Delta reports record profit for Q4

[topDawg]

WT,

Still opining about DL "the invincible" aye ?

Your OWN words are Correct. DL NEEDS more LHR, more SA (especially from MIA) and more west coast.
(guess that PDX brilliant move didn't work out to expectations) ! So, lets see. Which airline has a Monopoly on your "4 things wish list". Is it US ? Ah NO. Is it WN ? No, guess again. Frontier ?
Nope. (I know) JET BLUE ! "BLAAAAAAAAAAAAAA" (thats the sound of the ungodly BUZZER going off, to inform you that the Time IS UP)

It's A A ! (Who is presently going through the "get SCRUBBED real Clean $$$$ BK car wash" ) !

Yes (thanx to the Famous RED TAILS), DL is looking pretty good. ($$$$$) You'll get no argument from me on DL's Current situation. But I really have to laugh about all the "Buy AA in BK talk", or even thier demise. All it would take is (hypothetically) Warren Buffett to go buy B6 and hand it over to AA, (WT, don't forget AA = BA, JL, and Qantas) then go and pick up as many 777-200LR's that DL has now, then PRESTO, DL is relegated back to the LESS than # 1 spot.

Moral of the story.
BEWARE the wounded Lion, who's getting "born again" in BK court !!!!!!!!!!!!

Ok, slow down there dude.
1) DAL and NWA were making money pre-merger. All the merger did was make us both stronger, so its as much thanks to the red tails as blue.
2) While MIA- Brazil is a market Delta wants, badly, Brazil as a hole is growing, so if they can't get to MIA they can keep trucking from ATL.
3) Just because AA buys 10 77Ls doesn't mean they have places to put them and make money. Oh, and congats on the JL/BA/QF thing, remind me how that working out again? who has more flights to OZ? DL or AA? How about Europe DL or AA? Asia? DL or AA? Japan? DL or AA? If you think QF/JL/BA is helping your a little crazy. Its a way to outsource.....as an employee you shouldn't be happy.

and oh FWIW Dleta has proven that they can get LHR, and are willing to pay for LHR slots. As nice as it would be to get the 20 slots AA has via a merger, Delta can build a strong LHR network via AF/KL/AZ and the open Market.

 

[topDawg]

I agree with the priority of DL's strategic goals.... I think it is less than a one in three chance that DL will succeed with AA but acquiring AS should be a fairly easy transaction - and AA has to factor a DL acquisition of AS into AA's reorg plan.
.I don't give it one out of three. I think if Delta is willing to give up a good bit of NYC slots, and lose the JV with BA/AF/KL and likely JL/Virgin and QF then it would get the green light. I don't see a EU green light with the JVs though. If they aren't willing to do that then, welcome AS.
I think DL would prefer not to duplicate A and B models doing the same thing - ie the 320 and 737 families; you do it as part of the merger, but you have to ask what the value of doing it on a long term basis is, other than in AA's case which is to acquire alot of airplanes quickly in order to drive down price.
.which is not something Anderson likes to do. I think if they can find a way to dump the S80s with one family, which they could do with the DL/AA 737NG options along with the top end of both 757 fleets then they would cancel the A32S/A32SNEO and 737MAX. Anderson isn't into buying planes just to do it. A owned 10 year old 57 is just as good as leased new 321.
As for the Trent overhauls, unless DL acquires AA or buys dozens of used 777s, the case is pretty weak for even wanting to gain the competency to overhaul a relatively few number of engines, even if DL could be certified as an RR approved station.
.We could be, We can do anything we want really. Want to? not unless we buy AA. V2500 is the only one that has a chance right now. GE90 could also be interesting if we add more LRs and or 300ERs. With only GE and AF having shops that do them now.
There are many other competencies that could be developed and used to make money, including the ones you note that DL already has such as more airframe work.
.Airframe is likely the starting point, but they want that in GDL. Got to keep out Cost in line. :angry: I wonder if after that flops if they will suck it up and bring our work back of if they will build a hangar in like China. Around and around we go.
I don't think you can underestimate how much DL is driving to have some of the best finances in the industry - a key factor that will be considered during future stages of consolidation.
Let's not forget that the value of AF-KL has sunk dramatically along with other European carriers.... while there may be little strategic value gained above the current JV, don't rule out that DL couldn't use its shekels to go shopping elsewhere in the world.
Yes but what your missing here is Delta will have to add a good bit of TATL capacity back into the market once we get past 2013 due to the agreement with DALPA. Those asses, wanting to fly flights in house and such.

