Originally Posted by abeflyer
Let’s look at a merger rationally.
Parker has said that the airline industry needs consolidation and that HP will participate in this. HP is big in the west. US big in the east. US is about twice as large as HP and flys to 15 cities in Europe profitably.
Now US management and cost structure were in the pits and management floundered. Therefore the second bankruptcy, which was lead by financial people outside the industry. Along comes merger discussions that can allow HP to triple in size and give Parker what he knows he needs–i.e. a east coast presence and national footprint. Costs are still going down on US as senior employees leave and will continue throughout this year (over 1,000 senior flight attendants alone are leaving). Within the last couple of days, US has proposed parachutes for salaried employees to stay pending any merger (1200 are included that would be laid off)–additional savings. US in its second bankruptcy has been saying wants to adopt the HP model with simplified fares and labor contracts have already been based on HP’s contract.
To make a merger work Parker needs to keep both HP and US’s frequent flyers happy to get each to fly on the other. I would see the best of both programs being adopted CP and CP desk for 75,000 miles (let me tell you its always nice to have a phone answered, “How may I help you Mr. Abeflyer.”).
Parker from everything I have read is a people person with his troops. US hasn’t had that since the 80's. Just encouraging the troops and giving them a ray of hope should improve moral.
As to PHL, well, its actually been improving lately. Whoever is this month’s manager (frequent changes have happened there), seems to have gotten the troops to recognize that US planes do reach PHL on time and they have to be at the jetway when the planes park (instead of 15-20 minute waits, the jetway has started to move as soon as the plane stops recently).
The merger is actually a cheap way for Parker to build a national airline in his own vision and get into an alliance. Think how much it would cost in money and years forParker and HP to duplicate the US footprint. The finances on the US side are now mainly in order. Unsettling if it happens, yes, but they would be ahead of the UA and DL that have yet to confront their problems.
nice in theory but, rationally, implementable?? the AFA and ALPA merger policies-- very strictly worded to measure seniority from original date of hire-- force giving US's labor almost totally dominant seniority rights systemwide in a merged operation. there's no way for HP to expand by buying US without effectively trashing its own employees.
as for US losing senior employees, at this stage at least it's of limited benefit-- the returning employees also have a ton of seniority and are high in the payscale. they're recalling voluntary-furloughed FA's with over 10 years in, this summer.
US's finances are anything but mainly in order. Their unit revenue is in complete free-fall with the new entrants hammering its previous fortresses-- down over 9% in the first quarter, much much worse than any other legacy carrier, and much much faster than any costs are falling. A merger wouldn't make those entrants less aggressive-- merely expose HP's assets and put at risk everything they've built these last few years.
US is a chinese fingertrap for HP-- attractive on the outside but only an impediment in the end.
the proof of the pudding will be in the cash of course-- the most recent estimate is several hundred million in further outside financing would be required to put this through, and that's presuming the agreement of shareholders and labor groups.