Reed Richards
Veteran
- Sep 2, 2009
- 1,389
- 1,161
Agreed. But we have all lived what is "deserved" vs. what happens. RR
U.S. government, two airlines say open to settling merger fight
- Thread starter traderjake
- Start date
Jester
Veteran
After reviewing the DOJ's claims, in many ways, the arguments presented are nearly laughable. What is most striking would be how the DOJ seems to forget that aircraft by their very nature are mobile; therefore, if there are high fares between two non-hub cities in non-slot restricted airports, the opportunity exist for competitors to provide comparable, connecting services. For example, the highest Herfindahl–Hirschman Index (HHI) post-merger scores would be between CLT and DRO, even though there is a reasonable opportunity for United, Delta and even Frontier to start connecting service between the two cities. The same could be said for other high scored pairings as with CLT-OGG, MRY-PHX, STL-STX, DFW-PSP, etc., as United and Delta, along with smaller carriers could fill-in all of the "thousands" of "presumptively illegal" routes between the proposed merger if fares became excessive. The HHI suggests there are barriers to entry into markets dominated by one or two companies, which as a general rule, does not apply to airlines able to shift from less profitable routes into routes providing greater returns. Good example would be Allegiant Airlines who dumps routes, before a single flight is flown on the basis of poor bookings and 3-month probationary periods are common.
However, the obvious slot-restricted airports commanding high dollar fares: DCA, LGA and even JFK/EWR clearly have barriers to entry, and probably the real underlying cause to the DOJ's lawsuit, as commonly accepted. All this other "presumptively illegal" nonsense is just an attempt to start high and come down to a negotiated agreement with the slot restricted airports.
Finally, I had to chuckle at the following paragraph in the complaint:
"Although it too is a national network carrier, US Airways has hubs in cities that generate less revenue from passengers flying nonstop than the other legacy airlines’ hubs. Because US Airways’ hubs generate less revenue from passengers flying nonstop, US Airways must gain more revenue from connecting passengers. It gets that revenue by offering connecting service that is up to 40% cheaper than other airlines’ nonstop service. US Airways calls this program 'Advantage Fares.'"
Translation: "US hubs suck for revenue generation compared to other airlines (so US employees will need to continue to work on the cheap if this merger is rejected)."
Crash Pad DCA
Senior
The DOJ and the Attorney General of Republican controlled AZ (the home base of US!) and the Attorney General of Republican controlled FL (home of MIA hub of AA) and the Attorney General of Republican controlled PA (home of PHL hub of US) and the Attorney General of Republican controlled TN and the Attorney General of Republican controlled TX (home base of AA!) and the Attorney General of Republican controlled VA (home to DCA!) have ALL charged US+AA with the ONE very specific charge:
"The merger between US Airways and American would likely substantially lessen competition, and tend to create a monopoly, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. Therefore, this merger should be permanently enjoined."
http://www.justice.g...9900/299968.pdf (Page 7, §13)
That's the one and the only one thing the DOJ+6 Republican States Attorney's General have to prove in court. And they only have to prove that the merger "would likely" substantially lessen competition. They don't even have to prove the merger "would" subtantially lessen competition. Not a high mark.
Plus if the merger goes through and it DOES end up "substantially lessening competition" then the DOJ+Republicans can sue DP & Co under the Sherman Act. So even if DP dodges the Clayton Act bullet this go around, he's staring down the barrel of the Sherman Act gun aftwards. I fully expect DOJ+6 Repubs to "stand their ground" on this one.
DOJ+6 Republicans simply have to present the damning happy trail of emails which show DP & Co's past, present and future plans to "substantially lessen competition" and the judge should be able to summarily conclude that the merger "would likely" (given DP's and Kirby's statements, emails, past actions and stated future plans) substantially lessen competition. Case closed.
Time to get off the bar stool, sober up and head to the negotiation table. DCA slots are going to be handed out, capacity will not be cut 10% and as a result TX, PA and AZ will get their flight and job guarantees at least for 5 years. Clearly DP will also be made aware that he is welcome to come back to court post-merger under the Sherman Act if there are any more anti-competitive/monopolistic shenanigans.
