rising
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IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 06, 2012 2:15 pm

No surprise here.

International Airlines Group is looking at purchasing a minority stake in AMR Corporation. The deal would allow for IAG and AMR to "expand their commercial partnership and ensure the US carrier remains part of Oneworld, the global airline alliance."

IAG Chief Willie Walsh was also quoted as supporting an AMR Corporation/US Airways Group combination.

We have seen similar events in the past, some have panned out, others have not. Lufthansa was considering purchasing a stake in UAL Corporation earlier in the decade. We also saw the race to cement a deal with JAL via a minority stake. Be curious to see how this one pans out.


http://www.ft.com/cms/s/0/41dc82c0-d...dc-00144feab49a.html#axzz22m5BaawD
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timboflier215
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 06, 2012 2:22 pm

Quoting rising (Thread starter):
IAG Chief Willie Walsh was also quoted as supporting an AMR Corporation/US Airways Group combination.

Not a surprise - from an IAG/Oneworld point of view, and AA/US tie up would knock a competitor out of Star, and increase the connectivity options in the world's most important air travel market.

From an AA point of view though, I am yet to be convinced such a merger makes any sense.
 
TWA85
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 06, 2012 8:30 pm

Quoting timboflier215 (Reply 1):
Not a surprise - from an IAG/Oneworld point of view, and AA/US tie up would knock a competitor out of Star, and increase the connectivity options in the world's most important air travel market.

From an AA point of view though, I am yet to be convinced such a merger makes any sense.

Agreed! IAG simply wants to protect their intersts in the Oneworld Trans-Atlantic JSA. As for AA, A merger with US, has its pro's and its con's. The bigger question is, does it make sense now or later?
 
LHRFlyer
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 06, 2012 10:56 pm

The Financial Times has been carefully selective in quoting Willie Walsh.

What the Financial Times didn't say is that IAG is not actively looking to acquire a stake in American Airlines (or JAL) at the moment but they remain open to it.

The example Willie Walsh cited about Delta and GOL actually reinforces the point. GOL is not in an alliance but Delta's stake enabled it to partner with GOL. AA and IAG is a different story. AA and BA and Iberia are already involved in deep co-operation with membership of Oneworld and the transatlantic joint-venture. There is little to be gained beyond this through a minority stake.
 
mikey72
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 8:03 am

People are now questioning whether IAG's interest in acquiring a stake in AA complicates QF's potential plans with EK due to QF's cooperation with AA ?

Help somone ?

  
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
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RWA380
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 8:55 am

If AA and US hook up, it will be a much different route map 3 years from merger day, expect some hub reductions that won't be popular with everyone, just like the rest of the past mergers.
IE...MEM, CVG, STL, MCI, PIT and more, just an unfortunate reality of doing business in a merger frenzied industry.

[Edited 2012-08-07 02:24:13]
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Burkhard
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 9:07 am

There goes the cash Iberia has collected over decades to have a UK based investor invest in a bankrupt US enterprise - and then UK and US complain about underfinancing of Spanish Economy... While it is likely to happen I think it would be better invested in Spain.
 
jumpjets
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 10:29 am

Quoting Burkhard (Reply 6):
There goes the cash Iberia has collected over decades to have a UK based investor invest in a bankrupt US enterprise

IAG is a listed company quoted on the Madrid and London stock exchanges. The largest single investor is Bankia of Spain [albeit they are likely to sell] who own 12% of IAG - nearly 3 times the next larger shareholding. To describe IAG as a UK based invrestor is not very accurate.
 
bill142
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 10:40 am

Quoting jumpjets (Reply 8):

Not to mention that IAG is domiciled in Spain and only operationally located in the UK.
 
LHRFlyer
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 10:42 am

Quoting Burkhard (Reply 6):

Except it won't. As I said above Willie Walsh has been selectively quoted. He is never going to rule out an investment entirely but he was clear no investment is planned at the moment.
 
AAplat4life
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 10:54 am

Frankly, it is far from clear that US would need IAG to do a transaction. The creditors might be willing to take all stock unless AMR puts stock and cash on the table.
 
HPRamper
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 2:38 pm

Quoting RWA380 (Reply 5):
If AA and US hook up, it will be a much different route map 3 years from merger day, expect some hub reductions that won't be popular with everyone, just like the rest of the past mergers.
IE...MEM, CVG, STL, MCI, PIT and more, just an unfortunate reality of doing business in a merger frenzied industry.

