lasairlinerenth
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AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 5:17 pm

I came across this article at the Huffington Post (via the http://www.huffingtonpost.com/huff-w...s-american-airlines-ceo-interview/

Regards to all,
Tony

[Edited 2012-07-25 10:21:52]
 
catiii
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 5:37 pm

The link you have included is broken.
 
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Polot
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 5:44 pm

 
flyguy89
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:17 pm

Pretty much what I expected, and what he said makes a lot of sense. If I'm an AA creditor and I know the airline is getting stronger and would emerge a lean competitor from BK, I'd vote against the merger...as Horton pointed out, it would bring better value to me as a creditor in the long-term if AA is able to negotiate from a position of strength.
 
BlueDanube
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:18 pm

I thought that the creditors ultimately decided if AMR's reorganization plan would be allowed to bring the company out of BK, not Horton himself. Or am I misunderstanding bankrupcy laws?

LCC should get its chance to present its plans in court. Being as they are also trying to influence the creditor's committee, wouldn't it make sense for that committee to hear out US Airways plan....at some point?
 
KDAYflyer
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:25 pm

A merger with US would not be good for AA IMO. The airline would simple degrade down to a large version of US, which I would see as a big drop in service.
 
lasairlinerenth
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:29 pm

Quoting catiii (Reply 1):

I see that now. My sincerest apologies. I posted, then did a small edit, and somehow the whole thing got messed up -- all while I drove to work and so I can't re-edit. Please forgive me.

And THANK YOU to Polot for reposting the correct link.

Best,
Tony
 
SPREE34
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:35 pm

Quoting KDAYflyer (Reply 5):
A merger with US would not be good for AA IMO. The airline would simple degrade down to a large version of US, which I would see as a big drop in service.

Which pretty much seems what the American consumer is willing to pay for anymore.
I don't understand everything I don't know about this.
 
aztrainer
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:35 pm

Well, it seems Horton used Parker as a catalyst to galvanize the resolve of AA to not merge with US after their talk. Every story needs to have a good guy and bad guy. I wonder, if this is totally true about the meeting, how Parker feels about Horton's actions?
 
flyingcat
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:45 pm

Horton says that the views of Union leadership on a US merger do not reflect the employees of AA. Any AA front liners here wish to comment on this.

As an outsider it seems like HQ is trying to start something similar to Keep Delta My Delta, however it seems like it is falling flat.
 
deltal1011man
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 6:54 pm

Quoting lasairlinerenth (Thread starter):

Duh. they merge with US before they get out of BK, Horton may not get his big bonus.

Quoting flyingcaT (Reply 9):
Horton says that the views of Union leadership on a US merger do not reflect the employees of AA. Any AA front liners here wish to comment on this.

Rolmfao....right because Horton seems to have such a handle on what his employees want.
 
brilondon
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 7:20 pm

Quoting BlueDanube (Reply 4):
I thought that the creditors ultimately decided if AMR's reorganization plan would be allowed to bring the company out of BK, not Horton himself. Or am I misunderstanding bankrupcy laws?

LCC should get its chance to present its plans in court. Being as they are also trying to influence the creditor's committee, wouldn't it make sense for that committee to hear out US Airways plan....at some point?

He has some influence in the proceedings and is closer to the situation the the shareholders, and is why shareholders don't run the day to day operations of the airline.
Rush for ever; Yankees all the way!!
 
hiflyer
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 7:37 pm

Quoting DeltaL1011man (Reply 10):
Horton may not get his big bonus.

And that may be the main issue right now IMHO....AA sr mgt may lose out in a merger instead of splitting new shares in a reorg AMR....that means that the line employees could be a pawn in a high level mgt slugfest over bonuses. I surely hope that I am completely wrong....but it doesn't seem to be trending that way with these last few statements from both Parker and Horton.
 
ckfred
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 9:23 pm

Quoting BlueDanube (Reply 4):
I thought that the creditors ultimately decided if AMR's reorganization plan would be allowed to bring the company out of BK, not Horton himself. Or am I misunderstanding bankrupcy laws?

LCC should get its chance to present its plans in court. Being as they are also trying to influence the creditor's committee, wouldn't it make sense for that committee to hear out US Airways plan....at some point?

Under the bankruptcy code, the debtor has an exclusive period to formulate a plan of reorganization and present it to the court and creditors. The exclusive period now runs until December 29, absent any further extensions by the court.

If the plan is ultimately approved by a majority of the creditors' committee and the judge, then AMR will exit bankruptcy.

