British Airways In Talks With American, Continental

[Hunter]

Wrong! The AA/TWA deal does not, has not, will not, or ever "make sense after all".

[...] The only small item of value TWA brought to AA was some gates and slots in DCA and NYC; which AA could have had very easily if TWA had stopped flying altogether. It wasn't worth the price AA paid (cash, assumption of liabilities, integration costs, bringing the TWAers to top scales, and the seniority headache).

Only? Small? How about TWA's 26% stake in Worldspan that AA sold in March, 2003 for $250+ million? Never mind the 2 years worth of dividends that ownership stake paid out.

Try this on for size. If we are to believe everything that came out of AA Headquarters at the time, that $250 million may very well have kept AA in compliance with loan covenants and thus allowed them to avoid a default. Remember, it wasn't but a few weeks after the sale that AA was "on the court house steps ready to file" if the unions didn't capitulate on concessions.

The other small TWA assets you mention, the LGA and DCA slots and gates, allowed AA to set up its version of an east coast shuttle with AE and fill a gapping hole in its network. Those slots also earned AA a tidy little sum as quite a few were leased out to other airlines eager to gain access to LGA and DCA. Oh, and it didn't hurt that AA was able to constrain the growth of other carriers by controlling those slots, either.

Still think those assets were small? Continental certainly didn't think so. In a filing with the bankruptcy court, CO said they were willing to offer $400 million for those small assets and a few other assets like those at JFK and ORD.

Finally, that debt you seem to always harp about was primarily operating leases for aircraft. Of course you know that as a condition of the deal, AA demanded TWA file bankruptcy and in turn AA renegotiated that debt (operating leases) under much more favorable terms. Some of the facility and aircraft leases were outright rejected.

Look. You are rightfully defensive of your “seniorityâ€￾ and what it seems you consider a benevolent employer. What you fail to recognize is that by stapling or otherwise denying the employees of an acquired carrier their seniority, you disrespected your own. The unions at AA, particularly APFA and to a lesser degree APA and the TWU, are the pariah of organized labor because of their short-sighted actions in regard to the TWA purchase.

The industry is in the mists of some very sweeping, fundamental changes. Today’s predator is tomorrows prey. For your sake, I hope all this false bravado you are exhibiting has some substance behind it.

 

[Hunter]

Only? Small? How about TWA's 26% stake in Worldspan that AA sold in March, 2003 for $250+ million? Never mind the 2 years worth of dividends that ownership stake paid out.

I apologize. I misspoke and cannot edit my above post. AA's share of the Worldspan sale was $219 million.



Source:

American Airlines, Delta Air Lines and Northwest Airlines complete sale of Worldspan

AIRLINE INDUSTRY INFORMATION-©1997-2003 M2 COMMUNICATIONS LTD

American Airlines, Delta Air Lines and Northwest Airlines have completed the sale of travel reservations company Worldspan.

The three carriers have reportedly sold the computerised reservations system used by travel agents to Travel Transaction Processing in a deal worth about USD1bn. Under the terms of the deal, Delta, which had a 40% stake, received USD285m in cash and USD125m in credits for Worldspan services over nine years. The carrier also received a USD45m subordinated promissory note that matures in 2012.

Northwest got USD280m in cash for its 34% stake, as well as credits for future services, while American received USD180m in cash and a USD39m promissory note for its 26% stake.

((Comments on this story may be sent to [email protected]))

COPYRIGHT 2003 M2 Communications Ltd.
COPYRIGHT 2003 Gale Group

 

[AMFAMAN]

Only? Small? How about TWA's 26% stake in Worldspan that AA sold in March, 2003 for $250+ million? Never mind the 2 years worth of dividends that ownership stake paid out.

Try this on for size. If we are to believe everything that came out of AA Headquarters at the time, that $250 million may very well have kept AA in compliance with loan covenants and thus allowed them to avoid a default. Remember, it wasn't but a few weeks after the sale that AA was "on the court house steps ready to file" if the unions didn't capitulate on concessions.