 

[tom barry]

Ok, slow down there dude.
1) DAL and NWA were making money pre-merger. All the merger did was make us both stronger, so its as much thanks to the red tails as blue.
2) While MIA- Brazil is a market Delta wants, badly, Brazil as a hole is growing, so if they can't get to MIA they can keep trucking from ATL.
3) Just because AA buys 10 77Ls doesn't mean they have places to put them and make money. Oh, and congats on the JL/BA/QF thing, remind me how that working out again? who has more flights to OZ? DL or AA? How about Europe DL or AA? Asia? DL or AA? Japan? DL or AA? If you think QF/JL/BA is helping your a little crazy. Its a way to outsource.....as an employee you shouldn't be happy.

and oh FWIW Dleta has proven that they can get LHR, and are willing to pay for LHR slots. As nice as it would be to get the 20 slots AA has via a merger, Delta can build a strong LHR network via AF/KL/AZ and the open Market.

Well a few things "back at ya" !

DL Now has , an Enormous Overhead, as Fuel prices are rocketing skyward !

DL is light years away from Fleet commonality, (again the fuel thing)

Should DL "get" those LHR routes that you speak of, I doubt they will be at oppertune times.
Beside, whats gonna make the loyal JFK/LHR folks leave AA for DL ?

I've said MANY times, that DL can fly NS from NY to any paved runway in Europe. Who cares ?
Are you going to tell me that that JFK/Bucharest trip is a Big Money maker ? Dl DID that lil' trick so they could tout themselves as having the most NS's from NYC. They may have been fooling a lot of folks, but I wasn't one of them. (Remember the UAL claim to fame that they were the ONLY airline that flew from Every state in the US ?) (Including Wilminton Delaware, down the street from PHL)

I still believe AA will do something with B6 (think JFK) ! I believe AA is still holding numerous authorities from JFK to everywhere in Europe via the TWA buy out.
Let me know when DL come marching back into DFW, If EVER , AND if they Ever try to set up shop in MIA to SA ! (Note All those carribean/Latin folks live in MIA, not ATL.

 

[WorldTraveler]

