The value of merging is not so much in the benefits to the two airline's route structure but in getting AMR new management to capitalize on what is already there. From the top all the way down to flight ops there isn't a person at AMR who knows how to operate or run an airline in today's world. AA will be fine in the future IF the current mindset all the way from the CEO to the flight attendant, pilot, ramper, etc., is changed. That is what Ch. 11 reorganization will do for you.
AA and US merger?
- Thread starter LUVJAMESC4EVER
- Start date
Well FLEX it didn't work at TWA twice. Once they go to the well it's too easy.
http://www.reuters.com/article/2011/12/02/uk-dealtalk-americanairlines-idUSLNE7B100820111202
For US Airways (LCC.N), the merger-hungry fifth-largest U.S. airline, a bankrupt American Airlines may present an irresistible takeover target, but many in the aviation world think the headaches and hassles of consolidation are not worth the payoff of such a tie-up.American, a unit of AMR Corp (AMR.N), filed for Chapter 11 bankruptcy protection on Tuesday in a bid to shed some of its uncompetitive costs and restructure its debt.
Bankruptcy leaves the company vulnerable to potential takeover attempts from would-be suitors like US Airways, whose chief executive Doug Parker has long promoted consolidation as a means to slim down an industry plagued by overcapacity. US Airways once tried and failed to buy Delta Air Lines (DAL.N) as it restructured in bankruptcy.
Since the Delta/Northwest and United/Continental mergers, American and US Airways have been considered logical partners for a potential combination, but analysts have said American's high labour costs and unresolved contracts with its unions make any deal too difficult to negotiate.
Sweeping cost cuts in bankruptcy could remove one potential hurdle, but analysts and bankers noted that US Airways still has its own challenges of having to integrate labour groups following its 2005 merger with America West Airlines.
"Strategically that's one of the final combinations that could make sense, but there's a real issue for US Airways to do a deal, as well as the fact that US Airways is still slightly smaller," said one industry banker who asked not to be named because he was not authorized to speak with the media.
A second industry banker added: "US Airways still has two airlines. If they can't combine those two houses, how they can combine with American? Today there is no labour deal at US Airways, and those labour deals still need to be negotiated."
Analysts also said the benefits of any merger are less clear for American Airlines.
"From the standpoint of US Airways, it would be a huge opportunity," said airline industry consultant Robert Mann. "It would take them into markets they don't have access to today from a hub standpoint.
"Looking at it from the American Airlines' perspective, it doesn't make the combined American and US Airways network competitive with Delta or United (Airlines)," he said.
For a merger to appeal to American Airlines, Mann said, it would have to bolster American's international routes. American Airlines is a global airline that hopes to lure business travellers with international partnerships and a hub-and-spoke model that focuses on cities that are major business centres.
US Airways has a strong presence on the U.S. East Coast but has less to offer in foreign markets.
Airlines in bankruptcy are logical targets for a rival willing to attempt a takeover, because the would-be acquirer can present a proposal to a committee of airline creditors rather than directly to the management team, which might be less inclined to take the deal.
Bankrupt airlines also are attractive takeover targets because they have court protection to cut costs and restructure debt.
Neither American nor US Airways would comment on merger prospects on Thursday.
American has long expressed confidence in its prospects as a stand-alone airline, although its two biggest rivals United and Delta were formed from mergers that so far are successful.
US Airways failed to acquire Delta through a hostile takeover bid in 2006, and Delta later merged with Northwest Airlines, which restructured in Chapter 11 at the same time as Delta, to become the No. 2 U.S. carrier.
US Airways also had two rounds of fruitless merger talks with UAL Corp. UAL merged with Continental Airlines last year to form the world's biggest carrier -- the new United Airlines, a unit of United Continental Holdings (UAL.N).