AA/US doesn't have redundant hubs in the way DL/NW did. The only times two hubs are fairly close, one is generally an O&D type hub while the other is a connecting hub, neither of which can fill in for the other.
 
commavia
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 2:40 pm

Quoting HPRamper (Reply 12):
AA/US doesn't have redundant hubs in the way DL/NW did. The only times two hubs are fairly close, one is generally an O&D type hub while the other is a connecting hub, neither of which can fill in for the other.

... with the possible (likely?) exception of PHX.
 
flyby519
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 4:00 pm

deleted.... my apologies

[Edited 2012-08-07 09:42:26]
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LAXdude1023
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 4:23 pm

Quoting Burkhard (Reply 6):
There goes the cash Iberia has collected over decades to have a UK based investor invest in a bankrupt US enterprise - and then UK and US complain about underfinancing of Spanish Economy... While it is likely to happen I think it would be better invested in Spain.

In Spain? The country whose economy is on the verge of collapse?
It is what it is...
 
jumpjets
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 4:57 pm

Quoting Burkhard (Reply 6):
There goes the cash Iberia has collected over decades

..oh and I suppose investing around $1.75bn in A330s [ignoring the exercise of any options] doesn't count as using Iberia's money to develop Iberia.
 
FCAFLYBOY
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 5:47 pm

Let's also not forget that IB did have some cash yes, but why?

Years and years and years of under-investing in their product, service and aircraft. If BA had been so complacent they would have billions banked by now!

I hardly think ANY of our European airlines are in a position to preach, most are bleeding millions. British or German or not!
 
jfk777
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 6:19 pm

Quoting Bill142 (Reply 9):
Not to mention that IAG is domiciled in Spain and only operationally located in the UK.

That may have been done for legal reasons or the deal was just negociated that way. Willie Walsh is the CEO of IAG and works in London, BA is the one that runs this show. Iberia couldn't even operate their Latin American affiliates, IB is not going to teach BA anything. Iberia's "core" Latin to Europe routes are being invaded by LH and Air France, AF flies from CDG to Santiago, Chile nonstop.

The sale of TAP will have lots of negatives in Madrid, if Lufthansa gets it they will own Brazil.
 
LHRFlyer
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 8:26 pm

There is actually a lot going on behind the scenes to invest in the Iberia brand and product and the Madrid hub. Also some of the recent BA customer service initiatives, like the "Know Me" programme to equip BA cabin crew with iPads are being replicated at Iberia. It is going to take time and it's not always going to be easy, but there is huge potential for Iberia in the long term.
 
mikey72
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 07, 2012 9:09 pm

Quoting jfk777 (Reply 18):
Air France, AF flies from CDG to Santiago, Chile nonstop.

AF flies to lots of places...unfortunately they don't make any money doing it.

Quoting jfk777 (Reply 18):
The sale of TAP will have lots of negatives in Madrid, if Lufthansa gets it they will own Brazil.

LH won't buy TAP...not with the BD fiasco still raw and the books only just recovering.....aren't you over-looking Latam anyway....
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
HPRamper
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 12:50 am

Quoting commavia (Reply 13):
... with the possible (likely?) exception of PHX.

I hope you are talking about PHX vs. DFW and not PHX vs. LAX...

I fully believe PHX will lose some connecting traffic to DFW but its huge O&D base and Southwest location will ensure it keeps running as some sort of hub, even if it's shrunk to CLE levels. It just can't be fully assimilated by other hubs.
 
Maverick623
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 3:00 am

Quoting HPRamper (Reply 21):
but its huge O&D base

PHX is hardly a bastion of O&D. That being said, it does hold its own.... for now.

Quoting HPRamper (Reply 21):
It just can't be fully assimilated by other hubs.

Certainly not by LAX. Parker had a meeting with some PHX-area mayors and assured them that PHX would remain a hub. Then again, UA said the same things about CLE.

However, reliable scuttlebutt is that PHX will lose the Hawaiian flying to LAX, while gaining smaller routes from LAX (and maybe a few widebodies). LAX is very expensive operationally compared to PHX, but can offset that somewhat by the higher traffic flows.
"PHX is Phoenix, PDX is the other city" -777Way
 
smi0006
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 4:48 am

Quoting mikey72 (Reply 4):
People are now questioning whether IAG's interest in acquiring a stake in AA complicates QF's potential plans with EK due to QF's cooperation with AA ?

I don't think that it will have an impact at all ( I still don't see the benifit to either QF or EK, a QR / QF tie up is far more likely, but different thread ), I feel formalised alliances are over rated on A.net. Oneworld, Skyteam and Star are only there as branding for products. The same agreements and alliance could occur behind the scenes without a 'branded' alliance. Alliance loyalties are a nice notion here on A.net. But in the real world only competition law and profit matter when it comes to alliances.
 
