I never thought I would see the name "American Airlines" associated with "low-cost carrier."
The new AA - Attacking Delta one hub at a time
- Thread starter Super FLUF
- Start date
I never thought I would see the name "American Airlines" associated with "low-cost carrier."
diamondcutter
Veteran
- Apr 11, 2007
- 640
- 618
He started off so good , them bam the backed handed did . WT I would expect nothing less from you.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #18
perhaps my message did not come across as intended. Let me rephrase.
I am not going to 2nd guess what might or might not work w/ this merger at this point. There is nothing any different today than there has been for the past how many months of conversation on here and elsewhere about it.
AA and US will not LEGALLY be allowed to even look at each others' books in any more detail than they do now until the feds give approval. They usually allow some additional "looking" during the gov't review process but opening books completely for all sides to see won't happen for a long time.
There is very little that will change in terms of planning for months.
Point two is that mergers consistently overpromise and under deliver - or at least back track because of "unforeseen circumstances." And lest there be any doubt about my position, DL did no less in promising to retain MEM and CVG when it was very certain it was in the cards to pare them. Given this is megamerger number 4 in the US (including WN), every one of those mergers has resulted in less today than was promised on merger day.
Given that this merger has been driven to a very great deal by employee involvement before the merger, employees have very high expectations about what they will receive. I am simply saying that no one should be surprised if they don't end up w/ what they were expecting... that is life.
Mergers are exciting days and I am not going to take the joy of that day away from any of you to whom it has mattered.
Of course on merger day, you want to believe you have all kinds of possibilities to do things you haven't done before. There will be clear benefits from the merger; the creditors wouldn't have approved it if there were not.
But you also should not think that all the problems that existed before will now be overcome or that the new AA will uniquely have options and resources that its competitors do not; if you do, then you are probably too focused on the excitement of this day to consider the realities of tomorrow.
I wish you all well; I really do.
I have said before and I will say again that you have now received what many of you wanted; it is up to you to make it work and to prove you are right.
It is also noteworthy that the article cited actually had a pretty balanced appraisal between those who think AA can create difficulties for DL as well as those who don't think that is terribly reasonable. As usual, I didn't see a whole lot of balance as to the two sides. There are also changes involving UA that weren't mentioned and are far more significant, including the loss of US from Star.
Quite simply, we won't really know for a good long time the effect of any of it.
I am not going to 2nd guess what might or might not work w/ this merger at this point. There is nothing any different today than there has been for the past how many months of conversation on here and elsewhere about it.
AA and US will not LEGALLY be allowed to even look at each others' books in any more detail than they do now until the feds give approval. They usually allow some additional "looking" during the gov't review process but opening books completely for all sides to see won't happen for a long time.
There is very little that will change in terms of planning for months.
Point two is that mergers consistently overpromise and under deliver - or at least back track because of "unforeseen circumstances." And lest there be any doubt about my position, DL did no less in promising to retain MEM and CVG when it was very certain it was in the cards to pare them. Given this is megamerger number 4 in the US (including WN), every one of those mergers has resulted in less today than was promised on merger day.
Given that this merger has been driven to a very great deal by employee involvement before the merger, employees have very high expectations about what they will receive. I am simply saying that no one should be surprised if they don't end up w/ what they were expecting... that is life.
Mergers are exciting days and I am not going to take the joy of that day away from any of you to whom it has mattered.
Of course on merger day, you want to believe you have all kinds of possibilities to do things you haven't done before. There will be clear benefits from the merger; the creditors wouldn't have approved it if there were not.
But you also should not think that all the problems that existed before will now be overcome or that the new AA will uniquely have options and resources that its competitors do not; if you do, then you are probably too focused on the excitement of this day to consider the realities of tomorrow.
I wish you all well; I really do.
I have said before and I will say again that you have now received what many of you wanted; it is up to you to make it work and to prove you are right.
It is also noteworthy that the article cited actually had a pretty balanced appraisal between those who think AA can create difficulties for DL as well as those who don't think that is terribly reasonable. As usual, I didn't see a whole lot of balance as to the two sides. There are also changes involving UA that weren't mentioned and are far more significant, including the loss of US from Star.
