Is USAirways hostile takeover Of AA for Real?

[PITbull]

Bull, if you are so concerned about the employees of US, what is there long term outlook without this merger? Sure they will still hang around, and your AFA cronies will keep their dues flowing for a bit longer. Did you ever stop to consider that Parkers offer to AA labor will cover everyone if a merger is completed? At this point winning AA labor over is a must when it comes to the BK process, and he has been focused on that. Sure we would all love for him to strike sweet deals with our unions that will bring us a big fat raise, but as a standalone that ain't gonna happen.

So when is a profit a profit????? You guys had some good quarters.


You still write out the same as you always did...I do know you. You can't fool all the people all the time...

And what's your payout for this deal to go through this time????

The US Airways employees should never settle for another bankruptcy concessionary contract...they've been there, and have done that twice, and another time restructuring contracts in early summer 2002 OUTSIDE of BK. AA's labor contracts from either US Airways or AA will be yet another concessionary contract for US Airways employees.

I get it; I know you damn well get it, but you and your co-hort posters on here are trying to convince AA labor and US Airways...mergers are the only options, concessions are a good thing as long as your still employed.. and "don't worry...be happy" mantra yet again...

 

[wings396]

My Payout, now that's ouright funny....Your throwing darts into the dark on that guess, and you missed by a mile.
I can assure you that I'm not in any key postion in any way, shape, or form. Yes there have been some decent profits as of late, and this can better any labor groups positon at the table if the timing is right. I'm sure that you know very well how unpredictable this industy is. A nice profit for a few quarters, then the bottom can fall out due to a sharp rise in fuel costs and/or an economic downturn.
What this industry needs is long term stability, and consolidation is a key factor in that direction. By no means will it solve everything, but it will reduce over capacity, and give all airlines better pricing control. I know that you have stated that the consumers will suffer, but can you honestly say that they have been paying a fair price for air transportation for the last 20 years? You know very well that our wages have been subsidizing low fares for many years, and it's time for the passengers to pony-up if they want to fly, as the Walmart fare days are coming to a close.

 

[WorldTraveler]

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What this industry needs is long term stability, and consolidation is a key factor in that direction. By no means will it solve everything, but it will reduce over capacity, and give all airlines better pricing control. I know that you have stated that the consumers will suffer, but can you honestly say that they have been paying a fair price for air transportation for the last 20 years? You know very well that our wages have been subsidizing low fares for many years, and it's time for the passengers to pony-up if they want to fly, as the Walmart fare days are coming to a close.

Your statement about airline employees subsidizing low fares is absolutely correct.... but I have to press on your statement about consolidation resulting in better pricing control. It hasn't been addressed here or in Mr. Parker's glowing assessments of how well this merger will benefit everyone.... so I am going to throw it out one more time.

1. What is going to be cut - and more importantly which side are the job cuts going to come from?
You argue that consolidation is good for the industry - but tell me where US is going to consolidate. What hubs get cut and whose employees work at that hub?
Before you answer, perhaps you should look back at the history of consolidation in the past decade and look at what has been cut and who paid.
Since Horton says AA introduced consolidation in the past decade (9/11 period to present, plus or minus), the AA- TW merger resulted in dramatic cuts to former TW's capacity which we all know.
Look at HP/US - PIT, BWI, LAS - each side "gave" but alot of capacity came out. US' current system is stable - no real threats of further cuts.
DL/NW? CVG and MEM have shrunk alot of connecting capacity and DFW before the merger- BUT much of that capacity has been moved to NYC.
CO/UA - not much cutting so far at all. They have moved capacity back and forth between IAD and EWR and between IAH and DEN but so far, not much capacity has come out.
WN/FL - reduced duplicate BWI and MKE flying; has cut some ATL "spoke" legs and added more capacity to others to/from WN "hubs" or focus cities.

UA hasn't seen any revenue bump or increased pricing control since the merger - so far they are at the bottom of the barrel.
DL has had industry leading or close to it RASM growth (pricing control) for over a year and a half. The merger is paying dividends in terms of increased pricing.
WN's RASM is increasing again as they cut capacity.

But note that EACH carrier that is saying RASM growth as a result of a merger IS generating it ON THEIR OWN through their own cuts and restructuring.

Where will US' cuts come from and whose jobs are attached to them?

You do realize that AA/US combined will have about 20K more employees than DL or UA have and all three will be about the same size? DO you think that Wall Street and Doug Parker are going to look past a headcount bloat of 25% relative to its peers?

