Merger Relief for American Airlines: April 24, 2012

[WorldTraveler]

Let's make something very clear.
You, wings, had no interest whatsoever with me until US decided to publicly pursue a merger via AA's labor unions. The ONLY reason why I have become public enemy to you is because I have come out so strongly AGAINST the idea, showing why AA employees and the company and its creditors will be harmed by pursuing a merger with AA.
The fact that there is NO evidence that US is succeeding in convincing the non-labor creditors that it is worth their while to pursue a merger with US and in fact evidence showing they are not interested in pursuing a merger validates that my points are correct - and I am certain that will continue right through the 1113 process, after which US has very little ability to convince anyone at AA that they can provide a superior offer.
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This ALL has nothing to do with Delta and your feeble attempts at trying to connect the two demonstrates your frustration.
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Despite your arguments that I am only about DL, I have repeatedly said and continue to say that I believe AA's best course of action is to emerge as a standalone... and ONLY if US forces a competitive bidding process which the creditors believe is necessary will DL along with BA and TPG and whoever else wants to bid bring forth their bids, which is precisely why you and Parker are scared to death at the prospect that this whole thing will get out of US' control.
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Guess what? It was NEVER in US' control and all the noise that you and others made about how this merger was in the bag overlooked the whole fact that the non-labor creditors and mgmt have far more of a say in what goes on than you want to give them credit for. And while Parker may have learned to get labor on board, he hasn't succeeded with AA mgmt or the non-labor creditors - and when the 1113 process is completed, even labor will find little attractive about US.
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And then US will be once again forced to compete after losing yet another chance of acquiring a larger network carrier.
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I don't despise US - but I have little interest in hearing the whining about why US "deserves" a merger when it has forfeited one opportunity after another in key competitive markets and has retreated to its own strength markets, which is where its network strength exists.
The slot deal is a perfect example of how DL spent two years patiently waiting - and ended up with 3X the number of slots gained at LGA as it ended up giving to US at DCA, a far less valuable business travel market. Even now, DL has moved far more aggressively at using its slots.
So you tell me why we should believe that US should be trusted with some of the finest assets in the industry complements of AA when they have forfeited one opportunity after another.
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The fact that DL happens to have been the airline that has been most effective at pushing US further and further against the wall doesn't change the fact that US' future will be determined by AA's creditors and mgmt, not DL's.

No, the creditors are not throwing executives overboard because they are worried about a US merger. AMR said from day 1 of their BK that they would eliminate 20% of their executive ranks.... many of those that have been or will be released are eligible to retire. AA is not unaware that alot of people are not impressed with the past 10 years of performance by its entire mgmt team and changes needed to be made - but pushing a bunch of retirement-ready execs out the door in order to meet the 20% requirement for senior level retirements hardly indicates fear of Wall Street backlash.

BTW,
here is a BLISTERING assessment of where UA is right now and evidence that AA is picking up boatloads of passengers bolting from UA.

http://www.portfolio.com/business-travel/2012/05/02/united-airlines-hurt-by-passenger-and-employee-complaints/index.html

It probably doesn't help US that they are a partner of UA right now ... and it certainly makes AA's job of correcting its revenue shortfalls a whole lot easier.... which of course makes Parker's job of convincing AMR's creditors that they need US all the more difficult.
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Maybe Parker still has a chance at picking up UA....

 

[Buck]

"AMR seems to be signaling that it has become alarmed enough by recent developments to suddenly sack the veteran wrangler of its decade-long position toward labor. This could mean AMR has sensed that either the bankruptcy court is becoming attracted to the US Airways plan versus its own restructuring plan or that the court is just plain losing confidence in AMR management's ability to manage its way out of this mess," Bryan wrote in an investor note on Wednesday.

-Andrea Ahles

 

[wings396]

I still have no interest in you, and have always found your Pro-Delta stuff to be a bit overboard as well as annoying. You chimed in on many US posts long before the AA topic came about. You are now going over the top in trying to convince whoever you can that AA is better off without US, even though credible sources are saying otherwise. Are you in touch with any of the creditors on the UCC to know where they stand on the merger? I have seen many of your page long Delta love letters posed on their boards, and have often wondered how/why anyone to be so Pro-company while claiming not to work for them. I think that you have also bashed SWA & AT prior to becoming consumed with the AA/US topic. I have been on these boards for nearly 10 years, and have NEVER seen anyone so vocal about any airline such as you are. If it has any possible effect on Delta, you are on it like a fly on a fresh turd. If you honestly have no ties to Delta in any way shape or form, you should seek mental help. You must have some hidden motivating factor that drives you to spend a good portion of your life typing all of this rhetoric about the airlines.

