Jetblue Ream rumor - Merged Topic

[tom barry]

The tone of the "denials" from AA mgmt would seem to indicate that B6 is more than just one of several alternatives being considered. B6 does have the potential to help AA restore some of the strength it has lost in the NE, but there are clear antitrust issues - AA plus B6 would operate about 2/3 of US carrier slots at JFK - and there are certain to be objections to a plan that would involve a network carrier taking over a low fare carrier - almost guaranteeing that there would be slot divestitures to ensure competition is maintained.

I'm still not sure I understand the whole premise of the meeting in LA, including that a senior AA exec would say as much as they did, particularly given the very delicate nature of AA's restructuring right now.

Given that the clear intent of the letter is to convince pilots that AA has a perishable strategic goal in mind which should be used as leverage to improve the contracts for labor, the letter has to be viewed with an appropriate bias.
It is hard to know what the judge will do if the AA pilots reject the contract proposal, but there should also be healthy skepticism that the pilots could achieve a significantly improved version by voting down what is on the table.

Will make for some interesting spectating in the near future - but there is good reason to believe that AA would find benefit in merging w/ a non-union airline that has considerable strength in key markets where AA has given up alot of strength in recent years.

Seems WE had this discussion BEFORE..........World Traveler.
SEVERAL TIMES !

 

[ContUNITEus]

Received a call from an AA friend about the same. Seems that this is the new big thing being talked about all over the premises.

 

[WorldTraveler]

Seems WE had this discussion BEFORE..........World Traveler.
SEVERAL TIMES !

yes, we have and perhaps it is worth expanding on some of those conversations:

1. AA has a poor track record of making mergers work post-deregulation and of demonstrating the stated benefit down the road.
2. AA and B6 have substantial overlap at JFK and operate 2/3 of the slots allocated to US carriers - and half of total slots (1/4 of JFK's slots are operated by foreign airlines). Given that B6 is NYC's hometown low cost carrier and has stimulated the market tremendously, the chances that AA and B6 will be able to combine their total slot pools w/o divestiture is slim to none.
3. Based on current schedules, AA and AE operate 19.5% of the flights at LGA; B6 has less than 3% more. LGA is the preferred airport for local passengers to destinations from NYC that are within the perimeter that is permitted; EWR is 2nd for inside perimeter markets; JFK is third. For outside perimeter markets, JFK is #1 while EWR is #2. DL's presence at LGA is more than twice the size of combined AA/B6 while CO's presence to inside the perimeter markets for the combined city is smaller than DL's (combining all 3 airports). IOW, AA would create a leading presence to longhaul markets (outside the perimeter) but would still be #3 to DL and UA for inside the perimeter markets.
4.With an AA acquisition of B6, AA would simply be regaining many markets they have lost to B6 over the past several years.. but B6 has stimulated those markets w/ low fares that are not sustainable under AA's cost structure - or even the combined AA/B6 cost structured proportionationaly weighted by each one's size. Many of the markets will shrink in size as fares have to rise to match higher costs.
5. BOS, B6's second largest market, has been hyperstimulated by low fares - it will shrink under AA's cost structure - and would probably shrink under B6's cost structure as a standalone company since B6's non-fuel costs are going up faster than the industry as a whole due to an older workforce and older airplanes.
6. AA/B6 doesn't solidly put AA back in the game in the largest NE markets including NYC and doesn't do anything for its lack of presence in Asia.


There are positives, though.
1. B6 has said the 190s don't work as well in their network as they want. They could work quite well in AA's network in a hub-feeding capacity rather than point-to-point low cost service. The 190s are also good airplanes for point to point business markets - such as from NYC, BOS, and DC.
2. Other than antitrust issues, an AA/B6 merger should be fairly simple - far easier than AA/US.
3. Other carriers in NYC such as DL and UA might not be hurt near as much as you think - since removing a large low cost carrier would boost their yields signficantly.

AA probably will do something w/ someone... I'm just not sure the evidence is there that they will really create anything close to a combination of what the two are now - adn that they will gain an advantage over their peers in the process.

 

[The Dissident]

removed

 

[Frank Szabo]

... snip
What ever happen to taking care of their employees?
... snip

The company that, once upon a time, did that died in the late 90s.

The new crop of MBAs took over with their "me first" attitude was ushered in and they immediately set out to increase their compensation in any way possible at the expense of anyone who got in their way, all the time claiming their actions were to benefit the "stakeholders".

It doesn't promise to get any better. This is the spoiled brat generation running things now and it's not just American Air but the entire American corporate attitude - countrywide. It's the generation the parents indulged (so to have it better than they did, even though "they" didn't have it too bad) and instilled situational morality/ethics upon.

