U.S. government, two airlines say open to settling merger fight

[Crash Pad DCA]

Freedum

I guess you dont understand WN has the highest percentage of unionized workers, highest paid workers and the most profitable airline.

And lowest paid CEO, too!

 

[Black Magic]

Freedum

I guess you dont understand WN has the highest percentage of unionized workers, highest paid workers and the most profitable airline.

And most importantly a single aircraft type point-to-point business model that generates huge revenue and is completely different from traditional hub and spoke legacy carriers. Write it on the chalk board 1000 times 700UW and don't forget it!!

 

[Kev3188]

— American Eagle, 11,166, up 13.5 percent.

Wow. Anyone have an idea of what caused that big of jump?

Flow back stuff? New ground handling agreements?

 

[FWAAA]

Wow. Anyone have an idea of what caused that big of jump?

Flow back stuff? New ground handling agreements?

Odd, as Eagle had fewer airplanes in June than it did the year before. My guess would be the new ground handling agreements - Eagle was hiring in quite a few cities where Eagle doesn't fly. Another possibility is that Executive Airlines, which had been flying ATRs at SJU and DFW, shut down and perhaps some of its employees were hired by Eagle.

 

[mike33]

7,000-15,000 jobs will be eliminated.

UA has 82,489 employees
DL has 74,546 employees
US+AA will have 31,020+59,163 = 90,183 9% larger than UA, 21% bigger than DL.

Why will US+AA need 7,600 more employees than UA and 15,000 more employees than DL to do the same job?

My guess would be because US via HP has alot more P/T. Also a large % of work is contract for DL thru DGS

 

[Crash Pad DCA]

My guess would be because US via HP has alot more P/T. Also a large % of work is contract for DL thru DGS

The numbers from the DOT are FTEs (full time equivalents). So to make the numbers work each PT at DL, UA, AA, US is counted as 0.5 FTE. In other words, the PTs are in there. But yes, DL does a lot of contract work. That may be the path that US+AA takes. I think baggage service at AA is contract work without any flight or health benefits...The best is yet to come, right?

 

[Kellerguy]

The DOJ's case in a nut shell..

#1 DCA is problem one, and an easy one to fix as identified above.
#2 the "connections dilemma" this is a new one they pulled out of their hat mid way through the analysis from the states AG complaints and has never been analyzed or used before. It had no precedence of any kind and oddly enough is brought on you might say by the transportation patterns of network carriers themselves, so the victims of this tragedy of sorts are the non hub cities that are bitter over the loss of direct services over the last 20 years. So in a sense, failure to allow AA/US to merge increases the likelihood of per analysts one of the two carriers OF NOT being successful--so the heartburn that is causing this frustration does not then diminish at that point, it increases. It could be the worst outcome the DOJ could hope for since the truce LCCs are not network carriers and are not likely to be for many many year nor are they likely to server small to mid size cities for many many years.

A better way a looking at what is going on here is that the DOJ has taken a huge reach on interpretation of the law and injecting CONSUMERISM into businesses properly and fairly competing against each other, and in doing so has injected itself into the marketplace where it has no business AT ALL in a role to PICK WINNERS AND LOSERS. This is not an antitrust trial we are about to go through, this is a political shaping exercise-----and she unions shall quietly by while Obama's Consumer Lawyers break ground on new law.

And oh by the way, if they win, courts from this point on must uphold it, because courts unlike the political appointed beaurocrats that interpret application of law each time they want to apply it, must abide in accordance with prior precedents.

 

[WorldTraveler]

Also a large % of work is contract for DL thru DGS

no it is not. DOT data shows that DL outsources the same amount of total work in its system as other airlines.... about 10%.


Keller,
The idea of market concentration by region and not just city is not a new concept to the DOJ or antitrust law, even if it hasn’t been used as much in the airline industry before.
Now, the airline industry has concentrated to the point that AA/US’ presence in key regions produce antitrust issues in small specific markets, primarily from the SE to the SW.
The good news is that the “fix” for region to region antitrust violations should not be terribly painful – cede gates and airport facilities in non-slot controlled airports, limit price increases in those markets to some sort of index of the industry which is more competitive, possibly provide marketing support to startup competitors in those regions.
DCA is a whole lot more difficult and there are indications that Parker is being told that he must continue to serve the small markets from DCA about which he has made such a big deal or give up those slots to other carriers PLUS he has to reduce the size of the combined AA/US operation down to a size within what the DOJ is comfortable for a slot-controlled airport – meaning new competition on core routes.
Parker will give in or the DOJ will win.
Remember the DOJ still has emails and documents showing that AA and US execs intend to eliminate competition, raise prices, and reduce capacity as a result of the merger. All of the “they don’t have a case” crowd somehow manages to forget those things – but they are smoking guns from the DOJ’s perspective.

Parker will settle but he is giving up a whole lot more than he was willing to do before.

