14 am

chepos wrote:
The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


IIRC - UA/US initially proposed divesting the DCA operation into a new entity called DC Air that would have been partially owned by American and United - that proposal raised anti-competitive issues; instead a new proposal created a DC Air that would have been 51% owned Bob Johnson, the founder of BET and USAirways director, and 49% owned by American Airlines; the ex-US Fokker 100 would have been allocated to the new operation.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 11:42 am

jph7291 wrote:
Overall, the proposed operation was seen as too East Coast-concentrated. And between CLT, IAD, DCA, BWI, PHL, PIT, LGA and to a lesser extent BOS, it is pretty hard to argue with that. Contrast that with the other airlines at the time...the only other major hub in between all of that would have been CO at EWR plus the very mediocre (then) operations of AA and DL at JFK/LGA.


But out of CLT, IAD, DCA, BWI, PHL, PIT, LGA, BOS, the only UA hub in there was IAD, which has never been that large of an operation. All the others were US hubs, which always had a very significant east coast concentration due to their origins as Allegheny and subsequent mergers with Mohawk and Piedmont.

Apart from the new UA becoming dominant in all three DC area airports, not much would really have changed in the overall east coast region.

But considering it's the federal government that decides these things, and the fact that it happens to be based in DC, it's easy to see why the DC issue could have been the deal breaker.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 11:44 am

elmothehobo wrote:
chepos wrote:
The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


IIRC - UA/US initially proposed divesting the DCA operation into a new entity called DC Air that would have been partially owned by American and United - that proposal raised anti-competitive issues; instead a new proposal created a DC Air that would have been 51% owned Bob Johnson, the founder of BET and USAirways director, and 49% owned by American Airlines; the ex-US Fokker 100 would have been allocated to the new operation.

DCAir was not going to be owned by AA,Robert Johnson of BET was going to be the owner.

AA was going to get the Shuttle routes.

https://money.cnn.com/2000/05/24/deals/united_johnson/
Last edited by Boof02671 on Mon Jun 24, 2019 11:46 am, edited 1 time in total.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 11:46 am

It was anti competitive. The shuttle was to be a joint AA\UA operation.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 12:19 pm

Boof02671 wrote:
DCAir was not going to be owned by AA,Robert Johnson of BET was going to be the owner.

AA was going to get the Shuttle routes.

https://money.cnn.com/2000/05/24/deals/united_johnson/


The Shuttle routes were going to be split between AA and UA; the final plan before the merger was abandoned was Bob Johnson with 51% of DC Air and AA with the remaining 49%.

I may have conflated the proposed co-ownership of the former USAirways shuttle operation with the initial concept of DC Air's ownership structure.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 12:56 pm

I remember the DOJ having a major issue with this, regarding all the other reasons mentioned in this thread already. As someone growing up in Pittsburgh, I remember the big question was "will PIT remain as a hub," which UA eventually did confirm their commitment to keeping it. I just find that ironic now. The year after the DOJ shot this down, September 11th happened, the entire airline industry suffered, US went into a financial nose dive, and they ended up closing the PIT hub anyway.

I know it's moot at this point, but I have my doubts that this merged UA/US airline could have kept their commitment to PIT. US axed BWI because WN was well established there and building up a massive operation, directly competing against US on most of their northeastern city pairs. The writing was already on the wall for PIT, but nobody wanted to admit it at the time - at least not before 2003 when US was in bankruptcy and made the announcement that PIT would be closed. I don't think the US/UA merger would have had a different outcome for their PIT hub.
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Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 1:44 pm

AA was not going to own a piece of it, the article clearly stated, AA looked at owning a stake.

https://www.chicagotribune.com/news/ct- ... y,amp.html
 
USPIT10L
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:05 pm

steeler83 wrote:
I remember the DOJ having a major issue with this, regarding all the other reasons mentioned in this thread already. As someone growing up in Pittsburgh, I remember the big question was "will PIT remain as a hub," which UA eventually did confirm their commitment to keeping it. I just find that ironic now. The year after the DOJ shot this down, September 11th happened, the entire airline industry suffered, US went into a financial nose dive, and they ended up closing the PIT hub anyway.