Now I hate when these threads turn into AA vs TWA again, but you're wrong regarding the sale of Worldspan coming before the BK threat. The Worldspan deal went down on June 30, 2003, or about 10 weeks after the so-called BK bluff.

 

[L1011Ret]

So well said and all your facts are so true.....

Nonsense, as the above posts indicate neither you nor aafsc have any real knowledge whatsoever of the assets AA acquired. How many hangers? How many baggage carts? How many deice trucks? How many gates, etc.? How many A/C that were paid for?

 

[aafsc]

Only? Small? How about TWA's 26% stake in Worldspan that AA sold in March, 2003 for $250+ million? Never mind the 2 years worth of dividends that ownership stake paid out.

Try this on for size. If we are to believe everything that came out of AA Headquarters at the time, that $250 million may very well have kept AA in compliance with loan covenants and thus allowed them to avoid a default. Remember, it wasn't but a few weeks after the sale that AA was "on the court house steps ready to file" if the unions didn't capitulate on concessions.

The other small TWA assets you mention, the LGA and DCA slots and gates, allowed AA to set up its version of an east coast shuttle with AE and fill a gapping hole in its network. Those slots also earned AA a tidy little sum as quite a few were leased out to other airlines eager to gain access to LGA and DCA. Oh, and it didn't hurt that AA was able to constrain the growth of other carriers by controlling those slots, either.

Still think those assets were small? Continental certainly didn't think so. In a filing with the bankruptcy court, CO said they were willing to offer $400 million for those small assets and a few other assets like those at JFK and ORD.

Finally, that debt you seem to always harp about was primarily operating leases for aircraft. Of course you know that as a condition of the deal, AA demanded TWA file bankruptcy and in turn AA renegotiated that debt (operating leases) under much more favorable terms. Some of the facility and aircraft leases were outright rejected.

Look. You are rightfully defensive of your “seniority” and what it seems you consider a benevolent employer. What you fail to recognize is that by stapling or otherwise denying the employees of an acquired carrier their seniority, you disrespected your own. The unions at AA, particularly APFA and to a lesser degree APA and the TWU, are the pariah of organized labor because of their short-sighted actions in regard to the TWA purchase.

The industry is in the mists of some very sweeping, fundamental changes. Today’s predator is tomorrows prey. For your sake, I hope all this false bravado you are exhibiting has some substance behind it.

TWA's 26% stake in WorldSpan was used as collateral for the cash AA advanced to TWA to keep it afloat; which it quickly burned through and AA had to advance another $125 million in addition to giving up some of aircraft deposits to keep the carcass afloat. As for the 2 years of dividends and small profit on the sale of WorldSpan, big deal. AA could have put that $200 million in some other type of investments and made the same if not more in terms of interest.

Regarding the DCA and NYC slots, your right, CO offered $400 million BUT ONLY FOR THE SLOTS; NO PEOPLE. It would have been better if AA offered $500 million for the slots and ONLY the slots. If CO would have obtained the slots instead of AA, it is possible they would have filed CH.11 for a third time due to lack of cash.

The debt AA assumed for TWA's assets involved more than just renegotiated aircraft leases. (How many of those ex-TWA aircraft are sitting in the desert that AA is still paying leases on. This just makes the TWA deal even more expensive for AA.) AA assumed the TWA retiree medical obligation which put around a $730 million dollar liability on AA's balance sheet.

Finally regarding seniority, there is something called CAREER EXPECTATIONS; TWA people had none, AA people had nothing but. If TWA would have shut the doors for good, nAAtives would have been unaffected and all the TWAers would have been on the street. TWA had 9 wide bodies as to where AA had over 150. The TWA pilots wanted DOH in order to capture all the wide bodies for themselves even though they rightfully belong to AA pilots. The TWA F/As wanted DOH to get the best trips to China, Japan, etc. even though TWA never flew there. People from a DEAD company should never be allowed to destroy the careers of long time employees of a health company. I'm in the TWU and we went to binding arbitration. The arbitrator ruled and, like the US East pilots, the TWA ramp/mechanic and related are doing whatever they can to try to nullify it through grievances and lawsuits. Your just upset because you didn't receive a HUGE windfall at the expense of, and on the backs of, long time AA employees. Any other group will fight to protect what is rightfully theirs. If UA and US merge watch those UAL pilots fight to preserve what is rightfully theirs (B747-400s across the Pacific) from the US East pilots who could never have expected to fly that type at US. I also wonder if the UA F/As will try to dump AFA again because of their DOH by-laws.

