UAL's Tilton Wants to Acquire Rivals
02-17-2005, 09:44 PM
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UAL's Tilton Wants to Acquire Rivals
United airlines wants to buy rivals
Once it's out of bankruptcy
Thursday, February 17, 2005
By ERIC TORBENSON / The Dallas Morning News
Bankrupt for two years, United Airlines Inc. has a new role in mind if it can reorganize: industry consolidator.
Taking cues from the telecommunications industry, the money-bleeding airline business needs to consolidate to regain its health, United chairman and chief executive Glenn Tilton told investors in New York on Thursday.
Look for his carrier to act, he said.
"For the industry to get to a position where it can genuinely make some progress through the current level of disfunctionality, there need to be fewer network legacy carriers," he said at the J.P. Morgan Airline Conference.
"Just as telecom is plagued with overcapacity and commoditization, so is the airline industry, which must follow and consolidate."
United, based in Elk Grove Village, Ill., lost $1.6 billion in 2004. But it's primed to be an acquirer because it has the best assets and will have used its bankruptcy to strengthen its finances for mergers, Mr. Tilton said.
"The perception of what's possible in the industry from two years ago has changed," he said.
"Two years ago ... you would have not thought possible what we have already done."
For a carrier struggling to attract financing to exit bankruptcy, talk of buying out competitors may seem audacious.
But for an industry in such peril, all kinds of different approaches are being broached.
Still, analysts such as Jamie Baker with the conference's host, J.P. Morgan, questioned whether the industry's problems would be solved through mergers.
He argued that previous deals haven't lowered costs or eliminated excess capacity.
And United's previous attempt at buying US Airways Inc. in 2000 was a "massive distraction."
Federal regulators nixed that effort because of antitrust concerns.
Arpey's take
Many barriers remain to airline mergers, according to other industry executives, including Gerard Arpey, chairman and CEO of American Airlines Inc.
"Given what [the] industry has been through since 9-11, there is very little balance sheet strength left, and it takes a lot of money to successfully integrate two complex, large organizations," he said.
"I think you could argue that the government barrier [to airline mergers] might be lower, but I think the financial barrier might be higher."
American was the last major carrier to merge with another airline, buying the assets of bankrupt Trans World Airlines Inc. in 2001 in a move that has paid few dividends in a deep industrywide slump.
"I can definitely comment to you that it's real hard," he added.
Still, regulatory hurdles may be lower because of the rise of low-cost, low-fare carriers, which have stripped traditional network carriers of their pricing power, Mr. Tilton said.
Union concerns
The bigger problem has been blending labor unions together, which causes fierce seniority wars and savages morale.
With United poised to terminate all its pension plans, unions are becoming "more and more aware of the realities" of the industry's dire economics, Mr. Tilton said.
Analysts agree unions have lost their ability to dictate wages and working conditions.
"We think unions must acknowledge that there aren't any more golden eggs to squeeze out of the airlines," said Ray Neidl of Calyon Securities in a recent research report.
The last obstacle, integrating different computer systems, facilities and aircraft fleets, "is just work," said Mr. Tilton, whose background is in the oil industry.
"I think there are synergies to be had."
With six large hub carriers fighting fast-growing low-cost competitors, the industry will remain drenched in overcapacity for years to come with no clear way to get planes out of the sky.
The largest carriers are expected to lose more than $1 billion this year despite record demand for air travel.
Even top dog Southwest Airlines Co. has felt the pain of too many seats.
Its average fares fell 5 percent in January compared with last year, chief financial officer Laura Wright said at the conference.
Southwest's rivals will add an average of 10 percent more capacity on competitive routes this year, she said.
"There's just a tremendous amount of seats in the market," she said.
That's not stopping Southwest from increasing its schedule by 10 percent in 2005 compared with 2004. It's increasing its fleet by 29 new planes.
ATA alliance
Southwest has taken its first consolidation-type step since it acquired Morris Air in 1993, buying six gates from bankrupt ATA Airlines Inc. at Chicago's Midway Airport.
The two carriers entered into an alliance, selling seats on each other's planes out of Midway, and the setup is working as planned, Ms. Wright said.
The arrangement should create $25 million to $50 million in extra revenue for the carrier, which had $6.5 billion in total sales in 2004.
Some executives say that if consolidation comes anywhere among airlines, it is likely to start first among the smaller, low-cost carriers such as struggling ATA.
America West Airlines Inc. chairman and chief executive Doug Parker speculated last week that mergers were likely, and several other low-cost carriers aren't profitable or are just barely making money with oil prices near $50 a barrel.
