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US Airways Makes Formal Merger Offer For AA  
User currently offline777law From Monaco, joined Jul 2006, 203 posts, RR: 0
Posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40921 times:

We knew this day was coming

http://my.chicagotribune.com/#section/-1/article/p2p-73612409/

Says the combined company will be valued at $8.5 billion. A deal could be concluded next month.

[Edited 2012-12-07 13:04:10]


UA- Premier Platinum, AF / KL - Flying Blue Petroleum, BA Executive Club Silver
241 replies: All unread, showing first 25:
 
User currently offlineDeltaMD90 From United States of America, joined Apr 2008, 7257 posts, RR: 52
Reply 1, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40884 times:

Finally. Article is kinda vague... what is standing in the way / helping the merger out? DOJ concerns, AA's management not wanting a buyout, etc?


Ironically I have never flown a Delta MD-90 :)
User currently offlineairliner371 From United States of America, joined Aug 2012, 1278 posts, RR: 1
Reply 2, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40809 times:

Finally.... Now lets get our hands dirty!


You will either love or hate the airline industry. If you love it, it will get in your blood and it will never leave.
User currently offlinenw1852 From United States of America, joined Dec 2006, 40 posts, RR: 0
Reply 3, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40837 times:

Great...Looks like AA will have their new livery for about 10 seconds.

User currently offlineJFKPurser From United States of America, joined Mar 2007, 478 posts, RR: 4
Reply 4, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40754 times:

Quoting DeltaMD90 (Reply 1):
Finally. Article is kinda vague... what is standing in the way / helping the merger out? DOJ concerns, AA's management not wanting a buyout, etc?

Horton's ego and his stock options in a post-BK AMR standalone, which will never exist at this point.

Since the NDA, US has had plenty of time to dig through AMR's finances and has, in all likelihood, presented the UCC with an offer they are certain Horton will not be able to beat, now that AMR's fixed costs are finally established in the wake of today's ratified AA pilot LBFO.


User currently offlinerwy04lga From United States of America, joined Jul 2005, 3105 posts, RR: 8
Reply 5, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40433 times:

All it took was the APA agreement to get US on bended knee. Although it seems more like a shotgun wedding.


Just accept that some days, you're the pigeon, and other days the statue
User currently offlinenwcoflyer From United States of America, joined Jun 2003, 687 posts, RR: 14
Reply 6, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40380 times:

Can't say I'm surprised. Hopes it works out for all of us on both sides. There is great potential for success or failure with this merger if approved.


The New American is arriving.
User currently offlinekaitak From Ireland, joined Aug 1999, 12321 posts, RR: 35
Reply 7, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40334 times:

Quoting JFKPurser (Reply 4):
LBFO.

What's this?

Good to hear that this is moving forward; I always thought that AA would welcome US; after all, it's an airline that makes AA look very good indeed.

Seriously, though, AA needs help to get its act together and there does not seem to be a lot of confidence in the current AA management. I guess the key question I would have (and I'm sure employees of both airlines would have) is this: over and above raising the $8.5b to buy AA, does US have the resources to invest in AA and bring it around. Will it invest in its product, cabin crew training (including rebuilding morale - and that applies across the airline, not just cabin crew). I really do hope that this is a success for both carriers.


User currently offlinePHX787 From Japan, joined Mar 2012, 6940 posts, RR: 18
Reply 8, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40341 times:

Well the boys in Tempe better start packing    Not looking forward to this at all... the shuttering of another hub at an airport I have connections to is not something I can handle well.


One of the FB admins for PHX Spotters. "Zach the Expat!"
User currently offlinespiritair97 From United States of America, joined Jan 2011, 1231 posts, RR: 1
Reply 9, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40336 times:

Damn.......gone are the days of a nice US Airways livery and Star Alliance benefits for us Divdend Miles members.

User currently offlinesouthwest737500 From , joined Dec 1969, posts, RR:
Reply 10, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40216 times:

Screw this merger. US Is a great airline, there goes the livery and bye bye star alliance I loved the star

User currently offlineavek00 From United States of America, joined Oct 2004, 4281 posts, RR: 20
Reply 11, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40098 times:

Y'all give up too easily, LOL.


Live life to the fullest.
User currently offlinetimpdx From United States of America, joined Jul 2009, 474 posts, RR: 0
Reply 12, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40102 times:

Bad news for Tempe and PHX.

User currently offlinephxa340 From United States of America, joined Mar 2012, 832 posts, RR: 1
Reply 13, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 40000 times:

US Airways is bringing no cash to the table. It will be a 100% stock transaction. If Parker thinks the combined company will be valued at 8 billion he is dreaming. Far from a done deal ... Especially in current market conditions considering this is an all stock transaction

Patience people.


User currently offlineFWAERJ From United States of America, joined Jun 2006, 3635 posts, RR: 2
Reply 14, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 39981 times:

Not surprised, but this could be good or bad for FWA.

If things turn out positively, PHL and/or CLT could be added from FWA (with the Lincoln Financial and Wells Fargo connections, I wouldn't be surprised). Or US/AA could pull a PIT dehubbing on FWA and tell pax to just take them out of IND. I will be eager to see which route they take.

Quoting spiritair97 (Reply 9):
gone are the days of a nice US Airways livery
Quoting nw1852 (Reply 3):
Great...Looks like AA will have their new livery for about 10 seconds.

I'm willing to bet that the brand for the merged airline will be named American Airlines and the livery will be the new AA livery that we don't know much about other than it's based on silver paint. The idea of the AA image surviving isn't far-fetched: AA creditors would own 70% of the new US/AA per the article.

Quoting PHX787 (Reply 8):
Well the boys in Tempe better start packing   

Arizona will flight hard to ensure that US/AA HQ remains in Tempe. They don't want a repeat of UA/CO where Chicago won out over Houston due to sUA contracts, even though Houston is a far better place to do business. But I think that Texas will win out, even though both Arizona and Texas are very pro-business states.



I don't work for FWA, their tenants, or their ad agency. But I still love FWA.
User currently offlineDocLightning From United States of America, joined Nov 2005, 18675 posts, RR: 58
Reply 15, posted (1 year 4 months 1 week 3 days 14 hours ago) and read 39973 times:

Quoting PHX787 (Reply 8):
Well the boys in Tempe better start packing Not looking forward to this at all... the shuttering of another hub at an airport I have connections to is not something I can handle well.

I don't think they are going to give up PHX. It's too important of a sun destination and it also has good West Coast connections. I know DAL is close, but MSP is close to DTW and they both operate fine, too.

Quoting spiritair97 (Reply 9):
Damn.......gone are the days of a nice US Airways livery and Star Alliance benefits for us Divdend Miles members.

Well, you get OW instead, which isn't exactly something to sneeze at. We all know that US's days as a *A member were numbered once the UA/CO merger happened.


User currently offlineAWACSooner From United States of America, joined Jan 2008, 1800 posts, RR: 1
Reply 16, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39921 times:

US and HP merger is still working itself out how many years later?
I can't wait to see the results of THIS one...someone get me a decade's supply of popcorn!!!


User currently offlineN766UA From United States of America, joined Jul 1999, 8090 posts, RR: 24
Reply 17, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39895 times:

If you'd told me 10 years ago that in a decade only United, USAir, and Delta would exist, I'd tell you you were nuts...


This Website Censors Me
User currently offlineairliner371 From United States of America, joined Aug 2012, 1278 posts, RR: 1
Reply 18, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39823 times:

Quoting FWAERJ (Reply 14):
Arizona will flight hard to ensure that US/AA HQ remains in Tempe.

US Airways has said the merged airline will be HQed in Dallas, no question about it.



You will either love or hate the airline industry. If you love it, it will get in your blood and it will never leave.
User currently offlineYflyer From United States of America, joined Feb 2007, 944 posts, RR: 1
Reply 19, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39829 times:

Quoting DeltaMD90 (Reply 1):
Finally. Article is kinda vague... what is standing in the way / helping the merger out? DOJ concerns, AA's management not wanting a buyout, etc?

Well, a few nights ago I heard on NPR that AA's management will get a large bonus if the airline emerges from bankruptsy as a standalone company, so I would imagine they're doing everything in their power to avoid merging.


User currently offlineJFKPurser From United States of America, joined Mar 2007, 478 posts, RR: 4
Reply 20, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39761 times:

Quoting kaitak (Reply 7):
What's this?

LBFO = Last Best Final Offer.


User currently offlineAA94 From United States of America, joined Aug 2011, 530 posts, RR: 0
Reply 21, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39770 times:

Quoting phxa340 (Reply 13):
US Airways is bringing no cash to the table. It will be a 100% stock transaction. If Parker thinks the combined company will be valued at 8 billion he is dreaming. Far from a done deal ... Especially in current market conditions considering this is an all stock transaction

Patience people.

Hallelujah.

I don't understand why some people think that the phrase "US Airways makes merger offer for AA" means "AA/US are merging." People, they are not the same thing.

The fact that the APA and AA came to an agreement today takes away most of DP's leverage, IMO. This will be a decision made by AA's creditors, not Doug Parker or Tom Horton.

US trying to turn around AA is the blind leading the blind. No offense intended, but that's the way I see it. AA can do it by themselves, and they'll be better off for it.



Choose a challenge over competence / Eleanor Roosevelt
User currently offlinePHX787 From Japan, joined Mar 2012, 6940 posts, RR: 18
Reply 22, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39769 times:

Quoting FWAERJ (Reply 14):
Arizona will flight hard to ensure that US/AA HQ remains in Tempe. They don't want a repeat of UA/CO where Chicago won out over Houston due to sUA contracts, even though Houston is a far better place to do business. But I think that Texas will win out, even though both Arizona and Texas are very pro-business states.

I sure hope so, but I haven't seen crap from Jan or Greg or Mark about trying to stop this.

if things go PHX's way, we may finally see Asian service, however.

Quoting AWACSooner (Reply 16):
US and HP merger is still working itself out how many years later?

   this. There's no way this can actually proceed before east and west merge together. If not, we'll have east, west, and south   



One of the FB admins for PHX Spotters. "Zach the Expat!"
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 23, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 39595 times:

Still not buying that it's as "done" a deal as some here continue to claim. I think the merger stands a good chance of happening, but I don't think it's a done deal - still plenty ahead to work out.

If it happens, the good news for me personally and other DFW-area travelers is that DFW will inevitably remain the headquarters, and largest hub, of American Airlines - with or without a merger. The name would stay AA, which I'm happy about, and the resulting airline would remain in oneworld, which I'm also happy about. In addition, the headquarters remaining in DFW would virtually guarantee that a large portion of the corporate functions running the company would be legacy-AA, not legacy-USAirways, regardless of who the actually executives are at the top. As somebody who views AA as the superior airline in a wide variety of areas including most aspects of hard and soft product, ground and onboard service, frequent flyer program, and IT/systems, that to me is a good thing. The combined company would have an expanded network with improved access to the northeast and to some extent Europe. I just hope that if Parker does get his hands on one of the largest and most storied brands in the industry he doesn't royally screw it up by imposing cheapened and suboptimal service or systems (SHARES) onto the "new AA."

And if a merger doesn't happen, I think AA will be just fine as well. The last year has seen AA improve dramatically in a variety of areas - without any "help" from Doug Parker. New (and very nice) planes are arriving at the rate of almost one per week. New onboard products and amenities are and will soon be rolling out, including the new longhaul premium meal service which I'm looking forward to enjoying soon. AA's IT systems from AA.com to the mobile app to tablets for pilots and FAs are continuing to see more and more enhancements. All of that is very positive.

I believe now, have believed, and will continue to believe regardless of the revisionist history that the unions have been and will always continue to be pushing that AA has very bright long-term prospects with or without a merger. AA does not "need" a USAirways merger (in fact quite the opposite - Parker desperately needs this merger far more than AA or Horton does). So whatever happens, I look forward to it just happening already. Merger or no merger, I'm looking forward to some clarity soon.

Quoting airliner371 (Reply 18):
US Airways has said the merged airline will be HQed in Dallas, no question about it.

Fort Worth, not Dallas.  


User currently offlineaa77w From United States of America, joined Jan 2012, 31 posts, RR: 0
Reply 24, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 40912 times:

Maybe I'm naïvé, but I don't see this as a done deal. I mean AA has requested the ability to come out of BK as a standalone carrier be extended through March, 2013 and with labor relations as they are at both companies, it seems to me that there is no way that this will happen by Jan, or anytime in the near future. Again, not an expert by any means, but there seems to be a long road ahead before this could be a reality.

User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 25, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 40915 times:

Quoting PHX787 (Reply 22):
I sure hope so, but I haven't seen crap from Jan or Greg or Mark about trying to stop this.

They've got nothing to say. Earlier reports alluded to Parker's sales pitches all over Capitol Hill, where he was almost certainly - and not surprisingly - told in no uncertain terms by every member of the huge Texas congressional delegation he spoke with that they would do everything they could to block a merger if it meant the headquarters leaving Texas. In addition, I'm sure any "negotiations" now occurring also essentially take as given that the headquarters will stay in Texas. That is probably make-or-break.

Quoting PHX787 (Reply 22):
if things go PHX's way, we may finally see Asian service, however.

Doubtful.

Quoting PHX787 (Reply 22):
There's no way this can actually proceed before east and west merge together. If not, we'll have east, west, and south

Kirby has essentially said it himself, as have many current USAirways pilots: if this merger happens, the whole issue of east and west will in large part go away. There will be a single representation election in which, in all likelihood, the USAirways (USAPA) pilots will be outvoted by the AA (APA) members and APA will end up the single collective bargaining agent. When that occurs, the arbitration, seniority list integration, etc. process will all start rolling, but with the whole east-west fight on the back burner, as the USAPA members will be outnumbered roughly 2-to-1.


User currently offlineb757capt From United States of America, joined Feb 2004, 1336 posts, RR: 0
Reply 26, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 42018 times:

Quoting phxa340 (Reply 13):

Totally and respectfully disagree with you. There is so much value that the AMR Managment has left untouched.



The views written by this user are in no manner the views of my employer and should not be thought as such.
User currently offlinephxa340 From United States of America, joined Mar 2012, 832 posts, RR: 1
Reply 27, posted (1 year 4 months 1 week 3 days 13 hours ago) and read 41728 times:

Quoting b757capt (Reply 27):

I am talking about what the financial markets value the new AA. Nothing to do with untapped value that management is leaving on the table. IPOs have been horrible this year because the market is undervaluing pretty much everything - just like they will the combined AA


User currently offlineseatback From United States of America, joined Mar 2002, 738 posts, RR: 0
Reply 28, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 40182 times:

With AA creditors holding a 70 percent stake in the new company, wouldn't that put AA in the driver's seat?

The creditors will determine who runs the company, not Doug Parker.


User currently offlineAcey559 From United States of America, joined Jan 2007, 1495 posts, RR: 2
Reply 29, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 40253 times:

Quoting N766UA (Reply 17):
If you'd told me 10 years ago that in a decade only United, USAir, and Delta would exist, I'd tell you you were nuts...

Not to argue semantics, but it won't be Delta, United and US Airways; it would be Delta, United and American.  

I'm not convinced either though. I'd prefer AA to be a standalone carrier but we'll have to see. I'm not assuming anything is expected given the history of this industry.


User currently offlinebrilondon From Canada, joined Aug 2005, 4055 posts, RR: 1
Reply 30, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39774 times:

Quoting nw1852 (Reply 3):
Great...Looks like AA will have their new livery for about 10 seconds.

Why?

Quoting commavia (Reply 26):
Kirby has essentially said it himself, as have many current USAirways pilots: if this merger happens, the whole issue of east and west will in large part go away. There will be a single representation election in which, in all likelihood, the USAirways (USAPA) pilots will be outvoted by the AA (APA) members and APA will end up the single collective bargaining agent. When that occurs, the arbitration, seniority list integration, etc. process will all start rolling, but with the whole east-west fight on the back burner, as the USAPA members will be outnumbered roughly 2-to-1.

This sounds something like the TWA/AA merger and the USAPA will just have their seniority list stapled to the bottom of the APA's list. What is the real bargaining power here as the unions have always been pushing for a merger, so I would not be surprised if you see the new AA livery come out on top.



Rush for ever; Yankees all the way!!
User currently offlineblueflyer From United States of America, joined Jan 2006, 3696 posts, RR: 2
Reply 31, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39527 times:
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Quoting FWAERJ (Reply 14):
The idea of the AA image surviving isn't far-fetched: AA creditors would own 70% of the new US/AA per the article.

