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US Airways Sees ‘One Big Deal’ Left for U.S. Airline Mergers
- Thread starter USA320Pilot
- Start date
Let me preface this reply by stating that I no longer work for US Airways or any of its' affiliate companies. My current job is in management for a major rental car company, and many of our customers arrive on flights operated by US Airway or an affiliate carrier. They often arrive at the rental counter pissed off due to problems they have had with US, whether it involves flight irregularities, service issues, or baggage problems. They are generally very unhappy. Rarely do I hear the same tales of woe from customers who have arrived on CO, DL, UA, WN, B6, FL, or AA. What this leads me to believe is that business people only fly US because they have no other viable choice from their point of departure.
The truth of the matter is that US Airways used to be a good company that was aiming to be at least as good as or better than CO, UA, and DL, and the employees tried to make sure their customers had a good experience. Ever since the company fell under the control of America West management, it has gone seriously downhill. Mr. Parker may be very good at attracting capital and keeping the bills paid, but he seriously sucks at leading the employees to make US Airways even a mediocre airline.
With all of that said, there is no value in US Airways as it now stands. As the old and tired cliche' often says, "The Emperor has no clothes". The only way US Airways will ever be involved in a merger transaction will be due to luck, and another carrier wanting to purchase US capacity and then close down the US operation to grow their own market share. The end game has been coming for many years, and it will be sad to see US go away, but it will be an event that is way past its' time.
If I were still employed by US Airways, I would be planning ahead for the day when the operation comes to a close, because that is the only logical conclusion that comes to mind. Good luck to you all because the end is nigh.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- #22
Jim,
you miss my point... AA is obviously not interested in US and US obviously wouldn't want AA in the shape they are in....
but if AMR ends up in BK, then they will have to get cleaned up.. and when they are cleaned up, they become a viable dance partner for US... and when you are in BK, you lose a great deal of control about your future... so Dougie would be delighted to pull the US acquisition plan for DL out of the back drawer, make some major revisions (esp. those that led to gov't and employee outcries and allowed DL to sink the deal), and then ACQUIRE (not merge with) AA.
If AMR has no control, Doug is free to create his own little empire and obviously AA has the premium revenue and big market access and bulk that US lacks.
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US isn't interested in saving AA.. Parker is interested in creating some sense of viability for US long term... as it stands even US east is not viable up against a much larger DL that does everything US does and more, WN which has the potential to drop fares in every remaining US dominant market and connect the east and west like Doug thought he was doing w/ LCC, and against UA which only has invited US to the party because of a presence in the SE that neither UA or CO has and which you can't ignore given that neither UA or CO is in the top 3 carriers in any major city in the SE, including Florida.
Virgin is looking for options but the most legally feasible alternative is a joint acquisition by DL and AF/KL. AF/KL is European like VS and DL has the mass to make the USA end of a VS acquisition work. There aren't too many other potential bidders that could make a similar bid, including other publicly named potential bidder,, Qatar Airways. US obviously could not obtain the benefits DL has w/o a European bidding partner and US still doesn't have the network mass to make it work.
Obviously, a US acquisiton of AA would put US into a leading position in an alliance where it wasn't a side show as well as give US a leading position at LHR... and US right now is a larger carrier in continental Europe than AA - partly driven by the Star Alliance and US' ability to feed traffic to LH and co.
Obviously Parker is not planning on shutting the doors... and he is not making his decisiosn based on the strength or weakness of US' employee or customer relations.
There is truth to the fact that US does have a very weakened position from which to compete and it has to find a viable solution or US can't survive... but US still has key assets and access to key markets and properly managed they could go a long ways to providing a future for US employees.
yes.. it is just a question of who calls the shots... if AMR loses its ability to control its future, in steps Doug Parker. Guaranteed.
OP
USA320Pilot
Veteran
- May 18, 2003
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WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- #28
the only reason why US lost the DL deal was because Parker came out and said that there would be a lot of rationalization of capacity and he preyed on the non-union status of DL employees to say that DL employees would end up on the cutting board.... DL's then CEO Grinstein turned the US acquisition threat as a personal threat to Grinstein's turnaround plan for DL... which he felt personally responsible for because he allowed DL to get into the shape it did.... Grinstein tapped into DL's employee loyalty which we saw in 9 union elections remains incredibly strong and unique in the industry.
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given AA's history w; TW which was and is still very fresh, DL found allies in lawmakers who loudly said they AA-TW debacle would not be repeated.
When DL and NW merged, they went overboard to convince the world there would be no involuntary furloughts and no hubs closed (yes, I know people will point to CVG and MEM now and say they lied but what really is the defintion of a hub - and apparently DL HAS managed to keep lawmakers off its back). With UA/CO, OH wanted guarantees IN WRITING.. who knows what it will accomplish but the AA-TW acquisition set the standard for communities to protect themselves such that US wont' be able to use that language again.
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let's not doubt the change of control that has taken place in BK among US airlines... it is a very real threat and one that AMR can't avoid if it goes in... it's also possible there could be some major asset sales but that is probably not likely unless the assets are sold for a hefty premium since AA has debt that supports a whole airline that would have to be dealt with - and even an int'l asset sale (LHR slots, LatAm operation) is not enough to cover all of AA's debt.
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US can't appear to be too vulnerable to investors because there is no assurance they could pull a deal off - or that AMR will end up in BK... but the loss of control to AMR is very real and US still has major structural obstacles to its own long term existence that have to be dealt with.
As much as I don't want to see AA employees subjected to Parker's style of management (he is a slightly kinder and gentler version of Lorenzo), US will do what it strategically needs to do and if AA can't protect itself, Parker will step in.....
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I am not saying with any certainty at this point that AMR wil end up in BK or that US will step in if AA does up in BK... but US has the greatest remaining strategic needs among the network carriers, Parker has a hstory of corporate raiding that exceeds his ability to run high quality airlines, and AA has many of the things that US needs... you can define leadership many ways but one of them is certainly knowing when opportunities exist and going for them.... Like US, AA has been locked in labor discord for years and in AA's case it has significantly weakened them.. it is very possible that AMR will hit a tipping point in the next 18 months if fuel prices remain high and capacity has to come out of the system. AA is the weakest player to defend itself against market share plays by other carriers. Of course, US has to be worried about fuel too but remember that HP wasn't exactly in great shape when it pulled off the US deal; he needs only to find someone more wounded than US in order to succeed.
if Parker is able to snare AA and jettison parts of the current US, it is certainly not beyond him to try - and there is a reasonable chance he just might succeed.
You should live it.
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