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enilria
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Thu Oct 20, 2016 7:52 pm

commavia wrote:
Again - no argument. In 2008, Virgin America's offering in the transcon markets was highly disruptive. In 2016? Not so much.

2016 speaks to my point about sniffing IPO cash.
commavia wrote:
In other words ... Virgin America came into DAL without any clear plan as to how to profitably schedule its two gates there, and then set about filling (or in some cases not filling, as it were) its DAL flights with drastically-discounted seats in a transparent attempt to salvage the DAL adventure. "Disruptive" as defined by aggressive discounting? No question. Financially sustainable for the industry, let alone Virgin America itself? Demonstrably not.

VX is profitable. The legacies now have huge profit margins. Defining a carrier with 5% profit margins rather 25% as unsustainable just hands the industry to the legacies for their view of what competition should be. i.e. none.

commavia wrote:
I don't follow. Airlines have been flying thousands of seats per week from California to Mexico for decades - long before Virgin America even existed. Indeed, Alaska was arguably more of a "trailblazer" in this area than Virgin America. I think the "huge upswing" in flying between California and Mexico has far more to do with the progressive loosening of the U.S.-Mexico bilateral than Virgin America. Capacity between LAX and Mexican beach resorts is about to "swell ridiculously" again this winter - and it has absolutely everything to do with the lifting of bilateral restrictions, and basically nothing to do with Virgin America.

VX was the first LCC into those markets since F9 failed at it. VX did much better and then came WN from SNA and B6 wanting to fly from LGB. Now everybody with an airplane seems to be flying LAX-SJD/CUN. When VX did it they didn't need a liberalized bilateral because there were open spots nobody thought the market could justify. These markets had been stagnant and VX stimulated them to grow and they keep on growing.

commavia wrote:
Another example of a disruption that happened nearly a decade ago.

They still get credit.

commavia wrote:
In other words - once faced with the reality that at some point even the most idealistic investors would demand some form of economic return for their hundreds of millions in capital, Virgin America's managers decided it was time to behave in a financially rational way.

Let's be frank, Branson is a deal-maker and he always has been. He really hasn't kept anything. His airlines are all basically gone. The record company is gone as far as I can see. All these businesses are just transient investment vehicles with his brand stamped on them to get them off the ground and create resale value. Good for him.

VX was not intended to be like B6 IMHO, a long term independent airline. VX was created to be sold. Indigo has the same motus operandi. So it was inevitable they wanted to launch strong out of the gate and then wait for a buyer. It doesn't mean the government has to let them be bought. The best laid plans of mice and men... If they stick around they can either see all their investment slowly die as they blow like a stick in the wind or they can get back to what they were doing which is being disruptive. How disruptive was FL after the WN merger was announced? They call it a chilling effect.
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Thu Oct 20, 2016 8:10 pm

enilria wrote:
VX is profitable. The legacies now have huge profit margins. Defining a carrier with 5% profit margins rather 25% as unsustainable just hands the industry to the legacies for their view of what competition should be. i.e. none.


First off, the U.S. network carriers are posting "huge" profit margins compared to the industry's history, but not compared to other large, complex, publicly-traded industrial and transportation companies. In that context, their margins are entirely normal. And not to mention, I'm not aware of any U.S. network carrier posting anything close to a 25% net margin. Second, the above comment is ironic given that the airlines in the U.S. (and globally) posting the most impressive margins are generally not network carriers at all, but low-cost and/or ultra-low-fare operators like Spirit, Allegiant and - not coincidentally - Alaska. And finally, I'm not defining a 5% margin as inadequate for a U.S. airline - investors are. Airlines are in a constant competition with each other for passengers, but they're also in a constant competition with thousands of other companies for investors' capital, and if Virgin America is simply incapable of producing margins commensurate with the returns that investors expect for the risk they take on their investments, then sorry, but that's how capitalism works. Don't like it? Re-regulate the airlines, turn them into public utilities, and then we'll all be able to enjoy the combination of both lower margins and higher fares.

enilria wrote:
Now everybody with an airplane seems to be flying LAX-SJD/CUN. When VX did it they didn't need a liberalized bilateral because there were open spots nobody thought the market could justify. These markets had been stagnant and VX stimulated them to grow and they keep on growing.


We'll just have to agree to disagree. I have a very different recollection of history. Virgin America "stimulated" growth in "open spots nobody thought the market could justify" like SFO-PVR and LAX-CUN, routes that Alaska was flying a decade ago? I don't think so. Again, other airlines have been flying these routes for years. There was absolutely nothing novel or unique about Virgin America's entry other than the fact that it added another competitor. These markets are being stimulated and growing because the restrictions on the number of airlines allowed to fly them keep getting reduced - incrementally a few years back when non-MEX Mexico was opened to a third U.S. competitor per route, and now this winter when all restrictions go away.

enilria wrote:
VX was not intended to be like B6 IMHO, a long term independent airline. VX was created to be sold. Indigo has the same motus operandi. So it was inevitable they wanted to launch strong out of the gate and then wait for a buyer. It doesn't mean the government has to let them be bought. The best laid plans of mice and men... If they stick around they can either see all their investment slowly die as they blow like a stick in the wind or they can get back to what they were doing which is being disruptive. How disruptive was FL after the WN merger was announced? They call it a chilling effect.


I highly doubt that Sir Richard would agree with that characterization, but nonetheless, I of course agree that the government doesn't "have to" let Virgin America be bought. If regulators want, they certainly have the power to effectively stop the deal. And in so doing, they'll essentially just guarantee that Virgin America continues to struggle along, financially under-performing its competitors, until it likely eventually liquidates during the next economic downturn - and all in the name of "disruption." My opinion continues to be that Virgin America's business model was neither scalable nor sustainable, and that one way or another consolidation was going to occur with Virgin America - whether by acquisition or liquidation. Acquisition is far cleaner and, needless to say, far less "disruptive" to the lives of employees and travelers.

