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AA/Us Merger - Two Airlines, One Parent?  
User currently offlinecloudboy From United States of America, joined Jan 2004, 814 posts, RR: 0
Posted (1 year 8 months 3 days ago) and read 8285 times:

With all the talk about an AA/US merger, the focus has been on combing the two companies into one. Certainly this addresses teh issue of being as big as UA and DL. But, seeing that the UA/CO merger is going less than swimmingly, that US still hasn't completely managed to combine with the old American West let alone plunge ahead with AA, and there being some obvious major obstacles in getting both AA and UA pilots to agree, I am wondering if there is another option.

Could AMR holdings combine with Us Air, and operate two airlines - AA and US - under separate flags? Air Canada is launching Rouge as a discount carrier - I am wondering if this strategy might work for AMR. AA would be the "premium" offering, with US being the discount option. This allows the airline to get the benefit of both the premium and discount markets while tailoring both their product and their pay scales to the appropriate market.


"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
27 replies: All unread, showing first 25:
 
User currently onlineTWA772LR From United States of America, joined Nov 2011, 1906 posts, RR: 1
Reply 1, posted (1 year 8 months 3 days ago) and read 8234 times:

For some reasons companies in the US, unless the company being bought by a lesser company dates back to the 1800s and has a GIGANTIC brand recognition, don't like to do that.


Go coogs! \n//
User currently offlineUA787DEN From United States of America, joined Dec 2012, 420 posts, RR: 0
Reply 2, posted (1 year 8 months 3 days ago) and read 8186 times:

US companies don't really like that. For one, oblivious public wouldn't get the fact that they are one big company. Two, why? The AC rouge works based off of cold Canadian hubs and warm Caribbean islands. US and AA might have to consolidate hubs still, and a full interline agreement is more easily booked, navigated, and understood on one company and website. Plus, I think US pilots might like a pay raise with this deal. Also, two seperate express brands would be interesting.

User currently offlinedoug_Or From United States of America, joined Mar 2000, 3403 posts, RR: 3
Reply 3, posted (1 year 8 months 3 days ago) and read 8179 times:

I'm pretty sure union contracts would prevent them from operating as separate entities.


When in doubt, one B pump off
User currently offlineBill142 From Australia, joined Aug 2004, 8445 posts, RR: 8
Reply 4, posted (1 year 8 months 2 days 23 hours ago) and read 7981 times:

Quoting doug_Or (Reply 3):
I'm pretty sure union contracts would prevent them from operating as separate entities.

Or union contracts might make them look at two entities.

There are plenty of instances of two airlines under one parent around the world. The more relevant examples would be AF/KL or BA/IB


User currently offlineUA787DEN From United States of America, joined Dec 2012, 420 posts, RR: 0
Reply 5, posted (1 year 8 months 2 days 23 hours ago) and read 7946 times:

Europe works differently than the mess known as the US airline and government and merger system.

User currently offlinePHX787 From Japan, joined Mar 2012, 7445 posts, RR: 17
Reply 6, posted (1 year 8 months 2 days 23 hours ago) and read 7889 times:

It's feasible but the least bit probable. I'd think it'd be a better way to do it though.


次は、渋谷、渋谷。出口は、右側です。電車とホームの間は広く開いておりますので、足元に注意下さい。
User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2358 posts, RR: 1
Reply 7, posted (1 year 8 months 2 days 21 hours ago) and read 7713 times:

Quoting doug_Or (Reply 3):
I'm pretty sure union contracts would prevent them from operating as separate entities.

Separate entities is something AA should have included in the term sheet. If it didn't, AA management committed another strategic error.

The ability to operate a separate carrier would be an absolute necessity if AA ever considered a merger with an airline with lower costs(B6 or AS)



The 747: The hands who designed it were guided by god.
User currently offlineDocLightning From United States of America, joined Nov 2005, 19568 posts, RR: 58
Reply 8, posted (1 year 8 months 2 days 21 hours ago) and read 7682 times:

Quoting Bill142 (Reply 4):
There are plenty of instances of two airlines under one parent around the world. The more relevant examples would be AF/KL or BA/IB

Not comparable. AF has one main hub at CDG. KL has one main hub at AMS. US airlines are multi-hub operations. While certain airlines have stronger representation in a given part of the country, most major US airlines have decent penetration into most markets.

Americans think of themselves as Americans and they think of US and AA both as American carriers. They are not going to have deep-seated nationalistic loyalty to one brand vs. the other (usually). Thus, there isn't a point in keeping both brand names as such.

However, one interesting idea is to keep the US brand as an LCC-type carrier operating North American flights and the AA brand for premium routes (eg. JFK-LAX/SFO/HNL) and international service. You could even arrange for separate FF programs: one that is optimized for customers who fly mostly domestic legs (Dividend Miles) and one that is optimized for frequent customers who fly mostly international/premium legs (AAdvantage), but with cross-redeemability.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3591 posts, RR: 10
Reply 9, posted (1 year 8 months 2 days 20 hours ago) and read 7563 times:

Quoting Bill142 (Reply 4):

The primary reason for keeping the different companies in the AF/KL and IB/BA situations is the bi-lateral air services agreements for Europe are still in individual countries names in many cases.

