AA to Asia: a new option

[NewHampshire Black Bears]

DL will be starting alot more service to Asia in just the next couple years.

That will be just a prelude to the ex-UA 744s flying from ORD-HKG and SFO-TPE as sample routes.

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DUDE, I think your overly OBSESSED with UA !!!!!!!!!!

NH/BB's

 

[JFK777]

Back in 1985 when Pan Am sold their Tokyo routes to UAL, The japanesse gave their blessing to the transfer of the beyond rights. 20 years later, numerous US airlimne Bankruptcys later they probably will not. If NW is taken over as a whole by AA or DL then things stay as they are. IF AA buys NW Asian division I would not be so sure the Japs would transfer the beyonds rights so freely. A carve up of NW would be very messy, NW 744 pilots would want to be grandfathered & AA's 777 pilots might want a stab at flying AA's new Flagship, the 744. All the F/A flying those routes would want the same deal too. Very messy politically and labor would be a nightmare.

 

[FWAAA]

Although the Japanese gov't might not be real receptive to a sale by NW of its Japanese rights to another airline, the rights (flowing from the 1952 treaty) inure to successors and assigns of the old Northwest Orient; all the buyer has to do is merge into a subsidiary of NW that just so happens to hold its Asian rights - say NWA Asian Subsidiary Corp - and there's nothing the Japanese gov't can do or say about it. The horrific events of 1941-45 are the sole reason NW and PA were permitted to treat Japan like another State.

Before anyone gets their panties in a wad - I didn't say a merger with the whole NWA. Just a newly formed sub created specifically for the deal. One into which NWA drops the particular assets the buyer wants to buy.

 

[WorldTraveler]

NRT rights are no different than any other right held by any US airline – they are the property of the US government who has the right to allocate and transfer them to whomever they wish. There are a myriad of possibilities for creating corporate structures but ultimately all US aviation rights belong to the US government, or more appropriately the American people.

 

[TechBoy]

NRT rights are no different than any other right held by any US airline – they are the property of the US government who has the right to allocate and transfer them to whomever they wish.

Not true. I don't know the details of the Japan rights, but the LHR rights, for instance, are personal to AA and UA and cannot be transferred on the whim of the USG. I suppose the the USG can stop any US carrier from exercising the rights, but they cannot independently transfer them.

 

[bagstacker]

NRT rights are no different than any other right held by any US airline – they are the property of the US government who has the right to allocate and transfer them to whomever they wish. There are a myriad of possibilities for creating corporate structures but ultimately all US aviation rights belong to the US government, or more appropriately the American people.

I realize international flying is where the revenue premium is these days, but would the benefit to AA be worth taking on more debt and adding the cost/complexity of another a/c type? I would think AA's biggest task at this point is finding a way to replace a large part of its fleet (MD-80, older 757's).

I'm not sure AA has enough of a cash cushion to spend too freely right now, but??? :huh:

 

[FWAAA]

I realize international flying is where the revenue premium is these days, but would the benefit to AA be worth taking on more debt and adding the cost/complexity of another a/c type? I would think AA's biggest task at this point is finding a way to replace a large part of its fleet (MD-80, older 757's).

I'm not sure AA has enough of a cash cushion to spend too freely right now, but??? :huh:

I dunno, but if AA could somehow attract the bulk of NW's higher-yielding pax to Asia (by converting their WP miles to AAdvantage miles/immediately matching status, etc) and could simultaneously dump the lower yielding domestic pax onto whomever will have them, don't ya think the benefits could outweigh the costs?

AA's gonna end the quarter with something like $6 billion of unrestricted cash in the bank (less any unanticipated extra debt paydown). Spending a little of that to bring in another $8 billion or $10 billion of annual revenue (say the top 2/3 of NW's revenue) might just pay off in spades.

The next wave of airline consolidation isn't gonna be just about getting larger, it's gonna be about trying to attract and keep the higher-yielding customers of the acquired airline and dumping the bargain fare hunters of both the acquired and the acquiring airline.

 

[bagstacker]

I dunno, but if AA could somehow attract the bulk of NW's higher-yielding pax to Asia (by converting their WP miles to AAdvantage miles/immediately matching status, etc) and could simultaneously dump the lower yielding domestic pax onto whomever will have them, don't ya think the benefits could outweigh the costs?

AA's gonna end the quarter with something like $6 billion of unrestricted cash in the bank (less any unanticipated extra debt paydown). Spending a little of that to bring in another $8 billion or $10 billion of annual revenue (say the top 2/3 of NW's revenue) might just pay off in spades.

The next wave of airline consolidation isn't gonna be just about getting larger, it's gonna be about trying to attract and keep the higher-yielding customers of the acquired airline and dumping the bargain fare hunters of both the acquired and the acquiring airline.

Yes, if they could find a way to maximize the upside while avoiding any unfortunate and costly entanglements such as employee and fleet integration issues, it could be a sweet deal. I guess we'll just have to wait and see. If the price of oil keeps dropping like it has been, that will give AA (and others) a little breathing room (whew!), not to mention increased cash flow and profits.

 

[eolesen]

NRT rights are no different than any other right held by any US airline – they are the property of the US government who has the right to allocate and transfer them to whomever they wish.

The super-incumbant rights at NRT for both UA and NW are currently quite specific to those two carriers. At the very least, I'd expect DOT to handle any request for assuming NWA or UA's incumbant rights as a full blown route authority proceeding.

I'll respectfully disagree with FWAAA that the Japanese government would allow the subsidiary concept to happen that easily without also gaining something for their carriers in the process, i.e. cabotage. It's entirely possible that if there were to be an asset grab with respect to either NWA or UAL, the beyond rights for the carrier affected would be sacrificed by the DOT to expedite the process and prevent cabotage.

 

[NewHampshire Black Bears]

IF, what FWAAA says is true(and I suspect it is), that AA is "close" to having $6B on hand, and with oil prices dropping(for the moment), what will happen when AA starts reporting 8/10 billion on hand ?

More specifically, does'nt it make sense that "we're" getting VERY close to some sort of "movement", given the LARGE, and soon to be HUGE amount of cash on hand ??

(I respectfully request from my union colleage's(SP?) that reply's about concessions etc., not apply to this interesting topic)

(That's NOT to say for a moment, that I don't agree with them ) !!!!!!!!!!!!!!!!!

Thanx,

NH/BB's

 

[eolesen]

what will happen when AA starts reporting 8/10 billion on hand ?

I don't think it will get that large. There are some large debt repayments coming due in 2007 and 2008 if I recall, so I'd expect some serious restructuring and paydown of that to occur first.

With the APA at the table next year, I would expect an order shortly, which would take care of the rest of the surplus (i.e. that which is above and beyond operating and crisis management cash).

Or, perhaps AA is simply following NW's lead, and building up enough cash to weather a long, bitter strike?...

 

[AMFAMAN]

Or, perhaps AA is simply following NW's lead, and building up enough cash to weather a long, bitter strike?...

Won't be from the mechanics as long as the twu is still around. :down:
Besides, most of the twu loyalist would scab anyway. :down:

 

[WorldTraveler]

NHBB,
the obsession is part of my USAviation personna. It's much more fun than reality.

AA has got some BIG corporate ideas up its sleeve with that much money on hand... and it isn't at all unrealistic that it is over $6B now. Debt service is a big issue but if AA pays off several billion dollars in debt in the next year or two, they will be sitting very pretty. Whatever they do, no one should be surprised when some big announcement comes out from AMR.