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

[Piedmont1984]

Feed?

O&D?

Will lots of folks really want to stop in Hawaii enroute to a Far East hub where they can again change planes before getting to their destination?

Or, should we go for another hub at a leisure destination?

Hawaiian might be a good merger prospect, but not for Asia access from the mainland.

Thanks. I needed that.

 

[autofixer]

My MBA neighbor just flew (drove from GSO to RDU) RDU-MCO-MDW to get a cheaper fare. People will do anything to save a nickle.

 

[Dont call me Shirley]

http://www.usatoday.com/story/todayinthesky/2013/08/21/american-airlines-no-plan-b-if-us-airways-merger-fails/2681345/

American Airlines: No 'plan B' if US Airways merger fails

No "Plan B"/ Now where have I heard that before?

 

[nycbusdriver]

My MBA neighbor just flew (drove from GSO to RDU) RDU-MCO-MDW to get a cheaper fare. People will do anything to save a nickle.

Really?

His time is obviously worth little to him. But, being a dime-a-dozen MBA, he's probably used to that.

 

[nycbusdriver]

http://www.usatoday....-fails/2681345/

American Airlines: No 'plan B' if US Airways merger fails

No "Plan B"/ Now where have I heard that before?

It's the circle of life.

 

[jimntx]

My MBA neighbor just flew (drove from GSO to RDU) RDU-MCO-MDW to get a cheaper fare. People will do anything to save a nickle.

Amateur! I once had a passenger who flew LGA-ORD on AA, then ORD-HPN (White Plains, NY 40 miles from LGA) on AE because he needed two segments to maintain his Executive Platinum status.

 

[zethya]

AA/US File for November 12, 2013 Trial.
http://finance.yahoo...-203700107.html

 

[traderjake]

Gina Talamona, a Justice Department spokeswoman, responded yesterday to questions about the agency’s approach by citing the lawsuit and comments made Aug. 13 by Assistant Attorney General Bill Baer on a conference call with reporters.

The so-called legacy airlines are focused on each other, and “to a large extent Southwest and the other low-cost carriers are not competitive constraints in many, many respects,” Baer said on the call.


That argument spurred Helane Becker, a Cowen & Co. analyst in New York, to question the Justice Department’s rationale in concluding that Southwest wasn’t “a viable fourth competitor,”as she put it in an Aug. 20 note to clients.

“By what standard does the government cite they aren’t a serious competitor?” Becker wrote. “Southwest is one of the most competitive airlines, with competitive air fares throughout the domestic US. Indeed, the airline has limited international service, and does not charge baggage fees, while most other airlines have bag fees.”
Besides carrying the most travelers on domestic routes, Southwest is the largest airline in the U.S. using the industry benchmark of miles flown by paying passengers. On that basis, it is more than twice the size of Tempe, Arizona-based US Airways.

http://www.bloomberg...html?cmpid=yhoo

 

[Jester]

http://www.usatoday....-fails/2681345/

American Airlines: No 'plan B' if US Airways merger fails

No "Plan B"/ Now where have I heard that before?

I don't think if I was an American creditor, I would want to hear there are no alternative plans. It won't be long before creditors begin to offer their own plan as the exclusivity period has expired, and I really don't think the creditors care if the firm is sold off in pieces to maximize outstanding claims and displace thousands of workers in the process.

The irony is that the DOJ desire to maintain more competition by challenging the merger may cause DL and UA to become larger and an effective duopoly with the best assets of AA being divvied-up to the highest bidder through liquidation.

 

[jimntx]

The problem I have with all the Plan B drivel is that the merger with LCC is Plan B. Plan A was to emerge from BK as a standalone. In real business the various plans are designated in chronological order. Plan A is the first plan. Plan B is the second. etc. etc. etc.

As E has pointed out, the merger exclusivity period is drawing to a close (early December, IIRC). The November court date (if they get it) is still cutting it pretty close. And, the judge may or may not grant an extension of the exclusivity unless both parties ask for it (and even then, he's not required to grant it). My gut feeling is that some at Centerport would be just as happy to walk away from this deal as not.

And, when you consider that the pieces of AMR may be worth more than the whole on the open market, the creditors may get tired of waiting for their money.