I guess, once again, that's where I disagree with this entire thesis and line of argument - I don't worship at the alter of competitive "disruption" just for disruption's sake. I'm perfectly fine with the U.S. airline industry having arrived at what I consider an (entirely rational) equilibrium where fares stay high enough so that air travel is readily available and accessible to the vast majority of the U.S. population, but airlines also make a reasonable return to competitively compensate employees and return a risk-appropriate level of cash back to owners. I guess I keep coming back to - "disruption" to what end? Sure, it will ensure that fares are lower. But then we'll essentially be right back to the perpetual cycle of capital destruction and financial uncertainty that dominated the first three decades of deregulation - where essentially 100% of the benefits (value) of the U.S. air transportation system accrued to one single constituency (passengers) and essentially 100% of the costs of the system accrued to the other two sets of stakeholders (employees and owners). That system was horrifically unsustainable, and - even as a fare-paying passenger myself - I have no interest in returning to it.
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 3:23 am

Sources: Alaska Airlines Acquisition of Virgin America to Finalize Next Week

"According to sources, concerns had been raised referencing the overlap of Virgin America’s route structure and Alaska Airlines’ code-share agreements with American and Delta Airlines. Alaska had a long time partnership with both carriers recognizing each others frequent flyer status holding passengers with perks such as mileage accrual, free checked bags, board room access and complimentary upgrades. Whispers indicate the Delta partnership may have been completely dissolved and American Airlines’ may have been significantly reduced." (emphasis mine)

http://savvystews.com/2016/11/sources-alaska-airlines-acquisition-of-virgin-america-to-close-next-week/

Who knows if these latest rumors are true - they do seem plausible, and the author is a former Virgin America employee.

The complete dissolution of the partnership with Delta would hardly be surprising - and of course was likely only a matter of time, anyway, absent regulatory intervention. DOJ to Alaska: "You must end the Delta partnership." Alaska to DOJ: "Oh no, please no, don't make us do that." [wink, nod, breaks out press release on Delta codeshare termination first drafted in 2013] ;)

With respect to AA - presumably the codeshare partnership of the two that Alaska would be much more interested in keeping - I sincerely hope that reality will prevail on the DOJ and Alaska will be able to maintain the partnership, even if in a slimmed down form. If the DOJ wants to require the two airlines to stop codesharing on overlapping routes - of which there will be many more post-merger - I think that's entirely fair and understandable. But I continue to believe that it is entirely unnecessary, unreasonable and illogical for regulators to require Alaska and AA to cease their codeshare altogether.
 
airliner371
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 4:41 am

EA CO AS wrote:
Again, this has nothing to do with eliminating a competitor. It's all about gaining immediate greater access and more critical mass at SFO and LAX, both markets that AS would have taken decades to achieve organically.

Listen, I used to say the same thing about the AirTran deal... It's not about eliminating a competitor. And like AirTran, that's not all acquiring VX does, but it certainly is a benefit and certainly a good reason for Alaska to go through with this deal. It is ignorant to think that Alaska hasn't at least thought of this and is happy with eliminating a competitor.

IPFreely wrote:
I think some of the behavior we have seen and are seeing from regulators with AA-USAirways and Alaska-Virgin is a swinging of the pendulum back from the relative non-event that was the antitrust approval of Delta-Northwest, United-Continental and Southwest-AirTran. Those three mergers didn't really have to give up anything...

United had to give up 18 slot pairs at EWR to SWA and 3 gates as part of their merger. Now there are no more slots at EWR so its a moot point but they did make UA/CO divest at least SOME assets.

enilria wrote:
It could also be argued that VX caused the legacies to vastly upgrade their domestic IFE product.

I'd argue that B6 did that, not VX. In all honesty, what game-changing innovation did VX really bring to the market? Mood lighting? B6 was the airline that came in with a revolutionary on-board experience that really impacted the industry, VX just made some small improvements that we now see other airlines following.

commavia wrote:
Sources: Alaska Airlines Acquisition of Virgin America to Finalize Next Week

"According to sources, concerns had been raised referencing the overlap of Virgin America’s route structure and Alaska Airlines’ code-share agreements with American and Delta Airlines. Alaska had a long time partnership with both carriers recognizing each others frequent flyer status holding passengers with perks such as mileage accrual, free checked bags, board room access and complimentary upgrades. Whispers indicate the Delta partnership may have been completely dissolved and American Airlines’ may have been significantly reduced." (emphasis mine)

http://savvystews.com/2016/11/sources-alaska-airlines-acquisition-of-virgin-america-to-close-next-week/

Well finally!!! (If true of course). AS probably happily offered to end the DL codeshare, gets them out of a deal they wished they could previously get out of. While they probably aren't happy giving up at least parts of the AA codeshare, I'm glad it appears that will happen.

I think this merger will give us a great make-up of airlines in the industry now. 3 legacies, 1 major national hybrid carrier, one strong East coast oriented airline, one strong West coast oriented airline, 2 ULCC's and some smaller airlines.
 
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usxguy
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 5:37 am

I just bought a ticket as an Alaska flight but operated by American into LAX - which is kinda odd. Virgin America is also on this route, so I can see where some flights that have overlap, Alaska maybe won't be too sad to drop their code from AA.

