Wednesday, June 13, 2007

United: still looking to merge

United Airlines CFO Jake Brace recently said that his airline is still looking for a merger partner. He recently said that there are still airlines that United could merge with, but that it isn't looking to do a hostile take-over. He said that "consolidation is not something that one company can do in isolation. 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." Evidently he was referring to the failed US Airways hostile takeover attempt of Delta.

Brace also said what United was looking for in a merger partner:

  • an airline with a strong Atlantic network (like Continental or Delta). This is one of United's weaker areas.
  • an airline with a southern hub (like Delta) so that it can increase its presence in the Caribbean and Latin America, which is its other main 'weaker area'.
  • an airline with a strong northeast presence (like Continental, US Airways, and to a lesser extent, Delta)
United has long called for increased consolidation within the industry, but hasn't really been specific in saying which airline would be a best fit. Both Continental and Delta have been rumored to be serious possibilities, and United actually contacted Delta back in 2005 about a merger. (Delta declined.) Delta seems, at this point, the most likely candidate - it has one of the strongest Atlantic networks, it has a southern hub (at Atlanta), and it has a pretty good northeast presence. Of course, other airlines are fair game, too - and until United management announces which airline it's interested in, we probably won't know for sure.

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