This is certainly a heads up to start encrypting the frat house emails. Or better yet to completely stop sending incriminating emails and to quit making public statements that "could be" construed as anti-competitive and monopolistic. The DL and UA CEOs seem to be able to do it...
And so people don't accuse Holder and O'bama (he's Irish, right?) and the Left Libs of making this stuff up just to make Repubs unhappy, it should be noted that Clayton Act was passed in 1914. OK. Woodrow Wilson, a Democrat, was President at that time, but right now in 2013 it seems the DOJ+6 Repubs are "just doing their jobs".
For reference, Section 7 of the Clayton Act as codified in 15 USC §18 reads in part:
"No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly..."
http://www.law.corne...code/text/15/18
The DOJ+6 Repub's charge is simple, specific and clear cut. The DOJ+6 Repubs will present their case and their evidence. The legal bar of proof in this case is a lowly "would likely" or "may be". Time to turn on the paper shredder and wipe the hard drives in Tempe or at least be slow to repond to request for discovery...
Horton hears a
Thanksgiving is 28 Nov this year. I guess the DOJ+6 Repubs plan to fire up the grill start roasting turkeys early this year on the 25th.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #79
Over the past couple weeks since this merger broke, the sentiment of this board toward the lawsuit has changed – there are still some people who think the DOJ is totally out to lunch but there are fewer and fewer people who can legitimately continue to argue that the DOJ’s case is completely without merit.
Usually, I would say that there's a SBCIH that I would EVER agree with anything that WT says, but oh well, here goes...
A CEO and the rest of the frat house should know better than to put this stuff in writing. And if they don't know better, then they probabably aren't qualified for the jobs they hold. You certainly don't send an email to the DL CEO indicating that you want him to stop a triple miles promotion because it's going to cost you money and let him know (threaten?) that you are going to drag him through the mud on Wall Street if he doesn't stop the promotion. Put down the bottle, stop the trantrum and grow up!
7K-15K jobs are going after this merger and 10% of flights (including some of these in rural TX and PHX) are going away...But PA is going is going to demand flight guarantees at PHL (like UA had to do in CLE and DL at MEM, MSP and DTW) and PA wants Moon Ops, Airbus MX and the 1,000 jobs associated to stay OR they want their bond and tax credit money back. No easy out for US in PA this time.
This will be settled. The merger will go through. But PA, VA, AZ and TX are all going to get some guarantees out of this (so we will see how many flights and jobs are actually cut before 5 years) and DP and Co are going to get some sort of public slap on the wrist for the email trail...
Even if this is a highly biased board (industry loyalists if not employees compared to gov’t lawyers and a judge), that is a sign that AA/US won’t just walk into court and blow the DOJ out of the water, gaining everything that AA/US wants and humiliating the DOJ – what some people including AA/US have indicated they intend to do.
That never happens when the DOJ takes a company to court.
The DOJ does have enough real evidence to say that AA/US are different and far more anticompetitive mergers than previous megamergers.
I do think the merger will go thru but there will be significant concessions….
Do you suppose that part of the reason why Parker is fighting DCA divestitures so hard is because he doesn’t want to be humiliated when everyone sees that all of the efforts he put forth to create the DCA hub are undone in just a couple years? I stated at the time of the slot deal that Parker would face obstacles if he chose to merge and the DOJ and DOT indicated then they would not allow US to grow any further.
Even if AA/US “only” has to divest a dozen slots at DCA (one-fourth of AA’s current portfolio), the impact will be much larger than it was for UA at EWR, a much larger hub with a lot more business traffic.
Is it possible that part of what the DOJ wants is a change in leadership at AA/US in order to ensure that the email leaks that occurred (again which didn’t happen at other airlines or at least never became public) can’t occur again? Parker could pull this deal together and then be put on the sidelines. Permanently. The board could get this deal done and then demand a new leader even if the DOJ doesn’t require it since the emails and his intransient attitude could well result in more divestitures than would otherwise have been required. A company the size of the new AA can’t have bad relations with top government officials. And the board could force changes whether the merger goes thru or not.
