The financial burden of the ongoing coronavirus pandemic has impacted airlines of all sizes. Even larger carriers, such as US legacy airline United, have not been immune from the effects of the current crisis. However, despite this, rumors have surfaced that appear to suggest that, amidst the chaos of COVID-19, United may be planning to acquire another carrier.
Recent rumors
View From The Wing first reported yesterday that United is reportedly open to mergers and acquisitions (M&A). The news is said to have been delivered in a meeting by John Gebo, its Senior Vice President of Financial Planning.
UA: Listening to a meeting with John Gebo, UA open to M&A but nothing on the horizon right now, if an opportunity arises they could jump on it, either a whole airline or specific assets
— JonNYC (@xJonNYC) February 8, 2021
Rumors regarding these plans that have surfaced on social media suggest a degree of flexibility to United’s approach. Indeed, it is thought that the Chicago-based airline would be willing to acquire either certain assets, or an entire airline itself.
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In any case, it does not appear that any such deals will take place particularly imminently. This is perhaps unsurprising, given the current state of the airline industry. While there may be struggling airlines out there that are in a position to be acquired, United itself also has financial difficulties of its own to deal with in the short-term. Let’s examine these in greater detail.
Difficult times for United
What perhaps makes these rumors less credible is the financial difficulties that United has undergone in recent months. Of course, it is not unique in having made losses due to the coronavirus crisis. Nonetheless, it is worth examining how these have played out. Last month, the carrier made the headlines when it announced a $7.1 billion loss for 2020.
This included almost $1.9 billion in the fourth quarter alone. The pandemic’s financial hardships have also forced the Star Alliance founding member to lose personnel. Just before Christmas, it hinted that it would have to send staff on furlough once again in April. Then, in late-January, it notified as many as 14,000 staff that they could be affected by these furloughs.
The furloughs are not expected until April because of a $15 billion nationwide payroll support package that was passed in December. This is set to protect jobs until March, and it allowed United to recall 13,000 furloughed employees. Of the money United received, View From The Wing claims that it may only need to spend 10% to recall and pay its furloughed employees. As such, perhaps it will have some funding left over for an acquisition after all.
Growth through a previous merger
United is no stranger to expanding as a result of mergers and acquisitions. Perhaps the most high-profile of these occurred in 2012, when it merged and completed operational integration with Continental Airlines.
It had already completed its acquisition of the carrier two years previously. The merger saw United gain a huge number of aircraft. Indeed, as of September 2010, Continental’s fleet consisted of nearly 400 planes, and it also had almost 100 more on order. Years later, United now boasts the world’s third-largest airline fleet, thanks in part to this merger and acquisition.
Simple Flying contacted United for a statement, but did not receive a response by the time of publication. We will update this article with United’s comment if and when it arrives.
What do you make of United’s rumored plans to acquire another carrier? Let us know your thoughts in the comments.