IAG would love to have a single airline as would AF for the cost savings.


User currently offlineAADC10 From United States of America, joined Nov 2004, 2088 posts, RR: 0
Reply 10, posted (1 year 8 months 2 days 19 hours ago) and read 7471 times:

Quoting cloudboy (Thread starter):
Could AMR holdings combine with Us Air, and operate two airlines - AA and US - under separate flags?

It is certainly possible, but it will not happen. Both DL and UA tried marketing low fare subcarriers (Song and Ted) not long ago but they did not work out. Offering a consistent unified service apparently had a better appeal than marketing sub-brands. A combined AA/US would operate under the American Airlines name even while many aspects of the carriers are still separate, with some remnants of the old America West still around (I have not read someone calling it American West for a while now).

As I keep saying, Doug Parker was an AA executive under Bob Crandall and I am sure he wants to take the old master's spot. He would be more than willing to roll everything up into AA, as long as he is in charge.


User currently onlineUSAirALB From United States of America, joined Sep 2007, 3058 posts, RR: 2
Reply 11, posted (1 year 8 months 2 days 12 hours ago) and read 7000 times:

I suppose your asking if US and AA can merge in a way similar to KL/AF, BA/IB, LA/JJ. The answer is no, unfortunately, for a number of reasons. Airlines in the US (and most companies as well) don't really merge like they do in other parts of the world.

Quoting cloudboy (Thread starter):
AA would be the "premium" offering, with US being the discount option

I am confused about your discount/premium option. AA and US are both major international airlines, offering service to high-yielding destinations around the world. It would be difficult to change US from a full-service airline (I know they are traded as LCC but like it or not they are a full service legacy carrier) to an LCC. Airlines within another airlines DO NOT work well in the US, we can look at Continental Lite, Delta Express, Shuttle by United, Metrojet, Song, and Ted. It just doesn't work. Starting a LCC that operates both domestic and long haul international routes would be a risky move IMHO.



E135/E140/E145/E70/E75/E90/CR2/CR7/CR9/717/732/733/734/735/73G/738/739/752/753/762/772/319/320/321/333
User currently offlineDeltal1011man From United States of America, joined Sep 2005, 9343 posts, RR: 14
Reply 12, posted (1 year 8 months 2 days 10 hours ago) and read 6409 times:

Quoting cloudboy (Thread starter):

no union with any intelligence would allow it.

Quoting Bill142 (Reply 4):
Or union contracts might make them look at two entities.

no. Union contracts would make one of the airlines be nothing but RJs as it would be against scope to have anything larger than 86 seat jets (on the US side) or 76 seats (on the AA side). (all of which have a hard cap limit also). No judge is going to force that on a union.

Quoting Bill142 (Reply 4):

There are plenty of instances of two airlines under one parent around the world. The more relevant examples would be AF/KL or BA/IB

Europe is not a country. Not apples to apples.

Quoting Byrdluvs747 (Reply 7):

Separate entities is something AA should have included in the term sheet. If it didn't, AA management committed another strategic error.

uh...you think the APA would allow for complete outsourcing? You do know that AMR didn't force terms on any of its unions right? All have agreed to contracts.....

Quoting DLPMMM (Reply 9):

The primary reason for keeping the different companies in the AF/KL and IB/BA situations is the bi-lateral air services agreements for Europe are still in individual countries names in many cases.


this



yep.
User currently offlinecloudboy From United States of America, joined Jan 2004, 814 posts, RR: 0
Reply 13, posted (1 year 8 months 2 days 9 hours ago) and read 6205 times:

I am not talking about an airline within an airline, aka TED or "Song. Both of those had problems separating themselves from their parent, and that is one of the big things that kept them from being successful. I am talking two separate airlines, owned by one holding company. You could establish codeshares and JVs and whatnot, but the two operations would be kept separate. I know US's cost structure is higher than WN and B6, but it is lower than AA's. More importantly, the airline image differentiates the two - you average passenger considers US to be a cheap airline, while AA is considered the "professional, upscale" airline.

Obviously this will negate some of the benefits of merging - eliminating hubs and duplicate routes. But the gain would be two market presences. I know US pilots would love the chance to get a pay raise, but I have a feeling management would be just as happy if they didn't get one. I would probably keep the same FF program across both, but... for instance on AA, if they focused on higher fares, would get better accrual rates and offer upgrade options, where as with US you would get lower accrual rates and perhaps only an economy plus section.



"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
User currently offlinetoltommy From United States of America, joined Dec 2003, 3289 posts, RR: 4
Reply 14, posted (1 year 8 months 2 days 9 hours ago) and read 6122 times:

Quoting AADC10 (Reply 10):
It is certainly possible, but it will not happen.

Actually it is not possible. The scope clause in the pilot contract prohibits it. Each carrier has its own agreement regarding which aircraft must be flown by the parent carrier/company. In theory, I like the idea, but the unions would won't. The AA pilots wouldn't want to see growth at US, causing furloughs on one side vs the other.