The surviving image has very little to do with who owns what. The post-merger airline could be 100% owned by US Airways shareholders and it would still be called American Airlines. It's all about which brand has greater (positive) awareness, not just in the US but overseas as well, and for all the holes in its international coverage, AA is still better known in Europe and Asia than US Airways, hence the AA brand coming on top.

Same thing happened when US Airways and America West merged, or when Northwest and Delta did, or United and Continental. It is a marketing-driven decision.



I've got $h*t to do
User currently offlinedeltaffindfw From United States of America, joined Sep 2003, 1426 posts, RR: 1
Reply 32, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39434 times:

Quoting brilondon (Reply 32):
This sounds something like the TWA/AA merger and the USAPA will just have their seniority list stapled to the bottom of the APA's list. What is the real bargaining power here as the unions have always been pushing for a merger, so I would not be surprised if you see the new AA livery come out on top.

That will most likely not be the case. With the new laws, binding arbitration is mandatory if they can't come to a compromise. I seriously doubt an independent arbitrator would "staple" the seniority list like TWA. They will be integrated just like DL and UA.

[Edited 2012-12-07 15:08:55]

User currently offlinedeltairlines From United States of America, joined May 1999, 8867 posts, RR: 12
Reply 33, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39444 times:

Quoting PHX787 (Reply 22):
if things go PHX's way, we may finally see Asian service, however.

Doubt it. Maybe eventually a 4x/week 787 on JAL to Narita. Still doubtful though - the LAX operation will remain pretty respectable and that's where there's the O&D, and most of the largest flows already have LAX service.

Quoting DocLightning (Reply 15):
I don't think they are going to give up PHX. It's too important of a sun destination and it also has good West Coast connections. I know DAL is close, but MSP is close to DTW and they both operate fine, too.

Agreed that PHX isn't going to go away completely. DFW is a good 850 miles or so east of PHX. LAX is a great location, but AA is maxed out on real estate over there. Phoenix at least allows for a gateway into the smaller California cities from large/mid-tier Eastern cities that the Eagle terminal at LAX can't really handle.

Quoting FWAERJ (Reply 14):
If things turn out positively, PHL and/or CLT could be added from FWA (with the Lincoln Financial and Wells Fargo connections, I wouldn't be surprised). Or US/AA could pull a PIT dehubbing on FWA and tell pax to just take them out of IND. I will be eager to see which route they take.

Maybe CLT would happen, PHL is a pretty constrained facility as it is.

Quoting seatback (Reply 30):

The creditors will determine who runs the company, not Doug Parker.

I believe part of the proposed deal is that Parker is the one that gets to run the show. That being said, I'd guess most of the creditors would rather take Parker, who is leading US to record profits while doing it with an inferior network compared to UA/AA/DL (having PHL as the Northeast hub, which is not the same level as Washington and New York; CLT for the Southeast hub which is heavily reliant on flow traffic, lacks high O&D numbers and is a second fiddle to a certain other hub that's 227 miles southeast down I-85; and PHX where nearly every route that sees mainline service sees another airline also flying mainline equipment on it, and there's that other airline that shares Terminal 4 with them which puts downward pressure on yields). Give him the network of AA, where (based on December ASMs), AA is 38x larger to Central America, 3.4x larger to Caribbean, 25x larger to South America, 2.2x larger to Europe and infinitelly larger to Asia. Not to mention hubs in much stronger cities such as Miami, Dallas, Chicago and New York (granted the last has some slot restrictions).


User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4482 posts, RR: 22
Reply 34, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39418 times:

Quoting kaitak (Reply 7):
LBFO.
What's this?

Last Best Final Offer

Quoting brilondon (Reply 32):
This sounds something like the TWA/AA merger and the USAPA will just have their seniority list stapled to the bottom of the APA's list.

This is nothing like the TWA/AA merger. There will be no stapling of seniority lists.



I got my head checked--by a jumbo jet
User currently offlineplatinumfoota From United States of America, joined Jan 2006, 554 posts, RR: 0
Reply 35, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39426 times:
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Quoting blueflyer (Reply 33):
The surviving image has very little to do with who owns what. The post-merger airline could be 100% owned by US Airways shareholders and it would still be called American Airlines. It's all about which brand has greater (positive) awareness, not just in the US but overseas as well, and for all the holes in its international coverage, AA is still better known in Europe and Asia than US Airways, hence the AA brand coming on top.Same thing happened when US Airways and America West merged, or when Northwest and Delta did, or United and Continental. It is a marketing-driven decision.

So..... no American Airways??



Never forget United 93
User currently offlineLAXdude1023 From India, joined Sep 2006, 7320 posts, RR: 24
Reply 36, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39367 times:

This was inevitable. We knew this day was coming, but lets keep a few things in mind:

1) So far this is just an offer. We already know AA itself will reject it, the question is what will the creditors board have to say. It could go either way so lets keep our emotions in check for a bit until we know more.

2) Should there be a merger, things like location of HQ and name have already been announced. No need to re-hash it.

3) We already know the Unions want a merger and management doesnt and they will fight tooth and nail to get what they want.

This all said Im all for a merger. I think it will give the combined airline a great network presence and fix the gaping holes in the current AA network (sans Asia, but AA made progress recently there). Selfishly, as a DFW resident, I would be happy about the extra jobs and the boost to the current hub here. Empathetically, I feel for our friends in Arizona because they will be the one taking it in the shorts over a AA/US merger.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineEricR From United States of America, joined Jul 2010, 1801 posts, RR: 1
Reply 37, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 39403 times:

Quoting commavia (Reply 24):
in fact quite the opposite - Parker desperately needs this merger far more than AA or Horton does


I would like to clear up one item. Parker doesn't "desperately need" this merger far more than American. US is very profitable (more so than AA) and US's stock has been one of the best airline stocks this year. US has been, and will continue to be, fine on its own.

However, Parker "wants" this merger because he believes that one of the few ways to make this industry profitable is via consolidation. Furthermore, a merger would put US in better competitive situation versus carriers such as UA or DL, especially on the international front. But to say Parker desperately needs this merger is exaggeration.

Quoting commavia (Reply 24):
I just hope that if Parker does get his hands on one of the largest and most storied brands in the industry he doesn't royally screw it up by imposing cheapened and suboptimal service or systems (SHARES) onto the "new AA."


Did Parker cheapen US or did he make the most out of the assets that he had? He did a far better job from a business standpoint than Arpey or Horton.

[Edited 2012-12-07 15:17:41]

User currently offlineDocLightning From United States of America, joined Nov 2005, 18675 posts, RR: 58
Reply 38, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 38937 times:

Quoting brilondon (Reply 32):
This sounds something like the TWA/AA merger and the USAPA will just have their seniority list stapled to the bottom of the APA's list.

No. TWA was broke. Not just bankrupt but broke. On the day AA took over, TWA did not have enough cash on hand to fund their operations for the day. The TW employees basically got "staple or quit."

In this case, AA is not broke, they are in bankruptcy and are slated to come out of it even if no merger occurrs.


User currently offlineGSPSPOT From United States of America, joined Sep 2003, 2965 posts, RR: 2
Reply 39, posted (1 year 4 months 1 week 3 days 12 hours ago) and read 38589 times:

Wow! So the merger potential is becoming reality - at least solicitation of a merger is reality. Can't wait to see what happens!


Finally made it to an airline mecca!
User currently offlineallegiantflyer From United States of America, joined Mar 2012, 162 posts, RR: 0
Reply 40, posted (1 year 4 months 1 week 3 days 11 hours ago) and read 37870 times:

all we can do is hope that this doesn't happen! It would be a complete mess!

User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 41, posted (1 year 4 months 1 week 3 days 11 hours ago) and read 37935 times:

Quoting deltairlines (Reply 35):
I believe part of the proposed deal is that Parker is the one that gets to run the show.

One of the reasons cited for the United-US Air merger failing was the question of leadership (Tilton).

No way to predict who would run the show in the event of a merger.


User currently offlineCoachClass From United States of America, joined Jan 2010, 418 posts, RR: 0
Reply 42, posted (1 year 4 months 1 week 3 days 11 hours ago) and read 37357 times:

Quoting southwest737500 (Reply 10):
Screw this merger. US Is a great airline, there goes the livery and bye bye star alliance I loved the star



Good god. I hope that the livery isn't like what UA/CO did.


User currently offlineSPREE34 From United States of America, joined Jun 2004, 2194 posts, RR: 9
Reply 43, posted (1 year 4 months 1 week 3 days 10 hours ago) and read 36930 times:

Quoting brilondon (Reply 32):
This sounds something like the TWA/AA merger and the USAPA will just have their seniority list stapled to the bottom of the APA's list.

I see no similarity at all. If there is a merger, there will be negotiations, then arbitration if necessary. (Not that USAPA understands the concept) No staple. Laws have been passed concerning seniority integrations.

If USAPA wants to kick, cry, and renig in an AA/US merger, it won't matter. APA out numbers USAPA. Ironic, eh?

Quoting deltaffindfw (Reply 34):
They will be integrated just like DL and UA.

  

Quoting JBirdAV8r (Reply 36):
There will be no stapling of seniority lists.

  



I don't understand everything I don't know about this.
User currently offlinegilesdavies From United Kingdom, joined Dec 2003, 2985 posts, RR: 2
Reply 44, posted (1 year 4 months 1 week 3 days 10 hours ago) and read 36521 times:

So, so, so hope this does not go through...

I love US Airways, just the way they are!

I like their Dividend Miles, being a member or Star think their hubs at Philly and Charlotte are first rate. Always have a good experience when fly through them, to and from Europe.

US keep assuring users, their present client base and local markets that their existing hubs have nothing to worry about, and will just mean more flights to more hubs. I am not buying that!

I just think US are taking a great risk and is potentially a gamble too far...

Maybe I can be accused of holding on to the past, but since the HP/US Merger, the airline is doing great and why change?! They have turned themselves around...


User currently offlineViscount724 From Switzerland, joined Oct 2006, 24061 posts, RR: 23
Reply 45, posted (1 year 4 months 1 week 3 days 10 hours ago) and read 36379 times:

Quoting platinumfoota (Reply 37):

So..... no American Airways??

AA was American Airways until 1934.

August 1933 timetable.




June 1934 timetable.



User currently offlinemayor From United States of America, joined Mar 2008, 9950 posts, RR: 14
Reply 46, posted (1 year 4 months 1 week 3 days 10 hours ago) and read 36304 times:

Quoting blueflyer (Reply 33):
The surviving image has very little to do with who owns what. The post-merger airline could be 100% owned by US Airways shareholders and it would still be called American Airlines.

Exactly..........during US' failed attempt to gobble up DL during our BK, it was clear that Parker wanted it to be basically US Airways, but with DL's branding.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlinekevindca From United States of America, joined Aug 2000, 104 posts, RR: 3
Reply 47, posted (1 year 4 months 1 week 3 days 9 hours ago) and read 35621 times:

Quoting commavia (Reply 26):
Kirby has essentially said it himself, as have many current USAirways pilots: if this merger happens, the whole issue of east and west will in large part go away. There will be a single representation election in which, in all likelihood, the USAirways (USAPA) pilots will be outvoted by the AA (APA) members and APA will end up the single collective bargaining agent.


So true. Kirby seems to think that this merger will solve the labor issues because AA employees will be the overwhelming majority, and since they have already come up with proposed agreements with AA's unions, poof, no more worries about integrating East and West.

I hate be cynical, but I can't help but believe that the driving force behind the union enthusiasm for a merger (apart from their hatred for the current AA management team) is that they are thinking along the same lines: a merged company will almost certainly elect all of AA's unions onto the property simply because AA's employees outnumber US's 2-1. So, poof, APA, APFA etc. will see their membership, and their dues income, increase 30-50%. Certainly a good business move for the unions, so even though I disagree with them, I can't blame them.

Personally, I think this merger would be a disaster for both companies. The nightmare of trying to integrate these companies is not worth the debatable benefits.


User currently offlineBeardown91737 From United States of America, joined Jun 2011, 429 posts, RR: 0
Reply 48, posted (1 year 4 months 1 week 3 days 9 hours ago) and read 35112 times:

I hope this merger doesn't happen because US adds to, and fills the gaps in UA's network, without taking me way out of the way like SLC or DFW. I also like being able to get Mileage Plus credit on US, and the possibility of redeeming miles on US with the seats and international destinations it adds.

Quoting commavia (Reply 24):
In addition, the headquarters remaining in DFW would virtually guarantee that a large portion of the corporate functions running the company would be legacy-AA, not legacy-USAirways, regardless of who the actually executives are at the top.

Many corporations have a majority of their operations outside HQ. Boeing, for example. UCH is another.

Quoting commavia (Reply 26):
Earlier reports alluded to Parker's sales pitches all over Capitol Hill, where he was almost certainly - and not surprisingly - told in no uncertain terms by every member of the huge Texas congressional delegation he spoke with that they would do everything they could to block a merger if it meant the headquarters leaving Texas.

Like they did with United? If there were an internet in 1980, someone could have used the congressional delegation formula to predict that United and Delta would have HQ in Los Angeles (and US in San Diego).

Quoting seatback (Reply 30):
With AA creditors holding a 70 percent stake in the new company, wouldn't that put AA in the driver's seat?

Only if the AMR creditors think current AA management would do better. They just want their money.

Quoting Acey559 (Reply 31):
Not to argue semantics, but it won't be Delta, United and US Airways; it would be Delta, United and American.

More accurately it would be Delta, UCH, and LCC. That would also eliminate all the a.net confusion about how post merger AA will be exactly like pre-BK AA, except they have to "let" Parker be CEO.

Quoting gilesdavies (Reply 46):
US keep assuring users, their present client base and local markets that their existing hubs have nothing to worry about, and will just mean more flights to more hubs. I am not buying that!

The experience with DL and UCH has shown that merged legacies have more hubs than pre-merger.

Quoting mayor (Reply 48):
Exactly..........during US' failed attempt to gobble up DL during our BK, it was clear that Parker wanted it to be basically US Airways, but with DL's branding.

I can see why LCC would keep the AA name, not because it is storied in a good way, but because it tells when the airline files. I never saw the need to keep Delta since it describes where DL served before deregulation.



135 hrs PIC (mostly PA-28) - not current. Landings at MDW, PIA, JAN.
User currently offlinePu From Sweden, joined Dec 2011, 690 posts, RR: 13
Reply 49, posted (1 year 4 months 1 week 3 days 9 hours ago) and read 34718 times:

Quoting kevindca (Reply 49):
The nightmare of trying to integrate these companies is not worth the debatable benefits.
AA's primary raison d'être is the relentless pursuit of premium markets and the most premium fliers. Their cornerstone plan, route structure, alliance strategy, marketing, product investments etc. all show AA aims towards the opposite end of the spectrum of customers compared to those who are fine with the US product.

To my mind US+AA adds very little competitive advantage beyond what AA already has in capturing the most premium fliers. Its no accident US chose the stock symbol LCC, and to me AA+US only adds value to a LCC-style, minimal service, non-premium-product airline business plan. I don't think Parker is going to change his style: cut costs, cut premium service....and gain the ability to earn profits on cheap fares.

...so I say Parker wants AA essentially to make whats worked at US work bigger and NOT to continue AA's premium service/premium customer strategy.




Pu

[Edited 2012-12-07 18:36:21]

User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 50, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33913 times:

Quoting LAXdude1023 (Reply 38):
This all said Im all for a merger. I think it will give the combined airline a great network presence and fix the gaping holes in the current AA network (sans Asia, but AA made progress recently there). Selfishly, as a DFW resident, I would be happy about the extra jobs and the boost to the current hub here. Empathetically, I feel for our friends in Arizona because they will be the one taking it in the shorts over a AA/US merger.

I generally agree. The combined airline would have an impressive network that is essentially at parity with Delta in terms of scope, breadth and access, with only a few exceptions in areas that are structurally inaccessible for geographic or competitive reasons, with or without a merger (namely: the west coast and mountain west, and Asia). But in the south, upper midwest, and east coast, and internationally to Europe and of course Latin America, the "new AA" would have an extremely impressive network. The thought of being able to earn and burn AAdvantage miles to all those new places in the east is appealing.

My only apprehension is, both for practical and sentimental reasons, with Parker getting his hands on something that was in many ways already quite successful, and heading in a very positive direction, and screwing it up. I hope he doesn't force the vastly inferior SHARES or USAirways' other inferior internet/IT infrastructure onto the combined airline. I hope he doesn't degrade AAdvantage, which is one of the best FF programs in the industry. I hope he doesn't reverse the generally excellent course AA's onboard product seems to be going in - with lots of new planes, improved amenities and IFE, upgraded premium meals, etc. I hope he doesn't mess with some of AA's more historic "legacy" vestiges (like longstanding flight numbers, etc.).