2. AA and US BOTH had hubs in the regions where they say they need to grow - and each has closed them. AA in BNA and RDU; US in PIT. UA closed its MIA-Latin America hub years ago and is only now regaining the #2 spot in Latin America - but still w/o MIA. You argue that the combined AA/US network will fill in all those holes that both lack, but don't consider that perhaps the combined carrier strength in those regions even w/ a merger still won't be great enough to overcome those cuts. US has walked away from NYC except for hub flying. If A can't retain enough size in NYC -and their relative position continues to shrink - how is US going to help? CO/UA does nothing to help them in the SE or MIA-Latin America and they still don't have the size necessary to compete w/ DL and AA in the SE.
You would like to think that competitively AA plus US is going to be 1 plus 1 is three.... but we have yet to see evidence that it won't be 1 plus 1 is 1.75 or 1.5.
Do you really think that DL, UA, and WN plus B6 are going to calmly sit on the sidelines and let the "last major merger" proceed smoothly. Don't you think they will be focusing enormous competitive energy on AA/US including US' and AA's existing hubs.... just as Spirit is doing at DFW, DL in NYC, and WN could EASILY do in CLT or PHX... and we are still a couple years ahead of the fall of the Wright Amendment?

3. US ALREADY prices its product well below other carriers in many markets, esp. in Europe and Latin America. You need only look at DOT fare data to see that US' fares to key markets like LHR are well below its other network peers, including DL which gained access at the same time US did. US also undercuts other carriers in most non-Star markets as well as to from Rio and other Latin America countries.
Perhaps the best thing that US could do is figure out how to compete w/ its peers in the same markets earning comparable levels of revenue. It is a whole 'nother discussion about why US can't do that now - but unless you can answer that question, you are either setting yourself for a whole lot of job cuts at US or a merger that will never deliver the benefits that you preach - and a few analysts want to believe will come from this potential merger.


These are real questions that have to be answered in order to determine how a proposed merger would work - and absent answers, hype about what a merger will benefit is nothing more than hot air - no matter how many other analysts think the merger is a good idea w/o figuring out to make it work.

 

[john john]

My Payout, now that's ouright funny....Your throwing darts into the dark on that guess, and you missed by a mile.
A nice profit for a few quarters, then the bottom can fall out due to a sharp rise in fuel costs and/or an economic downturn.
What this industry needs is long term stability, and consolidation is a key factor in that direction. By no means will it solve everything, but it will reduce over capacity, and give all airlines better pricing control. I know that you have stated that the consumers will suffer, but can you honestly say that they have been paying a fair price for air transportation for the last 20 years? You know very well that our wages have been subsidizing low fares for many years, and it's time for the passengers to pony-up if they want to fly, as the Walmart fare days are coming to a close.

So you(management) are predicting profits if AA and US merge and you predict fuel price will increase so manage the airline(s) and award the front line employees

 

[wings396]

I can't predict anything, and can only go by what has happened in the past. If things remain on track, yes a profit can be made by the combined airlines. And yes, fuel prices will most likely increase as they always have. Matching ticket prices in order to keep up with operating costs is a key factor to being profitable. The more solid and profitable the company is, makes it likely that the employees will be better off for the long term. I'm sure that you know very well what our chances have been to improve our contracts while the company has been losing money. If you don't agree, tell me where this is headed with US as-is......

 

[WorldTraveler]

I can't predict anything, and can only go by what has happened in the past. If things remain on track, yes a profit can be made by the combined airlines. And yes, fuel prices will most likely increase as they always have. Matching ticket prices in order to keep up with operating costs is a key factor to being profitable. The more solid and profitable the company is, makes it likely that the employees will be better off for the long term. I'm sure that you know very well what our chances have been to improve our contracts while the company has been losing money. If you don't agree, tell me where this is headed with US as-is......

but you can't explain where the surplus 20,000 employees will go or what routes and hubs will be cut? sounds to me like blind faith rather than a solid business plan.

BTW, Parker likes to say - and you like to repeat - that Parker learned his lesson w/ the DL merger about the importance of getting the employees onboard. As you recall, he blatantly came out and said there would be excess capacity in the combined DL-US system that needed to be rationalized and the employee cuts would come from the ranks of the DL employees, since they were non-union.
Of course we know merger laws were changed since then, but it still doesn't change the fact that Parker has not said where the cuts will come from - and they will come from somewhere or there will be no benefits from the merger.
The fact that Parker is happy to tell AA employees what he will do for them but won't tell his own employees anything comparable leaves them ALL more than a little suspect.
Getting employees onboard requires telling the WHOLE TRUTH, not just the part that tickles the ears of those who can make or break the possibility of a merger.