(Yes, that's right. I AM the eternal optimist. Why do you ask? )

Sorry about the double post. I don't know what happened there.

 

[Jester]

My problem with all of this Plan B drivel is that the merger with LCC is Plan B. Plan A was to emerge from BK as a standalone. In real business, the "plans" are designated in chronological order. Plan A is the first plan. The first alternate is Plan B. The next...Plan C. Do you see a trend emerging here? In theory, you don't go to Plan B until Plan A is proven to be unworkable or it has been proven that Plan B will provide a better monetary return. No such events have occurred thus far.

The 18 month exclusivity period for AA management has pass (AA filed BK in November 2011), and now creditors are able to bring their own plans. While AA as a stand alone firm is still a very viable plan, it won't be without further labor concessions, nor will AA be in a strong position against either DL and UA in the long-term. Not to say that US is that much better position, but has the benefit of lower labor costs (for now), and a niche airline of sorts providing extensive service into DCA with vast coverage along the east coast with destinations into Europe.

I think the creditors are willing to wait until the Court rules on the matter or if a settlement can be worked with the DOJ, but after that point if the merger will not being happening, it will be a matter as to what makes the creditors the most on their claims. Let's keep in mind that "Plan A" was rejected by the creditors as the merger was more profitable, even though it was opposed by AA Management, so in many ways, the creditors hold the cards as to AA's future.

The cynical side of me says that the DOJ will approve the merger once either US and AA begin to lose boatloads of money after DL and UA get their operational house in order.

 

[nycbusdriver]

My problem with all of this Plan B drivel is that the merger with LCC is Plan B. Plan A was to emerge from BK as a standalone. In real business, the "plans" are designated in chronological order. Plan A is the first plan. The first alternate is Plan B. The next...Plan C. Do you see a trend emerging here? In theory, you don't go to Plan B until Plan A is proven to be unworkable or it has been proven that Plan B will provide a better monetary return. No such events have occurred thus far.

The creditors' committee never even entertained the notion of your so-called Plan A. It is a chimera alive in the minds of the AA-equivalent of the "keep my Delta my Delta" crowd. It was, and is, obviously unworkable in the shadow of the reconstituted Delta, United and Southwest.

 

[nycbusdriver]

The cynical side of me says that the DOJ will approve the merger once either US and AA begin to lose boatloads of money after DL and UA get their operational house in order.

The cynical side of me says that Parker is trying to come up with some credible way to insure that LCC reports a loss for the third quarter. Assuming the judge accepts the request for a November 12 hearing, the timing of a quarterly loss announcement would be perfect.

You are correct, though, that the threat to an unmerged AA lies in the near future when DL, UA and SW get their new machines oiled, polished and hungry. Whoever is at the helm of an unmerged AA will quickly learn to insert "right-size" into every public utterance. "Shrink to profitability" will become the AA corporate mantra (not that it has ever worked, mind you.)

That same fate awaits an unmerged US, although that then-stagnant carrier will do a bit better financially off the backs of its employees who are perennially willing to subside the Kettles' vacations.

 

[usa1]

Mr Holder this industry does not suffer from to little competition, but from to much.

1978 national average prices:

Cost of a new home: $62,500.00
Cost of a new car: $7,500
Cost of a first-class stamp:$0.13
Cost of a gallon of regular gas: $0.63
Cost of a dozen eggs: $0.82
Cost of a gallon of Milk: $1.71
Cost of an average 250 mile plane ticket: $100.00

2013 national average prices:

Cost of a new home: $234,000.00
Cost of a new car: $30,000
Cost of a first-class stamp:$0.46
Cost of a gallon of regular gas: $3.45
Cost of a dozen eggs: $3.39
Cost of a gallon of Milk: $3.44
Cost of an average 250 mile plane ticket: $100.00

IM on a 1991 pay scale?

 

[Piedmont1984]

The cynical side of me says that Parker is trying to come up with some credible way to insure that LCC reports a loss for the third quarter. Assuming the judge accepts the request for a November 12 hearing, the timing of a quarterly loss announcement would be perfect.

All he needs to do is ask the judge in NC to lift the injunction.