PilotAction US Airways & American Airlines Trial & Other News Update

[USA320Pilot]

PilotAction Merger News for US Airways & American Airlines #3: November 1, 2013

AMR in Settlement Talks With Florida Over Merger Suit

AMR's stock rose 7.5 percent to $7.90 at the close in New York, capping off a 27 percent gain for the week in the biggest such advance since February, amid mounting optimism that the deal would succeed. US Airways' stock climbed 2.1 percent to $22.44. That sent the stock to its ninth straight weekly increase, the longest such streak since May 2012

See Story: http://www.bloomberg.com/news/2013-11-01/amr-in-settlement-talks-with-florida-over-merger-suit.html?cmpid=yhoo


US Airways and American Airlines Have a Lot of Friends, Part 1

See Story: http://www.fool.com/investing/general/2013/11/01/us-airways-and-american-airlines-have-a-lot-of-fri.aspx


US Airways and American Airlines Have a Lot of Friends, Part 2

See Story: http://www.fool.com/investing/general/2013/11/01/us-airways-and-american-airlines-have-a-lot-of-f-2.aspx


How Serious Are the Airline Merger Talks With the DOJ?

See Story: http://www.fool.com/investing/general/2013/11/01/how-serious-are-the-airline-merger-talks-with-the.aspx

 

[USA320Pilot]

PilotAction Merger News for US Airways & American Airlines: November 3, 2013
 
U.S. Wants Broad Divestitures From US Airways, AMR
 


By 
BRENT KENDALL and 
JACK NICAS 



Nov. 3, 2013 6:49 p.m. ET
 
CHICAGO (WSJ.com) - U.S. antitrust authorities want to see a broad package of divestitures from AMR Corp. and US Airways Group Inc.  as part of any deal to settle the government's challenge to their merger plan, people familiar with the matter said.
The people said talks are under way between the two sides three weeks before a trial of the antitrust challenge is set to open in Washington.
The Justice Department's antitrust suit, which sought to block the merger of AMR's American Airlines and US Airways, argued that the deal would harm consumers by reducing air service and increase fares. It listed more than 1,000 routes on which regulators believed competition would suffer.
The opening of settlement talks suggests that the government isn't taking an absolute stand against the deal, and that a trial isn't a certainty. At the same time, however, the airlines might resist the broad concessions that the government is seeking.
A person familiar with the Justice Department's thinking said department lawyers insist that any settlement should include divestitures at key airports throughout the U.S. The department believes that the two airlines would need to divest assets at those airports to ensure that their merger wouldn't limit consumer choices on nonstop and connecting flights or harm consumers by raising fares, this person said.
The airlines are prepared to give up slots at Reagan National Airport outside Washington, where US Airways is already the dominant carrier, and make some divestments at other U.S. airports, two people familiar with the negotiations said last week. A person familiar with the process said Sunday that the airlines' settlement proposal would include divestments at other U.S. airports besides Reagan National.
Some of the busiest U.S. airports have limited room for competitors to expand, either because takeoff and landing slots are limited or because there aren't enough gates. LaGuardia and John F. Kennedy International airports in New York are among those with limited slots, while airports in Chicago and Los Angeles have limited gate space.
Another asset in limited supply is permission to fly to some international destinations. US Airways recently obtained rights to offer service to São Paulo, Brazil.
If combined at their current size, AMR and US Airways would vault past United Continental holdings Inc. and Delta Air Lines Inc. as the largest carrier in the world by traffic. AMR and US Airways say the merger would offer fliers more choice and a bigger route network.
The Justice Department's suit challenging the merger warned against overconcentration in the U.S. air-travel market if the deal went ahead as planned, because it would leave the U.S. with just four airlines controlling more than 80% of the domestic market.
Both sides have said they are prepared to go to trial, which is scheduled to begin Nov. 25.

 

[Beancounter]