I know it's moot at this point, but I have my doubts that this merged UA/US airline could have kept their commitment to PIT. US axed BWI because WN was well established there and building up a massive operation, directly competing against US on most of their northeastern city pairs. The writing was already on the wall for PIT, but nobody wanted to admit it at the time - at least not before 2003 when US was in bankruptcy and made the announcement that PIT would be closed. I don't think the US/UA merger would have had a different outcome for their PIT hub.


A major concern of local lawmakers at the time was also the future location of the US Airbus maintenance center, unknown at that point because US had not yet committed to it (it was later outsourced to Mobile, AL IINM). I believe had the merger gone through, UA would've been forced into Chapter 7 BK post 9/11. There was no way an airline that size was surviving integrating all that into one company. Look at the size US was in 2001 and then look at what both HP in 2006 and AA in 2013 got. A very different network, thst's for sure. 9/11 and DOJs merger refusal helped create that. It also indirectly led to the mergers that followed from 2006 to 2015.
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Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:38 pm

USPIT10L wrote:
steeler83 wrote:
I remember the DOJ having a major issue with this, regarding all the other reasons mentioned in this thread already. As someone growing up in Pittsburgh, I remember the big question was "will PIT remain as a hub," which UA eventually did confirm their commitment to keeping it. I just find that ironic now. The year after the DOJ shot this down, September 11th happened, the entire airline industry suffered, US went into a financial nose dive, and they ended up closing the PIT hub anyway.

I know it's moot at this point, but I have my doubts that this merged UA/US airline could have kept their commitment to PIT. US axed BWI because WN was well established there and building up a massive operation, directly competing against US on most of their northeastern city pairs. The writing was already on the wall for PIT, but nobody wanted to admit it at the time - at least not before 2003 when US was in bankruptcy and made the announcement that PIT would be closed. I don't think the US/UA merger would have had a different outcome for their PIT hub.


A major concern of local lawmakers at the time was also the future location of the US Airbus maintenance center, unknown at that point because US had not yet committed to it (it was later outsourced to Mobile, AL IINM). I believe had the merger gone through, UA would've been forced into Chapter 7 BK post 9/11. There was no way an airline that size was surviving integrating all that into one company. Look at the size US was in 2001 and then look at what both HP in 2006 and AA in 2013 got. A very different network, thst's for sure. 9/11 and DOJs merger refusal helped create that. It also indirectly led to the mergers that followed from 2006 to 2015.

US didn’t outsource all of Airbus overhaul, PIT was doing all narrowbody Airbus which they still do, as well as CLT.

US violated the IAM CBA, we won in court in the first round after the first Bankruptcy, appeals court demanded the case to arbitration, which we won (IAM), they filed bankruptcy the second time to get out of it.

Currently 50% of all LUS billable hours of all overhaul must be done In-house.

Your post is incorrect.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:40 pm

Merger was officially announced on 24 May 2000, and was terminated in July 2001. One thing that people often forget is that US at the time had a respectable IAD operation as well, with a bunch of P2P Express and MetroJet flights. As of June 2000, they had 105 IAD flights (including Mainline, Express, and MetroJet) to 27 nonstop destinations. Combined BWI/IAD/DCA, US had 433 daily flights to 65 destinations.

http://web.archive.org/web/200010180020 ... /index.htm
http://web.archive.org/web/200102092230 ... 1_0110.htm

Interesting "planned new routes" (which to me is confusing/misleading because IIRC US was already operating CLT-SEA, for example):
http://web.archive.org/web/200106180554 ... ticmap.gif
http://web.archive.org/web/200106180548 ... tl_map.gif

BOS would have turned into a hub more or less. US had already operated 183 daily flights to 34 destinations, and UA operated LAX/SFO/ORD/IAD/DEN/LHR. They had planned BOS-SAN/SEA/PDX/FRA/NRT. This is the first I have seen plans of a UA BOS-NRT.
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:51 pm

UAUA wrote:
Then why did they allow AA to buy TW?

And after a few years, all these merges took place.


AA didn't buy TW per se. AA bought the assets they wanted when TW declared Chapter 11. If AA had not done so, TW was going to file Chapter 7. The end.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 3:58 pm

The USA market would have looked very different with CO+NW, US+UA, AA, DL. AIRTRAN probably would have gone to someone else, DL maybe acquire AS, VX swallowed by who? Or maybe VX+B6?
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USPIT10L
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 4:53 pm

Boof02671 wrote:
USPIT10L wrote:
steeler83 wrote:
I remember the DOJ having a major issue with this, regarding all the other reasons mentioned in this thread already. As someone growing up in Pittsburgh, I remember the big question was "will PIT remain as a hub," which UA eventually did confirm their commitment to keeping it. I just find that ironic now. The year after the DOJ shot this down, September 11th happened, the entire airline industry suffered, US went into a financial nose dive, and they ended up closing the PIT hub anyway.

