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Merger: AA/Alaska Air Merger?  
User currently offlineCIDflyer From United States of America, joined Apr 2005, 2301 posts, RR: 3
Posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5887 times:

was just reading an article relating to the NW/DL talks, and in the article it hinted that AA may be forced to link up with Alaska if mergers start taking place. I know its been talked about here on the board, but this is the first I have actually seen anything mentioned about it in the media.

http://money.cnn.com/news/newsfeeds/...OWJONESDJONLINE000817_FORTUNE5.htm

Would an AA/Alaska tie up work out better than the Reno Air/AA merger? What would AA really gain out of this if it were to take place? Perhaps it would maybe work out since they would gain SEA as a large hub, and more of a west coast presence. SEA also could become a Pacific gateway for AA.

Thoughts on this?

23 replies: All unread, jump to last
 
User currently offlineCommavia From United States of America, joined Apr 2005, 11630 posts, RR: 61
Reply 1, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5842 times:

The media and others have been spreading this rumor for years now. It has been circulating for almost a decade.

The truth is that while I have no idea whether American and Alaska are talking about a merger (I doubt it), they would both be absolutely moronic to pursue it.

It would be Reno Air all over again. Back in 1998, when American bought Reno, they figure that while the costs would be much higher from brining Reno Air's operations up to AA's cost levels, that would be made up from the enormous revenue growth and synergies that would occur from combining Reno's intra-West Coast network with the global AA network. Problem is: it never happened. The cost went up, but the fares didn't.

You can't raise fares along the West Coast - it's just next to impossible, and there is no way you could ever raise fares enough to sustain American's current cost levels. Alaska and Horizon have survived and thrived up and down the West Coast because they have low costs and have focused on running an extremely efficient and organized operation (the Menzies/Seattle ramp episode aside).

If these two do want to pursue some sort of strategic relationship, the only way it could work would be for the two to apply for and receive antitrust immunity. I don't think they'd have too much trouble, as they have virtually no route overlap in either of their networks. Then, the two could essentially combine their networks together, but without actually merging the companies and bringing Alaska/Horizon's costs all the way up to AA's already-unsustainable levels. They could seek synergies and efficiencies from combining certain functions in certain places, like colocating in terminals where possible (although they actually already do this in lots of places), joint fuel purchasing, joint contracts, etc.

But as for a merger of American and Alaska: I say no way, it will never happen. And if it does, it will sadly mean the ultimate dismantlement of much of the Alaska/Horizon network - which is, once again, why I doubt it will ever happen.


User currently offlineANCFlyer From , joined Dec 1969, posts, RR:
Reply 2, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5840 times:

And this has been talked about over and over and over . . . why would AS commit suicide by joining AA?

Not happening.


User currently offlineTOLtommy From United States of America, joined Dec 2003, 3292 posts, RR: 4
Reply 3, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5832 times:

Besides that, AA pilots are in contract negotiations right now. You think HP/US has been ugly? Just imagine what would happen if AA went out and bought another airline right now.....

User currently offlineBahadir From United States of America, joined Oct 2001, 1790 posts, RR: 10
Reply 4, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5813 times:

I know CO/AS has been a rumor for so many years and I give that more chance than AA/AS.


Earthbound misfit I
User currently offlineBobnwa From United States of America, joined Dec 2000, 6471 posts, RR: 9
Reply 5, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5761 times:



Quoting ANCFlyer (Reply 2):
And this has been talked about over and over and over . . . why would AS commit suicide by joining AA?

Not happening.

It doesn't make any difference whether AS would like it or not. If another carrier say AA or CO wanted to up the AS shares on the stock market, they would own AS. That is how the stock market works.


User currently offlineStitch From United States of America, joined Jul 2005, 30988 posts, RR: 86
Reply 6, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5755 times:
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A major AS/QX strength is that they codeshare with AA, NW, CO and DL in the US and much of OneWorld and SkyTeam around the world.

If they merge with AA, in addition to seeing much of their network dismantled, they would lose significant amounts of both O&D and connecting traffic along the Western US and Alaska which is what has helped them survive as an independent corporate entity.


User currently offlineCALPSAFltSkeds From United States of America, joined Dec 2006, 2634 posts, RR: 9
Reply 7, posted (6 years 5 months 1 week 3 days 9 hours ago) and read 5744 times:



Quoting Commavia (Reply 1):
t would be Reno Air all over again. Back in 1998, when American bought Reno,

Ditto for AirCal/AA merger a couple of years earlier.


User currently offlineStitch From United States of America, joined Jul 2005, 30988 posts, RR: 86
Reply 8, posted (6 years 5 months 1 week 3 days 8 hours ago) and read 5701 times:
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Quoting Bobnwa (Reply 5):
It doesn't make any difference whether AS would like it or not. If another carrier say AA or CO wanted to up the AS shares on the stock market, they would own AS. That is how the stock market works.

