The chances of "THIS" coming to fruition ?

[tom barry]

It "appears" that the majority consensus ....is ...that BA(etc) will bankroll AMR to keep them immune from US/DL !

If That IS the case, what's to prevent AMR(BA etc.) from turning-the-tables ON US to acquire THEM(via a USA surrogate) for the ultimate purpose of dismantling them as we know them today, retaining thier best parts (CLT) the BOS/LGA/DCA Shuttle, Thier compatable A/C and an unspecified number of thier fine employees.

For AA, PHL would be the Biggest problem. Imagine a "new" WN/Air Tran with a fleet of A330's/767/757, with european and some caribbean routes to match.

LAS/PHX could be de-hub'd.

Could this become a reality ?

All replys welcomed, ESPECIALLY...eolesen and Boeing Boy. (you too WT)

 

[Buck]

It "appears" that the majority consensus ....is ...that BA(etc) will bankroll AMR to keep them immune from US/DL !

If That IS the case, what's to prevent AMR(BA etc.) from turning-the-tables ON US to acquire THEM(via a USA surrogate) for the ultimate purpose of dismantling them as we know them today, retaining thier best parts (CLT) the BOS/LGA/DCA Shuttle, Thier compatable A/C and an unspecified number of thier fine employees.

For AA, PHL would be the Biggest problem. Imagine a "new" WN/Air Tran with a fleet of A330's/767/757, with european and some caribbean routes to match.

LAS/PHX could be de-hub'd.

Could this become a reality ?

All replys welcomed, ESPECIALLY...eolesen and Boeing Boy. (you too WT)

You TWU INFORMER.

 

[Kellerguy]

Hmm, maybe. Back to the original hypothesis, LCC might be in big trouble should this scenario play out, particularly if fuel goes up since they don't have any hedge protection. I would't dismiss the PHL hub just yet though, since AA would need to develop a "true" east coast hub. The majority of the population lives there and AA does not come to mind as the likely carrier to fly on for travel between points in the north east. Depending on the arrangements with JB, JFK could become that answer, but you're also talking potential slot control issues (I think) there. EWR is not slot controlled so UAL might have the upper hand there in so far as the umber of operations into and out of EWR versus AA @ JFK. CLT provides a good and viable mid Atlantic hub and other than ATL O&D traffic being superior could compete. I imagine the fixed operations costs are lower at CLT. AA will still need a west coast hub, and considering the potential of the JAL JV merging or code sharing with AS might make sense.

My question in all this in the business plan is whether a code share is in the longer term best interest with JB and AS or an outright merger. It seems like we'd be partnering with an airline / making them financially stronger while at the same time potentially making them more dangerous to us in the longer term.

 

[Barfbag]

It "appears" that the majority consensus ....is ...that BA(etc) will bankroll AMR.

BA may make a sizable investment up to the limit by US law, but King Williem aint no fool. He won't make any move until it's a fact that AMR is whole and it labor contracts nullified.

With Oil futures higher, the US economy on life supports and the Euro still in trouble, I'm surprised that BA is making any gestures right now, if " it appears " has any legs.

 

[FWAAA]

Hmm, maybe. Back to the original hypothesis, LCC might be in big trouble should this scenario play out, particularly if fuel goes up since they don't have any hedge protection. I would't dismiss the PHL hub just yet though, since AA would need to develop a "true" east coast hub. The majority of the population lives there and AA does not come to mind as the likely carrier to fly on for travel between points in the north east. Depending on the arrangements with JB, JFK could become that answer, but you're also talking potential slot control issues (I think) there. EWR is not slot controlled so UAL might have the upper hand there in so far as the umber of operations into and out of EWR versus AA @ JFK. CLT provides a good and viable mid Atlantic hub and other than ATL O&D traffic being superior could compete. I imagine the fixed operations costs are lower at CLT. AA will still need a west coast hub, and considering the potential of the JAL JV merging or code sharing with AS might make sense.

My question in all this in the business plan is whether a code share is in the longer term best interest with JB and AS or an outright merger. It seems like we'd be partnering with an airline / making them financially stronger while at the same time potentially making them more dangerous to us in the longer term.

Newark isn't slot controlled, but it is slot controlled. Let me explain. Historically, EWR was not slot controlled. As the slot controls were repealed at ORD, JFK and LGA, traffic grew so fast (primarily small RJs and props) that the FA re-instituted departure and arrival management programs at all three airports (ORD's have since expired) and added EWR to the mix as well, given the huge delays experienced by CO flights departing EWR over the past few years and the proximity to JFK and LGA and the effect that EWR flights have on the NYC airspace.

When UA and CO merged, CO provided WN a number of EWR slots in exchange for the government's blessing. That's how WN gained entree into EWR.

