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Will US Carriers Ever Merge W/ A Foreign Carrier?  
User currently offlineIrishpower From United States of America, joined Aug 2003, 386 posts, RR: 0
Posted (3 years 11 months 4 days 11 hours ago) and read 4256 times:

I know US laws regarding foreign ownership of domestic carriers is strict but is it possible that we may see a merger of a US carrier with a foreign carrier? It doesn't even have to be from another continent?

We have seen AF/KL, BA/IB, LH/LX what about AA/AC or DL/MX?

Is it possible to see a European style merger here in the US?

29 replies: All unread, showing first 25:
 
User currently offlineviajero From Mexico, joined Aug 2008, 132 posts, RR: 0
Reply 1, posted (3 years 11 months 4 days 10 hours ago) and read 4165 times:
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It may perhaps be possible under a modified NAFTA agreement for transnational North American carriers to merge someday, but as you correctly stated, not without regulatory changes involving foreign ownership percentages and a radical shift in Washington's thinking.

Regards,
viajero


User currently offlinebmacleod From Canada, joined Aug 2001, 2262 posts, RR: 0
Reply 2, posted (3 years 11 months 4 days 10 hours ago) and read 4142 times:

Quoting Irishpower (Thread starter):
what about AA/AC

I get shivers still thinking about Don Carty's hostile attempt to takeover AC with Gerry Shwartz and ONEX in 1999. I was relieved when AMR finally dumped him.

UA/CO makes more sense as it is part of Star..but unlikely as AC would rather continue to go solo....



The engine is the heart of an airplane, but the pilot is its soul.
User currently offlineAADC10 From United States of America, joined Nov 2004, 2088 posts, RR: 0
Reply 3, posted (3 years 11 months 4 days 9 hours ago) and read 4107 times:

It is not too likely because airline ownership is considered a "national security" issue as aircraft could be used for military transport. All you have to do is cry "9/11" and opposition crumples in fear.

User currently offlineburnsie28 From United States of America, joined Aug 2004, 7539 posts, RR: 8
Reply 4, posted (3 years 11 months 4 days 9 hours ago) and read 4036 times:

That and the fact that it would likely be the US carrier taking over for any of those foreign carriers since the world's largest airlines are mostly here in the US and you would get foreign governments all up in arms about that. The only thing I could think of is US carriers taking over mexican carriers, but then again, I don't think US carriers have any interest in Mexico other than the few beach markets, especially with all the issues down there and poor domestic market.


"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlinefxramper From United States of America, joined Dec 2005, 7263 posts, RR: 85
Reply 5, posted (3 years 11 months 4 days 9 hours ago) and read 3996 times:
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I think you'd see a US carrier operate a hub outside the country before you'd see a foreign carrier merged.   

User currently offlineflyby519 From United States of America, joined Jul 2007, 1138 posts, RR: 0
Reply 6, posted (3 years 11 months 4 days 9 hours ago) and read 3952 times:

Quoting AADC10 (Reply 3):
It is not too likely because airline ownership is considered a "national security" issue as aircraft could be used for military transport. All you have to do is cry "9/11" and opposition crumples in fear.

Maybe the government will get rid of that CRAF policy and just hold a permanent contract with companies like North American, Omni, World, etc



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User currently offlinebobnwa From United States of America, joined Dec 2000, 6465 posts, RR: 9
Reply 7, posted (3 years 11 months 4 days 9 hours ago) and read 3944 times:

Quoting flyby519 (Reply 6):
Maybe the government will get rid of that CRAF policy and just hold a permanent contract with companies like North American, Omni, World, etc

The carriers you list would not have enough lift in an emergency. The government would still require the lift of AA,DL,UA,US etc in times like desert storm or Viet Nam.


User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 8, posted (3 years 11 months 4 days 8 hours ago) and read 3924 times:

Quoting burnsie28 (Reply 4):
and the fact that it would likely be the US carrier taking over for any of those foreign carriers since the world's largest airlines are mostly here in the US and you would get foreign governments all up in arms about that.

Wait...you're seriously stating that as FACT, because you really have to be jesting???? Much more likely is American's wouldn't like playing second fiddle to more successful airlines.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7141 posts, RR: 8
Reply 9, posted (3 years 11 months 4 days 8 hours ago) and read 3915 times:

Quoting Irishpower (Thread starter):
Is it possible to see a European style merger here in the US?

No, because there is no EU style organization in North American. The initial attempts at a Common Market - NAFTA - has not taken off so it will be a few more decades before that the United Sates or Mexican States or the Canadian States of North America emerges to counterbalance the EU.


User currently offlineAntoniemey From United States of America, joined Dec 2005, 1555 posts, RR: 4
Reply 10, posted (3 years 11 months 4 days 8 hours ago) and read 3851 times:

Quoting fxramper (Reply 5):
I think you'd see a US carrier operate a hub outside the country before you'd see a foreign carrier merged.

