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BA & AA: Full Blown Merger Possible?  
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Posted (8 years 8 months 3 days 4 hours ago) and read 7230 times:

OnLine Jamaica Observer? reports that Willie Walsh wants a closer alliance with AA under the proposed US-EU open skies deal.

Proposals include:

Co-ordinating all passenger/cargo between US-EU, leading to joint operations in some markets.

Joint sales and marketing, extensive code-sharing, and full reprocity between their FF programs.

Both airlines to retain their own identities, but their is talk of a combined brand for certain routes. Both want to operate as one entity across the Atlantic. This would see a BA flight operated with AA metal and onward within US.

Asked about a full merger, Walsh said "That is a completely different agenda. The first stage is to move to a closer relationship."

Industry observers place a value of £5Billion ($8.5B) on the merger, creating the largest passenger airline in history. While there are 30 airlines UK-US, there are 80 overall EU-US. And even although AA/BA marketshare UK-US is 60%, their EU-US marketshare is only 35%.

What a beauty if this did happen. Thing is, would the respective authorities allow it?

45 replies: All unread, showing first 25:
 
User currently offlineZone1 From United States of America, joined Jan 2005, 1035 posts, RR: 7
Reply 1, posted (8 years 8 months 3 days 4 hours ago) and read 7203 times:

I doubt it. If they can't get monopolistic immunity for an alliance, there is no way they could get approval for a merger. Further, a foreign company cannot own a US airline outright. I don't know if the UK has the same type of laws, though.


/// U N I T E D
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 2, posted (8 years 8 months 3 days 4 hours ago) and read 7180 times:

Quoting Zone1 (Reply 1):

I don't know if the UK has the same type of laws, though

There are no laws that I know of that would prevent foreign ownership of a UK airline. SQ owns 49% of VS and LH & SK own almost 50% of BD.

If this EU-US open skies deal does take-off (no pun), and the US does relax foreign ownership rules, then I don't see why it cannot happen. Of course, you will have your protesters, most notably VS, but on alliance terms, I would bet that STAR would have more marketshare transatlantic than BA/AA.


User currently offlineCentrair From Japan, joined Jan 2005, 3598 posts, RR: 20
Reply 3, posted (8 years 8 months 3 days 4 hours ago) and read 7166 times:

Quoting Scotron11 (Reply 2):
If this EU-US open skies deal does take-off (no pun), and the US does relax foreign ownership rules, then I don't see why it cannot happen.

Please let this happen. PLEASE!!!!!!!!!!
I would love to see KL/AF buy up more or a huge part of NW.

AA/BA would be awsome.



Yes...I am not a KIX fan. Let's Japanese Aviation!
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 38
Reply 4, posted (8 years 8 months 3 days 3 hours ago) and read 7128 times:

Quoting Scotron11 (Reply 2):
If this EU-US open skies deal does take-off (no pun), and the US does relax foreign ownership rules, then I don't see why it cannot happen. Of course, you will have your protesters, most notably VS, but on alliance terms, I would bet that STAR would have more marketshare transatlantic than BA/AA.

If you are talking about alliances, why would you not include the other European One World members?

I think the key thing is the importance of US-UK traffic. I just don't see BA/AA deals being approved as long as they have such a commanding position in this important market.

Quoting Centrair (Reply 3):
I would love to see KL/AF buy up more or a huge part of NW.

Wouldn't the Japanese government have something to say about this? I would imagine it would given NW's privileged position in Japan.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 5, posted (8 years 8 months 3 days 3 hours ago) and read 7103 times:

Oh dear! Once Sir Bearded hears of this, something big will hit the fan at the VS Headquarters! No doubt VS will again bring out their slogan 'No Way BA/AA'. Perhaps BA should respond 'VS/SQ so why not BA/AA?'

 duck 



MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
User currently offlineBackfire From Germany, joined Oct 2006, 0 posts, RR: 0
Reply 6, posted (8 years 8 months 3 days 3 hours ago) and read 7067 times:

Jamaica appears a little behind the times...these comments from Walsh were reported weeks ago.


