johnny kat
Senior
- Oct 11, 2011
- 343
- 330
World Traveler you are very insightful with regards to the cons of a AA/US tie up. All of your posts have been very well said. So, If you were the CEO of US what would you do with the company?
AA/US continuation of good trend
- Thread starter usa1
- Start date
signals
Veteran
The dream continues
signals
Veteran
Keep dreamin'
signals
Veteran
Can't speak for WT, but I would sell US for parts much like an auto parts dealer!
johnny kat
Senior
- Oct 11, 2011
- 343
- 330
Signals, I'm not sure if you actually work for AA or just an observer. But judging from you smug response I think you probably are junior and uninformed. OK, so from my perspective I could care less if US merges with AA. But let's take a look into the crystal ball...if AA does not get its' labor costs below the competition in BK and never merges it will not have the growth dynamic and market share needed to run with the big boys. In essence it will have to do exactly what US did and file for BK twice. If you think that the new airplanes will save the company then you are sadly mistaken. By the time the new jets arrive AA will be in such bad shape they want be able to execute the plan. The training costs and associated fleet retooling and integration for the new planes will be quite costly not to mention the brokerage fees (probably paid to some exec.). So no revenue growth at AA while all this is happening combined with DL, UA/CO and even US eating a hole in AA's revenue base. If you are employee at AA you should probably be ready to take around a 40% hit to your salary and benefits without a merger and double BK. US would easily provide another 13 billion or so to AA's bottom line, a newer fleet (immediately), provide AA with market share to equal the other two. So, all this vitriole you are spewing certifies you are not going to be part of the solution to AA's issues but rather part of the problem...AArogance.
NYCDelta
Senior
We keep hearing that everytime another merger occurs, or an airline goes under. When will this industry truly be healthy? I'm asking because I honestly don't know the answer. Do we only have enough business for 4 majors (AA/UA/DL/WN), 3 mid-sized (B6/AS/HA), and 3 small (Spirit/Allegiant/Frontier)? Is that still too many? IDK.
The answer to your question is dynamic, not static, and changes with the price of jet fuel. Full-year, 2011 was the most expensive year for fuel prices in history. If it moderates, there may be enough business for the current airlines. If it rises another dollar a gallon and stays there, we'll need a lot less airline capacity unless people magically agree to pay a whole lot more to fly.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #68
J Kat,
thanks for your words and I do believe your assessment is accurate... unfortunately, lots of people here have grown accustomed to shooting the messenger even if they are right. I stand with you in saying that AA knows what it needs to do and their problems will not be totally solved by a bunch of new airplanes... although getting rid of a lot of older planes will allow AA to dramatically cut costs - and jobs too.
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As for what I think US mgmt should do... I have long said that I think from a finance/strategic standpoint that US execs are doing about as good as they can w/ the hand they have been dealt. The real question is why they didn't figure out how to turn the company around a whole lot earlier before they gave up so many key parts of their network. It really is quite amazing that US couldn't figure out how to use their LGA slots any better... at the very least it is hard to believe that they didn't realize that when you quit flying LGA-Florida, they would no longer be considered a viable competitor given that other carriers fly to Florida and have a whole lot of other routes as well.
.
I think US made a mistake by walking away from PIT... it wasn't the biggest market but it played a key role in US' network and without it, US now is missing a huge part of its network. Perhaps they could not have reduced the costs for operating in that new terminal enough to make a difference in BK but I would bet the airport would gladly sign a new agreement for a smaller lease that would allow US to grow in PIT. Or they could go to CLE if UA walks away from that hub... or other hubs that have been downsized... assuming the current dominant carrier decides not to fight them... not exactly a given. Rebuilding another hub somewhere in the midwest would be a whole lot less costly than acquiring another carrier and would solve much of what US needs in its domestic network.
.
US has done a good job of focusing its transatlantic network on Star hubs and they can continue to do a lot more both in Europe and elsewhere, even without ATI.
There is alot that US could fly to/from Latin America from its PHX and CLT hubs, many of which do not necessarily require widebodies.
US has to develop a presence in Asia; PHX-NRT is not the ideal route to start a presence in Asia but it can work. PHL- Asia also has potential
.
US biggest need is to deliver a product that is at least on par or superior to its peers... and that obviously comes from paying and treating people a whole lot better than the way they are treated now. US mgmt needs to understand that in a service business your employees will treat your customers only as good as the employees are treated. And US also needs to understand that a relatively small investment in product can go a long ways to improving the perception of the product overall.
.