JFK "slots" are available for the asking during the morning and early afternoon; the real bottlenecks are the 3:00 pm to 9:00 pm peak TATL departure periods. Acquiring B6 could help AA by providing numerous JFK slots plus a significant customer base in NYC and BOS. The fleet models are no longer that dissimilar as B6 sells the forward rows with lots of legroom for extra $$$ (its version of F class) and the rest of the cabin seating is like MRTC (and AA is going forward with its version of E+ as well). Only problem is that the B6 employees (except the pilots and mechanics) are very low-paid compared to AA's employees. Of course, the US employees are also paid very low wages compared to AA (but US are higher than B6, except for pilots - B6 pilots make more $$$ than US pilots).

Adding B6 and AS would help AA quite a bit, but there will probably still be lots of uninformed "analysts" banging the "AA must merge with US" drum. Add all three to AA and AA would be the largest airline by far.

 

[usa1]

Tom thats pretty much what I predicted in another thread two weeks ago. Just hope we get a retirement package when it happens.

 

[WorldTraveler]

EWR is slot controlled just like LGA and JFK - just like you are either pregnant or you are not. Nothing in between. (ok maybe not YOU)
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If AA emerges from BK whole and able to grow there is little reason for them to acquire US; AA will be able to grow more cost efficiently than it they could buy capacity from US. AA proposes to have non-labor CASM nearly identical to DL and US but a labor CASM equivalent to DL's (page 464 of the 1113 filing).
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Neither AS or B6 will acquire AA... it will have to be AA acquiring one of those two and AMR can't acquire anything until it is out of BK, stable, and having met the plans it proposed to its creditors.
By that point, the industry could have changed and AS or B6 - and possibly US - might have been acquired by someone else.
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BA like DL doesn't want to spend money on an acquisition but BA is willing to act first to protect its interests but certaintly doesn't want to if it can avoid it.
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The BOS-LGA-DCA Shuttle doesn't make money for either DL or US anymore. It is merely a marketing tool designed to help move corporate traffic. It is very possible that US might realize that with a greatly reduced presence in LGA, it cannot maintain the Shuttle any longer... more than half of its traffic on its Shuttle has been connecting traffic for quite some time.

 

[Buck]

Column: Time to re-regulate the airlines

By Mark Lennihan, AP

By Phil Longman

Published: 3/28/2012 6:23:13 PM

Almost as bad as flying these days is owning airline stocks. According to the industry's leading trade group, Airlines for America, U.S. airlines have lost $50 billion over the past 10 years. Even as the economy recovers, the latest figures show airlines were still earning less than half a penny on every dollar of revenue in 2011, which is well below the amount needed to replace its aging fleet or maintain current levels of service. Even before the recent bankruptcy filing by American, the value of all publicly traded U.S. airline stocks was less than that of Starbucks.

The industry's trend toward insolvency would be even steeper were it not for the major subsidies it extracts from taxpayers. These include billions of dollars spent to construct and maintain airports, and $15 billion in grants and loan guarantees airlines received in the aftermath of 9/11.

And they include tens of billions of dollars in unfunded pension liabilities that major airlines, such as United and U.S. Airways, have shoved onto taxpayers by filing for bankruptcy protection. Recently, American Airlines retreated from its threat to dump $10 billion in unfunded pension obligations onto the public, but taxpayers will pay anyway as the reorganizing carrier sheds 13,000 jobs and drastically curtails service. Since 1978, almost all start-ups have either failed or been absorbed.

Dwindling service

The broader consequences to travelers have been starker. Over the past five years, service to medium-sized airports has fallen by 18%. Adjusted for growth of the economy, capacity is at its lowest level since 1979, and the industry has announced plans to cut another 1% of available seat miles in the first three months of this year.

High fuel prices are a factor, but they are not sufficient to explain the erosion of airline service. Nor can we just blame the Great Recession. Throughout decades in which the price of energy has risen and fallen and the economy has boomed and busted, the industry has been barely able to earn its cost of capital. It's now clear the industry's problems are structural and deepening, as is the crisis faced by cities and industries that rely on frequent, affordable service to remain competitive in the global economy.

How to fix things?

What's the solution? Until 1978, U.S. policy viewed airline service as a "public convenience and necessity." The Civil Aeronautics Board assigned routes, set fares and ensured that airlines remained modestly profitable.

This regulatory regime had problems, but fares did fall dramatically thanks largely to technological innovation. DC-8s and other mass-market jets during the 1960s and early '70s vastly expanded such popular tourist destinations as Florida's Disney World and the Caribbean. By 1977, 63% of Americans older than 18 had taken a trip on an airplane, up from 33% in 1962.

Indeed, after adjusting for shifts in energy prices, a 1990 Economic Policy Institute study found that airline fares fell more rapidly in the 10 years before 1978 than afterward. Under deregulation, the government has allowed giant airline mergers, such as Southwest/AirTran and United/Continental, that cause monopolistic prices on many routes.