There are too many obstacles to a BA/AA merger. The EU competition authorities and the US DOJ would require a complete stripdown of their operation, at least until the London Heathrow access issue is resolved.

Besides - who would own the merged company? BA can't be seen to be in control of a US carrier, because of the ownership restrictions, and AA ownership of a merged entity won't sit well with BA (or anyone else, I'd have thought...)


User currently offlineTrvlr From United States of America, joined Feb 2000, 4430 posts, RR: 21
Reply 7, posted (8 years 8 months 3 days 2 hours ago) and read 6996 times:

This is almost exactly what Northwest and KLM have done for years in the transatlantic market.

Hopefully the new agreement will lead to a restructuring of airline ops at Heathrow and catalyze a closer association between AA and BA. With every other major US and European airline involved in an antitrust-immune relationship, there's very little reason why AA and BA should not be allowed the same.

Aaron G.


User currently offlineQantasclub From Australia, joined Nov 2003, 757 posts, RR: 2
Reply 8, posted (8 years 8 months 3 days 2 hours ago) and read 6962 times:

Quoting Centrair (Reply 3):
AA/BA would be awsome

How would coupling BA with an airline that provides one of the lowest standards of inflight service be an awesome thing? I pray that this never EVER happens and that AA will eventually fold like it deserves to.



Long Haul is the only way to go
User currently offlineTrvlr From United States of America, joined Feb 2000, 4430 posts, RR: 21
Reply 9, posted (8 years 8 months 3 days 1 hour ago) and read 6930 times:

Quoting Qantasclub (Reply 8):
How would coupling BA with an airline that provides one of the lowest standards of inflight service be an awesome thing? I pray that this never EVER happens and that AA will eventually fold like it deserves to.

AA isn't going to fold, and furthermore it's not like BA has a better partner in the States. Which airline, in your opinion, would be better? Even if they weren't already taken, AA's slight service deficiencies compared to the likes of Continental are clearly made up for by network reach and financial stability. Also keep in mind that flatbed biz seats comparable to BA's (perhaps even after the latter's upgrade) will come online next year. Seat pitch is also not horrendous--especially compared to, say, Qantas's 744ERs (14 hours in those things is killer!)

However, more broadly I do agree with you--I'd much rather fly BA across the Atlantic than AA. Especially if they do SAN-LHR again post-787.

As a oneworld Sapphire, I'll certainly be glad when AA and BA link up.

Aaron G.


User currently offlineClassicLover From Ireland, joined Mar 2004, 4626 posts, RR: 23
Reply 10, posted (8 years 8 months 3 days 1 hour ago) and read 6892 times:

Quoting Qantasclub (Reply 8):
How would coupling BA with an airline that provides one of the lowest standards of inflight service be an awesome thing? I pray that this never EVER happens and that AA will eventually fold like it deserves to.

I don't see why it shouldn't. Everyone screams monopoly, but it's not like there aren't other airlines flying the Atlantic. If they were the only two, I could understand it, but they're not.

It would save them both a lot of money to do that, and if any aircraft are freed up, they can expand elsewhere in their networks.

Trent.



I do quite enjoy a spot of flying - more so when it's not in Economy!
User currently offlineBobnwa From United States of America, joined Dec 2000, 6443 posts, RR: 9
Reply 11, posted (8 years 8 months 3 days ago) and read 6827 times:

Quoting Centrair (Reply 3):
Please let this happen. PLEASE!!!!!!!!!!
I would love to see KL/AF buy up more or a huge part of NW.

KL/AF currently own zero part of Northwest and Northwest own zero part of KL/AF.