I know it's moot at this point, but I have my doubts that this merged UA/US airline could have kept their commitment to PIT. US axed BWI because WN was well established there and building up a massive operation, directly competing against US on most of their northeastern city pairs. The writing was already on the wall for PIT, but nobody wanted to admit it at the time - at least not before 2003 when US was in bankruptcy and made the announcement that PIT would be closed. I don't think the US/UA merger would have had a different outcome for their PIT hub.


A major concern of local lawmakers at the time was also the future location of the US Airbus maintenance center, unknown at that point because US had not yet committed to it (it was later outsourced to Mobile, AL IINM). I believe had the merger gone through, UA would've been forced into Chapter 7 BK post 9/11. There was no way an airline that size was surviving integrating all that into one company. Look at the size US was in 2001 and then look at what both HP in 2006 and AA in 2013 got. A very different network, thst's for sure. 9/11 and DOJs merger refusal helped create that. It also indirectly led to the mergers that followed from 2006 to 2015.

US didn’t outsource all of Airbus overhaul, PIT was doing all narrowbody Airbus which they still do, as well as CLT.

US violated the IAM CBA, we won in court in the first round after the first Bankruptcy, appeals court demanded the case to arbitration, which we won (IAM), they filed bankruptcy the second time to get out of it.

Currently 50% of all LUS billable hours of all overhaul must be done In-house.

Your post is incorrect.


Where is your proof, if you don't mind my asking? I was going off what I remember at the time. I saw a congressional hearing on CSPAN regarding the merger and UA openly comitted to building an Airbus mx center here, at least at the word of UA's then-head of governmental affairs, Shelley Longmuir. I recall US attempting to outsource their Airbus mx during the second BK filing in late 2004. I remember Parker brought a lot back in-house. A lot changed for US from 2001 to 2006, when HP bought US.
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Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:03 pm

I worked in CLT and I was an IAM rep, after bankruptcy 1 PIT did all narrowbody Airbus, CLT did all 737s and all widebodies.

They were going to build an all new facility in PIT with the merger.

And here is your proof about UA-US merger pit facility

http://old.post-gazette.com/businessnew ... local1.asp

https://www.bizjournals.com/pittsburgh/ ... ory5.htmlM

Google is your friend.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:05 pm

The second bankruptcy we ended up with 50% of billable hours in- house

I was on the Mechanic and Related Negotiating Committee in Bankruptcy 2.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:07 pm

Appeals court ruling

https://www.bizjournals.com/pittsburgh/ ... ily33.html

Arbitration award

IAM Wins US Airways Airbus Arbitration

October 1, 2004 - The International Association of Machinists and Aerospace Workers (IAM) today announced a major victory over US Airways in a year-long dispute over subcontracting heavy maintenance of the airline’s Airbus aircraft.

“The IAM more than a year ago told US Airways that our contract prohibited subcontracting this work,” said Robert Roach, Jr., IAM General Vice President of Transportation. “US Airways wasted countless dollars on attorneys to fight their employees, and is now financially liable to our members for their corporate arrogance. I urge US Airways to begin embracing their employees as valuable assets and listen to our ideas for addressing the substantial challenges facing the airline.”

US Airways began illegally subcontracting Airbus Heavy Maintenance Visits (HMV) to Singapore Technologies Mobile Aerospace Engineering located in Mobile, Alabama in October 2003. The IAM won an immediate injunction in Federal District Court halting the subcontracting, but the Third Circuit Court of Appeals on February 3, 2004 lifted the injunction. The Appeals Court ruled the dispute should be resolved through the System Board of Adjustment, which is the arbitration mechanism provided for in the IAM-US Airways contract. The three-member System Board is made up of one Union member, one company member and a neutral.