Quoting EricR (Reply 39):
I would like to clear up one item. Parker doesn't "desperately need" this merger far more than American. US is very profitable (more so than AA) and US's stock has been one of the best airline stocks this year. US has been, and will continue to be, fine on its own.

I disagree.

I think Parker is desperate - thus his attempt in the last five years to merge with everybody who would listen (and some who wouldn't). It's not because he's some grand financial visionary boldly advocating for consolidation when nobody else was. Hardly - several other major mergers were proposed or enacted before he even closed on his first merger. The real reason he was so desperate to merge with Delta, then United, and now with AA, is because he sees the writing on the wall.

A large portion of the profits his airline is now producing are predicated on labor costs well below the "industry standard" AA's unions have been so focused on. He has been benefiting now for years from labor costs produced by two bankruptcies and union in-fighting. I suspect even he has been somewhat surprised at how long he's been able to keep this game up, but I think he knows that sooner or later the reality is going to hit.

As Parker has alluded to himself, a large portion of his network is built upon these lower labor costs and when they go up, a large portion of USAirways' network is not going to work anymore. His only hope is to try and substantially boost revenue to cover that labor cost jump, and since there is no real way for USAirways to achieve that organically, the only alternative is to attempt to do it via a merger and all the "synergies."

Quoting EricR (Reply 39):
He did a far better job from a business standpoint than Arpey or Horton.

Well of course he did. He had the enormous benefit of two bankruptcies that dramatically lowered his costs, and yet he still got to claim the moral high ground (although his unions never bought it) that he wasn't there for either of those bankruptcies.

If AMR had gone through two bankruptcies in the last decade, I'm sure it, too, would be producing profits these days, as evidenced by the fact that in several recent quarters AMR has produced operating margins close to USAirways', but without the benefit of much of the restructuring of bankruptcy.

Quoting Beardown91737 (Reply 50):
Many corporations have a majority of their operations outside HQ.

Outside of purely operational functions like airports and maintenance, airlines typically have traditionally only had a single function not centrally located at the headquarters location, and that was reservations call centers. Beyond that, airlines in the modern era seldom have multiple core administrative functions spread among multiple cities simply because it's inefficient and economically unjustifiable. Even in cases when airlines say they are going to do so (typically for political, rather than financial, reasons), they ultimately end up consolidating anyway (witness: Delta's progressive pull down of Northwest's former Eagan campus). This merger would be no different. There would be absolutely no reason for a "new AA" to essentially keep two headquarters offices when there is already one facility large enough to handle it all.

Quoting Beardown91737 (Reply 50):
Like they did with United? If there were an internet in 1980, someone could have used the congressional delegation formula to predict that United and Delta would have HQ in Los Angeles (and US in San Diego).

Huh? The combined airline would be headquartered in Fort Worth, Texas and branded "American."

Parker has already agreed to that.

[Edited 2012-12-07 19:31:03]

User currently offlineusairways85 From United States of America, joined Nov 2001, 3326 posts, RR: 7
Reply 51, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33800 times:

Quoting kaitak (Reply 7):
Good to hear that this is moving forward; I always thought that AA would welcome US; after all, it's an airline that makes AA look very good indeed.

From the perspective of the top tier AA elites they probably have a different opinion

Quoting commavia (Reply 24):
somebody who views AA as the superior airline in a wide variety of areas including most aspects of hard and soft product, ground and onboard service, frequent flyer program, and IT/systems, that to me is a good thing. The combined company would have an expanded network with improved access to the northeast and to some extent Europe. I just hope that if Parker does get his hands on one of the largest and most storied brands in the industry he doesn't royally screw it up by imposing cheapened and suboptimal service or systems (SHARES) onto the "new AA."

I agree here, but just look at the UA/CO merger. Without going off on a tangent a lot of paxs blame Smisek for taking what should have been delivered on a silver platter and f'ing it all up.


User currently offlinesouthwest737500 From , joined Dec 1969, posts, RR:
Reply 52, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33757 times:

US please look at how great your airline is, your doing great financially, you don't need to merge just build on what you have

Oh yeah and the US livery is awesome


User currently offlinemayor From United States of America, joined Mar 2008, 9950 posts, RR: 14
Reply 53, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33285 times:

Quoting Beardown91737 (Reply 50):
I never saw the need to keep Delta since it describes where DL served before deregulation.

Perhaps it was because that Delta was a more well known brand, compaired to US.

Quoting commavia (Reply 52):
The real reason he was so desperate to merge with Delta, then USAirways, and now with AA, is because he sees the writing on the wall.

The order should be USAirways, Delta and now AA. US Air was already "merged" (so to speak) with America West when they went after Delta.

Quoting commavia (Reply 52):
(witness: Delta's progressive pull down of Northwest's former Eagan campus).

All DL promised was that no FRONTLINE jobs would be lost, particularly at MSP. HQ jobs are NOT frontline.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 54, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33131 times:

Quoting mayor (Reply 55):
The order should be USAirways, Delta and now AA. US Air was already "merged" (so to speak) with America West when they went after Delta.

My typo - I meant United, not USAirways.


User currently offlineCGKings317 From Canada, joined Nov 2005, 306 posts, RR: 6
Reply 55, posted (1 year 4 months 1 week 3 days 8 hours ago) and read 33151 times:
AIRLINERS.NET CREW
CHAT OPERATOR

Doesn't this merger, if ultimately approved by the creditors, also require DOJ approval? If it does, is it necessarily a foregone conclusion that DOJ will approve of this?

~CGKings317  



I love ✈ & volcanoes but the 2 of them dont get along, just ask KLM867 & PH-BFC
User currently offlineincitatus From Brazil, joined Feb 2005, 3964 posts, RR: 13
Reply 56, posted (1 year 4 months 1 week 3 days 7 hours ago) and read 32817 times:

Quoting EricR (Reply 39):
However, Parker "wants" this merger because he believes that one of the few ways to make this industry profitable is via consolidation.

With labor costs in parity with other airlines US is not a viable entity. US's days as it is today are numbered - merger or no merger.


User currently offlineLAXdude1023 From India, joined Sep 2006, 7320 posts, RR: 24
Reply 57, posted (1 year 4 months 1 week 3 days 7 hours ago) and read 32313 times:

Quoting southwest737500 (Reply 54):

I know what you're thinking: that a merger will harm the CLT hub. I might be inclined to share your concern if I lived out there. Don't worry too muc though, CLT is still going to be a large hub. You'll just see a scale back on secondary Europen and Caribbean destinations.

Quoting Pu (Reply 51):

I do agree on some levels. The strategy seems to have been to focus only on NRT, LHR, Latin America, and the Premium market. Sticking hard to that allowed AA to be left behind on several levels. I'm hoping a merger with US will broaden their focus and get them to have a focus on other secondary markets.

Quoting Beardown91737 (Reply 50):


Wishful thinking. The whole operation will be at DFW. It's already been confirmed.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4482 posts, RR: 22
Reply 58, posted (1 year 4 months 1 week 3 days 7 hours ago) and read 32056 times:

Quoting commavia (Reply 52):

My only apprehension is, both for practical and sentimental reasons, with Parker getting his hands on something that was in many ways already quite successful, and heading in a very positive direction, and screwing it up. I hope he doesn't force the vastly inferior SHARES or USAirways' other inferior internet/IT infrastructure onto the combined airline. I hope he doesn't degrade AAdvantage, which is one of the best FF programs in the industry. I hope he doesn't reverse the generally excellent course AA's onboard product seems to be going in - with lots of new planes, improved amenities and IFE, upgraded premium meals, etc. I hope he doesn't mess with some of AA's more historic "legacy" vestiges (like longstanding flight numbers, etc.).

I enjoy reading many of your posts because you often raise cogent points that really get my wheels turning. However, I think your rationale for worrying about the "desperate" Parker wantonly destroying American's high standard of service is definitely weighted more towards the sentimental side.

I'm not sure why there is little love for Doug Parker here, but the man is not an idiot; he's one of the most talented airline CEOs out there. He's not going to change things just for the sake of change. If it works, he'll keep it; if it doesn't, expect them to change. What works for US Airways doesn't necessarily work for a combined US Airways/American...that should be pretty straightforward.

Besides, it's not like US Airways is appreciably worse (or even that different) from its legacy peers. Perhaps I'm a rube that can't tell a Filet-O-Fish from lobster, but to me, US does a great job. Their Envoy product is quite impressive and, to me, it seems it can hold its own with just about any airline on the routes they serve.

Quoting incitatus (Reply 58):
With labor costs in parity with other airlines US is not a viable entity. US's days as it is today are numbered - merger or no merger.

I generally agree with the latter, but I'm not quite so doom-and-gloom on the former. As it stands now but with all labor costs at parity, it would be much less profitable and much more vulnerable to demand shocks and cost fluctuations...which needs to change, definitely, but I don't think US is a dead duck without a merger in the near-to-mid term.



I got my head checked--by a jumbo jet
User currently offlineAA94 From United States of America, joined Aug 2011, 530 posts, RR: 0
Reply 59, posted (1 year 4 months 1 week 3 days 7 hours ago) and read 31914 times:

Quoting LAXdude1023 (Reply 38):
3) We already know the Unions want a merger and management doesnt and they will fight tooth and nail to get what they want.

They did at one point, but with contracts getting figured out, do the unions still need a merger? The merger with US was the APA bargaining chip, but since they've since worked out their differences, is it really necessary? In my eyes, AA employees wanted a merger to spite management, not to actually merge with another airline.

Quoting kevindca (Reply 49):
Personally, I think this merger would be a disaster for both companies. The nightmare of trying to integrate these companies is not worth the debatable benefits.

  
Especially because the benefits are arguably scaled more towards the US side, not the AA side. AA premium pax and elites will lose big time.

Quoting Pu (Reply 51):
To my mind US+AA adds very little competitive advantage beyond what AA already has in capturing the most premium fliers. Its no accident US chose the stock symbol LCC, and to me AA+US only adds value to a LCC-style, minimal service, non-premium-product airline business plan. I don't think Parker is going to change his style: cut costs, cut premium service....and gain the ability to earn profits on cheap fares.

        

Quoting commavia (Reply 52):
I think Parker is desperate - thus his attempt in the last five years to merge with everybody who would listen (and some who wouldn't). It's not because he's some grand financial visionary boldly advocating for consolidation when nobody else was. Hardly - several other major mergers were proposed or enacted before he even closed on his first merger. The real reason he was so desperate to merge with Delta, then United, and now with AA, is because he sees the writing on the wall.

  

Quoting CGKings317 (Reply 57):
Doesn't this merger, if ultimately approved by the creditors, also require DOJ approval? If it does, is it necessarily a foregone conclusion that DOJ will approve of this?

Yes, a merger would require DOJ approval. I think that there's a fairly good chance that they would approve it. It's certainly not as potentially monopolizing as some of the other mergers in the recent years (and they all got approved).



Choose a challenge over competence / Eleanor Roosevelt
User currently offlinebos2laf From United States of America, joined Sep 2004, 371 posts, RR: 0
Reply 60, posted (1 year 4 months 1 week 3 days 6 hours ago) and read 31676 times:

Quoting SPREE34 (Reply 45):
Laws have been passed concerning seniority integrations.

  

And said laws were passed largely as a result of the brutal rape of the TW workforce in that merger.


User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 61, posted (1 year 4 months 1 week 3 days 6 hours ago) and read 31437 times:

Remember, people thought that the AT&T/T-Mobile merger would proceed without a hitch as well.

We all know how that turned out.

The combination suggested by the merger is a combination of last resort. There are no other legacy carriers that are not jumbo-sized (i.e. UA and DL) who can merge with either party. That doesn't mean they should.


User currently onlineByrdluvs747 From United States of America, joined Jul 2004, 2309 posts, RR: 1
Reply 62, posted (1 year 4 months 1 week 3 days 6 hours ago) and read 30820 times:

Oh, how soon people forget the past. I'll never forget his attempt to charge for water.

All of you who are praising this merger will be cursing it once Parker begins his nickel & diming campaign. With reduced competition, I guarantee he will "enhance" AAdvantage to the point it resembles DL's SkyPeso program.

This merger with Parker in control is a disaster for AA frequent flyers.



The 747: The hands who designed it were guided by god.
User currently offlinerj777 From United States of America, joined Dec 2000, 1753 posts, RR: 2
Reply 63, posted (1 year 4 months 1 week 3 days 5 hours ago) and read 30381 times:
Support Airliners.net - become a First Class Member!

Although a lot of people think it's almost a certainty, considering everything that's happened with the unions and all, until we see the thread that says "OFFICIAL: AA & US to Merge" everything is all speculation and no real fact. However, my opinion is that it will happen.

User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 64, posted (1 year 4 months 1 week 3 days 4 hours ago) and read 29734 times:

Quoting Byrdluvs747 (Reply 64):
Oh, how soon people forget the past. I'll never forget his attempt to charge for water.

I readily admit, I forgot that. But just ask the FAs over at US what they think of him versus the FAs at AA? Odd circumstance of the grass is always greener.


User currently offlineBDL757 From United States of America, joined Apr 2012, 143 posts, RR: 0
Reply 65, posted (1 year 4 months 1 week 3 days 4 hours ago) and read 29619 times:

Quoting Pu (Reply 51):

I agree with what you're saying. American is/was known for promoting its' classiness and upscale service particularly on trans-cons and international flights. They have recently announced the new first and business class seats as well as improved meal service. While I don't think that US Airways has as bad service as some on here think, they definitely are not on the same level as AA. It will be interesting to see if US standards will be brought up to AA standards which would cost a lot of $$$!


User currently offlineetops1 From United States of America, joined Nov 2005, 1037 posts, RR: 1
Reply 66, posted (1 year 4 months 1 week 3 days 4 hours ago) and read 29640 times:

All I see on here is a bunch of US haters as usual who don't know jack of what they are talking about . This merger is a done deal wether you guts like it or not .

User currently offlineLAXdude1023 From India, joined Sep 2006, 7320 posts, RR: 24
Reply 67, posted (1 year 4 months 1 week 3 days 3 hours ago) and read 29194 times:

Quoting etops1 (Reply 68):

Then you need to open your eyes. There's quite a few "Keep US my US" people on here.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineflyguy89 From United States of America, joined Feb 2009, 1850 posts, RR: 10
Reply 68, posted (1 year 4 months 1 week 3 days 3 hours ago) and read 29101 times:

Refreshing to see a formal proposal finally on the table after all the speculation.

I doubt Mr. Parker will be able to woo AA's creditors in the short term with his merger proposal...why accept what's probably a low-ball offer when you're in bankruptcy when you know if you wait until after bankruptcy you can get a better deal? AA certainly isn't over the barrel here like they were a year ago.

In the long-term I still see this merger happening, just probably not on Mr. Parker's terms.

Quoting etops1 (Reply 68):
This merger is a done deal wether you guts like it or not .

Oh? Spoken with any of the AA creditors or the DOJ recently? I'm sure it's as much a done deal as Parker's attempted merger with DL  


User currently onlineByrdluvs747 From United States of America, joined Jul 2004, 2309 posts, RR: 1
Reply 69, posted (1 year 4 months 1 week 3 days 2 hours ago) and read 28735 times:

Quoting dcann40 (Reply 66):
But just ask the FAs over at US what they think of him versus the FAs at AA?

Are you saying the US FA's like Parker? I have talked to many FA's who have less than stellar things to say about him.

Quoting dcann40 (Reply 66):

I readily admit, I forgot that.

Don't forget the wine service using plastic cups in F.

Quoting etops1 (Reply 68):
All I see on here is a bunch of US haters as usual who don't know jack of what they are talking about .

I've been flying HP out of PHX since the mid 80's and know first hand the "greatness" of Doug Parker's decisions. He leans towards "fees for everything" and giving less to customers while charging more for it.



The 747: The hands who designed it were guided by god.
User currently offlineBeardown91737 From United States of America, joined Jun 2011, 429 posts, RR: 0
Reply 70, posted (1 year 4 months 1 week 3 days 2 hours ago) and read 28678 times:

Quoting commavia (Reply 52):
Huh? The combined airline would be headquartered in Fort Worth, Texas and branded "American."

1. I knew that. My post that you quoted was about how you said the TX congressional delegation is telling Parker in 'no uncertain terms' that the HQ had to stay in TX. Did that happen with the UA/CO merger? If it did, it didn't work.
2. If it is all about congressional delegation size... California has the biggest (and craziest).

Quoting LAXdude1023 (Reply 59):
Wishful thinking. The whole operation will be at DFW. It's already been confirmed.

