US Airways Dividend Miles (Pre-2005 America West merger) - Wedding Bells?

Over on the UAL Board people are discussing that airlines emergence from bankruptcy in Fall. If both airlines are out of bankruptcy are we going to see merger talks part II? I'm sure this time the Feds would bless the marriage but we it be good for US? Is their management better than ours or would it be case of the minnow swallowing the whale with the US management team remaining in place. Don't laugh, I've seen this before. When the Burlington Northern Railway merged with the Santa Fe, more execs from the Santa Fe stayed even though it was the smaller road.

Reading sassaman's post made me think of the old 5th Dimension song "Wedding Bell Blues". ;)

Over on the UAL Board people are discussing that airlines emergence from bankruptcy in Fall. If both airlines are out of bankruptcy are we going to see merger talks part II? I'm sure this time the Feds would bless the marriage but we it be good for US? Is their management better than ours or would it be case of the minnow swallowing the whale with the US management team remaining in place. Don't laugh, I've seen this before. When the Burlington Northern Railway merged with the Santa Fe, more execs from the Santa Fe stayed even though it was the smaller road.

I think it would be a beautiful wedding. UA is not the largest airline anymore as they were when they tried this last time. The Feds let AA buy TW to become the largest. Would see no reason why they wouldn't let UA buy US. Everyone knows that there is too much capacity. This way they could great a completely national legacy carrier (with a slightly better route system than AA except in the south-central tier of course) and still cut the excess to create a profitable company.

For US FF though it's could be a mixed blessing. There are some advantage to the UA program, such as SWU's, CR-1's for 1Ks, exit-row blocking for UA 1P's and Economy Plus. But we would loose the unlimited upgrades and the 50% bonus drops to 25%..

I think if they did merge, they'd probably maintain pretty separate entities. Kinda like what Air France and KLM are doing now.

A big problem with the last merger was union coordination. I doubt it will be any easier this time around. The unionzed work force of TWA is still reeling over that merger.

Any two legacy carriers will be more than happy to merge RIGHT NOW if a financier will grant, without expectation of repayment, the $2,000,000,000+ necessary to fully integrate the airlines.

In other words, there probably won't be any wedding bells heard among legacy carriers anytime soon.

Well I for one hope it does not happen. I have never once had a good experience with UAL. And with the huge debt that both UAL and US Airways is in, I really don´t think we will see a merger anytime soon at all. And I hope never.

Everyone does not know that there is "too much capacity". That is a crock being perpetrated by certain airline "executives" who are desperately clinging to the old ways and parroted by utterly clueless "journalists", politicians and union leaders.

There is an excess over priced legacy gouge-o-matic fares and grossly inefficient operations.

There is a shortage of capacity. Demand is strong and growing. Load factors are darned near 80% -- that's a ridiculous number and a major contributing factor to operation snafus such as the Christmas mess.

Any pullback by (or failure of) a legacy airline will be immediately filled by all of the others and by the LCCs. All that will happen is that expensive seats will be replaced by less expensive seats. This has finally sunk in at Delta -- one of the previous champions of "over capacity" and will inevitably sink in at any surviving legacy airline. It is somewhat questionable if US Airways understands this as BloFares are still present in all too many markets... (Although Mr Lakefield did quote me (without attribution of course) on the "excess of over-priced fares" bit a few months ago!)

BTW -- I think merging with UA would be a huge mistake.

I'd rather see NW or HP or Virgin or even AA.

Virgin I'd say ok. But ever actually flown HP or NW (not mentioning
the unlikelihood of the latter)?

It would be neat to see US and AS merge. That way AS has the west coast routes while US has the east coast routes.

US did that already and botched it up big time. Read up on how great an airline PSA was before the early 90's when US then-management got it's grubby hands on it and ruined what it was.

Everyone does not know that there is "too much capacity". That is a crock being perpetrated by certain airline "executives" who are desperately clinging to the old ways and parroted by utterly clueless "journalists", politicians and union leaders.

There is an excess over priced legacy gouge-o-matic fares and grossly inefficient operations.

There is a shortage of capacity. Demand is strong and growing. Load factors are darned near 80% -- that's a ridiculous number and a major contributing factor to operation snafus such as the Christmas mess.

Any pullback by (or failure of) a legacy airline will be immediately filled by all of the others and by the LCCs. All that will happen is that expensive seats will be replaced by less expensive seats. This has finally sunk in at Delta -- one of the previous champions of "over capacity" and will inevitably sink in at any surviving legacy airline. It is somewhat questionable if US Airways understands this as BloFares are still present in all too many markets... (Although Mr Lakefield did quote me (without attribution of course) on the "excess of over-priced fares" bit a few months ago!)