Quite simply, we won't really know for a good long time the effect of any of it.
Maybe not at the expense of CLT...but maybe at the expense of JFK.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #22
No, companies even during merger negotiations do not have full access to all of the financial information nor would they want to provide that level of information.
There was no assurance that AA and US would merge months ago when they started these discussions; the last thing you want is a competitor to know everything about your company and then walk away w/o a merger.
Assurance of a merger only came last night after votes of both boards.
In fact, there was speculation when AA sent out the request for NDAs that other carriers did request information; I'm not sure we know who all requested information and what was given, but the NDA process was not originated as an exclusive process.
As merger negotiations become more intense, there is a desire to share more information but the feds are very careful about what information can be shared... and often what is released is only done in the presence of a government official or w/ them knowing exactly what was released.
There could be serious violations of antitrust laws if excessive information was released before the merger is fully approved. And it won't be fully approved for months.
That reality is in part why some companies report that their understanding of the acquisition changed after they were able to fully examine the books of their acquired company; I believe WN said that about some of the things they found out about FL's operations. That is part of the process.
I have a friend who is an antitrust lawyer w/ the DOJ; he has told me just enough in generalities to know that they are deadly serious about enforcing antitrust laws. There are no shortage of stories available online to know that is true, including in mergers.
There was no assurance that AA and US would merge months ago when they started these discussions; the last thing you want is a competitor to know everything about your company and then walk away w/o a merger.
Assurance of a merger only came last night after votes of both boards.
In fact, there was speculation when AA sent out the request for NDAs that other carriers did request information; I'm not sure we know who all requested information and what was given, but the NDA process was not originated as an exclusive process.
As merger negotiations become more intense, there is a desire to share more information but the feds are very careful about what information can be shared... and often what is released is only done in the presence of a government official or w/ them knowing exactly what was released.
There could be serious violations of antitrust laws if excessive information was released before the merger is fully approved. And it won't be fully approved for months.
That reality is in part why some companies report that their understanding of the acquisition changed after they were able to fully examine the books of their acquired company; I believe WN said that about some of the things they found out about FL's operations. That is part of the process.
I have a friend who is an antitrust lawyer w/ the DOJ; he has told me just enough in generalities to know that they are deadly serious about enforcing antitrust laws. There are no shortage of stories available online to know that is true, including in mergers.
No, my friends, there will be no long diatribes today nor likely in the future.
Promises, promises, promises..........
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #24
No, there really is no need to engage in lengthy discussions about what should be done because the decision has been made.
I actively engaged in discussions on this forum about UA's restructuring; they made their decision and other than noting areas of weakness or new strategic initiatives (fewer of those) in their performance today, I don't comment much about UA.
AA has a window to make this deal work and I have no reason to doubt that all of you will do your part to make it happen.
It will be at least another year before we really see indications of how a combined airline operates compared with just simple addition of how well they would have operated on their own.
AANOTOK
Veteran
- Oct 10, 2009
- 4,627
- 2,242
You will never know how they would have operated alone (stand alone). If the past is any indication, then you probably would have seen BK #3 (#1 was 2003) and possibly liquidation. Of course labor would be blamed for not getting whacked enough both through outsourcing and pay/benefit cuts.
NewHampshire Black Bears
Veteran
- Aug 20, 2002
- 10,154
- 681
OK 'Wings,......NOW 'we Ride as ONE Posse'.
I've got your back, and I KNOW you'll have mine !
I'm with you on the JFK/PHL/CLT thingy. I look at JFK/PHILLY as (like) a small but deadly WOLF PACK.
And though it will take 2/3 years to get it up and running, the FIRST order of Business will be to CHOKE DL International, out of JFK. W-G-A-phuck if DL is domestic king out of LGA. As DL loses market share out of JFK(International), DL/LGA will most likely trim down.
CLT(unfortunately) will most likely go from HUB, to focus city in 2/3 years, BUT will still move a TON of domestic traffic, and possibly a lot of Caribbean. The CLT-Shrink is inevitable because of (mostly) ATL and the worlds Biggest South American Hub....M I A !
