The only way I see a US-AA merger working is following yet another Ch 11 case at US. Although US pays many of its employees slave wages, it is still a high-cost airline (in part because of its reliance on high-CASM express operations). I predict that AA lowers its costs to industry-leading (meaning better than Delta), meaning that the current US would be far too expensive to combine with AA without a third (fourth) trip thru the bankruptcy wringer for the US employees. Downside: not even another trip thru bankruptcy would fix the East/West pilot morass.
AA/US continuation of good trend
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NYCDelta
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Exactly. I was just responding to "Bethune said there will be a merger" when, in reality he should have said "Bethune said there will be an ATTEMPT at a merger".
RowUnderDCA
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Delta had a merger option that was more attractive and they took that option. So, Delta did not choose a stand-alone option over merger with US.
BoeingBoy
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That's based on an assumption - that merger talks between DL & NW were sufficiently far along that the DL/NW merger was a real option in early 2007. There is nothing to prove that that assumption is correct. Neither the DL nor NW POR mentioned a merger between the two - unlike US, where the POR was based on the merger. Yet the creditors still backed DL's plan to emerge from bankruptcy as a stand-alone carrier. Which is what DL did. It was a year after DL and NW emerged from bankrupty before the merger was announced and another 6 months before the DOT approval came - again unlike US where the merger was announced while US was in bankruptcy and consummated 4 months later per the POR.
Jim
Jim
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Good one!But when it comes to US, enjoy the wild ride because Cybil is at the wheel!
This thread alone went from yet another US/AA merger wolf cry to the government took my retirement, to how to come back after your banned, to a pilot discussion, to a Delta call, to a failed Delta/US merger...OCD with 10 personalities
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USA320Pilot
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USA320Pilot
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I have grown tired of these endless threads about US going after AA - partly because they spend an aweful lot of time focused on something that may or may not happen and very little focused on current reality for either AA or US - but also because the desire for a US acquistion of AA is driven by US' desire to fix its revenue problem and to fix its labor problems. Given that there is little evidence anywhere in life that you fix your own problems by going after someone else, I don't think it is realistic to think that a combined AA-US would be a viable company unless US can get its act together - which means generating industry comparable profits and revenues which also means bringing US people up to industry compable pay.... until you fix those things, dragging one broken company into a merger and expect to merge it with another company that has all the resources to fix itself up in BK and solve its problems on its own, a merger won't do anything more than increase the magnitude of existing problems.
I don't think a BK could do much to fix US other than to get rid of "expensive" (from a CASM perspective) regional carrier contracts. But those regional operations on the east coast are precisely what gives US the identify it needs. What US needs is viable longhaul domestic and international operations that are lower CASM... of course that is what AA has but AA is still a shorter haul airline than DL or UA - so the only way to get US/AA CASMs down to levels comparable to DL and UA levels is to pay people a whole lot less - and you still have to generate RASMs higher than DL and UA in order to offset the higher costs. Given the competitive assaults on AA's network by low fare competitors, that is a pretty tough recipe to turn into reality esp. since the difference between AA and DL/UA profitability is about $2B/year - far more than even the highest labor cost disadvantage AA has claimed.
well said, Jim, and I can agree.
What US has to do is create a plan that creates more value than what AA can create on its own... the reason why DL was able to fend off US had nothing to do with a ptential NW merger but because DL's turnaround plan delivered more value to the creditors than US could. The same will hold true for AA. The chances of AA - which has an enormous amount of tools available in BK - NOT being able to create a plan that is superior to one created by another carrier NOT in BK - are pretty small.
Too many people are fixated on Parker's access to Wall Street money while failing to recognize that other companies have similar if not better access. Further, part of why Parker has succeeded on Wall Street is because he is smart enough to know when companies are going to fail and go find more money in an attempt to fix the problem -since those lenders would rather throw more money at a problem and drag out the resolution than say "enough is enough" and lose their investment. US is paying its debts -so the banks don't really care if US is viable long-term...it is in their interests to throw a little more money to solve the problem than to shut it down.
The same is not true of AA who can hit a whole lot more reset buttons than US can.
It's not mandatory that you respond to any of them. Stick to promoting Delta's omnipotence and you won't get so tired.
nycbusdriver
Veteran
Then why do you read them and insist on commenting on them?
Excellent question.