Delta, however, makes sense from a competitive standpoint. Alaska fliers can get status miles on Delta AND American right now, as well as elite benefits on both carriers. By taking in Virgin, they really do have a *very* attractive scheme going, so giving up Delta, while doesn't solve the problems, puts Delta 100% in the "competitor" column instead of "frenemy for now" column.

So I think this makes sense. DL gone, no tears lost. American/Alaska not quite as cozy - American because a part time girlfriend instead of full time, while keeping the wife happy, and also the parents. But I think Alaska would be fine with some loss of AA flights out of LAX & SFO considering all they are getting with VX.
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 5:51 am

commavia wrote:

The complete dissolution of the partnership with Delta would hardly be surprising - and of course was likely only a matter of time, anyway, absent regulatory intervention. DOJ to Alaska: "You must end the Delta partnership." Alaska to DOJ: "Oh no, please no, don't make us do that." [wink, nod, breaks out press release on Delta codeshare termination first drafted in 2013] ;)



I'm wondering what AS has to give to DL to get them to agree to an early termination of the partnership? Money? Couple of gates in SEA?

I'm thinking along the lines that if the DOJ tells AS to give up the codeshares, and AS is willing to but DL refuses,..... then what?? The DOJ can't force DL to give up the codeshares, since DL isn't merging. It's my understanding that AS simply cannot say to DL..."bye...we're done." without hefty penalties. It will be interesting to see (if the rumors are true) what AS had to do to buy themselves out of the agreement.
 
alasizon
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 5:57 am

ocracoke wrote:
commavia wrote:

The complete dissolution of the partnership with Delta would hardly be surprising - and of course was likely only a matter of time, anyway, absent regulatory intervention. DOJ to Alaska: "You must end the Delta partnership." Alaska to DOJ: "Oh no, please no, don't make us do that." [wink, nod, breaks out press release on Delta codeshare termination first drafted in 2013] ;)



I'm wondering what AS has to give to DL to get them to agree to an early termination of the partnership? Money? Couple of gates in SEA?

I'm thinking along the lines that if the DOJ tells AS to give up the codeshares, and AS is willing to but DL refuses,..... then what?? The DOJ can't force DL to give up the codeshares, since DL isn't merging. It's my understanding that AS simply cannot say to DL..."bye...we're done." without hefty penalties. It will be interesting to see (if the rumors are true) what AS had to do to buy themselves out of the agreement.


DOJ and DOT can get together and revoke the codeshare in theory. Now that'll never happen, but it is a possibility.

AS would never have to give up gates to end a codeshare, I'm sure there was an exit clause written somewhere at some point and given DL's codeshare was on the process of being on the way out more or less, there probably already was an exit plan. Probably a decent sized monetary penalty depending on how long the DOJ gives AS to end the codeshare, but definitely worth it for AS.
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airliner371
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 6:30 am

ocracoke wrote:
commavia wrote:

The complete dissolution of the partnership with Delta would hardly be surprising - and of course was likely only a matter of time, anyway, absent regulatory intervention. DOJ to Alaska: "You must end the Delta partnership." Alaska to DOJ: "Oh no, please no, don't make us do that." [wink, nod, breaks out press release on Delta codeshare termination first drafted in 2013] ;)



I'm wondering what AS has to give to DL to get them to agree to an early termination of the partnership? Money? Couple of gates in SEA?

I'm thinking along the lines that if the DOJ tells AS to give up the codeshares, and AS is willing to but DL refuses,..... then what?? The DOJ can't force DL to give up the codeshares, since DL isn't merging. It's my understanding that AS simply cannot say to DL..."bye...we're done." without hefty penalties. It will be interesting to see (if the rumors are true) what AS had to do to buy themselves out of the agreement.

I could be wrong but my understanding is that if the DOJ decides the codeshare must end for the merger to go through and Alaska proceeds with the merger, then the codeshare ends. Period. Because if Alaska were to proceed with the merger and the codeshare didn't end, the DOJ made it's decision known and both Alaska AND Delta would be in violation of that ruling. Again, I could be wrong but my understanding is that it is just that simple. A kind of, "sucks for you, Delta," moment.
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 6:40 am

airliner371 wrote:
commavia wrote:
Well finally!!! (If true of course). AS probably happily offered to end the DL codeshare, gets them out of a deal they wished they could previously get out of. While they probably aren't happy giving up at least parts of the AA codeshare, I'm glad it appears that will happen.


On the advice of legal counsel, I will have nothing to say at this time. ;)

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"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 6:42 am

ocracoke wrote:
It's my understanding that AS simply cannot say to DL..."bye...we're done." without hefty penalties.


Without going into detail, that's incorrect. And that's all I can say about that at this point.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
metaldirtnskin
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 7:44 am

commavia wrote:
With respect to AA - presumably the codeshare partnership of the two that Alaska would be much more interested in keeping - I sincerely hope that reality will prevail on the DOJ and Alaska will be able to maintain the partnership, even if in a slimmed down form. If the DOJ wants to require the two airlines to stop codesharing on overlapping routes - of which there will be many more post-merger - I think that's entirely fair and understandable. But I continue to believe that it is entirely unnecessary, unreasonable and illogical for regulators to require Alaska and AA to cease their codeshare altogether.


I sure hope so. From the perspective of a frequent traveler who already lives in AS' stronghold of the Northwest, without the AA and/or DL codeshares it's a lot harder to justify sticking with AS if you travel almost anywhere to the east. I made MVP Gold on AS this year but a big portion of that was either DL or AA. We could live without one or the other, but not both (even with the added VX routes, I suspect).
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 12:56 pm

AS is highly confident, they have a 737 painted in a special livery to celebrate the merger waiting to be unveiled.

https://www.instagram.com/p/BMZgTIYBYK-/

Looks really cool, says on the side "More to love"
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 1:18 pm

airliner371 wrote:
Listen, I used to say the same thing about the AirTran deal... It's not about eliminating a competitor. And like AirTran, that's not all acquiring VX does, but it certainly is a benefit and certainly a good reason for Alaska to go through with this deal. It is ignorant to think that Alaska hasn't at least thought of this and is happy with eliminating a competitor.


