American Airlines creditors want to talk merger

[UPNAWAY]

Downside is that USAir is the second place player at PHX. WN owns it.

Don't let facts get in the way of a good spin!

Nov, 2010 - Oct 2011 the latest BTS stats available Phoenix Sky Harbor summary of US only Flights
Passenger Counts

US Airways 38.13%
SWA 32.69%
Mesa 7.93% (which is almost exclusively US Express)
Delta 6.19%
AA 3.14%
Other 11.64%

So factor in Express, Mexico and Canada and us has almost 50% to luvs 32%.

 

[FA Mikey]

Be realistic SWA sets the pricing, not usairways. Keep in mind it wasnt SWA that was run out of LAS, usairways was. SWA was the culprit.

 

[commavia]

Be realistic SWA sets the pricing, not usairways. Keep in mind it wasnt SWA that was run out of LAS, usairways was. SWA was the culprit.

Agreed. USAirways has done a reasonable job of "right-sizing" their PHX operation to make it as competitive as possible with Southwest, and of course Southwest also isn't the competitor it once was. But, all that being said, while PHX may - as was alluded to - have some operational advantages over DFW, I think DFW would make more sense for a hypothetical combined company, simply because it can handle 90% of the connections PHX can, and will always be the bigger and stronger hub.

 

[UPNAWAY]

SWA didn't run US airways out of LAS US abandon LAS because of low fares better to use those AC in PHL, CLT or PHX.

SWA did just abandon PHL to US though.

 

[BoeingBoy]

SWA didn't run US airways out of LAS US abandon LAS because of low fares better to use those AC in PHL, CLT or PHX.

Who do you think has been responsible for the low fares?

Jim

 

[topDawg]

Well of course not. But why miss an opportunity to glorify the infallible grand creation that is Delta? You know Delta never loses, and if they do lose, it's only because everyone else is losing more.

In truth, I still believe AMR has a fairly good likelihood of emerging independently. However, if there is to be a merger, I see Delta as having zero shot, since any Delta plan would involve breaking AMR up into pieces, and I continue to believe AMR's stakeholders and creditors have a lot more to lose than gain from that scenario. On the other hand, I am growing more and more intrigued by a hypothetical AA-USAirways combination, albeit from a purely network perspective. The combined network would be a strong one - USAirways brings an excellent hub in Charlotte, the second best hub in the Northeast in Philadelphia, and an excellent position in all four of the Northeast's biggest markets. On the flip side, however, the integration would of course be horrific - for understandable reasons.

err. Hello pot. I'm Kettle and um your black.

 

[WorldTraveler]

What is abundantly obvious is that a DL acquisition of AA would be the worst nightmare for a lot of people on here even if it was the best deal AA could get. Watching some people's reaction the first time they had employee related mail from Delta Air Lines in their mailbox would be something to see.
.
What is also clear is that such a merger if it were to happen would have nothing to do with whether I think DL is great or not but because DL is in one of the best strategic positions in the US airline industry – a strong, healthy, gutsy airline that has a very strong record of successful mergers, an above average record of creating value for stockholders, and of recognizing and providing viable solutions to its strategic needs.
I can’t possibly predict whether DL will seek to acquire AA or not… but as the WSJ video linked on the DL forum shows, I am not the only person who thinks it is a viable possibility. I do know that DL does not want to allow US to get its hands on AA and is willing to and has the resources to keep AA at least independent - and DL may well decide that DL’s strategic to-do list could be largely completed with an AA acquisition.
Thank you, Jim, for making my point that with respect to aircraft lessors including Boeing, DL is a very strong candidate and maybe the best in a merger scenario. You do realize that DL is now the largest US airline with a Boeing only order book, with the exception of a few lingering and apparently cancellable Airbus orders. DL would have no problem making the best case that it could provide the best claim return for Boeing. Not only does DL have one of the fewest amount of orders relative to its size which provides strategic flexibility but it also is heavily skewed to AA/AMR’s EXISTING creditors.
All of the network and fit analysis that people here can do can’t overcome the fact that the deicison will be based on dollars and cents, not perceived network fit, that will make or break a deal. AA plus US gives AA some things it needs – but it leaves a whole lot unsolved and really doesn’t add near as much value as other potential mergers such as either B6 or AS. AA is actually ahead of UA/CO in many markets on the east coast already; throw in B6 and AA could easily gain most of what US could give them and do it far more cleanly. AA probably could overcome much of its strategic to-do list if it were able to acquire both AA and B6 – both of which are healthier companies than US. Problem is that with US, competitors will influence what AA can do if not acquire AA before it can set its own course. Still, US cannot make a financial proposal superior to what DL could do - which is probably why Parker has more recently said they don't need to merge - even though some people here keep pushing the idea.
There is no more basis for an argument that AA would have to be split up in a DL merger than there is in a US merger where it is a given that US will not be able to increase its presence at DCA any further. Sure, DL’s NYC divestitures would be larger than US at DCA but there will be divestitures either way. Divestitures, not splitting up the company in even similarly sized pieces. It is also very possible that DL could make an offer to buy AA and then offer a package of assets to be transferred to several bidders and/or turn over other assets to the government for a true blind auction. After the last round of slot divestitures, B6 and WN would both rather purchase a known quantity of assets than engage in a costly bidding process that still left WN – with a bank account fully capable of spending several hundred million dollars on slots – incapable of growing because the price was too high. Interestingly, B6 still has not announced its new schedules for its assets for which it paid an enormous amount that only incrementally changes its strategic position. As the industry further consolidates, the willingness to spend huge amounts of money on slots diminishes because fewer and fewer players are viable bidders. If B6 and WN split 80% of the available NYC slots DL would have to divest and the remaining 20% were returned to the government for them to distribute as they see fit, there would be virtually no losers.
And the issue still remains as to how many airlines the US really needs or notably if there needs to be 3 network carriers. When you consider that no merger proposal involving AA creates a global network on par with what DL and UA already have and there remain the possibility if not eventuality that either DL or UA – and perhaps both – will engage in further acquisitions – it is very possible that AA could be permanently faced with being unable to generate revenues on par with DL and UA, and as we have seen with US, being in that position relegates the company to substandard financial performance and very limited employment prospects for employees, something AA’s creditors (including its employees) will decide is not a viable long term strategy.
As always, we will see how it all plays out. While some would like to argue that a DL acquisition of AA is impossible, all that is really is impossible is that US will not touch AA.