AS does have options to prevent that - "poison pills" and such. Also, none of the US majors is sitting on $364 million which is what it would take to buy a majority stake in AS at the closing share price and market capitalization. And then, they need a majority of shareholders to agree to sell to them at that price, which is unlikely. Plus if an airline wants more then a small percentage of AS stock, they have to file their intent with the SEC. And if they filed an intent saying they want to buy a majority holding, you can bet AS stock is going to be a great deal more expensive after that filing because the speculators are going to run the stock up something fierce. So a hostile takeover attempt of AS could easily run a billion USD or more in order to "bribe" the shareholders to accept the offer.


User currently offlineBrilondon From Canada, joined Aug 2005, 4226 posts, RR: 1
Reply 9, posted (6 years 5 months 1 week 3 days 8 hours ago) and read 5701 times:



Quoting Bahadir (Reply 4):
I know CO/AS has been a rumor for so many years and I give that more chance than AA/AS.

This merger seems to have more of a chance then the AA/AS merger proposal. The routes would be more complimentary and I believe that it would be an easier go then with AA because of the union negotiations going on at AA.



Rush for ever; Yankees all the way!!
User currently offlineCommavia From United States of America, joined Apr 2005, 11630 posts, RR: 61
Reply 10, posted (6 years 5 months 1 week 3 days 8 hours ago) and read 5670 times:



Quoting Stitch (Reply 8):
Also, none of the US majors is sitting on $364 million which is what it would take to buy a majority stake in AS at the closing share price and market capitalization.

Actually, virtually ever major U.S. airline has far more than that sitting around in cash if they wanted to use it - to buy Alaska or anything else.

AMR alone is currently sitting on somewhere in the neighborhood of 13-15 times that amount.


User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 5 months 1 week 3 days 8 hours ago) and read 5601 times:

Alaska doesnt need a partner...DL/NW nor UA/CO threatens AS revenue streams..AS can still survive. I think a AA/US woudl be far more likely, though I hope AA has the smarts to sit it out and let the others self destruct.

Quoting Bobnwa (Reply 5):
It doesn't make any difference whether AS would like it or not. If another carrier say AA or CO wanted to up the AS shares on the stock market, they would own AS. That is how the stock market works.

AS can come up with all sorts of poison pills.


User currently offline777STL From United States of America, joined Dec 2004, 3642 posts, RR: 3
Reply 12, posted (6 years 5 months 1 week 3 days 8 hours ago) and read 5558 times:



Quoting EXAAUADL (Reply 11):
AS can come up with all sorts of poison pills.

Or a white knight in the form of CO, or one of the many other airlines it has codesharing agreements with.



PHX based
User currently offlineAlexInWa From United States of America, joined Sep 2000, 1150 posts, RR: 0
Reply 13, posted (6 years 5 months 1 week 3 days 7 hours ago) and read 5496 times:

I cant see any good merger between AS and......well anyone!!!!

I would agree that a CO merger would make more sense but that doesn't mean it should happen. I guess when you think about it, it would be HUGE for CO but what wouold AS gain? CO gets and west coast hub(s) plus Alaska domince and agrueably the top west coast presence short of maybe WN. Perfect fleet type, since the MD80's are almost gone, and an open door to the far east. Great for CO

Nothing for AS to gain.

Isn't AS still one of the healthier airlines as far as cash goes?



You mad Bro???
User currently offlineTVNWZ From United States of America, joined Feb 2006, 2388 posts, RR: 2
Reply 14, posted (6 years 5 months 1 week 3 days 7 hours ago) and read 5433 times:



Quoting AlexInWa (Reply 13):
Nothing for AS to gain

It would not be about what they have to gain. It would be about what the buyer would have to gain. If someone wanted to buy them, it could be done quite easily irregardless of poision pills, proxy fights etc. Bob is right. All you have to do is buy the stock.


User currently offlineANCFlyer From , joined Dec 1969, posts, RR:
Reply 15, posted (6 years 5 months 1 week 3 days 7 hours ago) and read 5421 times:



Quoting Bobnwa (Reply 5):
It doesn't make any difference whether AS would like it or not. If another carrier say AA or CO wanted to up the AS shares on the stock market, they would own AS. That is how the stock market works.

I quite well understand how the stock market works . . .

The TO and the article aren't talking about a "raid" on AS Stock, they're talking about an agreed upon merger.

Not gonna happen.

Where would AA get the $$ anyway . . . they're bleeding from every orifice at the moment because of their MD80 fiasco . . . they won't recover from this financially for a while . . .

Quoting AlexInWa (Reply 13):
Isn't AS still one of the healthier airlines as far as cash goes?

Yes.