Absolutely. As I've said before, I heard a Southwest executive - in a non-attribution setting - point black say that the AirTran acquisition was expressly about eliminating a huge competitor. Given the regulatory environment today, and the fact that Alaska isn't Every Regulator's Favorite AirlineTM like Southwest, I highly doubt any Alaska executive would ever say anything remotely like that. But of course it's true. In this case, Alaska's primary calculus for acquiring Virgin America, and at the price point it did, was clearly to (a) eliminate one competitor and (b) block the dramatic expansion of a second, far scarier, competitor in some of its core markets. I don't disagree with that logic at all - although I do still think it wasn't worth $4B.

airliner371 wrote:
I think this merger will give us a great make-up of airlines in the industry now. 3 legacies, 1 major national hybrid carrier, one strong East coast oriented airline, one strong West coast oriented airline, 2 ULCC's and some smaller airlines.


Agree - seems like a very reasonable and rational industry structure to me.

usxguy wrote:
So I think this makes sense. DL gone, no tears lost. American/Alaska not quite as cozy - American because a part time girlfriend instead of full time, while keeping the wife happy, and also the parents. But I think Alaska would be fine with some loss of AA flights out of LAX & SFO considering all they are getting with VX.


Yep. I can see the argument for Alaska and AA being required to stop codesharing in overlapping markets where they don't really need each others' flights in order to access a particular traffic flow, but maybe just to improve it (i.e., AA may want to codeshare on Alaska's numerous daily LAX-SEA flights to improve its schedule presence in the market, but AA doesn't truly need Alaska's flights to access that city pair now that it has its own, albeit fewer, flights). But in markets where the two airlines actually depend on each other to access a market (like AA into JNU or Delta into SHV, etc.) - requiring them to drop them does nothing but hurt consumers.

metaldirtnskin wrote:
I sure hope so. From the perspective of a frequent traveler who already lives in AS' stronghold of the Northwest, without the AA and/or DL codeshares it's a lot harder to justify sticking with AS if you travel almost anywhere to the east. I made MVP Gold on AS this year but a big portion of that was either DL or AA. We could live without one or the other, but not both (even with the added VX routes, I suspect).


Yep. As an AA FF, I love having the option of flying on Alaska and do so relatively often. They're a great airline.
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 1:51 pm

alasizon wrote:
DOJ and DOT can get together and revoke the codeshare in theory. Now that'll never happen, but it is a possibility.

AS would never have to give up gates to end a codeshare, I'm sure there was an exit clause written somewhere at some point and given DL's codeshare was on the process of being on the way out more or less, there probably already was an exit plan. Probably a decent sized monetary penalty depending on how long the DOJ gives AS to end the codeshare, but definitely worth it for AS.


Sorry, but the DOJ/DOT cannot simply rip up a codeshare agreement without giving notice providing reasons for seeking the dissolution and providing an opportunity for a hearing with the parties involved.
 
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Rajahdhani
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:04 pm

STT757 wrote:
AS is highly confident, they have a 737 painted in a special livery to celebrate the merger waiting to be unveiled.

https://www.instagram.com/p/BMZgTIYBYK-/

Looks really cool, says on the side "More to love"


Aren't we glad it doesn't say "More to LUV". I would like to see the DOJ try to approve that one...
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:06 pm

michman wrote:
Sorry, but the DOJ/DOT cannot simply rip up a codeshare agreement without giving notice providing reasons for seeking the dissolution and providing an opportunity for a hearing with the parties involved.


Well of course the DOJ cannot "cannot simply rip up a codeshare agreement without giving notice." Nobody is suggesting that would happen here. This is similar to the discussion about regulators imposing concessions on Delta and Aeromexico. Regulators cannot force these airlines to accept these conditions. But regulators can disapprove the deals said airlines want approved. The airlines themselves have asked for regulators to weigh in - and thus regulators can weigh in by requiring concessions to grant these airlines what they have asked for.
 
michman
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:13 pm

Not true.

" The Department does not approve or disapprove the agreements. Rather, the Department reviews the agreements to ensure that they would not harm the public and are not anti competitive. The Department can take action under its statutory authority to preserve competition under 49 USC 41712."

49 USC 41712 requires notice and opportunity for a hearing for the parties.
 
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enilria
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:16 pm

commavia wrote:
michman wrote:
Sorry, but the DOJ/DOT cannot simply rip up a codeshare agreement without giving notice providing reasons for seeking the dissolution and providing an opportunity for a hearing with the parties involved.


Well of course the DOJ cannot "cannot simply rip up a codeshare agreement without giving notice." Nobody is suggesting that would happen here. This is similar to the discussion about regulators imposing concessions on Delta and Aeromexico. Regulators cannot force these airlines to accept these conditions. But regulators can disapprove the deals said airlines want approved. The airlines themselves have asked for regulators to weigh in - and thus regulators can weigh in by requiring concessions to grant these airlines what they have asked for.

Yes, DOT can simply say that with the AA code share in place the deal will not be approved. Given how we are now a full month late on approval, I think the problems are pretty serious and the code share is the most likely item.