Well it's been pretty obvious that 70-80% loads are unprofitable for most carriers.

US did that already and botched it up big time. Read up on how great an airline PSA was before the early 90's when US then-management got it's grubby hands on it and ruined what it was.


This is not the same management team from the 90´s. Everyone from that team is gone

This is not the same management team from the 90´s. Everyone from that team is gone

I agree. Not to mention, I would hope any management team could learn from previous lessons.

Pardon me, but airline mergers are incredibly expensive. Who has the cash to buy pencils much less another legacy carrier?

It's not like anyone can take on more debt. Even Branson has limited financial wherewithall to aquire another airline.

US Airways needs IMO to generate profits as a stand alone airline and groom itself for either A) future expansion or B) Aquistion.

To try some far fetched convoluted deal now IMO would likely result in the demise of the aquiring carrier and US Airways.

This is not the same management team from the 90´s. Everyone from that team is gone

Which is why I referred to them as the "then-management" team. But, many would actually argue - despite the two major mergers (PSA and Piedmont) - that Colodny and friends were the best management team the company has had in 15 years.

Pardon me, but airline mergers are incredibly expensive. Who has the cash to buy pencils much less another legacy carrier?

It's not like anyone can take on more debt. Even Branson has limited financial wherewithall to aquire another airline.

US Airways needs IMO to generate profits as a stand alone airline and groom itself for either A) future expansion or B) Aquistion.

To try some far fetched convoluted deal now IMO would likely result in the demise of the aquiring carrier and US Airways.




..... and, just exactly W H A T does US have to really sell? Any solid competitor would simply compete head to head for a few months instead of buying "assets" from US.

Which is why I referred to them as the "then-management" team. But, many would actually argue - despite the two major mergers (PSA and Piedmont) - that Colodny and friends were the best management team the company has had in 15 years.

I'd argue that Wolf & Gangwal take the cake by a mile - they repaired US' badly tarnished image, restored significant shareholder value, began a hitherto-unthinkable fleet and route network rationalization program, and wisely determined that the best course for the airline long-term is to merge with another airline, and brokered a deal with United to that effect. The Wolf & Gangwal maxim that "there is NO PLAN B for US Airways" has proven true despite multiple leadership successions.

There is an excess over priced legacy gouge-o-matic fares and grossly inefficient operations.
...
There is a shortage of capacity. Demand is strong and growing. Load factors are darned near 80%...


If the legacies are grossly over priced AND running 80% load factors...AND still in the red...

Tell me how that adds up?

I agree that the over-capacity argument is over-played. My flights are full full full almost all the time. But flying, outside last minute walk-ups, is cheaper than ever at a time when costs are higher than ever - so I'm not sure I can buy the grossly over-priced part.

If the legacies are grossly over priced AND running 80% load factors...AND still in the red...

Tell me how that adds up?

I agree that the over-capacity argument is over-played. My flights are full full full almost all the time. But flying, outside last minute walk-ups, is cheaper than ever at a time when costs are higher than ever - so I'm not sure I can buy the grossly over-priced part.

Last minute walk-ups in most markets have probably come down more than all fares on a percentage and a $$ basis as well.

UA has now been in bankruptcy for 26 MONTHS. Thats over TWO YEARS and they are still asking for more time. Now, as US learned, you don't want to rush your exit, but you can't stay in Chapter 11 forever.

Their creditors have already started licking their lips over re-possessing UA assets and the judge already had to tell them to back off at least once.

Don't get me wrong, I'm a big UA fan and I have 8X more miles with UA than US, but at some point, you gotta wonder, just how long can you stay in Ch 11 and not emerge. :confused:

If the legacies are grossly over priced AND running 80% load factors...AND still in the red...

Tell me how that adds up?

You left "grossly inefficient operations" out of your math.

The LCCs turn a profit with lower average prices, lower walk-up prices and lower load factors. The difference? More efficient operations. Largely through more productive labor -- they pay more on a w4 basis but they get far better use of their people.

Demand is sky-high. The problem is not excess capacity. The problem is how these guys run the show. An airline failure will change nothing about that. Voluntary and unilateral capacity reductions are, as US has already demonstrated, suicidal.

You left "grossly inefficient operations" out of your math.

The LCCs turn a profit with lower average prices, lower walk-up prices and lower load factors. The difference? More efficient operations. Largely through more productive labor -- they pay more on a w4 basis but they get far better use of their people.

Demand is sky-high. The problem is not excess capacity. The problem is how these guys run the show. An airline failure will change nothing about that. Voluntary and unilateral capacity reductions are, as US has already demonstrated, suicidal.


