LAXDESI
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US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 4:54 pm

One would think this increases the likelihood of a merger between US Air and American in the long run.
http://www.bloomberg.com/news/2012-0...ward-american-airlines-merger.html

Quote:
US Airways Group Inc. is making “great progress” toward a merger with AMR Corp. (AAMRQ)’s American Airlines and has won backing on Wall Street for a takeover bid, Chief Executive Officer Doug Parker said. US Airways has received “tremendous” support from bondholders and analysts for a merger with Fort Worth, Texas- based AMR, Parker said.
 
atnight
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 6:43 pm

Well.... I think this shows that this deal is likely going forward... I only hope this brings a benefit to customers and is not another CO-UA disappointment.... I hope is more like DL-NW in the end, where the combined airline is really better than before to customers!
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HPRamper
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 8:01 pm

While I personally would like to see this happen, I would take everything Parker says with a grain of salt. Once the shareholders themselves start speaking up in support, then we can actually know the direction this is going. As of now, the only people we've heard from are the talking heads of the airlines and a couple of the labor unions (who are part of the deal, yes, but we've known their stance for a while).
 
LAXDESI
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 8:36 pm

The linked article below suggests that a ruling on American's labor contract is likely on June 22, after which American wil review merger proposals by other airlines. The estimated $1.2 billion in cost savings from US/American merger is about 3% of post merger revenue of combined airlines.
http://www.flightglobal.com/news/art...ptions-after-labour-ruling-373020/
 
texan
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 8:44 pm

Parker is posturing. He is making headlines trying to put pressure on the deal. No proposal has been presented to the bankruptcy court, at least to my knowledge. Until that happens I take his words with a grain of salt. He also didn't mention who might provide the extra financial backing.

Texan
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PHX787
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 10:33 pm

Quoting texan (Reply 4):
Parker is posturing.
Quoting HPRamper (Reply 2):
I would take everything Parker says with a grain of salt.

   he tends to talk out of his a$$ quite a bit.

Quoting texan (Reply 4):
No proposal has been presented to the bankruptcy court,

I highly doubt that the BK court would allow the merger to happen UNDER bankruptcy until everything within AMR and AA is figured out.

Also, I was just thinking about this- what would happen to AmEagle?
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flyby519
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 10:40 pm

Anyone remember or have links to articles with past US/DL and US/UA merger info? I am wondering if Parker was as optomistic of those deals working as he is of US/AA.
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texan
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 10:45 pm

Quoting PHX787 (Reply 5):
I highly doubt that the BK court would allow the merger to happen UNDER bankruptcy until everything within AMR and AA is figured out.

US (or anyone else, for that matter) could present a case that AA's exit from Chapter 11 is flawed and not in the best interests of the shareholders. At that point, the judge could consider the competing claims and, in consultation with the creditors, decide to implement a plan that provides a better payout for the creditors. Look at the deal that happened with the L.A. Dodgers (although that could also be a special case). If US doesn't think they will be able to get the cerditors to agree with a merger, a proposal through the BK court might be their best option if this is something they truly want to pursue.

Texan
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AWACSooner
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 10:53 pm

Quoting atnight (Reply 1):
I only hope this brings a benefit to customers and is not another CO-UA disappointment....

You only need to look at the US/HP merger to see the result of what happens when Doug Parker takes over another airline...so expect another CO/UA type scenario.
 
phxa340
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 11:15 pm

Quoting AWACSooner (Reply 8):
You only need to look at the US/HP merger to see the result of what happens when Doug Parker takes over another airline...so expect another CO/UA type scenario.

  

Still can't believe that after the HP/US merger , people still have unyeilding faith in Parker. One of the reasons that US is profitable is because their costs are lower because they don't have a merged pilot group.

Exciting times ahead ... crossing my fingers that no one loses their jobs at either airline (wishful thinking).
 
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DeltaMD90
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 11:40 pm

Not the most informed here, but I don't see why so many people bash Parker so much. I mean, I think the man has an ego and wants to merge US with anything really, and I know US is still kind of a mess (the pilot groups still being separate) but US was really, really at the brink of failure a few years ago and now it's a relatively healthy company. I think Parker is all right, and he may be what AA needs to fix them...

...or they'll all go down in flames. Hmm.

Quoting PHXA340 (Reply 9):
One of the reasons that US is profitable is because their costs are lower because they don't have a merged pilot group.

How does that make costs lower??

Quoting PHXA340 (Reply 9):
Exciting times ahead ... crossing my fingers that no one loses their jobs at either airline (wishful thinking).

I think layoffs are inevitable. Hopefully layoffs will be minimal and the combined company can actually stay afloat.
Ironically I have never flown a Delta MD-90 :)
 
chepos
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RE: US Airways Sees Progress Towards Merger With American

Thu Jun 14, 2012 11:51 pm

Quoting DeltaMD90 (Reply 10):
Not the most informed here, but I don't see why so many people bash Parker so much. I mean, I think the man has an ego and wants to merge US with anything really, and I know US is still kind of a mess (the pilot groups still being separate) but US was really, really at the brink of failure a few years ago and now it's a relatively healthy company. I think Parker is all right, and he may be what AA needs to fix them...

...or they'll all go down in flames. Hmm.

Quoting PHXA340 (Reply 9):
One of the reasons that US is profitable is because their costs are lower because they don't have a merged pilot group.

How does that make costs lower??

Quoting PHXA340 (Reply 9):
Exciting times ahead ... crossing my fingers that no one loses their jobs at either airline (wishful thinking).

I think layoffs are inevitable. Hopefully layoffs will be minimal and the combined company can actually stay afloat.



It's called jumping on the band wagon, it's cool to bash US Airways on this website. Half of the people who go on and on negatively about this merger neither work for US or AA, they just fly AA or have some weird attachment to the company.

HPRamper very well said, at this point it is very hard to say which way the wind is blowing on this merger.