Missed that. I thought it was just the HQ.

Anyway, I still want to keep US in Star.

Quoting southwest737500 (Reply 54):
the US livery is awesome

  



135 hrs PIC (mostly PA-28) - not current. Landings at MDW, PIA, JAN.
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 71, posted (1 year 4 months 1 week 2 days 23 hours ago) and read 27345 times:

Quoting JBirdAV8r (Reply 60):
the man is not an idiot; he's one of the most talented airline CEOs out there. He's not going to change things just for the sake of change. If it works, he'll keep it; if it doesn't, expect them to change. What works for US Airways doesn't necessarily work for a combined US Airways/American...that should be pretty straightforward.

I hear you that he's a smart guy and he isn't going to "change things just for the sake of change."

But I also hear (or rather, see) in my head the comments that were made by the USAirways (east) employees back in 2006-2007 about how the America West management and employees arrogantly forced "hear-in-the-desert," "regional airline" thinking onto the new USAirways regardless of whether it actually made sense or not. The attitude then, according to some USAirways employees, was that Tempe knew all the answers and because USAirways was bought they clearly didn't know what they were doing. I also remember the chaos it caused for several years.

I am concerned because, if that is true, I believe doing that again at AA would be a disaster. AA is one of the oldest and most institutionally "experienced" airlines in the U.S. - it's culture is also one of the most institutionally arrogant. Not to mention - it's double the size of USAirways. And AA does a lot of things "right" and does a lot of things far better than USAirways. Thus, as I said, why I am at least happy that the headquarters would be in Fort Worth - I'm hoping it allays some of that from happening.

Quoting Beardown91737 (Reply 72):
My post that you quoted was about how you said the TX congressional delegation is telling Parker in 'no uncertain terms' that the HQ had to stay in TX. Did that happen with the UA/CO merger? If it did, it didn't work.

No, to my knowledge that did not happen with UA/CO. In that instance, the entire thing was approached differently in D.C. Parker has been out shopping this around Capitol Hill for months and months, since long before any actual proposal was on the table. I do not believe that was the case with UA/CO.


User currently offlineAAplat4life From United States of America, joined Jun 2011, 162 posts, RR: 0
Reply 72, posted (1 year 4 months 1 week 2 days 22 hours ago) and read 26570 times:

Quoting phxa340 (Reply 13):
US Airways is bringing no cash to the table. It will be a 100% stock transaction. If Parker thinks the combined company will be valued at 8 billion he is dreaming. Far from a done deal ... Especially in current market conditions considering this is an all stock transaction

First, we do not know what Parker is bringing to the table yet or what AMR is offering as a stand-alone entity. Chance are that the secured creditors will get some cash and debt in whatever form AMR emerges from bankruptcy.

Also, the issue is not whether the combined company will be valued at $8B, but what AMR is valued as a stand-alone entity. We can go online and see what the market value is of Delta, United and US, but not AMR because its stock is just trading at a speculative liquidation value (the stock will probably be cancelled and new stock will be issued to the creditors and US shareholders. The current AMR shareholders will receive nothing.) We know right now that the market cap of US is about $2B. United is close to $7B and Delta about $8.5B. So if Horton thinks that the AMR side should get 80% and the US side 20%, he is putting a value on AMR as a stand alone entity at about $6B. With all due respect, under the circumstances, I would say that Horton is the one who is dreaming here.

Although I agree with you that this is not a done deal, the pressure to get the deal done right now is on the side of Parker.


User currently offlinemicstatic From United States of America, joined Jul 2001, 773 posts, RR: 1
Reply 73, posted (1 year 4 months 1 week 2 days 22 hours ago) and read 26456 times:

I'm mixed on this merger. The last few rounds of mergers have eliminated enough capacity to make the current carriers profitable. I'm wondering if a tie-up between US/AA would leave the US airline industry with monster carriers in United, Delta, and AA thus causing fares to skyrocket. While we still have Southwest and several boutique carriers, I would think the barriers to entry would be high for another carrier to come in and offer reasonable competition to keep the others in check. Further, I actually like the USAirways of 2012. In particular I like the fact that they serve some small markets (IE HVN), and I like having the ability to buy up to first class at a reasonable price. On the flip side, I've found American has become very stale. Their employees seem bitter, and their management has lacked creativity compared to other carriers. With that being said, I'm also in favor of long term stability in the airline industry. Guess we will have to sit back and watch it play-out.


S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
User currently offlineBE77 From Canada, joined Nov 2007, 455 posts, RR: 0
Reply 74, posted (1 year 4 months 1 week 2 days 20 hours ago) and read 25055 times:

Quoting N766UA (Reply 17):
If you'd told me 10 years ago that in a decade only United, USAir, and Delta would exist, I'd tell you you were nuts...

And if you were a bit older, you would have thought the same about TWA, Braniff, PanAm, (and CP and WardAir for us canoeheads). Not being cynical, but I wonder which, if any, of the airlines today will still be around in 10 years!

Quoting Viscount724 (Reply 47):
AA was American Airways until 1934

Good point / catch.

Not much detailed analysis yet on the likelyhood of success from the financial press, and even though it's been expected for quite some time it seems like no one was really ready for it when it did happen...hmmm...that's a recurring theme for Dec 7...were the US Airways lawyers humming Tora Tora Tora on their way into the court room?



Tower, Affirmitive, gear is down and welded
User currently offlineEricR From United States of America, joined Jul 2010, 1801 posts, RR: 1
Reply 75, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24647 times:

Quoting micstatic (Reply 75):
The last few rounds of mergers have eliminated enough capacity to make the current carriers profitable. I'm wondering if a tie-up between US/AA would leave the US airline industry with monster carriers in United, Delta, and AA thus causing fares to skyrocket. While we still have Southwest and several boutique carriers, I would think the barriers to entry would be high for another carrier to come in and offer reasonable competition to keep the others in check..

I think the latest rounds of consolidation have helped, but I think restructuring labor costs in BK combined with relatively low oil prices contributed a lot to improving the bottom lines for all airlines. I would not attribute consolidation as the only reason.

Also, the whole consolidation theory in my opinion is only an interim solution. It will help the legacy carriers establish mass to compete against low cost/low fare carriers. However, the threat of new, lower cost / low fare entrants remains.

From a customer standpoint, AA is a much better all around product for business travelers and FFs. But from a business standpoint, the AA model (and UA/DL) is not the best model. Costs in the industry are too high to provide all the frills that the big 3 provide - and they realize this - hence the reason why their business models have migrated more towards the LCC model over the years.

If the merger goes through, Parker will most likely make changes to the AA organization that may appear less from a customer standpoint, but needs to happen from a business standpoint. For example, do you really need an F cabin when business class is almost on par?

Quoting incitatus (Reply 58):

Are you assuming that the labor rates at other airlines remain constant?


User currently offlineAAIL86 From Finland, joined Feb 2011, 400 posts, RR: 3
Reply 76, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24364 times:

Quoting Beardown91737 (Reply 72):

1. I knew that. My post that you quoted was about how you said the TX congressional delegation is telling Parker in 'no uncertain terms' that the HQ had to stay in TX. Did that happen with the UA/CO merger? If it did, it didn't work.
2. If it is all about congressional delegation size... California has the biggest (and craziest).
Quoting Beardown91737 (Reply 72):
Missed that. I thought it was just the HQ.

As you should know - Parker has already officially proposed that the headquarters would remain in Fort Worth. What, you think someone from AA is now going to suggest keeping it in Tempe instead? DFW will also remain the largest hub because its the right business decision...

Quoting Pu (Reply 51):
Its no accident US chose the stock symbol LCC, and to me AA+US only adds value to a LCC-style, minimal service, non-premium-product airline business plan. I don't think Parker is going to change his style: cut costs, cut premium service....and gain the ability to earn profits on cheap fares.

I disagree with you there. Parker and gang had no choice but to pursue the current strategy with US Airways. They are based in second-tier cities for the most part, and so it would have been absolute folly to chase the same business plan as UA or AA might. Parker and his team at US realized they held the reins to a mule and not a thoroughbred (no disrespect intended), and so they built a business plan accordingly. Love US or hate US, they've been successful. A merger with AA and the changed dynamic of the combined carrier would present an opportunity to chase a different business plan...



The plural form of aircraft is * aircraft *
User currently offlineeinsteinboricua From Puerto Rico, joined Apr 2010, 2664 posts, RR: 8
Reply 77, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24273 times:

Quoting etops1 (Reply 68):
All I see on here is a bunch of US haters as usual who don't know jack of what they are talking about . This merger is a done deal wether you guts like it or not .

It's only an offer. If a car salesman makes you an offer for a car, does it mean that it's already sold?



"You haven't seen a tree until you've seen its shadow from the sky."
User currently offlineavek00 From United States of America, joined Oct 2004, 4281 posts, RR: 20
Reply 78, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24254 times:

AMR gets little of value from a merger with US Airways, and is better off building strengths at existing hubs rather than tosing a billion dollars down the drain to merge and integrate a carrier that operates at a substantial revenue disadvantage to legacy peers.

1. US has a sizeable TATL network, but it is NOT very strong, by any means. For starters, look at how much of that flying is purely seasonal, reliant upon tourist traffic. Second, US has been repeatedly refused acceptance into the Star A++ JV because including its flights in the mix would result in substantial revenue dilution for the other partners. And third, note that US has not made any plans to update its TATL 757s/767s to a competitive product in either cabin.

2. AA's Latin America network is best grown in the cities where it is currently concentrated -- MIA, JFK, and DFW. AA has room to expand its flying at all three of those hubs.

3. PHX isn't a great hub today (in part because there's too much WN flying there), and would likely be a financially disastrous hub under the merged carrier's cost structure. PHX also does nothing to further AA's efforts to expand Transpacific flying.

4. JFK can serve connecting passengers very well as soon as AA firmly commits to building out its hub facility there to its full potential. Slots will not pose a major issue at JFK, since the only timeframes that ae truly congested are the departure/arrival banks for TATL flights.

5. US' fleet is OK for what it does -- and with the possible exception of the A330s, does little for the route network of American. US' 767s -- and many of its 757s -- are in need of retirement. Most of the Airbus equipment is young, but then again, a spend of hundreds of millions of dollars, over several years, would be required to make the US Airbus fleet match/mimic the planned AA Airbus fleet. And Delta has been there, done that with using MD-80s on the Shuttle, and quickly discovered that they're too fuel-inefficient for very short runs.

And on top of all this, airline mergers bring about 1-2 years of operational infirmity and confusion all the way from the management ranks to the front-line employees, and that's in a best case scenario (and neither AA nor US management have a good track record in making mergers work well). Be careful what you wish for.



Live life to the fullest.
User currently offlineAA94 From United States of America, joined Aug 2011, 530 posts, RR: 0
Reply 79, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24179 times:

Quoting Byrdluvs747 (Reply 71):
I've been flying HP out of PHX since the mid 80's and know first hand the "greatness" of Doug Parker's decisions. He leans towards "fees for everything" and giving less to customers while charging more for it.

Agreed.

Quoting AAIL86 (Reply 78):
I disagree with you there. Parker and gang had no choice but to pursue the current strategy with US Airways. They are based in second-tier cities for the most part, and so it would have been absolute folly to chase the same business plan as UA or AA might. Parker and his team at US realized they held the reins to a mule and not a thoroughbred (no disrespect intended), and so they built a business plan accordingly. Love US or hate US, they've been successful. A merger with AA and the changed dynamic of the combined carrier would present an opportunity to chase a different business plan...

.. and good for him. But who says that Parker's business plan is right for AA? It clearly isn't. AA is a different airline than US is, and that's what worries a lot of us. The AA FFs and elites are at risk of being totally alienated by Parker because of his "dynamic" business goals. US is not the right airline to merge with AA, and Parker is not the right person to lead the charge.

Quoting flyguy89 (Reply 70):
Oh? Spoken with any of the AA creditors or the DOJ recently? I'm sure it's as much a done deal as Parker's attempted merger with DL  

  

Quoting BDL757 (Reply 67):
I agree with what you're saying. American is/was known for promoting its' classiness and upscale service particularly on trans-cons and international flights. They have recently announced the new first and business class seats as well as improved meal service. While I don't think that US Airways has as bad service as some on here think, they definitely are not on the same level as AA. It will be interesting to see if US standards will be brought up to AA standards which would cost a lot of $$$!

Agreed. While AA has had some rough years, it finally seems like they're getting themselves together. They're working on their finances, they've got new agreements with their labor, and they're looking to make significant upgrades to the passenger experience in all cabins on nearly every route. AAdvantage is a spectacular FF program. It hasn't always been meadows and rainbows, but AA has built themselves a nice FF base with very happy elite fliers (or that's my observation).

I think it would be a shame to see all this hard work go to waste. It's the uncertainty that scares me. I'm not sure if Doug Parker really realizes what AA is all about and what the fliers expect. I'd hate to see all this progress totally undone. Perhaps I'm being over dramatic here, but what sticks out in my mind is the LCC-style service that US provides. AA is an entirely different animal.

Not saying that one is necessarily "better" or "worse," but the business strategies are not parallel.



Choose a challenge over competence / Eleanor Roosevelt
User currently offlinemayor From United States of America, joined Mar 2008, 9950 posts, RR: 14
Reply 80, posted (1 year 4 months 1 week 2 days 19 hours ago) and read 24091 times:

Quoting etops1 (Reply 68):
This merger is a done deal wether you guts like it or not .

This merger (only an offer) is about as much of a done deal, at this point, as when US went after DL. Was THAT a done deal? Hardly.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineAAIL86 From Finland, joined Feb 2011, 400 posts, RR: 3
Reply 81, posted (1 year 4 months 1 week 2 days 18 hours ago) and read 23532 times:

Quoting AA94 (Reply 81):
But who says that Parker's business plan is right for AA? It clearly isn't. AA is a different airline than US is, and that's what worries a lot of us. The AA FFs and elites are at risk of being totally alienated by Parker because of his "dynamic" business goals.

I didn't endorse Parker's plan at all. There's no bigger AA cheerleader then I am, having worked there for 8 years and am now a very regular customer with elite status. As far as what plan should be followed - I spent years there watching ultra-conservative management decisions erode the company's industry leadership position. Granted, Horton and his team have been much more aggressive - and glad to see it. But is it a case of too-little too late as a stand alone carrier? Why not consider what US brings to the table?

Quoting AA94 (Reply 81):
AA is a different airline than US is, and that's what worries a lot of us.

DL and NW were about as different as carriers in the same country could get. One flew 40 747s to the Pacific and the other was a heavily domestic carrier with an emphasis on the US southeast and Europe. Just because AA and US are very different at present does not mean that a future combination is doomed to failure. May the best plan win....



The plural form of aircraft is * aircraft *
User currently offlinePu From Sweden, joined Dec 2011, 690 posts, RR: 13
Reply 82, posted (1 year 4 months 1 week 2 days 18 hours ago) and read 23423 times:

Quoting avek00 (Reply 80):

US has a sizeable TATL network

Which could be duplicated anytime by AA if it was so valuable; and AA already has the better TATL hub. Much of US in Europe was tried and rejected by AA already. The US feed to LH isn't going to work across high priced LHR.

US brings a lot of low RASM customers. Their route structure and hubs are built on this fact, but US brings nothing I can see that AA can't duplicate on its own.




Pu


User currently offlineflyingbobcat787 From United States of America, joined Nov 2012, 1 posts, RR: 0
Reply 83, posted (1 year 4 months 1 week 2 days 18 hours ago) and read 23036 times:

Also do not forget that US made an offer for Delta and we all know how that one ended as well

User currently offlineLAXdude1023 From India, joined Sep 2006, 7320 posts, RR: 24
Reply 84, posted (1 year 4 months 1 week 2 days 17 hours ago) and read 22409 times:

Quoting Pu (Reply 85):

I would argue that what US brings to the table that AA cannot get on its own is two fold:

1) The PHL and CLT local markets. Both of these US has hostage and both are valuable in different ways (PHL is very large and has a large Europe O&D component and CLT has very high fares as well as good O&D to London and Germany).

2) A Southern and Northeast hub. PHL is the only way AA can have an answer to EWR and CLT is the only way AA can answer ATL. Obviously PHL isn't EWR and CLT isn't ATL, but they are valuable markets.

Those things AA cannot gain on their own.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 25
Reply 85, posted (1 year 4 months 1 week 2 days 17 hours ago) and read 22399 times:

Quoting etops1 (Reply 68):
This merger is a done deal wether you guts like it or not .

They said the exact same thing when US went after DL, and look what happened to that now.