Said Mr. Tilton: "Somebody's going to aggregate the industry."
E-mail [email protected]
IT'S ALL UP IN THE AIR
Who might United Airlines might want to acquire?
US Airways: Got left at the altar with United in 2001; networks fit well together
Delta Air Lines: Probably too big to pass antitrust muster but would pose the fewest union hurdles.
Northwest Airlines: Stubbornly independent and has Asian routes that overlap a lot with United's. A bad match for airport hubs.
Continental Airlines: Great brand and strong hubs, but weakening balance sheet may force some tough decisions.
American Airlines: As unlikely as great airline coffee.
Southwest Airlines: In United's dreams. Southwest could buy several Uniteds with its current bankroll.
Once it's out of bankruptcy
Thursday, February 17, 2005
By ERIC TORBENSON / The Dallas Morning News
Bankrupt for two years, United Airlines Inc. has a new role in mind if it can reorganize: industry consolidator.
Taking cues from the telecommunications industry, the money-bleeding airline business needs to consolidate to regain its health, United chairman and chief executive Glenn Tilton told investors in New York on Thursday.
Look for his carrier to act, he said.
"For the industry to get to a position where it can genuinely make some progress through the current level of disfunctionality, there need to be fewer network legacy carriers," he said at the J.P. Morgan Airline Conference.
"Just as telecom is plagued with overcapacity and commoditization, so is the airline industry, which must follow and consolidate."
United, based in Elk Grove Village, Ill., lost $1.6 billion in 2004. But it's primed to be an acquirer because it has the best assets and will have used its bankruptcy to strengthen its finances for mergers, Mr. Tilton said.
"The perception of what's possible in the industry from two years ago has changed," he said.
"Two years ago ... you would have not thought possible what we have already done."
For a carrier struggling to attract financing to exit bankruptcy, talk of buying out competitors may seem audacious.
But for an industry in such peril, all kinds of different approaches are being broached.
Still, analysts such as Jamie Baker with the conference's host, J.P. Morgan, questioned whether the industry's problems would be solved through mergers.
He argued that previous deals haven't lowered costs or eliminated excess capacity.
And United's previous attempt at buying US Airways Inc. in 2000 was a "massive distraction."
Federal regulators nixed that effort because of antitrust concerns.
Arpey's take
Many barriers remain to airline mergers, according to other industry executives, including Gerard Arpey, chairman and CEO of American Airlines Inc.
"Given what [the] industry has been through since 9-11, there is very little balance sheet strength left, and it takes a lot of money to successfully integrate two complex, large organizations," he said.
"I think you could argue that the government barrier [to airline mergers] might be lower, but I think the financial barrier might be higher."
American was the last major carrier to merge with another airline, buying the assets of bankrupt Trans World Airlines Inc. in 2001 in a move that has paid few dividends in a deep industrywide slump.
"I can definitely comment to you that it's real hard," he added.
Still, regulatory hurdles may be lower because of the rise of low-cost, low-fare carriers, which have stripped traditional network carriers of their pricing power, Mr. Tilton said.
Union concerns
The bigger problem has been blending labor unions together, which causes fierce seniority wars and savages morale.
With United poised to terminate all its pension plans, unions are becoming "more and more aware of the realities" of the industry's dire economics, Mr. Tilton said.
Analysts agree unions have lost their ability to dictate wages and working conditions.
"We think unions must acknowledge that there aren't any more golden eggs to squeeze out of the airlines," said Ray Neidl of Calyon Securities in a recent research report.
The last obstacle, integrating different computer systems, facilities and aircraft fleets, "is just work," said Mr. Tilton, whose background is in the oil industry.
"I think there are synergies to be had."
With six large hub carriers fighting fast-growing low-cost competitors, the industry will remain drenched in overcapacity for years to come with no clear way to get planes out of the sky.
The largest carriers are expected to lose more than $1 billion this year despite record demand for air travel.
Even top dog Southwest Airlines Co. has felt the pain of too many seats.
Its average fares fell 5 percent in January compared with last year, chief financial officer Laura Wright said at the conference.
Southwest's rivals will add an average of 10 percent more capacity on competitive routes this year, she said.
"There's just a tremendous amount of seats in the market," she said.
That's not stopping Southwest from increasing its schedule by 10 percent in 2005 compared with 2004. It's increasing its fleet by 29 new planes.
ATA alliance
Southwest has taken its first consolidation-type step since it acquired Morris Air in 1993, buying six gates from bankrupt ATA Airlines Inc. at Chicago's Midway Airport.