My mistake . I meant the creditors and the BOD. Fly sAAfe 🙂
You're right. And while all of this organic growth at American, United and Delta will be taking a couple of years off and chilling out in the Seychelles smoking cuban cigars and patting themselves on the back for building the two largest airlines in the world, and while having done so, and for having knocked AA off it's perch as the largest most innovative, most consequential airline in the world. Wake up buddy. You're not the same airline you used to be. You haven't been in years. I wish the best of luck to you too.
ContUNITEus
Veteran
- Joined
- May 4, 2011
- Messages
- 501
- Reaction score
- 580
That's the thing, US management doesn't want a fully merged US-HP airline. Finishing the merger process would mean that they would have to agree on two major employee group contracts. That would mean significant labor cost increases. The tactic has been to delay, delay, divide, and then delay some more; just so that they can pull the rug out from underneath again, short of reaching the next contract, by announcing the next airline merger project.
As for the pilots' dispute, this is something that management loves, because without the two groups agreeing anytime soon, there will be up to another decade without an expensive pilot contract. If they really want to break the stalemate between the AWA and US pilot groups, they have to come up with something clever and extraordinary - a new twist, so to say. Throwing another wrench into the mix - as in AA's APA union - will definitely fix the seniority issue as there will have to be a re-vote for a resolution to this problem.
And once again, US is not in the position to bid for AA. It'll have to be a fully fledged merger, like the ones UA-CO and DL-NW achieved.
US is handling its mess very well. Trust me, this mess is a strategically tolerated one.
Nothing to say that Parker once he is unable to convince creditors and BOD to merge would not agree to a limited US LLC JV with AA. If as you say it would be a better result, that would allow him to move profitable assets around the the JV and let the non profitable portions die off. That was what Icahn did at TWA (I'm told by ex TWers) where he moved all the good assets to one company and the bad assets to another.
Hey I and most over here have nothing against US but I think we'd prefer to work out our issues and not have more piled on.
Hey I and most over here have nothing against US but I think we'd prefer to work out our issues and not have more piled on.
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
I’ll not spend a whole lot of time addressing DL specific comments other than to say that I have been following the industry since when DL used to have multiple L1011 flights per day from IAH (which was then a pretty new airport) and ORD to show how much the industry has changed. After being one of the smaller but better run airlines of the regulated era, DL spent the first several decades of deregulation trying to figure out its future… and didn’t do much well. DL’s BK was a true soul searching experience and as I expected DL came out of BK hitting on all cylinders and moving from a regulated era also ran in terms of size and industry impact to one of the global leaders in the industry – and is doing what it does now with a precision and level of success that has been lacking in the US industry. Whether you like DL as a carrier or not doesn’t change the fact that they dramatically turned the company around on and are accomplishing far more today than anyone could have imagined just a few years ago, particularly in the darkest days when many said it was time to turn the lights out at DL’s HDQ’s in ATL.
AA is capable of making just as dramatic of a turnaround and there is no doubt that AA/AMR’s board and mgmt has carefully studied the BK cases in the industry and tried to glean out what works, as well they should. There have been some massively failed reorgs and there have been some incredible successes – I have no doubt that AA can and will create their own success story that will look different from other carriers.
For those who haven’t read, my brother works for AA and I lived for many years in Texas and know many AA people… I most definitely have interests in what happens to AA – which is why I have consistently fought for their turnaround.
.
As to the questions raised above,
In short, the argument that consolidation is good for the industry may not apply any longer. Analysts note that for one of the few times in the deregulated era, airlines in the US are expected to be profitable during the lean winter quarters despite the US economy being in one of the worst shapes in decades and fuel being at record levels. Airlines DO in fact have pricing power because the industry has consolidated to the point where capacity is being pulled out across the board – by all carriers – and deep discounting is becoming harder and harder for consumers to find.