While the unions of AA have 1/3rd of the votes on the committee, AMR only needs a majority. So, it banks, the PBGC,and Boeing believe that AMR will be better off with the plan that the company presents, then US Air's plan will never see the light of day.

That's just how bankruptcy works.
 
AeroWesty
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 9:32 pm

From the linked article:

"There's an unspoken incentive for Horton to bash US Airways and quash merger speculation – drive down his rival's stock price and make a merger less expensive."

Reason enough right there.
International Homo of Mystery
 
laca773
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 9:59 pm

Horton really has the nerve to say all this after AMR/AA merged with three airlines, Air Cal, Reno Air and TWA. AMR & AA dismantled and destroyed what they had, along with taking the moral of many employees who were part of these merger deals and putting them in the toilet.
He approached B6 and AS, and they turned him down! Good for them. They know all to well how AA does when they are the one's calling the shots in a merger! Yahoo article link: http://finance.yahoo.com/news/americ...o-bashes-us-airways-154508886.html
Perhaps Horton should find employment over at Spirit. This guy needs to be humbled.
 
ldvaviation
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 10:35 pm

Quoting laca773 (Reply 15):
Perhaps Horton should find employment over at Spirit. This guy needs to be humbled.

Very smart guy. Hasn't just proven himself in the airline business. He doesn't need to be humble. He's got the resume.

If he is making his case now, it must mean that he's confident in the outcome.
 
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kc135topboom
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 11:13 pm

Quoting laca773 (Reply 15):
Horton really has the nerve to say all this after AMR/AA merged with three airlines, Air Cal, Reno Air and TWA. AMR & AA dismantled and destroyed what they had, along with taking the moral of many employees who were part of these merger deals and putting them in the toilet.

Wait a minute, you do know all of that happened before Horton was the CEO of AMR, don't you? He became the CEO the same day AA entered bankruptcy, and has only been there for about 8 or 9 months.
 
AAplat4life
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Wed Jul 25, 2012 11:19 pm

This is all posturing. Leehmam talks about AMR's "Goofy" merger explorations. US posted impressive profits today and is on solid financial footing with good management. AA has made a lot of announcements about improved performance and products, but the fact remains that AA will still be well behind Delta and United without a merger partner. It is all about who will run the show once a merger happens. I think that in a day or so Parker will come out with something that will make Horton look silly--once again. http://leehamnews.wordpress.com/
 
santi319
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 12:35 am

Quoting laca773 (Reply 15):
Perhaps Horton should find employment over at Spirit. This guy needs to be humbled.

Sorry, no can do, Spirit is in the business of making money, not losing it for an entire decade....
 
lucky777
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 12:37 am

This hostile takeover attempt is losing momentum by the second. Which isn't to say AA and LCC won't eventually merge at some point, i still think it'll happen at some point, but Parker won't be the one calling the shots.

Ray Neidl, the Maxim Group airline analyst who met Parker and Horton at their much ballyhooed breakfast last week said he was swayed by Horton's determination to keep American independent.

"I reduce (the) odds of a meger happening from 90 (percent) to less than 50" he said.

Another analyst, Helane Becker from Dahlam Rose, noted that "it's more important for US Airways to do the deal than it is for American."

I find it disgraceful how in a matter of weeks Dougie was able to come to agreements with all of AA's unions and yet the majority of his very own airline is still working under a deplorable contract negotiated back in 2005.

If i were Doug i'd start looking at Alaskan or perhaps Frontier...AA has essentially told Dougie to go pound sand.
 
etops1
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 12:46 am

AA can say what ever the F they want . Doesnt mean it will work out in their favor .
 
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Tugger
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 12:46 am

Quoting AAplat4life (Reply 18):
This is all posturing.

Yes, it all comes down to who will buy/merge with whom, how much it will cost, and who will be in control. US wants to be in control, in the pilots seat as it were, and they will only be able to be there if they can do what they are planning. Otherwise, after the bankruptcy is completed, it will be AA in control.

Tugg
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lucky777
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 12:50 am

Quoting etops1 (Reply 21):
AA can say what ever the F they want . Doesnt mean it will work out in their favor .

Sure sounds as if Dougie and Co. have lost any momentum they might have had. Even analysts who once put merger prospects at 90% are now saying its less than 50/50.

Don't worry ETOPS1, you'll still be able to nonrev to Asia and Australia. You'll just have to buy ZED tickets like all LCC employees do LMFAO!!!
 
commavia
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 1:17 am



Quoting flyingcaT (Reply 9):
As an outsider it seems like HQ is trying to start something similar to Keep Delta My Delta, however it seems like it is falling flat.

