US Airways and UAL in Merger Talks

11800506

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According to the Wall Street Journal, United Airline's parent company, UAL Corp., and US Airways are again in merger talks.

UAL Corp.'s United Airlines and US Airways have resumed discussions of a potential merger that would create a new global airline behemoth, people familiar with the matter said Wednesday.

The talks are the latest in a decade-long dance between the two big airlines and have recently heated up after months of off-and-on conversation, these people said. One person said the talks "aren't that far along," and could falter again as they have in the past, these people said.

Much remains undecided, including which CEO would run the combined company. The companies have not seriously discussed how a deal would be structured, though it would probably involve a stock swap because neither airline wants to deplete its cash reserves, one person familiar with the talks said.

UAL is the nation's third largest airline by traffic, and US Airways is the sixth. A merger would create the nation's second-largest air carrier behind Delta Air Lines Inc., which merged with rival Northwest in 2008. The new carrier would combine United's strength on international routes across the Pacific and domestic focus in the Midwest with U.S. Airways' large presences on the East coast and in the western U.S.
It seems further consolidation was inevitable after Northwest and Delta's merger, so it's not surprising that they're trying to merge again. I just wonder what exactly this will mean for consumers.
 

dmr727

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Dec 29, 2007
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Ugh...I'm curious to see how they merge the pilot seniority lists if this goes through. Airways has three lists and a nightmare of a pilot situation, while United has a decade's worth of pilots sitting on furlough.
 

Superdrive

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Oct 21, 2003
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This is not the same US Airways that tried to merge with United in 2000. That airline nearly shutdown until it was purchased by America West and operated combined operations under US Airways.

Since the previous administration allowed the NW/DL merger to take place, it would be interesting to see if the current DOJ would allow subsequent mergers.
 

11800506

macrumors 65816
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This is not the same US Airways that tried to merge with United in 2000. That airline nearly shutdown until it was purchased by America West and operated combined operations under US Airways.

Since the previous administration allowed the NW/DL merger to take place, it would be interesting to see if the current DOJ would allow subsequent mergers.
However United tried to merge again with US Airways in 2008 again and that merger failed as well.

It'll be interesting to see if this merger actually gets anywhere as opposed to United's past tries since it's attempted merger with Continental also failed.
 

aethelbert

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Jun 1, 2007
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It'll be interesting to see if this merger actually gets anywhere as opposed to United's past tries since it's attempted merger with Continental also failed.
United has done a lot more than attempt to merge with CO, though. They've been building up a very strong relationship during the past year or so. More is scheduled to roll out this year, including mutual benefits for frequent flyers of the other program, etc. I wouldn't say that their attempt failed, but it certainly would be a much more gradual transition if it goes through.
 

11800506

macrumors 65816
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United has done a lot more than attempt to merge with CO, though. They've been building up a very strong relationship during the past year or so. More is scheduled to roll out this year, including mutual benefits for frequent flyers of the other program, etc. I wouldn't say that their attempt failed, but it certainly would be a much more gradual transition if it goes through.
I'd be interested to see how United's partnership with Continental would continue if United merged with US Airways, though. Wouldn't building such a close partnership be a little pointless if United had no intentions of merging with Continental? I guess United theoretically could still merge with Continental after their US Airways merger but that would create a mess of a company and would likely not meet government approval. Then again, my knowledge of the airline industry is somewhat limited.
 

aethelbert

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Jun 1, 2007
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I'd be interested to see how United's partnership with Continental would continue if United merged with US Airways, though. Wouldn't building such a close partnership be a little pointless if United had no intentions of merging with Continental?
I was reading [a much more thorough] thread on this topic on FlyerTalk and a large consensus there is that United is using this tactic to scare Continental into speeding up the process. At least in terms of long-term network goals, Continental is a better fit for United, though at first glance things like fleet-commonality between US and UA may make sense as well. However, as dmr727 alluded to, the US/HP merger still hasn't really been completed among the labor force at the new US Airways, so now might not be the best time to make it worse.

Also, these types of stories come out every once in a while where the airlines will come out and denounce any validity to the story, which I see as possible here.
 

11800506

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I was reading [a much more thorough] thread on this topic on FlyerTalk and a large consensus there is that United is using this tactic to scare Continental into speeding up the process. At least in terms of long-term network goals, Continental is a better fit for United, though at first glance things like fleet-commonality between US and UA may make sense as well. However, as dmr727 alluded to, the US/HP merger still hasn't really been completed among the labor force at the new US Airways, so now might not be the best time to make it worse.
That would make a lot more sense. I'd be interested in reading that thread. Do you still have the link?