When you factor in that the weakest carriers financially are AA and F9 who are undergoing their own restructurings (BK or not), the rest of the industry looks quite healthy considering the environment. DL and UA and some low fare carriers have posted 10% operating margins, WN is quickly figuring out how to adapt its strategy to its new nationwide network in the midst of high fuel prices (where WN is paying the same prices as other carriers), and rationalization from the latest round of mergers (DL/NW, UA/CO, and WN/FL) is removing excess and unprofitable capacity.
So, no, there is no crying need for further consolidation…. The carriers that are performing the worst in the US industry would probably not fare better even if the industry was more consolidated. AA’s problems will not be solved by consolidation – they have too many people at too high of costs as well as assets for an airline of their current size and BK fixes that problem, not consolidation. F9 continues to be engaged in a losing battle for DEN that is leading UA to decide its strategy no longer requires a strong mountain presence because of its dual ORD/Texas option, ironically, the same central US strategy that AA has.
Consolidation won’t fix what remains to be done in the industry and AA could do fine without consolidation. AA WILL create a plan that makes AA viable as a standalone airline – that is what the creditors will require. The real question remains if AA will be large enough as it comes out of BK to compete with its network peers DL and UA.
So, let’s look at the strategic shortcomings of a potential AA-US merger…. AA/US would still be a distant #3 in Europe, including continental Europe and the situation would probably deteriorate because much of US’ continental Europe presence is tied to Star hubs and AA/US would undoubtedly move to oneworld. AA’s position in continental Europe is improving because of oneworld and the opportunities to connect AA and oneworld on the continent. In Asia, US can contribute nothing to AA’s position which is already a very distant number 3 and oneworld does little to change that… other than a few strategic routes that could be cost effective and logistically possible with the 773ER, there is no improvement on the horizon in Asia for AA or a merged AA/US. That leaves AA’s best performing int’l region as Latin America, right where it is today – and US contributes virtually nothing to AA’s ability to improve there and there is nothing that really limits AA’s ability to improve on its own Latin network by itself.
Turning to the domestic market, AA’s most at risk large markets are ORD and NYC. The slot swap has probably sealed AA’s fate in the NYC market where it will fall to a distant #3 to DL and UA, both of which have far stronger positions at LGA and EWR which are preferred business airports. Even if you play with slots at JFK and do something w/ B6, a single hub at JFK is now the least valuable hub when it comes to generating high value revenue, esp. since DL and UA both have their own longhaul hubs at JFK and EWR. DL’s advantage is that they have close-in high business revenue LGA as well as JFK while UA has it in one package at EWR as well as the necessary hub presence at LGA and JFK. New York City is the largest and most valuable market and AA’s position has eroded dramatically and an AA-US merger doesn’t fix that nor does any other strategic option anyone has suggested.
Chicago is the 2nd most valuable asset in AA’s network and AA’s position IS slipping both because of a more aggressive UA – which can tie NYC and CHI together in a way that previously only AA could do – and because of low fare competitors that are pounding away at the top revenue markets from CHI after years of being shut out of the market. Even if AA gains small jets, the level of competition at ORD will not change and the airport costs at ORD because of rebuilding the runways pose a serious threat to the ability of any carrier – UA included to hub there. Hubs do create mass that allows a greater market presence so it still is likely that one carrier could maintain a hub presence at ORD even with high airport costs because the local fares and low passenger percentages could grow to offset the costs of carrying higher cost connecting passengers, although there would be fewer overall connecting passengers. Bottom line, though, is that AA’s position is threatened at ORD far more by forces it cannot control – the UA/CO merger and the decision by Chicago to engage in a costly rebuild of the airport than any factor that AA can fix in BK. And US can certainly do nothing to help AA in ORD.
The west including DFW and PHX could see some consolidation but the real “loser” is PHX where the shotgun marriage of HP and US put HP’s operation which then couldn’t compete with WN and still can’t with US’ core southeast operation which is still where the majority of US’ profits come from – whether ex-HP people want to hear it or not. DFW is the crown jewel of the southwest and it is obvious that US wants to bail out of PHX in favor of a stronger DFW hub, which also helps deal w/ US lack of Midwest presence.