Good to see the conversation developing about DL’s future, esp. with respect to AA and a potential DL bid during AA’s BK.
.
First, I agree that the assets that AA has cannot be underestimated and there is no way that DL could duplicate at LHR or in Latin America or at DFW or ORD w/o having what AA has. Even if DL cannot obtain any of AA’s NYC assets other than the LHR slots, AA is still a very valuable franchise.
DL will likely make the decision within the next 6 months if they will attempt to make a bid for AA depending on how AA’s C11 case progresses, but if DL doesn’t bid on AA, it is almost certain that DL will begin the process of starting its own MIA-Latin America service. The equity positions in AeroMexico and Gol and the partnership with Aerolineas Arg… as week as it may be… still provide DL with the partnerships necessary to launch a small scale hub in MIA – and it only needs to be large enough to obtain the corporate business and provide the overall network advantage of being able to serve all major market regions from all of the major gateways. MIA has long been an enigma in that AA has been the only longhaul US carrier for years; DL’s success at starting MIA-LHR up against AA-BA had to be a trial balloon to see if DL really could compete not only against AA but also against an AA partner on a key hub route. So far, G3 has no intentions of flying long haul international but does have the ability to pump a lot of feed onto DL flights – which it does. AR’s international service is weak enough that DL would probably be the carrier of preference for most passengers in that partnership – all they need to do is distribute traffic in S. America. MEX is strategically very important as a hub – and for now, DL has the only major partnership between a US and Mexican carrier. Throw in markets like Colombia, Costa Rica, Guatemala, and Peru where DL has a decent position via ATL and then factor in that DL has so many US hubs that they can feed anything in MIA (including now both LGA and JFK to MIA) and it really is possible to build a DL hub in MIA.
As for London, it is doubtful there are enough slots for DL to meaningfully compete with either AA or UA… but DL is doing very well in LHR w/ what it does have. It needs several more key slots (an earlier ATL, LAX, and perhaps one more JFK minimum) but those slots could be bought ; right now all of DL’s slots are either from AF-KL or obtained from AA/BA as part of their joint venture (if DL acquired AA those slots would be given up and it would validate even further how small DL’s position at LHR is relative to other carriers). Also, Virgin Atlantic still hasn’t decided what it will do other than invest in its product and realizing that 4 holers aren’t necessary over the Atlantic and do provide a huge fuel penalty. If VS doesn’t sell equity or develop a strong partnership with DL, then it argues all the more that DL needs to buy its way into LHR – unless the size it has is sufficient.
Internationally, LHR and Latin America still demonstrate that AA – for far longer than a decade – has not been able to compete very well in markets that have Open Skies and are in areas where it has not been naturally strong. AA’s presence in continental Europe has long been weak and the number of markets where they have failed is long. Indeed, DL has not done much with Bucharest for years – but it still has a partner there and in PRG, even though many eastern European markets just aren’t large enough to work. DL left BUD when AA and MA decided to start service together and now AA’s service and MA are gone. AA tried unsuccessfully to fly to Russia and is now dropping India. AA has a token presence in Germany at best - and AB won’t help AA develop its long-haul presence because AB’s model is so different from AA’s.
After operating JFK-NRT for years without DL, AA quickly fell to #3 in the NYC-NRT market after DL restarted service using the PMNW hub despite AA having a partnership with JL… and is now ending the market. UA competes directly against every transpac route AA flies except for DFW-NRT and UA gets a significant revenue premium on every one of those routes. It is highly unlikely that AA will succeed in growing its presence to a significant degree in Asia against DL and UA and their partners who are much stronger. AA is also being trumped by UA out of ORD to Europe in addition to the difficulties they have in growing their international presence at JFK to Europe against DL. Once again, AA is not strong in JFK markets other than to their partner hubs.
Do you realize, Tom, that DL has gained a JFK-LHR local market share comparable to what AA has on its own metal at fares comparable to what AA has? DL’s 3 flights/day are enough to pick up the best local revenue and the same trend holds true on DL’s BOS and MIA to LHR… AA continues to pump a lot of connections onto its flights to LHR and have a presence in other markets that DL cannot gain…. AA also connects a lot of traffic beyond LHR or as stopovers that DL can currently route through continental Europe hubs.
And, Tom, DL still is the largest local market carrier in the NYC-Europe market. CO carriers more passengers in total from NYC to Europe but carries alot more connections. AF-KL combined only push DL's lead further forward.
Domestically, you cannot underestimate how significant AA’s loss of market share in NYC has been and will continue to be. AA has long had an advantage in corporate contracts because of its balanced presence at NYC, ORD, and LAX. UA now can put a strong position at all 3 cities on the table while DL has taken away any advantage any other carrier has at NYC by flying from LGA and JFK to every domestic major and most of the largest international markets. The fact that CO’s LGA-IAH market is larger than EWR-IAH highlights that LGA and JFK, not EWR, are the preferred airports for NYC and that is impossible for UA to have an advantage at EWR if the same hub exists at LGA and JFK.
UA has an advantage with ORD and a larger presence at LAX – part of why DL has to act. AS would give DL the size in LAX and they could add flights in a few more key ORD markets but AS doesn’t solve DL’s need for more presence in ethnic (not tourist) Latin America and at LHR. The bigger factor with AS is for AA to consider how its ability to compete will look if DL buys AS instead of AA. AA will be weakened to a #3 position in LAX which is where it is NYC and in most non-AA hub cities now – which is part of why corporate revenues are moving to DL and UA – and AA’s RASM growth is trailing the industry.
