Why UA should buy Air India right now!

Old Mar 12, 20, 7:11 pm
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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?
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Old Mar 12, 20, 7:19 pm
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How would you acquire a large airline without also getting their employees? Who would fly their planes?
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Old Mar 12, 20, 7:22 pm
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Thoughts?

Lol, I'll be happy just to hold onto my job (Pilot at United) let alone see us buy a foreign airline, in a country likely to be one of the more harder hit ones from COVID19.
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Old Mar 12, 20, 7:23 pm
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Originally Posted by rmadisonwi View Post
How would you acquire a large airline without also getting their employees? Who would fly their planes?
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.
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Old Mar 12, 20, 7:25 pm
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Originally Posted by rmadisonwi View Post
How would you acquire a large airline without also getting their employees? Who would fly their planes?
Given UA's previous history of integrating merged airlines into itself, I would be, to say the least, unexcited by the prospect.
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Old Mar 12, 20, 7:28 pm
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This has to be a joke, never read such garbage in my life. Do you know cash is king right now and is the only thing that will carry them through?
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Old Mar 12, 20, 7:31 pm
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not to mention that foreign ownership is limited (49%) and control must be vested in indian nationals

so united buys-in but cannot do anything to control/change AI's behavior.
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Old Mar 12, 20, 7:35 pm
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Originally Posted by 757FO View Post
Thoughts?

Lol, I'll be happy just to hold onto my job (Pilot at United) let alone see us buy a foreign airline, in a country likely to be one of the more harder hit ones from COVID19.
Higher probability of you flying if they have more routes to fly, right? Will avoid furloughs of current UA employees if UA can redeploy them. Remember, it's a cashless transaction for UA in the short term. So it's not like they would be spending cash on this, that they would otherwise spend on current employees....

Originally Posted by worldtrav View Post
This has to be a joke, never read such garbage in my life. Do you know cash is king right now and is the only thing that will carry them through?
They beauty of the transaction is it would be cashless. Has no impact on UA viability in the near-term...

Originally Posted by paperwastage View Post
not to mention that foreign ownership is limited (49%) and control must be vested in indian nationals

so united buys-in but cannot do anything to control/change AI's behavior.
The government can own 51% and cede operating control to UA. This is done all the time globally... India auctioned the airline last year and got zero bidders. Second auction also yielded zero bidders. They are desperate to sell.

Didn't Delta just acquire a LATAM airline...

Last edited by WineCountryUA; Mar 12, 20 at 8:34 pm Reason: merged consecutive posts by same member
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Old Mar 12, 20, 7:49 pm
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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.

Last edited by UA_Flyer; Mar 12, 20 at 8:25 pm
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Old Mar 12, 20, 8:07 pm
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Originally Posted by spartacusmcfly View Post
They beauty of the transaction is it would be cashless. Has no impact on UA viability in the near-term...
And where does the cash come from to operate a shamble of an airline? The Taj Mahal?
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Old Mar 12, 20, 8:10 pm
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Originally Posted by spartacusmcfly View Post
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.
Right, and so they’ll all just up and move to India.

And six months to a year from now when business (hopefully) gets back to normal, then what?
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Old Mar 12, 20, 8:27 pm
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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.
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Old Mar 12, 20, 8:38 pm
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Originally Posted by sfozrhfco View Post
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.
Or they can leverage their expertise in reservation systems, route logistics, frequent flyer programs, long haul maintenance, pilot training schools, knowledge of the India market, strong safety record, low cost of capital and highly trained excess personnell, to make a ton of money building a world class global airline.
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Old Mar 12, 20, 8:38 pm
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Better shot of Southwest buying Hawaiian now than United buying anyone, especially since they announced a halt to CAPEX.
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Old Mar 12, 20, 8:43 pm
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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.
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