Scott Kirby pitching UAL merger with American

[edyvw]

We know AA is the worst legacy carrier. There is no discussion about that. Their finances are abysmal, product is abysmal etc.
But this is a horrible idea. If this happens, in 10-20 years we will have to break up these companies as air travel is becoming an oligopoly. Buying a ticket in the US compared to the EU market is like a horror story that no one wanted to see, but we all got sucked in.
Not sure why UAL needs this. They finally caught up with Delta as a product, so not sure why this.
Maybe somehow it is good for UAL or AA (not sure how it can get worse for them) but not for a consumer.

https://finance.yahoo.com/markets/stocks/articles/report-united-ceo-pitched-merger-004625608.html

 

[CDNozzle]

Interesting to see how it'll play out, but the merger will never happen. Pretty sure there's already "rules" in place to prevent any one of the major US carriers from exceeding a certain % of market share or size.

 

[405fwy]

Reuters article mentions that Kirby wants the merge to be competitive with international carriers, I don't see that ever happening since no US carriers will be close to the experience of international carriers.

The benefit of AA for me is using AAdvantage miles for their partners, can't complain with a fixed award chart with no fuel surcharges. No other US carrier still offers that since they switched to dynamic pricing.

 

[fdcg27]

Well this came out of left field.
Most of the airline M&A talk recently has involved Jet Blue and who will end up with that airline.
A merger of this magnitude will never happen, but it's hard to see what United would get out of it anyway other than a large load of additional debt.

 

[duck__dodgers]

Not gonna happen (see JetBlue and Frontier), but....

if you're gonna pitch it, you might as well pitch it now. as it won't get easier in 2029 no matter who wins the elections between then.

the way that it could happen is if the new combo spins off **a lot** of gates at ORD EWR LGA JFK DEN DFW MIA SFO, and some Pacific/Atlantic routes.

and/or basically create one better new airline slightly bigger, a 2nd smaller airline with the lesser routes, gates

 

[Timmastertech]

I cant see it happening. I fly semi-regularly for job 2, usually on American because PHL is a hub. For all the hate AA takes, I would rather fly them than United. When I have flown United for whatever reason (an comparing Mainline to Mainline) I found the United planes more worn out and less comfortable. I much prefer the personal device streaming and seatback device holder on AA compared to seatback IFE so, unlike my last united flight, you dont get stuck with inop IFE and no where other than the tray table to place the device.

 

[Astro14]

Well - @Timmastertech - United has spent several hundred million $$ on new interiors and bought over 500 new airplanes with new interiors in the past 5 years, so, your contrast between the two is dated. United is ahead of every other US carrier in new interiors, new amenities (like Starlink, which works great), and new aircraft.

The rest of the industry is struggling to catch United, even Delta, because United has far more new destinations, dozens each year, and new aircraft being delivered than any other US carrier. United bought, in one order, more airplanes than Air Canada, and Lufthansa, combined, operate. Put another way, United’s order book is bigger than most carriers. In the next couple of years, the largest operator of the 737s in the world won’t be Southwest, it will be United.

Look, United should, like all companies, be exploring and considering every option. Just as the US military has done analysis and has a plan for conflict in every single part of the world, so should companies be doing the strategic analysis and planning for every possibility, regardless of how likely an administration is to approve it.

It is often the act of planning that is important, not the plan itself. The analysis matters. That analysis led to the order of over 900 new airplanes, for example.

What would United gain from this purchase/merger? Market share, which allows greater revenue generation, hubs with better weather, and a move into South and Latin America.

United is the largest carrier in the Pacific and the Largest in the Atlantic. But 25 years ago, United closed its Miami base and reduced operations in South America. There is a lot of potential room for growth there.

United may not want all of American - perhaps they want just a few key assets - gates in Chicago, Hub in Miami, Hub in Dallas, for example, and be willing to get rid of some of the less desirable assets.

 

[fdcg27]

This was apparently brought up in Kirby's February meeting with Trump, in which the main topic of discussion was to have been the future development of Dulles, an airport in which United is the primary tenant.
Not sure why this is coming out weeks later since it is not new news, just previously undisclosed.
As Astro posted above, United is definitely in growth mode and has expanded its international routes considerably.

 

[raaizin]

Exactly what we don't need another merger to create less competition, there have been too many in all industries. Lets create another oligopoly I am sure it will be great for consumers. Personally I think all mergers are bad for consumers as it reduces competition.

 

[fdcg27]

Exactly what we don't need another merger to create less competition, there have been too many in all industries. Lets create another oligopoly I am sure it will be great for consumers. Personally I think all mergers are bad for consumers as it reduces competition.