One can argue as long as you want about how strong AA will be coming out of BK – but their 8 years of waiting for labor peace and hoping someone else would fail have not worked – and AA will not be able to regain the competitive advantage it has lost… they will increasingly be relegated to a 2nd tier carrier with respect to AA just as US is. Add in the fall of the Wright Amendment and it will be very hard to argue that AA can increase its revenues and that AA can compete on the same level of revenue as other carriers. And low fare carriers continue to expand into AA markets. AA employees and creditors are very unlikely to believe that a 2nd tier, trailing revenue growth position with increased competition across AA’s network is in the best interest of the company or their futures.
As for fleet, arguments about DL’s mixed fleet seem meaningless in light of AA’s decision to buy duplicate models from both A and B – just as they did with the 763 and A300. If DL had to make a duplicate new generation fleet work because of not being able to get out of contracts, they would, but I agree they will make every effort to cancel one order or another.
It is also very true that DL simply does not believe the economics of buying new generation aircraft outweigh the fuel savings they would gain over current generation models. Far too few people understand how expensive airplanes are and how much debt it takes to service the debt necessary to buy those aircraft. Given that as the industry contracts, the ability to price the product in order to cover costs increases, it becomes less and less necessary to buy a bunch of new aircraft as a basis for being able to cover costs. DL has no intentions now to get rid of the M80 because it flies 2-3 hour flights on the east coast where DL has strong pricing power and where it can easily cover the increased fuel costs. In addition to the M90 which has fuel efficiency comparable to if not better than current aircraft at a fraction of the ownership cost, it is still very possible that DL could end up with FL’s 717 fleet which are very well suited for point to point markets like LGA, BOS, and perhaps eventually ORD or LAX – and again at a fraction of the cost of 319s or 73Gs.
But once again, the notion that AA will have a cost advantage relative to its peers because of its new fleet has to be viewed in light of the reality that other carriers are replacing their older aircraft as well and are not spending tens of billions of dollars to do so…. Part of AA’s expensive refleeting reflects its delay in starting the replacement process sooner – and some of it quite frankly is not necessary if AA combines with another carrier.
When you also consider that DL gained about a 15 cent per gallon fuel hedge advantage over its peers in the most recent quarter (about 5%) – which they apparently repeated in January – then the advantage gained from a new fleet is even smaller. From AA’s first quarterly report in BK (Covering 4Q2011), AA has about 20% of its fuel hedged, down from 35% a year earlier. The new fleet is still a year or more away… if AA and US each have a disadvantage to the industry in fuel costs, then it is even harder to argue how they can together or separately compete against carriers who have either newer fleets now or better fuel hedges.
Combining AA with US doesn’t solve any of the problems. Despite having some of the lowest paid employees in the industry, US still has higher costs. US can’t generate revenue premiums from its own network and yet expects to be able to gain revenue premiums from a carrier that will increasingly find it difficult to grow revenues on the scale of DL and UA. US doesn’t have anywhere close to the financial strength of even niche carriers like AS or B6, let alone DL or UA with whom it might have to compete with in bids for AA.
Even if US succeeds at acquiring AA, the integration will be long and painful and competitors will continue to take every opportunity to weaken the two combined carriers – who somehow are supposed to become much stronger overnight even though both carriers are much weaker now than their competitors.
Without AA, US’ future is increasingly uncertain as competitors continue to grow their presence in key US markets.
B6 could help AA grow its presence at JFK to a large size – but they could run into the same ATI issues that other carriers would have. While AA plus B6 at LGA and DCA wouldn’t be a problem, AA plus B6 at JFK would likely still require slot divestitures. Plus, JFK is not near as well positioned as LGA or EWR for US business markets from NYC and there simply aren’t enough slots between AA and B6 to compete effectively at LGA with DL or with UA at EWR.
Like US, a B6 or even AS merger would merely incrementally help AA while leaving them far short strategically in a number of areas. No solution increases AA’s presence in Asia. While US has a larger share in continental Europe than AA, it is largely tied to Star… if US moved to oneworld, it is doubtful they could retain their position in continental Europe.
AA waited while the DL and UA consolidated and there are no solutions that will allow AA to effectively compete long term against DL and UA which are both larger as individual airlines but also have larger alliances.
And I agree that DL would probably be willing to sacrifice its ATI relationships in order to gain AA… knowing that US would likely buy US and be forced to do the same thing. Alliances and joint ventures help move revenue but they cannot serve as valid substitutes to a much larger market position operated by one carrier.
The implications for maintenance are significant no matter what happens with AA, US, or with further consolidation in the industry. DL’s fleet likely will become younger even if it is also more complex with the addition of new fleet types. A flood of new AA outsourcing work could help DL gain more business for Tech Ops. Even if AA becomes an MRO force, it will take years for AA to stabilize and ramp up. Of course if DL gains new fleet types and perhaps even maintenance capabilities/capacity elsewhere in the industry, then DL will increase its ability to grow its MRO business. It is a lot harder to make the case for AA to retain its own maintenance capabilities if it is investing in a much newer fleet. OTOH, DL is gaining one dollar in revenue from insourcing for every 4 dollars it spends to maintain its own fleet… thus, DL’s older fleet increases its ability to make money from others because DL has the capabilities that others need. DL has said that Tech Ops generates 10% plus margins which means that DL directly is offsetting its own maintenance costs by at least 3-5%.
So, dawg, the industry is still in transition. DL’s position in the industry is not fully defined yet. The next few years will likely define the point of stability the US industry has been seeking for almost 35 years since deregulation. DL is making decisions now to position itself to benefit from the next round of consolidation – and that could have implications for DL employee compensation and benefits, including the fact that DL will find it increasingly difficult to not include WN in its pay and benefit comparisons given that DL, UA, and WN will be3 of the dominant airlines in the industry. Whether there are others in addition to those 3 remains to be seen.