The two carriers entered into an alliance, selling seats on each other's planes out of Midway, and the setup is working as planned, Ms. Wright said.
The arrangement should create $25 million to $50 million in extra revenue for the carrier, which had $6.5 billion in total sales in 2004.
Some executives say that if consolidation comes anywhere among airlines, it is likely to start first among the smaller, low-cost carriers such as struggling ATA.
America West Airlines Inc. chairman and chief executive Doug Parker speculated last week that mergers were likely, and several other low-cost carriers aren't profitable or are just barely making money with oil prices near $50 a barrel.
Said Mr. Tilton: "Somebody's going to aggregate the industry."
E-mail [email protected]
IT'S ALL UP IN THE AIR
Who might United Airlines might want to acquire?
US Airways: Got left at the altar with United in 2001; networks fit well together
Delta Air Lines: Probably too big to pass antitrust muster but would pose the fewest union hurdles.
Northwest Airlines: Stubbornly independent and has Asian routes that overlap a lot with United's. A bad match for airport hubs.
Continental Airlines: Great brand and strong hubs, but weakening balance sheet may force some tough decisions.
American Airlines: As unlikely as great airline coffee.
Southwest Airlines: In United's dreams. Southwest could buy several Uniteds with its current bankroll.
02-18-2005, 12:47 PM
#2
Gets Weekends Off
Joined APC: Feb 2005
Position: sitting
Posts: 116
Walk before you run Glenn
I find it interesting that Mr. Tilton is talking about buying rivals the same week that UAL Corp. restructured their DIP loans. http://biz.yahoo.com/prnews/050218/cgf028_1.html .
In effect, UAL is in default of the DIP covenants and the underwriters could call the debt. The only way UAL has to raise capital if their bankruptcy debt was called would be to sell assets.
Does he realize that the unions at UAL will never allow industry integration on the backs of their wage and work rule give backs? Didn't UAL learn anything from their failed attempt with USAir (besides how to **** away 2 BILLION dollars).
Yeah Glenn, pretty strong talk for an airline fighting for survival.
- L&S
In effect, UAL is in default of the DIP covenants and the underwriters could call the debt. The only way UAL has to raise capital if their bankruptcy debt was called would be to sell assets.
Does he realize that the unions at UAL will never allow industry integration on the backs of their wage and work rule give backs? Didn't UAL learn anything from their failed attempt with USAir (besides how to **** away 2 BILLION dollars).
Yeah Glenn, pretty strong talk for an airline fighting for survival.
- L&S
12-29-2009, 07:10 PM
#3
Moderator
Joined APC: Oct 2006
Position: B757/767
Posts: 13,088
Originally Posted by acl65pilot
I could have held it if I would have bid it higher up. I think it was my 23rd choice out of 65 or so MD preferences.
We will see on Friday.
We will see on Friday.
12-29-2009, 07:42 PM
#4
veut gagner à la loterie
Joined APC: Apr 2008
Position: Light Chop
Posts: 23,286
Originally Posted by johnso29
Well I guess somebody got a sneak peek!
12-30-2009, 03:27 AM
#7
Gets Weekends Off
Joined APC: Oct 2006
Position: 737
Posts: 590
Originally Posted by SWAjet
United airlines wants to buy rivals
Once it's out of bankruptcy
Thursday, February 17, 2005
By ERIC TORBENSON / The Dallas Morning News
Bankrupt for two years, United Airlines Inc. has a new role in mind if it can reorganize: industry consolidator.
Taking cues from the telecommunications industry, the money-bleeding airline business needs to consolidate to regain its health, United chairman and chief executive Glenn Tilton told investors in New York on Thursday.
Look for his carrier to act, he said.
"For the industry to get to a position where it can genuinely make some progress through the current level of disfunctionality, there need to be fewer network legacy carriers," he said at the J.P. Morgan Airline Conference.
"Just as telecom is plagued with overcapacity and commoditization, so is the airline industry, which must follow and consolidate."
United, based in Elk Grove Village, Ill., lost $1.6 billion in 2004. But it's primed to be an acquirer because it has the best assets and will have used its bankruptcy to strengthen its finances for mergers, Mr. Tilton said.
"The perception of what's possible in the industry from two years ago has changed," he said.
"Two years ago ... you would have not thought possible what we have already done."
For a carrier struggling to attract financing to exit bankruptcy, talk of buying out competitors may seem audacious.
But for an industry in such peril, all kinds of different approaches are being broached.
