Southwest Airlines wants American Airlines’ two gates at Love Field

[WorldTraveler]

Parker came out and disputed the value the DOJ put on the slots.
 
"I believe (that) in the DOJ (Justice Department) filing, they value that at $425 million; that's their valuation, not ours," Parker told the conference.

 

[FWAAA]

So exactly what is Dumbass Parker arguing?    

He admits that AA received $381 million in cash plus 12 slot pairs at JFK in exchange for its DCA and LGA slots that it was forced to divest.      Justice says that combined, that's $425 million total and Parker is disputing that total.    The Justice Dep't total assumes that the 12 JFK slot pairs are worth $44 million, or $3.67 million each.   My guess is that the DCA slots that AA traded to B6 for those 12 pairs at JFK were worth about $3.67 million each or thereabouts, which is the basis for the $44 million.    

 

[WorldTraveler]

trying to argue that AA didn't get taken to the cleaners as bad as the DOJ wants to argue they did. 
 
you can't take these gambling losses off of your income taxes. 

 

[700UW]

According to the experts AA didn't lose the battle, the DOJ did.

 

[WorldTraveler]

The DOJ didn't have 50+ slot pairs taken from it to be given to competitors.
 
AA had access to the gates at DAL. They could EASILY have told DL that they were terminating their lease and restarted their own service and competed against WN.
 
But WN whined to the DOJ about the fear of having to compete against AA so AA got put on a leash while all the rabid dogs are off the leash and free to attack. 

There was nothing equitable about the settlement including that AA loses the ability to defend its own markets.... but AA wanted the merger bad enough that they didn't walk away.
 
Yes, DL might lose the opportunity to compete from an airport that it served long before WN ever existed - in fact before Herb was even born, but DL's flights at DAL would have been growth to DL's network.
 
It also doesn't change that despite the merger, AA is still the #3 int'l airline among US carriers despite a primary goal of the merger being that AA needed to compete with DL and UA.
 
AA added a lot of domestic bulk via US but they are paying for that by allowing low fare carriers to dramatically increase their presence in key AA markets.
 
NO other carrier has given up as much in a merger settlement as AA/US did. 
 
There is no way to avoid admitting that AA lost and will continue to lose because of the merger.

 

[700UW]

From Forbes

The Winners And Losers Of The US Airways, American Merger

 

AP Photo/Susan Walsh
 

With the announcement of a settlement of the DOJ lawsuit against the US Airways – American merger, who are the winners and losers from the deal?
 
 Winner: The New American
It’s obvious, but the biggest winner here is clearly the merged airline, which got out of the DOJ action relatively unscathed. Yes, the loss of the 44 slot pairs at Washington Reagan is painful to a degree, especially given that Reagan was consistently the most profitable operation for pre-merger US Airways. But to put everything into perspective, the divested slots at Reagan and La Guardia represent less than 0.25% of the merged carrier’s capacity – a drop in the bucket in aggregate. And the gate divestitures and service commitments required by the settlement are all things that the merged carrier would have done anyway with the possible exception of Phoenix (I’ll address that below).
 
Loser: The Department of Justice
Let’s be frank; the DOJ settled because it had a weak case. The case was based on spurious reasoning and analysis, as I outlined in my breakdown of the lawsuit and there was a significant chance that DOJ might lose in court, which would be even more catastrophic from their perspective than allowing this merger to continue. Quite simply put, if the DOJ had lost this lawsuit, it would have been effectively powerless to stop future airline industry mergers. By settling here, they at least have a leg to fall back on in prosecuting future mergers, though it will need a much better case.
 

http://www.forbes.com/sites/airchive/2013/11/14/the-winners-and-losers-of-the-us-airways-american-merger/

 

[WorldTraveler]

relatively unscathed?
 
capacity is not the measure of the pain but the ability of other airlines to inflict competitive damage against the new AA/US.
 
EVERYONE will downplay the competitive affects of the slot divestitures and the  fall of the WA because they have no idea how these market will react to new service - and in many cases the fares and schedules aren't even known.

However, there is PLENTY of evidence of how much damage LFCs have done to carriers who have been unable to defend them.  B6 managed to force fares in the BOS-DCA market down dramatically... and that will be repeated in many more additional markets. 
 
The DOJ's position going in was that the merger would never happen.  Few people really believed that would be the outcome.
 
The divestitures are the largest in the history of US mergers and are taking place in the largest markets in the US at the same time the WA is falling in N. Texas.
 
Anyone who refuses to believe that the combined effect of these two events won't have an enormous effect on AA's revenues and profitability simply don't understand the industry. 
 
At least the DOJ got what they wanted when they said they wanted new competition.  It is impossible any longer to argue that new service translates into revenue for the carrier that starts service without affecting the incumbent carrier.
 
And the biggest proof in both cases is BOS-DCA and other DCA markets that B6 has added as well as the fact that WN has at least half of the market in cities from DAL which AA used to dominate via its service from DFW.