 

[aafsc]

Nonsense, as the above posts indicate neither you nor aafsc have any real knowledge whatsoever of the assets AA acquired. How many hangers? How many baggage carts? How many deice trucks? How many gates, etc.? How many A/C that were paid for?

Hangars? 3. The one in STL is old and is being torn down. I hear the one in LAX is old and going to be torn down for expansion. MCI is about 50 years old and falling apart although the city is paying for it's renovation to keep AA there and people employed.

Gates? AA dumped a lot of TWA gates in both big cities and small cities. Small cities include but not limited to PBI, RSW, RNO, etc. The big cities are LAX (where TWA was in the other terminal), MIA (same reason as LAX), STL, where they abandoned one terminal all together, and JFKs terminal 5, where it was outdated (40 years old) and AA did not need it because they built their new state of the art terminal. I flew through STL once and it was a dump.

Aircraft? Virtually all of TWA's aircraft were leased. I believe the only ones that they owned were 30year old beat up DC-9s.

Ground equipment? What a frickin joke. I have seen and worked with TWA's ground equipment; all old antiquated junk. We nAAtives try to avoid using it. Only thing it is good for is sCRAP metal. But I was told that TWA was in such bad shape that TWA actually leased that garbage from Ichan.

 

[L1011Ret]

Hangars? 3. The one in STL is old and is being torn down. I hear the one in LAX is old and going to be torn down for expansion. MCI is about 50 years old and falling apart although the city is paying for it's renovation to keep AA there and people employed.

Gates? AA dumped a lot of TWA gates in both big cities and small cities. Small cities include but not limited to PBI, RSW, RNO, etc. The big cities are LAX (where TWA was in the other terminal), MIA (same reason as LAX), STL, where they abandoned one terminal all together, and JFKs terminal 5, where it was outdated (40 years old) and AA did not need it because they built their new state of the art terminal. I flew through STL once and it was a dump.

Aircraft? Virtually all of TWA's aircraft were leased. I believe the only ones that they owned were 30year old beat up DC-9s.

Ground equipment? What a frickin joke. I have seen and worked with TWA's ground equipment; all old antiquated junk. We nAAtives try to avoid using it. Only thing it is good for is sCRAP metal. But I was told that TWA was in such bad shape that TWA actually leased that garbage ?



You are so toxic with your responses which indicates how little you really know. Your venom shows through. All we get is hate. Learn to reply like a civil human being.

 

[eolesen]

He's right about the ground equipment... and the hangars... and the jetbridges...

 

[tWade]

AA is flying a great number of acquired TWA MD-83's which have more range than the older model AA MD-80's. Of course, AA refers to them all as S-80's. On DFW-SEA flights, the MD-83's from TWA don't have to be weight restricted and go out full unlike the older, AA aircraft that frequently can't even carry a full load DFW to the west coast. This is worth some value.

I still don't understand the antipathy of some AA people toward the TWA folks. The TWA folks had made huge sacrifices to keep TWA going during a lot of adversity. There was obviously something of value there, or AA wouldn't have acquired TWA. The use of STL as a secondary hub didn't happen due to 9/11, but AA eliminated a competitor in NY, SJU, and also was able to raise ticket prices with less competition in the midwest. In most other acquistitions, the acquired party has gotten some consideration for what it brings to the table, i.e., planes, gates, slots, contracts (such as Apple vacations, sports charters). Some sort of slotting would have been fair. If UA decides to buy AA, I am sure that AA'ers will prefer some slotting over a pure staple job.

