cltrat
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- Aug 29, 2007
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do us all a favor and keep your pilot dribble to your own thread. The vast majority of us have long since lost interest
AMR
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do us all a favor and keep your pilot dribble to your own thread. The vast majority of us have long since lost interest
No Land Green
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Phoenix
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- Apr 16, 2003
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The irony is that the original post was being sarcastic of pilot dribble.
cltrat
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I'd rather see em dribble than hijack another thread with their endless pi**ing contest
the thread is about AMR bankruptcy not east pilot, west pilot, USAPA or DOH or even Nic
Where is the "Like" button?
Click the little green plus sign in the post you like. B)
higher oil prices which sharon just highlighted, one of the things forcing american airlines' hand today. much of that has been said about the future of american and the other legacy carriers. we are also keeping an eye on the shares of some of the other younger and often, perhaps, more nimble carriers. here's a look at how some of those airlines are trading right now. jet blue is up almost 8% on the trading session. joining us now to talk more about the fallout of american's announcement is analyst julius maldudas, president of aviation dynamics. welcome back. thank you. you do not think that the regionals will benefit from this. why? because american airlines is going to do very important strategic moves, shrink that airline and obviously the regional carriers are going to be the principal beneficiaries. you wouldn't buy them. jet blue is up 8% on trading session. does the market have this wrong? i think one should very carefully look at the regional carriers. i think those are the ones that are really going to win in the new year. because the new year is going to be a very difficult year because of oil prices. you've never been one that thought mergers really worked for the airlines. why not? well, that's a very difficult question. if you look at american airlines, they merged with three carriers. they bought twa for $1 billion and shut it down, literally, a year later. there are mergers today between continental and united. very difficult to implement all of these steps. now american airlines is going to have a very important opportunity. you've got delta that succeeded with northwest airlines in shrinking it completely. so some mergers work. some do not. what's your favorite play in the whole industry? what would you be betting on big? that's a very difficult one. i think the carrier that i'm most impressed, and this is for about more than 25 years, and that is southwest airlines. because the culture of that airline is so unique that herb kellaher and colleen barret created, very few people understand what has made that airline so great it is. what are you most bearish on? what would you either be shorting at this point or avoiding? the one that i am very concerned is about the regional carrier here, the u.s. air. i am very concerned that they could be the next one who does a chapter 11. i do not think that they will be able to merge with anyone at this point in time. why -- what's the pressure coming from? is it energy? is it labor costs? or maybe a combination of both? i think it's probably both. because the carrier is shrinking and you do not want to shrink in this business. because it is so difficult to grow. do they have pricing power now, the airlines? because capacity has been cut? yes, they do have some pricing power. but, still, there is great price competition from -- because of the regional carriers. they are doing very well. julius, good to see you again. thank you. thanks a million. happy holidays.
AAviator, are you familiar with the writings of USA320? If not, get ready, you're about to see a lot!
From the UA obsession to the AA obsession.
beachboy
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- Jul 7, 2006
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AAviator, are you familiar with the writings of USA320? If not, get ready, you're about to see a lot!
From the UA obsession to the AA obsession.
A year away from this place to peak back in , I am slamming the window back shut. The pilots are still playing Super Nintendo IIIVVVIIIW Serioirty Version and Chip is still with his UCT crap. It's like never leaving High School!...LOL AAviator, just be glad you don't have to fly with USA320- I see the name and WILL call out. One trip with him, I was like is this guy for real?! He sure was.
Btw I called this WAY back folks .....remember? Little did I think DAArth would have no legs and no $ to put Staples in the Stapler.
From the UA obsession to the AA obsession.
A year away from this place to peak back in , I am slamming the window back shut. The pilots are still playing Super Nintendo IIIVVVIIIW Serioirty Version and Chip is still with his UCT crap. It's like never leaving High School!...LOL AAviator, just be glad you don't have to fly with USA320- I see the name and WILL call out. One trip with him, I was like is this guy for real?! He sure was.
Btw I called this WAY back folks .....remember? Little did I think DAArth would have no legs and no $ to put Staples in the Stapler.
AA currently flies 47 777-200s with another 12-15 777-300s on the way (starting next year). On top of that, AA has 42 787-9s on order for 2014-2020 plus another 58 purchase rights for 789s. Lots and lots of shiny jets that will attract some pilots the way a picnic attracts ants. They may not be UA 747s, but they'd be a nice upgrade for someone stuck in an A320 at a measly $125/hr.
Hmmm, so you want USA320 cheering for a US/AA merger?
But thanks for the jab. Good luck.
Phoenix
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NYCDelta
Senior
I don't give a whole lot of credence to these self-anointed aviation "experts". Even Mike Boyd, whom I admire, isn't always right, but he does have some interesting things to say about the AMR filing. (I'm posting this here because there is so much discussion on why AMR must merge with LCC. If the mods want to move it to AA that's fine too)
In a nutshell:
1) AMR filed with so much cash so they could avoid DIP financing altogether. This eliminates an entire 3rd party during the negotiations and allows AMR more control.
2) Most of the aircraft parked will be Eagle. With fuel so expensive and the fact some of the RJs are getting old with more maintenance issues, they will be the first to go. Those cities that can support service on the new A319's will stay. Those that can't are probably in trouble.
3) Nobody wants used Super 80's. AMR should be able to renegotiate those leases to a level that allows them to fly them cheaply enough until the new planes arrive.
4) Payscales aren't the problem. Pension/work rules/debt burden are the problems. Those will definitely be fixed with BK.
