Re: AA take over UA?

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Oh, I don't see it THAT bad over at UA... US, certinally. I give US less
than a year. Their time is up and there's not enough time to allow the
economy to turn around. I think UA has time to fix their problems, but
time is ticking.

=20

UA does need some pretty big changes to happen. It's pretty clear that
they still are not on the right track. They are the second largest
carrier, it's going to take a little longer for them to go away, so
there is enough time for them to get some things fixed.

=20

Clay - SEA

=20

-----Original Message-----
From: Travel Pages [mailto:travelpages@xxxxxxxxx]=20
Sent: Friday, August 27, 2004 1:48 PM
To: The Airline List; Clay Wardlow
Subject: Re: AA take over UA?

=20

What I believe many on this list are missing is the extremely urgent
cash position of these two enormous animals, particularly UA.

=20

It's not like that UA can stave off liquidation if they do not take very
aggressive action very shortly, likely in the form of shrinking of
selling off pieces.  It's much too late to convince any bankers that
they know how to grow or reshape their business as is.  The body is now
so sick that amputation is the only option next to demisal.

=20

Theoretically, UA's assets could be liquidated and the pension liability
paid out with whatever's left from the fire sale, leaving service
disruptions and some idle equipment and personnel.  There's no major
damage to the system as someone will come in and restore some (certainly
not all) of their service.  Means less seats and higher fares.

=20

It is as bad as all this.  That's why the merger recommendation, which
seems so absurd, yet NOT merging, NOT dissolving, continuing to stay the
same with band-aid fixes every few years is even more absurd.  It won't
be UA/AA, but it won't be UA for much longer. =20

=20


Clay Wardlow <clay.wardlow@xxxxxxxx> wrote:

        I totally agree it would never happen. A family member in the
industry
        said that the TWA thing almost killed AMR, and to do it again
would be
        ridiculous.
=09
        Although I'm as big of a fan of AA as BAHA is of UA - we all
have our
        reasons and opinions - I'd never want to see this happen. As far
as
        aircraft is concerned, I'm not a fan of the 74s anymore. Sure
it's great
        for nostalgia, but it's in need of a replacement. Also, AA is
beginning
        to replace much of its Super-80 fleet with 73s.
=09
        Both airlines are having issues that would just get compounded
by
        something like this merger.
=09
        I don't get this guy. If we all see this as stupid, who the heck
is this
        guy and why in the world would he suggest something so idiotic.
Who does
        he think he is GWB or something? ;-)
=09
        Clay - SEA
=09
        -----Original Message-----
        From: David W. levine [mailto:dwl@xxxxxxxxx]=3D20
        Sent: Friday, August 27, 2004 10:22 AM
        Subject: Re: AA take over UA?
=09
        At 11:32 AM 8/27/2004, Bahadir Acuner wrote:
        >This is a nightmare for a UA 1K with 400,000 miles in last 3
years.
        >First of all, United is more innovative, has a much better
product and
        >better equipment. United's customer service, on board service,
domestic
        and
        >international service is way ahead of DAArk side.
        >
        >In terms of compatibility between airlines, there is almost
none! Their
        767s
        >and 777s that look like common fleets share different engines
(P&W on
        UA and
        >RR on AA). This is the case with 757s are as well.
        >
        >United has huge fleet of Airbus narrow body aircraft, AA
doesn't. UAL
        has
        >classic 737s, AA doesn't.
        >
        >In terms of unions ALPA and APA are two different pilot unions.
        >
        >Absolutely this person doesn't know what he/she is talking
about. The
        minute
        >AA buys UA, they will have to park all the Airbus aircraft and
that
        will do
        >numbers on the values of the birds which will not go well with
        creditors.
        >
        >So, in a nutshell, there is more chance of Southwest ordering
A380s
        than
        >this happening.
        >
        >BAHA
        >Fan of great service on United
        Whilst disagreeing with BAHA on the service levels (I find them
far less
        different than he does) I fully agree this was one serious dope
smoking
        exercise.
=09
        Beyond all the issues BAHA mentioned, you've plenty more.
=09
        AA and UA have totally incompatible alliance structures. (One
world Vs.
        Star)
        Nobody on either side of the Atlantic would let a merged AA/UA
keep
        their
        collective position in LHR. Nobody is going to allow a single
monster US
        carrier to keep its position in the two dominant European
alliances.
=09
        You'd have similar, although less extreme overlap in NRT, and
you'd have
        the
        minor problem of one entity suddenly controlling absurd amounts
of
        traffic
        at ORD,
        huge amounts at SFO, big slabs at LAX, and a huge chunk of the
US
        transcontinental
        market out of LAX, JFK, SFO,BOS,IAD. etc. Not likely to be
popular with
        anti-trust
        folks anywhere.
=09
        You'd also have massive messiness with DEN and DFW. They overlap
a fair
        bit
        in cachements, but you can't afford to walk away from either, so
you get
        to
        keep
        both.
=09
        Some of the fleet issues BAHA mention are underpinned by some
very
        different approaches
        to the whole notion of being a large carrier. AA doesn't have
747s by
        intent. It has an overall
        approach to international stuff that's been less driven by big
        airplanes,
        and historical
        roots than UALs. (To an extent, UAL still has international
structural
        hangovers which go back all the
        way to the Pan Am purchases) I don't know that you'd simply axe
the
        airbus
        narrowbody fleet,
        but sooner or later, you'd have to make sense of two very
different
        small
        airplane fleets.
        (AA's got all those Super-80s, and the bigger 737s, UA's got
bigger
        A32Xs
        and smaller 737s)
=09
        Further, the money story doesn't make sense. AA buying UAL won't
make
        the
        pension liability
        issues at UA go away. It won't make most of the UAL non debt
liabilities
        go
        away. Being more
        monolithic won't fix yield problems caused by low fare
competition.
        Being
        bigger won't fix historical
        issues having to do with having many more senior, expensive
employees
        than
        the startups.
=09
        Mark this one off as just silly.
=09
        - David

  _____ =20

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