I think what Parker probably needs to worry about more now are top-tier AA frequent flyers staging a "Keep AA My AA" campaign. I can envision an online petition with thousands of people - most of them airline buffs but many probably actual, high-spend AAdvantage members - supporting AA's product/service standards (as-is, and what's to come) and issuing a threat (in most cases hollow, but still) to defect if AA "goes USAirways."

In the long-run it would surely amount to little, and not mean much, but I doubt it's what Parker would want to see right now as he tries to convince creditors and stakeholders that he can take over AA and merge it with USAirways without driving away the high-value customers that AA currently attracts, and USAirways - at least to a certain extent - currently lacks.

Quoting lucky777 (Reply 20):
Another analyst, Helane Becker from Dahlam Rose, noted that "it's more important for US Airways to do the deal than it is for American."

And that, right there - I think - is the key. Many have long recognized it, and now that the initial aura of Parker's P.R. blitz has worn off, many more are coming to recognize it, too. USAirways does need this deal more than American does. While many - myself included - agree that an independent, post-bankruptcy AA will be at some competitive disadvantage, at least in terms of network scope and breadth, relative to Delta and United, I think there are few who seriously expect AA to be at any major competitive disadvantage to USAirways. In other words, I don't think there are many who truly believe post-bankruptcy AA will be in any worse shape than USAirways is in now. Indeed, it seems the unions are concerned - perhaps fairly - that AA will actually be excessively profitable because of the (from their perspective) unnecessarily extreme concessions AMR is seeking from the union work groups.

USAirways results today were impressive - and indicate, again, that Doug Parker has managed to turn a structurally disadvantaged airline into a profitable entity largely through doing precisely what AMR's unions accuse Horton of trying to do now: locking them into a low-cost contract for as long as possible, and outsource as many of them as possible. The irony is thick. He has had success in this regard to-date. Meanwhile, it does appear - at least on the surface - that AMR is beginning to pick up some momentum in their restructuring process, with a massive new fleet on the way, an apparently highly successful program to poach high-value United FFs, and financials rapidly improving - all before AMR has even gotten to address the single largest structural competitive impediment they have faced for years: the union contracts (with most of the uncompetitiveness coming from the pilots' contract, to a lesser extent some from the TWU, and almost none at all the flight attendants). We'll all get to see how things continue to progress - good or bad - over the next few months.

So with all that being said, while I think many of Parker's observations and statements about the strategic state of AMR, and the industry and competitive landscape, etc. are true - i.e., that the combined "new AA" would be stronger in several key regions, that the combined hubs/routes are highly complimentary, etc. - I think Horton's observation in the above-linked article is also equally accurate. Specifically, Parker is, indeed, in a "race against the clock to somehow increase revenue before he has to pay higher salaries in a new contract." Witness his ability to cut non-binding deals with another airlines' unions in two weeks while, to the chagrin and frustration of his own unions, they still don't have new contracts after 5+ years. Parker knows that math just as well as Horton does, which is why both of them, to a certain extent, are correct in what they are saying.

Quoting etops1 (Reply 21):
AA can say what ever the F they want . Doesnt mean it will work out in their favor .

Two-way street. There is plenty of spin, "posturing," and hyperbole going around from all sides. Those supportive of, and/or with a vested interest in, this merger are talking it up as if it's already a certainty. Those opposed to, or with a vested interest against, this merger are downplaying it as impossible. The truth is likely somewhere in the middle.

Personally, regardless of what anybody here on A.net or anywhere else says, I still don't think this merger - right now, under these circumstances - is a done deal. I continue to believe that the chances of AMR and USAirways merging is at nearly 100%, but that the chances of that happening while AMR is in bankruptcy are somewhere less than 100%. It may happen, it may not - at this point, I think it could go either way. As I said several weeks ago, I think Horton need not convince the stakeholders involved that a merger is a bad idea, but only that a merger is a bad idea now. Will he be able to do it? I don't know. It will be interesting to watch.



[Edited 2012-07-25 18:34:24]
 
sccutler
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 1:49 am

Read what Commavia wrote- he has grown up a wise one, indeed.

When (or if) AA and US are combined, it will be under AA's control.
...three miles from BRONS, clear for the ILS one five approach...
 
randyh3253
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 3:49 am

The AA version of "Keep Delta, My Delta," has started AA just uploaded this "I believe in American."
http://www.youtube.com/watch?v=mtTP72zW2uc&feature=plcp
 
laca773
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 4:12 am

Quoting KC135TopBoom (Reply 17):

Wait a minute, you do know all of that happened before Horton was the CEO of AMR, don't you? He became the CEO the same day AA entered bankruptcy, and has only been there for about 8 or 9 months.

