US Air - United in Merger Talks Again

[Airbubba]

April 7, 2010, 5:04 pm

United and US Airways Said to Be in Merger Talks

5:20 p.m. | Updated The UAL Corporation, the parent of United Airlines, and US Airways are in talks to merge, in a potential deal that would create one of the world’s largest airlines, people briefed on the matter told DealBook on Wednesday.

The negotiations mark the latest efforts to consolidate the struggling airline industry. Both companies have been vocal in calling for greater consolidation within the industry to help prop up falling revenues, with United’s chief executive, Glenn F. Tilton, among the leading proponents for more mergers.

“The investor seems to have spoken,” Mr. Tilton told The Financial Times in February. “The market seems to have suggested that scope and scale in a global business are important.”

United and US Airways are deep in their merger discussions, though a transaction is not expected to be announced for at least several weeks, these people said, cautioning that talks may still collapse. One potential hurdle could be union opposition...

United and US Airways Said to Be in Merger Talks - DealBook Blog - NYTimes.com (http://dealbook.blogs.nytimes.com/2010/04/07/united-and-us-airways-hold-merger-talks/?src=twr)

[Lrjetcap]

Cant wait to see how long and heated the discussions will be about the merger of those 2 seniority lists........

[Pugilistic Animus]

I hear the staplers clicking:\

when Capt. Sullenberger retired he only mentioned PSA:)

[Panama Jack]

Sounds to me like a merger of the two weakest airlines in the US, each one of them with their own set of chronic problems.

I know that some business nerds will tout the benefits of such a merger, the economies of scale :confused:, the syneries :eek: (of what?), and maybe even use the term "critical mass." :cool:

The physics nerds :8 would, correctly, point out to them that in their field when something reaches a "critical mass" it spontaneously explodes.

I wish them luck if they do decide to marry.

[protectthehornet]

How do you figure they are the two weakest airlines in America?

I don't see it that way.

AS a pilot for the USAIRways side, I will remind people that these two airlines have talked about mergers since the late 90's early 2000's. Indeed there was talk of just tossing out the bottom 600 pilots at usair for seniority integration.

I think it is more likely to see an invasion of the USA by Cuba than a merger of these airlines.

I'd love to see alpa try to justify putting a 22 year pilot with usair on the bottom of the list at united. Talk about your experience in the cockpit.

[Pugilistic Animus]

It is a Rumour network:)

[Ndicho Moja]

United and US Air merger? If you think that the service is bad now, which I do, imagine what a dreadful bastard child that union would produce. Good luck to them!

[Airbubba]

ALPA national is chomping at the bit to get the US Air pilots back in the fold. They will have to greatly favor the UAL ALPA folks with the seniority fences to get them to go along with the deal. USAPA will easily be voted out with the help of the West folks.

Pilots not yet born will be arguing over this one for years to come.:)

[West Coast]

Bet it's UA method of forcing CAL to make a decision and dance before it's too late.

Sure Tilton would rather dance with a cute one than an ugly one but he's intent on merging and I'll bet he hasn't quite given up on CAL. Many of the impediments of the proposed merger (if rumors are to be believed) of a few years ago have been removed, namely nearly 100 737's CAL didn't like. UAL's health is significantly better than it was two years ago as well.

Drunk Doug is being used.

[Airbubba]

Many of the impediments of the proposed merger (if rumors are to be believed) of a few years ago have been removed, namely nearly 100 737's CAL didn't like.

Remember the UAL-AAA merger proposal in 2001? To expedite approval, a special diversity airline, DC Air (aka Soul Plane) headed by BET founder Robert L. Johnson was to be created as part of the deal. The Justice Department still didn't give approval and United backed out leaving Stephen Wolf with his usual chunk of change for the unsuccessful merger.

UAL MEC seems to still oppose a US Air merger but they may be lobbying for a sweeter slice of the prenup on the seniority integration.

Or, as you imply, it may be part of a bigger scheme to get CAL into play...

[West Coast]

Your point is taken, this could very well be a message to the UA MEC as much as it's for outside consumption.

Who's list looks more attractive, more obtainable and provides the best relative seniority might be a subplot.

[RWEDAREYET]

My question is, how can United and USAirways merge when USAirways and AWA have yet to finish this task :ugh:

[lomapaseo]

this could very well be a message to the UA MEC as much as it's for outside consumption

The bigger issue of these kinds of public announcements is the affect on stock price. One does not put out statements of this magnitude to affect internal matters like unions without a clear assesment of the impact on stock and the investors.

Of course it also is a message to all players, but the valuation effect is paramont

[West Coast]

One does not put out statements of this magnitude to affect internal matters like unions without a clear assesment of the impact on stock and the investors.


That thought process didn't seem to be evident in the AWE-USAIR merger

[Airbubba]

One gotcha with US Air in any new merger is the wage snapback provision in the pilot contract. It would put book rates at, shudder, pre-BK 2002 levels:

US Airways:Pilot Contract Threatens Merger | Transportation | Financial Articles & Investing News | TheStreet.com (http://www.thestreet.com/story/10718204/1/us-airwayspilot-contract-threatens-merger.html)