Are you even in the Airline Industry?
Did you previously work for Delta?
Do you want to work for Delta?
Are you working with one of Delta's PR firms?
Are you a lobbyist for Delta?
Are you really Richard Anderson, or a bootlicker of his?
Are you one of AA's Creditors?
Are your working for Horton?
Are you just some poor lonely guy who has nothing else to do, except post here?
Are you just dong this because you saw Delta L-1011's when you were a kid?
Are you a college student working a degree in airline management?
If you can't answer YES to any of these questions, pick up the phone NOW, and call for help.
If you hurry, perhaps you can land a managers job at that new Delta refinery outside of Philly.....

 

[FWAAA]

"AMR seems to be signaling that it has become alarmed enough by recent developments to suddenly sack the veteran wrangler of its decade-long position toward labor. This could mean AMR has sensed that either the bankruptcy court is becoming attracted to the US Airways plan versus its own restructuring plan or that the court is just plain losing confidence in AMR management's ability to manage its way out of this mess," Bryan wrote in an investor note on Wednesday.

-Andrea Ahles

Vicki Bryan is either woefully out of touch with what's been happening since Nov 29 or she's lazy and making things up.

WT is right: this week's announcements of departing executives are merely a continuation of what Horton announced months ago and have nothing to do with the court "becoming attracted to US" or the court "losing confidence in AMR management's ability to manage its way out of this mess."

 

[MCI transplant]

<_< ----- The above post is what is known as "damage control"!!!

 

[Mach85ER]

My work is done here. My large suppository of truth has worked it's way into the afflicted. In some cases, it may have inspired thought and reflection despite the discomfort, to others, it is pleasure. Those people disturb me. I'm out, later.

 

[ebwgs]

I still have no interest in you, and have always found your Pro-Delta stuff to be a bit overboard as well as annoying. You chimed in on many US posts long before the AA topic came about. You are now going over the top in trying to convince whoever you can that AA is better off without US, even though credible sources are saying otherwise. Are you in touch with any of the creditors on the UCC to know where they stand on the merger? I have seen many of your page long Delta love letters posed on their boards, and have often wondered how/why anyone to be so Pro-company while claiming not to work for them. I think that you have also bashed SWA & AT prior to becoming consumed with the AA/US topic. I have been on these boards for nearly 10 years, and have NEVER seen anyone so vocal about any airline such as you are. If it has any possible effect on Delta, you are on it like a fly on a fresh turd. If you honestly have no ties to Delta in any way shape or form, you should seek mental help. You must have some hidden motivating factor that drives you to spend a good portion of your life typing all of this rhetoric about the airlines.

Are you even in the Airline Industry?
Did you previously work for Delta?
Do you want to work for Delta?
Are you working with one of Delta's PR firms?
Are you a lobbyist for Delta?
Are you really Richard Anderson, or a bootlicker of his?
Are you one of AA's Creditors?
Are your working for Horton?
Are you just some poor lonely guy who has nothing else to do, except post here?
Are you just dong this because you saw Delta L-1011's when you were a kid?
Are you a college student working a degree in airline management?
If you can't answer YES to any of these questions, pick up the phone NOW, and call for help.
If you hurry, perhaps you can land a managers job at that new Delta refinery outside of Philly.....

Like

 

[eolesen]

Like

Yep.

I hear that WT really likes the widget colored gift baskets available by clicking on the

whenever you see them.

I hear he likes the red ones much better than the green ones...

 

[WorldTraveler]

