"Share The Market's View Merger Would Be Extremely Negative"

Even while many industry analysts believe a merger between United Airlines and US Airways is an inevitable certainty, the United chapter of the Air Line Pilots Association says they view such a merger as a truly lousy idea.

As ANN reported, just one week ago many assumed United was close to a merger with Continental Airlines... but that Houston-based airline put an end to such talk on April 27, when Continental announced it planned to continue as an independent carrier, or as part of a strengthened, non-merger alliance with other airlines.

Apparently eager -- some would say desperate -- to merge with, well, anyone interested, United immediately reopened what had been preliminary talks with US Airways about combining operations. Those talks appear to be in high gear... and a merger announcement could come within the next couple weeks.

That would be a horrendously bad idea, says Captain Steve Wallach, Chairman of the United Master Executive Council of ALPA. While United isn't exactly known as a shining beacon of operational efficiency, or positive management/labor relations... Wallach says US Airways is even worse.

"Continental Airlines' abandonment of merger discussions has produced intense media speculation that United Airlines is in final merger negotiations with US Airways. This speculation has created enormous concern among the pilots of United.

"United pilots share the market's view that a merger with US Airways would be extremely negative from United's perspective," Wallach added. "While United has its own problems and issues -- mostly created by management's single-minded focus since bankruptcy exit on consolidation as opposed to the basic 'blocking and tackling' required to run a successful airline -- US Airways' problems run even deeper."

ALPA notes US Airways "significantly" trails other legacy carriers in generating cash flow, and consistently ranks at or near the very bottom of most customer satisfaction indexes.

"Much of this is a result of US Airways' inability to achieve operational integration despite the fact that more than two and one-half years have elapsed since its merger with America West," Wallach said. "Continued difficulties associated with pilot seniority integration are well chronicled. Even those reports grossly underestimate the complexity of seniority integration, which likely will not be solved without years of litigation.

"US Airways' pilot integration problems have created a toxic stew, as any carrier that seeks to merge with it will quickly discover and one which in the current environment could imperil a United/US Airways combined enterprise."

Wallach recommends United "should take a page from Continental, and turn its attention inward. United is the only carrier in the industry with no aircraft on order or optioned. That is not a long-term plan for survival. While United's labor costs are among the lowest in the industry, its other costs excluding fuel and labor are among the highest, year over year.

"The United pilots have always been proactive in seeking creative solutions to problems. We have repeatedly demonstrated our ability to make the airline fly, despite management's missteps. However, we do not view a marriage with US Airways as anything remotely resembling a solution."

FMI: www.united.com, www.alpa.org, www.usairlinepilots.org, www.awappa.org