 

[topDawg]

Well a few things "back at ya" !

DL Now has , an Enormous Overhead, as Fuel prices are rocketing skyward !

DL is light years away from Fleet commonality, (again the fuel thing)

Should DL "get" those LHR routes that you speak of, I doubt they will be at oppertune times.
Beside, whats gonna make the loyal JFK/LHR folks leave AA for DL ?

I've said MANY times, that DL can fly NS from NY to any paved runway in Europe. Who cares ?
Are you going to tell me that that JFK/Bucharest trip is a Big Money maker ? Dl DID that lil' trick so they could tout themselves as having the most NS's from NYC. They may have been fooling a lot of folks, but I wasn't one of them. (Remember the UAL claim to fame that they were the ONLY airline that flew from Every state in the US ?) (Including Wilminton Delaware, down the street from PHL)

I still believe AA will do something with B6 (think JFK) ! I believe AA is still holding numerous authorities from JFK to everywhere in Europe via the TWA buy out.
Let me know when DL come marching back into DFW, If EVER , AND if they Ever try to set up shop in MIA to SA ! (Note All those carribean/Latin folks live in MIA, not ATL.

Delta's has the same fuel problems as AA now, and a post BK AA. Chap. 11 doesn't mean you get to pay less for fuel.

and I'm confused, what will make AA's fleet of
737/757/767/777/320/M80 any more "common" than the Delta fleet of 737/757/767/777/320/330/M80/M90?

AF/KL are sitting on good LHR slots, some of which are ATR-72 flights to CDG. What will make flyer switch? umm How about 200 flights from JFK, 250 flights from LGA? How about the 2nd largest airline in New York? Me thinks you know very, very little about Delta's NYC network. As for every runway in Europe, and who cares? um I'd guess the largest O&d market to Europe that is NYC?

And if AA does something with B6, 1) they will have to give up NYC slots, just like Delta did with US and UA did with CO. The total combined JFK slots of B6/AA would be close to the same number of Delta, but Delta will still have 250 flights from LGA. AA+B6 would still be number three in New York, behind UA and Delta.
As for the TWA route comment, this shows your stuck in the 50s. Google Open skies. (oh PS ever hear of this thing called Pan Am? Yeah, Delta got there Europe routes. So cool story on the TWA thing. )

and congrats on the DFW thing bro. We got a large, more powerful Atlanta with more routes to Europe and Latin America/South America. Let me know when AA gets a hub that is even close to the level of printing money that ATL is for Delta.

and Note, no NYC/WAS and BOS also have solid O/D numbers to SA. So is ATL Miami? no but ATL can be the gateway to the rest of the US other than Florida

 

[tom barry]

Before DL bought NW and AA was "number 1" ALL I ever heard from this DL board was "Bigger doesn't mean better" !!!!!!!!!!!!!!!!!!!!

Though it remains to be seen (post BK), AA can have just as many flights as DL from LGA or JFK, BOS, or any other place it has retreated from recently.
How do I know ? I LIVED it with AA in the very early 80's ! HEL*, I can remember when BOS whent down to " 11 " flights a day.
Then came Bob Crandall, and the rest was HISTORY ( $$$$) as DL sat helplessly by.

All I'm saying is that making gigantic statements....while your chief competitor is cashing in thier "Get out of Jail FREE card" $$$ is perhaps jumping the gun a bit brother.

AA has for years dealt with WN in Texas.
WAIT till WN/Air Tran get cranking out of HOT-Lanta !

As for DL "buying" AA, well you might want to consider the current administration, who is definitely enroute to 4 More Years, AND happens to have a special fondness for the O R D area !!

( I GUARANTEE You Overlooked THAT lil' Issue ) !!!!!!!! :unsure:

 

[WorldTraveler]