Regards,

Chepos
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AWACSooner
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 12:07 am

Quoting chepos (Reply 11):
it's cool to bash US Airways on this website.

and WN...and DL...and UA...and AA...and...and...and...

GUILTY!
 
usflyer msp
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 12:15 am

Quoting PHXA340 (Reply 9):
Still can't believe that after the HP/US merger , people still have unyeilding faith in Parker. One of the reasons that US is profitable is because their costs are lower because they don't have a merged pilot group.

Once again (for the 140th time), the pilot situation is completely out of Doug Parker's hands. It is an intra-union issue that is going to have to be settled in court. How could DP have forseen that the US East pilots were going to behave so immaturely?

Yes, the pilot discord does save money in wages (the US East pilots are lowest paid mainline pilots in the industry, even lower than Allegiant and Spirit) but does cost money in scheduling inefficiencies and wasted time in depositions and court hearings.
 
miaintl
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 12:18 am

I personally dont see how any of these airline mergers is good for customers. It would only limit choices, increase prices and shut down hubs.
 
usflyer msp
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 12:21 am

Quoting miaintl (Reply 14):
I personally dont see how any of these airline mergers is good for customers. It would only limit choices, increase prices and shut down hubs.

I concur but since the gov't allowed DL/NW, UA/CO and WN/FL they really couldn't say no to AA/US. They wouldn't be fair.
 
OB1504
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 1:57 am

Quoting miaintl (Reply 14):
I personally dont see how any of these airline mergers is good for customers. It would only limit choices, increase prices and shut down hubs.

As opposed to AA collapsing entirely? I think a merger with US will be the best outcome for them, but the integration is going to be like a train wreck in slow motion and service standards will plummet.
 
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DeltaMD90
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 2:08 am

Quoting miaintl (Reply 14):
I personally dont see how any of these airline mergers is good for customers. It would only limit choices, increase prices and shut down hubs.

As long as there is no abuse or monopolies (in most mergers, some things are given up) why should the government be involved? Companies have the right to be profitable even if it isn't always the optimal solution for customers...
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texan
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 2:22 am

Quoting PHX787 (Reply 5):
Also, I was just thinking about this- what would happen to AmEagle?

Sorry, didn't see this until now. There's no telling what would happen to Eagle. An acquiring company could decide to take it on, divest it or try another option. If it happens through the BK process, then the proposing company would have to discuss how it would deal with all the assets and liabilities of AMR. I won't even hazard a guess at what a company would propose to do in that situation!

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nutsaboutplanes
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 3:31 am

Quoting PHXA340 (Reply 9):
Still can't believe that after the HP/US merger , people still have unyeilding faith in Parker. One of the reasons that US is profitable is because their costs are lower because they don't have a merged pilot group.



Your statement is flawed and not in keeping with reality. People have faith in Doug Parker because 32,000 people still have jobs....5 years ago, that looked like an impossibility. Lets not forget that under Mr. Parker, the airline has executed some very key moves including the DCA slot transaction, International expansion, reorganization of the domestic network, continuous fleet renewal efforts and substantial debt pay-down which continues in 2012.

As far as your pilot statement.....DeltaMD90 said it very well. Yes, the pilots are lower paid on the EAST but that is a beast of their own making. The East pilots have simply decided not to abide by a ruling made in binding arbitration which I still don't understand....this is why they are paid lower. The airlines hands are tied and at the moment, the cost savings in wages for the east pilots somewhat covers the inefficiencies that come from having a split fleet.
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HKG212
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:58 am

Quoting atnight (Reply 1):
Well.... I think this shows that this deal is likely going forward

In fact, I interpret the latest media blitz from Parker to indicate exactly the opposite. Serious discussions take place in back rooms, not in the media.

Parker is clearly desparate to become the CEO of one of the big three airlines, and sees AA under Chapter 11 as his last chance. I don't know all the details but my gut tells me that this merger makes little sense except as a vehicle for Mr. Parker's burning ambition.
 
PHX787
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:01 am

Quoting HKG212 (Reply 20):
Parker is clearly desparate to become the CEO of one of the big three airlines, and sees AA under Chapter 11 as his last chance. I don't know all the details but my gut tells me that this merger makes little sense except as a vehicle for Mr. Parker's burning ambition.

   it's a horrible match, a match made in hell. Too much Northeast overlap = cut flights and raised fees, along with Bye-bye CLT. In the westcoast, if there is consolidation at LAX it would be horrible for the combined airline, and if it is combined at PHX the airport would become overcrowded.

And not to mention the unions from both airlines -_- I know we heard AA's agree, but they have their own internal issues as does US and former HP unions.

Until US can solve the East/West issue, no merger should be allowed to happen, I think.
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Flighty
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:27 am

Quoting PHX787 (Reply 21):
it's a horrible match, a match made in hell. Too much Northeast overlap = cut flights and raised fees, along with Bye-bye CLT. In the westcoast, if there is consolidation at LAX it would be horrible for the combined airline, and if it is combined at PHX the airport would become overcrowded.
(.......)

AA's northeast presence is where exactly... and bye bye CLT? One of global airlinedom's very largest hubs, one whose profitability nobody questions, will just vanish... Gotta love a.net.

Quoting Nutsaboutplanes (Reply 19):
Your statement is flawed and not in keeping with reality. People have faith in Doug Parker because 32,000 people still have jobs....5 years ago, that looked like an impossibility.

Exactly. Doug runs a pretty complicated airline, one that wouldn't even survive 1 quarter unless his team had all their ducks in a row. The naked truth is they know how to financially manage a network airline.
 
wn676
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 8:19 am

Quoting PHX787 (Reply 21):
Until US can solve the East/West issue, no merger should be allowed to happen, I think.

Tell us, what exactly is there for US to solve? What can they legally do to remedy the situation with the pilots? That issue is completely out of their hands.
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PHX787
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 8:20 am

Quoting Flighty (Reply 22):

AA's northeast presence is where exactly... and bye bye CLT?