User currently offlineCommavia From United States of America, joined Apr 2005, 11411 posts, RR: 62
Reply 12, posted (8 years 8 months 2 days 22 hours ago) and read 6690 times:

I think that a "merger" in the way that most industry observers have come to know is unlikely. The two are almost certainly not going to merge into a single airline, with a single management team, a single fleet, a single name or logo, etc. What is, however, very likely is that if the two are finally given the freedom afforded by anti-trust immunity to work together closely, their level of cooperation is going to dramatically increase.

These two airlines are an excellent fit, linking together the world's largest air market, the United States, and the world's largest international airport, Heathrow, together into a single network that will effectively blanket the globe. If American and British Airways are finally freed to "merge," as some have suggested, it would undoubtebly create one of the most attractive networks on earth for customers, and bring about arguably the most powerful and influential airline network in the history of aviation, based around the north Atlantic.

I ultimately expect:

*an equity swap (each buys a stake in the other, seats on respective boards, etc.)
*joint pricing and marketing -- this one is key, they will be able to competitively price their product jointly, without huge fare differences
*scheduling coordination -- the two airlines will be able to discuss scheduling and ensure that their flights don't overlap
*back-office functions -- eventually, the two may combine some back-office functions to realize certain synergies, like fuel buying, joint procurement, etc.
*ground handling -- likely, if this deal goes through, one of the first changes would be that AA would immediately take over ground handling for all BA flights in North America, and likewise for AA in Europe with BA handling


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 13, posted (8 years 8 months 2 days 21 hours ago) and read 6631 times:

Quoting Commavia (Reply 12):

*back-office functions -- eventually, the two may combine some back-office functions to realize certain synergies, like fuel buying, joint procurement, etc.

Why not aircraft as well? Apart from the A320/321s, BA & AA are mostly Boeing, aren't they?

I remember flying on a GF L-1011 LHR-JFK when they had the code-share w/TWA. So why not the same with BA/AA? Get some 744s into AA without them having to "buy" them!


User currently offlineOzGlobal From France, joined Nov 2004, 2711 posts, RR: 4
Reply 14, posted (8 years 8 months 2 days 21 hours ago) and read 6600 times:

Quoting Trvlr (Reply 9):
AA's slight service deficiencies

ROFL, If you compare to Continential OK, but who's doing that. We mean compared to good airlines.

Quoting Trvlr (Reply 9):
Also keep in mind that flatbed biz seats comparable to BA's (perhaps even after the latter's upgrade) will come online next year. Seat pitch is also not horrendous--especially compared to, say, Qantas's 744ERs (14 hours in those things is killer!)

QF's old business class seat have disappeared and all been replaced by SkyBed, even, last of all, on trans-pacific, where they don't really try due to market dominance.

As far as I understand, AA's new 'lie flat' business seats are not horizontal flat beds like BA's current, soon to be superseded J class. AA's 'new' J will be pre-BA's soon to be 'old' J class....

If I flew AA transatlantic after buying a BA ticket, I'd demand a refund...



When all's said and done, there'll be more said than done.
User currently offlineODwyerPW From Mexico, joined Dec 2004, 840 posts, RR: 2
Reply 15, posted (8 years 8 months 2 days 18 hours ago) and read 6393 times:

Foreign ownership of airlines is a strange problem.

I live in Upstate New York. Do you know that a British Company (National Grid) owns the Power Generation at NIAGARA FALLS and most of the Power Distribution throughout Western and Upstate NY? They may even own and operate some of the Nuclear Plants along Lake Ontario.

Anyway, if the US would allow foreign ownership/domination of something as key as POWER GENERATION and TRANSPORT INFRASTRUCTURE in one of our Key States (no disrepect to those of you who live in the other 49), why are they concerned with air transportation. Oh wait, it has to do with National Security doesn't it? Sheesh.



Quiero una vida simple en Mexico. Nada mas.
User currently offlineKen777 From United States of America, joined Mar 2004, 8187 posts, RR: 8
Reply 16, posted (8 years 8 months 2 days 18 hours ago) and read 6343 times:

I don't see a full merger, but would be very happy to see anti-trust restrictions removed. Code sharing would be a critical issue for me as it would open up the market and give me more options.

