Jacobin777
Senior
If only everyone understood the facts as eloquently has you have stated them (and FT as well).
I guess some people simply refuse to believe the truth.
JUSTICE DEPT SUES TO BLOCK US/AA MERGER
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If only everyone understood the facts as eloquently has you have stated them (and FT as well).
I guess some people simply refuse to believe the truth.
eolesen
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- Jul 23, 2003
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So, in your spare time when you weren't being a local president or fixing aircraft, I suppose you were inviting yourself down to the DOJ antitrust division's offices to oversee what they were doing back then?
The DOJ doesn't act in a vacuum. The process of approving a merger is interactive, with some discovery required.
I know you're smarter than a lawyer when it comes to negotiating, but even a lawyer can tell which way things are going based on the type of information requests that are being made, and amount of follow-up that goes on.
The government stepped in because the freight railroads wanted out of the business of moving passengers. Passenger trains had priority over freight, and that disrupted how things moved. Passenger rail had also lost money consistently for the two decades prior to the 1971 creation of Amtrak.
I can go on for days talking about why passenger rail wound up in the government's hands if you want to, and there's really no comparison between the two industries aside from the Railway Labor Act...
Exactly which airlines haven't been profitable, Bob? The ones who were burdened down by 50 years of contract language that couldn't keep pace with technology or customer behaviors? Or the ones who were able to adapt to a changing market place?
I'll give you a hint: contract language may be great for the employee, but it inhibits innovation and keeping up. It's almost as bad as having politicians decide what's good for the people instead of letting people choose for themselves.
It's a zero sum game in that there's no loss or gain of total customers, but it's putting the pricing power of 50% of the airline customers into the hands of four companies, and it's been done by consistently taking out the companies who had the ability to undercut the network airlines' fares the most.
When DL & NW was approved, CO, US, F9, YX, and FL were around to disrupt things.
When UA & CO was approved, US and FL were around to disrupt things, but YX was being priced out of business by the new DL.
When WN & FL was approved, there was still US to disrupt things, YX was folded into F9, which itself was being priced out of business by the new UA.
If US & AA is approved, who is left?
See a pattern? It's not too difficult. It's like that "and then they came for me" snippet that people like to quote from time to time.
At some point, the madness has to stop.
OP
robbedagain
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wn B6 spirit allegiant to name a few 
WorldTraveler
Corn Field
- Dec 5, 2003
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I have no idea where you come up with your statistics for SFO traffic but, not surprisingly, your AA numbers are exactly what I see but your DL numbers are a couple hundred thousand passengers short.
Perhaps SFO’s official traffic report will provide a little clarity. You would think they know who boards passengers, wouldn’t you? They say:
Airline Market Share at SFO
46% United Airlines
9% Virgin America
8% (tie) Delta, Southwest/AirTran - See more at: http://www.flysfo.com/web/page/about/news/pressrel/2013/sf1304.html#sthash.PG1zO7Ha.dpuf
Hmmm… maybe AA’s really not larger than DL at SFO.
Yes, I’ve said before that AA has enough slots to make NYC work but for some reason they continue to lose share to DL and B6. The issue is clearly not a lack of slots but AA’s ability to compete.
So, it is irrelevant that AA doesn’t bother to use 757s at LGA but somehow getting A319s and Ejets are going to solve the problem. Why couldn’t AA use M80s and 738s for mainline flights today and why are CR7s going to do that Ejets or mainline aircraft can’t IN TERMS OF REVENUE? Nothing! Those aircraft may cost less to operate but if AA decided it didn’t want to operate using aircraft it had, why do we think that new aircraft that are not significantly different in size are going to make any difference? IF AA wanted to pursue revenue and maintain its market share, they wouldn’t have sat still for years waiting for new aircraft.
AA’s new fleet will trade lower operating costs in the first several years for a substantial amount of new debt; AA and UA are basically taking the same strategy of buying hundreds of new aircraft in a relatively short period of time but are taking on enormous levels of debt while other carriers are not following that strategy.
