What If.......CO + UA .."DO the deal" ?

[donttouchthebeauty]

"donttouchthebeauty" spends 63% of the time, on the US/HP board.

With such an affinity towards US/HP, I suggest that "beauty" realize that US/HP has 2 choices to get into Asia.(NRT excluded)

Choice # 1; SLIM !!
Choice # 2; NONE !!!!

NH/BB's

LOL - Oh I love it - Well personally, I think before NWA decides to go chapter 7 they will be digging for a merger partner and I would think that it is a skyteam partner or next option would be US/HP... Considering DP's past with NWA.. However I could care less if AA and NWA merged, actually I would love it.. I am sure it would be much prettier than the TWA bump and grind... and sorry to tell yeah but i don't think the DTW girls will mess around and play the nAAtive games.. So considering the debt load of AA - be my guest.. take the scabs - they will fit right in. Don't hate on USAir - at least half of their a/c arent super 80s - Not to strike a word war or anything just an opinion - If you want to know the real truth though I think DAL will look for the partner due to a sellout of the FAs by the AFA to the company at NWA which will allow them to impose the new contracts and secure financing... Just be lucky your union - IMO - at least has a backbone of some sort..

 

[flyhigh]

...it would be a good fit for US/HP. The only different a/c are the 747's really which would be necessary for some of the uber-longhaul. The airbus fleet would go together nicely and possible allow for some additional draw down in domestic capacity. MEM would likely go away giving way to CLT.

I still see AA making a strong bid for the Asia portion much like CO did for TW's LGA slots/gates during that transaction. This would likely go differently. A bidding war by CO and AA and maybe DL if they could get approval would drive the price above US's ability.

 

[WorldTraveler]

AA should have about a half dozen widebody aircraft available by next summer given the transpac and transatlantic routes that are to be cancelled after this summer. Even if they get DFWPEK, they still have enough planes for several new routes.


Salivating about AA getting its hands on NW so they can connect passengers through NRT is meaningless in a market where new transpac flights that overfly the Pacific are being added every year. The bottom line is that if AA can't make routes to Asia work from its current strong hub markets, there's no reason to think they would benefit from NW. All of NW's Asian service is via NRT right now as it is so they will have to spend the first 3 years of 787 deliveries rebuilding their nonstop transpac service to points beyond Japan. AA could do that right now if they could figure out how to make it work.

I'd suggest that there are routes from ORD that AA should be flying now including HKG, TPE, and ICN. US carriers can add segments beyond TPE and ICN with local traffic rights allowing AA to develop a pretty significant Asian route system with a relatively small financial commitment - if they can figure out how to make new routes work.

 

[FWAAA]

Salivating about AA getting its hands on NW so they can connect passengers through NRT is meaningless in a market where new transpac flights that overfly the Pacific are being added every year. The bottom line is that if AA can't make routes to Asia work from its current strong hub markets, there's no reason to think they would benefit from NW. All of NW's Asian service is via NRT right now as it is so they will have to spend the first 3 years of 787 deliveries rebuilding their nonstop transpac service to points beyond Japan. AA could do that right now if they could figure out how to make it work.

World, you're an intelligent guy; so how come you keep posting stuff like this? AA and its cheerleaders aren't salivating over the possibility of connecting pax at NRT. We're salivating over the possibility of gaining 29 weekly frequencies to CHINA. THAT's what's got everyone salivating. Unlike all the other destinations you list, China is a limited access market. Completely opposite of "open skies." Valuable in part because not everyone with an airplane is allowed to initiate service between the USA and China. To a lesser degree, same thing with NRT.

NRT? Still a lot of value in the NRT access (of which NW has a LOT). Fifth freedom rights? Most people understand that long range airplanes have lessened their importance. Still, NW and UA use their fifth freedom rights pretty extensively, so there must be some profit in doing so.

I'd suggest that there are routes from ORD that AA should be flying now including HKG, TPE, and ICN. US carriers can add segments beyond TPE and ICN with local traffic rights allowing AA to develop a pretty significant Asian route system with a relatively small financial commitment - if they can figure out how to make new routes work.

HKG? Very competently served by a superior foreign airline - Cathay - perhaps you've heard of them? Only benefit of AA metal to HKG would be the ability to upgrade. But if you're already buying J or F, you'd be certifiable to do it on AA metal v. Cathay Pacific.

TPE? Lots of codeshare service with EVA, which offers excellent service. AA tried SJC-TPE, and it might have eventually panned out if the terrorists hadn't devastated AA five years ago. UA is going to restart TPE; we'll see how well UA does.

ICN? Knock yourself out. Lots of ways for AA to route pax there, via JAL (joining the OW Alliance next year) and CX.

World - it's not about placing lotsa dots on the map. It's about making a profit on each and every long-haul flight. If you can't sell enough J and F, you don't fly it.

AA has a recent string of failures on long-haul flights, like ORD-NGO (lost the corporate contract to UAL); DFW-KIX (restarted this route but couldn't sell enough J and F); SJC-NRT (not enough J and F to make this work - UA owns Bay Area to Japan traffic). I'm sure there are others.

