United-US Airways Merger: Who does it benefit?
May 28, 2008 · Print This Article
The on-again, off-again merger talks between United Airlines and US AIrways are, for now, off again. But if the two airlines do decide to merge their businesses together, who will reap the benefits?
On April 15, 2008, Delta and Northwest Airlines announced they reached an agreement to merge the two companies. The deal, if approved, will create the world’s biggest airlines.
Industry experts have speculated that this move would trigger a slew of consolidations and would dramatically shake up the airline industry in the U.S. United and Continental were said to be near finalizing a consolidation plan, when Continental abruptly announced that it has abandoned merger talks. It has been speculated that Continental’s move came after United’s parent company announced a $537 million loss during the first quarter of 2008 .
Undeterred, United was said to be in merger talks with US Airways, according to numerous news reports. Both airlines’ CEOs have long been advocates for airline consolidations. Following news of the Delta-Northwest merger, United’s CEO Glenn Tilton said in a statement that consolidation is “but one of the changes necessary to achieve sustained profitability.”
A merger may indeed be profitable for United Airlines executives, but airline passengers and airline workers have real reason for concern. Many industry experts have speculated that consolidations will bring on higher fares, reduced flights, and more crowded airports .
According to a Chicago Business News report, the five highest-paid executives at United would receive $13.3 million, mostly in stock, if United’s merger with another airline results in the other airline in control of the combined company. Those five executives would get another $17 million if they leave following a merger. That’s a total of $30.5 million for 5 people.
Tilton alone would get $6.6 million if he stayed on after a merger deal, or $12.8 million if he left within two years after a merger. This is in addition to what he and the other executives can earn from selling their stock. All together, they hold 666,850 shares, valued at about $20 million.
While other airlines have similar severance structures, compensation for United’s top executives are above the norm. Douglas Steenland, who is the CEO of Northwest and expected to be replaced post-merger, as Delta’s Richard Anderson will be the CEO of the new airline, will receive a total severance of $5.7 million in addition to his shares of stock.
ON THE 30TH OF AUGUST WE HAD A FLIGHT OUT OF WACO TEXAS. WE ARRIVE IN WACO AND WENT TO GET ON THE FLIGHT. WAS SEATED AND EVERYONE WAS GETTING READY FOR TAKE OFF AND THE PILOT WENT A LITTLE WAYS AND COME ACROSS THE SPEAKER AND SAID WE WILL BE GOING BACK TO THE TERMINAL, WE HAVE ENGINE PROBLEMS. THEN WE WENT BACK TO THE TERMINAL AND WE WERE TOLD THEIR WOULNOT BE ANOTHER FLIGHT TO DALLAS ON SATURDAY THE 30TH OF AUG. WE WERE GIVEN ALTERNATIVES WE COULD BE BUSED TO DALLAS AND STILL MISS OUR FLIGHT OR WE COULD STAY IN WACO AT OUR EXPENSE AND LEAVE ON SUNDAY SO, ENDED UP STAYING IN WACO RENTING A CAR AGAIN AND GETTING A HOTEL EXPENSES OF ABOUT 200.00 HUNDRED EXTRA DOLLARS WE HAD NO CLUE WE WOULD HAVE TO PUT OUT, THEN WE DID GET A FLIGHT ON SUNDAY FINALLY ARRIVED IN DALLAS, AND WE DID GET A FLIGHT OUT OF DALLAS AND THAT PLANE HAD PROBLEMS WE HAD TO GET OFF OT AND WE WERE OVER 2RS LATE GETTING INTO LOUISVILLE. I WILL SAY AMERICAN AIRLINES WILL NOT HAVE ANY OF MY BUSSINESS AGAIN, THEY OFFER ANY BETTER SERVICE THEN THAT THEY NEED TO BE OUT OF BUSSINESS. SERVICE WAS HORRIBLE. THANKS
ON THE 30TH OF AUGUST WE HAD A FLIGHT OUT OF WACO TEXAS. WE ARRIVE IN WACO AND WENT TO GET ON THE FLIGHT. WAS SEATED AND EVERYONE WAS GETTING READY FOR TAKE OFF AND THE PILOT WENT A LITTLE WAYS AND COME ACROSS THE SPEAKER AND SAID WE WILL BE GOING BACK TO THE TERMINAL, WE HAVE ENGINE PROBLEMS. THEN WE WENT BACK TO THE TERMINAL AND WE WERE TOLD THEIR WOULN’T BE ANOTHER FLIGHT TO DALLAS ON SATURDAY THE 30TH OF AUG. WE WERE GIVEN ALTERNATIVES WE COULD BE BUSED TO DALLAS AND STILL MISS OUR FLIGHT OR WE COULD STAY IN WACO AT OUR EXPENSE AND LEAVE ON SUNDAY SO, ENDED UP STAYING IN WACO RENTING A CAR AGAIN AND GETTING A HOTEL EXPENSES OF ABOUT 200.00 HUNDRED EXTRA DOLLARS WE HAD NO CLUE WE WOULD HAVE TO PUT OUT, THEN WE DID GET A FLIGHT ON SUNDAY FINALLY ARRIVED IN DALLAS, AND WE DID GET A FLIGHT OUT OF DALLAS AND THAT PLANE HAD PROBLEMS WE HAD TO GET OFF OF THAT PLANE AND WE WERE HELD OVER 1RS LATE GETTING INTO LOUISVILLE. I WILL SAY AMERICAN AIRLINES WILL NOT HAVE ANY OF MY BUSSINESS AGAIN, THEY OFFER ANY BETTER SERVICE THEN THAT THEY NEED TO BE OUT OF BUSSINESS. SERVICE WAS HORRIBLE. THANKS