Tom,
Your faith in and commitment to AA’s ability to restructure is commendable – but your faith is based on some incorrect assumptions. Your ideas require an honest discussion which isn't done by some people who choose to vote down a post w/o comment.
You are right that size isn't the sole determinant of success... but the DL and UA mergers allowed them to stratgegically leap frog based AA - and there is nothing in AA's plans that are known - or can even be suggested by looking at the industry - that allows AA to overcome the very real strategic advantages those carriers have gained through their mergers - and which AA was unable to do because it was not in a position to engage in mergers and acquisitions for about 10 years. Even if AA could correct some of its strategic shortfalls w/ spending money (which will be hard to do given how much AA will be spending on new aircraft), there is nothing stopping other carriers from launching competing bids or spending their own money to achieve their own strategic objectives.
There is actually very little evidence of any network/legacy airline regaining market share after it has lost it to either another network/legacy airline or a low fare/low cost carrier. For AA to make a statement that it will regain market share, it needs to be able to credibly show how. Other carriers are not going to sit back and allow AA to regain its market position – and although AA will reduce its costs, the idea that it will have costs dramatically lower than current competitors just can’t be supported. There are very few examples of airlines gaining market share without having a cost advantage… and DL and UA esp. in NYC will have the advantage of much larger positions in addition to cost structures that aren’t going to be that much different.
The simple fact is that all 3 NYC airports are slot controlled – and there are no indications that will change. As such, AA’s ability to add flights is indeed limited. Yes, they could regain share in BOS or LAX, both markets that are still divided between network carriers – but the share AA would gain has to come from someone and I just don’t see who AA can reasonably pull share from. If you can build a logical case for where and how AA could regain market share, let me know. BTW, B6 is a separate company – AA cannot share revenues with B6 and therefore B6 might be happy to have AA codesharing on B6 flights to bring in extra revenue… but B6 is going to make its decisions based on what is best long term for B6. Also, B6’s business model really does not work well in longer haul, premium markets where the network carriers have done well. Therefore, it is not realistic to think that B6 will regain market share in the transcon markets that AA has lost….. Virgin America’s model which is more premium focused works better in longhaul and more business oriented markets.
AA and WN have not at all competed against each other in the D/FW metroplex at all. WN has been living in a small box out of Love Field and AA has enjoyed the fruits of WN’s limitations for years. You could argue that CO and WN have coexisted in Houston or even AA/UA and WN have coexisted in Chicago and use that as the basis for saying that AA and WN can coexist in the metroplex, but it is not at all accurate to say that AA and WN have competed on an equal basis in the D/FW area. WN will move a certain amount of share that AA carries to WN’s new long haul domestic flights when that is possible – that is just a fact. AA must be prepared to compete for that traffic at prices WN will establish and to increase the amount of flow traffic through DFW such that AA can continue to operate a much larger hub – which is the most proven method network carriers have used to counteract the growth of low fare carriers.
Further, in ATL, it is precisely DL’s size that has allowed it to prevent FL from growing to more than about 15% of the ATL market. IN the first full quarter in which FL operated as a wholly owned subsidiary of WN, FL’s average fares in ATL did grow and their share increased slightly…. But since then, WN has started to cancel markets and even as WN has brought its own planes in, it is removing more FL capacity than the combined FL/WN capacity it is adding.

AMR’s creditors will make a decision regarding AA’s future based on what returns the greatest return to those creditors -because it is for their interests that AA must now make decisions.
Likewise, DL and every other carrier that might be interested in AA will make its decisions about whether a merger is worth it based on the costs and benefits. AA continues to control a number of very valuable industry assets and those assets may be better used in someone else’s hands than in AA’s… and some carriers might well be able to make a solid case for how they can deliver what they say they promise.
It is also very clear that DL will address its own strategic needs and given that many of what DL needs strategically happens to be what AA has, the chance is quite likely that DL will make a move one way or the another – and AA has to factor that into its long-term calculations. Given that DL has a pretty strong track record of successfully growing its presence in markets where AA was once strong, AA and its creditors might decide they can make more money selling AA after being cleaned up to DL than if they have to face a stronger DL for years and years ahead.
I wish AA and its people well - but well wishes and hope will be secondary to financial considerations. I can assure you that there analyses being done by all kinds of people and those analyses will continue to be done not just while AA is in BK but even beyond AA’s emergence, if it is able to emerge as a standalone company.
Finally, history is full of examples of people who thought government would protect specific companies only to show that indeed governments in the US let free market forces run their course after all. For government to protect the interests of one company at the expense of free market forces, they are by definition shorting the interests of someone else that might actually better protect a community’s interests long-term.

 

[tom barry]

Well W T, here is a FACT that you Absolutely overlooked !

Since the new laws regarding acquired carriers (Think TWA and MO. Sen. Mc Caskill), AA's union employees would go with them to a (hypothetical) DL.
Seeing DL escaped a unionized below-the-wing ramp force(NW) by a mere 500 votes, What on earth would another election pairing ex NW and AA union employees produce ???
Hmmm ???

You KNOW the answer, and DEL-DUH will NOT roll the dice on that baby !

So AA will Not be seeing HOT-LANTA any day soon.
Sorry !

I'm not so sure JFK is slot controlled, plus try to remember all those TWA JFK authorities that AA has tucked away for a rainy day.