He knew about the market concentration concerns. He probably didn’t know the DOJ had the emails and documents.
I predict AA/US will give up about 12-20 small city slots to other carriers plus 8-12 large jet slots that will be used by low fare carriers for a total loss of 20-30 flights (about 40-50% of the current AA portfolio.) If that happens, AA/US will come out looking very good. UA gave up 100% of its own pre-merger slots at EWR.

 

[Piedmont1984]

Just trying to KISS and not get bogged down interpreting arcane industry data, here is how I read the tea leaves.

Judge Kottar-Kottaly denied the DOJ the option to drag this out well into next year, which would have been a significant and possibly decisive win for the government by allowing the merger to lose momentum, incur significant BK costs, invite other interested parties, resuscitate AMR's standalone plans, etc.

Not only that, but she schedules the multi-day trial so it straddles Thanksgiving, thereby disrupting the holiday plans of high priced attorneys, executives and witnesses; unless the trial doesn't happen and the same group gets the week off (judge included).

Then, the icing on the cake, she opines that the POR has compelling reasons to be approved.

So, unless the DOJ is highly confident they have an airtight case and are willing to go for all or nothing, I expect the next development to be 'in earnest' settlement talks between now and November.

'84

 

[USFlyer]

And oh by the way, if they win, courts from this point on must uphold it, because courts unlike the political appointed beaurocrats that interpret application of law each time they want to apply it, must abide in accordance with prior precedents.

Only if upheld by an appeals court, and then only in the applicable jurisdiction.

 

[jimntx]

Wow. Anyone have an idea of what caused that big of jump?

Flow back stuff? New ground handling agreements?

AA has been downgrading ground personnel--agents and rampers, etc.--at a number of outstations from AA's payroll to AE's payroll. That way they can pay them a lot less. So, to some extent, that jump may simply represent a transfer of employees from one payroll to another.

 

[WorldTraveler]

... indeed... this might be a good time for a summary statement of the number of stations (and employees if possible) that AA and US above/below wing each have outside of its core hubs.

 

[wings396]

Keep in mind that not all of the outsourced work went to AE. Lowest bidder wins out in most cases. At US, they seem to go from one to another every few years when thier contracts expire. In a few stations some half assed vendors won the contract only to discover that it wasn't feasible AFTER startup. I know of a couple that have actually bailed out after a few months leaving US to get the former vendor back.

 

[FWAAA]

Just trying to KISS and not get bogged down interpreting arcane industry data, here is how I read the tea leaves.

Judge Kottar-Kottaly denied the DOJ the option to drag this out well into next year, which would have been a significant and possibly decisive win for the government by allowing the merger to lose momentum, incur significant BK costs, invite other interested parties, resuscitate AMR's standalone plans, etc.

Not only that, but she schedules the multi-day trial so it straddles Thanksgiving, thereby disrupting the holiday plans of high priced attorneys, executives and witnesses; unless the trial doesn't happen and the same group gets the week off (judge included).

Then, the icing on the cake, she opines that the POR has compelling reasons to be approved.

So, unless the DOJ is highly confident they have an airtight case and are willing to go for all or nothing, I expect the next development to be 'in earnest' settlement talks between now and November.

About that bolded portion: No, she did not - you're mixing up the judges. Judge Lane, the bankruptcy judge, has indicated that there may be compelling reasons to approve the POR. The district court judge who will hear the antitrust case, did not.

http://aviationblog.dallasnews.com/2013/08/judge-indicates-hes-leaning-toward-confirming-the-american-airlines-bankruptcy-plan.html/

http://www.reuters.com/article/2013/08/29/us-amr-bankruptcy-idUSBRE97S0W020130829

That approval, of course, would be conditional on the antitrust litigation. Approving it now means that if Parker wins, the merger can go into effect right away. If Parker loses, and no merger, no harm done since AA stays in Ch 11 to prepare another POR.

 

[Piedmont1984]

About that bolded portion: No, she did not - you're mixing up the judges. Judge Lane, the bankruptcy judge, has indicated that there may be compelling reasons to approve the POR. The district court judge who will hear the antitrust case, did not.

http://aviationblog.dallasnews.com/2013/08/judge-indicates-hes-leaning-toward-confirming-the-american-airlines-bankruptcy-plan.html/

http://www.reuters.com/article/2013/08/29/us-amr-bankruptcy-idUSBRE97S0W020130829

That approval, of course, would be conditional on the antitrust litigation. Approving it now means that if Parker wins, the merger can go into effect right away. If Parker loses, and no merger, no harm done since AA stays in Ch 11 to prepare another POR.

I thought she commented on the bankruptcy court proceedings as well, but can't find it now, so I stand corrected. Nevertheless, two judges in two separate courts seem to be on the same page, reasonably short timeline, POR approval and window wide open for settlement.