Posted on 04/08/2010 1:38:04 PM PDT by SeekAndFind
NEW YORK (MarketWatch) -- Shares of both US Airways Group and UAL Corp., the parent of United Airlines, climbed Thursday on reports the carriers were in early merger talks after a nearly two-year break.
Negotiations could still break down, and it could still be several weeks before any transaction is announced, according to media reports that cite anonymous sources.
Battered and bruised from the recession but facing an industry-wide recovery in demand and revenue, the two legacy carriers may now believe it's the time to combine operations to lower costs and shake out overlapping capacity.
Both airlines have overlapping domestic and transatlantic routes, while United also serves more destinations in Latin America and brings its transpacific routes to the table, a market in which US Airways has no presence.
Neither company has a strong cash position, which raises the possibility any deal could be in the form of a stock swap.
If the merger goes through, any revenue boosts would likely be competed away over time, while integration savings could be eclipsed by higher labor costs, said J.P. Morgan analyst Jamie Baker, in a note to investors.
"The true value in consolidation, in our view, comes in the savings associated with less flying," Baker said. "Cut 10% of flying, reduce expense by 8%, and maintain 95% to 97% of revenue, and we estimate pro forma [earnings before interest and taxes] rises by $800 million to $1.4 billion -- though we suspect any management figures would eclipse our admittedly simplistic analysis."
(Excerpt) Read more at marketwatch.com ...
(Deal will need labor support)
Can you say GM???
A combination of US Airways and United would bump them up as the second-largest airline, behind Delta Air Lines Inc. Delta became the world’s largest airline operator after it acquired Northwest last year.
Didn’t they try to do this a decade ago and got blocked by the justice department?
I guess if the unions bless it this time, it will sail through. We know who runs the country these days.
Actually a better network than Northwest/DL, with deep penetration in the top 20 markets...
It would leave American as the odd-man-out, that’s for sure!!
US Air and United?
They both stink.
listing the hub markets off the top of my head.
San Fransisco/Asia-UA
Los Angeles-UA
Pheonix-US
Las Vegas-US (Downsized recently)
Denver-UA
Chicago/Europe,Asia-UA
Philadelphia/Europe-US
Washington Dulles/Europe-US
Washington National-US
Boston-US
New York La Guardia-US
Miami/South America-UA (Small hub)
Charlotte-US
destined to fail. USAir still does not have the pilots unions meshed, they are in total disagreement with each other.
My guess is the Obama admin will kill it...if not the 2 airlines will kill each other in time.
It would be like merging Obama and Gore into one horrible person
what do you get when you put 2 bags of crap together?
a bigger bag of crap.
The two most arrogant, incompetent, customer unfriendly airlines coming together
Thank goodness for the presence of Southwest in Chicago, Denver, Pittsburgh and Philly....
Too true
another example of an over regulated industry which is less than consumer friendly
Anyone remember what commercial airline travel was like in the 60s and 70s?
You almost felt like they were appreciative of you choosing their airline
Now a days cattle are treated better than airline passengers
.
In other words, the smaller the size, the better the quality. The bigger the size the worse the quality.
Traveling on air is getting to be less and less a pleasant experience, from going through airports and having to deal with the hassles of having your body scanned and frisked to having to worry about the guy sitting next to you.
But is there a better way to travel long distance ? I think we’re stuck with planes unless someone can invent the “beam me up” machine.
Wonder why Atlanta is not on the list. It is the busiest airport in the USA.
Didn’t the CEO at United move to US Air some years ago ?
A decade ago, I wrote a letters to the Department of Transportation, my congressman and Senators, and the Ohio Attorney General saying a merger between UAL and US Air would cause fares to skyrocket between Dayton, OH and Dulles due to lack of competition. I was PO’d by the way I was treated by UAL (actually United Express) at Dulles. I don’t fly UAL. I have never been thruough O’Hare on UAL that I wasn’t stranded and forced to find another airline out. UAL sucks.
Atlanta is only “Busiest” because of the Delta hub, and through traffic.
While it is a top 20 Business travel Origination/Destination Market, it’s also a fortress hub, and has been for decades.
10 years ago on the Day-IAD run would have been Atlantic Coast/later Independence Airlines.
They died....
Dang! Glad you said that!
"Stuck" is a sore point with me over the years...Short seats and very marginal leg-room...
"Stuck" also describes being on a plane without food fit for human consumption. Even first class sucks these days by comparison to the 50's, 60's and early 70's.
"Stuck" accurately describes the frequent nightmare of sitting on the tarmac for hours and hours without being allowed to deplane when equipment fails or other minor circumstances...All due to absurd security restrictions.
"Stuck" is not getting a couple of glasses of cheap champagne as soon as everyone is on board.
"Stuck" is having some pervert use a a penis and titty checking machine to make sure that you aren't a right-wing, tea-partying, Constitution-loving terrorist intent on blowing up the plane.
Yep! "Stuck" is, definitely, what we are...Although "shafted" might be almost as appropriate.
YMMV. United and American managed to anger me so much back in the 60s I never flew them again until corporate policy required such a few years ago, for a particular trip.
I never much liked the old Delta (old planes...) and didn't quite trust NWA (dishonest flacks...), and lamented the departure of Continental (best of all SkyTeam members) from SkyTeam... but the new Delta is different.
Or maybe it's just that I now hold a high Elite membership. Good service, respect -- but the planes are bit newer too.
Though United's "Steerage-Plus" (whatever they call it, a bit more "legroom" than steerage class) is not a bad idea and I liked it on a trip from the Orient some years back.
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