 

[WorldTraveler]

Tom,
there is no such thing as "stored" route authorities in the US. They must be continually used (at least every 90 days), a waiver must be granted by the DOT (which has been done on SEASONAL bases due to significant events such as economic downturns, earthquakes in Japan etc), or the DOT revokes the authority and reassigns it to another carrier - although carriers usually return the authority before it is revoked. Thus, AA has no route authorities acquired from TW that still has value or could be used exclusively by AA... Most markets in the world are Open Skies which means any US carrier can start service w/ no respect to limits on flights. If a market does not have Open Skies, one carrier can start service if other US carriers agree they will not contest a desire by one airline to start service; if one or more airline also desires to start a route to the same country as the first carrier, then a route case is started and the DOT decides based on how they perceive the best public benefits.
.
If DL were afraid of further unionization they would not have engaged in one merger and acquisition after another. If DL were to acquire AA or any of its assets (including people), then they would certainly make their pitch for a non-union working arrangement, the people would vote, and DL would move on regardless of the outcome.
.
Yes, JFK is slot controlled 24/7 but not all off-peak slots are currently being used.
.
It's a little premature to be worrying about AA's outcome or what DL might do. For now, don't doubt that DL could be a credible bidder for AA and could easily present a superior proposal - and for now DL will continue to strengthen its finances by running a profitable airline which is the best advantage it will have going into any bidding contest.
Whether DL decides acquiring AA is necessary for DL to meet its strategic objectives remains to be seen.... there are other ways DL could achieve what it wants, even if not to the same degree... but at less cost and less risk.
and of course other carriers have their strategic objectives and resources they can use to make things happen for them... how it all shakes out is anyone's guess right now. Being aware of the possibilities and the rationale behind each move is our best strategy on this board.

 

[tom barry]

WT,

I appreciate the update on the "acquisition issues" , and the clarification on the JFK "slots".

I'm going to hold on to my belief about the possible union issues. Given the acquisiton fever that was stronger a year or two back, NW was a Must do, for DL ! The possible AA thing is a lesser issue to DL, in my view. Trust me my friend, DL wants nothing to do with any more unions, other than DALPA !

 

[Kev3188]

If DL were to acquire AA or any of its assets (including people), then they would certainly make their pitch for a non-union working arrangement...

This is, quite possibly, the understatement of the year.

Trust me my friend, DL wants nothing to do with any more unions, other than DALPA !

... And PAFCA...

 

[WorldTraveler]

Since DL actually kicked off the last round of mergers (DL-NW, UA-CO, and WN-FL), I don't think DL HAD to do a deal... they gained the strategic advantage by being the first mover, esp. since all the analysts said that mergers couldn't work because of labor integration. It is rather telling that the DL-NW merger was almost as flawless in execution as DL-Western 25 years before when WA's unions were just dissolved at the time of the merger.
.
Given that AA's pilots are not represented by ALPA, there will be changes with nearly all AA employees in a merger.... the question comes down to whether the unions at AA if a merger is announced can negotiate pretty specific terms of integration ... and it is very possible a merger agreement might include a "pre-nuptial agreement" dividing how employee assets are agreed to....
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Yes, Kev, DL will make their push... the question really remains whether the 3 years or more post DL-NW merger would result in a different result than the first elections. It is also worth noting that several AA polls on this forum have shown a large number of people who would opt for no union among some work groups.
DL might actually have the best chance at staying non-union in an AA merger by specifically stating in the merger agreement the terms of integration, even if a vote had to occur at a later time.

 

[tom barry]

Some thing else to consider in our hypo AA/DL marriage WT, that being of the large number of about to be furloughed "union members" (I've put union members in quotation marks because these folks I'm about to mention, only know about unions from Websters Dictionary), are being furloughed from TULSA Oklahoma and the greater DFW area. These folks NEVER saw a YES vote(for the company) that they didn't like.
SO, you'd be left with the NY/BOS/ORD/LAX crowd not so willing to kowtow.
Now couple that with the Good people (former RED TAILS) then DL has a shiite storm on thier hands.
Sure DL is handing out raises, and a lil' profit sharing, but do not for a second think that the AA/NW guys don't see/realize the crap DL is pulling with DGS/Ready reserve etc.