AA also has some recent winners, like ORD-DEL and ORD-PVG. Perhaps DL will hit home runs on many of its new long-haul flights. You'd better hope it does. If they work out - everyone looks brilliant. If they fail, that's a lot of 767s sitting around.

 

[WorldTraveler]

Sure, NW has lots of China access right now but lots more is coming very quickly, and I’ll bet that AA gets the next award for DFW service since it has the least service to China of any incumbents (even though HKG is not part of this route case, it is in China and CO flies there). It makes no sense to buy NW’s Pacific routes when lots more capacity will come online in the next few years. Plus I have a hard time believing that the ROI on the China routes would be enough to overcome the huge bill you had to pay to get “stuff†you don’t necessarily need which is what will happen in a route acquisition. And remember that in order for a route acquisition to occur, the current owner of the routes will have to be failing so AA would pay a price for satisfying the creditors recovery needs.

With all due respect, I think you short change AA’s ability to compete in the top markets of the world. AA is known worldwide and is certainly competitive on international routes with any US carrier. Sure, Asian carriers have better service but airline service is defined as much by how employees treat customers as anything. AA’s physical product is competitive with the best in the world, esp. with the new business class upgrade (although it was overdue).

You also cannot say that serving a market through a codeshare is acceptable. The goal is indeed to make money but I have a hard time believing that AA is not capable of doing that to Asia.

I believe AA’s biggest challenge in developing Asia is that your best hub – ORD – is shared by an airline that has a strong reputation and comparable service in Asia. DFW is not ideal for developing Asian traffic which is part of why KIX did not work. SJC didn’t work for the same reason PDX didn’t work for DL – not enough feed and too small of a local market – plus SJC is in the shadow of SFO which has lots of Asian service by UA as well as foreign carriers.

I believe LAX to Asia has long been underserved by US carriers and AA could make it work if they could get past the facilities issues. I believe DL is dead serious about developing Asia from LAX and if they succeed that could be pivotal on how AA and DL end up in Asia.

S. Korea is a strong market but it is heavily dominated by its home carriers just as TPE is by its carriers, although Taiwan is a smaller market. HKG is a big enough market that AA should be able to serve it and win and it is still China. US carriers do have better service reputations compared to Chinese carriers than when comparing Cathay but, the US carriers have the advantage of their huge US marketing presence (including the ability to negotiate wide-ranging corporate contracts) and their huge loyalty programs.

US airlines can win in Asia. Because every Asian route requires 2 airplanes because of the length, being able to fly within Asia is an advantage and both S. Korean and Taiwan provide that opportunity, esp. since SE Asia is going to take longer to develop nonstop routes because of the distance and even those nonstop routes will be from coastal gateways where there is less feed than from interior gateways.

While I don’t know what AA corporate is really thinking but there is a clear attitude on every discussion board that AA can only get into Asia by buying its way there. I think you have to get over that mindset. First, there is no assurance you’ll get the opportunity in a timely manner and secondly, because AA is capable of doing it on its own.

We’ll have to see where all these planes are going that are being pulled off the cancelled routes but it sure looks to me like AA could finally have the aircraft to expand into Asia if they want to and can make it work.

 

[777 fixer]

That headache would be shortlived. During that period, it would probably be NWA LLC, a division of American Airlines, Inc., so the different airplanes wouldn't be the hassle you paint it.

Oh, and the 777 order book is hardly full. In December, El Al ordered two 777-200ERs which will be delivered in early 2007. Many of the 777 orders are deferred well into the future. On top of that, the 777 line has some slack - Boeing could easily crank out one or two more per month if orders warranted it.

The El Al example is not the best one to make. That's only two aircraft. NWA has sixteen 747-400, tweleve of which are leased. Their A330 fleet consists of twentyone aircraft. That's thirty seven aircraft which AA wouls have to replace. That's not something you do overnight. Even if AA were announce they are buying NWA and ordering 777's they will have to wait at least a year before they see the first one show up. Then there's the financial issues. Does AA have the money to replace thirty seven aircraft quickly as you think they could?

Then there's the fleet of 747F, A319/320 and DC-9's you would have to replace. Let's face it. Buying NWA would be a big headache.

 

[FWAAA]

The El Al example is not the best one to make. That's only two aircraft. NWA has sixteen 747-400, tweleve of which are leased. Their A330 fleet consists of twentyone aircraft. That's thirty seven aircraft which AA wouls have to replace. That's not something you do overnight. Even if AA were announce they are buying NWA and ordering 777's they will have to wait at least a year before they see the first one show up. Then there's the financial issues. Does AA have the money to replace thirty seven aircraft quickly as you think they could?

Then there's the fleet of 747F, A319/320 and DC-9's you would have to replace. Let's face it. Buying NWA would be a big headache.

Good points. Still, if AA could capture a high percentage of the higher-yielding NW pax (and, at the same time, jetison a good percentage of the lower-yielding NW pax, along with some of AA's native lower-yielding pax), there would be plenty of cash flow with which to pay for the new airplanes. Sure, it wouldn't happen overnight, but it doesn't have to happen THAT quickly. In the two or three years that complete integration would take, the flow of new 777s would begin.

