Official: AMR Bankrupt

[texflyer]

your last phrase is what throws the whole deal out the window.... AA isn't desperate enough to get back in the spotlight via US.
BK is designed to allow AMR to restructure on its own; they have the tools to do what they need to do to turn the company around and the law gives THEM the advantage - exclusivity.
If January rolls around and AA has made no signs of cleaning itself up, then we can return to your discussion.... but I can assure you that if the creditors have to start looking for someone to buy out AMR, they will look high and wide - and LCC will have to compete on the basis of the business proposal it can make - including cash out of its own bank accounts and stock from its own treasury... against other investors/companies who will be expected to do the same thing.
There is no such thing as a "company is married" and therefore ineligible for any further marriages or asset acquisitions. ANY airline could conceivably buy AMR subject to antitrust regulations that would prevent a merger... and on that note, you might want to remember that the DOJ was very close to blocking the slot deal because US now controls more than 50% of the slots at DCA... unless US is willing to walk away from AA's DCA slots and fly AA's schedule with the slots US already has, there will be no merging of AA-US operations at DCA, just as there can be no merger or asset acquisition involving DL and AA at LGA... and probably none involving AA or UA at ORD... other than those pretty obvious overlaps, most every other combination is on the table.... if it comes down to asset acquisitions or mergers....

but the OVERWHELMING evidence is that AA will be able to successfully restructure and re-emerge on its own.

Yes, US would know that too. Doug has gone on record that is looking to merge, what better partner than a major that has just cleaned up its books. Heck, I would bet Doug would be willing to spend off the troubled East to get AA...........I don't want this to happen, but after seeing how close he came to getting Delta, I would not bet against him.

 

[WorldTraveler]

Yes, US would know that too. Doug has gone on record that is looking to merge, what better partner than a major that has just cleaned up its books. Heck, I would bet Doug would be willing to spend off the troubled East to get AA...........I don't want this to happen, but after seeing how close he came to getting Delta, I would not bet against him.

but just because Doug wants something and because it might be good for US doesn't mean it is good for AA/AMR and its creditors - or that other companies can't find and unlock more value from AMR than US could.
It's not just about US... it's about AA/AMR and its creditors first... only if it is completely apparent that they can't turn their ship around does ANYONE get a chance to compete for AA... and if it gets into a competitive situation, other investors and airlines have a whole lot better FINANCIAL track record than Doug Parker and US, no matter how bad it may hurt him to hear that.

 

[signals]

I'm continually amazed that the US people who regularly trash US mgmt now expect US will be the savior for another airline and THAT other airline's creditors will want to run their airline.
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To somehow think that LCC with the lowest market capitalization in the US will win a contest for AA's hand when other carriers have multiples more value than LCC - in some cases up to TEN TIMES more value - is nothing short of an absence of reality.
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Further, I have yet to hear a single AA employee say they want to be bought by US.... if AA has to be bought by someone else, the employees can very well influence the outcome....
US' last attempt at buying a bigger airline was thwarted by the vocal objections of DL mgmt and employees - you can bet AA employees would be even more interested in avoiding a long-term relationship with US.... a dozen other airlines could provide better employment outlook for AA employees than US - as well as better returns for the creditors.

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AA has an incredibly valuable franchise, even if they may cut 10-15% of their capacity in the next 6 months as they cut their losses and get rid of aircraft they do not wish to keep long term.
There is a list of airlines as long as your arm that can run AA as good as US could - including AA by itself after its employees endure massive cuts the size of which US employees have endured. If AA employees take cuts as deep as US employees have, AA will be swimming in profits and have absolutely no need of US - and the creditors know that.
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Even if the creditors decide there is more value in selling out after AA is cleaned out than waiting for AA to return to health on its own, the fact is that every one of those other airlines can pull the same financing tricks that Doug Parker can do - and they have much more valuable companies to offer the creditors as collateral as well.
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The only way US could buy AA is with borrowed money. The deciding factor if it comes down to a choice between carriers is who can offer stock in their own company as well. IN a competition for AA vs any other airline, LCC will never have the market value to tilt the contest in its favor.
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You can take THAT to the bank.

Stop the presses! I actually agree with you 110%! Not to mention that AWA got the money for the US merger by borrowing it from Air Canada.

 

[700UW]

Actually your wrong, AWA didnt raise any money for the merger.

US raised all the money with the help of Seabury and Associates, Airbus, Air Wisconsin, Air Canada and several investment firms invested in the new US.

 

[ContUNITEus]

Yes, US would know that too. Doug has gone on record that is looking to merge, what better partner than a major that has just cleaned up its books. Heck, I would bet Doug would be willing to spend off the troubled East to get AA...........I don't want this to happen, but after seeing how close he came to getting Delta, I would not bet against him.

Yes... Douggie needs another merger to gain significance.

WorldTraveler..... you seem to take this a little bit to serious. You missing my sense of humor. Of course AA will be fine on its own. The question is: Do they want to be on their own as the 3rd largest carrier?

My ignorant guess is that it is all just a precedent to a plan to combine with someone. I truely believe that they did not need to file for bankruptcy. Their agenda is to merge with someone. However, not one single one of the remaining other carriers, will accept AA as a merger partner with its current high costs. And finally, to say that AA is not interested in -once again- trumping UA in size, and to obtain an even greater market share is like AA saying a week ago that it "wasn't interested in filing for bankruptcy."

 

[AAmilesman]

Where are Owens and Schalk. Their absence is conspicuous.