Yes. He needs to keep in mind what AA's track record is in regards to mergers, and they are in bankruptcy period.
I'm not saying go merge with US by any stretch of the word. DP needs to get his employees on the same page before he does anything.

Quoting commavia (Reply 24):
And that, right there - I think - is the key. Many have long recognized it, and now that the initial aura of Parker's P.R. blitz has worn off, many more are coming to recognize it, too. USAirways does need this deal more than American does. While many - myself included - agree that an independent, post-bankruptcy AA will be at some competitive disadvantage, at least in terms of network scope and breadth, relative to Delta and United, I think there are few who seriously expect AA to be at any major competitive disadvantage to USAirways. In other words, I don't think there are many who truly believe post-bankruptcy AA will be in any worse shape than USAirways is in now. Indeed, it seems the unions are concerned - perhaps fairly - that AA will actually be excessively profitable because of the (from their perspective) unnecessarily extreme concessions AMR is seeking from the union work groups.

I appreciate what you have to say most of the time, commavia and you hit it on the bulls eye.
 
boeing773er
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 4:27 am

Quoting randyh3253 (Reply 26):

I believe in American!

I liked that little video, it was pretty good. They keep promoting the idea that they are gonna have the youngest fleet in the Americas.

I believe AA needs to come out of this bankruptcy as a standalone company, I am getting sick of consolidation in the US. There are not that many options anymore when you want to fly international, and domestic is fine for now but two more mergers/acquisitions down the road we won't have these options anymore.
Work Hard, Fly Right.
 
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Tugger
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 4:36 am

Quoting randyh3253 (Reply 26):
"I believe in American."

They need to shorten that to be: "I am American". It's simple and reaches a big cross section of people on a deeper level.

I could see the campaign, " We are American Airlines, you're number one choice in flying because you are number one to us." Then pan to crews: "I am American" and then show Ops: "I am American", then show FF's/passengers getting great service: "I am American.... and I always will be". Then the voice over: "Let's stay American, American Airlines, The airline of America."

Sappy? Sure. But simple and effective.

Tugg
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rwy04lga
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 7:05 am

Quoting randyh3253 (Reply 26):
The AA version of "Keep Delta, My Delta," has started AA just uploaded this "I believe in American."
http://www.youtube.com/watch?v=mtTP7...=plcp

I need a cigarette after that love fest!
Just accept that some days, you're the pigeon, and other days the statue
 
Flyglobal
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 8:42 am

So it will come to a shoot down between two ego guys fighting for the lead, just as a classic American Western.

Who is in the John Wayne role now?

regards

Flyglobal
 
hz747300
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 11:51 am

Quoting KDAYflyer (Reply 5):
which I would see as a big drop in service.

Maybe it's me, but I don't find much of a compelling difference between service in the two airlines anyways. Last winter on our trip home we flew both domestically, and the service was the same on both. US was ontime, but this likely because we flew into JFK with American.

Personally, I think AA should allow US to take them over. Delta and United now have such economies of scale, It is a fast way for AA/US to join that level. There will always be room on the market for your Southwests and Spirits, and even a regional player like Alaskan.

I say go for it! There isn't much overlap between the two. Even if the new airline cuts PHX, WN or Aeromexico will fill in the gaps.
Keep on truckin'...
 
bigjku
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 1:24 pm

Quoting hz747300 (Reply 32):

Personally, I think AA should allow US to take them over. Delta and United now have such economies of scale, It is a fast way for AA/US to join that level. There will always be room on the market for your Southwests and Spirits, and even a regional player like Alaskan.

It seems to me that US has potential labor issues coming up and their cost will rise. They are trying to get control of American by appealing to the unions there that will get salary crammed down in the bankruptcy so the airline can be competitive basically by promising that they won't cram them down as much. That just results in a big, uncompetitive airline that will have labor trouble and might go right back to bankruptcy to solve it.

The best solution for American is to resolve their labor trouble using the BK leverage they have and then see if US can sort out its labor negotiations. Then they can re-assess on another and decide who is doing the buying.
 
Flyglobal
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 2:44 pm

Quoting bigjku (Reply 33):
It seems to me that US has potential labor issues coming up and their cost will rise. They are trying to get control of American by appealing to the unions there that will get salary crammed down in the bankruptcy so the airline can be competitive basically by promising that they won't cram them down as much. That just results in a big, uncompetitive airline that will have labor trouble and might go right back to bankruptcy to solve it.

The best solution for American is to resolve their labor trouble using the BK leverage they have and then see if US can sort out its labor negotiations. Then they can re-assess on another and decide who is doing the buying.