A new national policy on airlines is in order, as even the industry itself is starting to realize. We need a regulatory regime that provides balanced, reasonably priced service to metropolitan areas that don't happen to be hubs, while also guarding against monopolistic combinations that harm the public and ruinous competition that leaves the industry financially unsustainable. Americans did this before we fell for the false promise of airline deregulation, and we can do it again.

Phil Longman is a senior fellow at the New Americ

 

[WorldTraveler]

Given that the current administration is adding taxes to the airline industry faster than even fuel prices are rising, I won't hold my breath for any comprehensive strategies from Washington for US airlines.

 

[Barfbag]

Column: Time to re-regulate the airlines

Not gonna happen, millions of American are right now, sitting in their easy chairs, searching for the lowest fare while in their underwear.

So stop dreaming.

Airlines will continue to go into bankruptcy court over and over again, people want to fly for free if possible.

The lowest fare wins, you lose. That's the sad truth...

That's the way Alfred Kahn planned it.

 

[tom barry]

Then I think it's safe to say that NO ONE will be acquiring ANYTHING from AA, any time soon. (think BA etc. $$$$).

Might You concur...World Traveler ???

 

[Buck]

Not gonna happen, millions of American are right now, sitting in their easy chairs, searching for the lowest fare while in their underwear.

So stop dreaming.

Airlines will continue to go into bankruptcy court over and over again, people want to fly for free if possible.

The lowest fare wins, you lose. That's the sad truth...

That's the way Alfred Kahn planned it.

I am not dreaming and I didn't write the article.

The story is being ran in USAToday.

 

[WorldTraveler]

I have said all along that the most likely outcome would be for AA to emerge all along, that DL's motives for suggesting it was interested in AA is to prevent US from being able to acquire AA - although if DL could do a deal that would give it a larger presence in Latin America and LHR DL would act, and BA is operating from the same principle of protecting its investment.
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It still doesn't change the fact that DL, like every other airline, has opportunities to improve its strategic standing and is perhaps the only large US airline that has the resources to acquire another airline right now - and in so doing could reshape the industry once again.
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If AA successfully restructures and US is kept in its box and UA becomes the high cost carrier, DL and AA might find it worth their while to "carve up" UA during their next BK which is bound to happen. DL could pick up the IAH, IAD, and ORD operations and a bunch of LHR slots while AA could take EWR and SFO.
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And DL could acquire AS before AA emerges and still be able to "part out" UA if that opportunity arises.
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At some point, one of the big 4 network carriers (US included) will not successfully emerge from BK....if AA successfully emerges, then it appears UA has the next appointment with the judge.
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[usa1]

Then I think it's safe to say that NO ONE will be acquiring ANYTHING from AA, any time soon. (think BA etc. $$$$).

Might You concur...World Traveler ???

For a long time BA has been interested in US's strong east-coast system to feed across the pond. It would take years for AA to build up these markets and a loyal FF group. They tried it in RDU once already. The UA/US and Star deal interrupted things last time BA/US had something brewing. AA is worth "much more" to "BA" if US come with them. But I think you're right about the many adverse affects it could have on US employees. CLT, DCA and whats left of LGA will be fine. But I can see reductions in PHL, PHX, possibly being reduced to focus cities instead of hubs. I see JFK, DFW and MIA growing.

A typical midsize, Mid Atlantic city would have daily service to CLT (5), DFW (3-4), MIA (2) and then depending on the size of the city, possible service to DCA (3), PHL (3). No 50 seaters, mostly mainline .... for sure nothing smaller than the Embraer 175.

Scope agreements would be very important in any labor deal, post merger. I can see AA employees warming up to a deal like that? Especially after they hear what the Judge offers in court?

 

[WorldTraveler]

No bidder is going to have any impact on what happens during the 1113 process for AA... that process is in motion and AA has more than enough time to conclude that process before it has to consider other offers.
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AA and BA already have service to nearly every medium size or larger city that can support int'l service on the east coast.... all that they would gain would be a slightly better shot at some of the small cities which DL and US largely serve. Yet despite all the hype about the power of alliances, carriers still agree to connect passengers to competing alliances at fares comparable to what you can get carrying that passenger solely on an alliance routing. ie BA can sell a ticket using BA to ATL and then DL to CAE or BDL via PHL.
Cutting off that ability will certainly invite backlash from regulators in Washington, Brussels, and every other capital.
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There has to be a pretty strong financial incentive for carriers to deepen relationships when the current ones work. AA still can access nearly all of the key cities in the US even if other carriers have faster routings....
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The best chance the airline industry would have to improve its fortunes would be to remove the airline industry from the Railway Labor Act... airlines long ago indicated they would prefer to do that and it is clear labor has not benefitted under it.