JFK. Combine DCA into the mix, along with CLT, PHL, and MIA, there are too many hubs on the eastern seaboard for this US/AA to operate out of. It's a cluttered, jumbled mess.
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wn676
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 9:09 am

Quoting PHX787 (Reply 21):
In the westcoast, if there is consolidation at LAX it would be horrible for the combined airline, and if it is combined at PHX the airport would become overcrowded.

Those are two different markets that can serve two different roles. It's cheaper and probably more efficient to continue to flow connecting traffic over PHX, which admittedly will remain as one of the weaker points in the combined system because of this. LAX could continue to build on its O&D strengths. There's obviously going to be some adjustments between the two, but neither one can fully replace the other.

Quoting PHX787 (Reply 24):
JFK. Combine DCA into the mix, along with CLT, PHL, and MIA, there are too many hubs on the eastern seaboard for this US/AA to operate out of. It's a cluttered, jumbled mess.

The same could be said here for JFK and PHL; both have different strengths that a combined airline could utilize more effectively rather than having only one or the other. As far as PHL/MIA/DCA, again, neither can fully replicate the flows that CLT handles due to infrastructure and geography constraints. The only big change I see coming at CLT would be a de-emphasis of their Caribbean/Latin America flying, for which MIA is much better suited.
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incitatus
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 1:54 pm

Quoting usflyer msp (Reply 13):
Once again (for the 140th time), the pilot situation is completely out of Doug Parker's hands

I don't agree with that at all. Ultimately the pilots have to come to an agreement, but smartly Parker turned his back to this issue. US has no incentive to see the pilots integrated because that will significantly raise the compensation of ex-HP pilots.

If US wanted to see the pilot groups integrated, it would have made material offers to sweeten the deal.

Quoting chepos (Reply 11):

It's called jumping on the band wagon, it's cool to bash US Airways on this website

Just remember, Parker was originally America West's CEO. What has he done for HP's pilots after the merger with old US? Nada!

Quoting wn676 (Reply 25):
The only big change I see coming at CLT would be a de-emphasis of their Caribbean/Latin America flying, for which MIA is much better suited.

Much of CLT survives on low fares for connecting traffic that gives it scale. With higher costs of AA+US, CLT would have to pared down significantly to break even.
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kgaiflyer
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 3:07 pm

I agree a combined airline would have too many hubs -- too close together, but I haven't seen much speculation of how fleet rationalization might be handled in a merged airline?

Will a merged airline keep the MD-80s? Will it turn all Airbus? All Boeing?
 
aeroblogger
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 3:11 pm

Quoting incitatus (Reply 26):

If US wanted to see the pilot groups integrated, it would have made material offers to sweeten the deal.

It has made offers to sweeten the deal. The pilots still haven't agreed.
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usflyer msp
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 3:46 pm

Quoting incitatus (Reply 26):
I don't agree with that at all. Ultimately the pilots have to come to an agreement, but smartly Parker turned his back to this issue. US has no incentive to see the pilots integrated because that will significantly raise the compensation of ex-HP pilots.

If US wanted to see the pilot groups integrated, it would have made material offers to sweeten the deal.

Actually, US legally can't do anything until the seniority list issue is settled. If US did reach some sort of contract agreement with USAPA, what seniority list would they use? If US picked a side, the other side would be filing a lawsuit against US so fast your head would spin. US' management is kind of stuck.
 
chepos
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 3:56 pm

Quoting usflyer msp (Reply 29):
Quoting incitatus (Reply 26):
I don't agree with that at all. Ultimately the pilots have to come to an agreement, but smartly Parker turned his back to this issue. US has no incentive to see the pilots integrated because that will significantly raise the compensation of ex-HP pilots.

If US wanted to see the pilot groups integrated, it would have made material offers to sweeten the deal.

Actually, US legally can't do anything until the seniority list issue is settled. If US did reach some sort of contract agreement with USAPA, what seniority list would they use? If US picked a side, the other side would be filing a lawsuit against US so fast your head would spin. US' management is kind of stuck.



The pilot situation at US has been explained numerous times on this website. It's not even worth explaining anymore as people don't bother to read previous threads or educate themselves on matters before making assumptions. I'm sure it will brought up on this thread numerous times over and over again.

Regards,

Chepos

[Edited 2012-06-15 09:28:13]
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JFKPurser
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 4:21 pm

A compilation of analysts' and other various opinions on the AA-US merger:

"I don't know anybody who's looked at it from 30,000 feet that would tell you that they think the standalone scenario is superior. [AMR] has not competed well when it was going from No. 1 to No. 2 now to the third position, and I don't see how a standalone would solve that, especially with this 'shrink and then re-grow' strategy they are doing."
– ROBERT W. MANN, AIRLINE ANALYST, R.W. MANN & COMPANY (06/07/12)

“AMR’s standalone plan contradicts itself, in our view. Just this afternoon AMR’s restructuring adviser said AMR would consider a merger because management’s fiduciary duty involves “maximizing stakeholder value.” If that’s true then why not explore one now? Is labor not a stakeholder? Even in a post-BK merger with LCC, wouldn’t AMR standalone have to reset wages higher? To us this feels more about self-preservation than maximizing stakeholder value, which an LCC bid would seem to do.”
– HUNTER KEAY, SENIOR AIRLINE ANALYST, WOLFE TRAHAN &CO. (4/25/12)

“Looking ahead, AMR’s plan to grow 20% over 5 years is toxic to industry pricing, which makes it bad for AMR & the industry in our view. Ultimately, AMR suffers a billion dollar plus revenue deficit to the industry & creditors must decide which is the stronger revenue model: AMR standalone? Or AMR/LCC combined? The network muscle AMR would inherit to support domestic & int’l flying makes it an open and closed case in favor of LCC in our view.”
– DAN MCKENZIE, ANALYST, RODMAN & RENSHAW (4/20/12)

