Is USAirways hostile takeover Of AA for Real?

[WorldTraveler]

So once again, the biggest question concerning the end game of deregulation is "What is the solution to the USAir situation?"

thank you for distilling the argument down to exactly why so many of us have problems w/ the whole US proposal to acquire AA, "We are the smallest network carrier, we can't really be a low cost carrier (even though that is the stock symbol we chose coming out of BK), we don't really generate revenues on par with the other network carriers, and we don't have the size to compete with them, so we are ENTITLED to be able to acquire AA, which is the only network carrier left since DL and UA both dissed us in the past decade or so."

With all due respect to you and other US employees as INDIVIDUALS, it is no one's problem except US' if they did not build a business model capable of competing w/ the strongest players in the industry.

Whatever decision is made regarding AA will be made based on the best interests of AA's stakeholders - which begin first with the creditors.

I wish you or US no harm, but honestly did someone not think this through when US walked away from one key market after another and shut PIT, their midwest hub when every other airline had at least one hub in the region, and then swapped away your slots in the largest business market in the US, if not the planet?

BTW, DL is not the high fare carrier in the NYC market. UA is. It is precisely because DL saw what CO was able to do by building a hub at EWR that DL said we need to have one of those two if we are going to really win in NYC - and you will recall that DL spent over a decade after acquiring PA's assets before DL figured out how to make NYC work.
DL's intention is to one-up UA since LGA and JFK are the preferred airports for local NYC short-haul and long-haul passengers, respectively.

AA/B6 probably would not obtain DOJ approval w/o divestitures at JFK- just like AA/US would not at DCA. If you combine AA/B6 at JFK after slot divestitures, they still would be much smaller in the NYC market as a whole than DL and UA and more importantly would not have the mass necessary to compete for short-haul passengers at LGA, the first choice airport for local NYC short-haul passengers, or EWR, the second choice airport.

AA/US would be the same story....

If NYC matters - and the fact that DL and UA EACH have local market revenue that is far larger than the local revenue at any of AA or US' largest hubs shows that NYC does matter, then you have to come up w/ a solution to compete in that market that provides enough size to matter. Being number 3 in a market doesn't work.

DL and WN actually coexist quite well side by side and both manage to hold their own, in fact better than any other network carrier has in a large WN focus city. DL and WN have operated side by side in SLC for years - and both have retained their market share. Despite predictions that WN would grow in ATL, the most recent data shows the only thing that is happening is that FL market share is being transferred to WN - but the combined market share percentage and average fare ratios between DL and WN are essentially unchanged.

US has been reduced to such a small size in NYC that is quite frankly immaterial no matter who it combines with.

If you can suggest a merger between AA and someone else in NYC that would pass antitrust immunity, then we can consider it.

Unless the FAA drops slot requirements at the 3 NYC airports, it is highly unlikely that anyone else could even try to grow in the market and even if they did they would still be facing the reality that there simply are not any successful 3 carrier hubs in the US - and that includes DEN where "success" is more than fleeting.
DL also controls about half of the gates at LGA and there is simply no room to add any more.

Whether you or anyone else wants to admit it, CO locked up the NJ side of the market a decade or more ago and DL settled the future of the New York state side of the NYC market over the past few years.

 

[wings396]

The NYC area airports are all a delay ridden cluster most of the time, and that and that adds up when it comes to operating costs. The area is also infested with every airline fighting for a piece of the pie, and that leads to lower fares. I'm no expert, but perhaps Parker calculated that US would fair better focusing their resources elsewhere such as DCA. In the long run maybe it was the best option, or maybe it wasn't....only time will tell.

 

[eolesen]

CO has dominated the EWR side of the river since around 1984, which is when PeoplExpress finally eclipsed Piedmont to be the largest carrier in terms of both PBs and operations...

I'd suggest holding off on ruling over the Battle for ATL... From all accounts, WN/FL have had a huge issue trying to deal with the IT implications of the disparate Res platforms. They still can't sell a joint booking.... Once they get that under control and both sides start talking to each other, I don't think you're going to see quite as much coexistence.

 

[WorldTraveler]

You do realize that the latest DOT report shows that every one of UA's hub airports all had lower arrival percentages than LGA and JFK?