Still, analysts such as Jamie Baker with the conference's host, J.P. Morgan, questioned whether the industry's problems would be solved through mergers.
He argued that previous deals haven't lowered costs or eliminated excess capacity.
And United's previous attempt at buying US Airways Inc. in 2000 was a "massive distraction."
Federal regulators nixed that effort because of antitrust concerns.
Arpey's take
Many barriers remain to airline mergers, according to other industry executives, including Gerard Arpey, chairman and CEO of American Airlines Inc.
"Given what [the] industry has been through since 9-11, there is very little balance sheet strength left, and it takes a lot of money to successfully integrate two complex, large organizations," he said.
"I think you could argue that the government barrier [to airline mergers] might be lower, but I think the financial barrier might be higher."
American was the last major carrier to merge with another airline, buying the assets of bankrupt Trans World Airlines Inc. in 2001 in a move that has paid few dividends in a deep industrywide slump.
"I can definitely comment to you that it's real hard," he added.
Still, regulatory hurdles may be lower because of the rise of low-cost, low-fare carriers, which have stripped traditional network carriers of their pricing power, Mr. Tilton said.
Union concerns
The bigger problem has been blending labor unions together, which causes fierce seniority wars and savages morale.
With United poised to terminate all its pension plans, unions are becoming "more and more aware of the realities" of the industry's dire economics, Mr. Tilton said.
Analysts agree unions have lost their ability to dictate wages and working conditions.
"We think unions must acknowledge that there aren't any more golden eggs to squeeze out of the airlines," said Ray Neidl of Calyon Securities in a recent research report.
The last obstacle, integrating different computer systems, facilities and aircraft fleets, "is just work," said Mr. Tilton, whose background is in the oil industry.
"I think there are synergies to be had."
With six large hub carriers fighting fast-growing low-cost competitors, the industry will remain drenched in overcapacity for years to come with no clear way to get planes out of the sky.
The largest carriers are expected to lose more than $1 billion this year despite record demand for air travel.
Even top dog Southwest Airlines Co. has felt the pain of too many seats.
Its average fares fell 5 percent in January compared with last year, chief financial officer Laura Wright said at the conference.
Southwest's rivals will add an average of 10 percent more capacity on competitive routes this year, she said.
"There's just a tremendous amount of seats in the market," she said.
That's not stopping Southwest from increasing its schedule by 10 percent in 2005 compared with 2004. It's increasing its fleet by 29 new planes.
ATA alliance
Southwest has taken its first consolidation-type step since it acquired Morris Air in 1993, buying six gates from bankrupt ATA Airlines Inc. at Chicago's Midway Airport.
The two carriers entered into an alliance, selling seats on each other's planes out of Midway, and the setup is working as planned, Ms. Wright said.
The arrangement should create $25 million to $50 million in extra revenue for the carrier, which had $6.5 billion in total sales in 2004.
Some executives say that if consolidation comes anywhere among airlines, it is likely to start first among the smaller, low-cost carriers such as struggling ATA.
America West Airlines Inc. chairman and chief executive Doug Parker speculated last week that mergers were likely, and several other low-cost carriers aren't profitable or are just barely making money with oil prices near $50 a barrel.
Said Mr. Tilton: "Somebody's going to aggregate the industry."
E-mail [email protected]
IT'S ALL UP IN THE AIR
Who might United Airlines might want to acquire?
US Airways: Got left at the altar with United in 2001; networks fit well together
Delta Air Lines: Probably too big to pass antitrust muster but would pose the fewest union hurdles.
Northwest Airlines: Stubbornly independent and has Asian routes that overlap a lot with United's. A bad match for airport hubs.
Continental Airlines: Great brand and strong hubs, but weakening balance sheet may force some tough decisions.
American Airlines: As unlikely as great airline coffee.
Southwest Airlines: In United's dreams. Southwest could buy several Uniteds with its current bankroll.
Once it's out of bankruptcy
Thursday, February 17, 2005
By ERIC TORBENSON / The Dallas Morning News
Bankrupt for two years, United Airlines Inc. has a new role in mind if it can reorganize: industry consolidator.
Taking cues from the telecommunications industry, the money-bleeding airline business needs to consolidate to regain its health, United chairman and chief executive Glenn Tilton told investors in New York on Thursday.
Look for his carrier to act, he said.
"For the industry to get to a position where it can genuinely make some progress through the current level of disfunctionality, there need to be fewer network legacy carriers," he said at the J.P. Morgan Airline Conference.
"Just as telecom is plagued with overcapacity and commoditization, so is the airline industry, which must follow and consolidate."