He is fighting for his job and his career, boys and girls.
The “fix” for the behavioral problems to the DOJ could give new AA the size it wanted but with so little true marketplace power that they don’t get the benefits of the merger. New AA’s competitors could leave AA hamstrung if AA can’t lead fare increases in key markets.
Thank you very much, Reed.
Key phase: Parker treated the DOJ employees just like his own
Even with heavy concessions, US needs a merger more than AA does. US doesn’t have the size to compete outside of its core hubs.
But no one should really think that AA doesn’t need the merger. AA is quickly falling to number 4 on the east coast, including behind US. Much of AA’s size on the business-heavy region east of the Mississippi is driven by Latin America which isn’t really reflective of the rest of the country. In fact, including AA’s domestic presence east of the Miss. makes them number 5 behind all of the legacies AND WN and that includes 3 of their cornerstone cities – ORD, NYC, and MIA.
And AA’s strength at DFW will be significantly challenged by the fall of the Wright Amendment little more than a year from now.
AA and US need each other, even if they don’t bring everything each other needs and even if the price to get the deal done is a whole lot higher than anyone originally thought.
Well said.
As for the timing of the case, it should be clear that the DOJ tried to use the tactic of a late trial to help its case but it hardly means the rest of its case is weak or that they can’t succeed if the case starts tomorrow.
Remember that the DOJ is part of the same government that apparently now has the ability to intercept and scan emails and every form of electronic communication being sent from anywhere in the world. Anyone who thought these capabilities were being used just in the war on terrorism is still stuck in the 50s. 1750s.
The economics of the merger certainly change if AA/US has to retain capacity where it thought it could cut it but have to cut it where they thought they could hold onto it.
And yet both need the deal badly enough that the price for not paying is higher than the price to pay.
The deal will go thru and deep concessions will be made will implications for a lot of other aspects of the merger.
Your Post is dead on! I was wondering when someone would bring up the obvious! World Traveler also great points, bottom line "IF" DP comes to some kind of settlement with the DOJ will the cost offset the potential synergy payday? Judge Lane might have to decide? And who in the END will face the inevitable "haircut" one gets in BK consolidation? My guess the ones that only have open ended misunderstandings. My feelings UNITED merger denial all over again for Usairways.
Crash Pad DCA
Senior
Seems what's past at AA is prologue at US+AA...
http://www.dallasnews.com/business/airline-industry/20130831-american-us-airways-also-fighting-their-own-image-histories-in-antitrust-case.ece
American, US Airways also fighting their own image, histories in antitrust case
By MICHAEL A. LINDENBERGER
Washington Bureau
[email protected]
Published: 31 August 2013 11:23 PM
Updated: 31 August 2013 11:32 PM
WASHINGTON — When Howard Putnam returned to his Braniff Airlines office one foggy February day in Dallas 31 years ago, he found a message waiting from the president of American Airlines — and knew it might be trouble.
Three decades later, the ensuing conversation hovers like a bad memory over American’s quest to merge with US Airways to form the world’s largest airline.
Company lawyers had warned him when he had arrived the previous fall as CEO that rival airlines were using what federal investigators called “dirty tricks” to pressure the already troubled Braniff. Their advice: Don’t talk to anyone from another airline without talking to the lawyers first.
Lawyers consulted, Putnam switched on a tape recorder in his office and returned the call to Robert Crandall, who had assumed the presidency of the larger airline in 1980.
“I think it’s dumb as hell for Christ’s sake, all right, to sit here and pound the [expletive] out of each other and neither one of us making a [expletive] dime,” Crandall, then 46, told Putnam.
Putnam asked Crandall if he had a suggestion.
“Yes, I have a suggestion for you. Raise your goddamn fares 20 percent. I’ll raise mine the next morning. … You’ll make more money, and I will, too.”
Braniff didn’t do that. Instead, Putnam turned the tape over to the Justice Department, which pursued an attempted price-fixing case against Crandall and American for three years. The case was settled out of court and Crandall got to keep his job — but with restrictions on what he could talk about with rivals going forward.
...