And the question remains what difference does it make in the discussion at hand whether God himself or an alien from Mars is speaking. If what is being said is truth, then that will become apparent in time.
The notion that anyone has more of a “right” to speak or assert their ideas because of some proximity to the situation goes out the window when you participate in a public discussion. If you want to convince AA employees this is a good deal, talk to them in person at their work locations (assuming AA mgmt doesn’t get you kicked off the property). When you choose to participate in a public forum, you have to live with input from everyone, regardless of how “connected” they are or not to the situation and whatever “right” they have or do not have to speak on the topic.
Since lists are in order, I’ll make mine:
1. AA is in BK for the 1st time… morally and legally they get their chance to restructure their company using the same laws and processes that everyone else in the legacy segment has used at least once - and notably US, multiple times. The exclusivity period remains in AA mgmt and creditors’ favor.
2. Only if AMR’s creditors believe they cannot successfully restructure the company will they seek alternate bidders – and likely before AA emerges they will be forced to entertain alternate bids just to verify that the AA standalone plan is best for all involved. If anyone can top AA’s standalone plan at the time that competing bids will be received, AA will probably NOT emerge as a standalone.
3. For now, AA is delivering ABOVE AVERAGE RASM growth, helped in part by problems at UA which continue to grow. While US is running as good of an airline as they have for years, AA is still producing superior revenue to US.
4. The largest piece of AMR’s BK that remains to be done is reworking their labor contracts. History strongly supports AA’s ability to succeed in the 1113 process since it has been used MULTIPLE times in the industry so far – and the law protects the company from actions by its employees. Legal actions or not, the vast majority of employees will show up the day after the cuts are made and thousands of employees are laid off; that has happened multiple times before at other airlines – and it happened at AA in 2003.
5. If a competitive bidding process emerges, it is unlikely that US, one of the financially weakest airlines in the US will be able to succeed at mounting a successful bid against other parties, including airlines outside of the US and investors outside of the airline industry. That is just hard, cold reality.
6. Despite multiple mergers and BKs, US still underperforms the industry in many key revenue-generating metrics, exactly the largest benefit they SHOULD be able to offer AA. AA can cut costs to levels necessary to compete; that is what BK does. IF AA merges with anyone, it will be based on the ability to significantly raise AA’s revenue profile. Given that AA produces superior quality revenues and has a larger presence in the largest competitive markets in the country while US’ revenue comes from smaller markets, US could offer very little to AA in terms of revenue.
7. Further consolidation remains likely in the airline industry. As fuel prices rise and demand consolidates among fewer players, it will continue to be necessary to have fewer airlines with broader networks. Thus, AA and US both have structural issues that put them at disadvantages to DL, UA, and WN. Given that UA and WN are still involved in mergers which are years away from being completed and are currently encountering significant difficulties, DL and US do have an advantage in being able to push consolidation but the largest and most successful players in the industry do and will have an advantage in consolidation. If AA successfully restructures, it will have considerable leeway in picking its merger partners - and it could involve B6 or AS - but probably not both at the same time. If UA completes its current merger w/o imploding, they could very well be interested in other assets, the most valuable of which remains US' CLT hub. But for now, given that everything DL needs, US also needs (but not vice-versa), it is highly unlikely that smaller US will succeed at outbidding DL in gaining the pieces necessary for DL to complete its network, particularly given that DL is generating financial returns close to the top of the network carrier segment of the industry. Throw in that there are several niche carriers including AS and B6 that also generate strong financials and could easily be interested in consolidation that involves picking up key industry assets, and it makes it even more unlikely that US will succeed at picking up one of the larger network carriers that all have very valuable industry assets.

Instead of worrying about who is posting and for what reason, how about focusing on those key realities?

 

[Mach85ER]

You're right world.

You are smarter than a former CEO that ran American when it was number one in service and other areas.

Maybe when the NFL season opens, you can sit in the upper deck at Giants Stadium and yell down to Tom Coughlin and tell him why your game plan is better than his.

Keep chewing, you'll get your leg out of the trap soon.

 

[mistified]

And the question remains what difference does it make in the discussion at hand whether God himself or an alien from Mars is speaking. If what is being said is truth, then that will become apparent in time.
The notion that anyone has more of a “right” to speak or assert...................... bla-bla........bla...bla..

WT
This is the first time in coperate history (airlines for sure) that while in BK the employees have sided with the suiter for a hostile take over of their company. And in doing so have basically anounced to the World, Wall Street and the Courts that they have - ZERO - confidence in the leaders.
This BK is in uncharted waters!

Let me use your own words to paraphrase:
Recognizing that this merger is a highly complex and unorthodox deal about which the vast majority of us (ncluding you) know nothing of the details and can't really know whether it will work or not IS the issue - and in so doing, recognize that making blanket statements about what can or can't be done is highly subject to being proven wrong, which is exactly what has happened so far.

mistified



mistified

 

[WorldTraveler]

If AMR's creditors thought that Crandall could run the show, they would bring him back and he could implement his ideas. Right now, the creditors and mgmt for whom they work are supporting AMR's standalone plan - and that is the camp I remain in. Crandall might realize he is doing more harm to AA's future by pushing a plan that is counter to what current mgmt and the creditors want. But it still doesn't change the fact that he doesn't run AA anymore and his opinion really doesn't mean any more than anyone else's - none of which matter compared to the creditors and AA mgmt.
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It is no surprise that labor has no confidence in mgmt - they didn't before BK and there was no reason to think it would change when they entered BK. DO you not think the creditors knew what they were facing with respect to labor? And in case you have forgotten, there have been a number of VERY contentious labor-mgmt relations in airline history esp. in BK.
What makes AA different from most airline BKs before is that AA is the only major in BK in an industry that is doing fairly well based on historical standards for the industry (which admittedly are not real great), US included.
Thus, the threat to AA has always been that AA would face a much more difficult restructuring compared to others, including the possibilty of a hostile takeover - and I have noted that multiple times over the past several years.