ON the east coast, US and AA both have their strengths but AA is holding its own without a SE hub – ala ATL or CLT. It is true that a combined AA/US would gain more advantages by combining their strengths on the east coast than either could obtain on their own, but particularly in the NE, AA/US would still be a distant #3.
From a network standpoint, there are very few advantages provided by an AA/US standpoint.
And more importantly, there is no evidence that revenue would improve in the key markets where competitors are moving revenue away from AA or US such as NYC, BOS, or CHI international.
From any rational assessment, an AA-US merger would provide little benefit and wouldn’t really address the size gap between AA and DL and UA.
While it is true that it is hard to determine whether there really is a size benefit for DL and UA as the megacarriers of the US now, they both say that they are moving corporate contracts away from AA because of the strength of their mergers and the fact that they are outperforming AA at revenue growth would appear to validate that AA is indeed losing corporate business to DL and UA – and unless there is any other explanation, the DL and UA mergers would appear to be doing what they said they would and what airline economics say happens – greater mass creates greater revenue generating opportunities.
.
But let’s also address the thirst for plucking AA up when it is at its most vulnerable point – in BK. In reality, those type of acquisitions JUST DON’T WORK. Companies succeed AFTER getting cleaned up – which is why no one bid on AA before it went into BK. CO, DL, NW, and UA were all restructured, successful companies BEFORE THEY merged – and the result is that they are stronger together than they were apart. Putting two not restructured, not successful companies together does not result in one successful company. US’s restructuring and merger is NOT complete and as noted Parker is happy to keep it that way, in part because he really wants to rip out parts of the current US and replace them w/ parts from another airline… that type of merger/asset swap has never worked…
Creditors, who as Jim notes, control AA’s future, DO NOT LIKE RISK – and they are less interested in taking on risk w/ someone who has yet to prove that he can succeed at what they said they would do years ago which is merge two companies. The argument that the 10K pilots of AA will overshadow the East pilots and shut them up is hardly the recipe for successful labor-mgmt relations but that is the best way the US labor issue can be addressed.
.
I could go on but won’t….
The simple fact is that Parker’s PR machine has been salivating for the day when Parker would have the opportunity to get its hands on one of the big boys…. All to piece together the airline he couldn’t build or acquire on its own. The US/Parker PR machine will continue to spit out noise advocating the value of US-AA merger but anyone can honestly see through the inaccuracies and media spin.
.
There is no value to AA or its creditors in an AA-US merger.
What is more likely to happen –which is what Parker fears is that AA will recover to the point where US will be found to be the “one extra network carrier too many” – and Parker will have nowhere to go to cash out.
Call the US-AA merger proposals what they are: an effort to improve US at the expense of AA, yielding no benefit to AA and virtually none to the industry other than getting rid of the underperforming assets at US and AA which can be far more effectively disposed of without a merger – and which neither can replace anyway.
My interest in the whole merger issue is because many AA people are being told they have no control over what happens and believe that their future is shot now. BK is painful but it is not the end of the world - and making another mistake won't make the first one any better. A US merger w/ AA would be a mistake for AA people and AA's ability to successfully restructure. AA will restructure on its own.
AA is capable of making just as dramatic of a turnaround and there is no doubt that AA/AMR’s board and mgmt has carefully studied the BK cases in the industry and tried to glean out what works, as well they should. There have been some massively failed reorgs and there have been some incredible successes – I have no doubt that AA can and will create their own success story that will look different from other carriers.
For those who haven’t read, my brother works for AA and I lived for many years in Texas and know many AA people… I most definitely have interests in what happens to AA – which is why I have consistently fought for their turnaround.
.