That's rather obvious, since there have already been US carrier hubs in other countries...



Make something Idiot-proof, and the Universe will make a more inept idiot.
User currently offlinejfk777 From United States of America, joined Aug 2006, 8340 posts, RR: 7
Reply 11, posted (3 years 11 months 4 days 8 hours ago) and read 3803 times:
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Quoting fxramper (Reply 5):
I think you'd see a US carrier operate a hub outside the country before you'd see a foreign carrier merged.

THis has happened since WW2 at Tokyo, by NW & UA( Pan AM), and until the mid-1990's in FRA ( PA).


User currently offlinenorthwestair From Poland, joined Jul 2001, 648 posts, RR: 5
Reply 12, posted (3 years 11 months 4 days 8 hours ago) and read 3785 times:

Remember when KLM came to the rescue of NW back in the 90's and the US government got mad cause they said that it was an attempt for a foreign company to take control of a US Airline


I don't care who you fly just as long as you fly
User currently offlinemutu From United Kingdom, joined Mar 2006, 536 posts, RR: 0
Reply 13, posted (3 years 11 months 4 days 8 hours ago) and read 3754 times:

Quoting par13del (Reply 9):
No, because there is no EU style organization in North American. The initial attempts at a Common Market - NAFTA - has not taken off so it will be a few more decades before that the United Sates or Mexican States or the Canadian States of North America emerges to counterbalance the EU.

The EU structure is closer to the USA federal system, long gone are the days of the EU (then called the European Common MArket) being about a free trade block like the idea behind NAFTA. Today it invoves the free movement of goods and people with an increasingly large legislative book common across the EU. In fact other than "federal tax powers" it is very similar to the US federal/state system .

So what you are seeing with the european mergers is like an alaskan carrier merging with a texas carrier. Where the structures get complex in europe is because of national ownership rule requirements effecrfively imposed undfer certain bilaterals - whilst these are not an EU consideration they are very often relevent in the context on ex EU bilaterals.

ie Parts of South America still have individual bilaterals with Spain governing which carriers can fly routes beween the 2. So if BA took control of IB and it was technically no longer a spanish carrier it would not be eligible for that route. Similarly there are bilaterals between UK and others which require BA to be UK controlled to fly those routes. So the complex structure adopted by AF/KL and BA/IB uses a special share mechanism which means whlst the holding co (IAG or Groupe AF) may be truly international in ownership, the individual airline operating companies (British Airways, Iberia, KLM, Air France) are each technically controlled domestically.

Ultimately the EU will renegotiate all bilaterals as they come up for review (the EU is taking those powers away from sovereign states except/unless the other country party will not accept an EU wide bilateral). When there are global/EU bilaterals the only requirement will be that to be an EU carrier eligible under the bilaterals you need to be EU controlled.

Now saying that i find it bizarre that aviation isnt totally liberalised globally, if its good enough for banks, insurance companies, oil companies and drugs companies, all as important to each country as "defense" then its just an old fashioned flag carrier/flag waving notion thats stuck in each nations psyche.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7141 posts, RR: 8
Reply 14, posted (3 years 11 months 4 days 7 hours ago) and read 3741 times:

Quoting northwestair (Reply 12):
Remember when KLM came to the rescue of NW back in the 90's and the US government got mad cause they said that it was an attempt for a foreign company to take control of a US Airline

Look at where they are now, both have since been taken over, makes you wonder what these managers really think.  


User currently offline2travel2know2 From Panama, joined Apr 2010, 2607 posts, RR: 1
Reply 15, posted (3 years 11 months 4 days 7 hours ago) and read 3675 times:

It was no "merger", but CO used to own 49% of CM, so CO did have a partly owned foreign airline.
Had CO kept its CM stock until now, then the UA/CO merger could have included a foreign carrier (actually 2, CM and its P5).



I'm not on CM's payroll.
User currently offlinebobnwa From United States of America, joined Dec 2000, 6465 posts, RR: 9
Reply 16, posted (3 years 11 months 4 days 6 hours ago) and read 3568 times:

Quoting northwestair (Reply 12):
Remember when KLM came to the rescue of NW back in the 90's and the US government got mad cause they said that it was an attempt for a foreign company to take control of a US Airline




KLM never contributed one dollar to NW in the 90's. KL did want to be an investor in NW and was a minor investor in NW during the leveraged buyout. All that money went to the buyout, but not to NW. NW then forced KL to sell their shares, because they did not want any other airline having ownership. So no, KLM did not bailout NW in the 90's.


User currently offlineburnsie28 From United States of America, joined Aug 2004, 7539 posts, RR: 8
Reply 17, posted (3 years 11 months 4 days 4 hours ago) and read 3431 times:

Quoting AirNZ (Reply 8):
Wait...you're seriously stating that as FACT, because you really have to be jesting???? Much more likely is American's wouldn't like playing second fiddle to more successful airlines.

Oh your right, I forgot how Mexicana was so successful and how Aeromexico hasn't been having any financial issues.