But beyond arguing that a third big airline will add, rather than destroy, competition to their industry, the airlines will face another hurdle: The industry’s own history of antitrust allegations.
From the moment it filed its case Aug. 13, the Justice Department has sought to portray the airline industry as ready to do whatever it can to keep prices artificially high. It argues things will get worse if the merger is allowed.
“Coordination becomes easier as the number of major airlines dwindles and their business models converge,” the government said in the complaint. “If not stopped, the merger would likely substantially enhance the ability of the industry to coordinate on fares, ancillary fees and service reductions.”
Or, as Diana Moss, a leading antitrust economist put it: “In a truly competitive market, firms will try to aggressively undercut one another on price. That’s not what we have seen with the airline industry.”
Instead, she said, the airline industry has a history of “predatory behavior” by large companies targeting smaller ones, and, among large companies, of “tacitly coordinating” to keep prices high.
That history, it’s fair to say, also includes times when cases brought against the airlines have been dismissed or defeated.
Argument in two parts
In its 56-page complaint and in comments by officials since filing suit, the government makes clear it agrees with Moss, who is vice president of the American Antitrust Institute, a think tank favoring aggressive enforcement of antitrust laws.
American and other airlines have a long history of being accused of — and sometimes being caught in — anticompetitive behavior, the government says in its suit. The government also says that, despite the airlines’ insistence, their own pricing history shows they work together, often tacitly, to keep prices artificially high.
American Airlines officials declined to comment on the record for this story, citing the pending trial...
History of legal complaints
...
Justice says that in 2010, US Airways chairman and CEO Doug Parker was so mad when a rival airline extended a “triple miles” promotion for passengers, he urged his lieutenants to “portray these guys as idiots to Wall Street and anyone else who’ll listen.”
He eventually sent an email chain directly to the rival airline’s CEO to make sure the message was delivered, the Justice Department alleges.
OK. Let's get the facts straight here...
DP started at AA, right?
And DP was never aware of this Crandall/AA story? (It was in the news for 3 years+. It was kinda a big story back in the day...)
And this case was never covered in any class DP took at MBA school? (Refund anyone?)
Someone needs to have an Initial Discussion or at least be placed on a Level 2 or 3 for a No Call No Show on this one!
I mean the 1999 case and complaint are right here!
http://www.justice.g...ses/indx199.htm
http://www.justice.g.../f2400/2438.htm
Really? No one saw this one coming? And this was a complete and total surprise to the industry and analysts? Pulleez!
Note to DP: post-merger they're coming after you for violating Section 2 of the Sherman Act, 15 U.S.C. § 2. Just a heads up.
And you might just want to briefly skim and review the 1999 AA case to see what the DOJ+6 Repubs have in store for you come 25 Nov. I hear they will be serving fresh crow to be washed down with copious cans of Whoopazz replacing the beer served at most Tempe functions.
The merger will go through. DP "may" keep his job, but expect him to be served with at least the same restrictions doled out to Crandall some 30 or so years ago! Past is truly prologue...
And Tabitha's final recommendation regarding emails and such...
http://www.dallasnews.com/business/airline-industry/20130831-american-us-airways-also-fighting-their-own-image-histories-in-antitrust-case.ece
American, US Airways also fighting their own image, histories in antitrust case
By MICHAEL A. LINDENBERGER
Washington Bureau
[email protected]
Published: 31 August 2013 11:23 PM
Updated: 31 August 2013 11:32 PM
WASHINGTON — When Howard Putnam returned to his Braniff Airlines office one foggy February day in Dallas 31 years ago, he found a message waiting from the president of American Airlines — and knew it might be trouble.
Three decades later, the ensuing conversation hovers like a bad memory over American’s quest to merge with US Airways to form the world’s largest airline.
Company lawyers had warned him when he had arrived the previous fall as CEO that rival airlines were using what federal investigators called “dirty tricks” to pressure the already troubled Braniff. Their advice: Don’t talk to anyone from another airline without talking to the lawyers first.
Lawyers consulted, Putnam switched on a tape recorder in his office and returned the call to Robert Crandall, who had assumed the presidency of the larger airline in 1980.