I’m sure you and others will argue that the strategy will work but you need only look at the successful LCCs like WN and AS to realize they buy what they can afford without taking on significant amounts of debt. That is the strategy that DL is following. I am as certain as the day is long that there will be a significantly positively difference in DL’s financial health a few years from now compared to AA and UA that can be directly attributable to DL’s decision to not spend money on airplanes as if Boeing and Airbus were shutting their doors tomorrow.
I’ve been hanging around this board for 10 years already… I can wait five more to see if I am right on this or not.
You, sir, have shiny jet syndrome – a aviation disease that is characterized by the notion that a machine can solve any problem.
AA lost a whole lot of ground in NYC and it is simply wishful thinking that they will regain it.
Do you realize that over the past 10 years, AA and UA have basically traded places in ORD international with respect to size? Ten years ago, AA outboarded UA in international passenger with 40% of the local int’l market compared to 33% for UA. Now the numbers have reversed but more significantly, UA’s international revenues have grown much faster than AA’s which means the revenue gap between AA and UA is much larger than it was before.
Yes, AA loyalist, AA has lost a lot of ground in NYC and ORD in the international arena and in LAX they are holding their own only by operating two heavily money-losing routes.
The DOT DOES publish the CASM and profitability for regions and they also provide market level revenue data, so it is indeed possible to say with a pretty high degree of uncertainty if a route is losing money. Besides, the DOT does provide identical revenue comparisons between airlines and when DL carries as much revenue on its single LAX-NRT as AA carries on its LAX-NRT PLUS LAX-PVG, DL is either rolling in cash or AA is losing boatloads of money. And DL still has a LAX-HND route that is generating more revenue on a smaller aircraft than either of AA’s two LAX-Asia routes.
I’m glad you recognize that being the largest doesn’t matter but you still want to fight to say that AA is larger in SFO. Wall Street would differ with you that “just enough profits” are ok.. I don’t’ think any airline has been accused of making too much.
Yes, AA has had a revenue problem whether you want to admit it or not.
Delta Air Lines Inc. collected 12% more revenue than American for every seat flown a mile in the third quarter this year. And yet it cost Delta 6% less to fly each seat one mile. (A seat mile, one seat flown one mile, is the standard way to compare unit revenue and costs in the airline industry.)
http://blogs.wsj.com/middleseat/2011/11/29/american-airliness-problems-not-just-a-costs-but-revenue-too/
And other carriers are engaged in refleeting as well including DL. DL just happened to stop at 100 new mainline narrowbodies instead of 450 or so for AA. DL’s getting the rest used at much lower prices but very similar operating costs. Other carriers are refleeting too, including WN using lower CASM aircraft. Thus, the difference in operating gains for AA because of its new fleet will be minimal and those gains will be wiped out by the higher ownership costs.
Shiny jet syndrome is curable by careful review of industry financials including watching AA’s financials compared to its peers over the next few years.
If you think that AA’s labor situation is so spotless, may I remind you what happened just under a year ago… in a move that did wonders to help DL increase its revenue share. Did you happen to notice that DL’s corporate revenue gains increased in the quarters following the labor events of last fall? Given that UA had their own operational meltdowns and AA had labor issues, corporate contracts were looking for someone who could help them get their employees where they needed to be with some reliability. It didn’t hurt that DL had just added 125 new flights at LGA, one of the most corporate contracted concentrated airports in the US.
If this merger really forces AA labor back into the arms of the management AA labor was running from, you might want to be very careful about any assessments of how great labor relations are at AA.
Perhaps SFO’s official traffic report will provide a little clarity. You would think they know who boards passengers, wouldn’t you? They say:
Airline Market Share at SFO
46% United Airlines
9% Virgin America
8% (tie) Delta, Southwest/AirTran - See more at: http://www.flysfo.com/web/page/about/news/pressrel/2013/sf1304.html#sthash.PG1zO7Ha.dpuf
Hmmm… maybe AA’s really not larger than DL at SFO.
Yes, I’ve said before that AA has enough slots to make NYC work but for some reason they continue to lose share to DL and B6. The issue is clearly not a lack of slots but AA’s ability to compete.
