United In 3-Way Deal?

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USA TODAY

April 19, 2010 Monday
FIRST EDITION

MONEY; Pg. 6B

601 words


Is United seeking three-way deal with US Airways and Continental?;
Merger would face antitrust obstacles

Dan Reed


United Airlines' talks with US Airways and Continental Airlines could result in more than just a simple merger of two big airlines.

Some analysts suspect that United is trying to put together a complex three-way deal that, in effect, would create a global aviation leader almost 50% larger than current No. 1 Delta.

To pull that off, United -- which is already a Star alliance partner with both airlines -- would have to convince antitrust regulators and Congress that such a large and unprecedented combination of carriers wouldn't reduce flight options and lead to higher fares. They'll also have to win the support of labor unions.

"United's 'Plan A' all along has been to do a merger with US Airways and keep Continental as their alliance partner with antitrust immunity," says independent analyst Hubert Horan. An executive at Northwest Airlines in the 1990s, Horan helped build the first international airline alliance, with KLM.

The current alliance between United and Continental allows them to divvy up international routes to fly and jointly set fares on those routes.

United's alliance with US Airways, because it does not have antitrust immunity, is mainly promotional.

The size of the combined airlines and significant overlap among the markets they serve could make it hard to get any deal approved by antitrust regulators.

United/US Airways would dominate the Washington, D.C., market. And the three airlines together would have unmatched strength in the Northeast -- with hubs in New York, Philadelphia, Washington and Charlotte. Over time, the airlines might squeeze out competition and drive up average fares in the region and to and from Europe.

Rivals, including Delta and American, would likely fight such a mega-combination.

But Horan argues that by using "the same legal language and concepts already used to justify all the other (airline) alliances that have been given antitrust immunity, you could justify allowing Continental to continue to have antitrust immunity with a larger, merged United."

A merged United and US Airways would rank as the second-largest U.S. airline, behind Delta, in passenger miles flown. Delta reported 163.7 billion passenger miles flown in 2009 by itself, and 188.9 billion including its regional airline partners.

United and US Airways combined flew 158.4 billion passenger miles last year. And if the miles flown on their regional partners are included, they combined to fly 209.2 billion passenger miles, 20 billion more than Delta and its regional partners.

Meanwhile, Continental flew 79.8 billion passenger miles last year, 89.1 billion counting those flown on its regional partners.

The carriers also would have to persuade unions to accept a deal that some don't appear to favor. Wendy Morse, head of the Air Line Pilots Association at United, said last week that her pilots prefer merging with Continental. Other unions at United also are leery of a US Airways merger.

Analyst Vaughn Cordle at AirlineForecasts.com, says labor's support for a merger can be "bought" by using a combination of big pay raises in the 10% range and shares in the merged airline.

Convincing United's and Continental's shareholders and employees that a United-US Airways merger is the better approach won't be easy. A merger with Continental creates more value, Cordle says.

Horan sees it differently.

"In 2008, Continental decided it was better to get 85% of the benefits of merger by joining in a partnership with United ... (than to) deal with all the labor issues and fleet issues and integration issues that would have come with" a full merger, he says. "Nothing's changed."


April 19, 2010

United Airlines At Center of Potential Merger Hookups

(Reuters) — United Airlines is now in separate merger talks with Continental Airlines Inc. and US Airways Group Inc. for the second time in two years as carriers feel pressure to further cut capacity, build revenue and accelerate the industry's recovery.

Word of potential consolidation, confirmed by a source familiar with the matter, has pushed the shares of U.S. airlines higher.

Many Wall Street analysts have responded positively to the prospect of a deal, especially between United, a unit of UAL Corp.and Continental.

Baggage Bind: How Fees Are Affecting Carry-on Luggage

Southwest Airline passenger Robin Bonner, of Solon, Ohio, places her luggage into the overhead compartment on a flight from Midway Airport in Chicago to Cleveland, Ohio, April 2, 2010. (Chris Sweda/Chicago Tribune/MCT)

By Julie Johnsson
Chicago Tribune

Posted: 04/18/2010 12:01:00 AM PDT

Every airline passenger is entitled to overhead space, right?