This is a proposal, not a "done deal". Two totally different things.

IMO, If this merger does happen, IF it does happen, I hope it is without Doug Parker, period.

Quoting micstatic (Reply 75):
I'm mixed on this merger.

+1 here, as well.



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 86, posted (1 year 4 months 1 week 2 days 17 hours ago) and read 22284 times:

Consider these points:

- AA retrenched while others grew primarily because their cost structure was so out of whack they couldn't effectively compete. With higher labor costs, lower productivity, inability to expand code sharing, and improperly sized aircraft for certain markets they had no choice but to focus on higher yielding markets (the Cornerstone Strategy) to compensate.

- AA has some pre-bankruptcy assets that are quite valuable. Tight JBA's, LHR slots, visibility and customer loyalty in high-yielding markets, the industry's preeminent frequency program, prominence in Latin America, and large orders for new aircraft on a desirable schedule at favorable terms.

- AA, at their worst, remained competitive and viable because the value of their franchise allowed them to.

Now, post-bankruptcy:

- With more efficient aircraft, the ability to apply the correct ship to the mission (expanded code sharing, lower cost regional partnering, large RJ's), lower raw labor costs, higher employee productivity (union and non), labor harmony (for a while), their yields will go up dramatically. Higher yields and lower costs fuel expansion and also allow maintaining marginal routes to bolster competitive position (EG: Spirit in DFW) or because they feed key international markets.

- The byproduct of the bankruptcy will be a "new AA" both cosmetically and structurally. Growth opportunities are virtually limitless and what's known as the "Cornerstone Strategy" basically become dots that can be connected with any combination of new AA flying, new code sharing opportunities, and efficient regional feed. All of which grow revenue, yield, profitability, and free cash flow for investment.

- The economy won't stay the way it is today forever. Because of the aforementioned assets, AA and their JBA partners are strongly positioned to take advantage of resurgence in the economy. AA's upside potential is greater than UA's and DL's and based on timing AA's in a better position to lock in future opportunities at a lower cost than both of them who inherited their assets via combination, not negotiation.

So doing the math of Parker's proposal he valued US at $2.5B and AA at $5.5B. The stakeholders aren't idiots. If via a stand-alone plan AA becomes a $8B company in two-years post-bankruptcy they'd be fools to let it go for $5.5B because Parker's itching to merge. Someday Parker's going to have to deal with his own labor cost issues and provide competitive pay to the pilots and flight attendants. Those costs are going to depress the value of US (especially because they have so much low-yielding flying) while AA's value is appreciating. Simply put, by waiting, AA's stakeholders can get more of a return by strengthening the value of their existing AA investment and waiting for US's value to become depressed. Also keep in mind that with all Parker's grand standing about the need for consolidation the financial benefits of an AA/US merger would help DL and UA just as much and increase the pressure on a AA/US combination financially while their immobilized for two years dealing with the merger. With everything AA's just gone through they'll be getting stronger and more financially viable each day. Which direction does anyone see a stand-alone US going? And that my friends is why Parker's so desperate to merge. US is the odd man out and can't compete with the new-AA, UA, or DL. I definitely think a merger will occur. But it will be the new-AA picking up a distressed US for a song at some point in the future. Not Parker shopping for a bargain and salvation on the court house steps.


User currently offlineAAIL86 From Finland, joined Feb 2011, 400 posts, RR: 3
Reply 87, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21882 times:

[quote=BarryH,reply=90]Consider these points:

An excellent analysis, thanks. I wonder if the BK court and creditors will see it this way?



The plural form of aircraft is * aircraft *
User currently offlinestrandedinbgm From United States of America, joined Jul 2007, 349 posts, RR: 0
Reply 88, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21877 times:

Dear Lord, please do everything in your power to not let this happen.


It's 737s, 747s and 380s. Not 737's, 747's and 380's. Learn to use the apostrophe for crying out loud.
User currently offlineAA94 From United States of America, joined Aug 2011, 530 posts, RR: 0
Reply 89, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21873 times:

Quoting avek00 (Reply 80):

  
Well stated on all points.

Quoting AAIL86 (Reply 84):
I didn't endorse Parker's plan at all. There's no bigger AA cheerleader then I am, having worked there for 8 years and am now a very regular customer with elite status. As far as what plan should be followed - I spent years there watching ultra-conservative management decisions erode the company's industry leadership position. Granted, Horton and his team have been much more aggressive - and glad to see it. But is it a case of too-little too late as a stand alone carrier? Why not consider what US brings to the table?

Sorry if it came off as saying that you endorsed Parker's plan - not my intent. And while I agree with your points about AA's previously conservative management, that is precisely my concern. I believe that AA is about to come into its own, and I believe that Parker will waste no time in undoing the progress of years past.

Quoting AAIL86 (Reply 84):
DL and NW were about as different as carriers in the same country could get. One flew 40 747s to the Pacific and the other was a heavily domestic carrier with an emphasis on the US southeast and Europe. Just because AA and US are very different at present does not mean that a future combination is doomed to failure. May the best plan win....

I agree, but the type of flying you describe above with regards to DL/NW is complementary. DL was the yin to NW's yang. The combination of those two carriers gave DL a strong global network, and now look where they are. In my opinion, DL and NW were more of a natural fit with complementary networks. AA and US don't fit together that easily.

Quoting BarryH (Reply 90):


  



Choose a challenge over competence / Eleanor Roosevelt
User currently offlinePu From Sweden, joined Dec 2011, 690 posts, RR: 13
Reply 90, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21751 times:

Quoting LAXdude1023 (Reply 88):

1) The PHL and CLT local markets. .......

2) A Southern and Northeast hub. ......

On the face of it, yes, I agree these are things US brings to the table. But certainly nothing else.

AA made a serious effort at RDU. It doesn't work with a premium service focused airline. Although conventional wisdom on a.net is that a hub in this region is what is needed, United makes half a billion a quarter profit without one because north-south flying is low yielding ....and east-west flying is so high yielding it justifies 3 class service. So a SE hub brings nothng to AA's model, but if the new AA model is the US model, it works great.

CLT and PHL local markets? Ok, fine, if you think that helps justify a merger, ok.

Essentially my point is that old Allegheny and Piedmont markets are appealing mainly to an Allegheny and Peidmont type airline, (aka US) and not to an airline who partners with BA and CX in pursuit of global premium fliers.

Actually, I think Parker's model is proven and could work very nicely imposed onto AA, but I don't see AA's model being workable on US, which IIRC is not even allowed to participate in the *A JV because their yields are so low.




Pu


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 91, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21787 times:

Quoting Pu (Reply 94):
AA made a serious effort at RDU. It doesn't work with a premium service focused airline.

I share your skepticism about whether AA "needs" CLT, but failure at RDU at a time when the region was much smaller and there was a much larger hub two hours down Interstate 85 doesn't prove anything.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineFlighty From United States of America, joined Apr 2007, 8198 posts, RR: 3
Reply 92, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21704 times:

People need to remember this is about running a business, not running a fantasy airline for the glory of its own staff. US has proved their business skills and their problem-solving ability.

US's business is much leaner and better run at this point than AA. They are both three-star airlines.

Nobody is saying AA can't _survive_ at all on its own. Old US also could have survived on its own (if you examine US's network, you can see that easily). Point is, the agency of entrenched management is not healthy. Management is very sentimental about cost items the passenger neither sees nor gives a rat's ass about.

Doug and Scott have proved they ruthlessly serve the customer and cut costs to please investors. They don't care about the tradition at Old US or American... and neither does Wall Street. The creditors, though, hmmm..... not sure yet.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 93, posted (1 year 4 months 1 week 2 days 16 hours ago) and read 21674 times:

Quoting Flighty (Reply 96):
Doug and Scott have proved they ruthlessly serve the customer and cut costs to please investors.

The point is that the "ruthless service" of customers paying $200 to fly MDT-MCO isn't the same as the "ruthless service" of customers paying $3,000 to fly JFK-LAX. Do you disagree with that proposition?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 94, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 21346 times:

I agree with those who believe AA does not "need" USAirways in order to be viable and successful long-term. Nonetheless, I also disagree with those who say USAirways brings nothing to the table for a hypothetical "new AA."

USAirways offers several strategically valuable assets that would be additive to an overall combined network, including:

(1) Philadelphia hub - Arguably among the best hubs in the northeast. While it is crowded, congested, and has aging facilities, that's just about every big airport in the northeast. But PHL would provide AA with an domestic and international, omni-direction, throughout-the-day hub like United has at EWR and IAD and Delta has in DTW.

(2) Charlotte hub - An excellent hub to serve the southeast and north-south traffic flows. The local market is a good one economically and demographically long-term, and it would provide AA with access to the only other viable southeastern U.S. hub besides Delta in ATL.

(3) Reagan - The slot holds at Reagan are incredibly valuable and many of those markets are extremely high-yielding with a large amount of corporate and government traffic, and a strong O&D component.

(4) Europe network - Connected to (1) above, USAirways does bring a branded network to Europe - particularly over PHL - that would bolster AA's already strong presence at LHR and CDG, and provide greater 1-stop connectivity between the eastern U.S. and Europe.


User currently offlinedeltaguy767 From United States of America, joined Jun 2005, 645 posts, RR: 2
Reply 95, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 21207 times:

One aspect which has not been discussed is the potential pressure from Wall Street to make a deal happen. All of the bulge-bracket Investment Banks are clamoring for business in the capital markets and M&A parts of the business, both generate significant fees. Based on public disclosures, Rothschild is advising AMR and a syndicate of IB's is covering LCC (Barclays, Guggenheim etc.) and in terms of transit M&A, they are all key players. You can bet your last dollar that all of the banks (and even their competitors) have pitch-books and scenario analyses drafted and distributed to the creditors committee.

Now of course while there are plenty of motivations to either do/not do a deal in this case, the banking aspect is one that cannot be ignored. Gut feeling is that pressure to consolidate will outweigh AMR's pleas to remain solo and a deal has a strong chance of happening. As for the logistical issues (Labor, financing, infrastructure etc.) their 'smoothness' isn't really a factor, money talks louder especially when the target is in BK. If a valuation is made which shows greater returns, and higher profitability through reduced competition and greater network reach, then the creditors will play ball and deal with the teething problems down the road.

Just some perspective from a financier.



A Good Landing is one you walk away from!
User currently offlineFlighty From United States of America, joined Apr 2007, 8198 posts, RR: 3
Reply 96, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 21023 times:

Quoting Cubsrule (Reply 97):
The point is that the "ruthless service" of customers paying $200 to fly MDT-MCO isn't the same as the "ruthless service" of customers paying $3,000 to fly JFK-LAX. Do you disagree with that proposition?

Mostly I mean US serves its customers well. They are ruthless about infrastructure cost. They would see a lot behind the scenes at AA that is entirely optional, not customer facing and can be ejected.

The in-flight product need not see any impact. They should do whatever makes sense.


User currently offlinePu From Sweden, joined Dec 2011, 690 posts, RR: 13
Reply 97, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 20985 times:

Quoting deltaguy767 (Reply 99):

Just some perspective from a financier.

Outstanding contribution, thanks for adding new thinking to those of us constrained by routes, hubs, etc.

How plausible is it that the investment banks might be able to structure a deal that would be especially attractive to the creditors cmte because it would offer a quick or guaranteed payout versus the risk of hoping a standalone AA works as AA mgmt hopes?



Pu


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 98, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 21068 times:

Quoting Flighty (Reply 100):
The in-flight product need not see any impact. They should do whatever makes sense.

Maybe not, but the inflight product at US did see impact and customers balked. Remember the charging for water debacle?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineavek00 From United States of America, joined Oct 2004, 4281 posts, RR: 20
Reply 99, posted (1 year 4 months 1 week 2 days 15 hours ago) and read 21048 times:

Quoting commavia (Reply 98):

A couple responses:

1. AA is still able to pursue the expansion of its footprint at Kennedy if so desired, and a nicely built out Kennedy hub trumps anything Philly brings to the table.

2. A stronger Miami hub does much more for AA than anything CLT brings to the table. As with Kennedy, the key constraint until now was AA's high cost structure and inefficient biz processes precluding growth. AMR has taken those issues off the table, so I expect substantial high-yield domestic and long haul expansion going forward.



Live life to the fullest.
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 100, posted (1 year 4 months 1 week 2 days 14 hours ago) and read 20679 times:

Quoting avek00 (Reply 103):
AA is still able to pursue the expansion of its footprint at Kennedy if so desired, and a nicely built out Kennedy hub trumps anything Philly brings to the table.

I disagree.

AA does have an enviable facility footprint at JFK - one that I'm sure will be a major asset for them to continue capitalizing on for decades to come, merger or no merger. However, JFK cannot ever be a hub in the same way that PHL can, for multiple reasons.

First, and most obvious, the intractable slot situation means that the only way AA would ever be able to substantially expand flying at JFK during peak times would be to acquire the JFK slot holdings of Delta or JetBlue. I don't see either happening. Second, JFK's local market, while enormous, is split with two other competing airports, both of which are closer and more convenient to certain strategically important segments of the overall Tri-State area market than JFK is. Third, and related to the second, not only is JFK competing with two other airports, but AA at JFK will always be competing with - at a minimum - two other airlines for New York area traffic.

PHL does not have these problems, or at least not to the same extent. It has no slots and while congested generally, it's certainly no worse than any of the New York area airports, and is probably better these days. PHL's local market, while not nearly as large as New York, is quite substantial, with a healthy amount of high-yielding business traffic, and PHL has it all - there is no major, viable competitor hub airport for local traffic within 100 miles. And finally, US (and, if a merger, AA) owns the PHL market, with no meaningful hub competitor.

All that is not to say for a second that a hypothetical "new AA" should just pull up stakes in New York. On the contrary, a merger would actually provide an appealing opportunity to optimize New York schedules for the local market and concentrate more and more connections over PHL. AA's slot holdings at LGA are huge, and USAirways - even after the slot swap - are also quite sizeable. Rationalization just between those two, and by eliminating redundant flights to PHL and CLT that leave within minutes of each other, would free up a sizeable pool of slots to redeploy to a few, select key markets AA doesn't already serve from LGA (MCI, IAH, possibly MSY, etc.). Similarly, the JFK schedule could be optimized for more premium-oriented longhaul O&D, catering to AA's substantial corporate clientele in the New York area. As I have said before, this merger would allow AA to dramatically increase its presence in the northeast, including becoming the #1 or #2 airline in 3 of the 4 major northeast markets (BOS, PHL, WAS) and a relatively close #3 in NYC, as well.

Quoting avek00 (Reply 103):
A stronger Miami hub does much more for AA than anything CLT brings to the table.

Internationally, yes. Domestically, no. MIA can never function as a domestic hub in the same way CLT does today because of its location. AA will never be able to access substantial traffic flows in and out of, say, SAV or GSO or JAX via MIA to/from the rest of the U.S. It's just not realistic. Now I agree with you that there would be optimization of CLT and rationalization with MIA, which I agree with others would likely entail shifting as many of the Caribbean connections as possible over MIA, and definitely Brazil, too. But I have long believed and still believe that CLT does have major value as a hub.

Quoting avek00 (Reply 103):
As with Kennedy, the key constraint until now was AA's high cost structure and inefficient biz processes precluding growth.

That was part of the constraint, albeit in MIA that didn't seem to slow AA down much at all in recent years, as AA has been growing steadily and rapidly.


User currently onlineD L X From United States of America, joined May 1999, 10987 posts, RR: 52
Reply 101, posted (1 year 4 months 1 week 2 days 14 hours ago) and read 20357 times:

Quoting flyingbobcat787 (Reply 86):
Also do not forget that US made an offer for Delta and we all know how that one ended as well

Also, US's management made an offer for US, and it apparently went pretty well.



Send me a PM at http://www.airliners.net/aviation-forums/sendmessage.main?from_username=NULL
User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 102, posted (1 year 4 months 1 week 2 days 14 hours ago) and read 20336 times:

Quoting avek00 (Reply 103):
1. AA is still able to pursue the expansion of its footprint at Kennedy if so desired, and a nicely built out Kennedy hub trumps anything Philly brings to the table.

While this depends on connections and flights, I think that JFK has greater mindshare in the minds of travelers than PHL which is why it in that respect would trump Philly. Operationally is a different story, however.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 103, posted (1 year 4 months 1 week 2 days 14 hours ago) and read 20223 times:

Quoting commavia (Reply 104):
Now I agree with you that there would be optimization of CLT and rationalization with MIA, which I agree with others would likely entail shifting as many of the Caribbean connections as possible over MIA, and definitely Brazil, too.