 

[WorldTraveler]

Hi Tom,
it is speculative enough even talking about a potential DL-AA merger but there is even more speculation when trying to predict how a union vote might go.....
First, AA's workforce will change dramatically during the course of restructuring... and some of the most senior people might actually be the ones in the south who are displaced to the north in order to retain their jobs. Predicting how a vote might turn out based on who is left and how that region thinks about unions is risky at best.....
Second, even if a union is voted in, it still does not require DL to sign a new contract on the terms of any employee group.... having a union does not obligate DL to provide the terms in a new contract equal to or better than any existing contract.
.
The primary points that need to be remembered are that:
1. DL will make its decision on whether to acquire ANY additional industry assets or cmopanies based on the value that is in those assets at the time of the acquisition plus reasonable costs of transition. Conversely, AA or any other seller will make their decision based on the current value of the offer, even if the offer includes stock in the new DL which the NW transaction did.
2. DL is not averse to unions and will not pass on key industry assets just because there is the potential for unions to be involved. Either the deal makes sense or DL wouldn't do it in the first place.
3. It is far from certain how industry compensation will look including pay and benefits in the near future.... there is every reason to believe that less competition will result in greater ability to price the product and the end of perpetual money losing cycles. Remember that AA is the only major US airline that has lost money over the past 2 years even the economy is weaker than it should be and fuel prices continue to rise. OTOH, fewer carriers means the carriers have more strength relative to labor.... and given that AA employees will give up significant benefits as part of their restructuring, and management at whatever company that either acquires AA or AA mgmt itself if AA remains independent has the ability to set the tone of how recouping compensation losses will occur for AA employees. Or put more simply, AA employees will act so as to most quickly regain their pay and benefits, regardless of how that might happen.
.
We are still about a month away from the end of AMR's first period of exclusivity regarding a POR. If other parties decide to make a case for their ability to manage AMR better, those voices could start to be heard in the near future.... and the creditors could push for hearing of alternate proposals. The chances are still slim that AMR would lose its exclusivity in presenting a POR (plan of reorg) at this point early in the process.... but it will be harder and harder for AMR to not allow those cases to be heard if there really is greater value in a non-AA mgmt proposal.
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Until AA is forced to hear alternate proposals and until one of them is being given serious consideration, if we will hear that at all, it is conjecture at best as to how it all might play out.

 

[metopower]

Hi Tom,
it is speculative enough even talking about a potential DL-AA merger but there is even more speculation when trying to predict how a union vote might go.....
First, AA's workforce will change dramatically during the course of restructuring... and some of the most senior people might actually be the ones in the south who are displaced to the north in order to retain their jobs. Predicting how a vote might turn out based on who is left and how that region thinks about unions is risky at best.....
Second, even if a union is voted in, it still does not require DL to sign a new contract on the terms of any employee group.... having a union does not obligate DL to provide the terms in a new contract equal to or better than any existing contract.
.
The primary points that need to be remembered are that:
1. DL will make its decision on whether to acquire ANY additional industry assets or cmopanies based on the value that is in those assets at the time of the acquisition plus reasonable costs of transition. Conversely, AA or any other seller will make their decision based on the current value of the offer, even if the offer includes stock in the new DL which the NW transaction did.
2. DL is not averse to unions and will not pass on key industry assets just because there is the potential for unions to be involved. Either the deal makes sense or DL wouldn't do it in the first place.
3. It is far from certain how industry compensation will look including pay and benefits in the near future.... there is every reason to believe that less competition will result in greater ability to price the product and the end of perpetual money losing cycles. Remember that AA is the only major US airline that has lost money over the past 2 years even the economy is weaker than it should be and fuel prices continue to rise. OTOH, fewer carriers means the carriers have more strength relative to labor.... and given that AA employees will give up significant benefits as part of their restructuring, and management at whatever company that either acquires AA or AA mgmt itself if AA remains independent has the ability to set the tone of how recouping compensation losses will occur for AA employees. Or put more simply, AA employees will act so as to most quickly regain their pay and benefits, regardless of how that might happen.
.
We are still about a month away from the end of AMR's first period of exclusivity regarding a POR. If other parties decide to make a case for their ability to manage AMR better, those voices could start to be heard in the near future.... and the creditors could push for hearing of alternate proposals. The chances are still slim that AMR would lose its exclusivity in presenting a POR (plan of reorg) at this point early in the process.... but it will be harder and harder for AMR to not allow those cases to be heard if there really is greater value in a non-AA mgmt proposal.
.
Until AA is forced to hear alternate proposals and until one of them is being given serious consideration, if we will hear that at all, it is conjecture at best as to how it all might play out.

This topic of mergers is interesting but why not talk about something that is more realistic. Merger with DL is not in my opinion in the mix. More a purchase of assets. None of the jewels that AA has are for sale or could be wrestled away from AA or their creditors. That is where the value is. So ..here is my question.What would DL want that AA is willing to dispose ? And if they where to buy some part of AA would DL be required to take any employees when outside of a merger?