CallawayGolf
Veteran
- Nov 13, 2009
- 1,920
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Im of the opinion that it wasnt AWAs strong financial health that provided the catalyst for the merger to occur; it was the leadership and vision put forth by Parker, Kirby, McClelland and Kerr that made it possible. In 2005 US Airways was on the ropes and AWA was getting by without flirting with bankruptcy, but it wasnt a powerhouse either. So what it really comes down to is that it was the AWA management team that made the business case for the merger. That message, based on strong analytics and the strength of Dougs reputation to accomplish what he set out to do, resonated with the capital investors who were willing to risk their investment dollars to fund the transaction. The merger team convinced investors that combining the two underperforming operations could produce a stronger, more viable airline which could compete effectively both against the LCCs and the big five network carriers. In 2005 many industry experts and media sources predicted the merger would be a catastrophic failure. On the contrary, Doug was projecting that the airline would generate new revenue opportunities while enjoying a more competitive cost structure. Economically, Doug was correct with 2006 Net Income exceeding the original estimates and 2007 producing record profits despite the operational setbacks that occurred with the loss of McClellands leadership and Kirby's botched RES migration.
So AWA was the vehicle used by the executive team to demonstrate the requisite confidence in the investment community in order to produce the merger. Still AWA operations were substantially stronger than legacy US was in the years leading up the merger. Nicolau recognized the vast differences between the US and AWA financial positions and based some of his rational on that fact. However, Im not sure that the boards ruling would have been all that different if US and HP were essentially equal in status. Slotting by equipment and status would probably have been pretty similar so the whole thread of how Nicolau got it wrong is faulty at best. What do you think he would have come up with if he thought the airlines were financial equals but AWA had no pilots on furlough but US did have many furloughs at the PID?
So AWA was the vehicle used by the executive team to demonstrate the requisite confidence in the investment community in order to produce the merger. Still AWA operations were substantially stronger than legacy US was in the years leading up the merger. Nicolau recognized the vast differences between the US and AWA financial positions and based some of his rational on that fact. However, Im not sure that the boards ruling would have been all that different if US and HP were essentially equal in status. Slotting by equipment and status would probably have been pretty similar so the whole thread of how Nicolau got it wrong is faulty at best. What do you think he would have come up with if he thought the airlines were financial equals but AWA had no pilots on furlough but US did have many furloughs at the PID?