Airline stocks down sharply - DOJ reportedly to block AMR/LCC

[wings396]

Something tells me that US Airways/AmericaWest and the AA execs pushing for this were completely caught off guard.

I don't think anyone had a clue that the DOJ was going to do a such a spectacular preemptive strike against Dougiee... I love the surprise element in all of this.

Do you love the surprise element in where your career may be headed? Future wages and benefits?

 

[Phoenix]

Perhaps this thread and the merger – if it happens - have been poisoned so badly by another opportunity to sling dirt but I’ll try and refocus on the topic itself.
By definition of “uncompetitive” the people/organizations that could be most hurt by the merger are the ones who are against it, or at least their government representations acting for them.
I suppose you mean Delta, though, since there are a number of articles that say that it was DL’s triple miles promo that Parker didn’t like which led to the chain of emails inside US complaining about DL’s actions and proposing that one day consolidation would stop that all from happening. That email chain was forwarded to DL execs, presumably Richard Anderson, according to at least one article which said that the DL exec replied to Parker saying the email was inappropriate and was being forward to the company’s chief counsel.

Whether DL sent it to the DOJ is unknown but the DOJ can and does fight anticompetitive actions whether a merger is involved or not. Further, if DL forwarded it to the DOJ, they probably did so to make certain that DL wasn’t later accused of colluding with US at some later point if the email surfaced. It is also possible that the DOJ flagged US and Parker at that point and began to demand copies of emails and other documents even before the merger application was filed with the DOJ.

Thus, for Parker to have been informed that a competitor was forwarding an email which another airline exec deemed to be unacceptable to their legal department should have raised all kinds of flags to Parker and anyone else at US who knew about it. To believe that denial of the merger came out of the blue when the DOJ could well have had an antitrust case open is a little hard to believe.

What can’t be denied is that US has locked itself into a business plan that originated from America West which involved bottom fishing for revenue from other carriers’ top markets, locking US into a profile of having lower revenues than their legacy airline peers, thus providing “justification” to pay below average labor rates.

Let's also be clear that AA, despite being smaller, has not resorted to a strategy of undercutting its competitors in its key markets as US has done. The prospects for AA based on its size and pricing and network strategies is very different than they are for US.

Desperate to end the cycle, Parker voiced continuous need for mergers in the industry and went so far as to send an email to the CEO of one of US’ chief rivals asking them to reduce competition. Is it any surprise that a company that US preyed on for years didn’t miss an opportunity to let the DOJ in on the little secret that Parker thought would just be guy talk over the bathroom stalls, even if their larger motive was to make sure that the recipient of the e-mail stayed out of hot water with the DOJ?

It is VERY, VERY possible that not approving the merger will be a small part of the ramifications of these newly released emails which the DOJ might have known around for years with effects felt throughout the executive ranks of US and AA, if the people there who wrote those emails are still around.

The fact that HP/US execs who wrote those emails would end up running the new AA is precisely why the DOJ decided they cannot allow the mindset that was expressed in the emails to be implanted in a larger, more concentrated industry.

AA and US lawyers and a lot of analysts will try to argue all kinds of other issues without admitting that these emails are likely the key evidence the DOJ needs to block the merger unless drastic, sweeping changes are made in AA/US mgmt and/or unless controls are in place to ensure the type of thing discussed in the emails never has the opportunity to become reality.

If Al Sharpton and Jesse Jackson want their gravy train to disappear along with all racist rants... then Holder wants executive boasting about consumer and labor exploitation to end too.

 

[robbedagain]

if the doj does approve of the merger... i would imagine they want executive changes at both airlines but esp at us or a whole new set at the new combined airline... and i would also imagine they could be forced to give up say up to 15% of the slots at dca for ex may be but dont know but both airlines as well as the doj all said they are open to settlement negogiations

 

[P. REZ]

I accept your biased opinion.

Here's another biased opinion. AA competes today, albeit more difficult given UA/DL sizes. If this merger crap goes away...AA can get back to building a quality airline that will compete on service, amenities, and destinations. These are the things that AA needs to improve to better compete, of which, US contributes absolutely nothing.

AMR can be a profitable company, the problem is it is very weak everywhere but MIA and DFW. Key markets in the midwest and northeast are lacking.The merger would allow for more profits but not a better company. DP has a proven track record of not providing good service compared to AMR, UAL or DAL. Profits over everything else. IMO, AMR if the merger were to occur, would not be known for service or amenities but through negotiations your pay would be better than if a stand alone carrier. That is what US employees know to be reality.

P. Rez

 

[im back..!!]

Uhhh, excuse me for pointing out the white elephant in the room....

AA has no approved plan, and no time past the 18month cutoff to formulate one.

Hostile bids for pieces will available soon, unless i'm misunderstanding the current bakruptacy laws...

Anybody have any idea's on this? Hopefully i'm wrong.?

 

[im back..!!]

Reference Chapter 11 explained:

As noted earlier, only the debtor may file a plan of reorganization during the first 120-day period after the petition is filed (or after entry of the order for relief, if an involuntary petition was filed). The court may grant extension of this exclusive period up to 18 months after the petition date. In addition, the debtor has 180 days after the petition date or entry of the order for relief to obtain acceptances of its plan. 11 U.S.C. § 1121. The court may extend (up to 20 months) or reduce this acceptance exclusive period for cause. 11 U.S.C. § 1121(d). In practice, debtors typically seek extensions of both the plan filing and plan acceptance deadlines at the same time so that any order sought from the court allows the debtor two months to seek acceptances after filing a plan before any competing plan can be filed.
If the exclusive period expires before the debtor has filed and obtained acceptance of a plan, other parties in interest in a case, such as the creditors' committee or a creditor, may file a plan. Such a plan may compete with a plan filed by another party in interest or by the debtor. If a trustee is appointed, the trustee must file a plan, a report explaining why the trustee will not file a plan, or a recommendation for conversion or dismissal of the case. 11 U.S.C. § 1106(a)(5). A proponent of a plan is subject to the same requirements as the debtor with respect to disclosure and solicitation.

