American Needs US Air Merger: Analyst

[SparrowHawk]

US Airways from a financial perspective is pretty solid. Sadly IMO that's where the good news ends.

Actually Herb Kelleher in an interview described the problems that both AA and US would face during a merger.

According to Mr. Kelleher,

“You put your employees first. If you truly treat your employees with respect, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy. So there is no constituency at war with any other constituency. Ultimately, it’s shareholder value that you’re producing”.

Neither carrier has ever grasped this simple approach that has made WN wildly profitable. The Tempe Frat Boy Society (DP & Co.) has never met an employee or customer they gave a damn about and near as I can tell AA isn't much better.

US does a credible job delivering shareholder value. However they do it at the expense of employees and customers. This simple fact makes another smooth merger between two dinosaurs unlikely.

 

[BoeingBoy]

True, AA does not outsource their maintainence and their only express carrier, Eagle, is wholly owned, so almost all of their labor is "in-house". However...

It's the "however" that I was getting at - whether per ASM, average employee, or about any other metric AA's labor compensation is among the highest of the legacies. Post-retirement medical, DB pension plans, etc, all cost big bucks that doesn't show up in wages.

Jim

 

[700UW]

AA's employees pay every paycheck to prefund their retirement medical.

 

[gaucho99]

In the CLT crew news session on May 27, Scott Kirby said long term, US will likely merge with either Delta, United or American. Once the UA-CO merger is done, the new UA and DL will each have about 22 percent of the market. AA will have 18 percent and US 8 percent. At the most, once we are merged, the new airline will have 30 percent market share, so any of the three is a possibility. He also said there was next to zero chance we would merge with any other carrier such as Jet Blue or Alaska. For the short term, we can survive and even prosper as a stand alone carrier but eventually we will merge.

 

[bigbusboy]

In the CLT crew news session on May 27, Scott Kirby said long term, US will likely merge with either Delta, United or American. Once the UA-CO merger is done, the new UA and DL will each have about 22 percent of the market. AA will have 18 percent and US 8 percent. At the most, once we are merged, the new airline will have 30 percent market share, so any of the three is a possibility. He also said there was next to zero chance we would merge with any other carrier such as Jet Blue or Alaska. For the short term, we can survive and even prosper as a stand alone carrier but eventually we will merge.

It's so embarrassing to admit agreement with SK.

 

[jimntx]

AA's employees pay every paycheck to prefund their retirement medical.

To be fair, though. I pay less than $8/month for retiree prefunding. As that is less than $100/yr, reflect on the cost of some of the new "wonderful" drugs (as Lil Abner used to call them). When I had the flu last year, my Dr. prescribed an antibiotic to ward off pneumonia--10 tablets taken 1/day for 10 days. My copay was $111 since I had not met my deductible for the year. The street price of those 10 tablets was $247!!!!

Our prefunding cost in no way reflects the actual cost of retiree medical care.

 

[IberiaMAL]

In the CLT crew news session on May 27, Scott Kirby said long term, US will likely merge with either Delta, United or American. Once the UA-CO merger is done, the new UA and DL will each have about 22 percent of the market. AA will have 18 percent and US 8 percent. At the most, once we are merged, the new airline will have 30 percent market share, so any of the three is a possibility. He also said there was next to zero chance we would merge with any other carrier such as Jet Blue or Alaska. For the short term, we can survive and even prosper as a stand alone carrier but eventually we will merge.

Why not merge with JetBlue nor Virgin America? Why not merge with Jetblue/Alaska/Virgin America, order some widebodies and expand? Besides... who knows what Virgin America/Jet Blue will be in the "long term." Virgin America could be flying to Sydney & JetBlue could be flying to Moscow... Look how far JetBlue has came in 10 years... what will they be in another 10 years? B6 has 151 aircraft with 121 on order.


What in the world would be the point of merging with Delta?

 

[wench1]

If it does happen with AA,,Im praying the deadwood, ! UNNEEDED Shift Manager, and 1 extra supervisor are HISTORY..
We work like dogs anymore..Dont Want OT..Offer Comp Time, This is a real joke,..WE ARE SO UNDERSTAFFED ITS PATHETIC..AND YET THEY WANT ON TIME DEPARTURES...

 

[usa1]

CAPS member maunder, at least, suspects they may be. Take the contrarian airline pick of US Airways: "With low oil prices, a strong US market, increasing services to South America [and the Caribbean], Europe, and Australia, and low operating costs, this stock is likely to increase in value dramatically in 2010-2011.

http://www.fool.com/investing/general/2010/05/28/wall-streets-buy-list.aspx

 

[BoeingBoy]

I didn't know US served Australia!! Wonder if those "low operating costs" include the costs of having the largest Express operation in the industry?

Jim

 

[usa1]

Republic definitely is US's best friend when it comes to standing up to Southwest's and Air Trans on cost. Nice planes, very professional crews, well run, very low cost. I think Republic will play an even bigger roll around here in the future.

 

[VegasGambler]

Republic definitely is US's best friend when it comes to standing up to Southwest's and Air Trans on cost. Nice planes, very professional crews, well run, very low cost. I think Republic will play an even bigger roll around here in the future.

Yeah low cost like you want fries with the burger types of pay

 

[vsi0]

Republic definitely is US's best friend when it comes to standing up to Southwest's and Air Trans on cost. Nice planes, very professional crews, well run, very low cost. I think Republic will play an even bigger roll around here in the future.

My God -- could it possibly get any worse around this place?

 

[VAflyGal]

Republic definitely is US's best friend when it comes to standing up to Southwest's and Air Trans on cost. Nice planes, very professional crews, well run, very low cost. I think Republic will play an even bigger roll around here in the future.

Oh my GOD who are you? Have you lost your mind? I would come through my phone and shake you into oblivion if I wasn't getting hammered over what you just said. Seriously. Scope what? Job security what? Lemme guess... You think it's okay if everyone works for substandard wages and you're fine with 20 somethings with less experience in a jet taking over? I could scream but it falls ond deaf years. Joe Public doesn't care about anything until someone parks a plane into a house in a snowstorm in Buffalo because the EXPRESS crew made a bad choice.
I'm not knocking regionals - I started there, but this post illustrates the ignorance that condones the outsourcing of our jobs.

 

[Planeologist]

Who are these analysts anyhow? What does it take to be an expert about the airline industry yet not work in the airline industry? Believe me, all it takes is an opinion (everyone has one) and an email address of someone at the WSJ or at USA Today, poof suddenly you're an industry expert. I'd like to see some actual qualifications.