“The Airbus was acquired by the Company in October of 1998 and the Company was, or should have been, well aware of maintenance obligations, particularly with respect to HMV work,” says the System Board of Adjustment’s decision. “If the Company is now faced with a bona fide dilemma, it is one that could have been, and to a certain extent was, recognized early on, but never accommodated in bargaining. The Company is ordered to cease and desist in outsourcing Airbus HMV work.” ST Mobile Aerospace has completed twelve Airbus overhauls in violation of the IAM collective bargaining agreement.

The complete signed decision will be available at http://transportation.goiam.org when received from the arbitrator.

“This decision reaffirms 55 years of contract language,” said William O’Driscoll, President of IAM District 142. “US Airways illegally outsourced Airbus work just months after IAM members provided $1.5 billion in savings to rescue the airline and allow it to emerge from its first bankruptcy. US Airways’ actions severely damaged the labor-management relationship that is critical for the company’s success.”

The parties have been ordered to meet and discuss how affected employees will be made whole for losses caused by the airline’s flagrant contract violation.

“The IAM will use every legal venue necessary to enforce this award,” said Roach.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:08 pm

HP didn’t buy US it was a merger with POR of the bankruptcy.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 5:13 pm

 
Iloveboeing
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 9:54 pm

jph7291 wrote:
chepos wrote:
The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


Sent from my iPhone using Tapatalk



This was indeed the major sticking point. And do not forget USAir's substantial BWI obs at the time a la Metrojet. Overall, the proposed operation was seen as too East Coast-concentrated. And between CLT, IAD, DCA, BWI, PHL, PIT, LGA and to a lesser extent BOS, it is pretty hard to argue with that. Contrast that with the other airlines at the time...the only other major hub in between all of that would have been CO at EWR plus the very mediocre (then) operations of AA and DL at JFK/LGA.


Metrojet was a joke and alienated many of the loyal FFs (such as my father) in the Baltimore region. My father flew US so much that he would regularly receive coupons, allowing free upgrades to first class. But US switched virtually everything at BWI to Metrojet, so it made those coupons utterly worthless. We lived northwest of Baltimore (Carroll County) and it made no sense for him to drive to DCA or IAD (2 hours each way) just to get a free first class upgrade.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jun 24, 2019 11:33 pm

Iloveboeing wrote:
jph7291 wrote:
chepos wrote:
The market concentration in the DC area was a big sticking point. With the UA hub at IAD and US holding a large slot portfolio at DCA the authorities frowned upon this.


Sent from my iPhone using Tapatalk



This was indeed the major sticking point. And do not forget USAir's substantial BWI obs at the time a la Metrojet. Overall, the proposed operation was seen as too East Coast-concentrated. And between CLT, IAD, DCA, BWI, PHL, PIT, LGA and to a lesser extent BOS, it is pretty hard to argue with that. Contrast that with the other airlines at the time...the only other major hub in between all of that would have been CO at EWR plus the very mediocre (then) operations of AA and DL at JFK/LGA.


Metrojet was a joke and alienated many of the loyal FFs (such as my father) in the Baltimore region. My father flew US so much that he would regularly receive coupons, allowing free upgrades to first class. But US switched virtually everything at BWI to Metrojet, so it made those coupons utterly worthless. We lived northwest of Baltimore (Carroll County) and it made no sense for him to drive to DCA or IAD (2 hours each way) just to get a free first class upgrade.

It was switched to Metrojet at BWI to compete against WN who was building up BWI.
 
ScottB
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 12:59 am

UAUA wrote:
Then why did they allow AA to buy TW?


There's a concept in antitrust law known as the "failing company doctrine;" i.e. a merger which might otherwise be prohibited is permissible if the outcome absent the merger would be the failure of one of the competitors. TWA had filed for bankruptcy and made a good case that the likely outcome without the AA asset purchase would be liquidation given their previous bankruptcies.

TVNWZ wrote:
AA didn't buy TW per se. AA bought the assets they wanted when TW declared Chapter 11.


The primary reason for the TW merger being structured as an asset purchase wasn't antitrust clearance, though. AA bought TWA's assets to avoid being saddled with Carl Icahn's predatory Karabu ticketing agreement which allowed his companies to purchase vast blocks of deeply discounted seats on TWA on itineraries not starting or ending at STL.

elmothehobo wrote:
new proposal created a DC Air that would have been 51% owned Bob Johnson, the founder of BET and USAirways director, and 49% owned by American Airlines; the ex-US Fokker 100 would have been allocated to the new operation.