I think it's easy to blame labor...but I also think it's inaccurate to paint labor as the primary cause. It's one piece of a complex puzzle. Look at CO - very efficient labor ops when compared to most others, but still currently losing money. The LCC's do have a very productive workforce and that does help their bottom line - but their operation is also more efficient and cost-effective because they're only flying one aircraft type and because they're almost exclusively domestic.

I can't find it now, but I swear I read that wages among the old airlines and LCC's are pretty much in line. But when you look at the work rules (# of people to turn a plane for example) the old stalwarts come out very much on the short end. I'd like to see an all encompassing breakdown in terms of comparisons. I obviously am one who blames labor first...unions are beyond me in this day and age with plenty of work rules at the federal level.

I obviously am one who blames labor first...unions are beyond me in this day and age with plenty of work rules at the federal level.

It's easy to say that when you've never been a pilot or flight attendant. In fact, I said that before I found myself flying for a living. The federal regulations governing air crew are very minimal, and we have no OSHA protection like the rest of you do. There was talk about OSHA covering us a few years back, but nothing ever happened with it so far as I can tell - and I haven't been able to find anything more about it.

Even with a strong labor contract, our schedules are still utterly ridiculous at times. Poor sleep schedules, poor meal schedules, poor nutrition, constant dehydration, hearing loss, higher than average rates of miscarraige, far higher rates of cancer, constant exposure to germs and allergens from all over the world, hopping from climate to climate, yadda yadda. It's tough to explain in a way that you'd get it without writing an epic and laying out my schedule. Our labor contracts are as much about quality of life as they are about compensation. I didn't grow up around unions, and don't like the lack of integrity and politics that are often played within them - but I can't imagine doing this job without the protection that they provide on the quality of life stuff.

Even with a strong labor contract, our schedules are still utterly ridiculous at times. Poor sleep schedules, poor meal schedules, poor nutrition, constant dehydration, hearing loss, higher than average rates of miscarraige, far higher rates of cancer, constant exposure to germs and allergens from all over the world, hopping from climate to climate, yadda yadda. It's tough to explain in a way that you'd get it without writing an epic and laying out my schedule. Our labor contracts are as much about quality of life as they are about compensation. I didn't grow up around unions, and don't like the lack of integrity and politics that are often played within them - but I can't imagine doing this job without the protection that they provide on the quality of life stuff.

I won't argue with the sleep schedule, meal schedule, etc; however, I'd be really curious about the "far higher rates of cancer." Can you elaborate. I'd be curious as the types and causes. I'm not a doctor, but I would imagine that if there were a much higher incidence of cancer that there would be a risk to any frequent flier and that the airlines would have some sort of warning on all tickets, etc..... like on cigarettes......

In the short run it would be great for US employees and flyers since the alternative is liquidation.

In the long run the legacy of ineptitude and incompetency will bring them both down, so it won't really matter. Some people probably think the combined carrier would be too big to fail, but I wouldn't count on government intervention over the next four years.

Then again, WN picked up ATA in bankruptcy so you never know. But WN is a stronger company and won't have to contend with a (formerly) high paid unionized workforce or a legacy fare structure.

Of course, this is really a pipe dream as UA has not turned around its operations and doesn't have a prayer of coming up with the cash necessary to effectuate an acquisition.

I think it's easy to blame labor...but I also think it's inaccurate to paint labor as the primary cause.

I didn't blame labor. I said that the LCCs get more bang for the labor buck. There are a lot of ways that that can happen and they aren't all, or IMHO even mostly, "labors fault". OTOH they aren't all management's fault either.

A big problem with the last merger was union coordination. I doubt it will be any easier this time around. The unionzed work force of TWA is still reeling over that merger.

And over at Northwest, they're still fixated on who's "red" (Northwest) and "green" (Republic). They probably always will be until the last ex-Republic employee retires (and maybe even until the last ex-Republic retiree dies).

I won't argue with the sleep schedule, meal schedule, etc; however, I'd be really curious about the "far higher rates of cancer." Can you elaborate. I'd be curious as the types and causes. I'm not a doctor, but I would imagine that if there were a much higher incidence of cancer that there would be a risk to any frequent flier and that the airlines would have some sort of warning on all tickets, etc..... like on cigarettes......


I guess to have need for a warning, you first have to nail down the causative relationship. Not an easy thing to do.

Breast cancer, malignant melanoma and non-melanoma skin cancers, acute myeloid leukemia, prostate cancer - all appear to occur in higher rates among flight crews. There have been a handful of studies done over the years, and some have tried to exclude non-flying factors (such as spending more time on beaches than the average Joe). But more research is needed to make any hard conclusions. I think the type of flying one primarily does needs to be looked at as well. It makes sense that the crews who routinely fly over the north pole to Hong Kong are probably going to have different outcomes than those who fly short hops at low altitudes, further from the poles.