 

[Real tired]

Uhhh, excuse me for pointing out the white elephant in the room....

AA has no approved plan, and no time past the 18month cutoff to formulate one.

Hostile bids for pieces will available soon, unless i'm misunderstanding the current bakruptacy laws...

Anybody have any idea's on this? Hopefully i'm wrong.?

Basically, I think this is the truth they just don't want to hear. The way I read it.

It's my opinion, to go at it alone, AA will be a much smaller company. Sadly, most likely US also.

I think the pain hasn't begun yet. For either of our companies.

 

[im back..!!]

Basically, I think this is the truth they just don't want to hear. The way I read it.

It's my opinion, to go at it alone, AA will be a much smaller company. Sadly, most likely US also.

I think the pain hasn't begun yet. For either of our companies.

--------------------------------
The realization to the employee groups hasen't even been recognized yet...

AA might be up for fragmentation, (as unbelievable as that may seem)..
USAirways dosent have the size it needs to pay a descent wage....after a decade there still wont be a raise.
And the west pilots are back to "not ripe" status...

all with one filing...... bummer..!

 

[AirwAr]

....

AA might be up for fragmentation, (as unbelievable as that may seem)..

...

Who would determine this? I guess the the BK judge would have to look at competing proposals and determine what is best.

If someone has the cash to invest in AA...would they do better by breaking up the company? I'm not sure about that. UA/DL would probably have the deepest pockets to chery pick, but given the DOJ's filing, do you think there's any appetitie for consolidating even more power with these 2 carriers?

As pure speculation on my part, no financial knowledge to back it up,...I don't see AA being broken up during this BK.

 

[FWAAA]

The expiration of the 18 month period of exclusivity doesn't mean that after that date, anyone can come offer whatever they want and walk away with AA in whole or its assets - it's not like a yard sale late in the afternoon when that technique tends to work.

All it means is that anyone is free to propose a POR to the creditors. While anything is possible, it's highly unlikely that the AA creditors would sell off the company piecemeal just because they can't merge with US.

The AA creditors were mesmerized by Parker and the prospect of merging, and forced Horton to merge with US instead of emerging independently, but that doesn't mean they view liquidation as preferable to emerging as a stand alone airline.

UA, DL and NW all emerged from their bankruptcies as stand-alone airlines and all were significantly smaller than AA is right now. They all had fewer planes and less annual revenue. There's really no basis for arguing that AA cannot emerge as a stand-alone airline. Parker begged and pleaded for a merger in bankruptcy, as opposed to later, because he knew that if AA waited, it would be unlikely that Parker would be chosen as the CEO - if Horton chose to merge with US in 2014 or 2015, Parker would probably be out of a job, along with his idiot henchmen, Kirby, Nocella and the rest.

Like I said - anything is possible, but the prospect of a fire sale at AA where vultures pick over the carcass of a dying AA doesn't look very probable. The creditors probably see AA as more valuable right now as a going concern.

Maybe TPG or some other airline financier will step forward with a plan to take over AA as a going concern, but I doubt it.

 

[freedom]

if I was an AA creditor I'd be looking at the fire slae option ....all the airlines have cash and all of them want to expand ...there is no better time than now while intrest rates are low and companies have cash to host an auction ...

Why should AA creditors chance AA somehow magically turning around and becoming a new improved airline ? Your work force has been shanked in BK therefore your most likely demorlized,not to mention that your work force is as old as time itself which can only mean that in time they will want back everything they ever had before ...

Might as well sell your company with its planes and workforce from the 1970s and try to get as much bang for the buck as possible .

 

[FWAAA]

if I was an AA creditor I'd be looking at the fire slae option ....all the airlines have cash and all of them want to expand ...there is no better time than now while intrest rates are low and companies have cash to host an auction ...

Why should AA creditors chance AA somehow magically turning around and becoming a new improved airline ? Your work force has been shanked in BK therefore your most likely demorlized,not to mention that your work force is as old as time itself which can only mean that in time they will want back everything they ever had before ...

Might as well sell your company with its planes and workforce from the 1970s and try to get as much bang for the buck as possible .

Go back to the kiddie table - the grownups are having a conversation.

 

[freedom]

Aww did my astute observation about AA's unruly work force ,inept managment, and antiquated equipment hit too close to home ?

I wonder what kind of interest rates AA would get as a BK stand alone on new AC , not good I imagine.

 

[robbedagain]

if I was an AA creditor I'd be looking at the fire slae option ....all the airlines have cash and all of them want to expand ...there is no better time than now while intrest rates are low and companies have cash to host an auction ...

Why should AA creditors chance AA somehow magically turning around and becoming a new improved airline ? Your work force has been shanked in BK therefore your most likely demorlized,not to mention that your work force is as old as time itself which can only mean that in time they will want back everything they ever had before ...

Might as well sell your company with its planes and workforce from the 1970s and try to get as much bang for the buck as possible .

i think what you need is a lot more help than meets the eye. i cant imagin you runnin this airline or any for that matter.. go get serious help dude... you need it...


fwaa if both aa and us negogiat with the govt to get the merger... what kind of concessions do you think would be given up.... if i had to to guess most of the concession if not all would come from the us side.. but esp in dca not sure about any other place

 

[JFK Fleet Service]

Go back to the kiddie table - the grownups are having a conversation.