Rajahdhani wrote:
STT757 wrote:
AS is highly confident, they have a 737 painted in a special livery to celebrate the merger waiting to be unveiled.

https://www.instagram.com/p/BMZgTIYBYK-/

Looks really cool, says on the side "More to love"


Aren't we glad it doesn't say "More to LUV". I would like to see the DOJ try to approve that one...

That's an unfortunate decision that smells of overconfidence by the maintenance and marketing departments, but the cost of a paint scheme is small potatoes here. It does suck to lose an operational plane at Thanksgiving. I don't see how they could fly that plane without the approval as it would possibly be false advertising since paint schemes are advertising.
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:17 pm

alasizon wrote:
ocracoke wrote:

I'm wondering what AS has to give to DL to get them to agree to an early termination of the partnership? Money? Couple of gates in SEA?


AS would never have to give up gates to end a codeshare...


If DL were in the place to demand gates, a smarter move would be to request them at SFO (where the merged entities have assets that can provide a greater asset to DL than at SEA where they already own sizeable holdings). It would provide for, at least in theory, an opportunity for DL to expand at SFO (not that they need it right now, with all major hubs connected, but they could grow a little if they wished, and had the space for it). With the upcoming DL/AM JV, and DL's pull at VS, and SkyTeam connections at SFO - they could theoretically provide better coverage to those flights. Not everything needs to go to SEA, and SFO is certainly quite high yielding (as UA, and VX has demonstrated). Are there any better markets, in the U.S., to 'dabble' around in?
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:36 pm

michman wrote:
Not true.

" The Department does not approve or disapprove the agreements. Rather, the Department reviews the agreements to ensure that they would not harm the public and are not anti competitive. The Department can take action under its statutory authority to preserve competition under 49 USC 41712."

49 USC 41712 requires notice and opportunity for a hearing for the parties.


Right ... so like I (and others) said ... regulators cannot - hypothetically - force Alaska and AA and/or Alaska and Delta to stop codesharing, but it can say that unless and until Alaska drops said codeshares, regulators will not approve the merger that Alaska wants. Again - Alaska is the one that asked for regulators to get involved, not the other way around. That's how it works.
 
IPFreely
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 2:40 pm

airliner371 wrote:
IPFreely wrote:
I think some of the behavior we have seen and are seeing from regulators with AA-USAirways and Alaska-Virgin is a swinging of the pendulum back from the relative non-event that was the antitrust approval of Delta-Northwest, United-Continental and Southwest-AirTran. Those three mergers didn't really have to give up anything...

United had to give up 18 slot pairs at EWR to SWA and 3 gates as part of their merger. Now there are no more slots at EWR so its a moot point but they did make UA/CO divest at least SOME assets.



You have attributed someone else's quote to me. My post was this:

IPFreely wrote:
The feds scrutinized the past mergers as much or more as this one. In the end each one required some small give and take on a code share here, a few gates there, or some minor route changes. Whenever bureaucrats look at something, they have to do something to justify their existence. The same thing will happen here. Whatever give and take is required will be so trivial that it won't affect anything when the deal is inevitably completed. But it will all be explosive news for the drama queens here on a.net.
 
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 3:26 pm

[/quote]I sure hope so. From the perspective of a frequent traveler who already lives in AS' stronghold of the Northwest, without the AA and/or DL codeshares it's a lot harder to justify sticking with AS if you travel almost anywhere to the east. I made MVP Gold on AS this year but a big portion of that was either DL or AA. We could live without one or the other, but not both (even with the added VX routes, I suspect).[/quote]
Agree - As a Delta platinum million miller in Seattle, the AS partnership has been good. I see much less AS flying in my future.
 
commavia
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 3:33 pm

admanager wrote:
Agree - As a Delta platinum million miller in Seattle, the AS partnership has been good. I see much less AS flying in my future.


Although, it must be said, and as I suspect you'll agree, that this is hardly a surprise. For just about any frequent flyer of Alaska or Delta who frequently travels on the other carrier - especially those based in SEA - the direction things are heading has been fairly obvious. If I remember correctly, the discussion in the past has centered around a roughly 2018 date as when the existing Alaska/Delta contractual relationship is up for renewal, anyway, so frankly I just view it as a question of whether the partnership ends then or essentially a year early on account of merger-related regulatory enforcement.

It will, indeed, be very interesting to watch how the economics of both carriers' operations in SEA change once each respective carriers' frequent flyers no longer have the benefit of reciprocal earn/burn on either airline. At that point, presumably, frequent flyers (and probably at least some corporate customers) will have to make a choice to shift all loyalty to one airline over the other or accept the potentially suboptimal pricing and/or elite status implications of splitting flying across both airlines. For a SEA-based traveler who is primarily domestic, Alaska is in almost all cases the far more attractive carrier. But obviously for a primarily international/longhaul traveler, Alaska can't offer virtually anything in a corporate contract. Fascinating dynamic.
Last edited by commavia on Sun Nov 06, 2016 3:34 pm, edited 2 times in total.
 
msycajun
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 3:33 pm

I've wondered if AS/VX is forced to end the AA and DL codeshares if it might consider a B6 codeshare. That plus connecting a few dots would be the start of a pretty good nationwide network.
 
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admanager
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 4:09 pm

commavia wrote:
admanager wrote:
Agree - As a Delta platinum million miller in Seattle, the AS partnership has been good. I see much less AS flying in my future.


Although, it must be said, and as I suspect you'll agree, that this is hardly a surprise. For just about any frequent flyer of Alaska or Delta who frequently travels on the other carrier - especially those based in SEA - the direction things are heading has been fairly obvious. If I remember correctly, the discussion in the past has centered around a roughly 2018 date as when the existing Alaska/Delta contractual relationship is up for renewal, anyway, so frankly I just view it as a question of whether the partnership ends then or essentially a year early on account of merger-related regulatory enforcement.