"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineDelimit From United States of America, joined Jan 2009, 1508 posts, RR: 2
Reply 18, posted (3 years 11 months 4 days 3 hours ago) and read 3351 times:

Quoting AirNZ (Reply 8):
Wait...you're seriously stating that as FACT, because you really have to be jesting???? Much more likely is American's wouldn't like playing second fiddle to more successful airlines.

What a charming generalization. And totally ridiculous.

Mergers aren't about profitability, they're about assets. How many airlines globally have the means necessary to buy out any major US carrier (the legacies or WN) with a clear majority interest? The US majors are worth billions and billions of dollars.

Quoting mutu (Reply 13):
Now saying that i find it bizarre that aviation isnt totally liberalised globally, if its good enough for banks, insurance companies, oil companies and drugs companies, all as important to each country as "defense" then its just an old fashioned flag carrier/flag waving notion thats stuck in each nations psyche.

You're not alone. It's a ridiculous bit of protectionism masquerading as national defense policy.


User currently offlinehuaiwei From Singapore, joined Oct 2008, 1114 posts, RR: 2
Reply 19, posted (3 years 11 months 3 days 13 hours ago) and read 3105 times:

Quoting Delimit (Reply 18):
The US majors are worth billions and billions of dollars.

And you believe US majors have the resources to buy up each other, but not some major foreign carriers with much healthier balance sheets and bigger warchests?



It's huaiwei...not huawei. I have nothing to do with the PRC! :)
User currently offlinedelimit From United States of America, joined Jan 2009, 1508 posts, RR: 2
Reply 20, posted (3 years 11 months 3 days 9 hours ago) and read 2977 times:

I never made that claim. Please don't put words in my mouth.

That said, other than LH, AF, SQ and the gulf civic works projects, I mean carriers, how many airlines have anywhere close to what the US majors can put there hands on? I believe, for example, Delta has around $5 billion in unrestricted cash, AA has slightly less, and the combined UA/CO have somewhere around 9 billion.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7141 posts, RR: 8
Reply 21, posted (3 years 11 months 3 days 9 hours ago) and read 2935 times:

Quoting delimit (Reply 20):
That said, other than LH, AF, SQ and the gulf civic works projects, I mean carriers, how many airlines have anywhere close to what the US majors can put there hands on? I believe, for example, Delta has around $5 billion in unrestricted cash, AA has slightly less, and the combined UA/CO have somewhere around 9 billion.

A couple years ago Doug Parker was attempting another airline take-over for much less money, the issue with take-overs is usually about stocks and getting controlling interest, the amount of actual cash in the bank is not the primary factor. Cash in the bank determines whether the carrier can pay its operating bills and is solvent, it is not a true measure of how much is required to "take-over" the carrier.


User currently offlinemutu From United Kingdom, joined Mar 2006, 536 posts, RR: 0
Reply 22, posted (3 years 11 months 3 days 7 hours ago) and read 2879 times:

Quoting par13del (Reply 21):

And of course most recent mergers have been largely paper deals, no cash. (other than paying the lawyers)

Cash is NOT the issue. Indeed it is highly unlikely any modern day carrier would fund a major acquisition/merger with cash when cash is no variable in their opertaing base

I believe in any event peple are getting carried away...wasnt the price attributed to the UA/CO deal $3.1bn? (thats not the combined value but the value assigned to the theoretical junior takeover partner, there is no such thing as a merger other than acounting nuances)


User currently offlineMexicana757 From United States of America, joined Apr 2001, 3041 posts, RR: 28
Reply 23, posted (3 years 11 months 3 days 7 hours ago) and read 2862 times:

Quoting burnsie28 (Reply 4):
The only thing I could think of is US carriers taking over mexican carriers, but then again, I don't think US carriers have any interest in Mexico other than the few beach markets, especially with all the issues down there and poor domestic market.

Like the US, Mexican law only allows 25% of foreign ownership of Mexican airlines. No US airline will be acquiring any Mexican airline until the law is changed or they find Mexican investors to partner with.


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25170 posts, RR: 22
Reply 24, posted (3 years 11 months 3 days 6 hours ago) and read 2824 times:

Quoting Irishpower (Thread starter):
I know US laws regarding foreign ownership of domestic carriers is strict but is it possible that we may see a merger of a US carrier with a foreign carrier?

The 25% foreign ownership restriction applies to all U.S. carriers, not just domestic carriers.


25 Antoniemey : In this context, Domestic means US-based.
26 delimit : I'm guilty of generalizing a bit as well it seems. It depends on what kind of take over you are talking about really. In an unfriendly takeover, a bun
27 B777LRF : If, and it's a very big if, the combined aviation markets of the US and EU should find themselves in collective meltdown, coming to the conclusion tha
28 swa4life : Lufthansa is already a majority stake shareholder of JetBlue are they not?
29 SCL767 : Nope, LH is a minority shareholder in B6.
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