United Has Merger Delusions
The second biggest airline is by far the most puzzling.
Alone among the 10 largest carriers, United (UAUA) has neither placed a major aircraft order recently nor expressed any interest in doing so. Instead, it seems singularly focused on finding a merger partner. The search has led nowhere -- not surprisingly, given that airline mergers rarely succeed.
Meanwhile, United's financial performance has been, to quote Winston Churchill, "a riddle, wrapped in a mystery, inside an enigma." Since it emerged from bankruptcy in February 2006, United has ridden a financial roller coaster. Its fortunes decline one minute, as they did in the first quarter, then rise the next, as they did last week.
Although it operates an imposing global route system at a time when international routes far outperform domestic ones, United sometimes appears to be floundering. "No analyst out there can figure out why they are not doing a better job," said aviation consultant Robert Mann. "This ought to be a gold mine."Instead, United is viewed as having failed to get all it needed from a bankruptcy that consumed three years. By contrast, Delta (DAL) spent 20 months in bankruptcy, yet remade itself. And United is often compared to American (AMR), which has similar costs despite not entering bankruptcy at all. United CEO Glenn Tilton came to the airline business with an outsider's perspective. Before joining United in 2002, he spent 32 years at Texaco, overseeing a 2001 merger with Chevron. Now, after less than four years in an insular industry staffed largely by lifers who are in love with it, he sometimes seems to tell airlines what to do. To watch Brittany Umar's video take of this column, click here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV