JUSTICE DEPT SUES TO BLOCK US/AA MERGER

[robbedagain]

even if the doj eventually gives the green light for us n aa to merge the biggie is at what cost such as slots at dc? fwaa i know i dont have to answer those questions but as far as from what i know several of them have college degrees one of them in union labor he in particular said that this comes down to the fact the govt cant really prove it given that they had already given the green light to the ua/co merger which should not have happen thats just what i was told... personelly for me i dont really care if we merge or not i just want the pay in my acct for the work i do... my own opin on this whole thing to be honest i do think that the doj will give us the green light to merge but at what cost is what to be determined...
the govt own bill baer even said that they are open to negogiations of settlement with the airlines and ironically both airlines said the same thing...

now for this aa been in ch11 for over 18 months and counting... can the creditors begin to deman payment in full if the govt does scuttle the merger? and if so would that result in aa being broken up and sold just to satisfy the creditors? no harm intended

 

[CactUSmx]

From what it sounds like AA US would have to give up a lot more than a few slots in DC. The DOJ was talking about giving up 1000 routes. Even if we meet in the middle and give up 500 routes which comes to 250 each between AA and US that will be massive job losses and your probably giving the routes to the competition to fly ex: JetBlue,Southwest,Spirit etc. Parker is so desperate for the merger to go through that he may agree to give up the routes and were all assssed out. Good Luck

 

[Mr Red]

Justice Department and six states, including Texas, sue to block US ...

 

[eolesen]

Who is the competition for AMTRAK in passenger rail service? How many markets does AMTRAK serve without a single competitor? And who really owns AMTRAK?

Who is the competition? Airlines. When you look at the numbers, Amtrak amounts to about 2-4% of the entire transportation marketplace over 300 miles. The **ONLY** place where they have anything over single digits in marketshare is in the WAS-NYC-BOS market, and that's somewhere around 20%. Outside that bubble, Amtrak is less needed than Saturday delivery by the USPS.

Being a loyal AA suppoter (in other words, an AA koolaider), I was going to bregudingly fly AA until I hit LT Platinum then probably stop flying AA. If its not Horton, I will most probably stick with AA and not move to "Plan-B".

Almost the same plan here, and I'm just two roundtrips to Asia away from lifetime Gold. Would be nice to get it before the merger closes, which now looks more and more possible, and before rules start changing on the program, which becomes more and more likely after a hostile takeover.

uh... AA's overall market share has not changed in BK and it has decreased significantly in a number of key markets over the past several years.

Who cares what the market share in what you define as "key markets" is at this point?

The goal should be concentrating on operating a profitable airline. In the past, that's what made WN profitable, and it's what keeps B6 and AS profitable today.

From what it sounds like AA US would have to give up a lot more than a few slots in DC. The DOJ was talking about giving up 1000 routes. Even if we meet in the middle and give up 500 routes which comes to 250 each between AA and US that will be massive job losses and your probably giving the routes to the competition to fly ex: JetBlue,Southwest,Spirit etc.

You clearly don't understand the difference between routes and how DOT defines a market. There are 1000 city pairs which the DOT showed as examples where US/UA would lock out any effective competition, but they're almost all flown over one of the consolidated hubs.

You're also not going to be able to say "WN can fly DFW-CLT and DFW-PHL" and have that solve the competition issues.

The fact is the other mergers proposed having a market share approaching 20%. This one proposes taking it over that, and it's a significant difference...

 

[WorldTraveler]

I'm responding to the statement about AA increasing its market share... because they didn't.
I didn't define what markets were key to AA. AA did that. It was called the cornerstone strategy.
Using AA's own goals, their market share was basically unchanged other than in NYC where we know what has happened.

Yes, I agree, being the most profitable is what is most important... but that also means to quit being focused on trying to be the world's largest airline or any other size comparison. If it happens, great.
It's why I keep harping away at certain market segments which AA THINKS they need to fly just because "they do." Who cares what "they" do if AA can't do if profitably.
DL and UA would probably like to fly MIA-S. America but they aren't.

And your graphic is still based on the notion that what AA and US are as individual carriers are before the merger will equate combined to what their share will be post-merger. It also is DOMESTIC market share instead of total US carrier industry. The network carriers have significant enough operations that their total share is a lot larger when you consider their int'l ops.

Since the merger hasn't even been approved, carrier shares will change and as much as Parker can't stand to say it, the way fares will go up is because capacity will be pulled from the system. He said that with his DL merger attempt and learned not to say anything about cutting capacity this time around; now, he just has to learn not to say that consolidation will increase prices.... but he might have used all of his chances to merge with a bigger airline.