I rather believe that AA wouln't like to be under control and the they bring up those issues to disturb the deal.
That's all. The game of 2 CEO's who would both like to have control.

Isn't this a regular method of defense, happening in many take overs when one doesn't want to be taken.
Put as much sand in the oil as you can!

Regards

Flyglobal
 
HPRamper
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 4:17 pm

Quoting flyglobal (Reply 34):
I rather believe that AA wouln't like to be under control and the they bring up those issues to disturb the deal. That's all. The game of 2 CEO's who would both like to have control.

Parker will get a bonus either way, it's in his contract that he will receive one if he loses his position due to a merger.

I wonder if Horton has a similar clause in his.
 
DLPMMM
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 4:43 pm

Quoting commavia (Reply 24):
Personally, regardless of what anybody here on A.net or anywhere else says, I still don't think this merger - right now, under these circumstances - is a done deal. I continue to believe that the chances of AMR and USAirways merging is at nearly 100%, but that the chances of that happening while AMR is in bankruptcy are somewhere less than 100%. It may happen, it may not - at this point, I think it could go either way. As I said several weeks ago, I think Horton need not convince the stakeholders involved that a merger is a bad idea, but only that a merger is a bad idea now. Will he be able to do it? I don't know. It will be interesting to watch.

Best analysis I've seen around here on the subject.   
 
ckfred
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 6:29 pm

Quoting laca773 (Reply 15):
Horton really has the nerve to say all this after AMR/AA merged with three airlines, Air Cal, Reno Air and TWA. AMR & AA dismantled and destroyed what they had, along with taking the moral of many employees who were part of these merger deals and putting them in the toilet.

I get sick and tired of people accusing AA of buying airlines, just to dismantle the operation.

Air Cal. What drove AA to scale back the old Air Cal hub at SJC was WN entering the West Coast market. WN forced a lot of downsizing west of the Rockies. What was left of the old Hughes Air West operation that NW inherited from the Republic merger (which wasn't much by the early 90s) was gone. US shut down a lot of the old PSA operation. DL downsized much of what was the old WA operation that was outside of the SLC hub. Only UA decided to fight WN in the West with the Shuttle.

Reno Air. The second go-round with SJC was doing well before the dot.com and tech bubbles burst. Because of Y2K, tech companies in the Silicon Valley were doing a lot of business. The dot.com people, flush with IPO money, were flying first class at very short notice. Between the recession that started before 9/11 and 9/11, people cut back on buying of new computer systems, especially hardware. The tech sector believed that everyone from the individual to Fortune 500 companies expected people to become technoholics, constantly updating their computer systems. When tech spending collapsed, business travel collapsed. It was even worse with the dot.coms. The stock market crashed in April of 2000. People realized that a lot of dot.coms were never going to make money, and many went under (such as Pets.com).

Adding to the issues were the decline in traffic to RNO and LAS after 9/11. That hurt what was left of the QQ operations at those two cities.

TWA. This made sense before 9/11. ORD had been a disaster the summer of 2000, because of a very stormy summer. With the suburbs stalling Chicago's efforts to build even one new runway, let alone the plan for 6 east-west runways, no one had any idea when the delays would start to improve. TWA was going under. And the EU was no where near completing an open skies agreement between the U.S. and all member countries. There was a lot to like about TWA with the STL hub only 300 miles away from ORD and many, many route authorities to Europe.

Unfortunately, STL is a bit like BNA and RDU. There isn't enough O&D traffic to justify the existance of a large hub, especially with the drop in traffic after 9/11. The delays at ORD initially declined due to reduced traffic, and construction on the 3rd east-west runway started.

Just to throw more issues into the mix, AA returned TWA's 717s and kept the F100s, because of financial considerations. That was a mistake. AA was also planning to swap TWA's 757s for the US 757 fleet and lease some fo the F100 fleet to DC Air, the airline Bob Johnson was starting based on the need of US to reduce its presence at DCA after its merger with UA. When the UA-US merger was nixed by the Feds, that stuck AA with its F100s and the oddball 757s from TWA.
 
TWA85
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 8:12 pm

Quoting ckfred (Reply 37):
I get sick and tired of people accusing AA of buying airlines, just to dismantle the operation.

Air Cal. What drove AA to scale back the old Air Cal hub at SJC was WN entering the West Coast market. WN forced a lot of downsizing west of the Rockies. What was left of the old Hughes Air West operation that NW inherited from the Republic merger (which wasn't much by the early 90s) was gone. US shut down a lot of the old PSA operation. DL downsized much of what was the old WA operation that was outside of the SLC hub. Only UA decided to fight WN in the West with the Shuttle.