Not so many years ago, we could fly out of DAY and choose between competitive fares offered by United, Delta, American, US Air, Northwest, Continental, Airtran and America West with Air Canada operating a sad little Beech 1900 commuter to Toronto.
Today, we're down to Delta, United and American as a result of past mergers. I think Air Canada still operates a commuter to Toronto although I'm not sure of that.

 

[wemay]

Interesting to see how it'll play out, but the merger will never happen. Pretty sure there's already "rules" in place to prevent any one of the major US carriers from exceeding a certain % of market share or size.

"Rules in place"

That used to mean something.

 

[4wd]

Airlines make money in premium seating …
I fly the 1-2-1 business class and enjoy an outstanding lounge at DFW. AA is actually pretty nice unless you go cheap seats.

 

[4wd]

"Rules in place"

That used to mean something.

Well, with over 1000 air frames - there would be a thinning of the herd

 

[wemay]

Well, with over 1000 air frames - there would be a thinning of the herd

Agreed

 

[4wd]

Reuters article mentions that Kirby wants the merge to be competitive with international carriers, I don't see that ever happening since no US carriers will be close to the experience of international carriers.

The benefit of AA for me is using AAdvantage miles for their partners, can't complain with a fixed award chart with no fuel surcharges. No other US carrier still offers that since they switched to dynamic pricing.

Yep, allot of times I fly a mix of AA, BA, and Qatar …
But it’s the same when I mix UA with LH and others …

 

[Astro14]

Interesting to see how it'll play out, but the merger will never happen. Pretty sure there's already "rules" in place to prevent any one of the major US carriers from exceeding a certain % of market share or size.

There are no “rules in place” - only a patchwork (or minefield) of regulatory bodies that will have approval and influence.

For example, DOJ would have to approve a merger between companies, and the Metro Washington Airport Authority would have to approve gate transfers in Dulles and Reagan, while the city of Chicago would have to approve gate transfers at O’Hare and in the case of slot-controlled airports, the FAA would get involved.

 

[4wd]

Most every country I fly to has a dominant airline - by far. This merger would still leave Delta and many other airlines in the mix - but one dominant airline …

 

[fdcg27]

Most every country I fly to has a dominant airline - by far. This merger would still leave Delta and many other airlines in the mix - but one dominant airline …

Is that a desirable state of affairs?
OTOH, its more the alternative offerings of foreign carriers keeping US airlines honest on international fares than it is competition between US carriers on international routes.

 

[dkryan]

“……..United may not want all of American - perhaps they want just a few key assets - gates in Chicago, Hub in Miami, Hub in Dallas, for example, and be willing to get rid of some of the less desirable assets.”

And therein lies the major problem amongst several problems with Kirby’s quest.

We see this frequently with mergers and takeovers. Rush in, monetize the good stuff for the personal gain of a handful of executives, then take the “leftovers” and sell it off piecemeal at reduced prices just to get rid of it.

The Jet Blue-Spirit merger never reached V1.

This attempt will never make it off of the taxiway.

And the one major asset that almost always takes a nasty hit is human capital.
As in perform a “Neutron Jack”, i.e., keep the physical assets and make the employees go away.

The battle alone that would arise from trying to merge the seniority lists for both the pilots and flight attendants will require a ringside seat and lots of popcorn.

And the unions won’t remain silent.

 

[fdcg27]

“……..United may not want all of American - perhaps they want just a few key assets - gates in Chicago, Hub in Miami, Hub in Dallas, for example, and be willing to get rid of some of the less desirable assets.”

And therein lies the major problem amongst several problems with Kirby’s quest.

We see this frequently with mergers and takeovers. Rush in, monetize the good stuff for the personal gain of a handful of executives, then take the “leftovers” and sell it off piecemeal at reduced prices just to get rid of it.

The Jet Blue-Spirit merger never reached V1.

This attempt will never make it off of the taxiway.

And the one major asset that almost always takes a nasty hit is human capital.
As in perform a “Neutron Jack”, i.e., keep the physical assets and make the employees go away.

The battle alone that would arise from trying to merge the seniority lists for both the pilots and flight attendants will require a ringside seat and lots of popcorn.

And the unions won’t remain silent.

To what extent might Kirby really be thinking of gaining control of a competitor and gutting it?
As with Southwest and Airtran.
United would love to take AA out of ORD and would also like picking up AA's useful hubs at DFW and MIA as well as gaining access to JFK.
OTOH, United would not relish taking on AA's debt load.