If true, that really puts US under the gun, doesn't it?
Another US red flag?
- Thread starter Mrs. McFly
- Start date
If true, that really puts US under the gun, doesn't it?
johnny kat
Senior
- Oct 11, 2011
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SQAWK...If no merge with AA it will not hurt my feelings. Sqawk...US will be fine either way, just smaller but no less profitable (unless AA wants to have a fight over PHL or CLT), which aint gonna happen because the new AA four corner strategy will be sending it back into BK. Sqawk...US will get its labor issues resolved and move on. Sqawk...what if no bid for AA ever happens, AA will just look 84 Lumber compared to lowes or home depot. Sqawk again US maybe taken off the table and acquired by another entity leaving the new AA with a 14 billion dollar or more revenue gap between it and DL or UA. Sqawk and sqawk again AA will not be the global power house you are dreaming of but just another shakey airline that is number three. the other number three airlines at one time were TWA, Eastern, and Pan AM...Said the very wise parrot.
PITbull
Veteran
- Dec 29, 2002
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What kind of business logic is that????
Not everyone can be #1 in any industry. And being #1 for many companies is a temporary position. Bigger is not always better...just like in sports. Didn't anyone ever tell you that size doesn't matter; its performance??????
johnny kat
Senior
- Oct 11, 2011
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Yes it is about performance. How do DL and UA do it with the size they are. US performance metrics are among the best and much much better than AAs on any given day.
With that said, US has to perform up to employee standards and is currently lagging a bit in that regard. But the notion that US must be married to AA in order to survive is hogwash. It is AA that needs US worse than US needs AA.
What will be most interesting to watch is how AA will do everything they have promised without market share and revenue capability.
And you PITbull know this better than most. If it can't be done, then all the promises to labor in the world will not keep the BK wolf away from the door. A smaller AA will not do as well against UA and DL.
And if US is acquired or otherwise then who will benefit from the 14 billion in annual revenues. Certainly not a standalone AA. Talk is cheap.
With that said, US has to perform up to employee standards and is currently lagging a bit in that regard. But the notion that US must be married to AA in order to survive is hogwash. It is AA that needs US worse than US needs AA.
What will be most interesting to watch is how AA will do everything they have promised without market share and revenue capability.
And you PITbull know this better than most. If it can't be done, then all the promises to labor in the world will not keep the BK wolf away from the door. A smaller AA will not do as well against UA and DL.
And if US is acquired or otherwise then who will benefit from the 14 billion in annual revenues. Certainly not a standalone AA. Talk is cheap.
Agreed. Excellent post. If/when AA and US combine (most likely when and not if), the resulting airline will push DL down to third place. Does anyone seriously believe that DL's continued success and existence will be threatened as a result? I don't.
johnny kat
Senior
- Oct 11, 2011
- 343
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FWAAA:
Agreed. Excellent post. If/when AA and US combine (most likely when and not if), the resulting airline will push DL down to third place. Does anyone seriously believe that DL's continued success and existence will be threatened as a result? I don't
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Yes, DL will be fine either way. AA will also want to be counted in the same category as DL (I hate to sound like WT) and UA. The only difference is AA will have a harder time generating the revenues the other two have right now putting it years behind in profits.
In time it will be UA or DL that order the first A-380s flown by us flag carriers and not the new AA. AA will have a much harder time getting to where the other 2 mega carriers are at the present time. So how does that benefit the new AA?
I am not overly thrilled at the idea of a merger having been through 3 so far. But if you don't particpate and get some skin in the game how does that serve anyone whose interested in playing the game? Just saying
Agreed. Excellent post. If/when AA and US combine (most likely when and not if), the resulting airline will push DL down to third place. Does anyone seriously believe that DL's continued success and existence will be threatened as a result? I don't
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Yes, DL will be fine either way. AA will also want to be counted in the same category as DL (I hate to sound like WT) and UA. The only difference is AA will have a harder time generating the revenues the other two have right now putting it years behind in profits.
In time it will be UA or DL that order the first A-380s flown by us flag carriers and not the new AA. AA will have a much harder time getting to where the other 2 mega carriers are at the present time. So how does that benefit the new AA?
I am not overly thrilled at the idea of a merger having been through 3 so far. But if you don't particpate and get some skin in the game how does that serve anyone whose interested in playing the game? Just saying
robbedagain
Veteran
- Oct 13, 2003
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i would not bet any us air carrier ordering the a-380 however id say the a-350 may be but not the 380
WorldTraveler
Corn Field
- Dec 5, 2003
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except that in the most recent quarter, Delta actually became the largest US airline on the basis of revenue, just barely gliding past UA who has kept a lot of capacity in their system which is not generating sufficient profit levels and thus their revenue performance is lacking. UA will not likely remain the size they currently are, esp. if they have to sign labor contracts that will push their costs well above AA and DL. Note that UA's one-time charge for the signing bonus for the pilots ate up almost all of their profits in the best quarter of the year - and UA ALPA estimates the new deal will cost UA 1 1/2 times per year on what they are spending on the signing bonus. And that is just one labor group at UA.
UA either needs to significantly redeploy existing capacity into higher yielding markets or shrink to cover its costs.
Meanwhile, AA/US - even if it happens - doesn't account for the capacity that will be cut as a result of rationalizing the network post merger - just as UA will be doing.
Bottom line, it is very unlikely that the industry will end up as AA/US #1, UA#2, and DL#3.
But more importantly, it doesn't really matter.
US HAS proven that they can survive as a standalone with a much smaller airline... their people are much lower paid that the other 3 network carriers. Thus, it remains to be seen if AA can generate revenues comparable w/ its new cost structure.
Speaking of costs, it also is not clear what AA will have to give up in terms of cost competitiveness in order to get a pilot deal - which might be imminent. If AA mgmt sees UA costs going up and AA allows costs to go above DL's but lower than UA's, there will still be plenty of room for AA to grow.
The key challenge for AA and US will be in having a route structure sufficiently large enough to compete globally with DL and UA who have a big advantage in the Pacific that neither AA or US together or alone can match. At the same time, AA has advantages such as MIA-Latin America that as long as it is maintained is an advantage that neither DL or UA can match....
but nothing, with anything in the business is set in stone.
And THAT should be the key takeaway.
BTW,
Richard Anderson has been in Paris meeting w/ Airbus and there are a group of DL pilots that believe an Airbus widebody order is likely... but it surely will NOT be the 380.
johnny kat
Senior
- Oct 11, 2011
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I saw something recently that said UA may be the first A380 customer based on their network capacity needs. I can't remember the publication though, sorry
yoyodyne
Veteran
God, I hope not, Airbii are pieces of ####...
signals
Veteran
US went through 2 BKs, your feelings should be hurt because of that. US will be fine and chances are AA will be great! US hasn't got its labor issue resolved going on 8 years now. AA perhaps learned from the BooK of US
and won't repeat Ur mistakes!!!Perhaps AA won't be a global power, but more than likely whatever the outcome, AA will be ahead of U
signals
Veteran
In today's world a A380 or even a Boeing 787, might be used for a massive pilgrimage to Mecca.