 

[Show me the money]

ARE YOU KIDDING!!! even wall street has said if this Management team ( Led by Horton) is left to run this company it will be back in bankruptcy in two years. American Airlines was voted one of the worst companies in America to work for. This current management team is interested milking every last dime out of this company they can at the employees expense and then move on. Parker may not be much better but is a thousand times better than the so far out of touch management we have now. The plan without the merger is to retain as few employees as possible with with max profit return and customer sevice an after thought.

what planet have you been living on? Say all you want the opinion comes directly from the Wall Street Journal. This manage ment team has taken huge bonuses and started the process of eliminating as many jobs as they can. This a fact The outsourcing of maintenance to north carolina and Communist China. With the quote that we needd to keep our quality management even if it cost us more. The profit have come on the backs of the employees. We have the lowest pay and the worst benefits while our upper management haave some of the highest compensation packages in the industry. Try working at AA and you will see why we were voted the worst company in America to work for.

 

[Jacobin777]

uh... AA's overall market share has not changed in BK and it has decreased significantly in a number of key markets over the past several years.

Yes, AA is showing profits but that is what has to happen to emerge from BK. The record profits also came in the 2nd quarter which is typically strong for airlines.

I'm not taking anything away from what AA has accomplished but it might take a little more time to declare victory - if that is even possible given that ongoing businesses don't really have a "finish line."

Also, as excited as you get about what AA has accomplished, most of the improvement has come because of labor cost cuts. You should expect labor - the majority of this board - to be able to see that.

What "key markets"? SJC?

AA had record earnings this past quarter and with the new fleet coming in and along with its new cost structure, it will be able to highly compete again at key (cornerstone) cities.

1)LAX-AA has more room and gate space to expand (unlike DL). Using current DOT data for domestic, AA is "neck-on-neck" with UA. I actually expect AA to surpass UA@LAX.

2) ORD-AA can grow @ORD. They have the critical mass, space, etc. Also, for everyone talking about "AA has shrunk considerably @ORD", has anyone seen how much UA mainline has shrunk @ORD over the past 10 years?

Now with AA getting A319's and other larger regionals, AA can start expanding at ORD with new and old routes which were once unsustainable/unfeasible with AA's old cost/plane structure. (I copied and pasted this quote from my Flyertalk comment.. )

3)MIA-AA fortress-no problems there.

4)DFW-same as MIA

5)JFK/LGA-tough but AA still have strong brand recognition and still is a strong competitor. Will only get stronger thanks to its new incoming fleet & cost structure.

I'm responding to the statement about AA increasing its market share... because they didn't.
I didn't define what markets were key to AA. AA did that. It was called the cornerstone strategy.
Using AA's own goals, their market share was basically unchanged other than in NYC where we know what has happened.

AA has never stated that their goal-timeline was 1-2 years. Until AA gets its new fleet, it won't be able to optimize its cornerstone strategy. The good news is its starting soon.

Apropos WT, we've had discussions a few years ago about AA B762's and its cost to fly, etc...well, they are going soon, very soon. We also dicussed a while back (on A.net) about how DL will be the 2nd largest carrier (at least domestic) to SFO-i.e.-how they will usrup AA. Well, that hasn't happened either.

 

[Bob Owens]

You don't think Parker won't be the first to screw you guys/gals over if he has to?

I think we can safely say he wouldn't be "the first" to screw us, that cherry was popped a long time ago and there has been a long list since that included your hero Horton.

 

[Bob Owens]

Many here conveniently forget that "we gave up our 30% to save AA and got nothing in return", filing for BK in 2003 would have yielded the same results probably and then some. At least AA was putting money into pensions, etc. for an additional 8 years!

Did they? IIRC they lobbied so they could legally underfund it, raising the liability up to around $7 billion by the time the declared BK. In negotiations the company admitted that switching to the 401K would not save them money, sure they made promises but its doubtful they will keep them.

Well if the merger doesn't go through, Horton probably isn't going anywhere. I think he deserves a chance to run AA.

I don't, he will never gain the respect of the workforce. Horton's departure is essential for morale. In our eyes he will always be the bastard who stole our pension and tried to sneak away with $20 million. The only thing that Parker had going for him was he wasn't Horton, but that's enough.

 

[Jacobin777]

I think we can safely say he wouldn't be "the first" to screw us, that cherry was popped a long time ago and there has been a long list since that included your hero Horton.

1)Horton isn't "my hero". Unlike some here, I don't make comments based on emotions.

2)Horton didn't "screw" anyone. Horton took over AA after AA filed for BK (maybe you forgot this little fact). His job was (and still is) to get AA "back to its feet"-which he has done now.

This included a multi-pronged approach, which included redoing salaries, pensions, fleets, etc.