Wrong. On a typical domestic flight, six passengers share luggage bins that fit four wheelie bags, at most, leaving some fliers out of luck at a time when more opt to lug their bags, rather than check them, to avoid airline fees.

More passengers also are competing for that space because planes are again filled to near-record levels, the result of carriers' capacity cuts and a rebound from last year's recession.

Unite - The Union For Life

With over two million members, Unite is the UK's largest trade union covering every industrial, occupational and professional sector of the economy. Here you will find information about what Unite is doing in each sector.

Unite is the union that represents the British Airways cabin crew, among others.

Eruption's Disruption of Air Traffic Deepens Across Europe

AP – A car is seen driving through the ash from the volcano eruption under the Eyjafjallajokull glacier


By Anthony Faiola and Karla Adam
Washington Post Foreign Service
Saturday, April 17, 2010; 5:59 AM

LONDON -- The global bottleneck in air travel from a spectacular volcanic cloud emanating from Iceland deepened Saturday as nations as far south as Italy were forced to shut down airports and others, including Britain, extended closures into Sunday.

First Coast Educators, Parents Applaud Gov. Crist's Veto of Senate Bill 6

Florida Gov Charlie Crist

Posted: April 15, 2010 - 12:38pm

By Topher Sanders
Educators, parents and school leaders celebrated Thursday after Gov. Charlie Crist’s veto of Senate Bill 6, the much-talked-about teacher pay reform bill.

Annette Worthen, president of the Duval County Council PTAs, said Crist’s veto was an example of the power of citizens’ voices on important issues.

“The governor listened to the parents, teachers and superintendents and didn’t put this burden on the backs of the children of Florida,” Worthen said.

Federal Reserve Bank of Atlanta CEO on State of Economy

Submitted by Abel Harding on April 15, 2010 - 3:16pm

Abel Harding

Dennis P. Lockart, the president and CEO of the Federal Reserve Bank of Atlanta, delivered a speech on the state of the economy at the Pensacola Surburban West Rotary Club earlier today.

In it, he discussed several key issues, including the state of the current recovery, the housing crisis and concerns about the commercial real estate sector.

I'm posting his remarks in their entirety - they're well worth the read.

Jacksonville Unemployment Rate Falls for First Time in 18 Months, But Remains High

Posted: April 16, 2010 - 10:36am

By Mark Basch

Jacksonville's unemployment rate fell in March for the first time in 18 months, the Florida Agency for Workforce Innovation reported today. But the jobless rate remains extremely high.

The unemployment rate for the Jacksonville metropolitan area - consisting of Duval, Baker, Clay, Nassau and St. Johns counties - fell from 12.2 percent in February to 11.9 percent in March, the state labor agency said. That was the first monthly drop in the rate since it fell by 0.2-percentage points to 6.4 percent in September 2008. The jobless rate had been rising steadily since then.

The 10 Most Common Travel Booking Mistakes

If you're planning to travel during a busy time like Presidents' Day week in Orlando book well in advance for the best prices and availability. (AP FILE PHOTO)

USA TODAY • April 16, 2010

If you're a long-time reader of SmarterTravel, you may consider yourself an old pro when it comes to booking airfare, hotels, and rental cars. But even the savviest of travelers can always use a refresher course, especially in light of travel's new realities—fees aplenty, confusing regulations, and endless fine print. Read on to see the 10 most common travel booking mistakes, and how to avoid them.

On Main Street, Wall Street's Big Profits Seem Like Bad Manners

By Tomoeh Murakami Tse
Washington Post Staff Writer
Friday, April 16, 2010; 9:43 AM

NEW YORK -- Any other year, blockbuster earnings would be something to brag about.

But this is a precarious moment for Wall Street, as Congress buckles down on its efforts to pass a financial regulatory bill that could erase billions from the bottom lines of big banks.

"It's got to be mixed emotions -- like your teenage daughter coming home at 3 a.m. with the Gideon Bible," said A. Gary Shilling, former chief economist at Merrill Lynch and president of an investment management and economic consulting firm.