As to the questions raised above,
In short, the argument that consolidation is good for the industry may not apply any longer. Analysts note that for one of the few times in the deregulated era, airlines in the US are expected to be profitable during the lean winter quarters despite the US economy being in one of the worst shapes in decades and fuel being at record levels. Airlines DO in fact have pricing power because the industry has consolidated to the point where capacity is being pulled out across the board – by all carriers – and deep discounting is becoming harder and harder for consumers to find.
When you factor in that the weakest carriers financially are AA and F9 who are undergoing their own restructurings (BK or not), the rest of the industry looks quite healthy considering the environment. DL and UA and some low fare carriers have posted 10% operating margins, WN is quickly figuring out how to adapt its strategy to its new nationwide network in the midst of high fuel prices (where WN is paying the same prices as other carriers), and rationalization from the latest round of mergers (DL/NW, UA/CO, and WN/FL) is removing excess and unprofitable capacity.
So, no, there is no crying need for further consolidation…. The carriers that are performing the worst in the US industry would probably not fare better even if the industry was more consolidated. AA’s problems will not be solved by consolidation – they have too many people at too high of costs as well as assets for an airline of their current size and BK fixes that problem, not consolidation. F9 continues to be engaged in a losing battle for DEN that is leading UA to decide its strategy no longer requires a strong mountain presence because of its dual ORD/Texas option, ironically, the same central US strategy that AA has.
Consolidation won’t fix what remains to be done in the industry and AA could do fine without consolidation. AA WILL create a plan that makes AA viable as a standalone airline – that is what the creditors will require. The real question remains if AA will be large enough as it comes out of BK to compete with its network peers DL and UA.
So, let’s look at the strategic shortcomings of a potential AA-US merger…. AA/US would still be a distant #3 in Europe, including continental Europe and the situation would probably deteriorate because much of US’ continental Europe presence is tied to Star hubs and AA/US would undoubtedly move to oneworld. AA’s position in continental Europe is improving because of oneworld and the opportunities to connect AA and oneworld on the continent. In Asia, US can contribute nothing to AA’s position which is already a very distant number 3 and oneworld does little to change that… other than a few strategic routes that could be cost effective and logistically possible with the 773ER, there is no improvement on the horizon in Asia for AA or a merged AA/US. That leaves AA’s best performing int’l region as Latin America, right where it is today – and US contributes virtually nothing to AA’s ability to improve there and there is nothing that really limits AA’s ability to improve on its own Latin network by itself.
Turning to the domestic market, AA’s most at risk large markets are ORD and NYC. The slot swap has probably sealed AA’s fate in the NYC market where it will fall to a distant #3 to DL and UA, both of which have far stronger positions at LGA and EWR which are preferred business airports. Even if you play with slots at JFK and do something w/ B6, a single hub at JFK is now the least valuable hub when it comes to generating high value revenue, esp. since DL and UA both have their own longhaul hubs at JFK and EWR. DL’s advantage is that they have close-in high business revenue LGA as well as JFK while UA has it in one package at EWR as well as the necessary hub presence at LGA and JFK. New York City is the largest and most valuable market and AA’s position has eroded dramatically and an AA-US merger doesn’t fix that nor does any other strategic option anyone has suggested.
Chicago is the 2nd most valuable asset in AA’s network and AA’s position IS slipping both because of a more aggressive UA – which can tie NYC and CHI together in a way that previously only AA could do – and because of low fare competitors that are pounding away at the top revenue markets from CHI after years of being shut out of the market. Even if AA gains small jets, the level of competition at ORD will not change and the airport costs at ORD because of rebuilding the runways pose a serious threat to the ability of any carrier – UA included to hub there. Hubs do create mass that allows a greater market presence so it still is likely that one carrier could maintain a hub presence at ORD even with high airport costs because the local fares and low passenger percentages could grow to offset the costs of carrying higher cost connecting passengers, although there would be fewer overall connecting passengers. Bottom line, though, is that AA’s position is threatened at ORD far more by forces it cannot control – the UA/CO merger and the decision by Chicago to engage in a costly rebuild of the airport than any factor that AA can fix in BK. And US can certainly do nothing to help AA in ORD.