All of the statements in this post are correct, except for AA abandoning SJC the first time as a result of WN. WN didn't start becoming aggressive on the west coast untill after the legacies had already downsized their operations there. The primary reason AA downsized their west coast operation the first time was the recession of the early 1990's. At this time SJC was nowhere near the market it had become in the late 1990's and didn't produce the revenue for AA to profitably sustain its operations there. When SJC began to expeirience massive growth in the late 1990's due to the dot.com boom, QQ was a very attractive, low risk option to regain the presence AA had abandoned earlier in the decade. As for UA, they chose to stay on the west coast and fight as they really had no other choice at the time because the west coast hubs and DEN accounted for over half of their network. The major flaw in all three of AA's acquisitions (not counting Trans Carribean) was their short sighted vision in regards to these acquisitions and lack of consideration of thier long term effects. Granted there is no way anybody could have predicted the recession of the early 1990's, and after 9/11 or the dot.com bust, however AA could have done more to evelauate the long term value of therse acquisitions in the event the west coast market dried up, or the congestion problems at ORD were rectified.

All this could be a major factor of why Tom Horton would like for AA to remain independent. Through out the entire bankruptcy process, AA has had two options; 1) Take the easy way and merge with another carrier, which although it provides many short term bennifits, does not provide many long term bennifits and could potentialy create more problems in the future; 2) Go the hard route and fix their problems from within (majority of these problems are self inflicted problems) which although does not provide many short term bennifits, it provides even more long term bennifits. WN has proved time and time again that organic growth is much more lucrative in the long term than aquired growth.

As for "AA needing to merge with US to remain competitive with DL and UA/CO", why do many keep making this statement? AA's problem has never been lack of revenue and cash (unlike US, PMDL, PMNW, PMUA, PMCO), as a matter of fact, AA's has lead the industry in revenue for several months. AA's problem has always been it's cost structure and lack of a more productive work force (once again, a self inflicted problem). As AA continues to lower their costs, increase labor productivity through new labor agreements, and GRADUALLY begin to impvove labor relations, AA is going to become a very fierce competitor in the future on its own. If AA merges with US then all that will happen is combining US's lower yeilding network with AA's higher cost structure (although not as high as pre-bankruptcy AA) which will result long term financial weakness. Especialy if Doug Parker plans to use AA's curent cash reserve to fund the merger.

Contuary to popular belief, the current AA management team is not as incompittent as they appear. They only appear incompitent for previous mistakes (of which they have learned their lessons from) that led AA into bankruptcy and disregard for the short term bennifits of a US merger. The best course of action for AA, is to go the hard route, of which AA has the revenue and cash to due so, and grow organically post bankruptcy. Then evaluate a meger IF AA contiues to struggle with out a merger.
 
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PW100
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Thu Jul 26, 2012 9:32 pm

Quoting KDAYflyer (Reply 5):
A merger with US would not be good for AA IMO. The airline would simple degrade down to a large version of US, which I would see as a big drop in service

Problem of course is that once in bankruptcy, it´s no longer about what´s good for the airline or even the consumer, but what´s best for the creditors. And they usualy have a pretty short horizon . . .
Immigration officer: "What's the purpose of your visit to the USA?" Spotter: "Shooting airliners with my Canon!"
 
AAplat4life
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 12:58 am

So there is a clear pattern here. One day, Horton fires his ammunition, and the next day US Air responds even better. This article from Bloomberg indicates that the trading market in AMR bonds are expecting a deal to happen.

http://www.bloomberg.com/news/2012-0...-corporate-finance.html?cmpid=yhoo

This is bankruptcy people. It is about dollars and cents and nothing else. Sure AMR has the exclusive right to present its plan of reorganization, but that does not mean the creditors have to accept it. If there is not enough support among the creditors, they will vote it down. Does Horton want to go that far into the land of embaraseement? At this point, he has lost all good will with US Airways. But US can give the creditors something better: stock in a stronger combined carrier and cash. AMR can only give the creditors stock in a carrier that is increasingly losing market share and cash if it can find investors.

Horton can make all the splashy annoucements he wants. Yes, a new day in airlline service with the AA A321transcom. Sure, configured with about 110 passengers so the piggy Airbus can make it transcon. How long will that last as AA leaves passengers on the West Coast? Not long. There is a reason why all of the other major U.S. airlines are opting for the 739ER and 739MAX: performance. Parker's ace in the hole will be to place a major order with Boeing. After AA has been sucked into the Airbus propaganda machine--as well it should since Airbus is obvioiusly giving AA a great deal--there is no reason for Boeing to continue to support Horton. Eventually, Boeing will throw its support behind Parker if Parker comes back into the Boeing fold. Once this happens, it will be over and Horton will be gone.
 
