Could US Airways Take Over American?

[WorldTraveler]

On a more serious note. Everyone says that AA would need to go into BK for US to have a chance at acquiring the airline. Not being even a novice when it comes to how aircraft are financed, Assuming that AA gets these 250 planes financed wouldn't that make it harder for another airline to pluck AA out of BK and make it more likely that AA would emerge stand alone with reduced wages and debt?

Because aircraft are financed based on INDUSTRY market values, there is no reason to think that ANY airline could not assume responsibility for that debt.
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If anything, it is likely that AA will get very attractive financing terms from Airbus - that is how they have gotten their foot in the door with every US airline- which could make AA's orders worth more than if they came from an established Airbus operator, like US.
Given that reality, AA's value as a takeover target could go UP....
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but the reality is that AA will not file or stay out of BK based on aircraft... it is their ability to continue to survive under their current business model - which right now has the highest costs among network carriers - that will mean the difference between BK or not for AMR.

 

[SparrowHawk]

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If anything, it is likely that AA will get very attractive financing terms from Airbus - that is how they have gotten their foot in the door with every US airline- which could make AA's orders worth more than if they came from an established Airbus operator, like US.
Given that reality, AA's value as a takeover target could go UP....

Do you think AA is seriously considering Airbus as a supplier? Or are they there to leverage Boeing?

So if I understand the rest of your comment then Boeing, Airbus and the big leasing companies would be willing to finance the purchase because even if AA went tits up or merged they could easily find homes for their delivery slots and/or existing planes?

 

[WorldTraveler]

Do you think AA is seriously considering Airbus as a supplier? Or are they there to leverage Boeing?

So if I understand the rest of your comment then Boeing, Airbus and the big leasing companies would be willing to finance the purchase because even if AA went tits up or merged they could easily find homes for their delivery slots and/or existing planes?

I think AA is ready to purchase Airbus products if that is what makes the most sense financially for them to do.
Whle I think there is truth to what Boeing says that the 737NG is not as cost uncompetitive compared the 320neo as Airbus says, I suspect that financing and other aspects of the contract such as Airbus' willingness to get rid of AA's M80s and old 300s are at play - and perhaps are factors that Boeing cannot or will not match.
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Even if AA buys from Airbus, I don't think it is anywhere near the end of the road for AA and Boeing.... I just think the notion that airlines will buy from one supplier and that they can't have 2 aircraft types of the same class because doing so is inefficient do not reflect current realities. When you fly 400 or more narrowbody aircraft, splitting the fleet between two manufacturers hardly produces major cost burdens.
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AA is not going to quit doing business even if they did go in BK and there is no certainty that they will... whoever acquired AA - if anyone did at all - could assume the leases just as well as the current AMR does.
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Bottom line is that fleet will not be a major factor in whether AMR stays out of BK - as long as other carriers have roughly comparable fleet/oeprating costs nor will whether AA has new planes make it any more difficult for someone to acquire them - should that opportunity arise.

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It still remains that if AMR ends up in BK, their abillity to defend themselves from takeovers goes down significantly.
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Given the amount of cash they have on hand, it is likely they can continue to hold on for a while.
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Which means that US needs to have its own business plan based on its ability to run its business.

 

[Phoenix]

This is not old news . This is a whole nother wave of merger speculation that is very possible.

Sure. The scenario is different now. It was a joke. Really, the AA rumor occurred in 2000, and the UAL rumor has been even more credible three times now. Maybe the West will offer to drop their lawsuits against DOH if we agree to staple AA below all USAPA pilots and allow them to shout "We saved you. You're lucky to have a job." Just saying, "that is very possible." Gee, thoughts of mergers bring out the best in everyone.

 

[Dont call me Shirley]

You Have absolutely no idea of what your talking about ...

Your: possesive form of you
You're: contraction of you are


Tomorrow: There/Their/They're

I'd give Its/It's a shot but know it's a lost cause.

 

[autofixer]

Your: possesive form of you
You're: contraction of you are


Tomorrow: There/Their/They're

I'd give Its/It's a shot but know it's a lost cause.





You really should not throw rocks in your glass house.