User currently offlineFlighty From United States of America, joined Apr 2007, 8488 posts, RR: 2
Reply 15, posted (1 year 8 months 2 days 8 hours ago) and read 5866 times:

Nope. The primary gains from an AA/US merger are as follows (in order of importance)

1. Eliminate many cost items from AA's cost structure by piggybacking on US.

2. Improve the revenue of AA by adding US's side of the network (more schedule, faster service).

3. Rebalance traffic across all hubs, leading to automatic 3-5% efficiency gain (aka cuts).

The cross-fleeting you see at the other merged carriers is a major component. Also, a single IT system is a huge deal. That stuff can't really happen if you keep 2 certificates and operations alive indefinitely.

The labor situation would be no better than it is now. It would be more expensive. This is to be more than offset by cost savings outlined above. Humans are unpredictable -- and labor tensions natural -- that aspect won't be going away anytime soon. Labor issues are never truly resolved in the real world.


User currently offlineCIDFlyer From United States of America, joined Apr 2005, 2285 posts, RR: 3
Reply 16, posted (1 year 8 months 2 days 6 hours ago) and read 4828 times:

Many wondered if DL/NW were going to go that route ala KL/AF but they didnt. Sounds good on paper but in reality if or when they merge they will go under the American name, makes it less confusing for passengers.

User currently offlinejmc1975 From Israel, joined Sep 2000, 3267 posts, RR: 15
Reply 17, posted (1 year 8 months 2 days 5 hours ago) and read 4430 times:

Quoting cloudboy (Thread starter):
that US still hasn't completely managed to combine with the old American West let alone plunge ahead with AA,

What the heck is American West????



.......
User currently offlinecapri From United Kingdom, joined Sep 2003, 449 posts, RR: 1
Reply 18, posted (1 year 8 months 2 days 3 hours ago) and read 3852 times:

The air fares are high and getting higher anyway, bring back regulations and maybe the government will subsidize fuel and we could see lower prices, who knows.

User currently offlineBlueJuice From United States of America, joined Jun 2010, 244 posts, RR: 0
Reply 19, posted (1 year 8 months 2 days 3 hours ago) and read 3691 times:

Already been done by SouthTran Lineways errr... Southwest Airlines/AirTran Airways.
  


User currently offlinePHX787 From Japan, joined Mar 2012, 7445 posts, RR: 17
Reply 20, posted (1 year 8 months 2 days 2 hours ago) and read 3562 times:

Quoting jmc1975 (Reply 17):
Quoting cloudboy (Thread starter):
that US still hasn't completely managed to combine with the old American West let alone plunge ahead with AA,

What the heck is American West????

Are you kidding?
The airline that bought US to bring them out of BK



次は、渋谷、渋谷。出口は、右側です。電車とホームの間は広く開いておりますので、足元に注意下さい。
User currently offlineJerseyguy From United States of America, joined Oct 2005, 1982 posts, RR: 0
Reply 21, posted (1 year 8 months 2 days 2 hours ago) and read 3533 times:
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Quoting jmc1975 (Reply 17):

What the heck is American West????

The new name of the airline when American and WestJet merge. I heard that AA Unions aren't happy with US's preposal and are in talks with WestJet..   



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User currently offlineJerseyguy From United States of America, joined Oct 2005, 1982 posts, RR: 0
Reply 22, posted (1 year 8 months 2 days 2 hours ago) and read 3498 times:
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Quoting PHX787 (Reply 20):

Are you kidding?
The airline that bought US to bring them out of BK

You must be confused, other than America West I can't think of any other airline US has bought recently.



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User currently offlinejonathanxxxx From United States of America, joined Feb 2011, 673 posts, RR: 1
Reply 23, posted (1 year 8 months 2 days 2 hours ago) and read 3468 times:

Quoting PHX787 (Reply 20):
Are you kidding?
The airline that bought US to bring them out of BK
Quoting Jerseyguy (Reply 21):
The new name of the airline when American and WestJet merge. I heard that AA Unions aren't happy with US's preposal and are in talks with WestJet..   
Quoting jmc1975 (Reply 17):
What the heck is American West????

He is right, there is no such thing as American West  

P.S. America* West...


User currently offlineWingtips56 From United States of America, joined Dec 2010, 385 posts, RR: 0
Reply 24, posted (1 year 8 months 2 days 2 hours ago) and read 3391 times:

He meant the former America West (no -N), under the IATA code HP. That's actually the Phoenix (Tempe)-base company that bought the original US Airways, taking on the better known US Airways name for the combined company.


Worked for WestAir, Apollo Airways, Desert Pacific, Western, AirCal and American Airlines
25 cloudboy : Geez - one little typo. I am glad I am not writing about the Southwest/Air Tran merger. Hate to see what I might have mistakenly written for Air Tran!
26 Cubsrule : I don't see how this would work. What happens in a city like STL, where there are higher-yielding routes with more of an O&D focus (LGA, DCA) and
27 Post contains images PHX787 : Read it wrong stupid ipad
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