United Chief Executive Officer Glenn Tilton, who reportedly has hired an investment bank to explore strategic options, has spoken for nearly two years about the need for consolidation in the airline industry.
Tilton also has made no secret of his desire to see United take part in that movement. He has major-merger experience. Before becoming United’s CEO in 2002, Tilton was Texaco’s chief executive shortly before that company merged with Chevron.
Credit Sights analyst Roger King wrote in a report issued today that if anyone takes over Delta Air Lines, bet on United.
The airline “is the perfect merger companion on paper, maximizing network synergies to create potentially the best airline in the world,” King wrote. “CEO Tilton has been on the merger warpath for a while, and Goldman Sachs is in place to help.”
“It would offer the Departments of Justice and Transportation with the opportunity to promote the welfare of the American airline industry,” King wrote.
We’ve been consistent in our position on consolidation in the airline industry, and nothing has changed,” United spokeswoman Jean Medina said in written statement today. “We believe in a level playing field for all and that the market should decide.
United Chief Financial Officer Jake Brace said during a presentation at the Citigroup Global Transportation Conference in New York today: It was not at all surprising to us, not because we had any advanced knowledge of it but because the industrial logic of mergers in the airline industry is so compelling.
We believe that mergers in the airline industry have significant synergies and we believe that the industry needs to consolidate. We’ve been a proponent of it and nothing that we’ve seen has changed our view and in fact it seems that the market today also recognizes that consolidation is a good thing for the industry, Brace said. We’re obviously going to do what we think makes sense for our company and we’ll be interested to see what happens with US Air and Delta.
United shares were trading up nearly 9 percent midday today.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or at kyamanouchi@denverpost.com .