“In order to get the best resolution for everybody, all options should be on the table.”
– JOSH GOTBAUM, PRESIDENT, PENSION BENEFIT GUARANTY CORPORATION (4/20/12)

"If they merge in bankruptcy, they can keep the extra value inside…The airline could invest in the company and in making labor happy."
– VAUGHN CORDLE, ANALYST, AIRLINEFORECASTS LLC (4/20/12)
SERVICE / NETWORK

“AMR has a network disadvantage today, which has resulted in a substantial revenue disadvantage. A combined AMR-LCC eliminates the weaknesses present in each standalone airline and we project revenue synergies of $1.5 billion annually.”
– WILLIAM GREENE, MANAGING DIRECTOR, MORGAN STANLEY (6/10/12)

“US Airways still has a strong presence on the East Coast via its Charlotte (CLT) and Philadelphia (PHL) hubs, which together represent 67% of the company's traffic…Interestingly, US Airways, although mostly a domestic carrier, flies to more European destinations out of PHL than AMR does out of JFK, further indicating AMR's weak East Coast footprint. Thus, we think combining the carriers will expand revenue since AMR will benefit from US Airways' east coast presence and US Airways will benefit from AMR's Latin American exposure in Miami and Dallas. We believe the increased East Coast presence will enable AMR to shrink its revenue gap and lower its salary costs.”
– BASILI ALUKOS, EQUITY ANALYST, MORNINGSTAR (6/7/12)

Buddy La Follette
st Updated 6/13/12
“LCC and AMR together would be stronger than AMR alone, we believe. We view LCC’s route structure as being very complementary to AMR’s. LCC’s substantial eastern U.S. market presence, which it efficiently manages through its Philadelphia and Charlotte hubs, have much greater connectivity than AMR’s hub at JFK. AMR has struggled to generate this kind of connecting traffic in order to compete with Delta and United out of New York. The combined company could capitalize on LCC’s strong Eastern presence and combine both companies’ sizeable international presence to compete more effectively with United and Delta.”
– BOB MCADOO, ANALYST, IMPERIAL CAPITAL (5/29/12)

“In terms of network overlap, LCC’s network would be very complimentary [sic] to AMR’s network, in our
opinion, as a combined airline would attain greater scale and be much better suited to compete against DAL
and UAL.”
– HUNTER KEAY, SENIOR AIRLINE ANALYST, WOLFE TRAHAN &CO. (4/25/12)

“[A merger] provides a stronger and more vigorous American Airlines. It's good for the communities we serve. They'll have better choices than they do now. It'll create additional opportunities in a large number of markets that don't have adequate competition. We believe it will actually increase competition in the industry and benefit the employees of American Airlines and benefit the company itself.”
– DAVE BATES, PRESIDENT, ALLIED PILOTS ASSOCIATION (4/20/12)

“We believe an AMR-LCC merger would enable the combined companies to provide a broader footprint with fewer aircraft. Adding connections from LCC’s Charlotte, Philadelphia, and Washington D.C. hubs would create market leadership (more destinations with greater frequency) in a majority of markets East of the Mississippi, in our view.”
– GLENN ENGEL, ANALYST, BANK OF AMERICA MERRILL LYNCH (4/20/12)

“The AMR and LCC route systems fit in nicely that would enable a merged airline to cover the whole country, Europe and South America…There is little overlap so we doubt that there would be much regulatory pushback.”
– RAY NEIDL, ANALYST, THE MAXIM GROUP (4/20/12)
CUSTOMERS

“A deal here could work to the advantage of consumers. Keep in mind that on a stand-alone basis, American and especially US Airways lack the scale to excel. A combination would create a powerful competitor to United and Delta for domestic as well as international routes. The new company would provide a counterweight to other huge global airlines such as Lufthansa and Air France. It would be better positioned to compete for emerging-market routes as well. Don't count it out.”
– EDITORIAL, CHICAGO TRIBUNE (4/30/12)

"The bottom line for travelers could be that three major international carriers would compete vigorously for business customers and vacationers alike, with the scale to offer flights on their own planes to most corners of the world and the ability to stay profitable even during periods of high oil prices. Ultimately that’s a better travel system than the gyrations of boom and bust of the past decades."
– SCOTT MCCARTNEY, COLUMNIST - THE MIDDLE SEAT TERMINAL, WALL STREET JOURNAL (4/20/12)

Last Updated 6/13/12
LABOR
"Bottom line, 55,000 employees at AMR aren’t wrong; and it’s hard to envision the creditor’s committee ultimately supporting a plan where labor isn’t onboard. The precedent is powerful; consolidated airlines make superior business models.”
– DAN MCKENZIE, ANALYST, RODMAN & RENSHAW (6/13/12)

“It is my view, after the events of [April 20], that the bondholders and everyone interested in this case should think long and hard about the qualitative side of a potential standalone entity and what losing your people – in such spectacular and resounding fashion – really means to the present and to the future of American Airlines.”
– HOLLY HEGEMAN, EDITOR, PLANEBUSINESS (4/24/12)

“[A] common objection to this merger is the tired line that US Airways can’t get its own house in order, so how could it handle American? Very well, actually. The US Airways unions are being cautious, but they should be happy. US Airways has been clear that it needs to keep wages lower because it can’t produce as much revenue as the big three from its existing network. With American, that changes and raises will become possible.”
– BRETT SNYDER, EDITOR, CRANKY FLIER (4/23/12)

“This agreement puts flight attendants in a far better position than any proposal American Airlines management has made. Equally important is the business plan US Airways has put forward, which I strongly believe will bring American Airlines back to profitability and competitiveness. A combined US Airways and American Airlines will eliminate the competitive advantage of Delta and United and making us relatively competitive in both size and network.”
– LAURA GLADING, PRESIDENT, ASSOCIATION OF PROFESSIONAL FLIGHT ATTENDANTS (4/20/12)