Possessive is the correct spelling.
grammar.ccc.commnet.edu/grammar/possessives.htm

 

[signals]

Is it merger season already? :huh:

Another chance for US to cry Merger WOLF!

Spin the wheel

 

[Be Careful What You Wish For.]

You really should not throw rocks in your glass house.

Possessive is the correct spelling.
grammar.ccc.commnet.edu/grammar/possessives.htm
[/quote]

Are you sure about that?

...what your talking about...

"...what you are talking about..."?

It's not "his" talking - it's another person's talking.

 

[nycbusdriver]

You really should not throw rocks in your glass house.

Possessive is the correct spelling.
grammar.ccc.commnet.edu/grammar/possessives.htm


Are you sure about that?



"...what you are talking about..."?

It's not "his" talking - it's another person's talking.

Although both use the apostrophe, there is little similarity between the possessive and the contraction, grammatically speaking. "Its" is a possessive and the lone exception to the use of the apostrophe. "It's" is a contraction and always means "It is."

That's a good example of why English drives non-English speakers nuts when trying to learn it. There are probably more exceptions than rules when it comes to the English language. I'm glad I learned it as my primary language; I doubt I would have the patience to learn it as a foreign language.

 

[WorldTraveler]

In order to answer the question as to whether a merger for US would do any good, you have to understand the difference in the way each of the large US airlines have built their domestic networks and where their strength now lies.
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DL, NW, US, and WN were historically stronger in small and medium size cities than they were in the largest hub cities and it was from their strength in the smaller cities that they built their presence in the largest markets.
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CO (since their restructuring) and UA have always been larger in major markets while being much weaker in the smaller cities…. CO has had very little presence in small and outside sized cities.
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AA historically was stronger in larger cities but had a good presence in medium sized cities – more of a hybrid of the two networks.
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In the past decade as WN has changed its strategy from being strong in airports where it could be the dominant carrier to developing a large presence in large airports, prices on many of the markets between medium and large markets have fallen.
With its high cost structure, AA has shifted its strategy from a hybrid with a decent presence in small and medium sized markets to having a strategy more like CO and UA. .
The UA/CO merger did little to improve UA’s presence in medium and small cities and basically only served to concentrate UA’s position in the largest markets – and UA lost a lot of domestic market share over the past decade esp. to WN.
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DL’s BK allowed it to regain its position as the largest domestic network airline outside of the major markets…. But DL also has focused a great deal of attention on picking up market share in major markets such as NYC, BOS, and WAS. By the time of the UA/CO merger, DL had become the largest airline in NYC based on passenger boardings, a few percent behind CO in revenue; the largest network airline in BOS, and the 2nd largest airline at DCA behind US…. Most of those gains were possible because of NW’s domestic size but DL has also maintained a presence in key markets in the NE, even apart from the NW merger.
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It is no surprise that the 3 largest airlines outside of the largest big NE and California markets plus CHI are DL, US, and WN…. Because all three are lower cost operators than AA and UA.
The merger of DL and NW was a merger of two airlines that built their int’l networks and their presence in larger cities based on their presence in small and medium sized markets while the UA/CO merger was largely the result of two airlines that placed their focus on the largest markets in the US, to the exclusion of many small and medium sized markets.
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Going into this fall and the capacity cuts that have been announced, it is noteworthy that UA/CO has significantly cut domestic capacity and based on schedules that have been loaded, DL will become the US’ largest domestic carrier, including connection carriers followed by WN/FL and then UA/CO. DL’s domestic capacity growth is being driven – as it has in recent months – by upgauging of DCI flights and by additions of seats to the mainline domestic fleet.
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US’ domestic capacity is largely unchanged – indicating that US’ mgmt’s strategy or rightsizing the domestic network has largely been completed.
When the DL/US slot swap goes through, it will likely result in more seats for both carriers as they more efficiently use the slots they gain vs. the ones they currently hold.
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While DL and WN have both aggressively been growing in larger markets, they have not given anything up in small and medium sized markets, which is why both have seen their overall domestic market share and revenue go up. AA and UA’s domestic market share have gone down as it has concentrated its domestic presence in largely more competitive major markets YET because significant shares of the market in cities like NYC, LAX, WAS etc are from small and medium sized cities in which other carriers are now larger, AA and UA have lost market share even in their largest markets….and that trend will likely continue as DL and WN both attempt to build their presence in the largest markets – based on their presence in the small and medium sized markets. US’ market share has stabilized but it has a decent and stable presence in its own small and medium markets, even if most are largely shared with DL.
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Thus, as long as AA and UA continue to lose their presence in small and medium sized markets, a US merger with either would only result in a short term improvement in US’ strategic situation because US’ network is undersized in small markets based on the size of AA and UA’s network in larger cities and US’ network is geographically concentrated on the east coast.
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While a lot of people criticize US mgmt for a lot of things, they do understand the network aspects of the industry and are doing the best job they can with the network they have. US wasn’t big enough to hold its own in larger markets like NYC and BOS but US mgmt does recognize their future strength will come from concentrating in the major markets where they can defend themselves – like PHL, DCA, and CLT – while holding onto their position in small and medium sized markets, which they are doing fairly well.
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It is possible that an AA BK and the lower cost that could come with it could provide US with a chance to buy AMR and gain a better shot at some of the key East Coast markets but given how aggressively DL and WN have expanded on the east coast, there is no assurance that US could achieve their goal.
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There likely wouldn’t be near as much gained from a US merger with either AA or UA but it could distract US from doing what it has done relatively well which is maintain a solid #2 presence on the East Coast – which has seen a lot of low fare carrier growth and that is not likely to change.
US’ best strategic path is to maintain what they are doing and become as global as they can from their current CLT and PHL hubs as well as to grow their other focus cities/hubs such as DCA as large as they can.