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Polot
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 1:13 am

Quoting AAplat4life (Reply 40):
After AA has been sucked into the Airbus propaganda machine--as well it should since Airbus is obvioiusly giving AA a great deal--there is no reason for Boeing to continue to support Horton. Eventually, Boeing will throw its support behind Parker if Parker comes back into the Boeing fold. Once this happens, it will be over and Horton will be gone.

The complete A v B garbage you posted aside, why would Boeing suddenly abandon support for Horton, the guy who is running the company with Boeing planes on order, for Parker, aka the man who runs the airline with absolutely 0 Boeing planes on order and no indication that they are interested in any (as a standalone)?
 
flyguy89
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 1:16 am

Quoting AAplat4life (Reply 40):
This is bankruptcy people. It is about dollars and cents and nothing else.

The same goes for US, it's a two-way street and ultimately the creditors will decide.

Quoting AAplat4life (Reply 40):
But US can give the creditors something better: stock in a stronger combined carrier and cash.

That's all debatable, AA would also be able to give creditors new stock in a lean, more competitive, better managed AA which is over twice the size of US. As you said, it's all about dollars to the creditors and AA is still very cash-rich and everything you're saying is highly speculative, you're assuming that US is, hands-down, going to be able to offer them a better deal, but that is still very debatable. If US is doing as well as it is in it's current size, I think it's generally accepted that a post-BK AA will be even more healthy, competitive, and profitable and able to negotiate from a position of strength....so playing devil's advocate, why should the creditors want to sell out now versus post-BK, being the leader between the two carriers (AA and US)? A healthy out-of-BK AA will command a higher price than an in-BK AA.
 
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mayor
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 2:36 am

Quoting tugger (Reply 22):
Yes, it all comes down to who will buy/merge with whom, how much it will cost, and who will be in control. US wants to be in control, in the pilots seat as it were, and they will only be able to be there if they can do what they are planning. Otherwise, after the bankruptcy is completed, it will be AA in control.

Much as it was with the failed attempt by US to take over DL.

Quoting commavia (Reply 24):
I think what Parker probably needs to worry about more now are top-tier AA frequent flyers staging a "Keep AA My AA" campaign. I can envision an online petition with thousands of people - most of them airline buffs but many probably actual, high-spend AAdvantage members - supporting AA's product/service standards (as-is, and what's to come) and issuing a threat (in most cases hollow, but still) to defect if AA "goes USAirways."

Do you think AA's employees AND retirees would be on board with this, as it was in the "Keep Delta, My Delta" campaign?

Quoting tugger (Reply 29):
then show FF's/passengers getting great service: "

And, where would they find this???     
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
ChicagoFlyer
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 3:17 am

What I don't understand (honestly) is what's in this for US Air, i.e., why their stock price is bid up. (I certainly understand why Doug Parker wants the combination to occur)

Fundamentally, there are no cost synergies in this merger. The contracts US Air's unions get post merger (to match their counterparts in American) will be much richer than they would in a standalone entity (I disagree with Horton/commavia about the "race against the clock" -- i.e., in my view, Aprey's and now Horton's rhetoric about other airlines' "labor cost convergence" is merely a justification for AA high cost, not the truth). The contracts AA's unions get post merger may not be as rich as their current deal but will be much richer than what they would get in bankruptcy (why do they all raise both hands up for a merger?) If the two airlines combine, the domestic network will get chopped greatly. There's value in lower capacity/higher fares, but the industry will capture most of the value--not the combined entity (why do UA/DL CEOs always say consolidation is in their interest?).

In my view any combination can only happen after AA has reduced its cost structure in Ch11 (whether pre- or post-exit is not really important). Parker's "agreements" with AA's unions strike me as just talk. The market seems to be betting on a combination of 2 things. 1) Parker's team will extract greater revenues from AA's international fleet than AA's past/current management; and 2) The unions will get paid only down the road not immediately (as in current US Air)--stock markets have attention span focused on short-term! This also implies 3) Little combined operations (as in current US Air). I personally am not sure that US's current business model can scale up well enough.
 
AAplat4life
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 11:09 am

Quoting ChicagoFlyer (Reply 44):
What I don't understand (honestly) is what's in this for US Air, i.e., why their stock price is bid up. (I certainly understand why Doug Parker wants the combination to occur)

I think the stock price of US Air has risen due to its financial performance. An operating profit for last quarter of $321M for an airline of this size is stunning. The cost savings would be in overlapping management and certain related functions, but I don't see cost savings as being material enough to justify this transaction.