Beardown91737
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 6:05 am

Quoting Maverick623 (Reply 22):
PHX is hardly a bastion of O&D. That being said, it does hold its own.... for now

Other way around. PHX is the connecting hub, LAX is O&D. US has about 300 flights from PHX, and AA has about 200 from LAX.
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RWA380
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 8:37 am

Quoting HPRamper (Reply 11):

AA/US doesn't have redundant hubs in the way DL/NW did. The only times two hubs are fairly close, one is generally an O&D type hub while the other is a connecting hub, neither of which can fill in for the other.

If AA/US marry, JFK, PHL, DCA, CLT, MIA are all on the east coast, then there are the big two in the middle ORD and DFW, well placed, then there is the two out west, PHX and LAX, I'd be surprised if AA didn't dehub PHX and build LAX, and IMO, CLT would most likely suffer as well, I'd expect the combined force to keep both JFK and PHL, with a nice little domestic hub as well at DCA.

Quoting Beardown91737 (Reply 23):

Other way around. PHX is the connecting hub, LAX is O&D. US has about 300 flights from PHX, and AA has about 200 from LAX.

Exactly why I'd expect LA 9the much larger market) would be part of the new AA long after PHX is reduced down to hub flying only. Then there is the Pacific Northwest where AA is almost non-existent, maybe the AS/AA agreement will keep AA happy enough, keeping them from trying any harder up here.
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AirbusA6
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 12:36 pm

Of course, many years ago BA had a significant stake in the old US, which didn't end happily...
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Maverick623
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Wed Aug 08, 2012 8:13 pm

Quoting RWA380 (Reply 24):
I'd be surprised if AA didn't dehub PHX and build LAX,

Prepare to be surprised. As I said earlier, there is simply no room to "build" LAX, let alone absorb even half the traffic PHX has.

If PHX does ever happen to be dehubbed post-AA merger, it won't happen for 10 years.

Quoting RWA380 (Reply 24):
CLT would most likely suffer as well,

Not a chance. CLT has been a hub since the Piedmont days. It ain't goin nowhere.

Quoting RWA380 (Reply 24):
I'd expect the combined force to keep both JFK and PHL

I always laugh at that one: no airline in their right mind would dehub two well performing stations for PHL and JFK, two of the most delay-prone airports in the US.
"PHX is Phoenix, PDX is the other city" -777Way
 
vv701
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Thu Aug 09, 2012 12:07 pm

Quoting AirbusA6 (Reply 25):
Of course, many years ago BA had a significant stake in the old US

24.6 per cent. But then BA started to court AA. So if AA and US do decide to cohabit, that barrier disappears. What goes around comes around?
 
AAplat4life
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 13, 2012 11:04 am

It looks like Horton has soften his tone somewhat on a US merger, and they'll start talking about it in a few weeks. He hasn't ruled out remaining independent, but he is going to explore the merger aspect. I think that the merger is the fastest way for AMR to emerge from bankruptcy and could be compelling to the creditors.

http://news.airwise.com/story/view/1344849090.html
 
avek00
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Mon Aug 13, 2012 3:03 pm

Quoting AAplat4life (Reply 28):
It looks like Horton has soften his tone somewhat on a US merger, and they'll start talking about it in a few weeks. He hasn't ruled out remaining independent, but he is going to explore the merger aspect. I think that the merger is the fastest way for AMR to emerge from bankruptcy and could be compelling to the creditors.

I think the softer tone is part of a masterful play to keep AMR independent -- the numbers for independent vs. merged AA will look vastly different once 1113 relief is obtained. There's a reason why Parker tried to encourage AA labor to accept the TA's -- once 1113 is imposed, Parker can't justify the additional costs that adhering to his term sheets would bring to New American, and the resulting renege on those term sheets will get him booted out of the game.
Live life to the fullest.
 
ckfred
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 14, 2012 4:54 am

Quoting Burkhard (Reply 6):
There goes the cash Iberia has collected over decades to have a UK based investor invest in a bankrupt US enterprise - and then UK and US complain about underfinancing of Spanish Economy... While it is likely to happen I think it would be better invested in Spain.

Once AA comes out of bankruptcy, it will be a leaner carrier with a much better cost structure. DL and UA seem to be doing quite well, post Chapter 11.