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US does not need a merger as much as some people think. They need to do what they currently do as good as they possibly can.

 

[Dont call me Shirley]

[/quote]
Possessive is the correct spelling.
grammar.ccc.commnet.edu/grammar/possessives.htm[/b]
[/quote]


The sentence, without contractions, is "what you are talking about". You're is the contraction, "your' would be incorrect.

Although both use the apostrophe, there is little similarity between the possessive and the contraction, grammatically speaking. "Its" is a possessive and the lone exception to the use of the apostrophe. "It's" is a contraction and always means "It is."

That's a good example of why English drives non-English speakers nuts when trying to learn it. There are probably more exceptions than rules when it comes to the English language. I'm glad I learned it as my primary language; I doubt I would have the patience to learn it as a foreign language.

That, my friend, is why the its/it's battle is a lost cause. Actually, I think that many, if not most, non native speakers of English show proper grammar usage, especially if they learned English in school as kids. Many Dutch, Germans, and Scandinavians speak English better, albeit with an accent, than a great many Americans.

We could go and discuss the studies that show Dutch teens have a better command of American geography than American teens, but that would take us way off track.

We now return to previous somewhat pointless discussion. (They're / There / Their having it over at anet, too).

 

[WorldTraveler]

indeed they are... but they aren't having as much fun via a grammar lesson, though...
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The same thing applies here as it does to the thread about why the US forum is the most popular and that is because AA and US both have the greatest instability about their future while other carriers, esp. DL and UA, have largely defined their strategic future....
the fact that a bunch of people on a.net know where hub cities are doesn't begin to discuss whether a merger would ever work, let alone is even necessary.
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The best post on a.net was not much different from what I said here... except it was AA focused... both airlines need to focus on doing what they each need to do to ensure their success.... both have enough strrengths that they don't NEED a merger - as long as they can stop the shrinking of their own networks which has happened over the past decade - and specifically five years.
Both need to be able to defend what they have, something neither has done terribly well. If you haven't something well as a "single" it is not likely you will do it well when "married."
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competition has shifted back and forth between the east and west coasts - and it is now squarely focused on the east coast largely because of the FL/WN merger.
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US can have a decent strategic future if it does what it does well....

it might help if it were not in Star where it is a decent step child that is only wanted for its SE presence... but given that oneworld has its own NE presence to defend, it might not be a lot brigher there.... further, the bulk of US' European network is built around Star hubs and that cannot be duplicated in oneworld's hubs, esp. LHR.