DL, UA, CO, HP, NW all have done this over the past few years. I don't see why you are so bitter at Horton because the same situation happened to you?

Did they? IIRC they lobbied so they could legally underfund it, raising the liability up to around $7 billion by the time the declared BK. In negotiations the company admitted that switching to the 401K would not save them money, sure they made promises but its doubtful they will keep them.

I don't, he will never gain the respect of the workforce. Horton's departure is essential for morale. In our eyes he will always be the bastard who stole our pension and tried to sneak away with $20 million. The only thing that Parker had going for him was he wasn't Horton, but that's enough.

AFAIK, AA's obligation (promises) is something they have to keep. If they don't, maybe you have a legitimate gripe, but until then, you are simply hypothesizing.

AA's making money. Like DL, maybe AA will eventually start profit sharing. Personally, like many other companies, rather than cash, I would like to see AA give stock-based compensation. This way everyone does well if AA (and its subsequent stock) does well and vice-versa.

I would also like to how Horton is "sneaking away" with $20 million? Please explain.

 

[Bob Owens]

1)Horton isn't "my hero". Unlike some here, I don't make comments based on emotions.

2)Horton didn't "screw" anyone. Horton took over AA after AA filed for BK (maybe you forgot this little fact). His job was (and still is) to get AA "back to its feet"-which he has done now.

This included a multi-pronged approach, which included redoing salaries, pensions, fleets, etc.

DL, UA, CO, HP, NW all have done this over the past few years. I don't see why you are so bitter at Horton because the same situation happened to you?



AFAIK, AA's obligation (promises) is something they have to keep. If they don't, maybe you have a legitimate gripe, but until then, you are simply hypothesizing.

AA's making money. Like DL, maybe AA will eventually start profit sharing. Personally, like many other companies, rather than cash, I would like to see AA give stock-based compensation. This way everyone does well if AA (and its subsequent stock) does well and vice-versa.

I would also like to how Horton is "sneaking away" with $20 million? Please explain.

Horton took us into BK as Arpey retired, he bragged about taking Labor through the wash. Horton screwed us, he has to go, without the $20 million. You claim that all the other carriers went through this, show me any carrier where for the first five years you only get one week of vacation, show me any carrier where they only recognize five holidays and only pay four hours extra for working eight hours on the Holiday, show me any other carrier where you only get 5 sick days, show me any other carrier where no matter how many hours you are on the clock you never get more than 1.5X pay, show me any other carrier where they earn less and pay more for Medical coverage. The fact is that AA is THE WORST carrier to work for, worst in benefits, worst in work rules, worst in Holiday pay, worst in Vacation, worst in sick time, worst in benefits and worst in pay. Thats why workers at AA are bitter and Horton was at the helm when this was put in place and thats why he must go or AA will continue to fall behind their peers. The lack of response to the petition is indicative of how the employees feel about everything, not so much about the Merger, THEY DO NOT CARE. Sure they show up and put forth minimal effort till they find something else or retire but that is not a formula to become a leader, and nobody, except you, is enthused about Tom Horton or his plans. If AA is to succeed Horton must go. The only thing good about the merger was that Horton would be gone, and that was the main point stressed by the Unions in favor of the merger, but management was so arrogant in violating the intent of the law with the $20 million buyout that they brought the wrath of the DOJ on them. They deserve this action, everyone knows what the intent of the law was, for them to say that they were going to find a way to pay it anyway was a slap in the face to every person in this country who supported that legislation. Sure other carriers got their competition crushing mergers approved, but they didnt flagrantly brag about how they were going to find a way to do what the people of this country decided was unacceptable. Maybe if AA/US had backed off on giving Horton the $20 million they would have let them slide through like UA and DL, but they obviously feel that they can f&^K with the government like they can with us.

Bankruptcy is FAILURE, the fact that in reality it has become a scam to rip off workers is not to be acknowledged publicly, thats why the government put in the law limiting payouts to executives, to keep the scam in place, but AA management decided to put the whole scam at risk by insisting that they would still reward executives for what is supposed to be failure. To say that they were blindsided by this is Bull. Twice the DOJ objected to the payout to Horton. That Leprechaun masquerading as a Judge failed to follow the cue and was set to allow the payment to Horton, so the DOJ decided to not look the other way on the anti-competitive effects as they have in prior mergers of this merger and act.

IMO if they had dropped the $20million payout to Horton the suit would not have been filed.

 

[dfw gen]

Thats a good post Bob to expand a little bit... after 9/11 aa had pre-ron allen delta type good will by their emoloyees. Unfortunately aa took the good will as an opportunity to screw their employees. Aftet carty and 20003 and the beating we took then. Combined with the latest contract sold by the twu most employees could not care less. In fact aa is hiring supervisors from a temp agency because no one will take the job. That is why aa employees are the least productive in the industry . There is absoultly no accountability with even less pride in a job done. So to be honest merger or not nothing will change so why go out if your way?