“[US Airways] is currently profitable and could elevate American to a top-tier carrier. If a merger were to take place it could help turn around our airline, give us new management and a path towards a more positive future, something that has long been missing in our work lives.”
– JIM LITTLE, PRESIDENT, TRANSPORT WORKERS UNION (4/20/12)

“For the American unions, it's a real indictment to the company's plan. In fact, they are casting their lot with the devil they don't know rather than the devil they do.”
– BOB MANN, PRESIDENT, R. W. MANN GROUP (4/20/12)

“All our members think we would be better off by merging with US Airways…US Airways could be the light at the end of the tunnel for our members. We know where we're going with American Airlines.”
– RICK MULLINGS, ORGANIZER, TWU LOCAL 514 (TULSA) (4/20/12)

“A combination of US Airways and American could bolster the oneworld Alliance, make frequent-flier programs at both American and US Airways more stable bets for long-term rewards and give employees at both companies more long-term job security. It likely could help US Airways solve the seniority integration problem at its pilots union, which has been unable to internally mesh together pilots from the old US Airways with pilots from America West Airlines. Moving them to a more lucrative contract at American with a much larger seniority list could be a strong incentive to settle that mess.”
– SCOTT MCCARTNEY, COLUMNIST - THE MIDDLE SEAT TERMINAL, WALL STREET JOURNAL (4/20/12)

Last Updated 6/13/12
REGIONAL IMPACT
"There’s a clear choice. One choice is to build the largest airline in the country right here in North Texas, and the other choice is to shrink that airline and send those North Texas jobs to other countries. [A] merger seems to me to be the best plan to protect North Texas jobs and protect the airline."
– CLAY JENKINS, COUNTY JUDGE, DALLAS COUNTY (4/23/12)

“Some people, including politicians, are worried about disruptions at American Airlines. Sounds almost quaint, with the company in Chapter 11, shedding jobs and debt. How about this scenario instead? Fort Worth becomes home to the world's biggest airline once more, and for the first time in a decade, American and its unions strike a deal. Does that sound like a hostile notion?”
– MITCHELL SCHNURMAN, COLUMNIST, FORT WORTH STAR-TELEGRAM (4/21/12)

“We expect LCC to put forth a compelling business plan that offers smart growth in areas where AMR+LCC is already strong on a pro forma basis: Miami and Dallas-Fort Worth to name two, with less of a focus on competitive markets in Chicago, New York, and certainly Los Angeles. Government officials, including Senator Kay Bailey Hutchison (R-TX) have expressed hesitation about AMR being acquired. Well, today in a letter from APA President Dave Bates, President Bates said ‘First and foremost, the combined carrier will be branded American Airlines, based in Fort Worth Texas and headquartered at CentrePort.’ Problem solved.”
– HUNTER KEAY, SENIOR AIRLINE ANALYST, WOLFE TRAHAN &CO. (4/20/12)

MANAGEMENT
“A combined LCC/AMR, managed by the current LCC leadership, would be a stronger entity than would a standalone AMR, in our opinion. The added benefits of a merged entity would come from adding LCC’s substantial Eastern U.S. market presence and LCC’s existing Trans-Atlantic operation to AMR’s operation.”
– BOB MCADOO, ANALYST, IMPERIAL CAPITAL (5/29/12)

“Some have worried that a combined US Airways/American would look like US Airways. It won’t. It will be American but better-run. The airline will remain American Airlines and will be headquartered right where it is today. There will just be a better team in place to run a better network.”
– BRETT SNYDER, EDITOR, CRANKY FLIER (4/23/12)

“Working with US Airways, APA was able to achieve in just over a week far more than we had been able to achieve in more than five years of trying to bargain with AMR management. Our interaction with US Airways was in stark contrast to what we have been experiencing with AMR. We dealt directly with the people whose jobs are to run an airline. Many of the talks consisted of president-to-president interaction. In accordance with the APA Constitution and Bylaws, there were always two members of the APA Negotiating Committee present during these negotiations. Completely absent from the discussion were the posturing and game-playing that characterizes the approach AMR management takes when dealing with us.”
– DAVE BATES, PRESIDENT, ALLIED PILOTS ASSOCIATION (4/20/12)

"US Airways has a very strong management team that has kept that airline profitable and run a top-notch on-time operation for the past several years. American’s management has struggled—the bottom of the industry in financial losses and often in late and canceled flights as well."
– SCOTT MCCARTNEY, COLUMNIST - THE MIDDLE SEAT TERMINAL, WALL STREET
JOURNAL (4/20/12)

Last Updated 6/13/12
"I absolutely believe if anyone in the industry could do [a merger], it is Doug Parker."
– VAUGHN CORDLE, ANALYST, AIRLINEFORECASTS LLC (4/20/12)

REGULATION / ANTITRUST
“The bottom line is that we believe a merger between AMR Corporation and US Airways would create a formidable competitor to both Delta and United. We also think that an AA/US merger would be positive for the US airline industry. Lastly, a deal would still need approval from the Department of Justice which typically focuses on city-pair concentration. In that regard, American and US Airways’ networks are complementary with only a dozen or so overlap routes out of several 1,000 domestic city-pairs.”
– MICHAEL LINENBERG, MANAGING DIRECTOR, DEUTSCHE BANK SECURITIES (05/28/12)

“We see little problem with DoJ approval, assuming LCC is happy to divest assets in Washington D.C., and we have yet to talk to a potential institutional investor that sees merit in a standalone AMR plan. Not saying they’re not out there… we just haven’t spoken to them if they are. Alternatively, support for an LCC-AMR merger, run by LCC management, seems to have broad support by the investment community and now AMR labor. If LCC promises to avoid shedding 6,200 jobs currently targeted for cuts (as LCC CEO said in his letter today), how can regulators not at least be open-minded to the idea?”
– HUNTER KEAY, SENIOR AIRLINE ANALYST, WOLFE TRAHAN &CO. (4/20/12)

