roadwarrior
06-13-2007, 11:23 PM
United's CFO says merger still a goal
By DAVE CARPENTER
AP BUSINESS WRITER
CHICAGO -- United Airlines remains interested in industry consolidation and would like to team up with a U.S. carrier with a strong presence in the Northeast and a hub in the South, its chief financial officer said Wednesday.
Jake Brace told analysts there are candidates for such a merger but indicated United has no intention of attempting a hostile takeover, citing the recent failed bid by US Airways Group Inc. to acquire Delta Air Lines Inc.
"Consolidation is not something that one company can do in isolation," he said at the Merrill Lynch Global Transportation Conference in New York. "We don't believe that ... hostiles in the airline industry are very successful. Our belief is that you have to do something on a consensual basis."
United, a unit of Chicago-based UAL Corp., publicly began touting the need for industry consolidation even before ending a three-year bankruptcy restructuring last year. But the nation's second-largest carrier has taken a lower profile on the subject in recent months with conditions less ripe for a merger.
Not only are U.S. airlines financially more stable than in recent years, both Delta and Northwest Airlines Corp. completed their restructurings this spring, thus eliminating rivals' ability to acquire them in bankruptcy and slash costs more readily in court.
Brace rejected a suggestion that United has downgraded consolidation as a priority and shed some light on what it has in mind if it can find a willing merger partner. He said it would like to combine with another airline that is strong in the Atlantic and needs a southern-tier hub to strengthen its service to the Caribbean and Latin America, where it has a smaller presence than other U.S. airlines.
"Our focus is on the Northeast, a southern-tier hub and helping us in Latin America," he said.
Delta, US Airways and Continental Airlines Inc. all have been mentioned as possible merger partners for United, although Brace didn't name names.
Airline consultant Robert Mann said Delta is the likeliest candidate, with strengths in both areas.
"If you're just taking the (Brace) hints, you'd say Delta," said Mann, who is based in Port Washington, N.Y.
"He's basically saying the same thing that (CEO Glenn) Tilton's been saying for a long time, which is 'Please, someone write us a big check.'"
Tilton and other advocates of consolidation say the industry would be financially stronger and more efficient by a merger that would eliminate excess capacity and help boost fares and revenue.
Delta CEO Gerald Grinstein disclosed last October that United had contacted the Atlanta-based airline about a possible merger in 2005, which Delta rejected. United also hired Goldman Sachs & Co. last year to explore strategic options.
Shares in UAL Corp. rose 43 cents to $35.03 Wednesday, down from $44 at the start of the year.
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On the Net:
http://www.united.com
By DAVE CARPENTER
AP BUSINESS WRITER
CHICAGO -- United Airlines remains interested in industry consolidation and would like to team up with a U.S. carrier with a strong presence in the Northeast and a hub in the South, its chief financial officer said Wednesday.
Jake Brace told analysts there are candidates for such a merger but indicated United has no intention of attempting a hostile takeover, citing the recent failed bid by US Airways Group Inc. to acquire Delta Air Lines Inc.
"Consolidation is not something that one company can do in isolation," he said at the Merrill Lynch Global Transportation Conference in New York. "We don't believe that ... hostiles in the airline industry are very successful. Our belief is that you have to do something on a consensual basis."
United, a unit of Chicago-based UAL Corp., publicly began touting the need for industry consolidation even before ending a three-year bankruptcy restructuring last year. But the nation's second-largest carrier has taken a lower profile on the subject in recent months with conditions less ripe for a merger.
Not only are U.S. airlines financially more stable than in recent years, both Delta and Northwest Airlines Corp. completed their restructurings this spring, thus eliminating rivals' ability to acquire them in bankruptcy and slash costs more readily in court.
Brace rejected a suggestion that United has downgraded consolidation as a priority and shed some light on what it has in mind if it can find a willing merger partner. He said it would like to combine with another airline that is strong in the Atlantic and needs a southern-tier hub to strengthen its service to the Caribbean and Latin America, where it has a smaller presence than other U.S. airlines.
"Our focus is on the Northeast, a southern-tier hub and helping us in Latin America," he said.
Delta, US Airways and Continental Airlines Inc. all have been mentioned as possible merger partners for United, although Brace didn't name names.
Airline consultant Robert Mann said Delta is the likeliest candidate, with strengths in both areas.
"If you're just taking the (Brace) hints, you'd say Delta," said Mann, who is based in Port Washington, N.Y.
"He's basically saying the same thing that (CEO Glenn) Tilton's been saying for a long time, which is 'Please, someone write us a big check.'"
Tilton and other advocates of consolidation say the industry would be financially stronger and more efficient by a merger that would eliminate excess capacity and help boost fares and revenue.
Delta CEO Gerald Grinstein disclosed last October that United had contacted the Atlanta-based airline about a possible merger in 2005, which Delta rejected. United also hired Goldman Sachs & Co. last year to explore strategic options.
Shares in UAL Corp. rose 43 cents to $35.03 Wednesday, down from $44 at the start of the year.
---
On the Net:
http://www.united.com