“I think it’s dumb as hell for Christ’s sake, all right, to sit here and pound the [expletive] out of each other and neither one of us making a [expletive] dime,” Crandall, then 46, told Putnam.
Putnam asked Crandall if he had a suggestion.
“Yes, I have a suggestion for you. Raise your goddamn fares 20 percent. I’ll raise mine the next morning. … You’ll make more money, and I will, too.”
Braniff didn’t do that. Instead, Putnam turned the tape over to the Justice Department, which pursued an attempted price-fixing case against Crandall and American for three years. The case was settled out of court and Crandall got to keep his job — but with restrictions on what he could talk about with rivals going forward.
...
But beyond arguing that a third big airline will add, rather than destroy, competition to their industry, the airlines will face another hurdle: The industry’s own history of antitrust allegations.
From the moment it filed its case Aug. 13, the Justice Department has sought to portray the airline industry as ready to do whatever it can to keep prices artificially high. It argues things will get worse if the merger is allowed.
“Coordination becomes easier as the number of major airlines dwindles and their business models converge,” the government said in the complaint. “If not stopped, the merger would likely substantially enhance the ability of the industry to coordinate on fares, ancillary fees and service reductions.”
Or, as Diana Moss, a leading antitrust economist put it: “In a truly competitive market, firms will try to aggressively undercut one another on price. That’s not what we have seen with the airline industry.”
Instead, she said, the airline industry has a history of “predatory behavior” by large companies targeting smaller ones, and, among large companies, of “tacitly coordinating” to keep prices high.
That history, it’s fair to say, also includes times when cases brought against the airlines have been dismissed or defeated.
Argument in two parts
In its 56-page complaint and in comments by officials since filing suit, the government makes clear it agrees with Moss, who is vice president of the American Antitrust Institute, a think tank favoring aggressive enforcement of antitrust laws.
American and other airlines have a long history of being accused of — and sometimes being caught in — anticompetitive behavior, the government says in its suit. The government also says that, despite the airlines’ insistence, their own pricing history shows they work together, often tacitly, to keep prices artificially high.
American Airlines officials declined to comment on the record for this story, citing the pending trial...
History of legal complaints
...
Justice says that in 2010, US Airways chairman and CEO Doug Parker was so mad when a rival airline extended a “triple miles” promotion for passengers, he urged his lieutenants to “portray these guys as idiots to Wall Street and anyone else who’ll listen.”
He eventually sent an email chain directly to the rival airline’s CEO to make sure the message was delivered, the Justice Department alleges.
OK. Let's get the facts straight here...
DP started at AA, right?
And DP was never aware of this Crandall/AA story? (It was in the news for 3 years+. It was kinda a big story back in the day...)
And this case was never covered in any class DP took at MBA school? (Refund anyone?)
Someone needs to have an Initial Discussion or at least be placed on a Level 2 or 3 for a No Call No Show on this one!
I mean the 1999 case and complaint are right here!
http://www.justice.g...ses/indx199.htm
http://www.justice.g.../f2400/2438.htm
Really? No one saw this one coming? And this was a complete and total surprise to the industry and analysts? Pulleez!
Note to DP: post-merger they're coming after you for violating Section 2 of the Sherman Act, 15 U.S.C. § 2. Just a heads up.
And you might just want to briefly skim and review the 1999 AA case to see what the DOJ+6 Repubs have in store for you come 25 Nov. I hear they will be serving fresh crow to be washed down with copious cans of Whoopazz replacing the beer served at most Tempe functions.
The merger will go through. DP "may" keep his job, but expect him to be served with at least the same restrictions doled out to Crandall some 30 or so years ago! Past is truly prologue...