It will, indeed, be very interesting to watch how the economics of both carriers' operations in SEA change once each respective carriers' frequent flyers no longer have the benefit of reciprocal earn/burn on either airline. At that point, presumably, frequent flyers (and probably at least some corporate customers) will have to make a choice to shift all loyalty to one airline over the other or accept the potentially suboptimal pricing and/or elite status implications of splitting flying across both airlines. For a SEA-based traveler who is primarily domestic, Alaska is in almost all cases the far more attractive carrier. But obviously for a primarily international/longhaul traveler, Alaska can't offer virtually anything in a corporate contract. Fascinating dynamic.


You are right (removes head from sand) as 2018 is almost here. These will be interesting times. I do like the B6 suggestion, but I can't see it happening.
 
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enilria
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 4:14 pm

msycajun wrote:
I've wondered if AS/VX is forced to end the AA and DL codeshares if it might consider a B6 codeshare. That plus connecting a few dots would be the start of a pretty good nationwide network.

AS would cry crocodile tears about dropping DL. I know they have wanted out of it. Contractually, however, it was too expensive for them to break the contract.

This presents an interesting point. Let's say AS was willing to sacrifice the AA code share. If DOJ tells AS that they must end the DL code share to merge with VX, it gets tricky depending on how the contract is worded. If there is no out in this situation, AS would possibly owe DL the same damages it has so far been unwilling to pay. Given how DL has used the deal to move into AS' #1 hub and has used it as a competitive dagger, the cost to exit the deal must be steep. It's possible this is the real issue here and not the AA deal. I doubt it, but it could be.
 
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NameOmitted
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 4:29 pm

STT757 wrote:
AS is highly confident, they have a 737 painted in a special livery to celebrate the merger waiting to be unveiled.

https://www.instagram.com/p/BMZgTIYBYK-/

Looks really cool, says on the side "More to love"


Wow. How much does it cost to keep that bird in a hanger while waiting on the DOJ?
 
PlanesNTrains
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 5:21 pm

FWIW, the rumor was that the deal would be approved in the next week or so. It should all be over soon.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
2175301
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 6:26 pm

enilria wrote:
AS would cry crocodile tears about dropping DL. I know they have wanted out of it. Contractually, however, it was too expensive for them to break the contract.

This presents an interesting point. Let's say AS was willing to sacrifice the AA code share. If DOJ tells AS that they must end the DL code share to merge with VX, it gets tricky depending on how the contract is worded. If there is no out in this situation, AS would possibly owe DL the same damages it has so far been unwilling to pay. Given how DL has used the deal to move into AS' #1 hub and has used it as a competitive dagger, the cost to exit the deal must be steep. It's possible this is the real issue here and not the AA deal. I doubt it, but it could be.


I am quite sure that AS will have negotiated with the DOJ so that the language of the DOJ is such that AS can claim "force-majeure;" and as such not be subject to any termination cost.

Force-majeure clauses are rarely executed; but, exist for valid reasons. In my professional carrier I once executed it on a multi-million dollar/year fuel contract for a small power plant.

For those not familiar. Force-Majeure is a standard clause that releases you from a contract penalty free for reasons beyond your control. Rare weather events, war, meteor strikes, etc. In this case a regulator is saying that something that previously existed cannot be allowed going forward. AS can claim that they entered the merger with the intent that the code-share not be effected; and that they had no effective choice in the matter. I see this as a clear Force-Majeure situation.

Have a great day,
 
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11725Flyer
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 6:41 pm

2175301 wrote:
enilria wrote:
AS would cry crocodile tears about dropping DL. I know they have wanted out of it. Contractually, however, it was too expensive for them to break the contract.

This presents an interesting point. Let's say AS was willing to sacrifice the AA code share. If DOJ tells AS that they must end the DL code share to merge with VX, it gets tricky depending on how the contract is worded. If there is no out in this situation, AS would possibly owe DL the same damages it has so far been unwilling to pay. Given how DL has used the deal to move into AS' #1 hub and has used it as a competitive dagger, the cost to exit the deal must be steep. It's possible this is the real issue here and not the AA deal. I doubt it, but it could be.


I am quite sure that AS will have negotiated with the DOJ so that the language of the DOJ is such that AS can claim "force-majeure;" and as such not be subject to any termination cost.

Force-majeure clauses are rarely executed; but, exist for valid reasons. In my professional carrier I once executed it on a multi-million dollar/year fuel contract for a small power plant.

For those not familiar. Force-Majeure is a standard clause that releases you from a contract penalty free for reasons beyond your control. Rare weather events, war, meteor strikes, etc. In this case a regulator is saying that something that previously existed cannot be allowed going forward. AS can claim that they entered the merger with the intent that the code-share not be effected; and that they had no effective choice in the matter. I see this as a clear Force-Majeure situation.

Have a great day,


If this clause exists, I doubt it would apply in this case. It's a totally voluntary event. AS will most likely have to give something to DL In the case of an early termination of the codeshare.
 
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EA CO AS
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 11:13 pm

Everyone is off-base on their guesses, but once I can share more info, I will.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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11725Flyer
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 11:21 pm

EA CO AS wrote:
Everyone is off-base on their guesses, but once I can share more info, I will.


I can hardly wait!
 
milemaster
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Sun Nov 06, 2016 11:25 pm

EA CO AS wrote:
Everyone is off-base on their guesses, but once I can share more info, I will.


Thanks. That is really useful!
 
SFOtoORD
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 12:20 am

My guess is just that AS cannot renew DL when it expires and that the AA codeshare is restricted out of specific markets. I don't see any gates being given up.
 
