16 April 2008

United + US Airways - not a good merger candidate

In all the hubbub about mergers, one of the key ones discussed is the United and US Airways. (US Scareways to its friends).

The numbers don't actually look too bad. If you run through the fleets and the attributes - you think its a good mix.

One small detail? The synergies between the carriers on fleet are actually largely all played out. WHAT????

Yes you did not see a misprint. One of the fallacies of the Alliance Game has been the issue of once the airlines are in place and reach a steady state in an Alliance then the value of the Alliance goes away. IE the synergies are a one time benefit.

Thus while individually the airlines would look to be a good combination (although Tilton's stuffed shirts wouldn't last too long and anyway he is OUTTA there), the longer term prognosis is that the synergies in revenue are not as attractive.

You have been warned.



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