DL has DTW Solid, a slowly dwindling MSP and a nice operation in SLC. Everybody and thier brother is in LAX. UAL has Frisco/EWR and Houston. The (new) AA has BOS.
DL(thanx exclusively to BIG RED) will split ASIA with UAL, with a much smaller amount left for AA..
Stay tuned my new Best Friend. (NO sarcasm meant at al).
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #27
You are absolutely right, AANOTOK, that we will never know how AA and US would have fared as standalones now that the decision to be made has been made.
It is also true that the creditors had to face the very real prospect that AA could have been even further marginalized in key markets, not just by DL but by other carriers as well.
However, it is equally true based on the past that DL has been able to expand in both AA and US markets with very little resistance over the past 5 years and there are no indications that DL is changing its strategy. In fact, the number of seats in nearly all AA/US hubs and key markets is increasing this summer compared to last even though DL's system capacity is expected to be down; DL knew full well that the merger was coming and continues to build its presence in key AA/US markets so as to mute the effects of the merger.
Even if AA/US goes on the aggressive against DL at LGA, DL still has established itself with seat shares exceeding 1/3 of the total seats in the market in LGA-MIA and since DL has no hub on the other end, the number of seats DL sells to local passengers is much higher. DL is very close to seat parity with US in LGA-PIT right now. DL continues to grow LAX while AA and UA are both shrinking there. DL is once again the largest carrier at JFK this summer in terms of both seats and flights. (and Bears, DL's international presence at JFK is twice the size of AA's - and DL has its own int'l presence at EWR that will be enhanced in both places by Virgin plus Skyteam.... .let's not forget that Iberia continues to shrink - a couple thousand more employees will be laid off in the very near future).
DL's position at JFK, LGA, and DCA relative to the new AA at the same airports will continue to be a key strategic determiner of success on the east coast.
Even though DL is the largest carrier at both LGA and JFK (and the new AA will not surpass DL in those markets), DL does 47% of the slots at JFK while US has 55% of slots at DCA. The feds will likely argue that they cannot allow US/AA to exceed US' current position of 55% of slots at DCA; the only slot controlled airport where there is a higher percentage of slots than that is EWR where UA now has about 75% of the slots.
US could agree with the feds and be forced to divest nearly all of the slots it gains from AA at DCA or it can accept a higher percentage of slots at DCA. But if AA/US ends up with 65% of the slots at DCA, DL could very well argue that it should too be allowed to acquire 65% of the slots at either JFK or LGA, or both, since the feds would have allowed the new AA plus UA to have that high of percentages of slots at DCA.
At that point, then DL could go after B6 which has a pretty low market cap and at the same time gain a whole lot more market access not only in NYC but also in BOS, DCA, Florida, and to the Caribbean and Latin America.
Even if DL doesn't do anything to add slots, slot divestitures by AA/US at DCA will very likely exceed whatever revenue synergies they would have achieved at LGA and JFK where both are fairly complementary.
There really is no telling where the next strategic moves will be but history points rather strongly to the fact that DL has given nothing up to AA, UA, or US over the past decade and there is no reason to think DL is going to let that track record change - of course if history is any indication.
DL could also shift its strategic focus west with an acquisition there that would make it much harder for AA/US to gain synergies. If PHX shrinks, DL at SLC is likely to be one of the top hubs to benefit.
DL could also continue to focus on building its presence in key AA/US international markets as it is doing in the UK, Mexico, and Brazil with its partial ownership of Virgin Atlantic, AeroMexico, and Gol.
It is one thing to argue that the merger MIGHT slow the assaults that AA and US have both sustained on their networks from other carriers; it is quite another to suggest that AA/US will start turning back the tide esp. against DL which has demonstrated an ability to find opportunities where others have not. It is still a half year or more from merger approval and other carriers including DL are expanding in key AA/US markets.
BTW, my market specific responses to the issues raised in the article and by others in the post are about the same length as the article cited by the OP. No copying and pasting of articles (esp. w/o comment) will go along ways to limit what I can respond to.
It is also true that the creditors had to face the very real prospect that AA could have been even further marginalized in key markets, not just by DL but by other carriers as well.
