WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #601
Thanks, Pit.
It's really not hard to make an honest appraisal of the AA situation if one is willing to set their personal biases aside and look at the situation thru the eyes of its each AA/AMR constituent and then recognize one's own biases probably don't represent what is best for the whole.
From the beginning of this AA drama (which has played out for years but which hit is peak w/ the BK filing), I have asked 2 questions about this situation and those who want to come to the conclusion about what is best would do well to ask the same two.
1. Are you (or I) willing to allow AMR to pursue the best option, including a standalone option which gives AA and its constituents the opportunity to give it "one more try" to compete in the US airline industry?
2. If an AA standalone option is not viable, are you (I) willing to seek the best option for AA and its people, even if that means something other than my (your) personal desires?
Most definitely, I would love to see DL pick up some of assets - if not as much of the compAAny that they can pick up - as long as the parts of AA that DL can't use are placed in the hands of someone who will use those assets and not just toss them aside.
Because AA is a viable operating airline, there is nothing in its operation that can't be used by one airline or another. The key in any deal - including AA standalone or AA/US is to make sure the maximum amount of AA's people and resources can be preserved in any transaction.
But I have also said from the beginning that the best outcome for AA is a standalone plan - because based on business history and principles, that absolutely is true. Mergers and asset sales do involve risks.
But if AA's pilots and other labor groups come to the conclusion that they cannot or will not work for the terms AA proposes, then you have to look for a solution that allows them to pursue their best interests - even if it means with another company.
For those who think an IAG or TPG investment will solve the problem, I'd like to hear how. How is IAG - which has a limited ability to invest in AMR going to bring labor peace to a company that they cannot control? How is and IAG or TPG investment going to lift AA employee labor rates to levels that AA labor expects? What is the basis for improved revenues or reduced costs which would form the basis for increasing AA employee pay levels? There is no reason to think that AA is going to get any more revenues because of an investment from a oneworld carrier than they could under their present joint venture agreements.
An IAG investment doesn't do anything to bring an end to the labor discord that has wracked AA for years and would likely only be eliminated with massive pay raises that are not supported by AA's current business plan.
Those who want to look to AS or B6 or WN or any other non-network carrier, what evidence is there that they would acquire or merge with a network carrier which has a very different business plan than their own and expect to succeed. Those companies all succeed because they know what they do well and don't try to do a bunch of other things, including be something they are not.
For those who think Wall Street is only interested in pushing labor rates to the bottom of the barrel, you might check out pay rates, esp. for pilots using the site above since it is very easy to do, and see that many of the successful airlines pay their employees as much or more than the airlines that continually have labor discord, including AA and UA for much of the past decade.
Wall Street wants predictability and to earn a profit, including on the investments they make in the airline industry which is highly capital intensive.
Wall Street is quite happy to see airlines pay their employees well IF that pay translates into stability and profitability at least as good as those airline's peers.
Arguing that size is bad because AA couldn't make it work is not exactly logic that will win the argument.
Shall we argue that east coast hubs don't work or flying to continental Europe doesn't work because one carrier can't make it work?
Whether people want to admit it or not, among network airlines - which is the peer set for AA and which WN is not in, DL has achieved labor peace better than its peers and it has done so while paying its employees industry average or better wages. DL also has the highest market cap in the US airline industry - meaning it has the capacity to offer more in equity to the creditors, is reducing its debt levels and paying down as would be necessary in an AMR merger, and is generating revenues and revenue improvements as good as or better than its peers.
By any reasonable industry metric, DL IS running as good or better of an airline than its network carrier peers.
And despite what some have tried to assert, there is no hard evidence that would stop AA and DL from combining the majority of their operations given antitrust laws - as applied throughout all types of industry which have long been more consolidated than the airlines. And notably, the same antitrust issues that would affect AA/DL at NYC would also affect B6 at JFK and AA/US at DCA.
If a merger or asset sale becomes reality, there are few truly clean transactions, esp. if you consider creating the size necessary for AA to effectively compete against DL and UA.
If DL is interested in all or part of AA, they cannot be ruled out as a very serious contender.
