Impact of UA merger on AA?

 
Old Sep 25, 06, 7:33 pm
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Impact of UA merger on AA?

The merger rumors have been kicking around for a long time, but now UA has hired Goldman Sachs to help it look for airlines to merge with. (See
http://www.forbes.com/2006/09/25/ual...markets10.html
for the latest). And Tilton has made repeated comments lately that he'd be very open to mering.

If UA merges with an airline with a lot of European destinations, it would seem that UA will have a significant leg up on AA in international flying, since UA is already much stronger in Asia.

OTOH you could perhaps argue that a merger would lead to further reduced capacity which will be a net win for all remaining airlines, since they will then raise prices.

Any thoughts?
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Old Sep 25, 06, 8:11 pm
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The impact is going to be highly variable, depending on merger partner.

So let's start with that question: with whom would they merge? There aren't a lot of choices:

1. Northwest
Fleet compatibility problems, labor problems, hubs that essentially overlap (Minneapolis and Chicago?), also financially struggling.

2. Delta
Slightly better but still not great.

3. Continental
Why would Continental be interested? They're doing just fine.

4. AA
Uh, no.

5. Southwest
Come on.

6. Midwest Airlines
Would it matter?

7. Frontier
Anti-trust problems.

8. Alaska
Fleet problems, but not totally crazy.

9. The New U.S. Airways
Would it then become the New New U.S. Airways? They just merged, so maybe they could just do another one.
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Old Sep 25, 06, 8:21 pm
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Originally Posted by sipples
9. The New U.S. Airways
Would it then become the New New U.S. Airways? They just merged, so maybe they could just do another one.
It couldn't work worse than the current merger! Or maybe, considering UA.com and USAirways.com it actually could!
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Old Sep 25, 06, 8:28 pm
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Originally Posted by justageek

Any thoughts?

I dont know about the business side, but I predict a 1000% increase in airliners.net-type posts of speculation or conjecture on FT.
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Old Sep 25, 06, 9:41 pm
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Originally Posted by justageek
Any thoughts?
If there is a merger, it will be with Delta.
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Old Sep 25, 06, 9:50 pm
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Originally Posted by inlanikai
If there is a merger, it will be with Delta.
Don't rule out CO.
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Old Sep 25, 06, 9:52 pm
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Originally Posted by DataPlumber
I dont know about the business side, but I predict a 1000% increase in airliners.net-type posts of speculation or conjecture on FT.
Speculation? Here? Are you sure?
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Old Sep 25, 06, 9:54 pm
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Originally Posted by DataPlumber
I dont know about the business side, but I predict a 1000% increase in airliners.net-type posts of speculation or conjecture on FT.
Coincidentally there's quite a large thread on airliners.net about this exact article and issue. A lot of people seem to think it's going to be CO, but UA has been rumored to be trying to merge with someone for 5-6 years now.
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Old Sep 25, 06, 10:07 pm
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Wow, let the speculation... er, it has made a huge start! But it's hard to imagine whose route structure would be really appealing and add revenue. I think CO would, for one, be resistive. NW would be somewhat duplicative to say the least, and come with some problems - unless they could be stripped out on merging. I dunno... I'll watch this thread, that's for sure, because I can't imagine a good match myself, even though UA is up for a wedding.

Looking for LUV in all the wrong places...
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Old Sep 25, 06, 10:11 pm
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AA? I don't think so.
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Old Sep 25, 06, 10:45 pm
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Maybe UA will pull a DL and merge with Ted.... I'm sure many of our UAers would be thrilled (or, not... because those 747s will have a yellow tulip )
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Old Sep 26, 06, 4:47 am
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Maybe they will merge with an overseas carrier

Maybe they will get Air Canada???
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Old Sep 26, 06, 9:14 am
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Well by hiring Goldman they are essentially putting the For Sale Sign up. There are several assets that other airlines covet but don't have the money for. DL, NW, and CO would all love the access to LHR. AA, DL, and CO would love the Asia Pacific routes, and of those, AA and CO are the only ones who could afford those. CO would be the most likely candidate but they have not expressed a real interest. Plus why would they want to dilute their product. Love them or hate them, CO seems to alway be up or at the top of all the satisfaction surveys. In the short run if CO and UA merged it would benefit AA because of hiccups that would occur during the process of melding the two companies.

Just my two cents.
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Old Sep 26, 06, 11:36 am
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Originally Posted by chsb
Well by hiring Goldman they are essentially putting the For Sale Sign up. There are several assets that other airlines covet but don't have the money for. DL, NW, and CO would all love the access to LHR. AA, DL, and CO would love the Asia Pacific routes, and of those, AA and CO are the only ones who could afford those. CO would be the most likely candidate but they have not expressed a real interest. Plus why would they want to dilute their product. Love them or hate them, CO seems to alway be up or at the top of all the satisfaction surveys. In the short run if CO and UA merged it would benefit AA because of hiccups that would occur during the process of melding the two companies.

Just my two cents.
If AA could get the Pacific routes, do we think it would take them? Uncle Bob always said that aquisition was NOT the way to grow, and he had very good arguments. But there's really no other way to get these routes. And would be a pretty attractive addition to AA's system.
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Old Sep 26, 06, 11:54 am
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All's I can say is that I sure would hate to be the guy in charge of putting together United and anybody else.

Maintenance programs, flight ops programs, IT systems.... EEEEEEK!

If this UA merger with whoever happens, which is questionable, but certainly possible, AA might benefit from all the problems that the 2 merging airlines would have putting themselves together.

If (a big if) we were ever looking at a situation where an airline were being "parted out" I would think that AA would be in a very good position to acquire a piece of an airline...especially the Pacific routes of either NW or UA.
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