I fully expect that US will continue to push for consolidation that would benefit US - and that is natural. But too many people think that US will get what it wants because they are the smallest... it is precisely because US has bigger competitors that they have to figure out how to make what they have work... and AA/US will still be smaller than DL or UA. If DL or UA take actions to block whatever benefit US/AA might get from a merger then whatever benefit US/AA might get is muted.
US needs to figure out how to make what it has work and needs to quit trying, among other things, to raid other carriers' hubs w/ below market pricing. There are a number of carriers that used that strategy, HP and TW included, and everyone of them ultimately failed or were acquired by other carriers.... and perhaps that is part of US mgmt's desire. But DL and UA - who are most able capable to buy out US - would rather slowly get what they can from US and slowly bleed it to death. AA and its creditors WON'T do a deal with US unless it delivers more value to them than AA reorganizing on its own.... given the number of tools AA has at its disposal, it is very unlikely to believe that will happen.
.
If I were a US employee, I would make sure I kept as much money on hand as possible, are prepared to make a career change as rapidly as possible, and realize that the future long term is not conducive to employment stability... and then be pleasantly surprised if anything better than any of that happens.
FWAAA and NYC,
If the US economy started growing again there might be some chance of increasing demand at a pace that would offset the drop in demand that will come from higher fares that will be necessary to match the increase in fuel - and the price will continue to rise because OPEC will keep pushing prices up as long as they can keep selling fuel at higher prices.
Given that the US domestic market is pretty close to fully saturated and there is little potential for increased stimulation by low fare carriers (whose model increasingly doesn't work at current fuel prices - let alone what we might see in the future), then the only real changes in the industry will be for carriers to grow where growth is still occurring - such as to/from developing economies - and by acquiring capacity from other carriers - whether that be through mergers or asset acquisitions such as the slot swap which will result in rearranging the local NYC and WAS markets (or has the potential to do so if the slots are properly used).
Size is always an asset in a commodity business which the airline industry largely is... even though AA has tried to claim that size doesn't matter, the fact is that DL and UA have managed to obtain business that AA once held as a result of their mergers.
US is a classic example of a carrier that has not managed to differentiate itself and has unsuccessfully competed against larger airlines.
.
DL and UA both understand that if further consoldiation or failures happen in the industry, they will be best prepared to compete with their nationwide and worldwide networks.
thanks for your words and I do believe your assessment is accurate... unfortunately, lots of people here have grown accustomed to shooting the messenger even if they are right. I stand with you in saying that AA knows what it needs to do and their problems will not be totally solved by a bunch of new airplanes... although getting rid of a lot of older planes will allow AA to dramatically cut costs - and jobs too.
.
As for what I think US mgmt should do... I have long said that I think from a finance/strategic standpoint that US execs are doing about as good as they can w/ the hand they have been dealt. The real question is why they didn't figure out how to turn the company around a whole lot earlier before they gave up so many key parts of their network. It really is quite amazing that US couldn't figure out how to use their LGA slots any better... at the very least it is hard to believe that they didn't realize that when you quit flying LGA-Florida, they would no longer be considered a viable competitor given that other carriers fly to Florida and have a whole lot of other routes as well.
.
I think US made a mistake by walking away from PIT... it wasn't the biggest market but it played a key role in US' network and without it, US now is missing a huge part of its network. Perhaps they could not have reduced the costs for operating in that new terminal enough to make a difference in BK but I would bet the airport would gladly sign a new agreement for a smaller lease that would allow US to grow in PIT. Or they could go to CLE if UA walks away from that hub... or other hubs that have been downsized... assuming the current dominant carrier decides not to fight them... not exactly a given. Rebuilding another hub somewhere in the midwest would be a whole lot less costly than acquiring another carrier and would solve much of what US needs in its domestic network.
.
US has done a good job of focusing its transatlantic network on Star hubs and they can continue to do a lot more both in Europe and elsewhere, even without ATI.
There is alot that US could fly to/from Latin America from its PHX and CLT hubs, many of which do not necessarily require widebodies.
US has to develop a presence in Asia; PHX-NRT is not the ideal route to start a presence in Asia but it can work. PHL- Asia also has potential
.
US biggest need is to deliver a product that is at least on par or superior to its peers... and that obviously comes from paying and treating people a whole lot better than the way they are treated now. US mgmt needs to understand that in a service business your employees will treat your customers only as good as the employees are treated. And US also needs to understand that a relatively small investment in product can go a long ways to improving the perception of the product overall.
.