As for back office options I would be all for that, but the problem in this area is that airlines speed far too much time developing new policies that restrict pax and there is more money to be saved by eliminating these policies than by combining the existing policies and restricting of two airlines.

There would probably be money saved by combining maintenance when possible (especially in the area of parts management), but there would be greater savings if the aircraft purchasing was at an alliance level when possible - such as a joint 787 purchase. The alliances have been rather poor about taking advantage of this potential.


User currently offlineVs25 From United Kingdom, joined Jun 2004, 66 posts, RR: 0
Reply 17, posted (8 years 8 months 2 days 18 hours ago) and read 6326 times:

There should be no reason (apart from a monopoly) to stop BA and AA merging and becoming 1 airline with all the benefits that would bring to the customer and to the shareholder. Foriegn ownership rules are market disorting. Why should airlines be singled out for protection and not other industries?

Lets go for BA/AA/Qantas - a truely global airline with an extensive network and vast economies of scale. A consistent product (eventually) across all the fleet.


User currently offlineTWAAF9 From United States of America, joined Nov 2004, 88 posts, RR: 0
Reply 18, posted (8 years 8 months 2 days 18 hours ago) and read 6287 times:

Quoting Qantasclub (Reply 8):
How would coupling BA with an airline that provides one of the lowest standards of inflight service be an awesome thing? I pray that this never EVER happens and that AA will eventually fold like it deserves to.

I don't understand how some always equate AA with poor service standards. I've flown them extensively (both as revenue and non-rev) across the US and over the Atlantic in all classes of service and have never found their product to be particularly lacking anything. Same for BA, UA, and VS.

Would AA's service be more palatable if the staff literally kissed your ass once onboard?



Ahh, the power of SABRE...
User currently offlineAJRfromSYR From United States of America, joined May 2005, 454 posts, RR: 0
Reply 19, posted (8 years 8 months 2 days 17 hours ago) and read 6259 times:

Quoting Qantasclub (Reply 8):
How would coupling BA with an airline that provides one of the lowest standards of inflight service be an awesome thing? I pray that this never EVER happens and that AA will eventually fold like it deserves to.

Never heard of DaimlerChrysler?



-AJR-
User currently offlineBmacleod From Canada, joined Aug 2001, 2242 posts, RR: 0
Reply 20, posted (8 years 8 months 2 days 17 hours ago) and read 6240 times:

I'd like to see a 744 in BA/AA colors....  sarcastic 

With an all-Boeing fleet (A300s being only exception), and the largest airline in the world, I always wondering why AA never even thought of ordering the 744.



The engine is the heart of an airplane, but the pilot is its soul.
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13509 posts, RR: 62
Reply 21, posted (8 years 8 months 2 days 16 hours ago) and read 6179 times:
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Quoting Bmacleod (Reply 20):
I always wondering why AA never even thought of ordering the 744.

Because it's too big for their needs. The 772 is a better fit for them.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 38
Reply 22, posted (8 years 8 months 2 days 15 hours ago) and read 5857 times:

Quoting Bmacleod (Reply 20):
I always wondering why AA never even thought of ordering the 744.

Because the US population is widely spread out and would object to being hurded a thousand miles or so into a very small number of mega-airports in order to fly to international destinations in jumbos. And because US authorities favored competition in the domestic market, there are not many large markets that could support a jumbo being that are dominated by a single carrier. If you can't dominate your market like an LH, AF or BA can, a jumbo is a big risk with its higher trip costs. Also, you don't need a jumbo if you can get enough slots at your prime international destinations and domestic hubs.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineMariner From New Zealand, joined Nov 2001, 24999 posts, RR: 85
Reply 23, posted (8 years 8 months 2 days 15 hours ago) and read 5789 times:
Support Airliners.net - become a First Class Member!

Quoting Atmx2000 (Reply 22):
If you can't dominate your market like an LH, AF or BA can, a jumbo is a big risk with its higher trip costs. Also, you don't need a jumbo if you can get enough slots at your prime international destinations and domestic hubs.