The whole DC Air sham was designed to grease the wheels with what had been a Democratic-controlled administration at the time the merger was announced: "The first African-American-owned airline!" The fact was that DC Air was going to be leasing a bunch of old planes from the "new United" (732s and F100s, and maybe some 727s) and have no relevant network outside of DCA.
 
UAUA
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 4:31 am

They were going to create an airline named DC Air right?

TVNWZ wrote:
UAUA wrote:
Then why did they allow AA to buy TW?

And after a few years, all these merges took place.


AA didn't buy TW per se. AA bought the assets they wanted when TW declared Chapter 11. If AA had not done so, TW was going to file Chapter 7. The end.


TWA was in such big trouble?
My former profile name was United Airline.
 
USAirKid
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 4:59 am

ScottB wrote:
TVNWZ wrote:
AA didn't buy TW per se. AA bought the assets they wanted when TW declared Chapter 11.


The primary reason for the TW merger being structured as an asset purchase wasn't antitrust clearance, though. AA bought TWA's assets to avoid being saddled with Carl Icahn's predatory Karabu ticketing agreement which allowed his companies to purchase vast blocks of deeply discounted seats on TWA on itineraries not starting or ending at STL.


I'm sure Karabu was part of the Chapter 11 / Asset Sale consideration, but it also allowed AA to leave behind any assets or liabilities it didn't want, and they probably got the ability to renegotiate leases, etc. I'm sure TWA had some pretty bad lease rates.
 
UAUA
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 5:02 am

Wonder if UA took over US what would it be like today. Would they still have merged with CO?
My former profile name was United Airline.
 
USAirKid
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 5:09 am

Here are some interesting quotes from an AA press release from January 2001:

American also announced that it has agreed to acquire certain key strategic US Airways assets, including 14 gates, 36 slots, 66 owned aircraft and an additional 20 leased aircraft, as well as to lease the gates and slots necessary for American to operate half of the northeast Shuttle with United Airlines. Under the terms of the agreement, American has agreed to pay $1.2 billion in cash to United Airlines and assume approximately $300 million in aircraft operating leases. The consummation of this transaction is contingent on the closing of the proposed merger between United Airlines and US Airways.

  • In addition, American has agreed to acquire a 49 percent stake in, and to enter into an exclusive marketing agreement with, DC Air, the first significant new entrant at Ronald Reagan Washington National Airport in over a decade. American has agreed to pay approximately $82 million in cash to DC Air. Under the marketing agreement, DC Air will participate in American's frequent flyer program. American has also agreed to provide to DC Air eleven F100 aircraft in a wet lease arrangement, which means that American personnel will be flying and maintaining American aircraft marketed as DC Air service. American Airlines will also have a right of first refusal on the acquisition of the remaining 51 percent of DC Air.


In many ways DC Air would've almost been a subsidiary of AA. Its interesting that most of the route and gate assets became part of AA later via the US-AA merger.

From United/US Airways, American will:

  • Acquire 36 jet and commuter slots at New York LaGuardia Airport.
  • Acquire five gates at New York LaGuardia, three gates at Ronald Reagan Washington National Airport, three gates at Boston Logan International Airport, and one gate each at Newark International Airport, Philadelphia International Airport and Atlanta Hartsfield International Airport. Also included are airport holding areas and terminal facilities to support the acquired gates.
  • Lease sufficient additional gates and slots necessary to operate 50 percent of the departures of the US Airways Shuttle, which includes Boston-New York, New York-Washington DC, and Boston-Washington DC.
  • Acquire up to 86 aircraft, consisting of 66 acquired outright and the leases of an additional 20, all of which are complementary to American's current fleet, including 34 B757-200s, 12 MD82s and 40 F100s, as well as spare engines, parts, inventory and other equipment necessary to support the aircraft. The transaction contemplates that a number of US Airways pilots sufficient to operate approximately 40 percent of the aircraft would join American Airlines, with the additional capacity being filled by existing American pilots and through the creation of new jobs. Should fewer pilots join American Airlines, United may elect to retain a commensurate number of B757-200s.

In addition, to ensure competition on United/US Airways hub-to-hub routes, American Airlines will guarantee that the following routes will be served by at least two roundtrips a day for the next 10 years: Philadelphia-Los Angeles, Philadelphia-San Jose, Philadelphia-Denver, Charlotte-Chicago (O'Hare), and Washington DC-Pittsburgh.


There are also details about the TWA purchase in there, but they're kinda off topic.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 8:54 am

Regarding DCAir, I had an Airways Magazine I purchased at an airshow from 2000-2001 which detailed the DC Air issue. Apparently UA or AA was supposed to give up gates at EWR to accommodate and DC Air was supposed to get them and then also acquire the US 757s from EA as well as part of the deal (independent of each other, I just remember reading it when I was 14).

DC Air was a stupid thing to align with regarding the UA / US merger, more like a New York Air type of operation for the Early 2000s. I think part of it was to calm the skeptics in congress but there was no hope for the merger at play. There was way too much WAS/NYC/BOS overlap at airports to let this merger occur.

The right thing to do was probably to release any of the gates airports to other carriers (BWI/DCA/IAD) and the NYC airports (EWR/LGA/JFK) to other carriers to make this work. I think UA was way too overly confident at the time that this was going to happen and instead released select routes missing from certain airports (EG: BOS-NRT) thinking it was a slam dunk for UA / US.

IIRC, UA didn't want to give up anything in the network except the DC Air consolidations with AA. UA / US could've given up BWI, LGA, MIA, DCA in favor of CLT, PIT, ORD, PHL, DEN, LAX/SFO, IAD and focus cities at BOS/JFK/SEA and maybe even EWR etc to make it work. I also say MIA because UA was struggling with that focus city at the time and could've been absorbed by CLT.

A grand merger in this scenario no doubt; but after 9/11 I think the merged UA / US would've been doomed and there would've been a ton of consolidation. AA/TWA was a different story because TW was really struggling behind closed doors. Same deal later with US as AW picked up US when they were on the verge of liquidation in 2004-2005, IIRC.
 
PHLBOS
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 12:47 pm

UAUA wrote:
I wonder what the aviation world would look like if UA took over US back then

Right off the bat:

The merger of those two carriers would've meant that there would've been three hubs (IAD, PHL & PIT) within 300 miles of each other... at least initially. Given the size of the merged carrier; even if 9/11 had not happened, maintaining all three hubs as they were would've been economically unsustainable in the long term.

For starters, the PIT hub would've been immediately dismantled; heck it was already placed on death row while the merger talks were going on. The PHL hub would've likely been reduced to focus city status with most if not all connection itineraries being shifted over to IAD, where there was much more room for expansion than at PHL. At the time, a massive terminal expansion was being planned for IAD that would've consisted of multiple concourse buildings linked with an APM similar to what ATL has; so a larger/consolidated hub operations at IAD was indeed doable... at least on paper.

In reality & post 9/11, the IAD expansion plans were trimmed back a bit. IIRC, this scale-back predated UA's filing Chapter 11.

Long story short, the cancellation of this merger saved the PHL hub as well as jobs in PA. Then again, had the UA/US merger happened; the 2005 HP/US & the later CO/UA merger would've likely not happened.
"TransEastern! You'll feel like you've never left the ground because we treat you like dirt!" SNL Parady ad circa 1981
 
elmothehobo
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Re: What happened to the proposed UA/US merger in the early 2000s?

Tue Jun 25, 2019 2:03 pm

ScottB wrote:
The whole DC Air sham was designed to grease the wheels with what had been a Democratic-controlled administration at the time the merger was announced: "The first African-American-owned airline!" The fact was that DC Air was going to be leasing a bunch of old planes from the "new United" (732s and F100s, and maybe some 727s) and have no relevant network outside of DCA.


DCAir effectively evolved into a vehicle for American to purchase the ex-US DCA network. Politics aside, Bob Johnson was a well known businessman with strong ties to the DC area, money to throw around (he was on the hook for investing $100 million for a 51% stake in the airline), and was a director at USAirways. I was only aware of the F100s going to DC Air.
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 12:16 am

Question, if UA and US did merge would PIT still be a hub today? Or was PIT similar to STL after their TWA acquisition in that there was too much overlap with other hubs. For AA it was ORD and DFW vs. STL, for UA would It have been ORD and IAD?


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Cody
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 4:37 am

I have a funny DC AIR story.