I fully expect that US will continue to push for consolidation that would benefit US - and that is natural. But too many people think that US will get what it wants because they are the smallest... it is precisely because US has bigger competitors that they have to figure out how to make what they have work... and AA/US will still be smaller than DL or UA. If DL or UA take actions to block whatever benefit US/AA might get from a merger then whatever benefit US/AA might get is muted.
US needs to figure out how to make what it has work and needs to quit trying, among other things, to raid other carriers' hubs w/ below market pricing. There are a number of carriers that used that strategy, HP and TW included, and everyone of them ultimately failed or were acquired by other carriers.... and perhaps that is part of US mgmt's desire. But DL and UA - who are most able capable to buy out US - would rather slowly get what they can from US and slowly bleed it to death. AA and its creditors WON'T do a deal with US unless it delivers more value to them than AA reorganizing on its own.... given the number of tools AA has at its disposal, it is very unlikely to believe that will happen.
.
If I were a US employee, I would make sure I kept as much money on hand as possible, are prepared to make a career change as rapidly as possible, and realize that the future long term is not conducive to employment stability... and then be pleasantly surprised if anything better than any of that happens.
FWAAA and NYC,
If the US economy started growing again there might be some chance of increasing demand at a pace that would offset the drop in demand that will come from higher fares that will be necessary to match the increase in fuel - and the price will continue to rise because OPEC will keep pushing prices up as long as they can keep selling fuel at higher prices.
Given that the US domestic market is pretty close to fully saturated and there is little potential for increased stimulation by low fare carriers (whose model increasingly doesn't work at current fuel prices - let alone what we might see in the future), then the only real changes in the industry will be for carriers to grow where growth is still occurring - such as to/from developing economies - and by acquiring capacity from other carriers - whether that be through mergers or asset acquisitions such as the slot swap which will result in rearranging the local NYC and WAS markets (or has the potential to do so if the slots are properly used).
Size is always an asset in a commodity business which the airline industry largely is... even though AA has tried to claim that size doesn't matter, the fact is that DL and UA have managed to obtain business that AA once held as a result of their mergers.
US is a classic example of a carrier that has not managed to differentiate itself and has unsuccessfully competed against larger airlines.
.
DL and UA both understand that if further consoldiation or failures happen in the industry, they will be best prepared to compete with their nationwide and worldwide networks.
signals
Veteran
Another option is that I am not in your industry at all, but have been on these boards long enough to have heard merger-wolf before.
Phoenix
Veteran
- Apr 16, 2003
- 8,584
- 7,430
You would make a superb journalist or analyst. You can say the sky is blue fifteen different ways, but what is really impressive is that you throw out a real zinger of a prediction... This is like a horoscope. You can insert anyone in the fortune and it makes sense.
If I were a {insert your company or country here} employee/citizen, I would make sure I kept as much money on hand as possible, are prepared to make a career change as rapidly as possible, and realize that the future long term is not conducive to employment stability... and then be pleasantly surprised if anything better than any of that happens.
Wow, where to begin? The classic WT post: overly wordy, self-important, full of vague references to industry happenings that are posed as fact but are merely anecdotal hearsay probably gleaned from Aviation Forums. Oh sure, a few subtle compliments are thrown in, as a head fake toward objectivity, but it's just filler until the big finale comes, that Delta uber alles and why does anybody even try to keep up? But I think most of your prescription for US is baloney. Oh, and as one who actually works at US, as opposed to someone who just reads about US, I am treated just fine, thank you.
FlyUs
Veteran
- Jul 28, 2004
- 610
- 45
A dream?? More like an opportunity or a smart business decisionThe dream continues
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #75
You mean, DCaf, that you don't really like hearing that US' future really isn't terribly bright, even if Parker and others have said it. I know that isn't the most delightful thing to hear but if it is the truth, then it would do you well to pay attention.
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It is always prudent to keep money in the bank... the advice to US employees is because their future long term is alot less certain than that of other carriers.
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Mocking others/other companies because they have got their act figured out does nothing but showcase the uncertainty of those doing the mocking.
etops, you better believe you'll get your gift certificate if I am proven wrong. We just might have to get together for a BIG LUNCH since no one else bellied up to the bar... I am quite interested in meeting about the only other person on here that will back up their convictions with a little hard earned bread.
.
It is always prudent to keep money in the bank... the advice to US employees is because their future long term is alot less certain than that of other carriers.
.
Mocking others/other companies because they have got their act figured out does nothing but showcase the uncertainty of those doing the mocking.
etops, you better believe you'll get your gift certificate if I am proven wrong. We just might have to get together for a BIG LUNCH since no one else bellied up to the bar... I am quite interested in meeting about the only other person on here that will back up their convictions with a little hard earned bread.