5) AA doesn't need to merge with LCC. PHX and PHL bring nothing to AA. CLT, although a profitable hub for LCC, also wouldn't add much to AA. CLT doesn't give AA much more than MIA & DFW already do. Many of CLT's service to other southern cities is on RJ's, which every airline is already trying to reduce (see above). I can see DCA being the only asset that would add value to AA's network.
6) Labor would be a nightmare.
If Doug Parker tries to merge LCC with AA it will only be to line the pockets of the senior executives, not to benefit either of the aforementioned carriers.
Mike Boy's full analysis can be found here:
AMR BK
In a nutshell:
1) AMR filed with so much cash so they could avoid DIP financing altogether. This eliminates an entire 3rd party during the negotiations and allows AMR more control.
2) Most of the aircraft parked will be Eagle. With fuel so expensive and the fact some of the RJs are getting old with more maintenance issues, they will be the first to go. Those cities that can support service on the new A319's will stay. Those that can't are probably in trouble.
3) Nobody wants used Super 80's. AMR should be able to renegotiate those leases to a level that allows them to fly them cheaply enough until the new planes arrive.
4) Payscales aren't the problem. Pension/work rules/debt burden are the problems. Those will definitely be fixed with BK.
5) AA doesn't need to merge with LCC. PHX and PHL bring nothing to AA. CLT, although a profitable hub for LCC, also wouldn't add much to AA. CLT doesn't give AA much more than MIA & DFW already do. Many of CLT's service to other southern cities is on RJ's, which every airline is already trying to reduce (see above). I can see DCA being the only asset that would add value to AA's network.
6) Labor would be a nightmare.
If Doug Parker tries to merge LCC with AA it will only be to line the pockets of the senior executives, not to benefit either of the aforementioned carriers.
Mike Boy's full analysis can be found here:
AMR BK
I want to address NYCDelta's point 5 because it seems to be the one point everyone seems to not understand. I'm going to list some numbers (in $billions$) that are YTD revenue figures all taken from Yahoo Finance. I'll also include the percentage of total industry revenue they represent. This determines market share based on revenue. Yes, I know market share can be determined using various differrent methods...I chose total revenue:
UA 28,182 28%
DL 26,176 26%
AA 18,023 18%
SW 11,550 11.5%
US 9,900 10%
B6 3,558 3.5%
AS 3,273 3.0%
It seems everyone is saying US brings nothing to AA in a merger. If you guage that on extensive international route structures, flashy service, widebody aircraft, fancy facilities, and big and generous FF programs you would be right...WE DON'T!!! But it's not about that. The airline industry today is a very mature industry with little room for growth. Ticket revenues can't grow much more. This is why we see the advent of all these ancillary fees. Airlines need more revenue and can't get it from ticket sales. So they start charging for everything else. Another way to grow revenue in a mature industry is to buy another participant in the industry. Mergers today in the airline industry are only about three things: revenue, costs, and market share. What US does bring to the table is a somewhat profitable franchise in spite of high fuel costs and a very heavy debt load that represents YTD revenues of $9.9 billion. Yes, I know our cost structure is low at the expense, blood, sweat, and tears of labor. Let's save the ethics of that for another discussion thread. I'm just looking at the numbers because that's what AA's BOD, creditors, investment bankers, accountants, and lawyers are all doing right now.
AA right now is in a distant third place in the industry. UA and DL control 54% of the airline market revenues, whlile AA controls 18%. If AA and US merge, assuming some synergies, market share of revenues will be equally shared by UA, DL, and AA in rough amounts of 26-28% for each. Combined, UA, DL, and AA will equally share control of 75% of the industry (rounded); although, this might be the part that raises flags at the DOJ. People make the argument for mergers between AA and either B6 or AS. Well yes, if you use the rationale of route structures and network feeds as a basis for a merger, they make more sense. But that's not what AA needs right now. AA needs revenue and market share in order to compete more evenly with UA and DL. US brings both to the table.
UA 28,182 28%
DL 26,176 26%
AA 18,023 18%
SW 11,550 11.5%
US 9,900 10%
B6 3,558 3.5%
AS 3,273 3.0%
It seems everyone is saying US brings nothing to AA in a merger. If you guage that on extensive international route structures, flashy service, widebody aircraft, fancy facilities, and big and generous FF programs you would be right...WE DON'T!!! But it's not about that. The airline industry today is a very mature industry with little room for growth. Ticket revenues can't grow much more. This is why we see the advent of all these ancillary fees. Airlines need more revenue and can't get it from ticket sales. So they start charging for everything else. Another way to grow revenue in a mature industry is to buy another participant in the industry. Mergers today in the airline industry are only about three things: revenue, costs, and market share. What US does bring to the table is a somewhat profitable franchise in spite of high fuel costs and a very heavy debt load that represents YTD revenues of $9.9 billion. Yes, I know our cost structure is low at the expense, blood, sweat, and tears of labor. Let's save the ethics of that for another discussion thread. I'm just looking at the numbers because that's what AA's BOD, creditors, investment bankers, accountants, and lawyers are all doing right now.
AA right now is in a distant third place in the industry. UA and DL control 54% of the airline market revenues, whlile AA controls 18%. If AA and US merge, assuming some synergies, market share of revenues will be equally shared by UA, DL, and AA in rough amounts of 26-28% for each. Combined, UA, DL, and AA will equally share control of 75% of the industry (rounded); although, this might be the part that raises flags at the DOJ. People make the argument for mergers between AA and either B6 or AS. Well yes, if you use the rationale of route structures and network feeds as a basis for a merger, they make more sense. But that's not what AA needs right now. AA needs revenue and market share in order to compete more evenly with UA and DL. US brings both to the table.
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