 

[MCI transplant]

Hangars? 3. The one in STL is old and is being torn down. I hear the one in LAX is old and going to be torn down for expansion. MCI is about 50 years old and falling apart although the city is paying for it's renovation to keep AA there and people employed.

Gates? AA dumped a lot of TWA gates in both big cities and small cities. Small cities include but not limited to PBI, RSW, RNO, etc. The big cities are LAX (where TWA was in the other terminal), MIA (same reason as LAX), STL, where they abandoned one terminal all together, and JFKs terminal 5, where it was outdated (40 years old) and AA did not need it because they built their new state of the art terminal. I flew through STL once and it was a dump.

Aircraft? Virtually all of TWA's aircraft were leased. I believe the only ones that they owned were 30year old beat up DC-9s.

Ground equipment? What a frickin joke. I have seen and worked with TWA's ground equipment; all old antiquated junk. We nAAtives try to avoid using it. Only thing it is good for is scrap metal. But I was told that TWA was in such bad shape that TWA actually leased that garbage from Ichan.

<_< ------ My, my, my, you do get around these days aa! As usual, your wrong again! Last word out of STL, the hanger there was staying! At least for the time being. And the old TWA hanger at LAX, is also! As for the Hanger here at MCI, we're doing fine, thank you! The City is pouring Millions$$$ into the old girl, and she's really not looking too bad. The place is full of shinny AA metal! And let me point out one little fact! Just because your old, doesn't mean your bad! I believe TUL is older than MCI!!! And AA at LAX has hangers that are older than TWA's! And you've brought up some interesting points! first when AA acquired TWA, one of the first things they did was gut this place! We as exTWAers tried to point out the fact that they were throughing away Millions $$$ in, yes, old, but serviceable tooling, and parts! New parts they couldn't be bothered with, because they didn't have AA part numbers went into the scrap pile!!We asked if we could buy some of it, and told, no way! I've personally seen this! They closed down one of the best APU overhaul facilities in the country. And engine overhaul! ---------- If AA wants to through out "old TWA" money$$$! Or not take advantage of assets just because they were TWA, we can't be held responsible for that! Another interesting point you've brought up! The fact AA is not taking advantage of TWA's Mid-East routes! This could be a real money maker for them if flown! Where's all that oil $$$$ going? Like it or not, that's where the money is!! Not at Heathrow! I know for a fact AA considered it. But quickly walked away from them! If AA doesn't have the back bone to fly these routs themselves, you know, they could resurrect TWAllc, and fly them under those colors!!! --------Oh! another fact! TWA hasn't flown DC-9's for years before the aquisition!

 

[BigBangTheory]

If UA decides to buy AA

Will never happen!!

 

[twaokc]

Will never happen!!

NEVER SAY N E V E R

 

[JFK777]

When the economy grows again and if fuel ever goes costs south, ST.Louis will be an important Hub for AA since DFW & ORD will reach capacity soon.

 

[FWAAA]

Another interesting point you've brought up! The fact AA is not taking advantage of TWA's Mid-East routes! This could be a real money maker for them if flown! Where's all that oil $$$$ going? Like it or not, that's where the money is!! Not at Heathrow! I know for a fact AA considered it. But quickly walked away from them! If AA doesn't have the back bone to fly these routs themselves, you know, they could resurrect TWAllc, and fly them under those colors!!! --------Oh! another fact! TWA hasn't flown DC-9's for years before the aquisition!

Whatchyou talkin' 'bout? TWA LLC flew 18 DC-9s until September 11, 2001:

http://www.shareholder.com/aa/EdgarDetail....2&SID=01-00

Middle East routes? In the wake of September 11? Seriously?

 

[LGA Fleet Service]

Though I am loathe to participate in this never ending debate about the TWA acquisition, I will say flying a big shiny airplane with a red white and blue stripe and the word 'American' writ large on the fuselage into that particular part of the world isn't too smart of an idea.

You know what we should be flying to CAI, RUH and JED?

The Buff

The Bone