So, it is irrelevant that AA doesn’t bother to use 757s at LGA but somehow getting A319s and Ejets are going to solve the problem. Why couldn’t AA use M80s and 738s for mainline flights today and why are CR7s going to do that Ejets or mainline aircraft can’t IN TERMS OF REVENUE? Nothing! Those aircraft may cost less to operate but if AA decided it didn’t want to operate using aircraft it had, why do we think that new aircraft that are not significantly different in size are going to make any difference? IF AA wanted to pursue revenue and maintain its market share, they wouldn’t have sat still for years waiting for new aircraft.
AA’s new fleet will trade lower operating costs in the first several years for a substantial amount of new debt; AA and UA are basically taking the same strategy of buying hundreds of new aircraft in a relatively short period of time but are taking on enormous levels of debt while other carriers are not following that strategy.
I’m sure you and others will argue that the strategy will work but you need only look at the successful LCCs like WN and AS to realize they buy what they can afford without taking on significant amounts of debt. That is the strategy that DL is following. I am as certain as the day is long that there will be a significantly positively difference in DL’s financial health a few years from now compared to AA and UA that can be directly attributable to DL’s decision to not spend money on airplanes as if Boeing and Airbus were shutting their doors tomorrow.
I’ve been hanging around this board for 10 years already… I can wait five more to see if I am right on this or not.
You, sir, have shiny jet syndrome – a aviation disease that is characterized by the notion that a machine can solve any problem.
AA lost a whole lot of ground in NYC and it is simply wishful thinking that they will regain it.
Do you realize that over the past 10 years, AA and UA have basically traded places in ORD international with respect to size? Ten years ago, AA outboarded UA in international passenger with 40% of the local int’l market compared to 33% for UA. Now the numbers have reversed but more significantly, UA’s international revenues have grown much faster than AA’s which means the revenue gap between AA and UA is much larger than it was before.
Yes, AA loyalist, AA has lost a lot of ground in NYC and ORD in the international arena and in LAX they are holding their own only by operating two heavily money-losing routes.
The DOT DOES publish the CASM and profitability for regions and they also provide market level revenue data, so it is indeed possible to say with a pretty high degree of uncertainty if a route is losing money. Besides, the DOT does provide identical revenue comparisons between airlines and when DL carries as much revenue on its single LAX-NRT as AA carries on its LAX-NRT PLUS LAX-PVG, DL is either rolling in cash or AA is losing boatloads of money. And DL still has a LAX-HND route that is generating more revenue on a smaller aircraft than either of AA’s two LAX-Asia routes.
I’m glad you recognize that being the largest doesn’t matter but you still want to fight to say that AA is larger in SFO. Wall Street would differ with you that “just enough profits” are ok.. I don’t’ think any airline has been accused of making too much.
Yes, AA has had a revenue problem whether you want to admit it or not.
Delta Air Lines Inc. collected 12% more revenue than American for every seat flown a mile in the third quarter this year. And yet it cost Delta 6% less to fly each seat one mile. (A seat mile, one seat flown one mile, is the standard way to compare unit revenue and costs in the airline industry.)
http://blogs.wsj.com/middleseat/2011/11/29/american-airliness-problems-not-just-a-costs-but-revenue-too/
And other carriers are engaged in refleeting as well including DL. DL just happened to stop at 100 new mainline narrowbodies instead of 450 or so for AA. DL’s getting the rest used at much lower prices but very similar operating costs. Other carriers are refleeting too, including WN using lower CASM aircraft. Thus, the difference in operating gains for AA because of its new fleet will be minimal and those gains will be wiped out by the higher ownership costs.
Shiny jet syndrome is curable by careful review of industry financials including watching AA’s financials compared to its peers over the next few years.
If you think that AA’s labor situation is so spotless, may I remind you what happened just under a year ago… in a move that did wonders to help DL increase its revenue share. Did you happen to notice that DL’s corporate revenue gains increased in the quarters following the labor events of last fall? Given that UA had their own operational meltdowns and AA had labor issues, corporate contracts were looking for someone who could help them get their employees where they needed to be with some reliability. It didn’t hurt that DL had just added 125 new flights at LGA, one of the most corporate contracted concentrated airports in the US.