 

[wings396]

Jobs have been lost, and more will be lost either way. AA is going to furlough thousands as a standalone, and with US the numbers will be reduced somewhat. Looking down the road, I feel that chances of recall for those on furlough will be better with a larger company that can expand somewhat in the coming years. I don't know where you are coming up with your numbers from, but I believe that US currently employs 32k.
On another note, your remarks about HP/US and some of the hub closures/cutbacks are not accurate. BWI met it's fate long before HP came into the picture, and PIT was on the way out as well. Why is this an issue in this case when DL has followed the same route? Did Delta have thousands of excess employees that they had to rid themselves of following the merger with NW?

 

[WorldTraveler]

If the topic is excess hubs, then the discussion should include the entire decade of the 2000s and would include DL's DFW hub and US' PIT and BWI hubs, even if they were not part of the BK per se. We all know full well that hub closures don't happen overnight w/ a merger - but excess capacity WILL come out of the system, just as it has with each of the carriers up to this point - merger or not. Every network airline is smaller than they were in 2000 (prior to 9/11) or grew only through mergers.

It is fair to not necessarily include AA's BNA and RDU hub closures since they happened long before 9/11 - but they do reflect that AA's expansion post deregulation did not work the way it planned - but it does say that alot of capacity was added post-deregulation - and you are right that there is still room for consolidation - fewer hubs.

But there are alot of people who are hung w/ the number and size of hubs when the real question is how large a carrier's market share is in the cities they serve and in the nation/world overall.
It is immaterial whether a city is a hub or not if a carrier is still the same size in markets with or without a hub.

The reality is that different carriers have used different strategies to reduce capacity - and have come up w/ very different results.

US' pull back in the east has caused it to drop to #3 or #4 in many or the largest markets and even in some of the cities in the SE that have historically been divided between DL and either Eastern or Piedmont, DL has become the largest airline - and that trend continues to grow with the slot transfer because NYC is a larger market from most of the cities that DL is adding service from NYC than they are to Washington, DC.

US has removed alot of hub capacity from the east coast but they have also reduced their position in a number of key markets as a result - that is why they need the merger.
Yes, DL did have surplus capacity post DFW - but they moved lots of that capacity to NYC where they are stronger than they have ever been; mainline was moved post DFW closure and DCI was moved more recently with the CVG and MEM pulldowns. Yet, DL still is #2 in DFW w/ a local market share comparable to what it had when DL had hundreds of flights per day there with a hub and DL still is the largest airline at CVG and MEM with 70% market shares and stable local revenue.

If a combined AA/US is going to reduce the number of headcuts that will happen post merger, they have to find a way to profitably redeploy that capacity or else they just reduce the size of the combined airline and give up some of the market share that they gained through the merger. If the purpose of a merger is to gain bulk and gain strength to serve key markets, then AA/US has to use its strength to grow where neither is strong now or where the combined airline would be strong enough post merger.

For AA/US, they would still not be strong enough to compete with DL or UA to/from Asia, continental Europe, or the Middle East and Africa - as well as in the mountain states and west coast.

Absent a plan to correct those deficiencies in the combined network and a plan to not only combine AA/US while competitors are looking to stop it in its tracks but also grow where AA/US combined are not strong, there is little chance that AA/US could succeed long term or AA/US' employees not be subjected to the same cuts.

BTW, we have yet to see UA/CO rationalize its system or indicate where it will grow w/ redeployed capacity - so the verdict is still out that UA/CO will be stronger long term..... they will be forced before long by Wall Street to get capacity out of the system to force up yields or their market value will drop quickly. UA's market value has dropped disproportionately relative to other airlines since UA announced its dismal 2nd quarter revenue performance. Wall Street expects better revenue numbers from a merger.

It is also not a given that the same number of jobs will be lost either way. If AA and US can maintain their operations as standalones - and both are doing that now, then it isn't a given that there will be a need to cut tens of thousands of excess jobs - and yes, if you look at the combined AA/US workforces, back out the cuts AA is making now plus Eagle as a wholly owned subsidiary minus owned regionals at DL and US, then AA/US still would have more than 10K more employees than DL and UA have for comparable sized networks.

 

[700UW]

US has not reduced PHL and CLT, they have grown it and LGA wasnt a hub and the capacity that was taken from LGA was added to DCA.

 

[WorldTraveler]

I didn't say they reduced PHL and CLT, but they have reduced their network down to 3 major hubs plus DCA - and they have also lost overall market share not only in the United States overall but also in key markets.