INDUSTRY LANDSCAPE
“Consolidation is positive for airline fundamentals in a number of ways but most importantly: (1) greater concentration of capacity in the industry would deter irrational pricing activity, (2) consolidation could take labor expense to levels similar to DAL/UAL, normalizing cost structures and reducing the incentive to price aggressively, and (3) consolidation could result in more conservative capacity trends at LCC/AMR.”
– WILLIAM GREENE, MANAGING DIRECTOR, MORGAN STANLEY (6/10/12)

"Such a merger would not be detrimental to oneworld. In terms of the joint business agreement any consolidation that increases the choices for our customers would be welcomed.”
– INTERNATIONAL AIRLINES GROUP (06/07/12)

“We think that an AA/US merger will be positive for the US airline industry. We also think the implications of a merger are positive for global airlines, particularly those in the oneworld alliance.”
– MICHAEL LINENBERG, MANAGING DIRECTOR, DEUTSCHE BANK SECURITIES

(05/28/12)
“A marriage of American and US Airways is the final piece of consolidation necessary to put the airline industry on sustainable financial footing after nearly three decades of over-expansion and hyper-competition that undermined profitability.”
– STEVEN PEARLSTEIN, COLUMNIST, WASHINGTON POST (4/28/12)

"US Airways is a good partner of ours. And if they were to leave the Star Alliance, it would have an impact on us and that would be on that piece negative to us. On the other hand, if they left as a result of a consolidation, I think that would be very good. It would be very good for the business and very good for the industry. And consolidation as you know has worked well for this business. And I think net to us, if US Airways were leaving for a consolidation that seems to be a lot in the news today, I think net-net, that'd be positive for United Airlines."
– JEFF SMISEK, CEO, UNITED AIRLINES (4/26/12)

Last Updated 6/13/12
“The whole US airline industry is likely to benefit from further industry consolidation, should it happen. We think LCC is an aggressive way to play the theme and could provide significant upside. Some investors are likely to shy away from the actual merger participants so we see upside potential across the whole group.”
– KEVIN CRISSEY, ANALYST, UBS SECURITIES (4/24/12)

“The merger of US Airways and American has far more positive benefits than negative ones and their merger would play a major role in making the US Airline industry better! History shows a long list of once great airlines that failed. Each of those failed airlines had one thing in common. They all failed to remain competitive. It's the opinion of AirlineFinancials.com that American and US Airways must merge to remain long-term competitive.”
– ROBERT HERBST, ANALYST, AIRLINEFINANCIALS.COM (4/20/12)

“We view an AMR-LCC merger outcome as a material positive for industry dynamics, in large part given the avoidance of potential value destruction stemming from AMR’s growth driven standalone ambitions.”
– JAMIE BAKER, ANALYST, JP MORGAN CHASE (4/20/12)

“A combination of the two carriers would be positive for both of them and the industry.”
– RAY NEIDL, ANALYST, THE MAXIM GROUP (4/20/12)
DEBT / EQUITY

“We estimate that AMR bondholders with impaired claims face a 21% downside if AMR doesn't merge with US Airways and a 41% upside if a merger occurs based on current trading levels; AMR shareholders get wiped out regardless; and US Airways shareholders have 30% downside with no deal and 59% upside if a deal occurs and the entity achieves all of our projected synergies.”
– BASILI ALUKOS, EQUITY ANALYST, MORNINGSTAR (6/7/12)

[Edited 2012-06-15 09:50:16]
 
incitatus
Posts: 2749
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 4:35 pm

Quoting JFKPurser (Reply 31):
A compilation of analysts' opinions on the AA-US merger:

Many of these comments make sense, but many of them are not from analysts - very misleading.
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JFKPurser
Posts: 296
Joined: Thu Mar 29, 2007 12:03 am

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 4:48 pm

Quoting incitatus (Reply 32):
Many of these comments make sense, but many of them are not from analysts - very misleading.

I changed the first sentence for you, so that you are no longer misled.



[Edited 2012-06-15 09:51:36]
 
ca2ohHP
Posts: 657
Joined: Sat Sep 17, 2005 4:14 am

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:09 pm

Quoting incitatus (Reply 26):
US has no incentive to see the pilots integrated because that will significantly raise the compensation of ex-HP pilots.

Actually pre-merger US pilots would see bigger gains. Their narrowbody counterparts at HP make $20-25/block hour more.

[Edited 2012-06-15 10:11:07]
 
boeing773er
Posts: 480
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:14 pm

Quoting OB1504 (Reply 16):

Please tell me how AA would collapse if they would not merge with US? I'm pretty sure AA will never collapse for these reasons

-They are in bankruptcy right now, not because they didn't have any cash or anything it's because their costs were too high and their unions didn't want to negotiate anymore.

- If AA even started to fail, some OneWorld partner would bail them out, sorta like what happened with JAL, they started to collapse and I believe OneWorld raised $1 Billion for them (and to keep them out of SkyTeam)

-If OneWorld wouldn't help, I'm sure there is some airline in the US who will be knocking on their door to merge.

-If none of those scenarios happen, some group would give them a bailout (namely TPG Capital, I believe they saved them in 2003)

Quoting PHX787 (Reply 21):
Until US can solve the East/West issue, no merger should be allowed to happen, I think.

I do not understand where this big problem between the East/West issue is. From a customer standpoint this issue does not exists. I think the only people who know about this problem are us A.Netters, the Employees of US, the Unions, and possibly the families of US employees. I know it isn't the best way to run an airline, but they aren't having any strikes, nor are they ruining the customer experience.

Quoting PHX787 (Reply 21):
along with Bye-bye CLT.