User currently offlineXT6Wagon From United States of America, joined Feb 2007, 3409 posts, RR: 4
Reply 16, posted (6 years 5 months 1 week 3 days 7 hours ago) and read 5371 times:

AA while seeming to be doing great is in very huge trouble. Which isn't saying that they are going under in the morning or anything, just that they have more than a few big problems that CAN sink thier ship in a hurry.

IMO a merger is the quickest way to MAKE those problems all stand up and tear the airline down in a hurry. AA needs to get thier house in order before they can merge.

Then there is the fact that its likely that AA wouldn't be ALLOWED to merge with anyone of size due to anti-trust issues. Thats the problem with being the biggest. Just makes it easy for others to speak out against you and have thier message heard.


User currently offlineTOLtommy From United States of America, joined Dec 2003, 3292 posts, RR: 4
Reply 17, posted (6 years 5 months 1 week 3 days 7 hours ago) and read 5358 times:



Quoting XT6Wagon (Reply 16):
Then there is the fact that its likely that AA wouldn't be ALLOWED to merge with anyone of size due to anti-trust issues.

Why? Hypothetically, there's less overlap in a AA/AS merger than there is in the proposed DL/NW merger.

I think AA has a better chance of a pre-packaged CH11 filing than a merger......


User currently onlineLAXdude1023 From India, joined Sep 2006, 7608 posts, RR: 24
Reply 18, posted (6 years 5 months 1 week 3 days 6 hours ago) and read 5278 times:



Quoting ANCFlyer (Reply 15):
Where would AA get the $$ anyway . . . they're bleeding from every orifice at the moment because of their MD80 fiasco . . . they won't recover from this financially for a while . . .

They will be fine. Im not too worried about that, however I agree that AA would be stupid to try and take over or merge with AS. Their operateing costs are too low. They have a good thing with them now in terms of FF agreements and that works fine for me on the West Coast.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineWatchandlearn From United States of America, joined Mar 2008, 56 posts, RR: 0
Reply 19, posted (6 years 5 months 1 week 3 days 5 hours ago) and read 5087 times:

There have been rumors for the past several decades that AS was going to be bought by someone...doubt it will actually happen. None of the large carriers want to deal with the headach and costs associated with training thousands of pilots for Alaska flying. Add to this the stand-alone egos of the AS board and it just seems implausible. I see the carrier actually acquiring another carrier before being acquired.

User currently offlineWESTERN737800 From United States of America, joined Feb 2008, 693 posts, RR: 2
Reply 20, posted (6 years 5 months 1 week 3 days 5 hours ago) and read 5053 times:

I would hate to see AA merge w/AS. Is there anything left of AA's merger with Air Cal or Reno Air? What's left of the AA/TW merger? A couple MD80s and a few RJs. AS is too vital to the Northwest and Alaska and with too much heritage to succumb to mass route, fleet, and employee cuts. If AA took over AS I doubt they would have much of a presence in Alaska. Lets hope this doesn't happen.


Bring back Western Airlines!
User currently offlineUnited1 From United States of America, joined Oct 2003, 5957 posts, RR: 9
Reply 21, posted (6 years 5 months 1 week 3 days 5 hours ago) and read 5021 times:



Quoting Commavia (Reply 1):
The media and others have been spreading this rumor for years now. It has been circulating for almost a decade.

It's been going longer then that even, at one point people swore that AMR stood for Alaska Midway and Reno.  Smile

I don't think that Alaska is looking to merge with anyone, and besides that if AA wanted to do it they have had decades to make it happen. Outside of the flying in Alaska state what would AA gain from it that they haven't had and shut down three times already.

Quoting XT6Wagon (Reply 16):
Then there is the fact that its likely that AA wouldn't be ALLOWED to merge with anyone of size due to anti-trust issues. Thats the problem with being the biggest. Just makes it easy for others to speak out against you and have thier message heard.

Currently yes but if UA/CO and DL/NW happen that particular hurdle goes away.



Semper Fi - PowerPoint makes us stupid.
User currently offlineItsASmallWorld From United States of America, joined Mar 2008, 23 posts, RR: 0
Reply 22, posted (6 years 5 months 1 week 2 days 15 hours ago) and read 3353 times:

I doubt that anyone will buy AS in the near future, but I wonder about the possibility of AS buying someone else? How great would it be if AS bought out HA and sent a few of those 767's up to ANC? Who knows?!

User currently offlinePavlovsDog From Norway, joined Sep 2005, 658 posts, RR: 0
Reply 23, posted (6 years 5 months 1 week 2 days 14 hours ago) and read 3079 times:



Quoting AlexInWa (Reply 13):
I cant see any good merger between AS and......well anyone!!!!

Hawaiian and AS would be a great fit if the merger were a amicable one. Lot's of synergy possibilities there.

AS's 737s could fly routes too thin for the HA's 763s and even do some interisland routes to supplement the 717s.


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