It does not matter how many hubs a carrier has. It does matter if they can effectively serve the US and the key markets in it w/ the hubs they do have.

US has given up of its ability to compete with larger carriers because it restructured by cutting hubs and not growing other hubs as fast. You can look at dozens of cities, including in US' key markets on the east coast, and see that US has given up alot of market share that even an AA/US merger will not fix - because AA and US together do not make the combined airline larger than its competitors in those markets.

 

[PITbull]

My Payout, now that's ouright funny....Your throwing darts into the dark on that guess, and you missed by a mile.
I can assure you that I'm not in any key postion in any way, shape, or form. Yes there have been some decent profits as of late, and this can better any labor groups positon at the table if the timing is right. I'm sure that you know very well how unpredictable this industy is. A nice profit for a few quarters, then the bottom can fall out due to a sharp rise in fuel costs and/or an economic downturn.
What this industry needs is long term stability, and consolidation is a key factor in that direction. By no means will it solve everything, but it will reduce over capacity, and give all airlines better pricing control. I know that you have stated that the consumers will suffer, but can you honestly say that they have been paying a fair price for air transportation for the last 20 years? You know very well that our wages have been subsidizing low fares for many years, and it's time for the passengers to pony-up if they want to fly, as the Walmart fare days are coming to a close.

Again, when is a profit a profit for negotiation purposes???? U has had profits of late, so how is labor in the position to receive their rewards for a decade of hard sacrifices.

Keep in mind, contract agreements are about every decade. Labor only gets a couple shots in a career to have any increases...and that's if the company doesn't cry the blues and force labor into a restrucuturing arena even without a bankruptcy, like they did to us in summer 2002.

It doesn't matter whether you gouge the flying public or not, the money just goes into the pockets of the EXECS and shareholders...that's how business works. Specifically when you have scrupulous management teams that behave the way US Airways managment behaves.

 

[PITbull]

I can't predict anything, and can only go by what has happened in the past.

If things remain on track, yes a profit can be made by the combined airlines. And yes, fuel prices will most likely increase as they always have. Matching ticket prices in order to keep up with operating costs is a key factor to being profitable. The more solid and profitable the company is, makes it likely that the employees will be better off for the long term. I'm sure that you know very well what our chances have been to improve our contracts while the company has been losing money. If you don't agree, tell me where this is headed with US as-is......

You say you can only go by the past as a reference...that's what I've been saying here for the past two months!!!!!

US Airways does not have a good track record.

The prediction that will occur as consolidations occur is government intervention; reregulate the industry. The degulating of the industry has created this instability in the industry, as the carriers try to compete with one another until they have no other choice but to go into BK to survive, consolidate or both...or go out of business.

That's how all this will pan out in the end. Has to, no other alternative.

 

[PITbull]

US has not reduced PHL and CLT, they have grown it and LGA wasnt a hub and the capacity that was taken from LGA was added to DCA.

LGA was a base, along with BOS and was closed in 2010.

 

[wings396]

Again, when is a profit a profit for negotiation purposes???? U has had profits of late, so how is labor in the position to receive their rewards for a decade of hard sacrifices.

Keep in mind, contract agreements are about every decade. Labor only gets a couple shots in a career to have any increases...and that's if the company doesn't cry the blues and force labor into a restrucuturing arena even without a bankruptcy, like they did to us in summer 2002.

It doesn't matter whether you gouge the flying public or not, the money just goes into the pockets of the EXECS and shareholders...that's how business works. Specifically when you have scrupulous management teams that behave the way US Airways managment behaves.

Please tell me if your chances of getting wage increases etc. are better if the company is making a profit, or losing money?
They have been crying poverty for years, and have now become a bit more profitable. What we and the entire industry needs is consistant profitablity vs one that comes and goes in cycles.

 

[PITbull]

Please tell me if your chances of getting wage increases etc. are better if the company is making a profit, or losing money?
They have been crying poverty for years, and have now become a bit more profitable. What we and the entire industry needs is consistant profitablity vs one that comes and goes in cycles.

That ain't going to happen without reregulating the airlines again...specifically in a consolidated industry with less competition. All the airlines are operating with basically the same labor costs...bottom of the barrel and can't squeeze anymore out of the employees, other than paying the company to come to work.

The next shoe to drop in a totally consolidated industry, with no more viable competition, will be the high fares for the flying public.
When it effects their pocketbook, and the politicians,they take major notice. That's when gov. oversight will have to balance the equation.

A pendulum swing...