This claim is a little absurd, CLT is US's largest hub by Seats and Daily departures. So can someone please tell me why CLT would leave the system if this merger would occur, because I can not think of any? Sure if the merger would occur I'm sure CLT wouldn't have as many Caribbean/South America flights, but that isn't going to take the hub status away. US needs CLT as a South connector hub, MIA can not effectively play the role that CLT does. Also, I believe US is planning on spending $1 Billion to add a new terminal in CLT, so to spend that kind of money then leave makes no sense (yes they also spent a lot in PIT before they left, but the costs were too high and the O&D wasn't there)
Work Hard, Fly Right.
 
JFKPurser
Posts: 296
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:16 pm

Quoting Boeing773ER (Reply 35):
If OneWorld wouldn't help, I'm sure there is some airline in the US who will be knocking on their door to merge.

You mean, an airline like US Airways?
 
PRAirbus
Posts: 687
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:22 pm

AA might be better off getting out of bankruptcy Ch. 11 as a stand-alone entity and then initiating itself a merger/acquisition once its house is in order. AA should pursue acquiring B6; it would give AA a more solid position in JFK and put it back as #1 in some Caribbean markets like Dom Rep and Pto Rico. Integrating US/AA unions could be a nightmare, a long one...what about fleet commonality? Most of US fleet doesn't even have IFE, who wants to fly a transcon on a plane w/no IFE? If AA plans work, fleet wise it'll be very well positioned, modify the brand and somehow work with its unions. US/AA might be a mess to integrate. :O
 
aeroblogger
Posts: 1380
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:42 pm

Quoting PRAirbus (Reply 37):
Integrating US/AA unions could be a nightmare, a long one.

Why? The AA pilots outnumber the pmUS pilots handily. And the HP guys who are tired of dealing with the USAPA will also probably join them... Any union issues would be gone quick after a merger.

Quoting PRAirbus (Reply 37):
Most of US fleet doesn't even have IFE, who wants to fly a transcon on a plane w/no IFE?

Me. If the price is competitive and the schedule is good, that is. And I think that most flyers would agree with me. And those that don't aren't likely to know about the IFE (or lack thereof) on any airline.
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Flighty
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 5:47 pm

Quoting Boeing773ER (Reply 35):
MIA can not effectively play the role that CLT does.

MIA is 650 miles south of CLT. They are not in the same region!

I see no changes that would occur at _either_ hub except a _couple_ of intercontinental flights might move to MIA or be eliminated. We're talking like 2 flights.

It is not practical to connect say, SXM to the nation through MIA. CLT is far better for that.
 
corinthians
Posts: 292
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:02 pm

Quoting JFKPurser (Reply 31):
A compilation of analysts' and other various opinions on the AA-US merger:

I used to be a “Wall Street Analyst” and knowing analyst-speak, I take their comments with a grain of salt because it usually means they’re pushing a certain agenda. Wall Street pushes anything and everything that encourages mergers, monopolies and reduces competition. Why? Because it means higher prices and higher revenue for the companies involved. Higher revenue means higher stock prices and greater return on their clients’ investments. The customer gets screwed in the end, but Wall Street doesn’t care and it’s good for them. Oh, and let’s not forget that whichever i-bank is involved with this merger will get a ton of money in set-up fees. So, it’s in their best interest to push a merger.

I’m against this merger for many reasons, but first and foremost because it will reduce competition and the customer will get screwed. The airline industry has been merger-happy the last few years and I fail to see how these mergers have benefited me as a consumer. Ticket prices have gone up and service levels are much worse compared to before when there were more airlines that actually competed against each other over service and price. Actually, I can’t think of an example in any industry where big mergers have actually yielded a net positive for the consumer. But, of course, Wall Street isn’t concerned about that. It’s not in their benefit to think so.
 
aeroblogger
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:12 pm

Quoting Corinthians (Reply 40):

I’m against this merger for many reasons, but first and foremost because it will reduce competition and the customer will get screwed. The airline industry has been merger-happy the last few years and I fail to see how these mergers have benefited me as a consumer. Ticket prices have gone up and service levels are much worse compared to before when there were more airlines that actually competed against each other over service and price. Actually, I can’t think of an example in any industry where big mergers have actually yielded a net positive for the consumer. But, of course, Wall Street isn’t concerned about that. It’s not in their benefit to think so.

I'd agree with your point completely if airlines were making obscene profits. But airlines are barely making profits at all. It would be great for the consumer if there was double as much capacity and much better service standards. But the airlines would all be bleeding.

A balance needs to be reached between airline profitability and the interest of the consumer. What that balance is can be debated, but a balance is definitely necessary. And it seems that those analysts etc. are saying that more consolidation needs to take place to achieve that balance. If that's the case, so be it.
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jfk777
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:24 pm

Quoting Boeing773ER (Reply 35):
This claim is a little absurd, CLT is US's largest hub by Seats and Daily departures. So can someone please tell me why CLT would leave the system if this merger would occur, because I can not think of any? Sure if the merger would occur I'm sure CLT wouldn't have as many Caribbean/South America flights, but that isn't going to take the hub status away. US needs CLT as a South connector hub, MIA can not effectively play the role that CLT does. Also, I believe US is planning on spending $1 Billion to add a new terminal in CLT, so to spend that kind of money then leave makes no sense (yes they also spent a lot in PIT before they left, but the costs were too high and the O&D wasn't there)Work Hard. Fly Right.

TO compare what CLT and MIA do is to be in 2 different worlds. Miami handles tons of International traffic to Latin America and the Caribean. CLT is like 1/2 ATL, its a domestic hubs with a few flights to Europe and Rio de Jainero. CLT provides AA with a hub it has been missing since RDU closed. Most Domestic MIA flights are in support of flights to South America.
 
PHX787
Posts: 7881
Joined: Thu Mar 15, 2012 7:46 pm

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:44 pm

Quoting wn676 (Reply 23):
Tell us, what exactly is there for US to solve? What can they legally do to remedy the situation with the pilots? That issue is completely out of their hands.
Quoting aeroblogger (Reply 28):
It has made offers to sweeten the deal. The pilots still haven't agreed.