 

[WorldTraveler]

don't worry, Frank.
B6 told the WSJ yesterday they haven't signed any non-disclosure agreement to exchange further information with AA and wouldn't sign one if they did receive it.
They also said that they believe the best value for their stockholders is to remain independent and to continue to add codeshare partners and traffic. Emirates indicated they are receiving thousands of connecting passengers per month from B6 and are boosting capacity based on B6's ability to deliver passengers to them.
Other foreign carriers are equally interested in seeing B6 continue what they have done so far - which is help their ability to compete at JFK.

Note that B6 feeds passengers to foreign airlines of all 3 alliances, as well as non-aligned airlines.

 

[Frank Szabo]

don't worry, Frank.
B6 told the WSJ yesterday they haven't signed any non-disclosure agreement to exchange further information with AA and wouldn't sign one if they did receive it.
They also said that they believe the best value for their stockholders is to remain independent and to continue to add codeshare partners and traffic. Emirates indicated they are receiving thousands of connecting passengers per month from B6 and are boosting capacity based on B6's ability to deliver passengers to them.
Other foreign carriers are equally interested in seeing B6 continue what they have done so far - which is help their ability to compete at JFK.

Note that B6 feeds passengers to foreign airlines of all 3 alliances, as well as non-aligned airlines.

I don't see anywhere in my post that expressed "worry". Disgust perhaps, but not worry.

Have you taken your meds today?

 

[WorldTraveler]

Do you really think that the phrase "don't worry" means that someone believes that you are fretting or worrying? Really?

Maybe B6 is playing hard to get - or perhaps they really don't have any interest in AA, in which case then you can THINK ABOUT the appropriate context for your disgust when AA's future is a little more clear.

 

[FWAAA]

B6 told the WSJ yesterday they haven't signed any non-disclosure agreement to exchange further information with AA and wouldn't sign one if they did receive it.

That's not what my copy of the WSJ said. Here's the quote:

Last week, Mr. Barger declined to say if JetBlue has received a nondisclosure agreement from American, which, if signed, would allow the two carriers to share confidential financial data to see if a combination was worth pursuing. But a person familiar with JetBlue said the airline hasn't received such a document and wouldn't sign it if one arrived.

JetBlue didn't tell the WSJ anything, but an un-named source claims what you posted.

 

[WorldTraveler]

This appears to be the operative sentence and if the WSJ at all found someone who had any knowledge of the situation - whether an unnamed insider or not - then the chances are that the whole idea of an AA acquisition of B6 might be a stretch:

"But a person familiar with JetBlue said the airline hasn't received such a document and wouldn't sign it if one arrived."



Maybe AA has interests but B6 doesn't?


OR If B6 really has no interest in a deeper relationship w/ AA, then maybe the whole letter and the supposed event in LA come into question, right? And perhaps it is simply a means by which someone thought they could convince others not to vote for the pilot deal, right?

 

[wings396]

This is going to be a first WT, but I'm going to actually agree with you on this one. It seems as if this could all be some sort of a scheme to sway the pilots vote.

 

[WorldTraveler]

and it could leave the door open for your bud, Dougie, to keep going w/ his campaign.

 

[Mach85ER]

What has happened is the momentum has more to reject the agreement. More and more pilots who had been on record as YES, are now voting no.

The most common theme is everyone has had enough and will not lock themselves into substandard govenrment ordered agreement for probably the next decade. Even the YES voters are only voting that way because of the utter contempt for senior management shared by every NO voter.

Now we have the Chief Pilot essentially threatening the group with the imposed 1113. If AA has any merger aspirations, they are truly shattered and this operation will be moving like mollasses at the North Pole.

 

[TWU informer]

Ream stated in Tulsa last week that there was better than a 50-50 chance that a merger would take place before the end of the year. He said the UCC was behind the move, and that new management and board would come with new airline.

I think there will be more than one work group without a consensual agreement next week.

Stores and F/A's ratify and Mechanics and Pilots reject.

 

[WorldTraveler]

What has happened is the momentum has more to reject the agreement. More and more pilots who had been on record as YES, are now voting no.

The most common theme is everyone has had enough and will not lock themselves into substandard govenrment ordered agreement for probably the next decade. Even the YES voters are only voting that way because of the utter contempt for senior management shared by every NO voter.

Now we have the Chief Pilot essentially threatening the group with the imposed 1113. If AA has any merger aspirations, they are truly shattered and this operation will be moving like mollasses at the North Pole.

It is possible that UA decided they needed to sign an agreement and allow enough details to slip out to make it apparent where AA is relative to DL and UA w/ respect to pilot wages.
Remember this is a HIGHLY competitive industry and AA has benefitted while UA has struggled w/ its merger. UA would love to regain its footing and at the same time slow AA's advances.

A merger may well happen... but the success of it and the ability of AA to regain key corporate business depends alot on how well they can emerge from BK and then engage in a merger. Corporate clients want reliability and stability... something that is fleeting in both mergers and BK.

In other AA route news, it appears they are not reloading summer seasonal schedules for ORD-HEL and ORD-FCO; they could come later but if they don't reappear, AA's Europe presence in ORD continues to shrink.