 
PilotAction Merger News for US Airways & American Airlines: November 3, 2013
 
U.S. Wants Broad Divestitures From US Airways, AMR
 


By 
BRENT KENDALL and 
JACK NICAS 



Nov. 3, 2013 6:49 p.m. ET
 
CHICAGO (WSJ.com) - U.S. antitrust authorities want to see a broad package of divestitures from AMR Corp. and US Airways Group Inc.  as part of any deal to settle the government's challenge to their merger plan, people familiar with the matter said.
The people said talks are under way between the two sides three weeks before a trial of the antitrust challenge is set to open in Washington.
The Justice Department's antitrust suit, which sought to block the merger of AMR's American Airlines and US Airways, argued that the deal would harm consumers by reducing air service and increase fares. It listed more than 1,000 routes on which regulators believed competition would suffer.
The opening of settlement talks suggests that the government isn't taking an absolute stand against the deal, and that a trial isn't a certainty. At the same time, however, the airlines might resist the broad concessions that the government is seeking.
A person familiar with the Justice Department's thinking said department lawyers insist that any settlement should include divestitures at key airports throughout the U.S. The department believes that the two airlines would need to divest assets at those airports to ensure that their merger wouldn't limit consumer choices on nonstop and connecting flights or harm consumers by raising fares, this person said.
The airlines are prepared to give up slots at Reagan National Airport outside Washington, where US Airways is already the dominant carrier, and make some divestments at other U.S. airports, two people familiar with the negotiations said last week. A person familiar with the process said Sunday that the airlines' settlement proposal would include divestments at other U.S. airports besides Reagan National.
Some of the busiest U.S. airports have limited room for competitors to expand, either because takeoff and landing slots are limited or because there aren't enough gates. LaGuardia and John F. Kennedy International airports in New York are among those with limited slots, while airports in Chicago and Los Angeles have limited gate space.
Another asset in limited supply is permission to fly to some international destinations. US Airways recently obtained rights to offer service to São Paulo, Brazil.
If combined at their current size, AMR and US Airways would vault past United Continental holdings Inc. and Delta Air Lines Inc. as the largest carrier in the world by traffic. AMR and US Airways say the merger would offer fliers more choice and a bigger route network.
The Justice Department's suit challenging the merger warned against overconcentration in the U.S. air-travel market if the deal went ahead as planned, because it would leave the U.S. with just four airlines controlling more than 80% of the domestic market.
Both sides have said they are prepared to go to trial, which is scheduled to begin Nov. 25.


 

Thanks for posting. I just read a similar article in The Wall Street Journal. Any thoughts on which airports/routes? Besides Reagan, LAX and South America routes jumped to mind. US is very dominant in CLT, but does anyone else really want access to that airport other that US?  I wonder if what the DOJ is asking for is realistic. Obviously, this administration doesn't give a rats hind quarters about how cuts will affect the employees or the company’s ability to compete.
 
Sorry if I’m ranting, but: TARP, Obamacare, DOJ.  This administration just sucks…… and I’m a Democrat!
 
Bean

 

[Pi brat]

Thanks for posting. I just read a similar article in The Wall Street Journal. Any thoughts on which airports/routes? Besides Reagan, LAX and South America routes jumped to mind. US is very dominant in CLT, but does anyone else really want access to that airport other that US?  I wonder if what the DOJ is asking for is realistic. Obviously, this administration doesn't give a rats hind quarters about how cuts will affect the employees or the company’s ability to compete.
 
Sorry if I’m ranting, but: TARP, Obamacare, DOJ.  This administration just sucks…… and I’m a Democrat!
 
Bean

CLT is very tight on gates, so a guarantee to offer gates to other airlines would be part of a deal I imagine. I don't know how you overcome the 1,000+ route issue the DOJ raises. How do you help the competitive situation of OGG-TPA? I think that was one city pair they raised, although I think it's BS. There is not shortage of competition in this mature air transportation system.
 
I agree with you about this administration. I'm hoping they decide they need a sure win and settle.

 

[FWAAA]

Thanks for posting. I just read a similar article in The Wall Street Journal. Any thoughts on which airports/routes? Besides Reagan, LAX and South America routes jumped to mind. US is very dominant in CLT, but does anyone else really want access to that airport other that US?  I wonder if what the DOJ is asking for is realistic. Obviously, this administration doesn't give a rats hind quarters about how cuts will affect the employees or the company’s ability to compete.
 
Sorry if I’m ranting, but: TARP, Obamacare, DOJ.  This administration just sucks…… and I’m a Democrat!

If the article looked familiar, it's because A320 cut and pasted the Wall St Journal article.    
 
Earlier this year, Jerry Orr was quoted in the Charlotte newspaper as saying that Southwest was interested in more gates at CLT.   US gets fairly high yields on the CLT O&D and no doubt WN will eventually want in on those high fares.   

 

[Pi brat]

WN is in CLT now. Everyone wants a share. Seems like I remember once that US had only about 50-60% of the OD market at CLT. You can get anywhere in the world out of CLT very easily, of course the US Constitution calls for cheap, nonstop flights, right?

 

[im back..!!]

Not to be a conspiracy theorist but....

Indigo partners just sold there shares of Spirit for around half a billion dollars.

Indigo partners bought Frontier from Republic.

Indigo partners home office is in Phoenix.

Denver paper article said Frontier would scale back flights at Denver.

Indigo partners is owned by William Franke.

William Franke is the turnaround expert that Arizona governor Fife Simington encouraged to take the helm at America West during their 1994 banckruptcy, he then subsequently handed the reins over to Doug Parker in 2001.

DOJ want a broad divestiture to allow the merger.

Soo, its all just speculation, but....

Could Usair and American get approval from the bakruptacy judge to allow a modification of the POR to sell off the West operation in Phoenix to Indigo partners. Creating a significant sized carrier based in Phoenix with the combination of the West and Frontier. Thus not only divesting of certain city pairs, but allso creating and promoting competition in the market place.