If this merger really forces AA labor back into the arms of the management AA labor was running from, you might want to be very careful about any assessments of how great labor relations are at AA.
Flying low
Veteran
- Jul 19, 2011
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Can anyone see what the WSJ says in this article? I don't subscribe to it....
U.S. Leaves American-US Airways Deal in the Lurch
Some Executives Had Relocated to Work at Combined Airline Before Merger Was Challenged
U.S. Leaves American-US Airways Deal in the Lurch
Some Executives Had Relocated to Work at Combined Airline Before Merger Was Challenged
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- #201
Type the exact name of the article in http://news.google.com/ and you can see it
Fair use:
"The merger agreement expires in mid-December if it hasn't received regulatory approval by then, if a government order prohibits the deal or if either party wants to abandon it, according to the fine print. According to people close to the situation, the two airlines could extend the expiration date if both sides agreed. But if one or the other doesn't want to go along, the merger plan would die.
"AMR, which spent part of last year resisting the merger, won't be allowed to go soft in its defense of the transaction, these people said, and it isn't expected that the company would do so. AMR has fiduciary and contractual obligations to fight for the deal because its board and creditors have approved it. "
Parker has already moved to the DFW area.
Fair use:
"The merger agreement expires in mid-December if it hasn't received regulatory approval by then, if a government order prohibits the deal or if either party wants to abandon it, according to the fine print. According to people close to the situation, the two airlines could extend the expiration date if both sides agreed. But if one or the other doesn't want to go along, the merger plan would die.
"AMR, which spent part of last year resisting the merger, won't be allowed to go soft in its defense of the transaction, these people said, and it isn't expected that the company would do so. AMR has fiduciary and contractual obligations to fight for the deal because its board and creditors have approved it. "
Parker has already moved to the DFW area.
Flying low
Veteran
- Jul 19, 2011
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- 232
Thanks WT.
http://www.cnbc.com/id/17099330 You know you just gotta laugh Doug in his apology says it isn't a trend! This was in 2007, Doug is better at establishing trends than anyone can imagine, how many failed merger attempts? What is even stranger is the unions, wallstreet, giving this guy the keys to the largest airline in the US, now who is showing lack of judgement?
WorldTraveler
Corn Field
- Dec 5, 2003
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US government air service contract awards can be found here.http://apps.fas.gsa.gov/citypairs/search/index.cfm?ft
PullUp
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- May 22, 2010
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So, just thinking out loud: Why did the Southwest/Airtran acquisition slide through DOJ review without a peep? Neither airline was in BK. Both airlines were doing well financially.
Airtran was bought to eliminate a competitor. Many head to head routes were cheaper on Airtran with better perks and first class too.
So this merger reduced the level of services offered to the public, eliminated a 'disruptor' airline that kept prices low, and reduced capacity in the overall marketplace enabling higher ticket pricing. BTW, does this sound familiar?
And the DOJ never voiced an objection?
I think DP needs to hire the lawyers that Southwest used....
Airtran was bought to eliminate a competitor. Many head to head routes were cheaper on Airtran with better perks and first class too.
So this merger reduced the level of services offered to the public, eliminated a 'disruptor' airline that kept prices low, and reduced capacity in the overall marketplace enabling higher ticket pricing. BTW, does this sound familiar?
And the DOJ never voiced an objection?
I think DP needs to hire the lawyers that Southwest used....
Two possible reasons: One is that adding FL to WN did not result in as large a market concentration increase as adding AA and US together (which is proven objectively if you look at the data); the other possible reason is that the DOJ dropped the ball and screwed up on the prior mergers, including WN-FL. If you read the complaint and Baer's prepared statement from a week ago, he basically admits that the prior mergers have resulted in the lessening of competition and not all the benefits that their proponents claimed. In short, he all but admits that the DOJ screwed up in the past.
There is no legal basis for US-AA to win by claiming that the government has to permit them to merge because the others got to merge. Parker's lawyers know that and have told him that - but obviously that's not the statements they make in public.
Sorta like when a lawyer knows their client is guilty but argues on the courthouse steps and in the courtroom that their client is innocent and will be vindicated at trial.