The reason that AA is in bankruptcy is that the wage and salary concessions of 2003 kept AA competitive, until DL, NW, and UA went into Chapter 11. CO was ahead of everyone, because it had already been in Chapter 11, more than once if I remember correctly, prior to 9/11.

Personally, I think that IAG either wants to keep Horton as CEO, post Chapter 11, or exert some influence as to a new management team. That's assuming that AA stays independent, and the new shareholders (which will be the larger creditors) decide that Horton and his team need to be replaced.

They may not be that willing to deal with Parker, for whatever reason.

And while AA's cornerstone strategy has its issues, they are all large markets that send a lot of traffic to the U.K., Spain, and home countries of other oneworld carriers. If you're BA, IB, or JAL, do you really want to see less feed at LAX, ORD, or JFK, because one or more of those hubs are downsized in favor of PHX, CLT, and/or PHL?

It's been well discussed as to the merits of AA's cornerstone strategy, but each hub does have the potential to feed a lot of traffic to Europe, Asia, and/or Latin America. L.A., Chicago, and New York have far more O&D potential than PHX, PHL, and CLT.

There's a reason why AA was able to get the likes of BA, Qantas, Iberia, and JAL into oneworld, while US had to become the subordiate to UA at Star.
 
Talaier
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 14, 2012 3:05 pm

Quoting jfk777 (Reply 17):

BA doesn't run anything because it doesn't exist anymore as a separate entity. And actually, IB has a lot to teach BA, particularly in terms of finance and cost management- no surprise IB's CFO is now IAG's CFO. Just like BA can teach a bit of customer service. IAG is the result of adding up to airlines that had absolutely no future on their own. In terms of strategic planning and how the company is run There is no IB or BA side to them aside from the livery. I think 2 years on is about time we started thinking of IAG as what it is, a single company.

Quoting LHRFlyer (Reply 18):

There is a lot of potential, yes, but the economic situation is going to push things that would normally take 1-2 years into a longer time frame.
 
Flighty
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 14, 2012 3:35 pm

Quoting ckfred (Reply 30):
L.A., Chicago, and New York have far more O&D potential than PHX, PHL, and CLT.

Those cities are notoriously price competitive. That is why no megahub other than ORD-UA has thrived in any of those glamor cities IMO. In my analysis, AA makes money at DFW and MIA, and loses money virtually everywhere else. Expanding those operations could mean expanding the losses.
 
PezySPU
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 14, 2012 7:19 pm

Quoting Talaier (Reply 31):
IB has a lot to teach BA, particularly in terms of finance and cost management- no surprise IB's CFO is now IAG's CFO

So is ex BA's CEO now IAG's CEO... But do tell us more about IB's expertise in finances. Looking at financial results of the two carriers, I can see a very different situation.
 
Asturias
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RE: IAG Eyes AMR Minority Stake-Supports US Air Merger

Tue Aug 14, 2012 7:36 pm

Quoting Burkhard (Reply 6):
There goes the cash Iberia has collected over decades to have a UK based investor invest in a bankrupt US enterprise - and then UK and US complain about underfinancing of Spanish Economy... While it is likely to happen I think it would be better invested in Spain.

  

The creation of IAG lined the pocket of many an executive on both sides, but ultimately it's doing no favor for either airline, BA or IB.

Quoting jumpjets (Reply 7):
IAG is a listed company quoted on the Madrid and London stock exchanges. The largest single investor is Bankia of Spain [albeit they are likely to sell] who own 12% of IAG - nearly 3 times the next larger shareholding. To describe IAG as a UK based invrestor is not very accurate.

BAA is completely owned by a Spanish company, yet it is a British based company, no? Of course it is.. and Bankia is not in the airline business and has no interest in owning shares in IAG.

IAG is headquartered in London. To describe IAG as a UK based investor is pretty spot on.

Quoting LAXdude1023 (Reply 14):
In Spain? The country whose economy is on the verge of collapse?

If one had investment capital in the USA when the great depression hit, one was in a very good position, since the state of the economy provided ample opportunities for smart and wealthy entities to increase their assets and future revenue and growth.. so yeah, only a punter would think: oh no econmy is bad, will not invest! While the smart money uses the chance to make some great investments.

It's not like an investment in Spain is tied to that country and that market, it has all of the EU to play with.

Quoting PezySPU (Reply 33):
So is ex BA's CEO now IAG's CEO... But do tell us more about IB's expertise in finances. Looking at financial results of the two carriers, I can see a very different situation.

Seeing as IB was making hand over fist before the creation of IAG, one would be wise to conclude that the fault doesn't lie with IB if the situation is worse today.

.. obviously.
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