The DC-9s? They're gone whether NW stays independent or is purchased. Embraer is gonna make a lot of 100 seaters. Part of the solution to the fleet rationalization would probably be a 3 or 4 way deal with some of the other merger participants. When UA tried to buy US, AA was gonna get the RR-757s from US. Someone was gonna get most of the F-100s - was it DCAir?

OK, it would be a headache. But not a show-stopper. Recall that AA was in serious talks with NW to buy the company in 2000. Had NW not wanted a 100% premium over its share price, AA would have done this deal 6 years ago and would have never thought about TWA. If the fleet wasn't a complete impediment then, it certainly isn't one now that NW can reject leases and renegotiate debt on the owned airplanes.

 

[NewHampshire Black Bears]

The AA/NW(year 2000) scenario that ...FWAAA refers to, is an "EXCELLENT Point" !!
(AND if my ol' memory is correct, AA looked at NW another time, before 2000)

Which is WHY, if UA/CO becomes a reality, I just think that, even against all LOGIC, something will "shake out" between BIG RED, and AA.

True, Asia is NOW starting to "open up", but at a "snails pace", also, these "3 ways deals", always look good on paper, but RARELY ever come to fruition !!!

NH/BB's

 

[RowUnderDCA]

I can't believe I'm going to say this: WorldTraveler is correct with his analysis.

China is the deal, per the other poster, not NRT.

But it's not worth it cost and headache-wise. Watch AA GET the new China frequency.

 

[donttouchthebeauty]

I can't believe I'm going to say this: WorldTraveler is correct with his analysis.

China is the deal, per the other poster, not NRT.

But it's not worth it cost and headache-wise. Watch AA GET the new China frequency.

Yes i agree they probably will get the frequency - but can they make it work is the question - you would think so - but look at osaka

 

[IMisstheAladdinTrays]

Yes i agree they probably will get the frequency - but can they make it work is the question - you would think so - but look at osaka

look at UAL's long term prospects! My money is on AA!

 

[donttouchthebeauty]

look at UAL's long term prospects! My money is on AA!

ALladin - cmon - you just despise UAL, not really you secretly love them!!! although we both know that UAL is in MUCH better shape for the long term - I believe you said they would never make it - seems the gossip the other day on the van is how AMR will go ahead and dump the pilots pensions b/c it will be such an unfair advAAntage that they dont get 15 years and only 7 with the new bill - It will be interesting - Make no mistake though, they will get the route b/c UAL already has the majority. UAL as well as USAir DAL and NW will be in better positions unfortunately due to BK.. But hey, it is the truth.. i guess CAL and AA will have to deal in other ways.

 

[JFK777]

NW 744 and A330 may be undesired by AA but they would have to remain for 2 years just to buy enough 777. But why would AA just dich good airplanes when there are crews ready and able to fly them day 1. Why is the idea of AA having 744 a bad idea. I think there are existing AA markets right now that could use 744(Miami to Buenos Aires) and NW markets that are better served by 777(SFO to Tokyo). The A330 could fly to Europe replacing 763 for the time being until 787 arrive. 744 to LHR, GRU, EZE and NRT would be great.

 

[LGA Fleet Service]

Why is the idea of AA having 744 a bad idea.

Long standing aversion to four engined aircraft.I think it's in the corporate level DNA.

 

[777 fixer]

Good points. Still, if AA could capture a high percentage of the higher-yielding NW pax (and, at the same time, jetison a good percentage of the lower-yielding NW pax, along with some of AA's native lower-yielding pax), there would be plenty of cash flow with which to pay for the new airplanes. Sure, it wouldn't happen overnight, but it doesn't have to happen THAT quickly. In the two or three years that complete integration would take, the flow of new 777s would begin.

The DC-9s? They're gone whether NW stays independent or is purchased. Embraer is gonna make a lot of 100 seaters. Part of the solution to the fleet rationalization would probably be a 3 or 4 way deal with some of the other merger participants. When UA tried to buy US, AA was gonna get the RR-757s from US. Someone was gonna get most of the F-100s - was it DCAir?

OK, it would be a headache. But not a show-stopper. Recall that AA was in serious talks with NW to buy the company in 2000. Had NW not wanted a 100% premium over its share price, AA would have done this deal 6 years ago and would have never thought about TWA. If the fleet wasn't a complete impediment then, it certainly isn't one now that NW can reject leases and renegotiate debt on the owned airplanes.

No it would not be a show stopper. However it would take a while to replace those DC-9's since there are just over a hundred of them in NWA's fleet. Same goes for the A319/320 since there are about a hundred thirty nine of them. Add that with the 747 and A330 fleet those NWA jsts would be around for a long time.

As I have said before IMHO a merger with NWA is a bad idea. Along with the fleet intefration issues there are the obvious work force integration issues. Just a big can of worms. If the rumors about a UA/CAL merger are true they can have the title of worlds biggest airline.