United Airlines United Airlines and Continental Airlines, Continental Airlines) after the merger, will become the world's largest airline. The shareholders of the two companies had been the loss of years to blow to the numbness, heard the news, perhaps they finally have to recover some consciousness. Indeed, news of the merger was announced, United Airlines and Continental Airlines shares Monday both rose more than 2%, however, the merger case doesn't seem so exciting, the profit outlook is also quite worrying.
Yes, in order to obtain sustained profitability, airlines and even the entire aviation industry are in urgent need of integration. However, the merger of the two companies in the case, the financial situation is grim, bond rating poorly, the history of profitability is also problematic, so its merger is difficult to make investors excited.
Robert Poole, Robert Poole) is no party funds will be the reason foundation, a director of transportation policy, he said: "if in 20 years ago, such a large scale of M & A is certainly impressive, but today the situation has been different. Good days for the airline are over.."
We can borrow from a group of figures to illustrate the problem: according to Monday's closing price, after a merger of two airlines, the market value of about $8 billion, equivalent to only 3% of Apple's (AAPL). In the past 10 years, the loss of the global aviation industry as high as $50000000000. If the metaphor of industry of aviation of a staggering walk lame, then m for him, just put a crutch for a deputy for the of bale, the road to a little easier, but did not cure the foot suffers from.
What is the US Justice Department?
In 2008, the George W. Bush administration has approved the airline (Delta Airlines) and Northwest Airlines (Northwest Airlines) with. And in view of the current problems of aviation industry heavy, it is difficult for us to imagine, the Obama government under the leadership of the United States Department of Justice (Justice Department) will be on the M & a filibuster, although the Obama administration always tend to protect the interests of workers and consumers.
And the reason behind this is not because the two airlines has less overlapping routes. In fact, according to the data provided by the planestats (Wyman Oliver), the company's, in the third quarter of 2009, the two companies have a total of seven routes overlap. In the current industry structure, cutting capacity is very difficult, so the market concentration should improve.
Between 2007 and 2009, the global air transport capacity has been reduced by 8%, but it is still not enough to offset the slump caused by the sharp drop in demand. Even if the airline has a lot of spare aircraft parked to the desert, but the traffic data, the Bureau of Transportation Statistics) figures show that over the same period ticket prices still fell by an average of about 8%. Vaughn Cordell (Vaughn Cordle) is located in Washington, D.C. air (airline forecasts), an aviation analyst forecast, he said: "Airlines complete loss of pricing power."
Marriage of convenience
Then this mega merger, do not shake the aviation industry, to help airlines by raising ticket prices (and not charge ridiculous fees) out of the woods? To know that reducing the number of seats may not have much effect, but to cut some flights, the situation is quite different.
However, things are not entirely so. First, the airline's merger and acquisition is a tricky name. For example, American airline (US Airways) and American West Airlines (America West) early in 2005 has been consolidated, but two companies of the pilots still qualifications to argue endlessly.
In addition, United Airlines and Continental Airlines after the merger, also won't have too much sway. Ten years ago, several large airlines controlled 80% of the market, but it is expected that this year by the end of the year will be only 50%, and Kedl believes that the day is not far from 40%. So, integration does not mean that more powerful, just a survival.
According to the forecast of the Cordell, due to rising oil prices, airport facilities use fee and security costs rise, and the impact of the strike, if not the merger, the five established airlines -- Delta and Northwest Airlines, American Airlines, United Airlines, Continental Airlines and the United States aviation, to 2014 will face up to $200 billion in additional costs. Kedl said, with united with Continental Airlines, the five airlines a total additional cost saving $3000000000.
In fact, even low-cost airline JetBlue (Blue Airlines) also welcomed the express. Nimble blue aviation director Virginia Gabe (Virginia Gambale was) said that at present aviation industry fragile and unpredictable situation, very difficult for long-term planning, so JetBlue glad to see the merger. She said: the uncertainty caused by low efficiency. And after the reduction of competitors, we are more prone to strategic decisions."
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