However, it is equally true based on the past that DL has been able to expand in both AA and US markets with very little resistance over the past 5 years and there are no indications that DL is changing its strategy. In fact, the number of seats in nearly all AA/US hubs and key markets is increasing this summer compared to last even though DL's system capacity is expected to be down; DL knew full well that the merger was coming and continues to build its presence in key AA/US markets so as to mute the effects of the merger.
Even if AA/US goes on the aggressive against DL at LGA, DL still has established itself with seat shares exceeding 1/3 of the total seats in the market in LGA-MIA and since DL has no hub on the other end, the number of seats DL sells to local passengers is much higher. DL is very close to seat parity with US in LGA-PIT right now. DL continues to grow LAX while AA and UA are both shrinking there. DL is once again the largest carrier at JFK this summer in terms of both seats and flights. (and Bears, DL's international presence at JFK is twice the size of AA's - and DL has its own int'l presence at EWR that will be enhanced in both places by Virgin plus Skyteam.... .let's not forget that Iberia continues to shrink - a couple thousand more employees will be laid off in the very near future).
DL's position at JFK, LGA, and DCA relative to the new AA at the same airports will continue to be a key strategic determiner of success on the east coast.
Even though DL is the largest carrier at both LGA and JFK (and the new AA will not surpass DL in those markets), DL does 47% of the slots at JFK while US has 55% of slots at DCA. The feds will likely argue that they cannot allow US/AA to exceed US' current position of 55% of slots at DCA; the only slot controlled airport where there is a higher percentage of slots than that is EWR where UA now has about 75% of the slots.
US could agree with the feds and be forced to divest nearly all of the slots it gains from AA at DCA or it can accept a higher percentage of slots at DCA. But if AA/US ends up with 65% of the slots at DCA, DL could very well argue that it should too be allowed to acquire 65% of the slots at either JFK or LGA, or both, since the feds would have allowed the new AA plus UA to have that high of percentages of slots at DCA.
At that point, then DL could go after B6 which has a pretty low market cap and at the same time gain a whole lot more market access not only in NYC but also in BOS, DCA, Florida, and to the Caribbean and Latin America.
Even if DL doesn't do anything to add slots, slot divestitures by AA/US at DCA will very likely exceed whatever revenue synergies they would have achieved at LGA and JFK where both are fairly complementary.
There really is no telling where the next strategic moves will be but history points rather strongly to the fact that DL has given nothing up to AA, UA, or US over the past decade and there is no reason to think DL is going to let that track record change - of course if history is any indication.
DL could also shift its strategic focus west with an acquisition there that would make it much harder for AA/US to gain synergies. If PHX shrinks, DL at SLC is likely to be one of the top hubs to benefit.
DL could also continue to focus on building its presence in key AA/US international markets as it is doing in the UK, Mexico, and Brazil with its partial ownership of Virgin Atlantic, AeroMexico, and Gol.
It is one thing to argue that the merger MIGHT slow the assaults that AA and US have both sustained on their networks from other carriers; it is quite another to suggest that AA/US will start turning back the tide esp. against DL which has demonstrated an ability to find opportunities where others have not. It is still a half year or more from merger approval and other carriers including DL are expanding in key AA/US markets.
BTW, my market specific responses to the issues raised in the article and by others in the post are about the same length as the article cited by the OP. No copying and pasting of articles (esp. w/o comment) will go along ways to limit what I can respond to.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #28
that should say 47% of the flights at LGA. For JFK, DL has about 30%, B6 has about 28%, and AA has about 16%.
robbedagain
Veteran
- Oct 13, 2003
- 11,125
- 2,676
wt there was an interesting article yesterday on www.justplanenews.com that i read and early on it looked as though us would drop the merger but thanks to help from a lawyer firm and their associates things picked up steam and the merger was all but announced by jan 31 real interesting. after the merger is complete which the two airlines said would be third quarter this yr 4 us and 5 aa board members and a few outsiders so may be things will be better than what you say or get better also anthr article on justplanenews indicated that both the boeing and the airbus orders have been confirmed for the new aa
johnny kat
Senior
- Oct 11, 2011
- 343
- 330
US is already ready to be all ready for this merger.