Even if everything you wrote is absolutely true, antitrust law doesn't permit two competitiors to violate the Clayton Act "because WN-FL violated the Clayton Act and the DOJ didn't stop them." Same story with DL-NW and UA-CO. That the DOJ may have been asleep at the switch and wrongly permitted those mergers doesn't require the government to let this one slide.
ContUNITEus
Veteran
- May 4, 2011
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I suppose that the thinking is that 4 wrongs don't make it right. Three was ok, but a fourth time.... nahhhh...
Now.... QUESTION: At what point do you stop it?
Do you think that maybe, after there are only four true coast to coast airlines left over - AA, DL, UA, and WN, it should still be OK for the American People and the DOJ to allow them to merge with each other, narrowing it down to two? Would you say, then: "well, we let them merge up until now, why stop now? How is that any fair? How is it right that we didn't stop them before, and are now stopping them?" Correct?
At what point do you put the breaks on? Who's to judge that enough consolidation is enough? Why should we ever stop them? Just let them all become one mega airline, to compete with all the other regionals and low-cost.
What would be the point of Anti-trust laws? Why not abolish Anti-trust laws altogether, since they, obviously, in some people's minds, interfere with free enterprise?
Here is my rant contribution for the day...
Why didn't we let At&t and T-mobile merge? It just makes complete sense to get rid of a Cell company that provides lower-priced cell-phone services? All of us can afford at&t. They should be allowed to dominate along with Verizon and Sprint. In fact, Verizon and Sprint should also merge, after at&t and T-Mobile give it another shot. There should only be one or two mega-phone companies. All the smaller phone companies, like Virgin Mobile should also be merged in with the pack.
Why not let Dish and DIrecTV merge? Who needs two main satellite TV companies? The ideal business world should be one with only one Satellite TV company so they can have 100% of their market?
Adobe, Microsoft and Apple also should merge. There should only be one OS out there, since they are pretty much copying each others ways - now-a-days. Windows looks day to day more like OSX and OSX looks day to day more like Windows. Looks to me that they are up to something. With an Adobe, MS, and Apple merger, we the consumers would benefit, as one company, would be able to offer us everything that we need - and shockingly - at lower prices - SUBSCRIPTION BASED ONLY.
Win-Dixie, Publix, and Kroger (and who knows who else) should all merge so that there is only two supermarket chains left in the country - Wholefoods and Kroger.
Sort of like we allowed with LA fitness... No more is there any competition to them and 24 Hours. - Bally's is gone already.
Walgreens and CVS are the dominant pharmacies, there only should be one left... Walgreens. All the other smaller chains need to be bought out.
Sears needs to discontinue its name and merge with Kmart, which then needs to be sold to Walmart.
We must allow only one company to survive, sort of like we did with Boeing, when they killed off their US competition - McDonnell Douglas and Lockheed.
Now.... QUESTION: At what point do you stop it?
Do you think that maybe, after there are only four true coast to coast airlines left over - AA, DL, UA, and WN, it should still be OK for the American People and the DOJ to allow them to merge with each other, narrowing it down to two? Would you say, then: "well, we let them merge up until now, why stop now? How is that any fair? How is it right that we didn't stop them before, and are now stopping them?" Correct?
At what point do you put the breaks on? Who's to judge that enough consolidation is enough? Why should we ever stop them? Just let them all become one mega airline, to compete with all the other regionals and low-cost.
What would be the point of Anti-trust laws? Why not abolish Anti-trust laws altogether, since they, obviously, in some people's minds, interfere with free enterprise?
Here is my rant contribution for the day...
Why didn't we let At&t and T-mobile merge? It just makes complete sense to get rid of a Cell company that provides lower-priced cell-phone services? All of us can afford at&t. They should be allowed to dominate along with Verizon and Sprint. In fact, Verizon and Sprint should also merge, after at&t and T-Mobile give it another shot. There should only be one or two mega-phone companies. All the smaller phone companies, like Virgin Mobile should also be merged in with the pack.
Why not let Dish and DIrecTV merge? Who needs two main satellite TV companies? The ideal business world should be one with only one Satellite TV company so they can have 100% of their market?
Adobe, Microsoft and Apple also should merge. There should only be one OS out there, since they are pretty much copying each others ways - now-a-days. Windows looks day to day more like OSX and OSX looks day to day more like Windows. Looks to me that they are up to something. With an Adobe, MS, and Apple merger, we the consumers would benefit, as one company, would be able to offer us everything that we need - and shockingly - at lower prices - SUBSCRIPTION BASED ONLY.
Win-Dixie, Publix, and Kroger (and who knows who else) should all merge so that there is only two supermarket chains left in the country - Wholefoods and Kroger.
Sort of like we allowed with LA fitness... No more is there any competition to them and 24 Hours. - Bally's is gone already.
Walgreens and CVS are the dominant pharmacies, there only should be one left... Walgreens. All the other smaller chains need to be bought out.
Sears needs to discontinue its name and merge with Kmart, which then needs to be sold to Walmart.
We must allow only one company to survive, sort of like we did with Boeing, when they killed off their US competition - McDonnell Douglas and Lockheed.
Yep. Many people are incorrectly concluding that the failure to prosecute all the other airlines for violating the law when they merged is somehow precedent they can cite to support a government loss in this case when it does decide to enforce the law. That's not how the legal system works.
Precedent comes from court decisions, not the exercise of prosecutorial discretion (what DAs and US Attorneys do when they decide not to prosecute or sue someone for what might be a violation of a law).
I have already stated it was going to be a costly merger if allowed to go forward. Matter fact I said it will involve more concessions than any past mergers that have taken place.
BTW; Heard some very interesting "rumor" the other day. SWA is examining the costs related with starting flts from DFW. Yes I said DFW. We all know that SWA would have to give up gate for gate from Love Field to DFW if they do, BUT, they are not restricted from doing so. Matter fact I was told they are looking at using "international flights only" from DFW as this would more than pay for the off-set. On a side note; also heard SWA may have found a loop hole where they may not have to give up any gates at Love as this would be "international gates" at DFW not domestic gates as the W/A calls for a 1 for 1 in gates, and this would be not be same gate for same gate. Time frame I was told was hopefully using DFW by 1st or 2nd quarter of 2015, has something to do with the expiration of the W/A. Just wondering if this will have something to do with some concessions or divestures at DFW for the AA/US merger. Very interesting to say the least. Bad timing for AA to have to worry about fighting against the W/A again, but it looks like they are going to have to. This would be the best time for SWA to slip into DFW as AA is focusing on the merger and coming out of BK. It would be 1 gate for now until results are seen then grow as needed. We were all told that SWA would benefit from this merger as they have from past mergers, just never thought we would consider DFW so soon, but I guess this would be the best time, and SWA has already experienced other big airports. I have not been able to confirm this since I heard it late last week. But you know how rumors are, hell, we were never able to confirm the AT purchase rumors. When I know more I will post...
BTW; Heard some very interesting "rumor" the other day. SWA is examining the costs related with starting flts from DFW. Yes I said DFW. We all know that SWA would have to give up gate for gate from Love Field to DFW if they do, BUT, they are not restricted from doing so. Matter fact I was told they are looking at using "international flights only" from DFW as this would more than pay for the off-set. On a side note; also heard SWA may have found a loop hole where they may not have to give up any gates at Love as this would be "international gates" at DFW not domestic gates as the W/A calls for a 1 for 1 in gates, and this would be not be same gate for same gate. Time frame I was told was hopefully using DFW by 1st or 2nd quarter of 2015, has something to do with the expiration of the W/A. Just wondering if this will have something to do with some concessions or divestures at DFW for the AA/US merger. Very interesting to say the least. Bad timing for AA to have to worry about fighting against the W/A again, but it looks like they are going to have to. This would be the best time for SWA to slip into DFW as AA is focusing on the merger and coming out of BK. It would be 1 gate for now until results are seen then grow as needed. We were all told that SWA would benefit from this merger as they have from past mergers, just never thought we would consider DFW so soon, but I guess this would be the best time, and SWA has already experienced other big airports. I have not been able to confirm this since I heard it late last week. But you know how rumors are, hell, we were never able to confirm the AT purchase rumors. When I know more I will post...
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