United Airlines and US Airways are reportedly discussing a merger, part of a longer consolidation trend in a troubled industry. Delta and Northwest effected their own merger back in fall of 2008. United and US Airways have been in talks before, but the deal has never quite come through. Could it work out this time, and if so, would it do some good?
- A Big Party of Awful At Business Insider, Vince Veneziani commends commentator and analyst Dennis Gartman on his points, which he reports as follows: "These are the two worst airlines in the world, Their services are uniquely bad, Their employees are uniquely surly, Their on-time and baggage services grades appalling, Their customer services reps uncommonly unhelpful." Veneziani adds his voice to Gartman's: "Two wrongs do not make a right."
If US Air and United merger, it is likely that American, Delta, and Continental will look for partners. The economy is still bad and the temptation to drive down costs too great, even if it is at the expense of customer service.
- US Airways 'Needs United,' explains The Wall Street Journal's Michael Corkery. While the merger would also help United "to tap U.S. Airway's east coast markets where United lacks a strong domestic presence," it's United that's the more successful company right now.
- A Possible Sticking Point Corkery describes the negotiations as "the on-again, off-again merger dance" between the two companies. In his analysis for Daily Finance, Sam Gustin picks out one factor that could turn the deal off again: US Airways has "two separate sets of pilot's contracts" left over from their old merger with America West. He talks with independent airline analyst Robert Mann about why that's a problem, and reports Mann's response:
"In this case, a merger would trigger provisions that would mean United would have to have all of its pilots fly at the 2003 US Airways rates that put that airline into bankruptcy twice." The issue, he says, is insurmountable under the current leadership.