 

[FA Mikey]

Who do you think has been responsible for the low fares?

Jim

 

[1AA]

The way I see this merger mania with USAir is......................

Only people with financial interest want to see this happen because the creditors have no faith in AMR's reorganization plan and fear AMR will ask for extensions. This will delay the creditors from getting their money. We on the inside know that a merger with USAir will be a disaster from a operational standpoint. Currently USAir has issues with work rules and seniority. Different work rules and seniority depending who you worked for prior to the merger with America West. Different unions for the same work groups. I believe this is why USAir was and still is unable to expand their International market. Too many restrictions in the work groups. So the only way to get International exposure is by merging with a carrier that already has an International structure in place. Delta, Continental and United had this when USAir was trying for a merger in the past. Now it's their last chance with AMR. Will it happen? Who knows. We will just have to wait and see.

 

[chucky]

Well of course not. But why miss an opportunity to glorify the infallible grand creation that is Delta? You know Delta never loses, and if they do lose, it's only because everyone else is losing more.

In truth, I still believe AMR has a fairly good likelihood of emerging independently. However, if there is to be a merger, I see Delta as having zero shot, since any Delta plan would involve breaking AMR up into pieces, and I continue to believe AMR's stakeholders and creditors have a lot more to lose than gain from that scenario. On the other hand, I am growing more and more intrigued by a hypothetical AA-USAirways combination, albeit from a purely network perspective. The combined network would be a strong one - USAirways brings an excellent hub in Charlotte, the second best hub in the Northeast in Philadelphia, and an excellent position in all four of the Northeast's biggest markets. On the flip side, however, the integration would of course be horrific - for understandable reasons.

Commavia where did you hear that Delta wanted to go after AA? Is there an official press release?, an official comment from Richard Anderson? speculation on A.Net?...where? what plan are you talking about?

 

[wings396]

The way I see this merger mania with USAir is......................

Only people with financial interest want to see this happen because the creditors have no faith in AMR's reorganization plan and fear AMR will ask for extensions. This will delay the creditors from getting their money. We on the inside know that a merger with USAir will be a disaster from a operational standpoint. Currently USAir has issues with work rules and seniority. Different work rules and seniority depending who you worked for prior to the merger with America West. Different unions for the same work groups. I believe this is why USAir was and still is unable to expand their International market. Too many restrictions in the work groups. So the only way to get International exposure is by merging with a carrier that already has an International structure in place. Delta, Continental and United had this when USAir was trying for a merger in the past. Now it's their last chance with AMR. Will it happen? Who knows. We will just have to wait and see.

 

[wings396]

The union issue that you speak of, only pertains to the pilot group. The f/a group is trying to close a deal, and all mtc, fleet, and cs groups are integrated. I don't believe that any of this has held back international growth, it has all to do with aircraft availability....

 

[commavia]

Commavia where did you hear that Delta wanted to go after AA? Is there an official press release?, an official comment from Richard Anderson? speculation on A.Net?...where? what plan are you talking about?

It was widely reported in the press. And I have no doubt Delta is, indeed, "exploring all options," as they have a fiduciary responsibility to their shareholders to do so. Nonetheless, as I said, I see it as having an extremely low chance of ever going anywhere because I think it would harm more than help the interests of the AMR stakeholders and creditors who will ultimately have to make the decision.

 

[eolesen]

Don't let facts get in the way of a good spin!

Nov, 2010 - Oct 2011 the latest BTS stats available Phoenix Sky Harbor summary of US only Flights
Passenger Counts

US Airways 38.13%
SWA 32.69%
Mesa 7.93% (which is almost exclusively US Express)
Delta 6.19%
AA 3.14%
Other 11.64%

So factor in Express, Mexico and Canada and us has almost 50% to luvs 32%.

Boardings are definitely good spin, but what % of US's enplanements are flow traffic?

From what I've seen, WN has more O&D traffic, and US is filling up empty seats with flow traffic. Last stats I saw showed 40% flow for WN at PHX.

As a point of comparison... at DEN... UA is still larger than WN when you look just at the T-100 data for enplanements.

If you filter it down to look at O&D, about 35% of UA's traffic is DEN O&D; 62% of WN's traffic is DEN O&D. Taking those percentages against enplanements, WN is carrying more local marketshare than UA.

That also shows the relative weakness of the UA hub... The MIA hub for AA used to run somewhere around 35% flow, and ORD-AA was around 50% compared to ORD-UA at ~55% flow.

 

[usa1]

$20 says it's Josh Gotbaum of the PBGC who is banging the merger drum this time.

Yepper! Government is looking for a way to patch up some of the mess they made of this industry over the pass 25 years ... this mess is a result of their over-site and lust for cheap tickets ... now its costing them money ... as much as a auto industry failure would have cost them if they had not stepped in and found a way to keep employee pension were they belong....my fingers are crossed?