When CLT is lower cost and, for many itineraries, less out of the way, why would this be so?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 104, posted (1 year 4 months 1 week 2 days 13 hours ago) and read 19938 times:

Quoting Flighty (Reply 96):
US's business is much leaner and better run at this point than AA. They are both three-star airlines.

On what basis? It's easy to be lean when you're running a primarily domestic operation. Throw in government control of operations overseas, international labor costs and work rules, aircraft sitting non-productively on the ground for eight hours for a turn around, and the massive amount of interlining that takes place for an international carrier and its JBA partners and Parker's simplistic world gets turned upside down pretty quickly. US' costs are artificially low simply because of the combination issues that have prevented the unions from getting competitive pay scales. I'm sure as part of the presentation to either go it alone or defer a merger AA's team will provide a reforecast of US' past two-years financial performance having been adjusted for what they should have been (and eventually will be) paying in labor. Trust me, that analysis won't be pretty. People that put together billion dollar M&A deals aren’t swayed by what’s shown on the surface or propaganda espoused by a merger partner seeking to outwardly maximize its value. DL’s stakeholders saw it in bankruptcy and told Parker to shove it.

The only assets US has that can’t be easily replicated are the DCA and LGA slots. And in a merger, half of the value of those assets will be lost because of the DOT forcing a divestiture in order to approve it. All AA gets from US is some fortress hub activity which is high yielding (as long as Southwest and Spirit think it should be) and some slots in slot controlled airports. Taking US out to consolidate the industry isn’t a stand-alone benefit for AA and would help their competitors equally (except for Southwest and Spirit who’d attack fortress hubs while AA/US was distracted).

You guys are rooting for heroes and villains. Whether a transaction occurs and the timing of it is all about intrinsic long-term (5+ years) value. Looked at that way there’s very little US brings to the table. If I were on a committee I’d vote to go it alone and wait for US to depreciate because with higher labor costs and a low yielding network that’s exactly where their headed. A stand-alone US has nothing but downside. After years of upheavel and acrimony a new-AA has nothing but upside. I think Parker's screwed.


User currently offlinedeltairlines From United States of America, joined May 1999, 8867 posts, RR: 12
Reply 105, posted (1 year 4 months 1 week 2 days 13 hours ago) and read 19907 times:

Quoting commavia (Reply 98):
USAirways offers several strategically valuable assets that would be additive to an overall combined network, including:

I'd add one more thing to the list - granted it's more short-term, but still beneficial, and that is the ability to have a good sized large RJ fleet.

One of the issues that AA has - notably at O'Hare is that there are very few CRJ-700s lying around, creating a gap between the ERJs and the 140 seat MD-80s. There are a lot of markets where a 76 seater is an ideal plane - one that has F, GoGo, etc. - keep in mind on these routes they are (or would be) competing directly with United, who is using mainline/ExPlus service in these markets.

Add in the A319s (again, short term as those are coming) and you now have the right equipment sizes available to you at O'Hare.

Quoting Cubsrule (Reply 107):
When CLT is lower cost and, for many itineraries, less out of the way, why would this be so?

There's a good glut of capacity to the Caribbean overall now anyway.

Will CLT still likely see flights to all your major islands? Absolutely. But most of your high-volume traffic flows can be reached as a one-stop connect over Miami on AA nowadays. You'd likely see stuff such as Punta Cana drop from 2-3 flights a day to 1 flight a day and redirect that capacity over to Miami. Wouldn't lose the service, but would size it more appropriately to the smaller local market.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 106, posted (1 year 4 months 1 week 2 days 12 hours ago) and read 19869 times:

Quoting deltairlines (Reply 109):
You'd likely see stuff such as Punta Cana drop from 2-3 flights a day to 1 flight a day and redirect that capacity over to Miami. Wouldn't lose the service, but would size it more appropriately to the smaller local market.

Unless the MIA-PUJ local market is underserved - and I have a hard time swallowing that argument - what does flowing that traffic over MIA accomplish other than increasing costs? CLT will always have more frequencies on the domestic legs, is a more direct routing on most of these flights, and is much lower cost.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineLAXdude1023 From India, joined Sep 2006, 7320 posts, RR: 24
Reply 107, posted (1 year 4 months 1 week 2 days 12 hours ago) and read 19894 times:

Quoting avek00 (Reply 103):

1) AA can't have at JFK what US has at PHL. It's as simple as that. AA can't have a hub that serves not only almost all major cities in the US, but all the small ones (with high fares) in the Northeast as well. PHL is a great mix of a domestic and a European hub, JFK is always going to be an O&D and international hub.

2) AA can't have at MIA what US has at CLT. MIA is an amazing asset, but it's not a Southeastern hub. It's a mainly international hub with not much use as a domestic connector.

Bottom line is that JFK/PHL and MIA/CLT don't serve the same purposes. They are apples and oranges. It's not as if they have to choose one or the other.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineflyguy89 From United States of America, joined Feb 2009, 1850 posts, RR: 10
Reply 108, posted (1 year 4 months 1 week 2 days 11 hours ago) and read 19434 times:

Quoting BarryH (Reply 90):
Consider these points:

         My sentiments exactly. I think with the continuing vast improvement in AA's performance over the past year, their "new" management has proven themselves that they are able to execute AA's turn around with the benefits of bankruptcy in place.

Quoting commavia (Reply 104):
Internationally, yes. Domestically, no.

I think he's saying this in the context of profit or profit margin, that MIA probably contributes more to the bottom line than CLT. I agree with what one of the posters stated earlier that AA doesn't need CLT or a Southeast hub and that UA has proven that. While CLT might be an incidentally nice addition as far as domestic market share goes, it wouldn't be a driving force behind any desire to merge with US.

Quoting commavia (Reply 104):
PHL's local market, while not nearly as large as New York, is quite substantial, with a healthy amount of high-yielding business traffic, and PHL has it all - there is no major, viable competitor hub airport for local traffic within 100 miles.

I agree here, I could see the combined carrier using JFK and PHL similar to how UA operates EWR and IAD.

Quoting Cubsrule (Reply 107):
When CLT is lower cost and, for many itineraries, less out of the way, why would this be so?

It would be a simple matter of taking capacity out of the market to improve yields. A combined carrier would not maintain their current respective capacity to the Caribbean as mergers are about eliminating competition, lowering capacity and improving yields...the only question for speculation IMO is just how much capacity will be taken out.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 109, posted (1 year 4 months 1 week 2 days 10 hours ago) and read 19400 times:

Quoting flyguy89 (Reply 112):
It would be a simple matter of taking capacity out of the market to improve yields.

You are making a different argument. Removing capacity from CLT rather than MIA is much different from what he suggested, which was shifting connecting flows from CLT to MIA.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineflyguy89 From United States of America, joined Feb 2009, 1850 posts, RR: 10
Reply 110, posted (1 year 4 months 1 week 2 days 10 hours ago) and read 19258 times:

Quoting Cubsrule (Reply 113):
Removing capacity from CLT rather than MIA is much different from what he suggested, which was shifting connecting flows from CLT to MIA.

Well I think shifting traffic flows to an extent will be a result of removing capacity from the market, but no I don't believe that connecting flows will be arbitrarily shifted one way or the other without a measure of capacity being reduced.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 111, posted (1 year 4 months 1 week 2 days 9 hours ago) and read 19146 times:

Quoting flyguy89 (Reply 114):
Well I think shifting traffic flows to an extent will be a result of removing capacity from the market, but no I don't believe that connecting flows will be arbitrarily shifted one way or the other without a measure of capacity being reduced.

. . . then we are saying the same thing. The shifting traffic is going to be more in markets like SKB, ANU or UVF that will likely lose the CLT connection, not big markets like PUJ or MBJ.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineFSXJunkie From United States of America, joined Oct 2012, 47 posts, RR: 0
Reply 112, posted (1 year 4 months 1 week 2 days 9 hours ago) and read 19024 times:

Quoting avek00 (Reply 11):
Quoting southwest737500 (Reply 10):
Damn.......gone are the days of a nice US Airways livery

I'd think that fleet repainting will be handled in a similar fashion as United/Continental.

All birds would be in current US Airways colors with "American" on the fuselage and "AA" on the tail.

The reason is that it'll be alot cheaper than painting the entire combined fleet in silver.


User currently offlineRyanairGuru From Australia, joined Oct 2006, 4681 posts, RR: 4
Reply 113, posted (1 year 4 months 1 week 2 days 9 hours ago) and read 18993 times:

Quoting flyguy89 (Reply 112):
AA doesn't need CLT or a Southeast hub and that UA has proven that

Not necessarily. From GSO it is a shorter flight to IAD than ATL, meaning that unless I want to got to SAV or MSY, total trip isn't really much different between UA and DL.

If we consider where high growth regions in the South are, you are looking at VA, TX, NC and ATL-metro. Obviously ATL is accounted for, UA are already in TX, and VA and NC are both close enough/closer to IAD than ATL that UA are just fine in the SE. MIA, however, doesn't cut it here.



Worked Hard, Flew Right
User currently offlineavek00 From United States of America, joined Oct 2004, 4281 posts, RR: 20
Reply 114, posted (1 year 4 months 1 week 2 days 9 hours ago) and read 19000 times:

Quoting flyguy89 (Reply 112):
I think he's saying this in the context of profit or profit margin, that MIA probably contributes more to the bottom line than CLT. I agree with what one of the posters stated earlier that AA doesn't need CLT or a Southeast hub and that UA has proven that. While CLT might be an incidentally nice addition as far as domestic market share goes, it wouldn't be a driving force behind any desire to merge with US.

My sentiments exactly. CLT ain't a bad hub, at all - it's quite good, actually. However, I stand by my assertion that AA would realize more upside in building out MIA than it would from gaining the CLT hub in the context of a US acquisition -- there is A LOT of ex-MIA flying (to Europe, Africa, and even within North America) that AA has left on the table due to its prior conservative business approach and cost inefficiencies, while CLT is basically completely built out and would conflict with the traffic flows where MIA connections do make sense.



Live life to the fullest.
User currently offlinerj777 From United States of America, joined Dec 2000, 1753 posts, RR: 2
Reply 115, posted (1 year 4 months 1 week 2 days 8 hours ago) and read 18895 times:
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Quoting FSXJunkie (Reply 116):
'd think that fleet repainting will be handled in a similar fashion as United/Continental.

All birds would be in current US Airways colors with "American" on the fuselage and "AA" on the tail.

The reason is that it'll be alot cheaper than painting the entire combined fleet in silver.

Actually, I have a feeling that the new AA livery has something to do with the merger. I mean think about it. AA confirms a new color scheme around the same time all the US/AA merger chit-chat started....... coincidence?


User currently offlinetpaewr From United States of America, joined May 2001, 450 posts, RR: 0
Reply 116, posted (1 year 4 months 1 week 2 days 8 hours ago) and read 18809 times:

I know Sabre spun off from AMR in 2000, does anyone know if AA retained the intellectual property rights the way CO did for SHARES. Also US got SHARES from HP, leaving Sabre at the time. Any color on what drove that move, beyond it being the legacy HP system? Does US/HP hold some type of intellectual property rights for SHARES as well?

User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 117, posted (1 year 4 months 1 week 2 days 8 hours ago) and read 18691 times:

Quoting tpaewr (Reply 120):
I know Sabre spun off from AMR in 2000, does anyone know if AA retained the intellectual property rights the way CO did for SHARES.

I would suspect AA got favorable licensing terms (very favorable) but the entire purpose of spinning Sabre off as a separate business was a bit different than what CO did with Shares. Just a guess on my part...


User currently offlinecrAAzy From United States of America, joined Jan 2008, 732 posts, RR: 0
Reply 118, posted (1 year 4 months 1 week 2 days 8 hours ago) and read 18705 times:
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Quoting EricR (Reply 77):
For example, do you really need an F cabin when business class is almost on par?

For those who fly and pay for F the answer is an easy yes. It doesn't need to be in every market but many of us will even go as far as choosing an extra connection if it means being able to fly longhaul intercontinental flights in F.


User currently offlineWingtips56 From United States of America, joined Dec 2010, 317 posts, RR: 0
Reply 119, posted (1 year 4 months 1 week 2 days 8 hours ago) and read 18699 times:

Quoting rj777 (Reply 119):
Actually, I have a feeling that the new AA livery has something to do with the merger. I mean think about it. AA confirms a new color scheme around the same time all the US/AA merger chit-chat started....... coincidence?

It is pretty much a coincidence. AA is going to be getting in new fleets of aircraft with fully composite exteriors (787) or increasingly composite exteriors (737Max, A319, A321 that won't continue to support the all-metal exterior image. That and the livery does date to 1969, so it's time for a refresh with a post-BK resurgence.



Worked for WestAir, Apollo Airways, Desert Pacific, Western, AirCal and American Airlines
User currently offlineflyguy89 From United States of America, joined Feb 2009, 1850 posts, RR: 10
Reply 120, posted (1 year 4 months 1 week 2 days 7 hours ago) and read 18505 times:

Quoting RyanairGuru (Reply 117):
Quoting flyguy89 (Reply 112):
AA doesn't need CLT or a Southeast hub and that UA has proven that

Not necessarily. From GSO it is a shorter flight to IAD than ATL, meaning that unless I want to got to SAV or MSY, total trip isn't really much different between UA and DL.

Sure, but that's only for certain markets and certain traffic flows. The number of markets where IAD, domestically, is more ideal than CLT or ATL is obviously small and I think all can agree that IAD definitely is no ATL or CLT. Both AA and UA have a lackluster presence in the Southeast and I don't think those few markets you mentioned are the drivers behind UA's profits, CO was also practically non-existent in the Southeast, so I stand by my point that an airline does not need a Southeast hub to be viable or profitable and thus would not be the main motivator in AA potentially wanting to merge with US.

Quoting Cubsrule (Reply 115):
The shifting traffic is going to be more in markets like SKB, ANU or UVF that will likely lose the CLT connection, not big markets like PUJ or MBJ.

Perhaps that or frequency reductions, it all just depends on how a combined carrier would optimize and leverage CLT and MIA in a single network.


User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 121, posted (1 year 4 months 1 week 2 days 7 hours ago) and read 18429 times:

Quoting BarryH (Reply 108):
. If I were on a committee I’d vote to go it alone and wait for US to depreciate because with higher labor costs and a low yielding network that’s exactly where their headed. A stand-alone US has nothing but downside. After years of upheavel and acrimony a new-AA has nothing but upside. I think Parker's screwed.

That pretty much sums up my thinking. There is little downside for AA in terms of emerging from bankruptcy alone. The chances are that US will deteriorate without AA and AA can pick it up for pennies in a few years.


User currently offlineAA94 From United States of America, joined Aug 2011, 530 posts, RR: 0
Reply 122, posted (1 year 4 months 1 week 2 days 6 hours ago) and read 18392 times:

Quoting BarryH (Reply 108):
On what basis? It's easy to be lean when you're running a primarily domestic operation. Throw in government control of operations overseas, international labor costs and work rules, aircraft sitting non-productively on the ground for eight hours for a turn around, and the massive amount of interlining that takes place for an international carrier and its JBA partners and Parker's simplistic world gets turned upside down pretty quickly.

Absolutely.

Quoting FSXJunkie (Reply 116):
I'd think that fleet repainting will be handled in a similar fashion as United/Continental.

All birds would be in current US Airways colors with "American" on the fuselage and "AA" on the tail.

The reason is that it'll be alot cheaper than painting the entire combined fleet in silver.

I'd bet a large sum of money that you are incorrect. AA is already developing a new branding and livery, and the entire fleet would be repainted in those colors (eventually). It's not as easy as just slapping an eagle on the tail.

Quoting Wingtips56 (Reply 123):
It is pretty much a coincidence. AA is going to be getting in new fleets of aircraft with fully composite exteriors (787) or increasingly composite exteriors (737Max, A319, A321 that won't continue to support the all-metal exterior image. That and the livery does date to 1969, so it's time for a refresh with a post-BK resurgence.

Agreed. There's no hidden meaning.



Choose a challenge over competence / Eleanor Roosevelt
User currently offlineDocLightning From United States of America, joined Nov 2005, 18675 posts, RR: 58
Reply 123, posted (1 year 4 months 1 week 2 days 4 hours ago) and read 18114 times:

Quoting einsteinboricua (Reply 79):
It's only an offer. If a car salesman makes you an offer for a car, does it mean that it's already sold?

It's more than "only" an offer. It's an offer that occurs at the end of an extended NDA for discussing this very possibility. And remember, AA's creditors ultimately get to make the decision.