This would also solve the integration issue Usair has been unable to achieve.

Pure speculation, anybodies thoughts?

 

[Art at ISP]

While perhaps unlikely, nothing would surprise me at this point.

 

[Beancounter]

WN is in CLT now. Everyone wants a share. Seems like I remember once that US had only about 50-60% of the OD market at CLT. You can get anywhere in the world out of CLT very easily, of course the US Constitution calls for cheap, nonstop flights, right?

From what I'm hearing then, CLT is probably one of those airports the DOJ will want to see some assets divested at.  Unbelievable that the Southwest/Airtran merger slid through and now the DOJ probably wants to give more slots to Southwest.  I hope it's not a lot, but the east coast is where US is dominant.  I hope when the DOJ says, "divest assets," they mean sell and not give away (which would be nuts). 
 
Bean   

 

[FWAAA]

From what I'm hearing then, CLT is probably one of those airports the DOJ will want to see some assets divested at.  Unbelievable that the Southwest/Airtran merger slid through and now the DOJ probably wants to give more slots to Southwest.  I hope it's not a lot, but the east coast is where US is dominant.  I hope when the DOJ says, "divest assets," they mean sell and not give away (which would be nuts). 
  

The article I read earlier this year said that Airtran had two gates but that WN wanted at least two more, which would give WN the ability to run about 40 daily flights.  
 
The good news is that "divest assets" almost always means "sell to the highest bidder" and not "government confiscates."
 
With US carrying about 90% of the total passengers at CLT (with a smaller share of the O&D), I agree that CLT is probably within the government's sights.    Same with PHL, where US controls a lot of the traffic.   
 
AA dominates DFW and MIA - should AA have to give up gates at those airports?    Neither is slot-controlled, and both have room to add more flights if airlines desire.  
 
ORD is one place where gate space is tight - perhaps AA would have to give up some gates there.  

 

[im back..!!]

The article I read earlier this year said that Airtran had two gates but that WN wanted at least two more, which would give WN the ability to run about 40 daily flights.  
 
The good news is that "divest assets" almost always means "sell to the highest bidder" and not "government confiscates."
 
With US carrying about 90% of the total passengers at CLT (with a smaller share of the O&D), I agree that CLT is probably within the government's sights.    Same with PHL, where US controls a lot of the traffic.   
 
AA dominates DFW and MIA - should AA have to give up gates at those airports?    Neither is slot-controlled, and both have room to add more flights if airlines desire.  
 
ORD is one place where gate space is tight - perhaps AA would have to give up some gates there.

Just curious, how many gates did SouthWest divest at Love field during the Airtran merger?

 

[nycbusdriver]

Not to be a conspiracy theorist but....

Indigo partners just sold there shares of Spirit for around half a billion dollars.

Indigo partners bought Frontier from Republic.

Indigo partners home office is in Phoenix.

Denver paper article said Frontier would scale back flights at Denver.

Indigo partners is owned by William Franke.

William Franke is the turnaround expert that Arizona governor Fife Simington encouraged to take the helm at America West during their 1994 banckruptcy, he then subsequently handed the reins over to Doug Parker in 2001.

DOJ want a broad divestiture to allow the merger.

Soo, its all just speculation, but....

Could Usair and American get approval from the bakruptacy judge to allow a modification of the POR to sell off the West operation in Phoenix to Indigo partners. Creating a significant sized carrier based in Phoenix with the combination of the West and Frontier. Thus not only divesting of certain city pairs, but allso creating and promoting competition in the market place.

This would also solve the integration issue Usair has been unable to achieve.

Pure speculation, anybodies thoughts?

 
 
One can only hope.

 

[traderjake]

That's your only hope.

 

[robbedagain]

Just curious, how many gates did SouthWest divest at Love field during the Airtran merger?

00000 as far as i know  wn and fl did not have to divest a thing...  though later on as i heard  wn has scaled atl ops back and pulled most of the fl markets from cities such as bwi out  or pulled out of some fl cities completely.... srq comes to mind
 
as far as i know phl and clt are not slot controlled 

 

[FWAAA]

Just curious, how many gates did SouthWest divest at Love field during the Airtran merger?

That's a good one!    
 
To be fair, the entire Love Field modernization/End of Wright Amendment Agreement is probably an antitrust violation.   It's an agreement between competitors (WN, AA and CO) plus two cities and two airports to restrain competition.      
 
WN didn't gain any additional DAL gates with the merger;  Airtran gave up its DFW operations so that WN wouldn't have to give up some of its 16 DAL gates.   
 
And before anyone asks,  NW-DL didn't have to divest anything in their merger.    UA-CO required that UA give up its slot portfolio at EWR, which was 18 pairs.    No big problem there, as UA-CO still dominates EWR.    That would be like US giving up its gates at DFW - AA still dominates that airport.