Article on airlines regrouping!

[Hopeful]

The combination of legacy carriers United Airlines (UAUA - commentary - Cramer's Take) and US Airways collapsed two months before the attacks, rejected by regulators who viewed it as anticompetitive. Even so, AMR Corp. (AMR - commentary - Cramer's Take) unit American Airlines was permitted to take over failing TWA, a deal that American now openly regrets.



EXCERPT FROM THE FOLLOWING ARTICLE





http://www.thestreet.com/_yahoo/newsanalys...E&cm_ite=NA

 

[PHL]

The US/UA merger cannot easily be compared to the AA/TWA merger.

The US/UA merger was denied for a few reasons, one of which being the amount of overlap and newly merged carrier (UA) would have. If I recall, DOJ had a lot of routes that would have been required to be dropped, too, which is something the US/UA management didn't fully agree with on all counts.

The AA/TWA merger was a different beast all together. Without it, TWA would have folded completely and many employees would be without jobs. Also, the airline economy was in the tanks at the time, so TWA completely shutting down would have been a huge economic impact on the already hurting industry. In hindsight, perhaps AA shouldn't have absorbed it. Or, perhaps they could have made better choices in the integration. Maybe someone else should have taken it, or maybe it should have liquidated ala Eastern or Pan Am.

 

[TIME FOR CHANGE]

it should have liquidated ala Eastern or Pan Am.

Ya Think
:blink: :blink: :blink:

 

[Bob Owens]

Without it, TWA would have folded completely and many employees would be without jobs.

Tell that to the TWA FAs.

Also, the airline economy was in the tanks at the time, so TWA completely shutting down would have been a huge economic impact on the already hurting industry.

Yea, but it would have been a positive effect. It would have reduced capacity and would have meant one less carrier chasing passengers.

One of the things that I find amazing is that as bad as they say things are the planes were full and none of the majors dissapeared. You would think that if things were that bad and all these carriers are running into BK that for sure at least one carrier would have liquidated, but that has not happened. Why?

I have my own feelings as to why.

If you look at who owns the airlines it may give a clue as to why all these money losing carriers are still in business.

Most of the carriers are owned by financial institutions.

The airlines are critical to the economy, the planes must fly. These institutions are willing to keep lending the airlines money despite the fact that they claim its losing billions. But these institutions demanded that we take pay cuts in order to get the loan, how convienient! Over at UAL they pulled off the best scam of all. They sold the airline to the employees at top dollar in a scheme that prevented them from selling the stock, then they ran the company into BK and aquired it back for nothing as creditors!!!

The economy, and these Institutions stand to lose a lot more if the airlines stop flying than they do by keeping them flying and not getting a ROI directly from the airline. On its face it would seem that the logical thing to happen would be for there to be some serious consolidation, like we see in most industries as they mature. But there is a problem with consolidation, especially in an industry thats as labor intensive as the airlines. When you consolidate the industry it becomes more vulnerable to strikes. Both USAIR and UAL had militant workforces, combining them would have created a huge carrier with a militant workforce, AA and TWA on the other hand had compliant workforces that on the whole were more amenable to concessions than their counterparts at UAL and USAIR. NWA, one of the smallest of the majors spent over a year and millions of dollars in an effort to bust their mechanics, despite the fact that there were massive layoffs throughout the industry in the two years prior to the lockout, which should have flooded the market with airline mechanics, they still could not round up their target goal of mechanics and despite slashing their schedule they are having a hard time delivering a reliable product. Most that had been laid off had found employment outside the industry. In fact a news article on the recent settlement on UC benifits cited that most of the mechanics had found employment shortly after the strike began, so the number due back benifits was minimal. So while NWA continues to limp along the fact is that they are doing so with the scapings off the bottom of the barrel, they had to settle for hiring those they would not have hired before and taking back those they tried to fire. If another carrier such as AA were to strike they would find the barrel empty. The fact is the larger the company the harder is is to replace the workforce in the event of a strike.

So one of the reasons why we wont see much consolidation anytime soon is because those who own the industry are better off keeping us all split up into smaller companies in small unions in a constant, or near constant, state of crisis. This keeps a downward pressure on wages, in the meantime the airlines are consuming fuel, leasing space,leasing aircraft, paying landing fees, utilities, interest on debt and moving people and goods where they need to be.

 

[MCI transplant]

The US/UA merger cannot easily be compared to the AA/TWA merger.

The US/UA merger was denied for a few reasons, one of which being the amount of overlap and newly merged carrier (UA) would have. If I recall, DOJ had a lot of routes that would have been required to be dropped, too, which is something the US/UA management didn't fully agree with on all counts.

The AA/TWA merger was a different beast all together. Without it, TWA would have folded completely and many employees would be without jobs. Also, the airline economy was in the tanks at the time, so TWA completely shutting down would have been a huge economic impact on the already hurting industry. In hindsight, perhaps AA shouldn't have absorbed it. Or, perhaps they could have made better choices in the integration. Maybe someone else should have taken it, or maybe it should have liquidated ala Eastern or Pan Am.

<_< ---- PHL! From someone who lived through it, I've got to say you don't know squat about what went on with TWA, at, or before, the buyout! Would it offend your sensibility if I said that TWA was purposely taken into Chapter.11? And it is rumored that Compton (TWA) and Carty (aa) worked this deal for as much as three years before the fact! Why take TWA into bankruptcy? One--- To shed as much TWA dept as possible! Two--- To get reed of Carl Ichon! Three--- To separate the Unions from their Scope clauses in their contracts! Would TWA have survived without a.a.? We'll never know now will we! But I do know the Unions were talking to Boeing at the time, to have them buy TWA out, and turn MCI into a Company (Boeing) owned MRO! Ironic! I hear aa is now talking to Boeing to do the same thing!