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enilria
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 1:34 am

2175301 wrote:
I am quite sure that AS will have negotiated with the DOJ so that the language of the DOJ is such that AS can claim "force-majeure;" and as such not be subject to any termination cost.


I get that, but those types of clauses for things that are outside the control of either party. That sort of DOJ requirement would be solely as a result of AS wanting to merge with VX, so it would not be force majeure, and I would expect DL to litigate the point unless mergers are mentioned as an out in the deal with DL.
11725Flyer wrote:
If this clause exists, I doubt it would apply in this case. It's a totally voluntary event. AS will most likely have to give something to DL In the case of an early termination of the codeshare.

Exactly.

FWIW, I think the DOJ issues are about AA and not DL, but it's a slim possibility.
PlanesNTrains wrote:
FWIW, the rumor was that the deal would be approved in the next week or so. It should all be over soon.

AS says the deal was already approved, so the question is whether AS agreed to the terms or DOJ caved. The former is more likely.
SFOtoORD wrote:
My guess is just that AS cannot renew DL when it expires and that the AA codeshare is restricted out of specific markets. I don't see any gates being given up.

That's where we came into this. If that's all true I think we would not be a month late. That's the deal I think everybody expected, plus possibly giving up the DAL gates.
 
PlanesNTrains
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 1:39 am

enilria wrote:
2175301 wrote:
I am quite sure that AS will have negotiated with the DOJ so that the language of the DOJ is such that AS can claim "force-majeure;" and as such not be subject to any termination cost.


I get that, but those types of clauses for things that are outside the control of either party. That sort of DOJ requirement would be solely as a result of AS wanting to merge with VX, so it would not be force majeure, and I would expect DL to litigate the point unless mergers are mentioned as an out in the deal with DL.
11725Flyer wrote:
If this clause exists, I doubt it would apply in this case. It's a totally voluntary event. AS will most likely have to give something to DL In the case of an early termination of the codeshare.

Exactly.

FWIW, I think the DOJ issues are about AA and not DL, but it's a slim possibility.
PlanesNTrains wrote:
FWIW, the rumor was that the deal would be approved in the next week or so. It should all be over soon.

AS says the deal was already approved, so the question is whether AS agreed to the terms or DOJ caved. The former is more likely.
SFOtoORD wrote:
My guess is just that AS cannot renew DL when it expires and that the AA codeshare is restricted out of specific markets. I don't see any gates being given up.

That's where we came into this. If that's all true I think we would not be a month late. That's the deal I think everybody expected, plus possibly giving up the DAL gates.


I think I stated it wrong. I believe it was that AS said that the deal would close next week.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
SFOtoORD
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 3:39 am

enilria wrote:
SFOtoORD wrote:
My guess is just that AS cannot renew DL when it expires and that the AA codeshare is restricted out of specific markets. I don't see any gates being given up.

That's where we came into this. If that's all true I think we would not be a month late. That's the deal I think everybody expected, plus possibly giving up the DAL gates.


Perhaps the DOJ started by looking for both AA and DL codeshares be canceled and AS has been negotiating on AA side. I also wonder whether the VS and BA codeshares would play as well.
 
PlanesNTrains
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 3:45 am

EA CO AS wrote:
Everyone is off-base on their guesses, but once I can share more info, I will.


I'm sticking with this until official news comes out. If the guesses about killing the DL codeshare, let alone the AA one, are a bit off-base, then I guess it's best for me to just chill.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
frmrCapCadet
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 4:52 am

And Alaska could just agree to end the Delta code share as soon as contractually possible. At which point Delta might just dump them already.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
PlanesNTrains
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 4:58 am

I just don't see Alaska anxious to end the deal if it costs them a breakup fee. They are already betting the farm on VX - cash is king. I don't see the deal automatically voided by the merger as that would be a voluntary act within their control. I'm guessing that they will probably have certain aspects of their codeshares trimmed, but I must admit I hope it's not a lot.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
airliner371
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 5:25 am

I know I'm reaching here but when a decision is made, either for or against the merger, can we create a new thread rather than continue this one. ;) :D
 
ldvaviation
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 5:48 am

PlanesNTrains wrote:
I just don't see Alaska anxious to end the deal if it costs them a breakup fee. They are already betting the farm on VX - cash is king. I don't see the deal automatically voided by the merger as that would be a voluntary act within their control. I'm guessing that they will probably have certain aspects of their codeshares trimmed, but I must admit I hope it's not a lot.


Contracts for unlawful conduct are not enforceable. In short, Delta cannot enforce the full terms of the contract or any of the consequences thereof if the DOT or DOJ were to find the codeshare agreement with Alaska unlawful under further review.

Indeed, the DOJ in the past has frowned on codeshare agreements between US airlines that end up exerting too much commerical control over one of the parties. See how the DOJ forced Northwest to divest its stake in Continental, a stake that in effect gave Northwest the right to veto a Continental merger with any other airline. If Delta could demand the breakup fee even in the event of a decision by AS to merge with another airline, voluntary or not, it would be exerting such control.

With that in mind, I dare say that there is a severability clause in the Delta/AS commercial contract that covers this very possibility and that took into account the DOJ's past actions on the matter and any future actions the DOJ/DOT might make.
 
avek00
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 1:38 pm

Most codeshare and FF partnership agreements contain material change clauses that enable termination of the agreement without penalty upon a merger of either party with another airline.
Live life to the fullest.
 
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enilria
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 3:14 pm

PlanesNTrains wrote:
I think I stated it wrong. I believe it was that AS said that the deal would close next week.

