JUSTICE DEPT SUES TO BLOCK US/AA MERGER
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Jacobin777
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IIRC, AA wasn't the carrier which really wanted to merge - nor was it Horton who as negotiating "behind the back" of the competitor the way Parker was (i.e.-to get AA unions join in the merger process).
Obviously US management "didn't do its homework" properly.
The ironic thing here is that if the merger doesn't go through, Horton can now really screw the AA unions with a new contract/agreement and the unions can't do too much besides striking (and I don't think that would work long-term).
I think Horton should redo contracts and completely dump the pensions the way UA and DL did.
Glenn Quagmire
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- Apr 30, 2012
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I am sure that will change the minds of the DOJ. Make sure you put all that in your letter to the judge.
freedom
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I think what your implying is that i'm "ranting" and if I were to put forth such a letter it would obviously sound insane ....
but the reality is that I'm NOT ranting ... The DOJ would whole heartedly approve this merger if they were afraid that AA would dissolve causing the loss of tens of thousands of jobs ... There's a political aspect to the Merger that has little to do with consolidation, passengers , or monopolies ...
If this wasn't purely political you wouldn't see so many cities suing in order to stop this , take Arizona for instance ... my state is undoubtedly afraid of the loss of jobs that will occur when the HQ moves from down town Tempe to Texas ...
Right now Arizona is just kinda chugging along , but losing Decent paying jobs will have a knock on effect on Mill ave ,the state , tax revenues will lessen ect ect ....
So really , if we're going to grab the tiger by the tail , we need to be prepared to think outside of the box ..To see the situation from several different angles .
overhauler
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- Mar 19, 2012
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I'm very happy this forced marriage orchestrated by Dougie, and the APA might not take place. AA doesn't need the nightmare that is America West/ US Air.
I disagree. The merger bolsters competition against the other big three (UA, DL and WN). US is not an effective competitor in many of these markets today, something I believe the DOJ overlooked. At this point, our opinions don't matter. This will either be decided by negotiations (which I'm sure are still continuing) or by a judge. I suspect the DOJ filed now as the AA Chapter 11 POR was about to be approved; this is now likely on hold, for an undetermined period of time.
Wow. So, you couldn't remain in markets before, but without a merger with US you will be able to? Did you get your costs down to jetBlue, VA and Spirit levels? All while DL and UA come at you from the other side?
Organic grow is great, but hard to do right now. Good luck.
WorldTraveler
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- Dec 5, 2003
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It will be decided in court... that's what the DOJ's action did in blocking the merger today and started the very lengthy process of appeal that AA and US both say they want to pursue.
AA's original reorg plan was based on 20% growth.
The simple notion that AA can grow itself to a size that will be competitive against its larger rivals is just not realistic. AA either has to figure out how to be a successful large niche carrier - and like it or not US is a successful niche carrier - or AA will face further cuts.
Given that the language of the DOJ's ruling severely puts in question any further mergers in the US airline industry, AA's strategic choices are not going to be easy.
Let's also not forget that AA's mainline Cost per ASM in the most recent quarter was above not only all of the low cost carriers including AS, B6, and WN but also DL and US. It is very hard to succeed at internal growth if your costs are higher than your peers.
There are a whole lot of strategic questions that have to be answered not the least of which is where AA goes from here.
OP
robbedagain
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the quest is if its rejected completely in court where in say 1 3 5 yrs would aa stand as well as us profits vs losses fuel expenses etc it was mentioned before but not sure when but it was mentioned that neither carrier could survive against dl ua in the long term
both airlines will appeal and accrding to an article on www.justplanenews.com the govt is relying heavily on the statements from the exectutives of both airlines...
both airlines will appeal and accrding to an article on www.justplanenews.com the govt is relying heavily on the statements from the exectutives of both airlines...
I definitely agree
Yes, AA's 2d quarter mainline CASM was higher than DL's, but not by much. If you add back the DL profit sharing that DL likes to exclude (and since AA's unions gave away their profit sharing, it's not an expense that will burden AA), the difference between AA's CASM and DL's CASM was de minimis.
What happens to AA's mainline CASM if AA adds all that capacity within five years like Horton planned in early 2012? Looks to me like that will drive down the mainline CASM by quite a bit. More ASMs against which to spread those fixed costs.
Further, AA doesn't have to have the lowest CASM, merely a healthy, large enough spread between its revenues and its costs to generate profits. As AA's mainline yield in 2012 was almost half a cent more than UA's mainline yield, and that spread continued for the first half of 2013, looks to me like AA will have little difficulty taking revenue away from UA even if AA struggles to take revenue away from DL. As AA grows its 2-class RJ operations, its regional yield should improve as well.