Then again, the US majors - following that business model - are all up the financial creek.

So maybe - just maybe - there is a better model than the one they have been following?

cheers

mariner



aeternum nauta
User currently offlineKanebear From United States of America, joined May 2002, 953 posts, RR: 1
Reply 24, posted (8 years 8 months 2 days 14 hours ago) and read 5571 times:

AA and BA want nothing more than the ability to do a full-on marketing lashup along the lines of NW/KL. Both NW and KL brand their J class as World Business Class, etc etc. They coordinate on routes, and so on. No reason whatsoever that BA/AA shouldn't be able to do this once the EU and US have open skies.

As for AA being a bad airline, they're not CX but they're quite good. The J product needs an overhaul desperately but it's getting one. As for AA going away, you should be wishing for the demise of ALL US carriers, since not a one is measurably better.


25 Atmx2000 : The US majors are up a financial creek because of an excessive focus on the domestic market with higher cost service that has led to them getting und
26 Post contains images Trvlr : Can you name a "good airline" that even comes close to the network reach of American, especially in the US market? Funny thing is, Chrysler's the one
27 Wdleiser : IF (I EMPHASIZE IF) AA and BA are allowed to have closer relations or even merge, do any of you think UA and LH should be allowed to merge or have clo
28 Trvlr : The thing is, NW/KL/AF/DL and UA/LH etc already have closer relations than AA/BA enjoy at the present time. The only real "advantage" the latter pair
29 Mariner : That may indeed be true. There is more to it, I think. I was thinking more of now, not then. I note that United (and other US majors) have said that
30 Qantasclub : That's because where you come from, it's pretty much the norm. You should fly domestically within Australia or fly long haul on SQ or CX. It's a diff
31 Atmx2000 : Yeah, the fact that the LCC model has taken off, combined with the fact some of these new carriers have a nicer product because they have new airplan
32 Post contains images Byrdluvs747 : I have said it before. I would protest on the steps of Congress to prevent the stingy British(Executive Club) from getting a hold of AAdvantage. BA =
33 Mariner : Snarky? I said: What is "snarky" about that? I thought it to be the simple truth. It isn't a criticism of the US. It may be a criticism of a system t
34 VV701 : There are now no British laws about airline ownership. However when BA was privatised there was a law that stated that foreign ownership of BA was li
35 Jetdeltamsy : I doubt this would ever happen. The British would almost certainly balk at having their flag carrier owned by a non-British entity. American Airlines
36 Atmx2000 : Yes, you said: Then you said: So maybe, just maybe that extra little "- just maybe -" set off my snark alarm. If my snark alarm is overly sensitive an
37 Bobnwa : They don't seem to mind that the Cunard line (QE2-QM2) are owned by Carnival Corp. an American company. Can't get much more British than those two sh
38 Concorde001 : I don't think we mind that much. For example, look at some these quintessential British companies and their ownership : Landrover is owned by Ford (A
39 Concorde001 : Shoud be Aston Martin!
40 Post contains images Atmx2000 : Yeah, and that most excellent British Secret Agent is played by a Canadian. You, know Austin Powers.
41 Thowman : I think if BA are going to merge with anyone, it is going to be IB. They already have a stake in IB and their routes complement eachother's very well.
42 Atmx2000 : Seems to be a logical outcome of merger mania in Europe. But perhaps they want to improve their financial situation before engage in such an endeavor
43 OzGlobal : Comparing US domestic market carriers is a different discussion. The thread is about AA/ BA and hence comparisons are on the international, not the d
44 AJRfromSYR : What are you trying to prove? You should fly on a BBJ, or a Golfstream, or a long haul on John Travolta's 707. It's a different world from where you
45 Jetdeltamsy : Yea, but BA is your flag carrier. Maybe the average guy on the street wouldn't mind, but politicians LOVE to involve themselves with the airline indu
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