But none of that - or how bad US wants AA - changes the fact that BK laws give the debtor a defined period of time to reorgnize itself and to make pretty dramatic cuts to its costs, including labor contracts - and that process is moving along and will be completed before AMR loses exclusivity to present a POR.
And it also requires that any hostile takeover still has to be financially superior to the plan which the debtor itself (AA) is implementing. Other than labor not liking it, we haven't heard any other creditors who believe it is unsustainable - or can't be changed easier than implementing a risky merger which still might not deliver the best value to the creditors.
All of US' talk means nothing unless AMR's non-labor creditors - who represent the majority - decide that AA cannot successfully restructure and seek to end AMR's exclusivity. And it is very likely that they will entertain competitive bids before AMR emerges... and if at that point, they can top AMR's standalone plan plus any competing plans, then they should win AA as a merger partner.
I personally doubt once the 1113 process moves forward that we will see a competing plan be put forward that can beat AMR's standalone plan.

 

[diamondcutter]

If AMR's creditors thought that Crandall could run the show, they would bring him back and he could implement his ideas. Right now, the creditors and mgmt for whom they work are supporting AMR's standalone plan - and that is the camp I remain in. Crandall might realize he is doing more harm to AA's future by pushing a plan that is counter to what current mgmt and the creditors want. But it still doesn't change the fact that he doesn't run AA anymore and his opinion really doesn't mean any more than anyone else's - none of which matter compared to the creditors and AA mgmt.
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It is no surprise that labor has no confidence in mgmt - they didn't before BK and there was no reason to think it would change when they entered BK. DO you not think the creditors knew what they were facing with respect to labor? And in case you have forgotten, there have been a number of VERY contentious labor-mgmt relations in airline history esp. in BK.
What makes AA different from most airline BKs before is that AA is the only major in BK in an industry that is doing fairly well based on historical standards for the industry (which admittedly are not real great), US included.
Thus, the threat to AA has always been that AA would face a much more difficult restructuring compared to others, including the possibilty of a hostile takeover - and I have noted that multiple times over the past several years.

But none of that - or how bad US wants AA - changes the fact that BK laws give the debtor a defined period of time to reorgnize itself and to make pretty dramatic cuts to its costs, including labor contracts - and that process is moving along and will be completed before AMR loses exclusivity to present a POR.
And it also requires that any hostile takeover still has to be financially superior to the plan which the debtor itself (AA) is implementing. Other than labor not liking it, we haven't heard any other creditors who believe it is unsustainable - or can't be changed easier than implementing a risky merger which still might not deliver the best value to the creditors.
All of US' talk means nothing unless AMR's non-labor creditors - who represent the majority - decide that AA cannot successfully restructure and seek to end AMR's exclusivity. And it is very likely that they will entertain competitive bids before AMR emerges... and if at that point, they can top AMR's standalone plan plus any competing plans, then they should win AA as a merger partner.
I personally doubt once the 1113 process moves forward that we will see a competing plan be put forward that can beat AMR's standalone plan.

I will say it again Thanxs Jimmity Crickit for yet another long winded response. Don't worry Delta will be fine after this merger. I think we might even be bigger than you.

 

[WorldTraveler]

I will say it again Thanxs Jimmity Crickit for yet another long winded response. Don't worry Delta will be fine after this merger. I think we might even be bigger than you.

I don't have any doubt that DL will be fine... but this thread is not about DL. It is about US' attempts to takeover AA. Despite all the noise that was made by Parker and US touting how good it would be, there is no evidence that the people who actually control AA's future buy it.
Which means that the BK process for AA will continue just as it did for every other network carrier.
If someone comes up w/ a deal better than what AA is proposing, then the creditors will certainly hear it at the appropriate time.
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If being confronted w/ this reality incites some to push red and green buttons in a childish belief that they can strike back at the message, then I will be happy to come along and serve a repeat dose of reality at the requisite necessary intervals.

 

[robbedagain]

i think and believe that based on US' failed hostile takeover of DL in their ch1 trip they learned a heck of a lesson yet this time around i believe that by first going to labor then next to creditors to convince them that the stand alone plan aint gonna fly in the high oil/gas prices is a brillant strategic manuver by parker in a way that they corner amr mgmt