From the looks of it, a lot of competition isn't doing much for consumers anyway.
That's not necessarily true, at least in certain markets such as the Washington D.C. one. According to a Washington Post article I read, United flights make up almost 60% of the flights out of Dulles (since it's their hub) and US Airways makes up around 30% of the flights at Reagan National and has the most flights there than any other airline. So if a merger were to take place, it would severely restrict competition in the DC market since the airline would then control a large portion of the DC market, which could lead to higher prices. If a merger were to take place, I'm sure the airline would be forced to give up some flights at one of the airports (likely Reagan) as a concession, but even still, they would still control significant number of flights out of DC.
 

dmr727

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dmr727

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Do you think there's a chance that American and US Airways will start talking to each other?
 

aethelbert

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Jun 1, 2007
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Do you think there's a chance that American and US Airways will start talking to each other?
I would guess that the next merger will involve alaska airlines. US Airways' general structure doesn't really show strong potential with any major carrier and they've still got issues from merging with America West.

AA and AS already have a pretty good relationship and their fleets, routes, and management structures compliment one another quite well.

That's my two cents, probably not worth much since it's just speculation.
 

jknight8907

macrumors 6502a
Jun 14, 2004
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Hudson Valley NY
Actually it probably is, if there are less airlines then airports like New York and Chicago should become less "full".
The planes are only there because there are people flying on them. Whether it's 1,000 planes a day owned by 15 airlines, or 1,000 planes a day owned by 3 airlines, it's still the same number of flights. Merged or not you can still only fit x number of people on a plane.
 

aethelbert

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The planes are only there because there are people flying on them. Whether it's 1,000 planes a day owned by 15 airlines, or 1,000 planes a day owned by 3 airlines, it's still the same number of flights. Merged or not you can still only fit x number of people on a plane.
No, not really. With fewer carriers in any give market, aircraft capacities can increase while keeping equal or greater load factors alongside lower total frequencies.
 

11800506

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I would guess that the next merger will involve alaska airlines. US Airways' general structure doesn't really show strong potential with any major carrier and they've still got issues from merging with America West.

AA and AS already have a pretty good relationship and their fleets, routes, and management structures compliment one another quite well.

That's my two cents, probably not worth much since it's just speculation.
Many on FlyerTalk seemed to feel that where AA was weakest compared to DL and UA/CO was in international flights, especially in Asia. So a merger with Alaska wouldn't really help very much in the regard. Although AA doesn't really have any other choice in carriers with the current crop left over, so I guess if they want to merge Alaska is their best bet.
 

aethelbert

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Many on FlyerTalk seemed to feel that where AA was weakest compared to DL and UA/CO was in international flights, especially in Asia. So a merger with Alaska wouldn't really help very much in the regard. Although AA doesn't really have any other choice in carriers with the current crop left over, so I guess if they want to merge Alaska is their best bet.
American certainly isn't weak in the international sphere. Asia, yes, but international, no. Their networks in the carribean, south and central America far exceed that of the competition. Their ATI with British Airways and Iberia over the Atlantic gives them quite a strong presence there as well.
United and Delta have larger presences in Asia due to tag-on routes, which don't really reflect the number of people flying directly across the Pacific.
 

yg17

macrumors G5
Aug 1, 2004
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Hostile takeover of United and Continental by Lufthansa. That would be my wish. Both airlines are an embarrassment to the Star Alliance and I would love to see Lufthansa service on US domestic flights.
Cheers,

Ahmed
I have no loyalties to airlines. All domestic airlines suck in their own unique ways, I don't fly often so I probably won't gain enough FF miles to get jack **** before I die, so I usually fly whatever's cheapest and the most convenient (which, domestically is Southwest about 99.99999999% of the time due to their large presence at STL), but if Lufthansa bought out UA and CO and provided Lufthansa-style service on domestic flights, I would have a new found airline loyalty. I've flown Lufthansa once (2 segment flight TXL-FRA-ORD) and the service was excellent.
 

dmr727

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Dec 29, 2007
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Although it's fun to think about, I think the cabotage rules will have something to say about it. :)
 

JNB

macrumors 604
I fly UA occasionally for convenience, but not by choice. I'm a CO Million-Miler for a reason, and it's because they've got a quality product, an outstanding FF program, and ensured that I got treated as well on partner airlines as when flying with them. All I see this doing is diluting the fleet and the service.

Just came through DCA and ORD this last week. Both should be bulldozed. With United's typical FF still inside, preferably.
 

aethelbert

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Jun 1, 2007
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I fly UA occasionally for convenience, but not by choice. I'm a CO Million-Miler for a reason, and it's because they've got a quality product, an outstanding FF program, and ensured that I got treated as well on partner airlines as when flying with them. All I see this doing is diluting the fleet and the service.

Just came through DCA and ORD this last week. Both should be bulldozed. With United's typical FF still inside, preferably.
Have you ever held a high position in Mileage Plus? Once upon a time, I was platinum on Continental... switching to United was the best thing that I've done with my airline options since. I was, though, status matched straight to 1K, so I never got to experience being an outsider.

Though, who knows what would have happened had I not been forced to switch to UA due to getting reimbursed, eh?

Hostile takeover of United and Continental by Lufthansa. That would be my wish. Both airlines are an embarrassment to the Star Alliance and I would love to see Lufthansa service on US domestic flights.
The current corporate structure is to ******* huge to add more. Even if it were legal, it would be a nightmare.