Do you have a link?
PlanesNTrains wrote:
EA CO AS wrote:
Everyone is off-base on their guesses, but once I can share more info, I will.


I'm sticking with this until official news comes out. If the guesses about killing the DL codeshare, let alone the AA one, are a bit off-base, then I guess it's best for me to just chill.

If it's not the code shares it's much worse. The code shares are easily lopped off, nobody gets fired and nobody has to be relocated. It's just a question of lost revenue. If they have decided something broader like AS/VX have too many hubs in the West or some other craziness like that it's much harder to fix and disruptive to the surviving employees.
frmrCapCadet wrote:
And Alaska could just agree to end the Delta code share as soon as contractually possible. At which point Delta might just dump them already.

AS will dump DL the second they are allowed. I'm sure they already gave notice years in advance.
airliner371 wrote:
I know I'm reaching here but when a decision is made, either for or against the merger, can we create a new thread rather than continue this one.

I think we should have some news to have a new thread. They just locked another thread on BA for just discussing rumors with no links.
avek00 wrote:
Most codeshare and FF partnership agreements contain material change clauses that enable termination of the agreement without penalty upon a merger of either party with another airline.

ldvaviation wrote:
Contracts for unlawful conduct are not enforceable. In short, Delta cannot enforce the full terms of the contract or any of the consequences thereof if the DOT or DOJ were to find the codeshare agreement with Alaska unlawful under further review.

I would agree IF DOJ had just done this out of the blue, but AS controls whether it happens by demanding the merger be approved. By definition it is not outside the control of AS. Additionally, the contract is not unlawful. If it were unlawful it would already not be in effect. The contract was approved when entered into. If DOJ pulls its approval due to factors outside the control of either party it is force majeure. I think DL could argue damages saying a merger approval is not outside the control of AS. OTOH, the contract may allow for mergers, but if that is the case AS should have merged with a gas station (or an airline with one banner towing biplane) and used it to cancel the DL code share a long time ago. Never underestimate DL's ability to write an ironclad contract and ram it down a partner's throat. The deal they did with Republic was masterful from DL's perspective and ruinous from Republic's. DL is extremely savvy with these deals and they had the advantage of knowing what their own plans were for SEA when the deal was signed, whereas AS was broadsided. So, I'm sure DL used that advantage to change the language to limit escape routes.
 
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diverdave
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 4:47 pm

enilria wrote:
Never underestimate DL's ability to write an ironclad contract and ram it down a partner's throat. The deal they did with Republic was masterful from DL's perspective and ruinous from Republic's. DL is extremely savvy with these deals and they had the advantage of knowing what their own plans were for SEA when the deal was signed, whereas AS was broadsided. So, I'm sure DL used that advantage to change the language to limit escape routes.


Good point. Some here seem to think that DL is both evil and stupid. :)

David
 
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NYCRuss
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 5:28 pm

diverdave wrote:
enilria wrote:
Never underestimate DL's ability to write an ironclad contract and ram it down a partner's throat. The deal they did with Republic was masterful from DL's perspective and ruinous from Republic's. DL is extremely savvy with these deals and they had the advantage of knowing what their own plans were for SEA when the deal was signed, whereas AS was broadsided. So, I'm sure DL used that advantage to change the language to limit escape routes.


Good point. Some here seem to think that DL is both evil and stupid. :)

David

DL isn't stupid. ;)
 
airliner371
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Mon Nov 07, 2016 5:34 pm

enilria wrote:
airliner371 wrote:
I know I'm reaching here but when a decision is made, either for or against the merger, can we create a new thread rather than continue this one.

I think we should have some news to have a new thread. They just locked another thread on BA for just discussing rumors with no links.

Huh? I think you missed the part where I said "when a decision is made."
 
Sparrow787
Posts: 163
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Tue Nov 08, 2016 1:11 am

Is Alaska going to keep VXs jfk base?
Would it remain the same, or do you think they would drop a frequency or two on the JFK-LAX/SFO to make room for at least a JFK-PDX once daily?
 
toltommy
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Tue Nov 08, 2016 1:35 am

All this A.net speculation for naught....

Virgin America (VA) shares closed up 3.6% Monday on expectations the U.S. Department of Justice was close to an agreement that will allow the company's purchase by Alaska Air Group (ALK) to win antitrust approval.

https://www.thestreet.com/story/1388426 ... _ven=YAHOO
A300/A310/A319/A320/A321/A332/A333/707/712/727/732/733/734/735/738/739/752/753/762/763/764/772/789/DC8/DC9-10/30/40/50/MD81/83/87/88/90/L1011-/250/500/CRJ200/440/700/900/EMB135/140/145/170/175/190/328Jet/F70/SF3/BE1/J31
 
MIflyer12
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Re: AS: "We Will Not Make Monday Deadline to Complete Merger"

Tue Nov 08, 2016 1:39 am

[quote="enilria"AS would cry crocodile tears about dropping DL. I know they have wanted out of it. Contractually, however, it was too expensive for them to break the contract.

This presents an interesting point. Let's say AS was willing to sacrifice the AA code share. If DOJ tells AS that they must end the DL code share to merge with VX, it gets tricky depending on how the contract is worded. If there is no out in this situation, AS would possibly owe DL the same damages it has so far been unwilling to pay. Given how DL has used the deal to move into AS' #1 hub and has used it as a competitive dagger, the cost to exit the deal must be steep. It's possible this is the real issue here and not the AA deal. I doubt it, but it could be.[/quote]

Do we have any reason to believe that exiting the codeshare deal gets any cheaper with this concession to get the merger approved? The DOT doesn't rewrite the DL/AS deal - whatever contract termination provisions existed still exist.

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