The west including DFW and PHX could see some consolidation but the real “loser” is PHX where the shotgun marriage of HP and US put HP’s operation which then couldn’t compete with WN and still can’t with US’ core southeast operation which is still where the majority of US’ profits come from – whether ex-HP people want to hear it or not. DFW is the crown jewel of the southwest and it is obvious that US wants to bail out of PHX in favor of a stronger DFW hub, which also helps deal w/ US lack of Midwest presence.
ON the east coast, US and AA both have their strengths but AA is holding its own without a SE hub – ala ATL or CLT. It is true that a combined AA/US would gain more advantages by combining their strengths on the east coast than either could obtain on their own, but particularly in the NE, AA/US would still be a distant #3.
From a network standpoint, there are very few advantages provided by an AA/US standpoint.
And more importantly, there is no evidence that revenue would improve in the key markets where competitors are moving revenue away from AA or US such as NYC, BOS, or CHI international.
From any rational assessment, an AA-US merger would provide little benefit and wouldn’t really address the size gap between AA and DL and UA.
While it is true that it is hard to determine whether there really is a size benefit for DL and UA as the megacarriers of the US now, they both say that they are moving corporate contracts away from AA because of the strength of their mergers and the fact that they are outperforming AA at revenue growth would appear to validate that AA is indeed losing corporate business to DL and UA – and unless there is any other explanation, the DL and UA mergers would appear to be doing what they said they would and what airline economics say happens – greater mass creates greater revenue generating opportunities.
.
But let’s also address the thirst for plucking AA up when it is at its most vulnerable point – in BK. In reality, those type of acquisitions JUST DON’T WORK. Companies succeed AFTER getting cleaned up – which is why no one bid on AA before it went into BK. CO, DL, NW, and UA were all restructured, successful companies BEFORE THEY merged – and the result is that they are stronger together than they were apart. Putting two not restructured, not successful companies together does not result in one successful company. US’s restructuring and merger is NOT complete and as noted Parker is happy to keep it that way, in part because he really wants to rip out parts of the current US and replace them w/ parts from another airline… that type of merger/asset swap has never worked…
Creditors, who as Jim notes, control AA’s future, DO NOT LIKE RISK – and they are less interested in taking on risk w/ someone who has yet to prove that he can succeed at what they said they would do years ago which is merge two companies. The argument that the 10K pilots of AA will overshadow the East pilots and shut them up is hardly the recipe for successful labor-mgmt relations but that is the best way the US labor issue can be addressed.
.
I could go on but won’t….
The simple fact is that Parker’s PR machine has been salivating for the day when Parker would have the opportunity to get its hands on one of the big boys…. All to piece together the airline he couldn’t build or acquire on its own. The US/Parker PR machine will continue to spit out noise advocating the value of US-AA merger but anyone can honestly see through the inaccuracies and media spin.
.
There is no value to AA or its creditors in an AA-US merger.
What is more likely to happen –which is what Parker fears is that AA will recover to the point where US will be found to be the “one extra network carrier too many” – and Parker will have nowhere to go to cash out.
Call the US-AA merger proposals what they are: an effort to improve US at the expense of AA, yielding no benefit to AA and virtually none to the industry other than getting rid of the underperforming assets at US and AA which can be far more effectively disposed of without a merger – and which neither can replace anyway.
My interest in the whole merger issue is because many AA people are being told they have no control over what happens and believe that their future is shot now. BK is painful but it is not the end of the world - and making another mistake won't make the first one any better. A US merger w/ AA would be a mistake for AA people and AA's ability to successfully restructure. AA will restructure on its own.
The Delta-centric hack has struck again! This time with a long, rambling, patronizing treatise that does nothing but glorify Delta and feigns concern for AA because his "brother works for AA." Mama must be proud! Give me a break! Nobody knows what's gonna happen in this filing. Go have a beer with your bro and counsel him on how he can Keep AA his AA.