User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 124, posted (1 year 4 months 1 week 1 day 22 hours ago) and read 17760 times:

Quoting LAXdude1023 (Reply 111):
Bottom line is that JFK/PHL and MIA/CLT don't serve the same purposes. They are apples and oranges. It's not as if they have to choose one or the other.

  

Exactly. JFK (and LGA) and PHL can be optimized for different purposes. PHL is and always will be a larger, and better, hub, for the reasons already mentioned, so it can continue to be optimized for connections, while the JFK and LGA schedules can be further optimized for the enormous O&D market in New York that AA already caters to.

Quoting flyguy89 (Reply 114):
Well I think shifting traffic flows to an extent will be a result of removing capacity from the market, but no I don't believe that connecting flows will be arbitrarily shifted one way or the other without a measure of capacity being reduced.

That is what I meant. There will be capacity rationalization, and hub schedule optimization, simultaneously.

Quoting Cubsrule (Reply 115):
. . . then we are saying the same thing. The shifting traffic is going to be more in markets like SKB, ANU or UVF that will likely lose the CLT connection, not big markets like PUJ or MBJ.

And again, that is what I meant all along. Apologies if I didn't make it clear. I was not implying that CLT would lose all of its international service, but I do believe many of the connections to smaller Caribbean markets - which today may only see a few flights per week in peak season through CLT, but perhaps multiple daily flights from MIA - will be shifted via MIA.

While MIA's per-enplanement costs may be higher than CLT, the yields are also likely higher in MIA, and it is more efficient to concentrate traffic in one place versus splitting it over two. Put another way: CLT may be cheaper on a 1-for-1 basis, but I suspect it is still cheaper and more efficient overall to operate 14 weekly flights to a given Caribbean market from MIA than 14 from MIA and 2 from lower-cost CLT.

As others have suggested before in previous threads, I suspect CLT will keep service to the largest and most important Caribbean leisure markets - SJU, STT, PUJ, NAS, MBJ and CUN. I suspect most of the rest - which in totality probably only amounts to 10-12 flights per week - would be shifted over MIA instead.


User currently offline777STL From United States of America, joined Dec 2004, 3362 posts, RR: 3
Reply 125, posted (1 year 4 months 1 week 1 day 18 hours ago) and read 17029 times:

Quoting AA94 (Reply 126):
I'd bet a large sum of money that you are incorrect. AA is already developing a new branding and livery, and the entire fleet would be repainted in those colors (eventually). It's not as easy as just slapping an eagle on the tail.

Not to mention that if a combined US/AA went all in with AA's branding, it wouldn't make much sense to muddy that by continuing to keep US's livery with AA's titles. CO and UA were a different animal in that CO had a significant international prescence, while UA had had a rather confused branding model prior to the merger. Neither would be true with an AA/US merger - US is almost non-existent outside of the United States and AA has an incredibly strong brand.



PHX based
User currently offlineJBo From Sweden, joined Jan 2005, 2308 posts, RR: 0
Reply 126, posted (1 year 4 months 1 week 1 day 18 hours ago) and read 16962 times:

Quoting 777STL (Reply 132):
it wouldn't make much sense to muddy that by continuing to keep US's livery with AA's titles.

What's really going to muddy the waters is the thought of adding so many more heritage liveries to the fleet.   Which, as cool as that would be, I would imagine a TWA heritage plane might open some old wounds for some folks.



I'd take the awe of understanding over the awe of ignorance any day.
User currently offlineEricR From United States of America, joined Jul 2010, 1801 posts, RR: 1
Reply 127, posted (1 year 4 months 1 week 1 day 17 hours ago) and read 16908 times:

Quoting BarryH (Reply 90):
-The byproduct of the bankruptcy will be a "new AA" both cosmetically and structurally. Growth opportunities are virtually limitless and what's known as the "Cornerstone Strategy" basically become dots that can be connected with any combination of new AA flying, new code sharing opportunities, and efficient regional feed. All of which grow revenue, yield, profitability, and free cash flow for investment..

One big issue with AA's cornerstone strategy is that it is not as solid as it appears on the surface though. 60% of AA's hubs are at airports where they do not have a dominating market share. JFK, LAX, ORD are very competitive hubs. It is difficult to get decent profits out of hubs like these. On the flip side, US has dominant share at PHL, CLT, DCA and thus has much better pricing power to help maintain fares at a reasonable profit.

In fact, when you look at the hub structures at DL, UA, US, and AA, I would say that AA's cornerstone hub structure faces the most pressure to the bottom line. The other 3 carriers have a much higher percentage of their hubs at fortress locations.

Therefore, while AA's hubs may be located in very large business centers and strategically spread out across the country, they face significant competition at these hubs. More competition means less fares. Less fares leads to smaller profits. BK may help them reduce costs, but they will still face significant revenue and profit pressure at these hubs.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16689 posts, RR: 51
Reply 128, posted (1 year 4 months 1 week 1 day 17 hours ago) and read 16770 times:

Isn't there something to be said for adding the millions (?) of loyal US fliers to the AA network, thus expanding their "base" of travelers. As mentioned US has a dominant position is some strong markets, DCA, PHL, CLT, as well as a sizable presence of travelers in outer spokes that feed through their hubs in the Southeast and Southwest. Those travelers would become loyal AA fliers, and would possibly help existing AA hubs.


Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 129, posted (1 year 4 months 1 week 1 day 17 hours ago) and read 16750 times:

Quoting EricR (Reply 134):
One big issue with AA's cornerstone strategy is that it is not as solid as it appears on the surface though. 60% of AA's hubs are at airports where they do not have a dominating market share. JFK, LAX, ORD are very competitive hubs.

I'm not sure if I'd agree with the characterization as "not as solid," although it is true that AA has intense competition in most of its cornerstones as driven by the sheer size of those cornerstones.

Nonetheless, it also - to a certain extent - depends on how you define these hub markets. United, for example, arguably faces just as much if not more competition in its hub markets as AA when you expand the definition of those hubs beyond just narrowly the airports to the larger markets. Specifically: of United's equivalent "cornerstone" markets (as of today) - EWR, IAD, CLE, ORD, IAH, DEN, LAX, and SFO - there is really only 1, CLE, in which United is truly the handily dominant market leader in those hub region. United is clearly the largest carrier in the NYC market overall, but Delta and JetBlue are close behind. United is the dominant carrier at IAD, but WAS overall is far more competitive. United also dominates IAH, but Southwest has a huge hub at HOU. SFO is the same - dominated by United - but the overall Bay Area market is far more competitive. And ORD, LAX and DEN? Those are just plain competitive both at the airport and regional level.

Really only Delta has a clearly dominant, leading position in all of its hub markets (not just airports) - with only JFK (NYC) really being intensely competitive, and ATL facing still-substantial competition from Southwest/AirTran - the rest of their hubs (DTW, MSP, SLC) are all owned by Delta.

Quoting EricR (Reply 134):
Therefore, while AA's hubs may be located in very large business centers and strategically spread out across the country, they face significant competition at these hubs. More competition means less fares. Less fares leads to smaller profits.

Although, the possible counter to that argument is that AA has now for months been consistently reporting unit revenue numbers that are very close to, if not exceeding, those of its two primary competitors - Delta and United (not adjusted for stage length, admittedly). So obviously, even with the structural limitations of AA's present network and the competitive pressures you accurately note, AA is still able to generate some form of fare premium relative to the competitiveness it faces at its major hubs. Contrast that with USAirways which, while handily dominating 2 of its 4 "cornerstones" (PHL and CLT) and having a very strong position in another (DCA), still reports unit revenue numbers that consistently trail those of AA, Delta and United.


User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 130, posted (1 year 4 months 1 week 1 day 17 hours ago) and read 16713 times:

Quoting STT757 (Reply 135):
Isn't there something to be said for adding the millions (?) of loyal US fliers to the AA network, thus expanding their "base" of travelers. As mentioned US has a dominant position is some strong markets, DCA, PHL, CLT, as well as a sizable presence of travelers in outer spokes that feed through their hubs in the Southeast and Southwest. Those travelers would become loyal AA fliers, and would possibly help existing AA hubs.

  

Definitely true - that would actually be one of the biggest network benefits of the combination.

In many large markets, this would instantly create a huge market player. Overnight, the "new AA" would become the 1st or 2nd largest airline in 3 of the 4 major northeast markets (BOS, PHL and WAS), and would be a very close #3 (which is perfectly adequate) in NYC - with only around 10-20% difference versus Delta's overall NYC capacity.

Plus, beyond the boost in the northeast in particular and the added network scope and access along the east coast, a merger would also lead to bulking up of the combined entity in many outstations. There are plenty of markets in the northeast and southeast in particular where AA is a very small player, and where USAirways is far smaller than it used to be, but when combined together the "new AA" would instantly become a far larger and stronger competitor, with far greater connectivity for local customers. I can think of plenty of places in the northeast that would benefit from having access to ORD for connections heading west and to PHL/CLT for connections heading south, or in the southeast that would benefit from having access to DFW for connections heading west, to PHL/CLT for connections heading north, and to MIA for connections heading south, etc.

[Edited 2012-12-09 10:45:43]

User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 131, posted (1 year 4 months 1 week 1 day 16 hours ago) and read 16559 times:

Quoting 777STL (Reply 132):
Not to mention that if a combined US/AA went all in with AA's branding, it wouldn't make much sense to muddy that by continuing to keep US's livery with AA's titles. CO and UA were a different animal in that CO had a significant international prescence, while UA had had a rather confused branding model prior to the merger. Neither would be true with an AA/US merger - US is almost non-existent outside of the United States and AA has an incredibly strong brand.

I tend to agree. US is unknown in almost every region of the world and has a weak brand IMO (I think it was stronger before the change from US Air to US Airways incidentally).


User currently offlineSTT757 From United States of America, joined Mar 2000, 16689 posts, RR: 51
Reply 132, posted (1 year 4 months 1 week 1 day 16 hours ago) and read 16505 times:

Quoting commavia (Reply 137):

Definitely true - that would actually be one of the biggest network benefits of the combination.

Otherwise their business strategy is simply to emerge from bankruptcy alone and try win back lost travelers in their "cornerstone" markets of Chicago, New York and Los Angeles as well as possibly grab some loyal DL, UA travelers. I don't see how this is possible unless AA differentiates themselves from the other legacies somehow, either going high end premium (adding back services) or going lower end and trying to be the G4 or NK of the legacies.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineEricR From United States of America, joined Jul 2010, 1801 posts, RR: 1
Reply 133, posted (1 year 4 months 1 week 1 day 16 hours ago) and read 16493 times:

Quoting commavia (Reply 136):
Nonetheless, it also - to a certain extent - depends on how you define these hub markets. United, for example, arguably faces just as much if not more competition in its hub markets as AA when you expand the definition of those hubs beyond just narrowly the airports to the larger markets. Specifically: of United's equivalent "cornerstone" markets (as of today) - EWR, IAD, CLE, ORD, IAH, DEN, LAX, and SFO - there is really only 1, CLE, in which United is truly the handily dominant market leader in those hub region.

While I understand what you are getting at, I think there is a lot more value in a specific hub airport than in a hub region.

For example, UA's EWR hub has the 6th highest average airfare in the country (Q2-2012 top 100 airports). While across the river, JFK has the 37th highest average airfare. The main difference is that EWR is a fortress hub while JFK faces much more competition and thus pricing pressure. Therefore, while both are in the same hub region, there is clearly an advantage to a specific hub airport.

I think out of UA's 7 hubs, ORD, DEN & LAX are the only really competitive hubs, and LAX appears to be on a path to focus city status (which is fine with SFO & DEN as legitimate replacements for connecting traffic).

Quoting commavia (Reply 136):
Really only Delta has a clearly dominant, leading position in all of its hub markets (not just airports) - with only JFK (NYC) really being intensely competitive, and ATL facing still-substantial competition from Southwest/AirTran - the rest of their hubs (DTW, MSP, SLC) are all owned by Delta.

I honestly believe US needs to be thrown into the mix as well. PHX is the only exception because fares are low due to WN's competition. However, what is interesting to note is that US's share in PHX is approaching close to a 60%. Furthermore, WN has been slowly reducing flights out of PHX over the last several years and continue to do so slowly each month.

Quoting commavia (Reply 136):
Contrast that with USAirways which, while handily dominating 2 of its 4 "cornerstones" (PHL and CLT) and having a very strong position in another (DCA), still reports unit revenue numbers that consistently trail those of AA, Delta and United.

True. No doubt about that. But one must also factor in that US does not have F nor Y+ to increase the average revenue.

At the same time, one needs to factor the cost savings US has over AA. US only has to maintain two classes of service on a plane versus AA which can have up to 4 classes of service. Furthermore, US does not have to maintain a separate sub-fleet allocated towards a competitive niche market (transcon). Furthermore, US can pack more people on to each plane with higher density aircraft.

While revenue is important, the bottom line is more important. The ultimate question is whether AA's premium advantage can offset the higher costs. BK will help this equation at a higher level (especially at the DFW & MIA hubs), but AA will have to continue to deal with competitive pressures at their 3 non-fortress hubs.

Quoting commavia (Reply 136):
although it is true that AA has intense competition in most of its cornerstones as driven by the sheer size of those cornerstones.

Here is one thing to consider. Would you rather have a hub in a place like PHL (metro pop of 4.5 million) were US is the dominant carrier - or - have a hub in a place like ORD where the metro area pop is 9 million (much larger metro area), but have to heavily compete with multiple airlines for that market share? This is the issue AA faces with their current hub structure.


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 134, posted (1 year 4 months 1 week 1 day 16 hours ago) and read 16501 times:

Quoting EricR (Reply 134):
Therefore, while AA's hubs may be located in very large business centers and strategically spread out across the country, they face significant competition at these hubs. More competition means less fares. Less fares leads to smaller profits. BK may help them reduce costs, but they will still face significant revenue and profit pressure at these hubs.

One word. Yields. All the "cornerstones" are big O/D markets and AA has lucrative corporate contracts with large companies that book premium fares and the premium cabin(s). Say anything you want about the strategy but if you look at AA's improved yield performance over the past twelve months it seems to be working. And since each cornerstone is also an international gateway beefing up code-shares and regional flying to connect smaller markets to them will only make the strategy more effective and further improve not only yields but load factor. And the more feed the more likely you'll see international growth such as LAX/HKG. The cornerstone strategy should be viewed as the outside edges of a puzzle. There's a huge amount of opportunity (and flexibility) in what's left to be filled in.

You guys keep mistaking full planes and beating NK/WN back in low-yielding point-to-point leisure markets as a measure of success. It's not how the game is won and the fact US is trapped in that model is part of why they need a merger partner. AA can sell 10% of a 767 between LAX and JFK at $99 with no issue because their carrying 30% of the plane at full or negotiated fares onward to the EU. That's not a luxury US and other domestic-only carriers have. AA abandoning SJU and the Caribbean wasn't a sign of weakness. It was a sign of intelligence because the assets could be applied elsewhere and generate significantly better returns. Some of AA's past and most likely future decisions make more sense if you look at them financially rather than emotionaly.


User currently offlineFlighty From United States of America, joined Apr 2007, 8198 posts, RR: 3
Reply 135, posted (1 year 4 months 1 week 1 day 16 hours ago) and read 16479 times:

Quoting EricR (Reply 134):
In fact, when you look at the hub structures at DL, UA, US, and AA, I would say that AA's cornerstone hub structure faces the most pressure to the bottom line. The other 3 carriers have a much higher percentage of their hubs at fortress locations.

Well said. People have this knee jerk reactions that hubs such as JFK and LAX are the primary moneymakers in the airline biz. It just isn't so. Their primary value is marketing and glamor.

Quoting dcann40 (Reply 138):
I tend to agree. US is unknown in almost every region of the world and has a weak brand IMO (I think it was stronger before the change from US Air to US Airways incidentally).

Certainly. US stands to gain from the proposed merger. Its network is profitable and stands to see revenue growth from being part of American.

US addresses AA's continuing weaknesses -- which are corporate bloat and a lack of fortress hubs other than the excellent DFW. The P2P cornerstone stuff is largely fluff IMO, nice to have for marketing & sales purposes.

Quoting commavia (Reply 137):
There are plenty of markets in the northeast and southeast in particular where AA is a very small player, and where USAirways is far smaller than it used to be, but when combined together the "new AA" would instantly become a far larger and stronger competitor, with far greater connectivity for local customers.

  

Thee are a hundred cities like this which, hint, have always fueled US and Delta, and can only help AA. Is it a glamorous cornerstone business, no. Is it a money maker of a model instead of a money loser, yes.