UA's costs are climbing and so are the costs at US. So far, the FAs have received raises. If the pilots figure out how to squeeze Parker for raises (even without a merger), then the costs at US will skyrocket.
Sure, DL could stymie AA's plans by growing its operations substantially, but so far, that doesn't look likely.
eolesen
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- Jul 23, 2003
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I don't think this will block future mergers. Keep looking to AT&T-TMobile as a parallel. Two companies in the top 5 trying to merge got shot down. T- Mobile with a smaller firm was OK.
DOJ's logic is pretty clear:
consolidation by smaller carriers = good
consolidation by larger carriers = bad
Looking back at the failed UA-US attempts, AA management now has an out clause they didn't have before. They were pressured into this by outside forces, and the unions.
They can choose not to push as hard if they want to, and the DOJ becomes the scapegoat. Or, they can try to make meaningful concessions to appease the DOJ, but I don't get a sense from DOJ's filing that there are concessions to be had which would do so. This isn't as easy as handing over a couple pairs of slots for auction.
Some of my more DC connected friends think this may just be the DOJ trying to appear like it is doing its job (as opposed to all the other examples lately where they're doing anything except upholding and following the law), and that they'll negotiate a settlement. Time will tell if that results in a deal so bad nobody wants to eat it.
It's going to be interesting to watch, though. Too many people were assuming this was a done deal and a slam dunk from the get-go, and watching the deal get stopped dead in its tracks is a bit rewarding to the pessimists who were repeatedly smacked down...
DOJ's logic is pretty clear:
consolidation by smaller carriers = good
consolidation by larger carriers = bad
Looking back at the failed UA-US attempts, AA management now has an out clause they didn't have before. They were pressured into this by outside forces, and the unions.
They can choose not to push as hard if they want to, and the DOJ becomes the scapegoat. Or, they can try to make meaningful concessions to appease the DOJ, but I don't get a sense from DOJ's filing that there are concessions to be had which would do so. This isn't as easy as handing over a couple pairs of slots for auction.
Some of my more DC connected friends think this may just be the DOJ trying to appear like it is doing its job (as opposed to all the other examples lately where they're doing anything except upholding and following the law), and that they'll negotiate a settlement. Time will tell if that results in a deal so bad nobody wants to eat it.
It's going to be interesting to watch, though. Too many people were assuming this was a done deal and a slam dunk from the get-go, and watching the deal get stopped dead in its tracks is a bit rewarding to the pessimists who were repeatedly smacked down...
overhauler
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- Mar 19, 2012
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Fess up, what is it about commas and periods you don't like?
AANOTOK
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Yep E, and just like you love to trash WT when anything about DL is mentioned, you and FWAAA's pants wetting over this announcement is sooooo obvious....I don't think this will block future mergers. Keep looking to AT&T-TMobile as a parallel. Two companies in the top 5 trying to merge got shot down. T- Mobile with a smaller firm was OK.
DOJ's logic is pretty clear:
consolidation by smaller carriers = good
consolidation by larger carriers = bad
Looking back at the failed UA-US attempts, AA management now has an out clause they didn't have before. They were pressured into this by outside forces, and the unions.
They can choose not to push as hard if they want to, and the DOJ becomes the scapegoat. Or, they can try to make meaningful concessions to appease the DOJ, but I don't get a sense from DOJ's filing that there are concessions to be had which would do so. This isn't as easy as handing over a couple pairs of slots for auction.
Some of my more DC connected friends think this may just be the DOJ trying to appear like it is doing its job (as opposed to all the other examples lately where they're doing anything except upholding and following the law), and that they'll negotiate a settlement. Time will tell if that results in a deal so bad nobody wants to eat it.
It's going to be interesting to watch, though. Too many people were assuming this was a done deal and a slam dunk from the get-go, and watching the deal get stopped dead in its tracks is a bit rewarding to the pessimists who were repeatedly smacked down...
eolesen
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- Jul 23, 2003
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Call it what you want, but the deal was all about market concentration. That's never been a good think for anyone in the long run.
There's another wildcard I'd overlooked while peeing in glee (according to the last post).
It would appear the 18 month exclusivity clause is now expired.
By the letter of the law, it would appear an unsolicited and competing bid can be submitted by outside parties, e.g. Indigo or TPG.
That would be the ultimate pissing in someone's Wheaties, no?
There's another wildcard I'd overlooked while peeing in glee (according to the last post).
It would appear the 18 month exclusivity clause is now expired.
By the letter of the law, it would appear an unsolicited and competing bid can be submitted by outside parties, e.g. Indigo or TPG.
That would be the ultimate pissing in someone's Wheaties, no?
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