From: CHRIS STAPLEY <stapleyca@msn.com>
The Boyd Group AdvantageAviation Insight & Perspectives
Available Nowhere Else
____________Hot Flash - Monday, October 29, 2007Now, We Can Talk Mergers
United's Perfuming ItselfIt's about as subtle as a IED attack.United has clearly tossed itself onto the sale block. Not to mention the chopping block.They're apparently clearing the decks to make themselves an easy pick-up. They're talking about selling off parts to, in the B-school-ese they're paying dearly for, "unlock shareholder value." Not to mention shed stuff that might be duplicative in case somebody wanted to buy them.United appears to be transforming itself from an airline into an acquisition target. They've hired consultants to "review" spinning off their maintenance operations - translation: spin'em off as fast as possible. They're talking about selling off other parts of the company, too. Parts that once gone might make United more attractive. And with cash in the till, too.Then we have the CEO who was reported to have blurted out to an employee meeting that the choice is a combination of United with another carrier, or back into bankruptcy. Subtle, eh? A heck of a compliment to a management team that had the airline in Chapter 11 for three years.This presents a real challenge for the rest of the industry. Since UA is hell bent on selling itself, it's not out of the question that somebody will look at buying. That means that every airline out there has no choice but to sit down and accomplish a lot of "what-if" scenario planning regarding their strategic options.Buy United? Encourage a competitor to do so? Make a play for key parts? Plan a regulatory attack, with the intent of stripping key parts (like the Tokyo fifth-freedom rights) from a potential merger? Might the PBGC try to grab some of the spin-off cash? Might the Star Alliance be interested in doing something? Go after ORD slots? Lots of competitive options out there. One thing, at least at this point, seems to be certain. United's management really wants to sell.So while mergers are neither necessary nor inevitable, if United wants to sell itself, it's going to sell itself. And somebody - or somebodies - will end up buying all or pieces of the entity.Stand by for some really innovative competitive responses.
United's Perfuming ItselfIt's about as subtle as a IED attack.United has clearly tossed itself onto the sale block. Not to mention the chopping block.They're apparently clearing the decks to make themselves an easy pick-up. They're talking about selling off parts to, in the B-school-ese they're paying dearly for, "unlock shareholder value." Not to mention shed stuff that might be duplicative in case somebody wanted to buy them.United appears to be transforming itself from an airline into an acquisition target. They've hired consultants to "review" spinning off their maintenance operations - translation: spin'em off as fast as possible. They're talking about selling off other parts of the company, too. Parts that once gone might make United more attractive. And with cash in the till, too.Then we have the CEO who was reported to have blurted out to an employee meeting that the choice is a combination of United with another carrier, or back into bankruptcy. Subtle, eh? A heck of a compliment to a management team that had the airline in Chapter 11 for three years.This presents a real challenge for the rest of the industry. Since UA is hell bent on selling itself, it's not out of the question that somebody will look at buying. That means that every airline out there has no choice but to sit down and accomplish a lot of "what-if" scenario planning regarding their strategic options.Buy United? Encourage a competitor to do so? Make a play for key parts? Plan a regulatory attack, with the intent of stripping key parts (like the Tokyo fifth-freedom rights) from a potential merger? Might the PBGC try to grab some of the spin-off cash? Might the Star Alliance be interested in doing something? Go after ORD slots? Lots of competitive options out there. One thing, at least at this point, seems to be certain. United's management really wants to sell.So while mergers are neither necessary nor inevitable, if United wants to sell itself, it's going to sell itself. And somebody - or somebodies - will end up buying all or pieces of the entity.Stand by for some really innovative competitive responses.
Chris Stapley