United, based in Elk Grove Village, Ill., lost $1.6 billion in 2004. But it's primed to be an acquirer because it has the best assets and will have used its bankruptcy to strengthen its finances for mergers, Mr. Tilton said.
"The perception of what's possible in the industry from two years ago has changed," he said.
"Two years ago ... you would have not thought possible what we have already done."
For a carrier struggling to attract financing to exit bankruptcy, talk of buying out competitors may seem audacious.
But for an industry in such peril, all kinds of different approaches are being broached.
Still, analysts such as Jamie Baker with the conference's host, J.P. Morgan, questioned whether the industry's problems would be solved through mergers.
He argued that previous deals haven't lowered costs or eliminated excess capacity.
And United's previous attempt at buying US Airways Inc. in 2000 was a "massive distraction."
Federal regulators nixed that effort because of antitrust concerns.
Arpey's take
Many barriers remain to airline mergers, according to other industry executives, including Gerard Arpey, chairman and CEO of American Airlines Inc.
"Given what [the] industry has been through since 9-11, there is very little balance sheet strength left, and it takes a lot of money to successfully integrate two complex, large organizations," he said.
"I think you could argue that the government barrier [to airline mergers] might be lower, but I think the financial barrier might be higher."
American was the last major carrier to merge with another airline, buying the assets of bankrupt Trans World Airlines Inc. in 2001 in a move that has paid few dividends in a deep industrywide slump.
"I can definitely comment to you that it's real hard," he added.
Still, regulatory hurdles may be lower because of the rise of low-cost, low-fare carriers, which have stripped traditional network carriers of their pricing power, Mr. Tilton said.
Union concerns
The bigger problem has been blending labor unions together, which causes fierce seniority wars and savages morale.
With United poised to terminate all its pension plans, unions are becoming "more and more aware of the realities" of the industry's dire economics, Mr. Tilton said.
Analysts agree unions have lost their ability to dictate wages and working conditions.
"We think unions must acknowledge that there aren't any more golden eggs to squeeze out of the airlines," said Ray Neidl of Calyon Securities in a recent research report.
The last obstacle, integrating different computer systems, facilities and aircraft fleets, "is just work," said Mr. Tilton, whose background is in the oil industry.
"I think there are synergies to be had."
With six large hub carriers fighting fast-growing low-cost competitors, the industry will remain drenched in overcapacity for years to come with no clear way to get planes out of the sky.
The largest carriers are expected to lose more than $1 billion this year despite record demand for air travel.
Even top dog Southwest Airlines Co. has felt the pain of too many seats.
Its average fares fell 5 percent in January compared with last year, chief financial officer Laura Wright said at the conference.
Southwest's rivals will add an average of 10 percent more capacity on competitive routes this year, she said.
"There's just a tremendous amount of seats in the market," she said.
That's not stopping Southwest from increasing its schedule by 10 percent in 2005 compared with 2004. It's increasing its fleet by 29 new planes.
ATA alliance
Southwest has taken its first consolidation-type step since it acquired Morris Air in 1993, buying six gates from bankrupt ATA Airlines Inc. at Chicago's Midway Airport.
The two carriers entered into an alliance, selling seats on each other's planes out of Midway, and the setup is working as planned, Ms. Wright said.
The arrangement should create $25 million to $50 million in extra revenue for the carrier, which had $6.5 billion in total sales in 2004.
Some executives say that if consolidation comes anywhere among airlines, it is likely to start first among the smaller, low-cost carriers such as struggling ATA.
America West Airlines Inc. chairman and chief executive Doug Parker speculated last week that mergers were likely, and several other low-cost carriers aren't profitable or are just barely making money with oil prices near $50 a barrel.
Said Mr. Tilton: "Somebody's going to aggregate the industry."
E-mail [email protected]
IT'S ALL UP IN THE AIR
Who might United Airlines might want to acquire?
US Airways: Got left at the altar with United in 2001; networks fit well together
Delta Air Lines: Probably too big to pass antitrust muster but would pose the fewest union hurdles.
Northwest Airlines: Stubbornly independent and has Asian routes that overlap a lot with United's. A bad match for airport hubs.
Continental Airlines: Great brand and strong hubs, but weakening balance sheet may force some tough decisions.
American Airlines: As unlikely as great airline coffee.
Southwest Airlines: In United's dreams. Southwest could buy several Uniteds with its current bankroll.
What exactly is your point of bringing up a thread from 2005???? Was there some kind of announcement??
Last edited by contrail67; 12-30-2009 at 03:29 AM. Reason: none
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