DCA was only 2 percentage points higher than LGA/JFK combined.

DL had the highest OT percentage at JFK; US was about 3 points ahead of DL at LGA. (DL's OT at DCA beat US by about the same amount.)

Given that DL and US have been w/in about a point of each other in OT for quite some time, the OT argument doesn't really work...
If LGA and JFK are that much more difficult, then DL has figured out how to run a reliable operation in that environment.

The same DOT report shows that US cancelled 0.9% of its flights vs. 0.4% for the month compared to an industry average of 1.1%.

Spin it if you want... but US could not compete in the NYC market, consolidated its operation in DCA where it is doing just fine, but DCA is no where near as large of a market in terms of revenues - and US really does not run a substantially more reliable operation because of operating in an "easier" airport.

When WN starts taking a dent out of DL's backside, let me know. GIven that they are transferring the majority of FL's fleet to DL over the next couple years, WN will have to be backfilling with larger airplanes - and WN has already said system capacity will not be growing in the near term, so WN will be reducing frequencies, not exactly the strategy to use to win passengers in a market where your competitor has 4X as many seats and flights as you do.
Given that WN is getting rid of the 717s and already transferring some of FL's 737s to WN, they don't need codesharing near as much anymore.

WN is a higher cost carrier than FL and DL has kept FL "in a box" just as it has done with WN in SLC.
Given that other carriers, including both AA and US have given up entire local markets that were formerly hubs to WN, I think WN knows where it can look if it wants to grow its business.
For right now, WN's focus is squarely on the fall of the Wright Amendment.

 

[johnny kat]

Well, one could mention the Delta at DFW failure a few years ago. But it is irrelevent to the current situation much like when US dumped Pit or AA shut RDU and BNA. Sorry to stick a fork in your eye, but the industry is doing a total transformation of late in case you haven't noticed.

WT, your bias and malice towards US reminds me of the days when everyone hated CO because of the Lorenzo fiasco. Anyone remember the CO logo with a big red line drawn through it always pasted on the pilots flight bags? Everyone I knew in the industry hated CO, then came the change through new management.

US is no different. The airline still has a very important role to play. It is a much too valuable franchise to dismiss. Whether a merger with AA or asset sale to one of DL's competitors, US will play a role in the outcome of DL's future.

Say what you will about Parker and US having the audacity to buy AA, but if I where a board member I would be behind him all the way. He is doing exactly what he has been hired to do, and that is to enhance the value of the franchise and produce profits. Something AA management hasn't done since Crandall.

The New York market will always be there, airlines will come and go. US has been there done that. DL if not careful will have it's own Waterloo in New York. LGA turned into one of the biggest money losers for US for alot of different reasons. The network really suffered because of the delays, the equipment was worn out, the employees hated the atc delays and watching the company take losses at LGA while the rest of the airline bled. I am not sure how DL expects to have a better outcome. As for the employees at US no one is longing for the mess known as LGA.

On a side note regarding your comment about little USAir having the cajones to go after AA, look what tiny little Texas Air did.

 

[silverbird007]

As far as WN in ATL, DL should not get too comfortable (im sure DL mgmt is fully aware of this) once WN gets everything worked out, look out! I work for AA and as far as the New York market is concerned, I think DL has done very good partly because of AAs horrible management team for the last 14 years. They will have to go at some point. Im a pretty junior fa at AA so of course i would prefer we merge with an airline that is more junior. But of course it is out of our hands. If we merge with US I hope Parker takes over and cleans house. I know the US employees are not too happy with Parker but I think he is at least a step up from what we have.

 

[PITbull]

As far as WN in ATL, DL should not get too comfortable (im sure DL mgmt is fully aware of this) once WN gets everything worked out, look out! I work for AA and as far as the New York market is concerned, I think DL has done very good partly because of AAs horrible management team for the last 14 years. They will have to go at some point. Im a pretty junior fa at AA so of course i would prefer we merge with an airline that is more junior. But of course it is out of our hands. If we merge with US I hope Parker takes over and cleans house. I know the US employees are not too happy with Parker but I think he is at least a step up from what we have.