 

[BigMac]

That is why aa employees are the least productive in the industry . There is absoultly no accountability with even less pride in a job done.

Least productive and no accountability?
Where exactly do you work?

 

[MCI transplant]

I think we can safely say he wouldn't be "the first" to screw us, that cherry was popped a long time ago and there has been a long list since that included your hero Horton.

Makes you feel like an ol' whore some times, doesn't it?

 

[WorldTraveler]

Jacobin,
It is good to talk with you again….
The Cornerstone strategy is a REVENUE strategy and AA defined what cities matter. Those cities are NYC, ORD, MIA, DFW, and LAX. There is no doubt about how AA is doing in DFW and MIA, hubs which it currently dominates. But AA’s position in ORD has slipped over the past several years, esp. in the int’l markets. Quite simply in NYC, AA gave up huge amounts of share to DL in global markets including top business markets and to B6 in leisure oriented markets.

NYC is slot limited which seems AA’s size relative to DL and UA and every other player is basically locked absent a merger. Given the concerns about market concentration, the chances of a merger that significantly change market share in key markets, esp. those with limited entry potential, are very slim. AA is probably at the size it will be in NYC. Thus, it has to use what it has in order to maximize its revenue.
Remember that AA has had a strategy at LGA to add flights into other carrier hubs; ironically, it is precisely because of the slot deal that DL now has the slots to add enough flights into AA’s key hubs to really make a difference – which is why AA has a small revenue share into DL’s hubs from LGA at average fares below industry average but DL has much larger shares (as high as 33% of LGA-MIA) at average fares comparable to AA.

I’m not sure where you think AA has growth potential at LAX that DL doesn’t unless AA is underutilizing its gates which I have never seen to be true.

AA’s revenue at LAX will go down with its 321 strategy unless it adds more revenue elsewhere… they would have to add back as much revenue generating capacity as they are cutting to keep revenues constant.
AA’s problems at LAX are twofold – LAX-NRT and LAX-PVG – two routes where they lose enormous amounts of money trying to fly routes where they are far weaker than DL and UA. DOT data consistenly shows that AA’s average fares in both of these markets are well below DL or UA’s and DL gets more revenue just on its LAX-NRT flight than AA gets on BOTH of its two LAX-Asia flights. AA has a revenue problem from LAX to Asia that no new aircraft or BK can fix.

While AA is larger than DL and neck in neck with UA (post merger), AA is most definitely smaller than DL at SFO whether you talk about domestic only or int’l and whether you look at passengers boarded or revenue. DL is also larger than AA in the entire west coast region. LAX is the only major west coast city where AA has is on par with or larger than DL and UA.

Don’t confuse revenue and cost strategies. The new fleet is about reducing costs but it does next to nothing to change revenues. Customers rarely consider aircraft type as a purchase driver other than to use small RJs on routes well beyond the tolerance people have for them, and only when other carriers offer an alternative (larger RJs or mainline.)

There is no route that AA could fly with a new fleet that it can’t fly now. AA is using 2 class RJs at both LAX and NYC. Both airports are effectively limited by capacity so whatever AA adds with a new aircraft means something else has to be taken out.

AA could carry a lot more passengers from LGA than it does with its existing fleet; correct me if I am wrong but AA rarely uses the 757 at LGA anymore while DL has hourly flights from ATL on the 757.
DO you also realize that AA’s average fare on LGA-ORD is considerably below DL and UA’s even though AA has the largest share of the market, or IOW, AA is maintaining its share by accepting lower fares than other carriers?

I’m not interested in a “my tools are bigger than yours” argument but simply to demonstrate that AA has the potential RIGHT NOW with its current fleet to gain whatever revenue it needs; if it can’t get that revenue now, neither bankruptcy or a new fleet will change that.

As much as you would like to think that new aircraft will change the outlook for AA, they are just machines to deliver transportation. Customers buy a service.
If anything, your faith in the ability of aircraft to solve AA's problems without acknowledging the revenue generation and human relations issues that AA faces ignores what it will take to turn AA around.

The most important asset AA has is its people – and right they are demoralized and broken from a multi-phase restructuring process that has dragged on for a decade, well beyond what other carriers have taken to get the job done.

Passengers want to receive service from employees who are happy to serve them.
There is an abundance of evidence on this forum and in surveys elsewhere that AA has an enormous job to rebuild relationships with its people and, until it does that, it ability to convince passengers that AA is the best place for them to spend their travel dollars will be limited.
A new fleet can’t fix that. Bankruptcy can’t fix that.