Whether this also has implications for frequent flyers remains to be seen. Some of the studies show that the higher rates of cancer seem to directly correlate to length of one's flying career. So...even though you might occasionally fly as much in a month as your crews do, are you doing it every month for 20-30 years?

Some info...:
-----------------

Conclusion: The increased risk of breast cancer and malignant melanoma among cabin attendants seems to be occupationally related. The part played by occupational exposures, i.e. cosmic radiation, disturbance of the circadian rhythm, and electromagnetic fields or combination of these factors in the etiology of breast cancer among the cabin crew, is still a puzzle as confounding due to parity appears to be ruled out.

Flight/Cabin Crews: Increased Risk Melanoma, Breast Ca
J Occupational Env Med, 10/03

---------------------
In the past three years, at least 10 studies on the subject have been conducted. Most found an increased risk of breast and skin cancer among those who make their living in the skies.

http://my.webmd.com/content/article/75/89842.htm

---------------------

The two most common invasive cancer types in this group, female breast cancer (60 cases) and malignant melanoma of the skin (15 cases), also occurred substantially more frequently among flight attendants than would be expected from the general population. Breast cancer incidence was over 30% higher than expected, and melanoma incidence was roughly twice that expected.

Cancer incidence in California flight attendants (United States).
Reynolds P, Cone J, Layefsky M, Goldberg DE, Hurley S.
California Department of Health Services, Environmental Health Investigations Branch, Oakland 94612, USA.

---------------------

Both malignant melanoma and skin cancer were found in excess in cockpit crew members with a long flying history, probably attributable to sun exposure during leisure time at holiday destinations. We cannot confirm previously reported increased risk of brain and rectal cancers in pilots. The study shows that male cockpit crew members in jets flying more than 5000 h have significantly increased frequency of acute myeloid leukemia.

Lancet 1999; 354: 2029*3

----------------------

http://www.cancerhelp.org.uk/help/default.asp?page=9270

I guess to have need for a warning, you first have to nail down the causative relationship. Not an easy thing to do.

Breast cancer, malignant melanoma and non-melanoma skin cancers, acute myeloid leukemia, prostate cancer - all appear to occur in higher rates among flight crews. There have been a handful of studies done over the years, and some have tried to exclude non-flying factors (such as spending more time on beaches than the average Joe). But more research is needed to make any hard conclusions. I think the type of flying one primarily does needs to be looked at as well. It makes sense that the crews who routinely fly over the north pole to Hong Kong are probably going to have different outcomes than those who fly short hops at low altitudes, further from the poles.

Whether this also has implications for frequent flyers remains to be seen. Some of the studies show that the higher rates of cancer seem to directly correlate to length of one's flying career. So...even though you might occasionally fly as much in a month as your crews do, are you doing it every month for 20-30 years?

Some info...:
-----------------

Conclusion: The increased risk of breast cancer and malignant melanoma among cabin attendants seems to be occupationally related. The part played by occupational exposures, i.e. cosmic radiation, disturbance of the circadian rhythm, and electromagnetic fields or combination of these factors in the etiology of breast cancer among the cabin crew, is still a puzzle as confounding due to parity appears to be ruled out.

Flight/Cabin Crews: Increased Risk Melanoma, Breast Ca
J Occupational Env Med, 10/03

---------------------
In the past three years, at least 10 studies on the subject have been conducted. Most found an increased risk of breast and skin cancer among those who make their living in the skies.

http://my.webmd.com/content/article/75/89842.htm

---------------------

The two most common invasive cancer types in this group, female breast cancer (60 cases) and malignant melanoma of the skin (15 cases), also occurred substantially more frequently among flight attendants than would be expected from the general population. Breast cancer incidence was over 30% higher than expected, and melanoma incidence was roughly twice that expected.

Cancer incidence in California flight attendants (United States).
Reynolds P, Cone J, Layefsky M, Goldberg DE, Hurley S.
California Department of Health Services, Environmental Health Investigations Branch, Oakland 94612, USA.

---------------------

Both malignant melanoma and skin cancer were found in excess in cockpit crew members with a long flying history, probably attributable to sun exposure during leisure time at holiday destinations. We cannot confirm previously reported increased risk of brain and rectal cancers in pilots. The study shows that male cockpit crew members in jets flying more than 5000 h have significantly increased frequency of acute myeloid leukemia.

Lancet 1999; 354: 2029*3

----------------------

http://www.cancerhelp.org.uk/help/default.asp?page=9270


Interesting stuff. Thanks.