I am rooting for AA. They have good prospects. But those prospects do not lie in doubling down on LAX, JFK and ORD, which combined, are a tiny minority of (profitable) O&D in this country.


User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 136, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16404 times:

Quoting EricR (Reply 140):
AA will have to continue to deal with competitive pressures at their 3 non-fortress hubs.

True, although I don't think AA will have much trouble addressing those competitive pressures now that they are finally freed from the union contracts preventing them from being competitive. Specifically, now that AA is free to use more large RJs, they should be capable of competing effectively in ORD by leveraging capacity discipline to drive improved yields. Codeshares should help AA in NYC. And AA is already doing just fine as-is at LAX, where it is extremely competitive in the market versus United.

Quoting EricR (Reply 140):
Would you rather have a hub in a place like PHL (metro pop of 4.5 million) were US is the dominant carrier - or - have a hub in a place like ORD where the metro area pop is 9 million (much larger metro area), but have to heavily compete with multiple airlines for that market share?

I'm not smart enough to say. It depends on the market, and the specifics. With the right airplanes, AA should have no trouble competing in ORD, whereas in PHL USAirways is already dominant.

Quoting BarryH (Reply 141):
Say anything you want about the strategy but if you look at AA's improved yield performance over the past twelve months it seems to be working.

I agree - it does appear to be working.

Quoting BarryH (Reply 141):
You guys keep mistaking full planes and beating NK/WN back in low-yielding point-to-point leisure markets as a measure of success. It's not how the game is won and the fact US is trapped in that model is part of why they need a merger partner.

There is no question that a substantial portion of USAirways' network would not be profitable once costs were elevated to the levels of a combined carrier. Capacity reduction will inevitably have to occur, focused primarily in the areas where revenue synergies cannot make up the higher cost difference (PHX first and foremost, and then also probably CLT) or where capacity already needed to be optimized (ORD). I suspect this would be accomplished by rapidly parking USAirways' old 737s, 757s and 767s and reallocating capacity.

That inevitability, however, does not mean that a merger doesn't still have merit and logic. Even net of capacity optimization and network rationalization, I still believe the combined network would be an impressive one - basically on par with Delta, with AA only missing the mountain west and Asia (and I think Delta's Asia position as it currently exists is tenuous, anyway). Domestically, AA would have an excellent network up and down the east coast, excellent central U.S. hubs to serve the south and midwest, a shrunken PHX (maybe) to handle connections to/from California, and excellent O&D concentrations and international gateways at LAX, JFK and of course MIA. Internationally, the combined carrier would of course still be dominant in Latin America, have a perfectly competitive Europe network, and a lacking - but improving - Asian network.


User currently offlineDocLightning From United States of America, joined Nov 2005, 18675 posts, RR: 58
Reply 137, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16391 times:

Quoting dcann40 (Reply 129):
Case in point: the offer by AT&T to acquire T-Mobile was not only made with information provided under NDA by T-Mobile, it was made with the full support of T-Mobile and Deutsche Telekom management. Indeed this was just one year ago:

Yes, that was stopped (and rightly so) by the government. If ATT and TM had merged, then Verizon and Sprint would have merged and that would have left two companies in charge of all cell service in one of the largest single cellular markets in the world.

In this case, there is ample precedent for such mergers. DL/NW and UA/CO. If the government had no problem with those mergers, they won't have a problem with this one, either.


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 138, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16377 times:

Quoting Flighty (Reply 142):
Certainly. US stands to gain from the proposed merger. Its network is profitable and stands to see revenue growth from being part of American.

No it's not. It's been profitible because of lower-than-industry pay scales for what accounts for 1/3 to 1/2 of their overall labor expense because the unions can't get their acts together. AFA's ready to initiate CHAOS and someday the two pilot groups are going to settle and there will be a big retroactive component as part of whatever new contract their willing to accept. US's profitibility is artificial and Parker (as well as AA's creditors) know that.

Quoting Flighty (Reply 142):
US addresses AA's continuing weaknesses -- which are corporate bloat and a lack of fortress hubs other than the excellent DFW.

American's ratio of management to other labor is one of the lowest in the industry. With the inability to act on unionized labor costs they got as lean as they could in labor areas they could control to help thier financial perfromance. Based on their scale, one could say their management ranks are understaffed. It's a $5B corporation and requires people to run it. Scale requires people to manage it. Did DL/NW or UA/CO cut half their managment staff in their mergers? No. It was only about 10-15% that was redundant.


User currently offlineavek00 From United States of America, joined Oct 2004, 4281 posts, RR: 20
Reply 139, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16400 times:

Quoting STT757 (Reply 135):
Isn't there something to be said for adding the millions (?) of loyal US fliers to the AA network, thus expanding their "base" of travelers. As mentioned US has a dominant position is some strong markets, DCA, PHL, CLT, as well as a sizable presence of travelers in outer spokes that feed through their hubs in the Southeast and Southwest. Those travelers would become loyal AA fliers, and would possibly help existing AA hubs.

Not really. By its own admission, US Airways operates at a 10-15% revenue DISADVANTAGE compared to its legacy peers. Put another way, what US brings to the table in a merger with American is a route network that makes less money per mile flown than American, but will be subjected to higher costs than it is today upon merger integration. For all the spin, here and elsewhere, about a US/AA merger, not one person has comprehesively addressed this glaring landmine that can easily torpedo the viability of a newly merged American Airlines.



Live life to the fullest.
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 140, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16365 times:

Quoting avek00 (Reply 146):
Not really. By its own admission, US Airways operates at a 10-15% revenue DISADVANTAGE compared to its legacy peers. Put another way, what US brings to the table in a merger with American is a route network that makes less money per mile flown than American, but will be subjected to higher costs than it is today upon merger integration.

Yes.

Quoting avek00 (Reply 146):
For all the spin, here and elsewhere, about a US/AA merger, not one person has comprehesively addressed this glaring landmine that can easily torpedo the viability of a newly merged American Airlines.

Well nobody has fully "addressed" it publicly, but of course we all know what Parker's plan is: he's betting that the revenue "synergies" will offset the cost increases. In isolation, of course it won't. And that of course leads back to capacity reduction to drive up yields - which has got to be Parker's plan. But there again, of course, he can't say that out loud before the deal is closed because of the political implications. The only viable way, at least that I can say, to address this "glaring landmine" is to cut capacity. I suspect that is exactly what we will see - again, first and foremost in PHX (which is almost certainly the lowest-yielding of USAirways' hubs), plus also in CLT (which is so heavily dependent on connections) and ORD (which was going to see capacity cuts anyway as AA moved to more large RJs there).


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 141, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16307 times:

Quoting commavia (Reply 143):
That inevitability, however, does not mean that a merger doesn't still have merit and logic. Even net of capacity optimization and network rationalization, I still believe the combined network would be an impressive one

No one should doubt that a merger will eventually happen. The question is timing and who's the hunter and who's the pray. AA is stronger than US even in bankruptcy. There's no reason to believe AA's value won't continue to appreciate post-bankruptcy. US has limited assets, is being pressured by the expansion of LCC's (with no high-yielding offset), and is about to get their costs walloped by unionized labor. In two years I'd project a stand-alone US to have a net value of between 25-50% less than today's. If AA's worth $5B in bankruptcy there's no reason to think they wouldn't be worth $8B in two years and I'm sure that's similar to what will be presented to the creditors in a stand-alone plan. So if you were a creditor, and knew the value of your asset was going to appreciate that much, why would you sell it at a bargain basement price right now? Especially when you could pick up US at a bargain basement price by simply waiting for some pretty clear impending external factors to play out?


User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 142, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16240 times:

Quoting BarryH (Reply 148):
No one should doubt that a merger will eventually happen. The question is timing and who's the hunter and who's the pray.

I'm less concerned about the semantics of who buys who. The bottom line is that the combined airline will be called "American," and headquartered in Texas. Given that, the practicality of who's actually sitting in the executive suite is less important to me. And I tend to agree that this merger is probably going to happen eventually one way or another. As such, if it makes more financial sense to do it now, then fine, and if not, then the two may well merge in a few years.

Quoting BarryH (Reply 148):
There's no reason to believe AA's value won't continue to appreciate post-bankruptcy.

I tend to agree that AA - which now finally has a competitive cost structure, less restrictive union contracts, and will soon have the right fleet - is headed in the right direction.

Quoting BarryH (Reply 148):
So if you were a creditor, and knew the value of your asset was going to appreciate that much, why would you sell it at a bargain basement price right now? Especially when you could pick up US at a bargain basement price by simply waiting for some pretty clear impending external factors to play out?

Time value of money, and risk. A dollar today is worth more than a dollar 18 months from now. Plus, the creditors (the new owners of the company) do not know what it would cost to merge in the future - it's an unknown. It can be prognosticated that USAirways has long term challenges that will erode its value in coming years - and I actually tend to agree with that assessment - but it's unprovable, and just a guess (albeit I think an educated one) at this point. Parker is coming to them right here right now with a deal, and we do not know if it is really a "bargain basement price" he's offering. We'll see. Parker obviously can't give away the store for his own shareholders, but on the flipside he seems to be willing to do just about anything to get this deal done.


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 143, posted (1 year 4 months 1 week 1 day 15 hours ago) and read 16220 times:

Quoting commavia (Reply 149):
Time value of money, and risk. A dollar today is worth more than a dollar 18 months from now. Plus, the creditors (the new owners of the company) do not know what it would cost to merge in the future - it's an unknown. It can be prognosticated that USAirways has long term challenges that will erode its value in coming years - and I actually tend to agree with that assessment - but it's unprovable, and just a guess (albeit I think an educated one) at this point. Parker is coming to them right here right now with a deal, and we do not know if it is really a "bargain basement price" he's offering. We'll see. Parker obviously can't give away the store for his own shareholders, but on the flipside he seems to be willing to do just about anything to get this deal done.

Parker's offer has already been deemed to have overvalued US' worth by a $1B. That's a pretty big number. If I were doing the analysis I'd produce two models; the first what US would look like as a stand-alone over the next twenty four months and a second one for AA as a stand-alone over the same time period. The latter becomes a baseline for creditors to calculate their return. Next I'd produce a combined model assuming a merger today. That would take in to account the synergies everyone's talking about as well as the cost of the merger and a clear identification of the financial risks to both expenses and revenue caused by the process. I'd also present a second merger scenario allowing US to depreciate over two years. Obviously, I don't have access to the hard numbers but I'd be willing to bet the downward projected value over time of US from the stand-alone analysis makes waiting more lucrative for AA's creditors. It also makes waiting pretty sucky for US’ shareholders and Parker as all the hype of their previous claims to success and profitability are proven to have been paper tigers created by outside factors and not skill or good management.


User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 144, posted (1 year 4 months 1 week 1 day 14 hours ago) and read 16115 times:

Quoting BarryH (Reply 150):
Parker's offer has already been deemed to have overvalued US' worth by a $1B. That's a pretty big number.

Well that may be a pretty big number, but whose number is it? Everybody on all sides are doing one big dance right now. It's called negotiation. Parker has his own motives and Horton has his. The UCC obviously wants to get the highest possible valuation for AMR they can, and thus the largest possible ownership in the combined entity. The USAirways shareholders want the same. What will come of these negotiations? We'll see.

Quoting BarryH (Reply 150):
If I were doing the analysis I'd produce two models; the first what US would look like as a stand-alone over the next twenty four months and a second one for AA as a stand-alone over the same time period. The latter becomes a baseline for creditors to calculate their return. Next I'd produce a combined model assuming a merger today. That would take in to account the synergies everyone's talking about as well as the cost of the merger and a clear identification of the financial risks to both expenses and revenue caused by the process. I'd also present a second merger scenario allowing US to depreciate over two years. Obviously, I don't have access to the hard numbers but I'd be willing to bet the downward projected value over time of US from the stand-alone analysis makes waiting more lucrative for AA's creditors.

I'm sure models just like those are being employed as we speak by smart people with billions of dollars on the line in order to make the best possible decision they can based on the information they have available to them.

I agree - in general - with your logic that USAirways will depreciate in value as time goes on. But again - that's an unknown.


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 145, posted (1 year 4 months 1 week 1 day 14 hours ago) and read 16179 times:

Quoting commavia (Reply 151):
I agree - in general - with your logic that USAirways will depreciate in value as time goes on. But again - that's an unknown.

Here's an analogy. You're living in a house you're perfectly fine with (AA). There's a house you want to buy that no one else wants and you know that you can buy it for 25-50% less by waiting (US). Do you buy it now or do you wait?

The problem with the synergies argument is that they are hard to calculate because there are so many variables at play outside your control. Like the economy, overseas wars and their effects, and force majeure. AA's got a lot on its plate just integrating all the new business elements they've gained in bankruptcy. Throw in the complexities of a merger and the awful labor relations at US and you've got a two year pile of crap to work through that impacts your operational effectiveness and pisses off your highest yielding customers. Meanwhile, while you're on the ropes and totally internally focused, you've taken capacity out of the market opening up opportunities for the LCC's and giving better pricing control to your biggest competitors. The more lucid approach would be for AA to re-constitute itself as a stand-alone and then take on the additional complexities of a merger. It would also give Parker a chance to get his own labor house in order even if it makes his bottom line uglier. US based on their trajectory is in a hurry. There's no reason for AA to be. It's not like US is going anywhere. And I’m sure the creditors are taking the latter in to account.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16689 posts, RR: 51
Reply 146, posted (1 year 4 months 1 week 1 day 14 hours ago) and read 16141 times:

Quoting avek00 (Reply 146):
Not really. By its own admission, US Airways operates at a 10-15% revenue DISADVANTAGE compared to its legacy peers

But isn't that more indicative of their business model then their hub market's potential. Again their stock ticker is "LCC", not exactly indicative of an airline going after high yield traffic.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlinecommavia From United States of America, joined Apr 2005, 11116 posts, RR: 62
Reply 147, posted (1 year 4 months 1 week 1 day 14 hours ago) and read 16112 times:

Quoting BarryH (Reply 152):
Throw in the complexities of a merger and the awful labor relations at US and you've got a two year pile of crap to work through that impacts your operational effectiveness and pisses off your highest yielding customers.

Well as has been previously discussed I think that if a merger happens the USAirways employees (especially the ex-America West folks) would soon have something all new to be furious about. The union integration issue would largely be rendered irrelevant since AA's pilot and flight attendant groups substantially outnumber USAirways'. When a seniority integration happens - inevitably as a result of arbitration - it is likely that DOH is going to factor in one way or another, and as such, the relatively less senior America West workforce stands to lose out, while AA's very senior workforce will likely be relatively less harmed. The AA unions know this - which I have to think is a big part of their enthusiasm for a merger.

On the issue of pissing off high-yielding customers - this is where my aforementioned apprehension comes in. I just pray that Parker doesn't screw this up if he does get control of a "new AA," because AA's relationship with its high-yielding business customers - through its network and AAdvantage - is one of the biggest thing AA has going for it. There is already a "Keep American My American" campaign on a certain prominent frequent flyer message board - and Parker would be wise to remain ever-conscious of that angle in this whole thing. If he drives those people away by imposing a cheaper, suboptimal way on a combined company, those vaunted revenue synergies he's pitching will never materialize. Just ask Jeff Smisek.

Quoting STT757 (Reply 153):
But isn't that more indicative of their business model then their hub market's potential.

Perhaps, although - again - that business model is going to be effectively dead if a merger happens (although I think it was not going to last much longer anyway). USAirways is able to handle relatively lower unit revenues because of its relatively lower unit costs (especially labor), but that won't be around much longer one way or another. So how will the business model evolve to handle that? I suspect the same way with or without a merger - but pulling down capacity.


User currently offlineCubsrule From United States of America, joined May 2004, 22299 posts, RR: 20
Reply 148, posted (1 year 4 months 1 week 1 day 14 hours ago) and read 16096 times:

Quoting avek00 (Reply 146):
Not really. By its own admission, US Airways operates at a 10-15% revenue DISADVANTAGE compared to its legacy peers. Put another way, what US brings to the table in a merger with American is a route network that makes less money per mile flown than American, but will be subjected to higher costs than it is today upon merger integration.

I've long wondered whether US has some revenue management problems. Here's a case in point: I buy a lot of tickets to other cities in the southeast 3-5 days out. A lot of times, the schedules are better in one direction on DL and the other on US, and I'm buying based on schedule. Well more than half the time, the US ticket costs less than half of the DL ticket. I see US leaving a lot of money on the table.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinedeltairlines From United States of America, joined May 1999, 8867 posts, RR: 12
Reply 149, posted (1 year 4 months 1 week 1 day 13 hours ago) and read 15959 times: