UA and CO seems a go

[US Oringinal]

This is my opinion about what has transpired in the last couple weeks and what is ahead for US.

Tilton and Parker KNEW if the "leaked" that they were in merger talks again everyone would protest--chiefly the unions. Also, it would draw CO back into talks with UA. Now it looks like the CO/UA deal is at hand...just what Tilton really wanted. And the UA Unions are going to support it---in their minds, anything is better than merging with US.

There is little doubt that "mass is king" in the ailine industry and with the consolidation of foreign carriers over the last couple of years, there is little the major USA carriers can do except to consolidate to compete.

Last summer there was some significant speculation that US and AA were in talks. Now that the UA/CO deal appears to be moving ahead, AA almost has no choice but to consider a merger with US. I think Parker has been strongly in favor of a US/AA tie-up...and my guess is that discussions have never really ceased from last summer.

US has some assets AA likes including the Shuttle, even with the DL slot transaction, a good number of LGA slots, and a strong Hub in the Southeast at CLT(remember AA's failed attempts to Hub out of BNA and RDU). AA also has to replace its aging MD-80's and US has the largest narrowbody fleet of the legacies. From a route standpoint, there's not alot of overlap. I can't see AA sitting on the sidelines long being a distant #3..Plus a AA/US merger could explain why US wanted a GIG/GRU and NRT slots in the transaction with DL. A US/AA combination could be a real powerhouse--especially in S. America and the Carribbean--and after losing ground, One World could come back into serious contention with Star, competing well in Europe, Asia and S. America.

From a labor standpoint, it'll be fairly easy for mgmt at AA and US to make a good case to the Unions that in order to survive longterm, AA and US must merge. Federal law now requires "fair and equitable" intergration of employee groups---AA can't just staple US on the bottom. It won't be an easy integration but niether is UA/CO(NW/DL are having their own problems as well). My guess is that there will be some guarantees offered to unions in a proposed merger in order to quiet some union opposition.

I think the reality of having 3 major, relatively same-sized carriers, is becoming more and more likely and I honestly believe that the mgmts at all the legacies have been working this out behind the scenes for the last couple years. If the UA/CO deal goes through, I think is VERY likely a AA/US deal will be announced in the next few months.

discuss...

 

[gar]

US Ori, I like your thinking. I am wondering if AA even needs to merge with anyone since I don't really see what airline would knock AA to fourth. US as a stand alone certainly wouldn't. It seems as if AA could wait for US to fail or pick up assets if we need to sell something off for cash. I also think that AA employees would vehemently oppose a merger with US just as UA employees did.

 

[JayBrian]

"I think the reality of having 3 major, relatively same-sized carriers, is becoming more and more likely and I honestly believe that the mgmts at all the legacies have been working this out behind the scenes for the last couple years. If the UA/CO deal goes through, I think is VERY likely a AA/US deal will be announced in the next few months."




A US/AA combination would probably have to reduce it's Caribbean market share.

 

[USFlyer]

A US/AA combination would probably have to reduce it's Caribbean market share.

Doubtful, since any airline who wants to fly to the Carribean can today, and DL is I believe the largest carrier in that market. Airtran, Spirit, etc. all already fly there, and I believe we effectively have open skies agreements with all of the nations in the Carribean. Plus, AA and US really don't compete much in the Carribean. AA serves NYC and south Florida with mostly O&D traffic, markets where US has scaled back quite a bit over the years.

 

[AstroLounge]

Doubtful, since any airline who wants to fly to the Carribean can today, and DL is I believe the largest carrier in that market. Airtran, Spirit, etc. all already fly there, and I believe we effectively have open skies agreements with all of the nations in the Carribean. Plus, AA and US really don't compete much in the Carribean. AA serves NYC and south Florida with mostly O&D traffic, markets where US has scaled back quite a bit over the years.

I highly doubt that Delta is the largest operator in the Caribbean. American is the dominant carrier in the Caribbean/Latin America region and has been so for years. And IF anyone even tried to 'Ramp Up' and give The Eagle a THREAT, I wouldn't be surprised to see the San Juan hub grow. AA is the PREMIERE CARRIER to Latin America..........and heck they managed to kick United 's arsce right out of Miami all in a few short years. Miami is opening a Brand New Terminal that will be strengthen it's hold as the #1 Gateway to the Southern Hemisphere. AA knows what it is doing in this part of the world and will pull out all the stops to CRUSH anyone foolish enough to take them on. And although I do not work for The Eagle, I know this part of the globe and spent many years Flying The Colours that AA inherited.