And Tabitha's final recommendation regarding emails and such...
robbedagain
Veteran
- Oct 13, 2003
- 11,125
- 2,676
what i found interesting was the judge said she was skeptical of the doj's wanting the march trial which to her was too far away and for the doj to get the discovery evidence.... if the doj needed that much time and if it were granted... then how is it they have to rush btwn now and nov to get the so called discovery evidence.. something sounds fishy to me and me thinks that there might be a settlement. but at what costs... me thinks that phx and dca may be the targets when all said n done...
nycbusdriver
Veteran
DCA is definitely their target. The DOJ wants "Its cake, and eat it, too." They will force AA/US to give up slots, while guaranteeing some level of service to smaller communities with the slots they have left. IOW, the DOJ wants to force the New AA into an profitless situation at the DCA "hub." Parker would then need to decide if the New AA could handle DCA as a "loss leader," and hope the rest of the rest of the system could subsidize the small-city service to/from DCA.
In my opinion, PHX is of no concern. I believe Parker has already reassured PHX that the level of service would remain (wink,wink). Besides, LCC has no competitor in PHX...that must be true because the DOJ never mentions SW/AirTran as a competitor.
DC Air could be reincarnated
http://articles.chicagotribune.com/2000-06-02/business/0006020260_1_united-us-airways-deal-dc-air-open-market
Wolf's gambit dares the Justice Department to bust up the United-US Airways deal at its own peril. If the trustbusters do so, they also knock down a chance for Johnson to create this country's only minority-owned airline.
Nobody likes a sweetheart deal except, of course, the sweethearts themselves.
And there's no disputing that Robert L. Johnson's deal to buy a big chunk of US Airways' operations in Washington, D.C., is as sweet as they come.
Johnson is paying $141 million for 222 flight slots at Washington's Reagan National Airport. It's hard to gauge the true value of those slots precisely, but experts in airline economics figure the slots could have sold for at least twice that much on the open market.
http://articles.chicagotribune.com/2000-06-02/business/0006020260_1_united-us-airways-deal-dc-air-open-market
Wolf's gambit dares the Justice Department to bust up the United-US Airways deal at its own peril. If the trustbusters do so, they also knock down a chance for Johnson to create this country's only minority-owned airline.
Nobody likes a sweetheart deal except, of course, the sweethearts themselves.
And there's no disputing that Robert L. Johnson's deal to buy a big chunk of US Airways' operations in Washington, D.C., is as sweet as they come.
Johnson is paying $141 million for 222 flight slots at Washington's Reagan National Airport. It's hard to gauge the true value of those slots precisely, but experts in airline economics figure the slots could have sold for at least twice that much on the open market.
Jester
Veteran
The counter intuitive argument is that by not allowing the merger, there will a de facto duopoly between DL and UA as their size would allow them to muscle around those in-between sized competitors (US and AA). If the objective is to protect competition, then the merger should receive a DOJ blessing. Any DOJ city pairing by which is cited as being “presumptively illegal” could be handled by the competition’s changing of flight schedules and re-allocation of aircraft assets, if the fares become excessive.
However, I suspect this is about DCA, LGA, JFK and to a much lesser degree, even PHX, where slot restrictions will not provide the desired competition, and PHX falls into a very odd position in having strong SWA competition, but that airline that will not fly into smaller markets. Ergo PHX has no slot restrictions, plenty of competition between large cities, but an US merger with AA will provide dominance into those smaller markets in southern CA, Arizona, southern CO, NM and parts of TX.
A merger will happen, but how much will need to be sacrificed in the process will be the Big Question.
Crash Pad DCA
Senior
Correct. If competition at DCA results in a big enough revenue deficit then the new US+AA will essentially be forced to maintain its "competitive" Advantage Fares program (undercutting UA and DL non-stop fares by up to 40%) to make up the lost revenue. The net result will be advantageous to consumers AND to CLT, PHL and PHX, but then DP might not be able to immediately triple his pay to the level of the DL and UA CEOs.
http://www.justice.g...13/299960-b.pdf
As the above graphics show, US took big price premium hits when B6 entered the BOS-DCA arena. Expect more 40%-60% hits on the soon to be returned US and AA BNA and RDU slots that will surely be quickly converted to "compeitive" routes by OALs.
It can be reasonably argued that US+AA is needed to offset DL, UA (or WN) - monsters admittly created with the blessing of the DOJ. But this case is not about that argument nor should it be. This case is solely about whether DP, SK & Co "would likely" exhibit and evidence anti-competitive behavior in violation of the Clayton Act and/or the Sherman Act. Period.