Quoting ChicagoFlyer (Reply 44):
If the two airlines combine, the domestic network will get chopped greatly. There's value in lower capacity/higher fares, but the industry will capture most of the value--not the combined entity

Most analysts do not see the domestic network getting chopped up much if this deal would happen. There are very few overlapping routes. It is possible that PHX would suffer some as well as ORD (Parker had a somewhat negative remark recently about passengers not wanting to connect through ORD. That may have been pandering to DFW supporters. Every airport has issues, but ORD is still one of the better airports.)

Quoting ChicagoFlyer (Reply 44):
In my view any combination can only happen after AA has reduced its cost structure in Ch11 (whether pre- or post-exit is not really important).

That is what Horton would like us to believe, but the acquisition costs could be greater for US after AMR emerges from Chapter 11. Besides AA will reduce many of its other costs while in bankruptcy, and a well paid workforce is more productive than one that believes it has been screwed over and over again by management.

Quoting ChicagoFlyer (Reply 44):
I personally am not sure that US's current business model can scale up well enough.

I agree with you. US would have to move more towards AA's model in many respects. However, US's model was good enough to earn $321M last quarter. AMR only earned about $90M excluding its bankruptcy costs.
 
AAplat4life
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 11:28 am

Quoting Polot (Reply 41):
The complete A v B garbage you posted aside, why would Boeing suddenly abandon support for Horton, the guy who is running the company with Boeing planes on order, for Parker, aka the man who runs the airline with absolutely 0 Boeing planes on order and no indication that they are interested in any (as a standalone)?

I admit that it is speculation that US would order Boeing planes, but it has expressed reservations about the A321 (even the NEO) as a 757 replacement. To reiterate, I merely suggested that a Boeing order could be an ace in the hole to sway Boeing to support the acquisition if Parker cannot muster enough other support from the creditors. Moreover, IF it looks like Horton will lose the battle, Boeing would want to throw its support in for Parker before it is too late. After all, oneworld alliance members have come out with favorable statements on the deal.

Quoting flyguy89 (Reply 42):
That's all debatable, AA would also be able to give creditors new stock in a lean, more competitive, better managed AA which is over twice the size of US. As you said, it's all about dollars to the creditors and AA is still very cash-rich and everything you're saying is highly speculative, you're assuming that US is, hands-down, going to be able to offer them a better deal, but that is still very debatable. If US is doing as well as it is in it's current size, I think it's generally accepted that a post-BK AA will be even more healthy, competitive, and profitable and able to negotiate from a position of strength....so playing devil's advocate, why should the creditors want to sell out now versus post-BK, being the leader between the two carriers (AA and US)? A healthy out-of-BK AA will command a higher price than an in-BK AA.

You are right, much of this is debaatable. However, what is even more speculative is what would AMR look like a year or two out of bankruptcy and what imput the creditors would have in a deal outside of bankruptcy. We cannot really answer the first part, but the second part is pretty easy. The creditors will have zero imput in a post-bankruptcy deal other than being able to vote on it (if a vote would be necessary) as shareholders. They can drive the transaction today and negoitate favorable terms. And since they will end up with an equity stake, it seems logical to conclude that they would prefer a stake in a stronger, larger carrier that can better compete with United and Delta.
 
silentbob
Posts: 1586
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 12:03 pm

Quoting ChicagoFlyer (Reply 44):
Fundamentally, there are no cost synergies in this merger.

That's patently absurd. Even if you only look at the elimination of salaries on the administrative side, that is tens of millions of dollars per year, possibly more.

Quoting AAplat4life (Reply 45):
I agree with you. US would have to move more towards AA's model in many respects

Parker has said pretty much the same thing, multiple times.
 
AAIL86
Posts: 454
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 12:38 pm

Quoting santi319 (Reply 19):
Sorry, no can do, Spirit is in the business of making money, not losing it for an entire decade....

Easier to do when you pay your employees less then Mcdonald's does....  
Quoting rwy04lga (Reply 30):
I need a cigarette after that love fest!

        
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
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par13del
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RE: AA's Tom Horton Calls Out US's Doug Parker On Merg

Fri Jul 27, 2012 1:08 pm

Quoting AAplat4life (Reply 18):
but the fact remains that AA will still be well behind Delta and United

Is this then perceived as a bad thing???, someone is behind between DL and UA and they appear to be doing ok, unless you are certain that the USA market place can only have 2 carriers, indeed even US is behind and they made a profit in the last quarter.

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