I imagine AA mgmt does, and had to know that Parker is salivating out west too. Its all about placating the creditors and one creditor in particular, Boeing would not be down with Parkers plan just as they were down for his plan for Delta. While Boeing is just one creditor its a big one and influential one.
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
not only is there a plan for getting through BK, but it almost certainly does not include US - or any other airline.
While some people here clearly want to trash anyone that doesn't agree with them - he's done it umpteen times to other people in this same thread - the facts remain the facts, and I don't have any problem w/ putting them down for everyone to see - esp. if it destroys the flimsy arguments put forth for an AA-US merger.
.
There are reams of documents that were filed and will be filed in the AA BK case... it is not about the emotion that far too many here use as the basis for their decisions about how the industry will turn out.
.
Boeing may be one of the largest creditors but it is far from clear whether AA's CURRENT creditors will agree to allow AA to assume as much risk as all of the new orders entail... remember only part of the order book has been financed. There is a very good chance that a big chunk of the future orders will not happen on the timetable AA originally set out - including because AA still has about 200 older owned aircraft that it wants to dispose of - but the creditors might not be excited about seeing those useable assets written off only to take on more debt, even if the newer aircraft can save money in operation.
Just because you or I could save money if we upgraded to a newer car, most of us do not because there are financial limitations that all of us must live under. Companies are no different.
Further, a big part of the cost savings AA was seeking in a new fleet can now be obtained from or offset by labor cost savings that AA could not have received outside of BK.
.
Shrinking down a large order for both A and B jets will be even harder for AA to do if it is forced into a merger with US, who has much less need of new jets and much less size to digest the size of the potentially outstanding order.
While some people here clearly want to trash anyone that doesn't agree with them - he's done it umpteen times to other people in this same thread - the facts remain the facts, and I don't have any problem w/ putting them down for everyone to see - esp. if it destroys the flimsy arguments put forth for an AA-US merger.
.
There are reams of documents that were filed and will be filed in the AA BK case... it is not about the emotion that far too many here use as the basis for their decisions about how the industry will turn out.
.
Boeing may be one of the largest creditors but it is far from clear whether AA's CURRENT creditors will agree to allow AA to assume as much risk as all of the new orders entail... remember only part of the order book has been financed. There is a very good chance that a big chunk of the future orders will not happen on the timetable AA originally set out - including because AA still has about 200 older owned aircraft that it wants to dispose of - but the creditors might not be excited about seeing those useable assets written off only to take on more debt, even if the newer aircraft can save money in operation.
Just because you or I could save money if we upgraded to a newer car, most of us do not because there are financial limitations that all of us must live under. Companies are no different.
Further, a big part of the cost savings AA was seeking in a new fleet can now be obtained from or offset by labor cost savings that AA could not have received outside of BK.
.
Shrinking down a large order for both A and B jets will be even harder for AA to do if it is forced into a merger with US, who has much less need of new jets and much less size to digest the size of the potentially outstanding order.
Well given your Boeing hypothesis, if credible, then you'd have to factor in Airbus too. If there is any credence to your Boeing hypothesis, what do you think Airbus might have to say about this? I won't disagree that AA mgmt has an idea of what it may or may not do. It's all of the other omniscient prognosticators who think they know but don't really know a damned thing that really amuses. And folks hang on to their every word like these hacks really know what they're talking about.
signals
Veteran
Actually, he's giving his point of view with some valid points. He wasn't glorifying Delta at all other than to give his experience with what Delta went through. Although long winded as always, if you read carefully you might learn that he believes that AA can restructure on its own without a merger...and I tend to agree.
As far as Parker and the boys salivating, the AA/US merger has been cried Merger Wolf at USboards for sometime now.
I didin't mention Airbus because its a given that Airbus would be in US corner. US is an important carrier to Airbus and if they could help facilitate an AA purchase they will.