Yes, a US+AA that behaves "competitively" is needed to offset DL, UA and WN. But a combined US+AA that is going be be lead by those who "would likely" behave in an anti-competitive/monopolistic manner is not good for consumers and the industry, and it would be in violation of long established US laws.
Again, moving forward at US+AA...
If DP wants to keep his job at US+AA then he's going to have to publically agree to "keep quiet" just like Crandall did 30 some years ago for a remarkably similar infraction. I bet also Advantage Fares magically stay in order to avoid a swift and immediate return to court for US+AA under the Sherman Act. DCA slots will be returned. Not enough to kill the "hub" but enough to make it hurt and draw a little blood. PIT/Moon Ops and MTC stay around awhile or US pays back all da' money. DP's choice. But PA's not getting pimped and b*tch slapped again this time around. The merger will be completed and US+AA will "consent" to behaving "competitively" post-merger. And if the merger fails, it's already in DP's contract that he will be paid $20 million. So emails or not...merger or not...DP gets paid!
This merger is going to make the new AA #1 in both the east and midwest and #3 in the west. When the LCC merger was put together the west was basically wiped out for the more profitable east coast operations. I do think that PHX will be safe for maybe 2 years and then get a haircut. LUV's biggest hub is PHX and I don't think the merger will help us compete any better with them. I think PHX will be cut by a third when all is said and done. (I hope I am wrong on this) I think the only thing that will save PHX is the continued extra utilization of aircraft (flex) that is currently a part of the operation.
Regarding this merger, IMO, there will be a settlement before November 25th.
P. Rez
Regarding this merger, IMO, there will be a settlement before November 25th.
P. Rez
Crash Pad DCA
Senior
The case is not about the DL UA duopoly. It's about whether DP & Co "would likey" behave anti-competitively or in a monopolistic manner post-merger in violoation of the Clayton and/or Sherman Acts.
Although there are only 12 directly overlapping (non-stop) routes on which AA and US curently compete (mostly hub-hub with exception of DCA-BNA and DCA-RDU), US currently "competes" (mostly with AA!) with Advantage Fares by undercutting AA and others by about 40% by offering one-stop alternatives (through PHL, CLT, PHX) on AA, DL, UA premium non-stop routes. US+AA has signaled that they will stop this competitive behavior post-merger hence the DOJ+6 Repub anti-trust filing and allegation.
That plus the DP email gift to DL CEO, and various unsundry public "we can stand alone" statements by SK, and the "we're outta PIT/Moon" statements, and the selling of the Tempe headquarters, and TX's fear of losing rural service in favor of US+AA routes that are more lucrative lead to the "surprise" DOJ+6 Repub complaint filing under the Clayton Act.
After a successful run in the CEO/executive suites at UA and DL, we are now serving at a local Tempe restaurant near you...
Crash Pad DCA
Senior
How the US+AA PHX+LAX hub duo (currently at #3) could even possibly compete for corporate contracts with DL's LAX,SEA,PDX,SLC triangular hub/focus combo and UA's LAX,SFO,DEN triangular hub combo out west, with near ZERO offerings to Asia and Europe, is completely beyond comprenhension. Something out west has gotta change and is gonna change quickly! Nocella and Isom have that on the "to do yesterday" list. It's not gonna be 2 years...
CLT is OK because CLT-MIA-DFW triangle is going to be used to strangle DL at ATL. PHL is OK becuase PHL-JFK (and maybe some BOS) is going to be used to hem in UA at EWR (and somewhat DL at JFK/LGA).
Will be interesting to see if US+AA will eventually offer UA any direct international compeition at IAD (LHR swap with BA?) or whether they will rely on oneWorld partners to do the dirty work, much as DL does with its SkyTeam partners.
Good luck to US AAll.
Crash Pad DCA
Senior
While I probably agree with your argument, I think this is the "Yes, your Honor, I was driving under the influence, but didn't hit or kill nobody" defense. Who knows, maybe it will fly in court.
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