That's exactly my point. You can't have 3 different sets of pilots (4, if you count the TW pilots) Operating under one name. It creates too many issues and worsens issues already afoot. Consolidation doesn't come without shedding some excess fat and once the US pilots find this out they're not gonna like this.

Quoting incitatus (Reply 26):
Much of CLT survives on low fares for connecting traffic that gives it scale. With higher costs of AA+US, CLT would have to pared down significantly to break even.

   my point exactly.

Quoting JFKPurser (Reply 31):
“In order to get the best resolution for everybody, all options should be on the table.”
– JOSH GOTBAUM, PRESIDENT, PENSION BENEFIT GUARANTY CORPORATION (4/20/12)

INCLUDING remaining 2 separate entities.
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chepos
Posts: 5961
Joined: Sat Dec 02, 2000 9:40 am

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:47 pm

Quoting PRAirbus (Reply 37):
AA might be better off getting out of bankruptcy Ch. 11 as a stand-alone entity and then initiating itself a merger/acquisition once its house is in order. AA should pursue acquiring B6; it would give AA a more solid position in JFK and put it back as #1 in some Caribbean markets like Dom Rep and Pto Rico. Integrating US/AA unions could be a nightmare, a long one...what about fleet commonality? Most of US fleet doesn't even have IFE, who wants to fly a transcon on a plane w/no IFE? If AA plans work, fleet wise it'll be very well positioned, modify the brand and somehow work with its unions. US/AA might be a mess to integrate. :O


AA acquiring B6 is Tom Horton's wet dream. AA acquires B6 and we would see a repeat in history, remember TWA, AirCal, RenoAir, the B6 route system would basically be gutted with the exception of the JFK slots. AA is not insterested in being #1 in PR, DR and other low yielding Caribbean destinations. How many times did AA try BQN - MIA/FK numeorus times only to pull out- same with PSE-MIA/FK. Keep in mind B6 is not in a financial distress at the moment and they along with their employees would get more benefit from codesharing with AA, why would they want to be acquired by AA?

Regards,

Chepos
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incitatus
Posts: 2749
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 6:58 pm

Quoting JFKPurser (Reply 33):
I changed the first sentence for you, so that you are no longer misled.

I read somewhere an expert saying there is "90% chance the merger will happen". It seems it did not make it to your list. I suggest you add it.
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boeing773er
Posts: 480
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 7:01 pm

Quoting JFKPurser (Reply 36):

Well, they are doing it now aren't they? But it isn't limited to just US; I'm sure if the price would be right any airline based in the United States would try to go after AA. Now, if their merger would get approved if another story (an AA-DL or AA-UA merger wouldn't go through, and i'm pretty sure everyone knows that)

Quoting chepos (Reply 44):

I sort of am against what you are saying, I believe AA would love to merge with B6 in any form. They would probably try out being number one in those markets, because where else would they put their extra planes they would acquire? It's not like AA will be in dire need of having new planes in their system in 5-10 years. If the AA-US merger wouldn't go through, B6/AA has a slight chance to make it. Of course with a huge amount of JFK slots going out the window to other carriers, but it could work. In the same sense, the B6 FLL focus city would more than likely be gone in a heart beat. Although, it could provide a good amount of domestic flights out of the Southwest region of the US for AA.

Would a B6-AA merger make AA number two or one again?

*sorry for being off topic of a US/AA merger*
Work Hard, Fly Right.
 
aeroblogger
Posts: 1380
Joined: Tue Dec 20, 2011 5:53 am

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 7:05 pm

Quoting PHX787 (Reply 43):
That's exactly my point. You can't have 3 different sets of pilots (4, if you count the TW pilots) Operating under one name. It creates too many issues and worsens issues already afoot. Consolidation doesn't come without shedding some excess fat and once the US pilots find this out they're not gonna like this.

Sure you can. It results in lower labor costs (which are offset by lack of flexibility).
I fail to see why it is imperative to have merged pilot groups in an airline.

And FWIW, the AA pilots will dwarf the USAPA pilots - a merger would effectively destroy US' problem.
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izbtmnhd
Posts: 295
Joined: Tue Aug 17, 2010 7:06 pm

RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 7:16 pm

Quoting Boeing773ER (Reply 46):
Of course with a huge amount of JFK slots going out the window to other carriers, but it could work.

If AA-B6 merge I can't help but wonder, who's left to give those slots too? WN? US? The total number of players seem to be shrinking by the minute.
 
chepos
Posts: 5961
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RE: US Airways Sees Progress Towards Merger With American

Fri Jun 15, 2012 7:17 pm

Quoting Boeing773ER (Reply 46):
I sort of am against what you are saying, I believe AA would love to merge with B6 in any form. They would probably try out being number one in those markets, because where else would they put their extra planes they would acquire? It's not like AA will be in dire need of having new planes in their system in 5-10 years. If the AA-US merger wouldn't go through, B6/AA has a slight chance to make it. Of course with a huge amount of JFK slots going out the window to other carriers, but it could work. In the same sense, the B6 FLL focus city would more than likely be gone in a heart beat. Although, it could provide a good amount of domestic flights out of the Southwest region of the US for AA.

Would a B6-AA merger make AA number two or one again?

*sorry for being off topic of a US/AA merger*



I did say Tom Horton's wet dream was to merge with B6, meaning that's what he wants to do. Not sure why AA would be rushing to for #1 in some Caribbean markets which are low yielding, they did concede those markets. They could redeploy those aircraft on routes which make money for the airline. Aircraft they don't need they would remove from the fleet, similar to what happened with the TWA merger. History has a funny way of repeating itself, we could very much see a repeat. Will the outcome be any different, doubtful. If B6 merger with AA, B6 would disappear. Highly doubtful that the B6 culture would be all over AA , the B6 culture, onboard experience and route system would be gone in the blink of an eye- after all it would be the AA dynasty running the show.

[Edited 2012-06-15 12:23:47]

[Edited 2012-06-15 12:35:12]
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