After the failed merger with UA, I was on a US AIRWAYS flight sitting beside a former exec from DC AIR. He was sort of arrogant. I still have his business card and it even had the proposed DC AIR logo on it. He was telling me how much of a mistake it was that the merger never happened and DC AIR would have been amazing.

Now at this point in history, the idea of Mid-Atlantic was just on the drawing board. This particular exec was now going to be a top manager at Mid Atlantic and it was going to be amazing, "just like DC AIR should have been."

I told him I thought MidAtlantic would get off the ground, be short-lived, and then be sold off to Chautuaqua and that operation would be re-named Republic. He told me that would never happen, he couldn't even imagine where I got that idea, and that MidAtlantic was going to be an integral part of the turn around at US AIRWAYS.

As for DC AIR, I fully admit I could be absolutely nuts, but I think I have a memory of it eventually operating a few turboprops, like the Dornier or the Dash 8 under the US AIRWAYS EXPRESS banner. The logo was a stylized Capitol Building.

Correct me if I am wrong...I can be humbled.
 
Cody
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 4:44 am

Let me correct myself. I am looking at the business cards mentioned in my previous post. There are four separate cards. US AIRWAYS, DC Air, MidAtlantic and PotomacAir. It is the Potomac Air logo that was a stylized Capitol Building.

Didn't PotomacAir use the certificate of the what would have been DCAir and operate very briefly as a US AIRWAYS EXPRESS carrier?

I seem to recall some sort of relationship between the two.
 
Ishrion
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 4:57 am

STT757 wrote:
Question, if UA and US did merge would PIT still be a hub today? Or was PIT similar to STL after their TWA acquisition in that there was too much overlap with other hubs. For AA it was ORD and DFW vs. STL, for UA would It have been ORD and IAD?


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Wasn’t the PIT decline due to 9/11?
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 5:47 am

STT757 wrote:
Question, if UA and US did merge would PIT still be a hub today? Or was PIT similar to STL after their TWA acquisition in that there was too much overlap with other hubs. For AA it was ORD and DFW vs. STL, for UA would It have been ORD and IAD?


PIT probably would've been closed as a hub under any rational management. It was an attempt by US to sort of do the "drop a hub in the middle of nowhere and just run lots of connections out of it." The wisdom has since changed to that a hub needs a good amount of O/D to survive, which PIT didn't have.. the US Air/ways management before the merger with AW was irrationally in love with the airport and terminal, as well as on the hook for big rent payments.
 
Boof02671
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 11:01 am

There were guarantees to keep PIT open and even build a new maintenance base.

http://old.post-gazette.com/businessnew ... local1.asp
 
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Re: What happened to the proposed UA/US merger in the early 2000s?

Mon Jul 22, 2019 2:48 pm

Boof02671 wrote:
There were guarantees to keep PIT open and even build a new maintenance base.

http://old.post-gazette.com/businessnew ... local1.asp

There is no mention of any guarantees of anything in that article.

The only thing guaranteed was job security for only two years:
http://old.post-gazette.com/businessnews/20000525maintenance9.asp

United verbally committed to a new PIT maintenance base but nothing contractually guaranteed afaik.


The thing I remember most about this proposed merger is grandiose talk from airline executives to local Pittsburgh politicians to sell the merger such as "new one-stop" international service to far flung destinations.
"But others noted that the combination is expected to result in more flights and choices for local fliers. United said it already plans to begin nonstop service to San Jose, Calif., Portland, Ore., and Denver if the merger is approved. It also is planning one-stop flights to Beijing, Tokyo, Seoul and Singapore in Asia and Buenos Aires, Rio de Janeiro and other Latin America cities."
http://old.post-gazette.com/businessnews/20000525consumers9.asp

http://lobby.la.psu.edu/070_Airline_Merger/Organizational_Statements/United_Airlines/United_Airlines_and_US_Airways_Agree_to_Combine.htm

I think local politicians were salivating at the image of United 747-400s pulling up to the gate at PIT.

Of course for those of us that knew better this would have only been the same flight number with a change of gauge somewhere down the line.

There is no way the PIT hub would have survived any of this. US was already favoring PHL and CLT for at least 7 years prior. I doubt UA would have built that mx base either with a $1 billion facility already under construction at IND, which itself was to be abandoned. It was a verbal comittment to please the local politicians until the merger went through, that's all.
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