You must be a fairly junior f/a with AA.

Parker is nobodies savior, though he may tout to AA employees that he is the only one that can offer them some kind of security. He does not have good labor relations with his own employees. If you have been reading these posts you would have clearly read that Douggie boy has NOT been able to merge a "regional" carrier like America West with US Airways for the past 7 years. They still operate separately.

How in hell will he be able to merge a major legacy carrier like AA, get employee ratification of joint agreements among their respective groups, having different union classes representing AA employees, and different unions representing US Airways employees???? Even the current US Aiways T/A for the f/a group who have been waiting for 7 years for a new contract, have much lower payrates than AA f/as while in BK.

This kind of stuff just doesn't magically fall into place without mediators and arbitrators, tied up in years of litigation.

If there ever would be a merger with these two airlines, I would think they would need to start from scratch with a new entire managment team on both sides...out with all the old and bad blood; and in with a new for starters.

 

[Be Careful What You Wish For.]

You must be a fairly junior f/a with AA.

...out with all the old and bad blood; and in with a new for starters.

Condescending as usual, you were junior as I recall.

Ever since your sweetheart deal with Jerry Glass fell through you've been on the outside looking in.

Would you care to elaborate for our friends at AA about your departure from union office?

If you go back far enough on the US forum anyone can find it for themselves.

When I get a chance I'll post some of the highlights here.

Keep grinding that axe or should I say, as in plural, axes?

 

[700UW]

Once again your posting lies.

 

[Be Careful What You Wish For.]

Once again your posting lies.

Prove it.,

 

[700UW]

Prove what you posted.

I know Pitbull personally and there she did not take a sweet heart deal from Glass.

Prove she did.

 

[Be Careful What You Wish For.]

I know Pitbull personally...

So what you are saying is PitBull WASN'T offered a sweetheart deal that WASN'T offered to the rest of the membership especially at her junior seniority?

Are you sure about that or are you just basing your opinion on personal preference?

I'll start looking for the announcement.

What DID happen to make PitBull resign her office?

PitBull did resign didn't she?

Why was that?

 

[malikie]

You must be a fairly junior f/a with AA.

Parker is nobodies savior, though he may tout to AA employees that he is the only one that can offer them some kind of security. He does not have good labor relations with his own employees. If you have been reading these posts you would have clearly read that Douggie boy has NOT been able to merge a "regional" carrier like America West with US Airways for the past 7 years. They still operate separately.

How in hell will he be able to merge a major legacy carrier like AA, get employee ratification of joint agreements among their respective groups, having different union classes representing AA employees, and different unions representing US Airways employees???? Even the current US Aiways T/A for the f/a group who have been waiting for 7 years for a new contract, have much lower payrates than AA f/as while in BK.

This kind of stuff just doesn't magically fall into place without mediators and arbitrators, tied up in years of litigation.

If there ever would be a merger with these two airlines, I would think they would need to start from scratch with a new entire managment team on both sides...out with all the old and bad blood; and in with a new for starters.

Parker is the savior of 33000 jobs that would not be here with the merger of two regioanl airlines, America West and US Airways. You might not like those words but without America West as a merger partner US Airways would have gone the way of Eastern, Branniff, and all the other airlines that have shut down.

Parker's job is to ensure the airline is profitable and he and his group in Tempe have done just that.

As for the airline not running as one the only groups not united are the Pilot group and the Flight attendant group. All other groups that are union are under one contract. In fact I believe most are under their second contract since the mereger.

The company is not at fault for the pilot mess that is all on the pilot's and the disorganization of the FA group is their own mess. But again you being a union person it's still all the companies fault.

 

[Toothy Grin]

Malikie,

+1 to you! Seems like the "statue" is stuck in time and space and isn't able to move or show any form of flexible thinking much less receive anything into that head of rocks.

How many folks on here have already posed, asked, posited, cajoled and pointed out to her that it appears there is an underlying "cause" behind her posts.

Oh well.

 

[eolesen]

Uh, do you think it's possible to take the ad hominums and accusations about a particular poster's motivations and what happened at USAirways over to that forum?

Thanks... we have more than enough of that behavior over here already.