It's really not hard to make an honest appraisal of the AA situation if one is willing to set their personal biases aside and look at the situation thru the eyes of its each AA/AMR constituent and then recognize one's own biases probably don't represent what is best for the whole.
From the beginning of this AA drama (which has played out for years but which hit is peak w/ the BK filing), I have asked 2 questions about this situation and those who want to come to the conclusion about what is best would do well to ask the same two.
1. Are you (or I) willing to allow AMR to pursue the best option, including a standalone option which gives AA and its constituents the opportunity to give it "one more try" to compete in the US airline industry?
2. If an AA standalone option is not viable, are you (I) willing to seek the best option for AA and its people, even if that means something other than my (your) personal desires?
Most definitely, I would love to see DL pick up some of assets - if not as much of the compAAny that they can pick up - as long as the parts of AA that DL can't use are placed in the hands of someone who will use those assets and not just toss them aside.
Because AA is a viable operating airline, there is nothing in its operation that can't be used by one airline or another. The key in any deal - including AA standalone or AA/US is to make sure the maximum amount of AA's people and resources can be preserved in any transaction.
But I have also said from the beginning that the best outcome for AA is a standalone plan - because based on business history and principles, that absolutely is true. Mergers and asset sales do involve risks.
But if AA's pilots and other labor groups come to the conclusion that they cannot or will not work for the terms AA proposes, then you have to look for a solution that allows them to pursue their best interests - even if it means with another company.
For those who think an IAG or TPG investment will solve the problem, I'd like to hear how. How is IAG - which has a limited ability to invest in AMR going to bring labor peace to a company that they cannot control? How is and IAG or TPG investment going to lift AA employee labor rates to levels that AA labor expects? What is the basis for improved revenues or reduced costs which would form the basis for increasing AA employee pay levels? There is no reason to think that AA is going to get any more revenues because of an investment from a oneworld carrier than they could under their present joint venture agreements.
An IAG investment doesn't do anything to bring an end to the labor discord that has wracked AA for years and would likely only be eliminated with massive pay raises that are not supported by AA's current business plan.
Those who want to look to AS or B6 or WN or any other non-network carrier, what evidence is there that they would acquire or merge with a network carrier which has a very different business plan than their own and expect to succeed. Those companies all succeed because they know what they do well and don't try to do a bunch of other things, including be something they are not.
For those who think Wall Street is only interested in pushing labor rates to the bottom of the barrel, you might check out pay rates, esp. for pilots using the site above since it is very easy to do, and see that many of the successful airlines pay their employees as much or more than the airlines that continually have labor discord, including AA and UA for much of the past decade.
Wall Street wants predictability and to earn a profit, including on the investments they make in the airline industry which is highly capital intensive.
Wall Street is quite happy to see airlines pay their employees well IF that pay translates into stability and profitability at least as good as those airline's peers.
Arguing that size is bad because AA couldn't make it work is not exactly logic that will win the argument.
Shall we argue that east coast hubs don't work or flying to continental Europe doesn't work because one carrier can't make it work?
Whether people want to admit it or not, among network airlines - which is the peer set for AA and which WN is not in, DL has achieved labor peace better than its peers and it has done so while paying its employees industry average or better wages. DL also has the highest market cap in the US airline industry - meaning it has the capacity to offer more in equity to the creditors, is reducing its debt levels and paying down as would be necessary in an AMR merger, and is generating revenues and revenue improvements as good as or better than its peers.
By any reasonable industry metric, DL IS running as good or better of an airline than its network carrier peers.
And despite what some have tried to assert, there is no hard evidence that would stop AA and DL from combining the majority of their operations given antitrust laws - as applied throughout all types of industry which have long been more consolidated than the airlines. And notably, the same antitrust issues that would affect AA/DL at NYC would also affect B6 at JFK and AA/US at DCA.
If a merger or asset sale becomes reality, there are few truly clean transactions, esp. if you consider creating the size necessary for AA to effectively compete against DL and UA.
If DL is interested in all or part of AA, they cannot be ruled out as a very serious contender.
