USPhilly

Hi saw this in the Philadelphia Daily News this morning (Friday). It obviously implies that US is considering a merger along with all the other major carriers. I'm curious what everyone thinks - do you think it will happen? If so, who do you think they will merge with and what impact will it have?

http://www.philly.com/philly/busines...l_a_trend.html

I personally think in order to remain competitive they need to merge with some other carrier since that's the way the industry seems to be going. As far as who, I'm not sure who would actually be a potential partner though. Ideally, I would love to see UA but that's highly unlikely. I can't imagine a merger could do anything but help US. There would be some logistical problems but in the end the increased routes would obviously be a huge positive. ^

EricH

Would anyone want to merge with US? If the rumors are true, and DL merges with NW and UA merges with CO, who would want to tie themselves to US? Add to that the inappropriately high self esteem in Tempe and I don't see anything happening.

BostonMark

I think a lot depends on what really does happen. If UA/CO combine and stay in *A, then the question is "what happens to US."

If US is kicked out of *A (possible because what would it bring at that point) then I might see US try to put together the LCCs and try buying Frontier, Midwest (depending on NW's investment - something they may have to divest as part of their merger), and if they're smart, JetBlue. AirTran probably doesn't buy them much of anything - fleet problems and why would they need Atlanta? By cobbling together all the LCCs to be competitive with WN, they can position themselves as the only "International LCC."

Now, before the flames begin, arguing whether or not they're an LCC is a different thread - it's what they call themselves.

IF US isn't kicked out of *A then I don't really think they need to do anything, though buying JetBlue to strengthen their *A ties would be a smart move. What they'd need to realize is that instead of making JetBlue's fleet match the US fleet, they should do the opposite - add an F section to B6 fleet, but keep the pitch, IFE, etc. that makes JetBlue popular.

Before anyone calls me stupid, it's just speculation of what might be possible or a direction they could head.

PHL

US and its management is the laughing stock of its peers. Doug Parker and company royally screwed it up in so many ways. Their biggest problem now is integrating the unions, which doesn't look like its going to happen anytime soon. The labor issues alone are enough to scare off any potential suitors. Instead, the big guys will merge and US could be weakened enough that their parts can be picked over like vultures. I don't see what US offers that any of the other big 5 don't already have anyway other than the shuttle.

USPhilly

Adding another dimension to this is that I read in the UA forum that UA mentioned they would consider dropping out of *A in order to complete a merger. If that actually happens, it could increase the value of US.

aztimm

There was just a thread on this about 2 weeks ago:
http://www.flyertalk.com/forum/showt...ghlight=merger

Perhaps a mod would want to merge these together.

US AIRWAYS FAN

DL and AA already have their own shuttle service.

Good question if US would get kicked out of *A or not. OR could UA leave *A for Skyteam. Honestly I don't think US will get kicked out of *A as UA is not going to be the only decision maker in this. UA may have brought them in but I don't think the decision is only on UA's shoulders to throw them out. There are other members like LH, AC, JK and others that US code shares with as well.

I think US is going to get left out unless US were to try to go after Alaska or Jet Blue.

With contracts still not settled. No one will touch US.

GaryZ

I like your post, it's got everything in it that a little rearranging would work for me: the last remaining legacy for US to combine with is AA, as unlikely as it sounds. Failing that, then Alaska would be a nice combo, or if that fails then US can simply play the spoiler and extort the soon to be merged partners in divesting routes to them.

As Parker has stated, mergers should help US no matter what form they eventually take.

dstan

I second that.

FrequentHopper

I still don't see why US would "need" to merge.

They've got improving operations, improving quality, and a couple of hubs that could support incremental international growth (CLT, PHX and, with decent ops planning, PHL).

The merger bugs from a couple of years ago are being smoothed out. And they're *nothing* compared to what DL/NW or DL/UA (and various other competitive combinations) will face.

Finally, all the snarkiness about "US is the laughingstock of the industry" is a bit rich. If it wasn't for the present management, neither US Airways nor America West would be in business. While they've done a lot of things differently than I would have (had I been in their shoes), they took two dead-and-buried airlines and merged them into a profitable international network carrier which is now posting improving operational statistics and posted a strong pattern of profitability for a long time before the current fuel-price spike.

Comparing US's profitability post-merger to "world class" carriers like Delta or Northwest is particularly illuminating. Those "stupid Tempe bumpkins" were making millions while Delta was facing the very real prospect of liquidation in the event of a pilot strike.

In the event of a bunch of consolidations, US will be decently positioned as a mid-sized carrier who will likely benefit from the slashed capacity and closed hubs of the new "mega carriers." Fewer flights and higher fares will mean breathing room and greater demand for new international and even domestic routes in the US system.

