http://www.chicagobusiness.com/cgi-bin/news.pl?id=19857

surely US needs *A a lot more than *A needs US...

I would leave US if they were not part of *A. I am saving my miles for a trip to New Zeland. I have no interest to use miles for domestic travel and I dont go to Europe.

Gotta be posturing for negotiations - they would have to be crazy to really consider dropping out of *

Gotta be posturing for negotiations - they would have to be crazy to really consider dropping out of *

That's not the way I read the article. It sounds like UA isn't sure if it wants to keep US in the alliance and is playing hardball in negotiations.

This is very unsettling. I'm sure I'd be in the midst of the herd running towards UA if this happens.

Surely it's in the interest of Star Alliance to keep US and UA in the alliance, and codesharing? It increases the reach of the Alliance as a whole...

I would leave US if they were not part of *A. I am saving my miles for a trip to New Zeland. I have no interest to use miles for domestic travel and I dont go to Europe.
You can still do that on QF even if the UA and NZ options go away.

I'm not worried about this. They filed their 10-K yesterday, and one of the things you do in that is list significant risks to the business. That type of language is typical in SEC filings, as you want to disclose as many contingencies as you can think of to minimize litigation risk should one occur. In this case, it says on page 5 of the 10-K:

US Airways has comprehensive marketing agreements with United Airlines, a member of the Star Alliance, which began in July 2002. United, as well as its parent company, UAL Corporation, and certain of its affiliates, filed for protection under Chapter 11 of the Bankruptcy Code on December 9, 2002 and emerged on February 1, 2006. United assumed these marketing agreements in its bankruptcy proceedings. On March 3, 2006, US Airways filed a motion with the Bankruptcy Court to assume its agreements with United; however, the Company is continuing to negotiate with United concerning revisions to the existing agreements. In the event the Company is unable to reach agreement with United, the Company’s codeshare relationship with United and membership in Star Alliance could be terminated.

I take this to be standard language in an SEC filing and not any indication that either party wants to terminate US's Star membership, which has apparently been revenue positive for both airlines (and don't forget Air Canada invested in US as well).

There's a lot of other company info in there, such as fleet mix, Express operator info, unions, bankruptcy financing, the Juniper credit card contract, fuel costs, etc., that may make it an interesting read for many of you:

http://www.americawest.com/awa/content/aboutawa/investorrelations/sec_filings.aspx

(Choose "10-K" in the format you want.)

Why did this become a news article on its own? I'd guess a slow news day.

Exactly, phlwookie. It's safe harbor stuff.

Sounds like a bored reporter who doesn't know how the industry operates.

I can, however, say that USAir and United are reworking how they share revenue on codeshare flights, especially after the $2.00 HTS/HHH/ART fares, which is why they haven't worked out a firm long term agreement.

Just breathe, they'll sign a new one.

They should definitely re-negotiate and play hardball on how much they reimburse UA and *A for lounge visits by US Airways Club members, so they can eliminate the absurd, unique-in-the-industry, triple-tier, add-on pricing scheme that is causing such an exodus of US Airways Club members to the Red Carpet Club.

. . . US playing "chicken" with *A; are they totally nuts?? . . .

As others note, there is nothing unusual or extraordinary going on. It's business as usual in the aviation chicken coop and the hens are "clucking around". It's all a part of the normal process of negotiation as partners work out evolving details for the future.

Barry

They should definitely re-negotiate and play hardball on how much they reimburse UA and *A for lounge visits by US Airways Club members, so they can eliminate the absurd, unique-in-the-industry, triple-tier, add-on pricing scheme that is causing such an exodus of US Airways Club members to the Red Carpet Club.


I agree ^ ^ ^ It is absurd!!

You do not see other alliances doing this...

They should definitely re-negotiate and play hardball on how much they reimburse UA and *A for lounge visits by US Airways Club members, so they can eliminate the absurd, unique-in-the-industry, triple-tier, add-on pricing scheme that is causing such an exodus of US Airways Club members to the Red Carpet Club.

The last few times I've been in the RCC they did not swipe my boarding pass, so I wonder how often they even "report" visits by US Club members. In fact, when I was at the LAX RCC at 5AM last Sunday they told me not to bother showing them my UA boarding pass, since I "couldn't have gotten past security without a UA boarding pass." Not quite true, as I could have had a CO boarding pass & walked from terminal 6, but the point is that they didn't even look at my US Club card long enough to get my information.

I'm now flying UA exclusively and let me tell you the planes are filled with US people. United is doing very well from this agreement and I doubt they would do anything to end it.

There are two factors to consider:

(1) I don't know what the requirements are to be in the *A club, and bmi as a low cost airline seems to be in, but it could be that US is starting to violate some of those tenants or thresholds;
(2) With America West footprint now overlapping with UA's, UA might be getting a bit skittish about too many overlapping flights.

I hope US gets out of star and goes with sky. I do not like UA at all. They deleted all of my miles, admitted they had a computer glitch, did not fix it and then I got treated bad on a flight. The ONLY airline that I have ever been treated bad on.

(1) I don't know what the requirements are to be in the *A club, and bmi as a low cost airline seems to be in, but it could be that US is starting to violate some of those tenants or thresholds;

Spanair is barely a mainline carrier, yet is part of *. I wouldn't worry too much about it at this point.

Also, it's often noted that * and ST have more positive public recognition precisely because they have multiple North American members (versus OW, where AA is the only NA carrier).

While UA might have a reason to want US out, I would assert that the European carriers, especially LH and JK, have a vested interest in the success of US.

US feeds a lot of connecting traffic to LH in PHL and CLT and gaining the HP cities in the west actually strengthens that positions. As for JK, they offer a lot fo connections options out of MAD so they too have an interest in keeping US in *A.

I agree this was just a worst-case scenario for a 10k filing. I'm losing no sleep over this. Besides, even if US were to leave *A there would be a warning period so we could cash in our miles and take off like lemmings to UA.

Let's not forget that throughout the merger, one of US Airways' favorite things to point to in self-promotion has been *A membership, as a way of distinguishing itself from JetBlue, AirTran and Southwest. I would agree with the "this is standard legalese" perspective on this--and also note that though US may not be the most valuable *A member, the others have no reason to want it out, since US Airways still has a base of X thousand (I really don't know how many) loyalists on the East Coast who look toward UA, LH & co. when flying outside of the immediate area and who would otherwise have no particular preference. The costs of having US in the alliance (allowing DM members to redeem miles, lounge access, etc) are small compared to the extra traffic--the fact that the three alliances exist to begin with will testify to that.

* and UA, for that matter, still need US for its Caribbean service. Let's face it UA Carib service is nothing to brag about.

* and UA, for that matter, still need US for its Caribbean service. Let's face it UA Carib service is nothing to brag about.

No, but if UA had to it could build that same service ex-IAD without really breaking a sweat. They might do it anyway if Tilton goes ahead with expansion of IAD now that Indy Air is dead.