Why UA should buy Air India right now!
#1
Original Poster
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Why UA should buy Air India right now!
Warren Buffet said, "When folks get greedy, I get scared and when folks get scared, I get greedy..."
Well the Aviation industry is scared. Would love to see UA get greedy. UA's balance sheet is in good shape to weather the storm, especially since they've drawn down a multi-billion dollar revolver. Now would be the perfect time to for UA to buy Air India and get the 'magic term' that everyone wants, but India hasn't historically rejected -- zero employees!
The deal would be:
1. Fleet
2. Routes
3. Zero employees
4. Absorption of debt ($2B USD), with payments starting in 2023. UA can easily finance that debt at ultra low interest rates in today's market.
5. 50/50 profit share with the Indian Government, for 10 years, with India profits going into a pension fund for former employees.
Would allow the Indian government to get out of the aviation money-pit they're currently suffering from. They could use the current Aviation environment as a scapegoat for not being able to protect the employee base.
Gives UA a great route network in the 2nd fastest growing aviation market in the world!
Thoughts?
Well the Aviation industry is scared. Would love to see UA get greedy. UA's balance sheet is in good shape to weather the storm, especially since they've drawn down a multi-billion dollar revolver. Now would be the perfect time to for UA to buy Air India and get the 'magic term' that everyone wants, but India hasn't historically rejected -- zero employees!
The deal would be:
1. Fleet
2. Routes
3. Zero employees
4. Absorption of debt ($2B USD), with payments starting in 2023. UA can easily finance that debt at ultra low interest rates in today's market.
5. 50/50 profit share with the Indian Government, for 10 years, with India profits going into a pension fund for former employees.
Would allow the Indian government to get out of the aviation money-pit they're currently suffering from. They could use the current Aviation environment as a scapegoat for not being able to protect the employee base.
Gives UA a great route network in the 2nd fastest growing aviation market in the world!
Thoughts?
#4
Original Poster
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
That's the beauty of doing it now. Lots of UA staff sitting idle globally... My guess is they would throw away ALL AI's IT systems and simply add the routes to the UA systems.
#5
Join Date: Mar 2005
Programs: Continental Onepass, Hilton, Marriott, USAir and now UA
Posts: 6,440
#8
Original Poster
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Didn't Delta just acquire a LATAM airline...
Last edited by WineCountryUA; Mar 12, 2020 at 8:34 pm Reason: merged consecutive posts by same member
#9
FlyerTalk Evangelist
Join Date: Apr 2003
Programs: UA*Lifetime GS, Hyatt* Lifetime Globalist
Posts: 12,332
Running a business or an operation out of India is quite a challenge. There are a lot of competitions in India as well as M3 doing fair amount of ferry flights out of India to their hubs for connections to the rest of the world.
There is also complex web of bureaucracy and competing and unclear regulations.
While (apparently) it is a cashless transaction, there are immediate cash flow needs to run the airlines and arranging credit facility to buy fuel and fund financing cost. United has just borrowed $2 billion to help it to pay for ongoing expenses due to shortfall in operating cash from slow down in traffic due to Covid-19.
https://money.usnews.com/investing/n...slams-industry
Not sure the point of having this topic discussed in a frequent flyer forum. M&A, business combination or business restructuring types of forums probably make more sense and should get more honest, educated and likely blunt reactions to the topic.
There is also complex web of bureaucracy and competing and unclear regulations.
While (apparently) it is a cashless transaction, there are immediate cash flow needs to run the airlines and arranging credit facility to buy fuel and fund financing cost. United has just borrowed $2 billion to help it to pay for ongoing expenses due to shortfall in operating cash from slow down in traffic due to Covid-19.
https://money.usnews.com/investing/n...slams-industry
Not sure the point of having this topic discussed in a frequent flyer forum. M&A, business combination or business restructuring types of forums probably make more sense and should get more honest, educated and likely blunt reactions to the topic.
Last edited by UA_Flyer; Mar 12, 2020 at 8:25 pm
#11
Join Date: Dec 2007
Posts: 843
And six months to a year from now when business (hopefully) gets back to normal, then what?
#12
Join Date: Apr 2003
Programs: B6 Mosaic, Bonvoy LT Titanium (x SPG LT), IHG Spire, UA Silver
Posts: 5,848
UA would be better off taking some of the cash they just drew down on their line of credit, taking it to a cold location, and setting it on fire. At least they could keep people warm for a few hours. They would likely lose less money burning it than taking over a failing airline right now.
#13
Original Poster
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
UA would be better off taking some of the cash they just drew down on their line of credit, taking it to a cold location, and setting it on fire. At least they could keep people warm for a few hours. They would likely lose less money burning it than taking over a failing airline right now.
#15
FlyerTalk Evangelist
Join Date: May 2006
Location: Pasadena, California
Programs: UA 1K, 1MM
Posts: 10,412
While I have no opinion on United buying Air India right now (well, except for wondering about the insanity of the minefield that this proposal entails ), I do think that FT is an excellent forum to have fun talking about such wild flights (ha, ha; see what I did there? ) of fancy. If nothing else, it's a fun, outside-the-box mental exercise. We should have more such threads.