FWAAA

Although I agree with much of your post, I'm not sure I follow the last sentence, in particular the bolded portion. The others consolidate, reduce domestic capacity, deploy those resources on more international services (which conventional wisdom holds is the ticket to success). Are you saying all that might lead to greater demand for more international flights on USAir?

sanFF

I remember when CO was a likely merger in 2000 but that fizzled. I still would love to see that happen if the code share disolves with NW/DL and CO leaving CO the need to code share with another partner. I think it would be great to see CO come back.

FrequentHopper

I don't think there would be a large increase in capacity in international flying by the merged carriers.

Nuking a hub or two would be a given, pulling down both domestic and international frequencies. While a DL-NW combination would certainly offer more nonstop international destinations, it would also consolidate capacity in certain routes where US and DL-NW would compete (such as New York to London versus PHL to London).

In addition, a great deal of the combined resources wouldn't be "redeployable to international routes" to start with. For instance, what will DL-NW do with all those old, creaky DC-9s? There won't be much in the way of international flying with those birds!

And DL has almost no new aircraft on order. So I suspect there'd be some reshuffling of aircraft from redundant international flying out of soon-to-be-nixed hubs like CVG-LON/CDG/FRA to new routes out of ATL. Fewer frequencies on those routes means more passengers connecting through PHL and CLT on US Airways to those same destinations.

I also don't believe international expansion is the panacea that Delta, in particular, seems to think it is. They've been flying a lot of empty planes to Dusseldorf, Africa and India with their international expansion as of late. While there's less LCC competition (for now), there's also little demand.

I think there's a real possibility that a "new Delta" has the possibility of becoming a new Pan Am. Remember how poorly their merger went, and how their "protected international routes" didn't save them from their ultimate end.

FrequentHopper

There's too much overlap between US and CO (PHL and EWR). There's also too much overlap between DL and CO (EWR and JFK).

If US is to be involved in a merger, I'd put my money on US-UA. It's the only merger that makes sense for United (if United wants to be in the driver's seat in any potential transaction).

fish114

Well for one isn't Delta trucking in a boatload of 777-200LR? And Delta and NW already compete on alot of international routes already, they both have a very large presence in Europe and Asia, although their hubs in the US are different, so I think it will be interesting to see what happens.

I also think there is certainly more than enough aircraft, if anything post-merger they will be selling/putting on hold. I mean if you look at each of the airlines fleets, as for as domestic goes, DL has 135 752s, 71 738s, and 117 MD88s, in addition to the other single aisle aircraft. NW also has about 200 single aisle planes as well (not including DCs, they have about 100 of them), and these airlines compete to a certain degree on domestic routes, and post-merger when they cut a couple hubs they will have more than enough domestic fleet to go around (thats about 600 single aisle jets, which seems to me like more than enough, its about 150 more than AA, whose backbone is their domestic and Caribbean routes. Also keep in mind that NW's backbone is their international routes (look at their HUBS in Amsterdam and Tokyo - what other US airlines has two hubs abroad?), and Delta seems to have a solid infrastructure when it comes to domestic routes, who also rely on international rev, but operate primarily domestic routes (yes i agree that is changing).

The real reason this merger will be so successful though is the international network that NW has combined with that lucrative domestic network Delta has. NW doesn't operate those lucrative transcon domestic routes, and they are focused mostly in the mid-western and western US, while Delta has that huge base of operations in Atlanta (SE). Combined, these airlines have got about 150 wide bodies, plus NW's 50+ commitment to the 787, and Deltas 10 77L, they will be a huge operation, especially internationally.

Aside from the inevitable Union issues, another major drawback will be fleet incompatibility, NW flies a good deal of airbus, and of course DL is a all-boeing airline. NW also doesn't fly any 767s, which is DL's longhaul workhorse, so their Amsterdam hub won't immediately do that much good.

I am not so sure this is going to have that much of an affect on US, primarily because US doesn't directly compete with either of these airlines on any major revenue routes. So I think that US's strategy coming out of this merger out to be to focus on their hub operations, but also try and expand in markets that this new goliath won't go into, specifically HUB - Europe and HUB - Asia routes, but the problem of course is that these A350s aren't coming in for another number of years. US just does not have the fleet right now to be an effective competitor in the long-haul route, which is kind of a shame, but thats how it is.

I am not sure how effective a merger with a LCC is going to be, since none havethat strong international network that US needs to get involved with, thats where the lucrative revenue is going to be, not domestic where you have got as many as 4-5 different airlines competing on certain routes right now. A merger may take out one of those competitors, but the others are still going to be there.