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

[AANOTOK]

...and provide more evidence for a merger

 

[UPNAWAY]

Anyone ointing out current profits to justify no merger have not paid any attention to the airline businness. Its is short boom cycles followed by long bust ones.

 

[ChrisUS]

Seems to me someone or agency didnt get his palm greased or was greased by Delta or United prior. This all makes no sense. If the DOJ had enough evidence to file a suit, why isn't it ready to go to court to support that decision? Why was a US/UA merger too big and anti competitive when a UA/CO creating a much LARGER airline, fine? Like UPNAWAY said, the airline industry is short boom cycles followed by long bust ones. The industry is making money finally and what are they doing with it ? Investing in fuel efficient aircraft and improving their product for consumers. Yep, everyone looses here. ( Sarcasm)

 

[WorldTraveler]

the answer has been posted a number of times but I'll try a quick recap....

AA/US is NOT the same merger as others. You and others want to argue that AA/US are being shafted because they can't get a merger now but others did.

By AA/US' own filings, they would become a larger airline that DL or UA even though they have a minimal presence in Asia. THAT means AA/US would be much more heavily concentrated on the east coast including in limited access markets like DCA.

It also doesn't change that there is documented evidence from AA and US execs saying that the purpose of the merger is to raise prices and reduce capacity - which is not only uncompetitive and sufficient to block the merger even if the network issues weren't a problem - but they also didn't exist with other mergers. There is no evidence that DL/NW, UA/CO, or WN/FL execs said the same thing.

Finally, the DOJ doesn't forecast profits for any industry. AA/US execs said they both airlines could be profitable on a standalone basis and AA just reported record profits to demonstrate that. If the Middle East melts down in war and airline profits tank, then perhaps AA/US can remove that objection.
It is absolutely true that the airline industry is highly cyclical and the up cycles are much shorter than the down cycles.
But AA filed for BK during a strong period to help ensure they can emerge and Parker went after them in BK.

The timing for AA's successful restructuring doesn't happen to align with the ideal time to be asking for a merger that will eliminate significant amounts of competition. The DOJ doesn't have to change its standards to fit Parker's opportunity.

 

[Reed Richards]

the answer has been posted a number of times but I'll try a quick recap....

AA/US is NOT the same merger as others. You and others want to argue that AA/US are being shafted because they can't get a merger now but others did.

By AA/US' own filings, they would become a larger airline that DL or UA even though they have a minimal presence in Asia. THAT means AA/US would be much more heavily concentrated on the east coast including in limited access markets like DCA.

It also doesn't change that there is documented evidence from AA and US execs saying that the purpose of the merger is to raise prices and reduce capacity - which is not only uncompetitive and sufficient to block the merger even if the network issues weren't a problem - but they also didn't exist with other mergers. There is no evidence that DL/NW, UA/CO, or WN/FL execs said the same thing.

Finally, the DOJ doesn't forecast profits for any industry. AA/US execs said they both airlines could be profitable on a standalone basis and AA just reported record profits to demonstrate that. If the Middle East melts down in war and airline profits tank, then perhaps AA/US can remove that objection.
It is absolutely true that the airline industry is highly cyclical and the up cycles are much shorter than the down cycles.
But AA filed for BK during a strong period to help ensure they can emerge and Parker went after them in BK.

The timing for AA's successful restructuring doesn't happen to align with the ideal time to be asking for a merger that will eliminate significant amounts of competition. The DOJ doesn't have to change its standards to fit Parker's opportunity.

Good summary World. I still maintain this denial is about Parker. He told the labor leaders a few weeks ago he did not see it coming, but two days ago a new report detailed LCC meeting with the DOL a mere week before the lawsuit. I think he stonewalled them, no concessions at all. I am sure that will eventually come out. His treatment of politicians and local airport communities is coming back to haunt him, as well as a foul undercurrent from the FAA who is VERY unhappy about him operating two pilot groups for 7 years, having been granted a single certificate. All the logic and facts in the world cannot overcome the fact he simply is not going to be allowed to run the largest airline in the world. DOL will make any arguments necessary to make sure what they have decided "happens." This Friday's scheduling hearing could end it all. IF she sticks with the March date, kiss the UCC and (eventually) labor agreements goodbye. RR

 

[Phoenix]

Good summary World. I still maintain this denial is about Parker. He told the labor leaders a few weeks ago he did not see it coming, but two days ago a new report detailed LCC meeting with the DOL a mere week before the lawsuit. I think he stonewalled them, no concessions at all. I am sure that will eventually come out. His treatment of politicians and local airport communities is coming back to haunt him, as well as a foul undercurrent from the FAA who is VERY unhappy about him operating two pilot groups for 7 years, having been granted a single certificate. All the logic and facts in the world cannot overcome the fact he simply is not going to be allowed to run the largest airline in the world. DOL will make any arguments necessary to make sure what they have decided "happens." This Friday's scheduling hearing could end it all. IF she sticks with the March date, kiss the UCC and (eventually) labor agreements goodbye. RR

On the bright side, if this merger fails to emerge as the fulfillment of the UCT lore of old, well at least Chip still has a calling. 🙂