 

[USFlyer]

Let me see if I can find the statistic. I'm fairly certain DL surpassed AA a few years ago.

 

[700UW]

AA is the largest carrier to the Caribbean then I believe US is 2nd now.

 

[End of USAPA]

Well, its done! And so is a piece of USair once AMR swoops in to pick up the valuable a$$ets on the east and leaves the rest to bake in the sun. Hmmm.
I don't know what this means except AMR is going to make a play for ALK and so will DAL. The two will put up a fight and the loser will turn around buy the east to secure the Atlantic seaboard and CHarlotte. AMR would love to have a hub in the southeast. DCA would mean a lot to them too, maybe not so much PHL and definately not PHX.

 

[cltrat]

I am wondering how an airline that lost a qter billion dollars could buy a lav truck much less another airline

 

[jimntx]

You are wrong! We did not lose a quarter billion dollars in the 1st quarter. We lost a HALF billion dollars in the first quarter. Just stand back and watch professionals lose money.

(Though I agree with your thought. We're losing money hand over fist. How can we buy anything? I know. Employee concessions! Yeah, that's the ticket.)

 

[BoeingBoy]

How can we buy anything?

Most airlines, even WN lately, don't own new airplanes outright. They're either sold to a leasing company and leased back, or paid for with EETC's (basically investors loan the money to buy the planes) to spread the cost out over years with the planes being collateral for the EETC holders. No different from you or I getting a new car - a lease or a loan.

Jim

 

[jimntx]

I was being facetious.

 

[Dog Wonder]

Hopefully, the merger threads will be shorter now UA and CO are out of the picture.

But dreamers will dream.

 

[JetMonkey]

This is my opinion about what has transpired in the last couple weeks and what is ahead for US.

Tilton and Parker KNEW if the "leaked" that they were in merger talks again everyone would protest--chiefly the unions. Also, it would draw CO back into talks with UA. Now it looks like the CO/UA deal is at hand...just what Tilton really wanted. And the UA Unions are going to support it---in their minds, anything is better than merging with US.

There is little doubt that "mass is king" in the ailine industry and with the consolidation of foreign carriers over the last couple of years, there is little the major USA carriers can do except to consolidate to compete.

Last summer there was some significant speculation that US and AA were in talks. Now that the UA/CO deal appears to be moving ahead, AA almost has no choice but to consider a merger with US. I think Parker has been strongly in favor of a US/AA tie-up...and my guess is that discussions have never really ceased from last summer.

US has some assets AA likes including the Shuttle, even with the DL slot transaction, a good number of LGA slots, and a strong Hub in the Southeast at CLT(remember AA's failed attempts to Hub out of BNA and RDU). AA also has to replace its aging MD-80's and US has the largest narrowbody fleet of the legacies. From a route standpoint, there's not alot of overlap. I can't see AA sitting on the sidelines long being a distant #3..Plus a AA/US merger could explain why US wanted a GIG/GRU and NRT slots in the transaction with DL. A US/AA combination could be a real powerhouse--especially in S. America and the Carribbean--and after losing ground, One World could come back into serious contention with Star, competing well in Europe, Asia and S. America.

From a labor standpoint, it'll be fairly easy for mgmt at AA and US to make a good case to the Unions that in order to survive longterm, AA and US must merge. Federal law now requires "fair and equitable" intergration of employee groups---AA can't just staple US on the bottom. It won't be an easy integration but niether is UA/CO(NW/DL are having their own problems as well). My guess is that there will be some guarantees offered to unions in a proposed merger in order to quiet some union opposition.

I think the reality of having 3 major, relatively same-sized carriers, is becoming more and more likely and I honestly believe that the mgmts at all the legacies have been working this out behind the scenes for the last couple years. If the UA/CO deal goes through, I think is VERY likely a AA/US deal will be announced in the next few months.

discuss...

If US/AA were to merge it would become the biggest airline (in revenues). The new United is listed at 29 Billion. 2009 revenues for both LCC and AMR total 30.3 Billion combined.

I guess it's all up to AMR if they want that title back or not.

 

[767jetz]

Hopefully, the merger threads will be shorter now UA and CO are out of the picture.

But dreamers will dream.

True that.

With the upcoming announcement on Monday, the idea of a US/UA merger, with it's many attempts and years of endless speculation, is finally going to it's permanent grave.

As for AA, IMO if they don't make a move in the next 6 months then their intentions of going it alone will be clear.