 

[nonrev]

I still remember the day LCC did this. The machinist union went to DC and the lost the first 112 requests the company asked the judge for..it's completely up to the BK courts and judges. I came in on one Monday and my pension was gone. Here in Pit the youngest mechanic we have working here is around 50 years old and it's common to see 65 year olds working the bag bins in overhaul. My new pension (PBGC) is around $1600 a month and that's the good part. Our health costs are well over $300 a month and people such as me with over 30 years senority just got our 5th vacation week back next year. There was a time that all chairs and boxes of any sort were removed from the hangar floor so you could not sit for a second. No drinks on the floor either and if you made it to break you had to sit on metal picnic tables with nothing to lean back on. I still can't touch weekends off...not enough senority. We had over 500 flights a day coming through Pit and on the very last day of our BK they canceled all the gate leases and today we sit at maybe 20 flights a day max with maybe 5 mechanics woking the gate. Remember people we had over 12,000 working here before the BK. We lost pushbacks to the rampers and I have not even started yet...trust me. Your union is powerless and everything around you will never be the same. I am sorry that I am so bitter but you will understand soon enough. Good luck to you guys and gals

 

[signals]

Actually your wrong, AWA didnt raise any money for the merger.

US raised all the money with the help of Seabury and Associates, Airbus, Air Wisconsin, Air Canada and several investment firms invested in the new US.

I stand corrected. But I knew Air Canada was involved somehow

 

[WorldTraveler]

Yes... Douggie needs another merger to gain significance.

WorldTraveler..... you seem to take this a little bit to serious. You missing my sense of humor. Of course AA will be fine on its own. The question is: Do they want to be on their own as the 3rd largest carrier?

My ignorant guess is that it is all just a precedent to a plan to combine with someone. I truely believe that they did not need to file for bankruptcy. Their agenda is to merge with someone. However, not one single one of the remaining other carriers, will accept AA as a merger partner with its current high costs. And finally, to say that AA is not interested in -once again- trumping UA in size, and to obtain an even greater market share is like AA saying a week ago that it "wasn't interested in filing for bankruptcy."

given that all kinds of talking heads are advocating an AA-US merger, then it's a tad more than water cooler conversation.
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AA-US won't come close to allowing a combined airline to surpass either DL or UA... neither AA or US has enough of a presence in Asia or the Pacific to be a viable competitor, most of US' presence in Europe is due to its relationship with Star carriers on the continent - and an AA-US merger would most certainly result in the new carrier leaving Star for oneworld which would negate the value of US' continental Europe presence, and after the slot swap, AA-US would be quite weak in NYC, far too small to regain the corporate business that AA has traditionally held and which will be very much under attack by competitors in the months ahead.
The only real strategic gain for AA via a US merger is increased access to the SE US but what AA can gain is still fairly limited.
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There is very little that a reorganized AA would gain from a US merger that it doesn't have now - which is another way of saying that US is the one that wants this deal - and that is not a very good reason for AA's creditors to see it as in THEIR best interest.
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I don't think AA's intention is to combine with anyone.... they have enough potential with oneworld in Europe that they can build out what they need and with the 773ERs and a new pilot contract, they can build out the Pacific from LAX and DFW...
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there is very little strategic benefit TO AA from a US merger... there is a whole lot of benefit to US... and that bias needs to be clearly recognized.

nonrev,
you are highly accurate... AMR will have no choice but to fight hard to gain what it needs to be viable and do it quickly . plain and simple..... employees will bear a high price to turn the company around, on top of the concessions they already have given... in that regard US and AA employees will share far too much.

 

[eolesen]

there is very little strategic benefit TO AA from a US merger... there is a whole lot of benefit to US... and that bias needs to be clearly recognized.

I rarely agree, but he's right there is no benefit for AA merging with US.

One thing's for sure -- if they did merge, USAPA would probably be put out of its misery.

 

[xUT]

Sorry to hear of the BK.
It's not going to be pretty. The US and UA bk's were brutal and I wish them on no one.
Hang Tough!
It's mostly out of your control now.

Take Care and Good Luck!
B) xUT

PS: Wait for the KERP decision, you won't like it either.

 

[FWAAA]

I rarely agree with Tim, but he's right there is no benefit for AA merging with US.

One thing's for sure -- if they did merge, USAPA would probably be put out of its misery.

I agree as well, despite rarely agreeing with WT.

The upside in a AA-US merger belongs almost entirely to US, not AA. US would gain a decent presence in NYC, ORD, LAX, MIA, LHR, China and NRT and a dominant position in Latin America. All things it currently lacks and many of which it cannot obtain thru organic growth. What would AA gain? PHL? CLT? PHX? Pilot labor strife?

 

[care2purchasefood?]

I say everyone just doesn't show up for work for a few days!! I mean EVERYONE!! Who cares now, because the only people that will benefit during and after BK are the dirtbags at the top. Horton is worse than Arpey! RUN FOR THE HILLS!!!

 

[ContUNITEus]

So who do you think AA would benefit merging with? Alaska? Jetblue? Spirit? Hawaiian? Out of all the players left over there... US is the biggest. As much as I hate US and I hope that they go to hell, realistically US is the most logical choice for for AA. No other major carrier merger will be allowed by the government.

And to all the AA egomaniacs.... don't worry. AA will be the surviving name with any merger with any carrier. Besides, Doug Parker can't wait to dump the US Airways name.

 

[ContUNITEus]

Actually your wrong, AWA didnt raise any money for the merger.

US raised all the money with the help of Seabury and Associates, Airbus, Air Wisconsin, Air Canada and several investment firms invested in the new US.

I stand corrected. But I knew Air Canada was involved somehow


Actually AWA did also have a large part in getting all the investors together. It was a joint effort from what I remember reading.